PRESENTATION ON THE FINANCIAL MANAGEMENT INFORMATION 3rd QUARTER IRO 2007/2008 13 FEBRUARY 2008

Table of Content The outcomes of the 2006/07 financial year. Data on trends in allocations, transfers and actual expenditure of conditional grants and capital expenditure of the department. Status on Operational Budget spending and explanation of variance analysis. 2nd and 3rd Term Expenditure Performance for the financial year 2007\2008, Under spending / overspending and capacity constraints that impacted on these events iro Conditional Grant.

OUTCOME OF EXPENDITURE PERFORMANCE: TRANSFERS AND ACTUAL EXPENDITURE (2007/08) Grant Quarter Transfer Expenditure % Deviation Integrated Housing and Human Settlement Development Grant 2nd Quarter 633,232 456,070 -28% 3rd Quarter 604,232 781,116 29% Total 1,237,464 1,237,186 0%

OUTCOME OF EXPENDITURE PERFORMANCE: TRANSFERS AND ACTUAL EXPENDITURE (2007/08) The implementation of the revised programme structure in terms of the establishment of regions on the Housing Subsidy System and Bas, including the loading of Charter of Accounts [or revision thereof], followed by the loading of new budget allocations that is only finalised and activated during the year results in under expenditure early in the financial year. A temporary delay with the processing of claims was also as a result of the rollout by the National Department of Housing of two new versions of the Housing Subsidy System that included a total shut down and backup, user re-installation, setup and training. The department’s enhancement of the new revised payment process resulted in delays in the processing of claims. In addition the late submission of claims by municipalities for work completed contributed to the under expenditure during the second quarter of the 2007/2008 financial year.

OUTCOME OF EXPENDITURE PERFORMANCE (OPERATIONAL BUDGET): PROJECTIONS AND ACTUAL EXPENDITURE (2007/08) Budget Quarter Projections Expenditure % Deviation Operational Budget 2nd Quarter 62,250 60,888 -2% 3rd Quarter 63,354 70,699 12% Total 125,604 131,587 5%

ALLOCATIONS, TRANSFERS AND ACTUAL EXPENDITURE (2006/07) The Department receives conditional grants from National Department for its Housing Fund and Human Settlement programmes. Transfers to the Department’s bank account for the period under review were done on schedule and in line with the provisions of the grant. No payments were delayed or withheld by the transferring Department; all monies due to the Gauteng Department of Housing were transferred. The Department did not incur any administration costs usually associated with retention of grants by the transferring Department because we complied with the provisions of the Conditional Grant as well as sections 21 and 22 of the Divisions of Revenue Act. The Department successfully spent 100% of it’s allocated Conditional Grant allocation. This was achieved by the continuous monitoring of expenditure against projections and actual delivery against planned delivery.

ALLOCATIONS, TRANSFERS AND ACTUAL EXPENDITURE (2007/08 YTD) Period Allocation Transfer Expenditure % Deviation (Over)/Under 1st Quarter 330,535 386,533 -17% 2nd Quarter 633,232 456,070 28% 3rd Quarter 604,232 781,116 -29% Total 1,567,999 1,623,719 -4%

REASONS FOR UNDER/OVER EXPENDITURE The major reason for under expenditure performance during the second quarter was due to project enrollment not materializing via the NHBRC resulting in the delays in terms of the roll out of the project. Similarly, the Department had experienced major delays with the approval of project plans and site lay-out plans by municipalities thereby giving rise to a slow turn around of delivery versus payments to these contractors due to such delays. The obligation by the Department was to reach a 75% spending margin by 31December 2007, irrespective of the marginal under-spending during the period April to November 2007 in comparison with the draw downs received in terms of the approved DORA payment schedule 2008. Good co-operation has been made by the contractors and service providers of the Department to compile and submit claims for all progress to date executed to the satisfaction of the department shortly after commencement of the builders holidays. This therefore gave rise to an acceptably high turn over of payments being generated as per their contract agreement. Successful processing by the Department of all such claims received for payment before the end of December 2007 To expedite with effect from end November 2007 the remedial work in terms of the rectification and regularization programmes of which caused an expenditure higher than the funding initially provided therefore based on the fast tracking of actual delivery achieved on the said programme.

Any major deviations from projections and delivery targets MONITORING CAPACITY The Department monitors expenditure against projections on a monthly basis to ensure that the projections and targets set by the Department are adhered to. Any major deviations from projections and delivery targets are investigated and corrective action taken and preventative measures instituted. The Department has adequate capacity to monitor all project development that is underway in the Province. The GDoH has continued with the use of appointed Professional Resource Teams made up of Engineers, Quantity Surveys, Architects, Project / Construction Managers as a means of assisting the Department in executing it’s mandate of monitoring and controlling housing delivery in the Province.

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