1. PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON HUMAN SETTLEMENTS ON HUMAN SETTLEMENTS Five Year Strategic Plan and Annual Performance Plan 2014-15 to 2017-18 25 March 2015

2. MANDATE, VISION AND MISSION NURCHA MANDATE “NURCHA ensures the availability of bridging finance to small, medium and established contractors building low and moderate income housing and related community facilities and infrastructure.” NURCHA VISION “To be regarded as a partner of choice for those seeking innovative bridging finance solutions” NURCHA MISSION “NURCHA initiates programmes and takes considered risks to ensure a sustainable flow of finance for the construction of low-income and affordable housing, community facilities and infrastructure. We work in partnership with all role-players in these markets to maximize the development of sustainable human settlements” 2

3. PURPOSE To present the Strategic Plan and the Annual Performance Plan to the Portfolio Committee, 3

4. INTRODUCTION NURCHA’s business: –short term project finance (24 months), to developers in the affordable housing segment, –Bridging finance to contractors, –Targeted programmes to finance and develop small contractors focusing on youth and women, –Deploy programme and fund management capabilities to support sector development efforts. NURCHA works on a ‘balanced budget principle’: –Administrative costs must be covered by budgeted income from operations Sources of income are: –Interest and fees from lending activities, –Fees from programme and management support activities, –Money market investments. 4

5. STRATEGY PILLARS 1)Increase development impact in line MTSF Targets and Mandate. –Increased lending towards delivery affordable housing, Grow loan book in the gap category of the market, Participate in sector initiatives on mining towns’ and respond to lending opportunities, Provide short term finance to rental projects (including student accommodation), Develop lending products that facilitate settlement consolidation and densification. –Improved access to finance for subsidy housing contractors: Consolidate the lending model and build provincial capabilities Secure buy-in of NDHS, Provincial Departments and Municipalities on an acceptable lending framework and sign protocols with provinces and Metros Implementation of Contractor Finance and Development Programme to focus women and youth owned small and medium contractors, Develop a lending product to enable women owned contractors to gainfully respond to business opportunities in the sector. –Review current lending facilities with financing partners, –Employ programme and fund management capabilities to provide strategic support in human settlement development programmes. 5

6. STRATEGY PILLARS Cont. 2)Restore organisational sustainability: -Sustain positive financial results, -Improve sustainability of business streams, -Strengthen operations to support provincial lending and development support activities -Establish provincial capabilities to interface with stakeholders and clients, and manage provincial development activities, -Continue with critical processes, controls and systems’ development to support business, 6

7. SOCIO-ECONOMIC BACKDROP NDP AND MTSF Policy and the programmatic measures to provide adequate shelter and of living environments, State interventions to address and counter market dysfunctions that perpetuates inequality and inefficient urban environments and weaken survival economic activities of majority of citizens. ECONOMIC FACTORS Performance of the economy generally and muted international and national growth projections, Banks’ willingness to lend and affordability amidst high demand in the affordable housing market, Interventions to improved affordability – (FLISP, MDI, Employer Supported Housing Schemes), 7

8. SOCIO-ECONOMIC BACKDROP Cont. GOVERNMENT INTERVENTION IN MINING AND FAST GROWING TOWNS Forward planning and availability of land, Bulk infrastructure, Speed of critical property development related approvals, FINANCING CAPACITY Access to funding at concessionary rate, Leveraging and funding mix between grant funding and private sector. Availability of takeout finance for rental projects,(long term finance). STATUTORY AND FINANCIAL INSTRUMENTS ANABLING NEW DFI TO REALISE THE DESIRED CAPACITY AND IMPACT 8

9. CORE BUSINESS 1.LENDING BUSINESS * Affordable Housing, Full and Sectional title, Rental – conventional and student accommodation *Bridging finance to Contractors 2.PROGRAMME MANAGEMENT * Programme management support *Fund management *CFDP 9

10. AFFORDABLE HOUSING OBJECTIVES AND TARGETS PROGRAMMEKEY PERFORMANCE INDICATOR BASELINE2019 PERFORMANCE TARGET Affordable Housing Finance: Grow the supply of affordable housing stock Value of loans R1.0 billion R1.7 billion Loans/projects approved for financing 65 112 Housing units in projects financed 10,656 units 16000 affordable housing units Value of projects financed R3.5 billion Improved geographical spread of financed projects beyond Gauteng 28%of loan book shared by 8 provinces 40% of loans book disbursed outside of Gauteng Grow the GAP housing component of the loan book 28% of the loan book 40% of the loan book by 2019 Develop new products and innovations Adopt energy efficiency measurement on projects financed Benchmark energy efficiency of the loan book by March 2016 Adapt financing mechanisms to respond to medium and high density housing developments New funding mechanism in place by September 2015 10

11. PROGRAMMEKEY PERFORMANCE INDICATOR BASELINE2019 PERFORMANCE TARGETS Subsidy Housing Finance: Improved delivery of subsidy housing Value of loans R491 million R684 million Loans/projects approved for financing 127 171 Housing units in projects financed 45,326 62,000 Value of projects financed R3.2 billion R7.4 billion Develop new products and innovations in business fulfilment. Develop financing mechanisms targeted to benefit women owned contractors. New funding mechanism in place by September 2015 Sign protocols for collaboration in lending with provincial human settlement departments and Metros 80% of protocols signed SUBSIDY HOUSING OBJECTIVES AND TARGETS 11

12. PROGRAMME AND FUND MANAGEMENT OBJECTIVES AND TARGETS PROGRAMMEKEY PERFORMANCE INDICATORBASELINE2019 PERFORMANCE TARGETS Programme and Fund Management Portfolio: Provide programme management and fund management services to provincial and municipal level development programmes. Provincial department of human settlements supported in execution of programme and mainstreaming youth 4 multi-years provincial support initiatives 1 PHP multi- year project  10 programmes supported across provinces 2 of which are PHP  Establish collaborations with community based organisations and/or co-ops to deliver PHP programmes  Manage R1 Billion of client programme funds in execution of programmes Small contractors benefiting from the contractor support programme CFDP pilot project in the EC, with 70% women contractors  150 contractors supported  70% youth 12

13. BUDGETED OUTPUTS 2014/15 TO 2018/19 OUTPUTS - APP 2014/20152015/20162016/20172017/20182018/2019 Year BudgetBudget 1. AFFORDABLE HOUSING (Houses and Serviced Sites) 1.1Contract Signed2021232426 1.2Houses and sites in signed contracts2 8003 1503 4503 6003 900 1.3Value of Loans (Rands)300 000 000315 000 000345 000 000360 000 000390 000 000 1.4Value of Projects (Rands)440 000 000630 000 000690 000 000720 000 000780 000 000 1.5Houses built and Sites serviced1 9502 2002 5002 6502 800 2. SUBSIDY HOUSING (Houses and Serviced Sites) 2.1Contract Signed2832353840 2.2Houses and sites in signed contracts9 66016 00017 50019 00020 000 2.3Value of Loans (Rands)112 000 000128 000 000140 000 000152 000 000160 000 000 2.4Value of Projects (Rands)724 000 0001 200 000 0001 750 000 0001 900 000 0002 000 000 000 2.5Houses built and Sites serviced5 5007 04412 83016 75018 250 3. INFRASTRUCTURE & COMMUNITY FACILITIES (Houses and Serviced Sites) 3.1Contract Signed44446 3.2Value of Loans (Rands)17 380 00018 000 000 27 000 000 3.3Value of Projects (Rands)88 000 000100 000 000 150 000 000 3.4Project Completed82444 13

14. BUDGETED OUTPUTS FOR 2015/16 - QUARTERLY BREAKDOWN 14

15. RISKS AND ENABLERS 15 Economic conditions –Affordability and creditworthiness, –Traction of state interventions to counter impact of economic constraints and stimulate the market, Financing capacity to meet anticipated lending demand from Developers and Contractors, Management of DFI amalgamation process, –Continuation of funding partnerships through the transition, –Staff turnover and challenges of attracting talent,

16. CRITICAL INDICATORS IN PERFORMANCE TRENDS

17. PROGRESS AND PERFORMANCE – LENDING PORTFOLIO 17

19. LENDING CAPACITY AND COMMITMENTS LENDING PROGRAMME TOTAL ACTIVE PROJECTS LOAN VALUE COMMITMENT LENDING CAPACITY ALLOCATION SET COMMITMENT CEILING No.(%)(R‘Million)(%)(R‘Million)(%)(R‘Million)(%) Subsidy Housing2441%11518%8013%20021% Affordable Housing2747%49477%47580%66570% Infrastructure712%355%407%808% TOTAL58100%644100%595100%945100% 19

20. FINANCIAL RECOVERY TREND 20

21. GROSS REVENUE PROJECTIONS 2014/15 TO 2018/19 21

23. FINANCIAL PERFORMANCE PROJECTIONS

24. STATEMENT OF FINANCIAL PERFORMANCE FOR THE PERIOD 2014/15 TO 2017/18 24

25. STATEMENT OF FINANCIAL POSITION AS AT 2014/15 TO 2017/18 25

26. STATEMENT OF FINANCIAL POSITION AS AT 2014/15 TO 2017/18 continued 26

27. STATEMENT OF CASH FLOWS LATESTBUDGETFORECAST ESTIMATES - 2014/152015/162016/172017/18 Cash generated/(utilised) in operating activities(59 068 779)(25 205 518)16 532 68518 226 431 Cash flow from funds (Deficit) / surplus for the period6 997 01214 665 92915 764 82818 331 902 Adjusted for non cash flow items: - Depreciation357 925344 923262 379 245 762 - Amortisation 899 3161 081 678848 652255 806 - Interest on SEDF loan4 907 3514 439 326 - - - Impairments - - - - - Increase / (decrease) in provision for project losses4 060 3485 229 922(1 691 174)(1 137 133) (Profit)/ loss on disposal of fixed assets - - - - Movement in gross accounts receivables2 508 1214 149 213948 000(62 000) Movement in accounts payables(7 695 770)(200 000)400 000592 095 Movement in managed funds(71 103 081)(54 916 509) - - Cash flows from investing activities(216 972 719)14 646 595(29 710 172)(31 379 957) Loan disbursements for construction projects(215 971 425)16 289 095(29 395 172)(31 066 957) Acquisition of fixed assets(251 186)(222 500)(190 000)(213 000) Acquisition of intangible assets(750 108)(1 420 000)(125 000)(100 000) Proceeds on disposal of fixed assets - - - - Cash flows from financing activities30 500 2024 782 8333 752 1803 831 638 Grants received - Nat. Dept. of Human Settlements - 61 000 000 - - Increase / (decrease) in loans obtained30 700 464(56 217 167)3 752 1803 831 638 Increase / (decrease) in overdraft facilities(200 262) - - - Net cash (used)/generated(245 541 296)(5 776 090)(9 425 306)(9 321 888) Balance at beginning of year457 510 737211 969 441206 193 351196 768 045 Balance at end of the period211 969 441206 193 351196 768 045187 446 157 STATEMENT OF CASH FLOWS FOR THE PERIOD 2014/15 TO 2017/18 27

28. CONCLUDING REMARKS The Five Year Plan and APP are hereby presented for discussion and to note the socio- economic conditions that define frame conditions and impacting on performance. 28

29. CONCLUSION 29