NURCHA PRESENTATION 2010 NURCHA CONSTRUCTION FINANCE AND SUPPORT SERVICES Subsidy Housing Infrastructure & Community Facilities Affordable Housing

WHO IS NURCHA? National Urban Reconstruction and Housing Agency Started in Section 21 Company – Nelson Mandela – Van Zyl Slabbert – George Soros – Joe Slovo Joint Venture – Government & Soros Economic Development Fund Major provider of bridging finance for construction projects

MISSION Nurcha initiates programmes to: Take considered risk Ensure sustainable flow of finance for viable construction projects Maximize delivery options in a way that promotes social and economic development Work in partnership with role players such as: Dept. of Human Settlements Dept. of Public Works Dept. of Roads and Transport, Education, Health etc Parastatals and Private Sector employers

NURCHA ADVANTAGE PARTNER OF CHOICE Innovative construction financing solutions – For Contractors and Developers who cannot easily access finance from conventional financial institutions – Understand the unique needs of Contractors and Developers with different levels of experience Implementing / Turn-Key Development Agent – For Employers / Departments / Municipalities – Contract & Account administration – Mentoring & Support to Contractors

NURCHA PARTNERSHIPS NURCHA Affordable Housing TUSK Infra structure SEBRA Subsidy Housing

BENEFITS OF NURCHA PARTNERSHIP One-Stop-Shop for construction finance and support services Extensive knowledge of the construction industry and material supplier network Range of construction support services to suit individual contractors’ needs NURCHA have a national footprint

NATIONAL FOOTPRINT NURCHA HQ JOHANNESBURG BLOEMFONTEIN FREE STATE NORTHERN CAPE NORTHWEST CAPE TOWN WESTERN CAPE EAST LONDON EASTERN CAPE DURBAN KWAZULU NATAL POLOKWANE LIMPOPO CENTURION GAUTENG MPHUMALANGA

CHALLENGES FOR CONTRACTORS Planning & costing Programming & Procurement Working Capital Claims & Certificates Financial administration

Materials Procurement We assist Contractors with: Sourcing of materials at best possible prices – Special discounts for Nurcha Contractors Opening of accounts with Material Suppliers Scheduling of materials according to delivery programme Issuing Payment Undertakings and Guarantees to Material Suppliers Managing payments to Material Suppliers according to certificates and construction milestones Agreements in place with major national suppliers – CASHBUILD, – Illiad Group (Builders Market and others) Support local suppliers where possible

LENDING CRITERIA Viability and profitability of contract Contractor’s ability to meet contractual requirements Housing - Project should have a minimum of 100 units Infrastructure & Community facilities – minimum contract value of R1 million Minimum loan amount – R No collateral required if loan is smaller than R10 million If loan is bigger > R10 million – 10% tangible security (negotiable) Should be registered with – N.H.B.R.C. for Housing Project – C.I.D.B. for Infrastructure Poor credit record will not necessarily disqualify an application

BENEFITS FOR EMPLOYERS Nurcha improve ability of Contractors to deliver within the required time frames Nurcha ensure that all suppliers and stakeholders are paid on time – Employer only deals with one other entity – Nurcha - and only one cession per project Nurcha assist the Contractor to submit correct claims and certificates Nurcha has a confirmed track records as Account Administrator and Implementing Agent for People’s Housing Projects Nurcha can act as Turn Key Development Agent for special projects

NURCHA – Partner in Development Please contact – Sophie Mpane Johannesburg Reggie Mtethwa Durban

NURCHA PRESENTATION 2010 NURCHA CONSTRUCTION FINANCE AND SUPPORT SERVICES Subsidy Housing Infrastructure & Community Facilities Affordable Housing

When do Contractors approach Nurcha? 1. During Tendering Letter of intent – Require 2 working days Performance guarantee – Require 2 working days We do not assist with completion of tenders 2. Bridging finance application When awarded a viable contract from a recognized employer in the public or private sector Signed contract or letter of appointment from Employer / Client / Department Require 14 working days for loan appraisal and approval 3. Performance Guarantee (if required) Subject to Nurcha financing the project

FINANCING CONTRACTORS Cover the period between issue and payment of a certificate Make interim advances for site establishment and wages Calculate the maximum loan value from the programme/cash flow agreed between Nurcha and Contractor Provide payment undertakings and guarantees to material suppliers

DOCUMENTATION REQUIRED APPLICATION DOCUMENTS Letter of appointment/contract signed by Employer Completed tender document Approved Priced Bill of Quantities (and drawings if applicable) Company registration certificate Directors/members’ S.A. Identity documents Bank account details Proof of residence Company VAT registration certificate Company tax clearance certificate Joint Venture agreement (if applicable) C.V. of site manager

DOCUMENTATION REQUIRED Additional documents for SUBSIDY HOUSING – Cost breakdown per house – Signed land availability agreement (if applicable) – House plans – Approved engineer designed foundation (if applicable) – Professional indemnity cover for engineer – Geo-technical subsidy approval (if applicable) – Township registration and surveyor general plan – N.H.B.R.C project enrolment (if applicable) Additional documents for loans > R10 million – Audited financial statements – Proof of tangible security – Proven construction industry record of at least 3 years

COST OF FINANCE - HOUSING Interest on Borrowing  Prime+ 0.2% p.a  Currently – 10.7% Initiation Fee  1.9% of the approved loan value (or R19,000 per million) Construction Support Fee - Housing  1.5% of the contract value per house (Vat Excluding)  Level of support required will be taken into account

COST OF FINANCE – INFRASTRUCTURE & COMMUNITY FACILITIES Interest rate- Current rate is prime plus 2% p.a. Initiation Fee Initiation Fee – 1.6% p.a of the approved loan amount Extension same rate if the project goes beyond the original completion date Construction support fee Considers level of support required – Minimum Support – R11,000 per month (Excl. Vat) – Maximum Support – R26,000 per month (Excl. Vat)

COST OF FINANCE – INFRASTRUCTURE & COMMUNITY FACILITIES Performance guarantee fee 10% p.a. of performance guarantee amount Evaluation fee 0.3% x Contract value – maximum of R

During loan application process – Assess Project viability / Review tender / Bill of Quantities – Assess Contractor’s capacity Performance guarantee (if required) Project Planning & Preparation – Programming and scheduling – Appointment of sub-contractors / project staff Site establishment assistance – Assess contractor’s needs and project requirements – Confirm that there are sufficient management capacity and storing facilities CONSTRUCTION SUPPORT SERVICES

Construction management assistance – Attendance at site meetings – Contract administration – ensure implementation of the conditions of the contract – Assist with legal advise / litigation if required Financial administration – Assist to finalize project budget – Monitor progress and cash flow – Monthly income and expenditure statements – Monitor claims and certificates – Compiling final accounts – Vat administration

ESSENTIAL WORKING AGREEMENTS 1.Loan agreement Describe loan terms and conditions Open joint project account with FNB Sign cession and step-in arrangements 2.Construction Support Services Agreement – Describe the support services to be provided 3.Employer Payment Undertaking Acknowledgment of cession and step-in agreement Agreement by Employer to pay all contract income into the Nurhca nominated bank account

BENEFITS OF PROGRAMMES Well structured to ensure uninterrupted flow of the project – Materials on site on time – Labour payments on time Strong emphasis on performance and participation of Contractor – Part of decision making all the way – More support to the less experienced contractors – Less support to the more experienced contractors – Constant monitoring of performance against programme Step in if required to get project back on track – Regular meetings to discuss project progress, cash flow and project related issues

BENEFITS OF PROGRAMMES Claims and certification support – Interactions with professional teams and building inspectors – Submission of Payment Certificates to Employers – Monitoring of timely payments into Project Account – Assist with claims for variation orders Assist in growing the Company - Skills transfer – Construction Management – Financial Management – Compliance with statutory requirements CONSTRUCTION ACADEMY

SO WHY CHOOSE NURCHA… Offer finance plus construction support Offer performance guarantees when required Access to material suppliers at discounted rates Scheduling of materials to delivery programme Finance viable project despite being blacklisted Intervene when employer payments are delayed Offer professional support – construction, legal, etc. All transactions are properly recorded All transactions and bank accounts are in the name of the contractor Easy to upgrade with CIDB as full contract and loan value of project is reflected in the contractor’s bank account We understand and are passionate about the construction business

AFFORDABLE HOUSING For Developers who undertake affordable housing projects - Development of serviced sites Construction of housing for ownership or rental Large scale mixed land-use, mixed income groups or mixed tenure projects Nurcha can provide between 70% and 95% of the bridging finance required for project

PROJECT REQUIREMENTS Selling price of housing package not to exceed R (serviced site and house, VAT inclusive) In case of mixed developments with a range of houses, only limited percentage of houses with selling prices between R and R – (Only 10% above R but not exceeding R ) Note: These figures are reviewed from time to time.

PROJECT REQUIREMENTS Developer needs to have – Purchased land, or – Signed land availability agreement Minimum number of units – Within Gauteng Province – 50 – Outside Gauteng Province - 100

APPLICANT REQUIREMENTS Developer should have: Minimum of three years experience in affordable housing market Audited company financial statements for minimum period of two years Ability to provide Nurcha with company’s current quarterly managements account Ability to contribute the first 5% to 30% of bridging finance requirement of project

COST OF FINANCE Interest Rate Prime to prime +2% p.a. Raising Fee 1% to 2% of approved loan amount.