2. Presentation to the Portfolio Committee on Housing held on 10 May 2006 – ROOM 146 Marks Building –
CAPE TOWN

3. Presentation Topics Introduction Mandate Funding Framework
List of Board Members
Corporate Governance
Strategic Plan including Budgets – Focus on the MTEF 2005/6 and 2006/7
Key Challenges
Specific Challenges in Relation to Delivery
Equity/Procurement/BEE and Contribution to ASGISA
Way Forward

4. 1. Introduction Presentation will cover the following: Establishment
Mandate and Expanded Mandate
Funding Framework by both Shareholders
Board Representation
Corporate Governance and alignment to the Policy Framework on Public Entities and DPSA Requirements
Key Strategic Plan, including Budgeting covering 2005/6 and 2006/7
Key Challenges and Proposed Corrective Measures
Specific Challenges in relation to Delivery
Equity Issues
Way Forward

5. 2. Establishment and Mandate
Servcon was established in 1995
Its Agreement was renewed in 1998 to dispose a further ring-fenced portfolio by 31 March 2006 and/or when the last property has been transferred to the last Servcon client;
Mandate was to Normalize Non-Performing Properties – Status of Redundancy to Liquidity

6. 2. Establishment and Mandate…
Servcon expanded Mandate over the Contractual Period:
Relocation Assistance Programme– 25/10/04;
Incentivized Vacant Possession: End of 2003/4;
Eviction of Defiant Occupants – Ended 30/9/04
PHD Normalization Programme – Started in 2003/4
Special in Situ Rightsizing Programme – 25/10/2004
Properties outside Servcon – Under Consideration but most PHDs wants that to form part of the Normalization Programme
Special Purpose Vehicle on Land and Landed Props.

7. 3. Funding Framework Banks contributes 50%: Operational Costs
Government contributes 50%: Operational Costs
NDoH: Restructuring of Servcon and incidental costs regarding exiting Banks
PHDs:
Incidental Subsidy Amounts – Qualified Beneficiaries
Normalization Programme

8. 4. List of Board Members Current Servcon: BNG Re-aligned Servcon:
Banking Association (BASA):
BASA; Nedbank; ABSA; FNB; STBANK
Government
NDoH; Treasury; SAPS; Justice; GPPHD; WCPHD
BNG Re-aligned Servcon:
Ministerial Appointments as soon as the current portfolio has been finalized and/or Signed Sale of Shares Agreement

9. 5. Corporate Governance Compliant; King Finance – 95%: PFMA – 100%;
Same Chairperson since 1998
Chairperson heading Audit/Remuneration Com.
PFMA – 100%;
DPSA Requirements – 100%:
Model used to Restructure Servcon
Policy Framework of Public Entities – 95%:
Materiality Requirements Met

10. 6. Strategic Plan and Budgets
Strategic Plan in place cover the period 2004/6 to 2009/10
Finalization of the Ring-Fenced Portfolio;
Normalization Programme of PHD owned or managed properties – Designated Portfolio;
Use of Servcon expertise post 31 March 2006;
Land identification and acquisition for Integrated Housing Development - BNG

11. 6. Strategic Plan and Budgets
RESTRUCTURED SERVCON
Land Parcel Landed Properties
Identification (Data) Identification (Data)
Receipt/Acquisition Receipt /Acquisition
Holding Holding
Mixed Use Program Mixed Use Program
Disposal Disposal/ Management

12. 6. Strategic Plan and Budgets…
Financial Year 2005/6:
Budget R59m
Expenditure R59m
Servcon Cost-Sharing Concept: R40m
CIDA R19m
Financial Year 2006/7:
Budget R60m
Servcon Budget R35m
Restructured Servcon R25m
PHD Normalization is dependent on Approved Designated Properties for the year KZN; WC;GP; EC

13. 7. Key Challenges
Specific PHDs having delayed transfer of incidental Special in Situ Rightsizing Programme;
Normalization Programme of PHDs:
Delayed understanding;
Misunderstood Value-Adding to PHDs;
Outside Servcon Portfolio – Facilitative Role;
Stalled process accommodating other PHDs to benefit through the Normalization Programme

14. 8. Specific Challenges Exited Banks from Servcon:
Qualified VOETSTOOT sale of Shares;
Continued Normalization Programme: PHDs have now motivated for a linked SPV/ Normalization Programme
Restructured Servcon:
Finalization on the Capitalization Programme
Inter-Departmental Linkages;
Private Sector Raising of Funds

15. 9. Equity/Procurement/BEE and contribution to ASGISA
Equity: Servcon will be restructured into a 100% State Owned Section 32 Company with the Capacity to transact as a Private Entity and yet accountable to the Minister;
Procurement is according to applicable Corporate and Government Requirements;
BEE – Process is still being determined but Service Level Agreement require following applicable Process
ASGISA – Rapid Housing Delivery Models

16. 10. Way-Forward
Finalized Ring-Fenced Portfolio – targeted 30 June 2006;
Normalization Programme – PHDs recommended to the Minister a Linked Process – Redundant Portfolio; Portfolio outside of Servcon; Shack Audit; Rectification Quantification Programme etc
Restructured Servcon Business Case articulated and will be presented to the DG within the next 7 Days

17. KE A
LEBOGA