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2 Presentation to the Select Committee on Public Services By Lindikhaya Mpambani Michael Rakgogo

3 1. Introduction Servcon has stopped operations in September 2009 as it is closing down. Since the cessation of operations, there were closure dedicated quality control activities that have been undertaken up until August To date most of the operations relate to the portfolio management of the original Servcon Mandate.

4 Annual Report for 2009/10 Financial Period Presentation Structure 1.Audit Opinion 2.Emphasis of Matters. 3.Annual Financial Statements. 4.Performance Information 5.Original Portfolio Management. 6.Closure Report.

5 Audit Opinion Our Financial statements remain unqualified since formation of the company in There were only eight items raised in our management letter and were all resolved by end of 2010 financial period.

6 Emphasis of Matters Matter were raised by the auditors include: –Going Concern Aspect –Prior Period error

7 Going Concern –We note that as per the instruction of the Office of the Minister the Servcon board of directors ceased operations and proceeded to close the company. –We are thus finalizing the closure of Servcon and therefore the auditors needed to draw to the attention of users of Financial Statements this fact.

Periodic Error -The entity was declare a income tax paying entity by SARS, and then the adjustments for prior years were done accordingly 8

9 Performance Original Portfolio Over a period of 13 years properties were satisfactorily resolved/normalized, leaving only 61 to be finalized. Should the some of the 61 properties remain outstanding at the time of closure, they same shall be transferred to National Human Settlements Department for management at that level.

Performance Information PROVINCETOTALNEDBANKSAAMBOU / FNB ABSA Eastern Cape KZN4130 FREE STATE2020 MPUMALANGA0000 GAUTENG WESTERN CAPE12 00 TOTAL

Performance Information GOALKEY PERFORMANCE INDICATOR TARGETPERFORMANCE RESULTS REASONS FOR VARIANCE Normalization/ regularization of Gauteng Housing Portfolio post 1994 Number of properties visited to determine ownership Target exceeded Number of houses rectified Target exceeded Number of properties revisited for regularization The Project was stopped due to company closure Number of properties regularization The Project was stopped due to company closure 11

GOALKEY INDICATOR TARGETPERFORMANCE RESULTS REASON FOR VARIANCE NORMALIZAT ION/REGULA RIZATION FOR EASTERN CAPE HOUSING PORTFOLIO POST 1994 NUMBER OF PROPERTIE S VISITED TO DETERMINE OWNERSHIP The project was stopped due to Company closure Number of properties visited for regularization The project was stopped due to Company closure Number of properties rectified The project was stopped due to company closure Normalization NDPW properties Number of properties visited-testing ownership and compliance lease agreements The project was stopped due to company closure 12

Annual Financial Statements BALANCE SHEET2010 ASSETS Property Plant and Equipment2,138,255 Other Financial Assets127,025,464 Deferred Tax4,586,086 Trade and other receivables178,434,948 Prepaid Expenses283,646 Cash and cash equivalents13,430,284 LIABILITIES 164,480,609 Tax Payable44,540,447 Trade Payables80,176,839 Financial Liability and Provisions39,763,323 ASSETS EXCEED LIABILITIES BY 161,418,074 13

Annual Financial Statements INCOME STATEMENT2010 Revenue 194,783,955 Other Income2,318,817 Operating Expenses(194,925,863) Operating Loss2,176,909 Investment Revenue3,014,437 Finance costs(5,039,899) Profit before Tax 151,447 Tax Expense(1,256,506) LOSS FOR THE YEAR (1,105,059 ) 14

15 Status of closure As indicated above, we have ceased operations at the end of September We remain in possession of land parcels and one building which will be sold to the public through the competitive bids as guided by Treasury Regulations

16 We have given notice to our landlord terminating our lease as at the end of November With effect from the 1 st December 2011, we moved to the NDHS offices to finalise outstanding issues. We continue to receive queries/complaints from communities who either were never part of the original portfolio and/or if they were in the portfolio they were rehabilitated and then taken off the portfolio.

17 We still have less than 300 title deeds that need to be handed over to the beneficiaries, we thus are waiting for the conveyancers to complete the process. Once our liabilities are settled we will then follow the PFMA guidelines to delist the entity from Treasury and apply to the court - through the Minister to liquidate the company - then would de-register Servcon with Companies and Intellectual Property Commission (CIPC)

18 We thereafter would apply to the court - through the Minister to liquidate the company. We then would de-register Servcon with Companies and Intellectual Property Commission (CIPC).

19 Thank You