1. Click to edit Master subtitle style 10/14/11 ANNUAL REPORT 2010 2011 FINANCIAL YEAR Dr. Jeffrey Mahachi Acting CEO Jeffreym@nhbrc.org.za 12 October 2011

2. 2 VISION AND MISSION VISION To be a world class organization that ensures that homebuilders deliver sustainable quality homes MISSION Regulate the home building environment Protect consumers Promote innovative technology and compliance Capacitate homebuilders Through registrations, enrolments, inspections, training and dispute resolutions 2Page 2

3. 3 MOTTO Quality is our Priority VALUE STATEMENTS Customer service excellence Good corporate governance Research and innovation Learning and caring organization Commitment and moral integrity Promoting technical excellence MOTTO AND VALUE STATEMENTS 3Page 3

4. 4 STRATEGY AND COMMITMENT STRATEGY To improve visibility and accessibility in the market while enhancing interaction with our stakeholders To position the NHBRC as a leader in knowledge creation, technical and technological building solutions through strategic partnerships To provide diversified services and products in line with changing building requirements and needs. COMMITMENT Serving you is our business 4Page 4

5. 5 PRODUCTS OFFERED The NHBRC offers the following Valuable Final Products: Registration of homebuilders Renewals of registration of homebuilders Enrolment of homes Late enrolment of homes Inspections of homes for Subsidy and Non-Subsidy Resolutions of Complaints Remedial works Conciliations between a homeowner and homebuilder Suspensions and de-registrations of homebuilders Training of homebuilders 5Page 5

6. 6 PERFORMANCE OF VFP VFP2009/102010/11VARIANCE Registration3,61611,115207% Renewal of registration10,3663,650(65%) Enrolment26,90331,45817% Late Enrolment2,130966(55%) Complaints1,186937(21%) Conciliations37453643% Homes inspected76,33715,631(80%) 6Page 6

7. 7 PERFORMANCE OF VFP VFP 2009/102010/11VARIANCE Remedial worksR13,400,000R22,000,00064% Suspended homebuilders45251213% Project Enrolment24,56425,0902% Home Enrolment41,61649,92920% Training of homebuilders7,5551505(80%) 7Page 7

8. 8 ACHIEVEMENTS OF THE NHBRC Ensuring compliance to norms, standards and quality within the sector. Assisting the public and private sector in improving programme and project management through training and skills transfer. Assisting the state in the implementation of the rectification programme. Improving the capacity of government to monitor and oversee human settlements development programmes and projects. Assisting the Department in the improvement of governance and performance in the sector. 8Page 8

9. 9 ACHIEVEMENTS OF THE NHBRC cont… Building and developing appropriate capacity at the provincial and municipal spheres to undertake human settlements development capacity for compliance and monitoring Protection of the interests of the public within the human settlements sector. The NHBRC has conducted assessments for rectification in KZN and Eastern Cape. Assisting government in the development of appropriate norms and standards in the provision of services, infrastructure and housing. The development of appropriate policy and legislative frameworks in ensuring compliance to norms and standards in human settlements development and protection of all stakeholders from poor workmanship. 9Page 9

10. 10 ACHIEVEMENTS OF THE NHBRC cont… Improving coordination and cooperation with the Department, Provinces and Municipalities in monitoring, compliance and adherence to the norms and standards set for development. Setting up Quality Assurance Systems in the Provinces and Municipalities 10Page 10

11. 11 Annual report ‘10/’11 FINANCE 11Page 11

12. 12  Value of plans passed declined by 5,1 % year on year to March 2011. (Statistics S.A.)  Recovery of residential home building market remains under pressure.  Existing home cheaper than newly constructed home by 18%. (Absa Property)  Prospective Homeowners compliance with Financial Institutions lending criteria.  Decline in subsidy project enrolments. Economic Analysis 2010/2011 12Page 12

13. 13 Financial Highlights 2010/11 Year-on-year comparison Revenue Impact 13Page 13 Premium Income 7,8%Fee and Technical income 9,7%Total income 0,07% (R326K)

14. 14 Premium Income Total Premium Income Technical Provisions (20,3%) (R 6,3 million) Revenue R 32,1 millionPremium Written R 25,8 million7,8% + 10,7%

15. 15 Fees and Technical Services year on year Subsidy Project Enrolment Fees (20,3%) (R 20,3 million) Technical Services 29,8% R 13,4 Million Registration & Annual Fees 19,3% R 2,1 Million Total including other (9,7 %) (R 9,2 Million)

16. 16 1616 Investment Income Interest earned -15.3% R 203 MillionRealised profit on available-for-sale investments +12,02% R 126,5 Million Total income from investments + 32% R 329 Million Fund Manager costs -7% R 0,6 Million

17. 17 Investment Income, Premium and Fees R’ million

18. 18 Insurance Claims and loss adjustment 39,4 % R 11,5 million (R 7,5 million) Operating 22,9 % R 86,7 million (R 25,7 million) Asset Management 7,0 % R 8,7 million (R 0,6 million) Administration 2,9 % R 330,6 million (R 9,9 million) Financial Highlights 2010/11 Year-on-year Expenditure Impact

19. 19 Surplus for the year R’ million

20. 20 STATEMENT OF FINANCIAL PERFORMANCE

21. 21 Actual Performance excluding Technical Provisions 2011Restated 2010 RR Insurance premium revenue331 933 736299 798 722 Fee revenue27 258 67249 945 237 Technical services revenue58 594 23545 153 093 Other income881 29917 156 326 Net income418 667 932412 053 378 Insurance claims & loss adjustment expenses-- Operating expenses86 742 492112 470 022 Administration expenses330 631 250340 561 898 Expenses417 373 742453 031 920 Finance costs2558 7 85 Results from operating activities1 293 935-40 987 327 Investment Income329 594 249249 626 921 Realised profit on sale of available-for-sale investments126 472 1929 711 932 Investment income203 122 057239 914 989 Investment Expenditure8 768 6689 426 212 Asset management services320 825 582240 200 709 Net investment income Surplus for the year322 119 51619 213 382

22. 22 Reconciliation of Budgeted Surplus to Actual Surplus 2222 Net surplus per approved budget 95 814 348 Adjusted for Movement in provisions and reserves (18 846 702) Revenue (Increase) 80 025 406 Expenditure (Savings) 88 259 802 Realised profit on sale of financial assets 126 472 192 interest received (Decrease) (36 521 150) Net Surplus per the statement of financial performance 335 203 896

23. 23 Claims R’ million

24. 24 Unearned Premium and Unexpired Provision R’ million

25. 25 Unearned Premium and Unexpired Provision R’ million

26. 26 Statement of Financial Position - Assets

27. 27 Statement of Financial Position - Liabilities

28. 28 Statement of Changes in net assets

29. 29 Financial Notes  Provision for Government debt R 29,8 million  Technical provisions – Short Term R 210,3 million – Long Term R 577,4 million  Income Receive in advance R 222,0 million  Available for sale investments R 3,1 billion  Vat deregistration – Contingent liability not substantiated.

30. 30 Actuarial Report at March 2011

31. 31 Technical Provisions as at 31 March 2011

32. 32 Prior year: (370.22)-9%(682.15)-8%(171.90)-12% Enrolment fee adequacy for 2011

33. 33 Solvency of Warranty Fund NHBRC Solvency Position Mar-11Mar-10 Assets3 120 105 3562 934 899 305 Equity Portfolio325 605 366- Bond Portfolio719 454 865- Money Market Portfolio1 618 631 962- Structured Products Portfolio454 289 004- Cash (Settlements Account)2 124 159- Fixed Interest Portfolio-2 251 282 808 Absolute Funds-683 616 499 Provisions787 638 872822 993 247 Unearned Premium Provision303 075 401430 492 802 Outstanding Claims Provision61 878 24472 606 049 Average Margin (99,5%) 54 909 548 6 968 696 64 167 073 8 438 977 Additional Unexpired Risk Provision422 685 227319 894 396 Actuarial Surplus2 332 466 4842 111 906 058 Surplus as % of Provisions296%257% Table on left: NHBRC Solvency: The Actuarial Surplus has increased by 10.4% which is in line with declining provisions and increasing assets. The Surplus as a % of Provision has increased over the year.

34. 34 Conclusion on the Solvency  The results of the actuarial valuation indicates that the NHBRC as a whole, including both subsidy and non-subsidy houses, is solvent and in sound financial position as at 31 March 2011.  The actuarial liabilities are 396% funded. 3434

35. 35 Interest Rate Sensitivity Analysis by 1% Movement of (± 1 %) R’ million Cash ± 18,7 m Bonds±6,2 m Inflation linked Bonds±6,1 m

36. 36 THE END THANK YOU 36Page 36