2010 Annual Report

KEY MOMENTS IN THE HISTORY OF THE NHBRC
AN OVERVIEW OF THE HIGHLIGHTS OF THE PAST THREE YEARS OF THE NHBRC 2007/08
Launch of Eric Molobi Housing Innovation Hub in Soshanguve, Pretoria. In view of increasing accessibility to our customers and home builders, NHBRC established satellite offices in KwaZulu-Natal (Newcastle and Port Shepstone), George and Klerksdorp. Established satellite offices in Newcastle and Port Shepstone for increased visibility. Increased the number of inspectors from 92 to 230 nationwide (non-subsidy).
2008/09
Developed breaking new ground housing typologies, approved by MINMEC. Established satellite offices in Gauteng (Tshwane), Free State (Bloemfontein and Bethlehem). Collapsed three stages of subsidy enrolments into two, improving service delivery. Enrolled homes (unit enrolment) in the subsidy sector for the first time. Held briefing sessions with provincial housing departments on the legislative review. Held workshops on home builder grading and the code of conduct with selected stakeholders.
2009/10
Launched the International Housing and Sustainable Energy Efficiency Competition (Drakenstein Municipality, Cape Town). Finalisation of the Eric Molobi Testing Centre. Established the Gauteng provincial customer care centre (offices relocated to Woodmead).
GLOSSARY OF ACRONYMS & ABBREVIATIONS
ACRONYMS GLOSSARY OF TERMS

AMCHUD ARMC ASGISA BBBEEA BCC BEE BIS BNG CEO CETA CIDB COC CPI CSI EE EEA GDP GIS HCPMA HDI IDP IFRS ISO LGA LRA MEC MINMEC NEPAD NHBRC NSDS NT OCP OHSA African Ministerial Conference on Housing & Urban Development Audit and Risk Management Committee Accelerated Shared Growth Initiative of South Africa Broad Based Black Economic Empowerment Act Black Construction Council Black Economic Empowerment Business intelligence system Breaking New Ground Chief Executive Officer Construction, Education Sector Training Authority Construction Industry Development Board Code of Conduct Consumer Price Index Corporate Social Investment Employment Equity Employment Equity Act Gross Domestic Product Geographical Information Systems Housing Consumers Protection Measures Act Historically Disadvantaged Individuals Integrated Development Plans International Financial Reporting Standards International Organization for Standardization Local Government Authorities Labour Relations Act Member of Executive Council Ministers and Members of the Executive Committee New Partnership for Africa Development National Home Builders Registration Council National Spatial Development System National Treasury Outstanding Claims Provision Occupational Health and Safety Act Public Finance Management Act Provincial Housing Departments Quality Management Systems Supply Chain Management Standing Committee on Public Accounts Skills Development Act Skills Development Levy Unearned Premium Provision
NHRBC ANNUAL REPORT 2010
PFMA PHD QMS SCM SCOPA SDA SDL UPP
VISION
To be a world-class organisation that protects consumers of the built environment and regulates the built industry.
MISSION
We shall: Provide excellent customer care and support service. Provide excellent consumer services. Provide and sustain a warranty fund that protects consumers. Provide a new range of cutting-edge services and products in the built environment. Empower the youth, women, unemployed, people with disabilities and emerging builders through education, training and development. Partner strategically with stakeholders. Promote quality and innovative building products and processes. Educate consumers about their rights, duties and obligations. Promote and maintain ethical standards in the built environment. Promote and support sustainable human settlement policies and initiatives. Promote technical excellence in the built industry through research and development.
MOTTO
Quality is our priority.
VALUE STATEMENTS
Customer service excellence Good corporate governance Research and innovation Learning and caring organisation Commitment and moral integrity Promoting technical excellence
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.
OUR COMMITMENT
Serving you is our business.
CONTENTS
Message from the Minister Chief Executive Officers Report Members of Council Executive Committee Financial Performance Review Corporate Governance Non-financial Performance Information Report Annual Financial Statements Performance against Strategic Objectives
5 6 10 12 14 20 30 46 93
MESSAGE FROM THE MINISTER OF HUMAN SETTLEMENTS, MR TOKYO SEXWALE
This year, 26 June marks the 55th anniversary of the adoption of the Freedom Charter, a key founding document of South Africas democratic constitution. We approach this historic occasion understanding that the charter remains relevant to the vision of a new South Africa. Its housing clause states without any equivocation: There shall be houses, security and comfort for all. All people shall have the right to live where they choose, to be decently housed, and to bring up their families in comfort and security. Slums shall be demolished and new suburbs built where all shall have transport, roads, lighting, playing fields, crches and social centres. Therein lies the founding philosophy, strategy, vision and practicality of human settlements. Our countrys constitution resonates with the charter on the question of housing and human settlements: Everyone has the right to have access to adequate housing and the state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of this right. The first minister of housing, comrade Joe Slovo, rallied large and small contractors, labour unions, community organisations and financial institutions in 1994, resulting in the landmark Botshabelo Accord, which stated: Government strives for the establishment of viable, socially and economically integrated communities which are situated in areas allowing convenient access to economic opportunities, health, educational and social amenities and within which South Africas people will have access on a progressive basis to a permanent residential structure with secure tenure, ensuring privacy and providing adequate protection against the elements, and potable water, adequate sanitary facilities including waste disposal, and domestic electricity supply.
CHIEF EXECUTIVE OFFICERS REPORT
The National Home Builders Registration Council has, over the past three years, experienced a continuous decline in the performance of some of the valuable final products. During the 2007/8 and 2008/09 financial years, the NHBRC enrolled 80, 239 and 42, 228 homes respectively. The performance of the NHBRC, in terms of enrolments of homes, was not spurred by the present global economic situation and its negative impact, which saw performance decline by 36%, with only 26,903 homes being enrolled for the financial year. The NHBRC has remained alert of the priorities of the national Department of Human Settlements in striving for the establishment of viable, socially and economically integrated communities which are situated in areas allowing convenient access to economic opportunities, health, educational and social amenities. To this end, one of the NHBRCs strategic objectives is to contribute to the creation of sustainable human settlements through the delivery of quality homes, which the council will do by promoting breaking new ground architectural designs. One of the mandates of the NHBRC is to represent the interests of housing consumers by providing warranty protection against defined defects in new homes. The NHBRC does that partly by registering home builders so that they may build according to the set standards in the home building manual. Each and every person engaged in home construction should be registered with the NHBRC. The council realised a decrease of 4.5% of builders registered with it for the 2009/10 financial year an indication that home building activities have been impacted upon by the slowdown in the industry. Due to the nature of the NHBRCs business, the Council has approved an organisational redesign process which aims to improve the way the NHBRC conducts business. The NHBRC is looking at creating regional reporting systems, which would improve visibility whereby provinces would systematically report to the regions. In areas with limited accessibility, mobile offices would be made available, ensuring that all the services rendered by a full office would now also be available to those living in remote areas.
TURNAROUND STRATEGY
The current Council was appointed in May 2009 and found a financially sound organisation. However, income was threatened by insufficient new enrolments to cover required cash flow from time to time. Thats normal in business as long as theres sufficient cash flow to cover the identified limitations/shortfalls. The organisation had its own challenges as experienced in the 2009/10 financial year. These included: Overstaffed organisation in non-income-generating areas; Ratio of core staff to support was three times; Customer interfacing activities were insufficient and reactionary; Typical home affairs behaviour in certain areas; Silo mentality; Non-working systems with unreliable data; Poor implementation of information technology system; Central office was too dominant and operating as a powerhouse; and About 200 cases of unrectified units ranging from three to four years.
CUSTOMER CENTRICITY
The National Home Builders Registration Council must focus and anchor its business around customer satisfaction; it currently overemphasises its regulatory framework at the detriment of the housing consumer. The NHBRC will be meeting home builders and home owners within 14 days of the home being enrolled. The NHBRC will also be rolling out the following strategies: Educate/create awareness about the structural warranty scheme; Arrange that the home owner/consumer meets with the inspector and the home builder. (The home builder will know that the home owner is aware of their rights and that they can call on the housing protector at any time to help with uncertain issues.); Ensure that the consumer signs a happy letter before occupation takes place; and A proactive approach to solving consumer problems through inspections. Together with our actuarial services, we are investigating the cost of improving warranty products from five to 10 years. In the review of the legislation we want to include other new products, such as: Owner builder warranty Home additions and extensions Extension of the house covered by current warranty Acoustic services: pre-completion air testing Air leakage testing: air tightness of homes Energy ratings: verifying energy efficiency Land quality services: check levels of carbon emissions Road, stormwater and sewerage warranty Site appraisal report Building control and inspections for municipality Home information brochures
FINANCIAL PERFORMANCE
The financial performance of the NHBRC for the 2009/10 financial year indicates that the gross insurance premium revenue written decreased by R7 million as compared to the previous financial year. The operating expenditure for the year at R111.4 million (2009: R118.4 million), decreased by R7.0 million, compared to the previous financial year. The current year warranty claims settled amounted to R14.1 million (2009: R6.9 million).
SOLVENCY OF THE NHBRC WARRANTY FUND

The solvency and financial position of the warranty fund is assessed annually by independent actuaries. The current year assessment of the solvency of the warranty fund, performed by Matlotlo Group (Pty) Ltd, is as follows: best practice actuarial methods were applied in the actuarial assessment. Matlotlo performed the actuarial valuation of all relevant provisions needed to enable the NHBRC to report on the basis required by AC 141 and IFRS 4. Every effort was made to achieve this, but was limited by the quality of the data provided. The valuation of the liability is performed on a run-off basis, and split into the unearned premium provision, the outstanding claims provision and the additional unexpired risk provision.
The outstanding claims provision (OCP) is a provision required with respect to complaints that will result in remedial work claims, but are still under conciliation or not fully settled. Remedial claims payments data from March 2006 to March 2010 were grouped in a run-off triangle per complaint period against development period of payment. The inflation-adjusted Bornhuetter Ferguson method (BF) was the most appropriate method for the triangulation of remedial work payments. The unearned premium provision (UPP) is the portion of received enrolments that is held to meet future complaint and conciliation expenses, overheads, remedial work claims and surplus for unexpired years of cover. An assumption is required about the portion of premium that is allocated to initial expenses. Actual expenses for 2009/10 were used to estimate expenses as a ratio of written premiums. These calculations showed that 103% of the enrolment fee is required to cover initial expenses for non-subsidy housing and 57% for subsidy housing (March 2009 valuation assumed 102% for subsidy houses and 47% for nonsubsidy houses.) The results of the actuarial valuation indicate that the NHBRC as a whole, including both subsidy and non-subsidy houses, is solvent and is in a sound financial position as at 31 March 2010 when valued on a run-off basis. The actuarial liabilities are 357% funded. However, for future business, the enrolment fees currently charged are inadequate to cover future expenses and liabilities for both subsidy and non-subsidy homes.
STRATEGIC INTENT
As a national home building regulator, the NHBRCs valuable final products have a great influence on, and contribution to, the South African economy. The continual improvement and maintenance of high quality service in operations is therefore a priority. Although the home building industry slowed down during the 2008/9 and 2009/10 financial years, the demand for quality and sustainable accommodation remained higher. The NHBRC is therefore committed to supporting government programmes and projects co-ordinated by the minister of human settlements. It acknowledges that housing contributes towards improving the quality of life for poor communities and to the economy at large. Strategic focus is to maintain strong and capable resources, and ensure the establishment of strategic partnerships with relevant role players to enhance and enforce high quality services and products in the home building industry through ongoing and proactive communication, empowerment and interaction.
Conclusion
In conclusion, there remain many challenges to provide better quality homes for all citizens and I am committed to ensuring that the NHBRC will continue as a major role player in the upliftment of quality homes.
Appreciation
The major achievements reported would not have been possible without the unreserved support of the minister of human settlements, the director-general, the Council of the NHBRC, and management and staff of the NHBRC. I would like to express my gratitude to you all.
Mr Sipho Mashinini Chief Executive Officer July 2010
MEMBERS OF COUNCIL
Ms Granny Seape Chairperson of Council B.Sc (Economics) (Univ. of Zambia); Dip. Marketing, Public Relations and Sales (London Chamber of Commerce); and Dip. Project Management (Newport University) NHBRC Council member as from 2009 to date
Ms Sharon De Gois Member of Council B.Soc.Sc; Hons B.Soc. Sc; Master of Town and Regional Planning; Dip. Project Management (Free State University) and Dip. Strat. Plan (Witwatersrand University) Dip Project Management (Executive Education accredited by Newport University) NHBRC Council member as from 2006 to date
Dr Adam Goliger Member of Council B.Sc and MSc in Civil Engineering (Warsaw Tech. University); and PhD in Civil Engineering (Univ. of Stellenbosch) NHBRC Council member as from 2006 to date
Ms Sibongile Nene Member of Council BA (Social Science) (Unisa); BA (Hons Sociology) (Unisa); MA (Sociology) (Univ. of Zululand) NHBRC Council member as from 2001 to date
Mr Bangiso Mhlabeni Member of Council Bachelor of Social Science (University of Cape Town), LLB (Honours) (University of Cape Town) and Post Graduate Diploma in African Studies (University of Cape Town)
Rev Vukile Mehana Member of Council B.Theo (Rhodes); Advance Management Program (INSEAD Bus. School, France); Top Management Program for Public Enterprises (Nat. Univ. of Singapore); and MBA (De Montfort University, UK) NHBRC Council member as from 2009 to date
Ms Thandiwe Silinda Member of Council B.Admin (Univ. of Limpopo) NHBRC Council member as from 2009 to date
Mr Paul Hlahane Member of Council B.Iuris and LLB (Hons) (Univ. of North-West); LLM (Univ. of Pretoria); and Adv. Dip. Labour Law (Univ. of Johannesburg) NHBRC Council member as from 2009 to date
Mr Mthembeni Mkhize Member of Council Dip.Arch Tech (Wits); B. Arch (Natal); M.Sc Arch (planning and housing) (Natal); and M.Sc Information Technology (Pretoria) NHBRC Council member as from 2009 to date
Ms Dina Maja Member of Council B.Iuris and LLB (Hons) (Univ. of Limpopo) NHBRC Council member as from 2009 to date
Mr Narain Kuljeeth Member of Council B.Proc and LLB (Hons) (Univ. of Durban-Westville) NHBRC Council member as from 2009 to date
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EXECUTIVE COMMITTEE
Mr Sipho Mashinini Chief Executive Officer, NHBRC Master of Business Administration (Thames Valley University, UK), Small Business Development Advancement (Cranfield School of Management, UK), Executive Development Programme (London Business School), Management Advancement Programme (Wits) Joined NHBRC as from 01 April 2010
Mr Courteney Thorp Executive Manager: Finance, Fund and Supply Chain Chartered Accountant (South Africa) Joined NHBRC as from 01 February 2003
Ms Thitinti Moshoeu Executive Manager: Customer Care Master of Science Business Studies (University of Falford, Manchester, UK) Joined NHBRC as from 01 August 2005
Ms Laurene Less Executive Manager: Corporate Services Master of Public Administration (University of Western Cape) Joined NHBRC as from 15 January 2008
Dr Jeffry Mahachi Executive Manager: Technical and Information Technology PhD: Civil Engineering (Wits University) Joined NHBRC as from 05 January 2001
Dr Awelani Malada Manager: Research and Strategic Planning PhD: Industrial and Systems Engineering (University of Pretoria) Joined NHBRC as from 01 October 2006
Mr Godfrey Chooka Manager: Risk B.Accounting (University of Zambia), MBA (De Montfort University, UK) Joined NHBRC as from 01 May 2009
Mr Paul Thabethe Manager: Internal Audit B.Com (University of Swaziland), CIA, CCSA (Institute of Internal Auditors) NHBRC Council as from 15 January 2007
Ms Beatrice Motsisi Manager: Marketing and Public Relations BA Communications (University of the North-West) NHBRC Council as from 15 January 2007
Mr Jacob Makgolane Company Secretary B.Iuris, LLB (Hons) (University of Limpopo) Joined NHBRC as from 01 April 2009
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FINANCIAL PERFORMANCE REVIEW
Overview
The real value of plans approved for new residential building in the current year had reduced by 13.3% compared to last year. In real value of residential buildings constructed was down by 40.5% compared to the first two months of the previous financial year. (Statistics SA). The effect on premium income written, by the NHBRC, in the non subsidy market, declined by 24% (R75.4 million) and increased in the subsidy market by 100% (R60.8 million) compared to the previous financial year. Indications are that the housing outlook for the construction of new homes for the next financial year is projected to remain flat despite the decline in interest rates and the economy emerging from the recession. The recovery in the residential building market remains under pressure as purchasing an existing home is 18.3% cheaper than building a new home. (Absa Property).
Results for the year

Revenue Net income for the year declined by R100.4 million (12%) compared to that of the previous financial year. Insurance premiums revenue declined by R129.7 million, after the change in IFRS4 change in the reduction in the unearned premium provision (R202 million) and the increase in the unexpired risk provisions (R171 million). The effect of the actuarial adjustment resulted in additional revenue of R31 million (2009: R146 million) Fee revenue decreased by R7.1 million (10%) as a result of a prior year restatement of subsidy project enrolment fees amounting to R46.0 million. Income from investments at R240 million decreased by R2 million compared to the previous financial year. (2009: R241.9 million 36.4%). The lower return on investments is a function of the lower interest rates and the utilization of R105 million to fund working capital requirements. The reduction of the working capital reserve is due to the extended credit terms taken by provincial human settlement departments. Profit on sale of investments during the year amounted to R9.7 million (2009: R0.0 million loss).
Source of revenue
Annual fees Subsidy project fees Enrolment fees Investment Late enrolment fees Technical 8% Registration fees Other income 2% 1%
36%
46% 7% 0.% 1%
The effect of the unearned premium and the unexpired risk provisions in terms of IFRS 4, on the premium written and premium earned is as follows:
700 600 500 400 300 200 100 0 -100 Premium income Earned premium (Deferred) /Realised 2007/08 597 546 -51 2008/09 319 465 146 2009/10 305 336 31
R millions
Expenditure Expenditure is categorised into risk mitigation (operating expenditure) and business support (administrative expenditure). Risk expenditure is incurred to mitigate any risk to the warranty fund by enforcing legislated building regulations. Risk expenditure comprises inspection fees incurred during the construction of homes and the accreditation of home builders on an annual basis. Business support expenditure consists of fixed costs to maintain the NHBRC operations and service to customers. The operating expenditure of R111.4 million (2009: R118.4 million) decreased by R7.0 million, compared to the previous financial year. The savings are mainly attributable to the reduced number of inspections performed due to the lower number of homes enrolled (R4.5 million).
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Technical services expenditure of R30.6 million was incurred for the rectification programme on subsidy homes in the Eastern Cape and KwaZulu-Natal. This expenditure is recovered by income generated by the Technical department of R59.7 million. The administrative expenditure of R322.1 million (2009: R258.9 million), an increase of R63.2 million, is incurred to service business growth and improve service delivery to all stakeholders. The increases compared to the prior year, other than for general inflation, is due to the increase in information technology (R13.6 million), Legal fees (R6.8 million) Consulting (R7.9 million) and training of emerging contractors (R19.1 million). The additional expenditure on information technology was incurred to stabilise the Oracle ERP system. Legal fees are mainly due to settlements of outstanding cases which were only finalised in the current financial year. Consulting expenditure increase was to address governance by increasing internal audits which were outsourced due to in-house capacity constraints. The increase in emerging contractors is governed by section 10(1) of the Housing Consumer Protection Measures Act, 1998 (Act No. 95 of 1998). The asset management service fees of R9.4 million (2009: R6.8 million) are paid to Investment managers who administer the investments on behalf of the NHBRC. Management fees are charged on a sliding scale based on the market value of investments under management. The NHBRC will in the next financial year review all contracts with investment managers and re-negotiate the current fee structures. Insurance claims and loss adjustment expenditure Current year claims represent the actual claims and related amounts paid out of the warranty fund during the financial year. The current year claims (R14.1 million) and loss adjustment expenses (R4.9 million) which decreased by R8.2 million compared to the previous financial year. In order for the Council to fulfil its obligations under the warranty scheme, the Council is required to provide for future complaints and conciliation service to housing consumers. The remedial work claims component includes both the reportable outstanding claims provision and the incurred but not reportable claims provision. The provision increased by R4.9 million to R72.6 million. The total unearned premium provision decreased from R632.4 million to R430.5 million. Net surplus for the year The net surplus for the year at R263.5 million (2009 R414.0 million) is R150.5 million (36.3 %) lower than the previous financial year. The effect of the economic downturn in the home building industry, which reduced premium income generated in the non subsidy sector was the main contributor to the lower net surplus. The decrease was partly mitigated by the reversal of technical liabilities of R25.9 million.
Revenue and Operating Expenditure (Excluding non cash flow items)

900 800 700 R million 600 500 400 300 200 100 0 Years 2007/08 2008/09 2009/10 Revenue and interest Expenditure Expense ratio 700 600 Expense Ratio 500 400 300 200 100 0.0
Investments The NHBRC is regulated in terms of the Housing Consumers Protection Measures Act, 1998 (Act of 1998) to establish a fund for the purposes of providing assistance to housing consumers under circumstances where the home builder fails to meet their obligations under section 13(e)(b)(i) of the Act. The investment mandate concentrates on the preservation of capital so as to ensure that the NHBRC remains financially sound to meet housing consumer claims as they arise. Investments are held in either the fixed interest portfolio or an absolute return fund portfolio. The two investment portfolios are managed on behalf of the NHBRC by five fund managers, and returns are managed against predetermined benchmarks. The total investment, at market value, increased from R2.8 billion to R2.9 billion during the financial year. The fair value adjustment in terms of IAS 39, at year end, decreased by R1.1 million to R65.7 million (2009 increase of R66.8 million). The investment returns outperformed the benchmark over the past 12 months with an annualised return on investments of 8.7% (2009: 7.8%). Investment Maturity Profile
1,400 1,200 1,000 800 R millions 600 400 200 0 Cash Bonds < 7 Years Bonds 7 - 12 Years Investments 2007/08 2008/09 2009/10 Bonds > 12 Years Equity
Technical Liabilities The technical liabilities are actuarially determined annually as part of the actuarial assessment. The technical liabilities consist of Outstanding claims, Unearned premium and Unexpired risk provisions which are defined in note 1, summary of significant accounting policies, in the Annual Financial Statements. The results of the actuarial valuation indicated that the Council as a whole is solvent, and able to fund its liabilities when valued on a run-off basis. The actuarial liabilities are 357% (2009:327%) funded. The Outstanding Claims provision is determined at a 99.5% sufficiency level. This is consistent with the Financial Services Boards draft guidelines on Financial Condition Reporting (FCR). These standards require short term insurers to hold liabilities at a 75% sufficiency level, and capital at a 99.5% sufficiency level.
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The Unexpired Risk provision for Subsidy Housing increased from R148.8 million to R319.9 million. This provision is required for subsidy housing to be independently solvent in terms of the insurance risk taken on for such houses. The provision for unearned premium decreased from R632.5 million to R430.5 million which resulted in additional premium income being released from prior year amounting to R202 million (2009: R238 million). Technical Liabilities
1,200 1,000 800 600 400 200 0 2007/08 2008/09 Years 2009/10 Unearned Premium Unexpired risks Outstanding claims
Cash Flow The negative cash flow generated from operating activities at R78.9 million was as a result of the decline in enrolment income. The shortfall was financed by withdrawing R105 million from the working capital reserve. Cash flow from investing activities increased by R135 million compared to the previous year. The organization net inflow of funds for the year R3.6 million (2009 outflow R45.7 million). Reserves The Council increased the Emerging Contractor reserve by R35.9 million (2009: R17.4 million) of which R32.8 million (2009: R13.7 million) was utilized during the year. The reserve is established in terms of Section 15(5) (d) of The Act. The non distributable reserve represents the fair value adjustment of investments to market value and decreased from R66.8 million to R65.8 million. The accumulated surplus increased from R1.8 billion to R2.1 billion during the current year.
R millions
Reserves
Accumulated Surplus 2,500 2,000 R millions 1,500 1,000 500 2007/08 2008/09 Years 2009/10 Emerging Contractor Non Distributable
Long-term Sustainability and Efficiency The long-term financial sustainability of the NHBRC can only be achieved by continuously managing the expense to income ratio, which will by implication grow investment reserves. The enrolment adequacy of the NHBRC is based on the apportionment of the 2010/11 budget for expenditure and the predicted volume of enrolments. Based on the projected income and expenditure the current enrolment fees charged will not be adequate for expenses and claims in both the non-subsidy and subsidy markets. Management is committed to maintain a cost-effective operation in order to address the shortfall. The results of the actuarial valuation indicate the Council as a whole is solvent and able to fund its liabilities when valued on a run-off basis.
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CORPORATE GOVERNANCE
Composition of the Council

The Council shall consist of a minimum of seven and a maximum of 15 members appointed by the minister of human settlements, in terms of Section 4 of the Housing Consumers Protection Measures Act, 1998 (Act No.95 of 1998) herein after referred to as the act. The minister appointed 13 members of Council, including the chairperson and the deputy chairperson. The Deputy chairperson, Mr Sipho Mashinini, resigned on 20 August 2009 and Council member, Mr C Kadwa, resigned on 21 September 2009.The total number of Council members is now standing at eleven (11). The composition of the Council is as follows: Ms Granny Seape: chairperson Ms Sharon De Gois Dr Adam Goliger Ms Sibongile Nene Mr Bangiso Mhlabeni Rev Vukile Mehana Ms Thandiwe Silinda Mr Paul Hlahane Mr Mthembeni Mkhize Ms Dina Maja Mr Narain Kuljeeth
THE NHBRC COUNCIL
Mandate of the Council

The NHBRC derives its mandate through the enactment of the act. The broad mandate is outlined under Section 3, as stated below: To represent the interests of housing consumers by providing warranty protection against defined defects in new homes. To regulate the home building industry. To provide protection to housing consumers in respect of the failure of home builders to comply with their obligations in terms of this act. To establish and promote ethical and technical standards in the home building industry. To improve structural quality in the interests of housing consumers and the home building industry. To promote housing consumer rights and to provide housing consumer information. To communicate with and to assist home builders to register in terms of this act. To assist home builders, through training and inspection, to achieve and to maintain satisfactory technical standards of home building. To regulate insurers contemplated in section 23(9)(a); and In particular, to achieve the stated objects of this section in the subsidy housing sector.
Composition of the Council and the attendance of council meetings The Council shall consist of a minimum of seven (7) and a maximum of fifteen (15) members appointed by the minister of the Department of Human Settlements, in terms of Section 4 of the act. The minister appointed 13 members of Council including the chairperson and the deputy chairperson. In line with good governance principles as espoused by the King II Report of good corporate governance, the Council is required to hold at least four (4) formal meetings per annum. The table overleaf reflects the members of Council and their attendance of meetings scheduled for the year under review:
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Council meetings Member Name Ms Granny Seape Mr Sipho Mashinini Dr Adam Goliger Rev Vukile Mehana Mr Cassim Kadwa Mr Bangiso Mhlabeni Mr Mthembeni Mkhize Mr Paul Hlahane Mr Narain Kuljeeth Ms Sharon De Gois Ms Sibongile Nene Ms Dina Maja Ms Thandiwe Silinda 13 Capacity
12 May 2009 28 May 2010 10 Jun 2009 21 Jul 2009 20 Aug 2009 21 Sep 2009 29 Oct 2010 30 Nov 2009 29 Jan 2010 25 Mar 2010
Totals per member 10 3 8 9 2
Chairperson Deputy chairperson Member Member Member Member Member Member Member Member Member Member Member Total members
12
11
12
10
Resigned

Resigned
10
9 8 10 6 2 10 10 9
COUNCIL COMMITTEES
Fund Advisory and Finance Committee The fund advisory and finance committee is responsible for advising the Council on the prudent management of its funds. The committee makes recommendations to the Council regarding the setting of fees, procedures and policies for approval by the Council, as well as on all matters relating to the management of risk, and the administration of its fund or any other Council fund. The committee regularly reviews the financial reports of management, approves the budget and advises Council on all financial matters. Registration Committee The registration committee is responsible for monitoring the registration and deregistration of home builders, and also recommends appropriate policies and procedures to Council. It evaluates owner-builder applications received, and determines whether home builders qualify in terms of the act for exemption from enrolment of their own homes. Audit and Risk Management Committee The audit and risk management committee is responsible for assisting the Council by reviewing the effectiveness of its systems of internal controls and risk management mitigation strategies; reviewing its financial policies and procedures; reviewing financial information reported to its stakeholders; and assessing the effectiveness of the internal and external audit functions. The committee also ensures the maintenance and monitoring of the risk management framework. The committee further reviews the risk register and assessment reports, to ensure efficiency and effectiveness of the risk management strategy and plans. Technical Advisory and Claims Committee The technical advisory and claims committee is responsible for evaluating remedial work claims submitted by provincial offices and making recommendations to the Council on the appropriate manner of dealing with such claims. In addition, the committee advises the NHBRC technical section with regards to all technical aspects of construction and innovation (both professional and technical), which may impact on the NHBRCs risk management process. Disciplinary Hearings Committee (Ad Hoc Sittings) The committee is responsible for adjudicating alleged breaches of the act by home builders and imposing disciplinary sanctions where home builders are found guilty of breach or contravention of the act. Human Capital and Remuneration Committee The human capital and remuneration committee advises Council on employees remuneration policies. This committee also maintains a corporate overview of the Councils human capital policies such as employee sourcing, development, relations and rewards. Industry Advisory Committee The industry advisory committee is responsible for giving advice to the Council on all matters relating to the operations of the home building industry, in addition to acting as a communication channel between the industry and the Council. Tender Committee The tender committee receives, evaluates, adjudicates and awards tenders in line with the NHBRC procurement policy and relevant legislation, e.g. Preferential Procurement Policy Framework Act, 2000 (Act No.5 of 2000) and its related regulations, and Broad Based Black Economic Empowerment Act, 2003 (Act No.53 of 2003), among others.
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Disciplinary Steering Committee The disciplinary steering committee is responsible for approving disciplinary policies, procedures and guidelines to manage the process of disciplining defaulting home builders. The committee assesses and approves the charges that will be preferred against home builders who have allegedly breached the Housing Consumers Protection Measures Act, 1998 (Act No.95 of 1998) (as amended) and recommends disciplinary action to the disciplinary committee.
RISK MANAGEMENT
Introduction NHBRC through its various business activities engages in a number of operations, most of which involve the provision of a wide range of valuable final products to protect the interests of housing consumers and to regulate the homebuilding industry. By their nature, such services/products present a substantial level of financial and operational risk, which must be mitigated on a continuous basis if the overall sustainability and prosperity of the organization is to be assured. The NHBRC risk policy provides the broad framework for dealing with risk in the organizations businesses. In prioritizing the organizations approach to risk management, it is a primary objective to manage each specific risk so as to neutralize its impact on the organization. Risk Policy Framework The methodology set out in global risk management standards incorporating the King II and King III, Institute of Risk Management South Africa (IRMSA), COSO (the Committee of Sponsoring Organizations of the Treadwell Commission), and PFMA, amongst others has been used as a benchmark in developing policy, and has been used in monitoring and implementing risk management measures. The key elements of NHBRCs risk management system are: a defined risk policy framework, risk identification, risk analysis, risk evaluation, risk remedies, monitoring and review, and communication and awareness. Oversight of Risk Management Policy Framework The Council is ultimately responsible for ensuring that the organizations risk management practices are sufficient to mitigate to the most cost-effective extent possible the risks present in the organizations various businesses. The Council delegates a portion of this responsibility to its Audit and Risk Management Committee. Management is mandated and empowered by the Council to implement risk management strategies in cooperation with it and the committee, report to the Council and committee on developments related to risk, and suggest to the Council new and revised strategies mitigating risk. Exco, through the Risk Manager, implements a risk control system to enable management to respond appropriately to significant risks that could impact negatively or positively on business strategic objectives. Risk reviews are conducted once per annum with the intention of conducting them bi-annually next financial year. Risks identified are ranked and classified into categories, reviewed, and then assessed by Exco, the Audit and Risk Management Committee and Council to determine the significant operational, strategic, and business continuity risks. The ratings are finalized after considering the mitigation plans and executive accountability is assigned for each of the risk categories. Emerging Risks and Risk Management Strategy The NHBRC is subject to a number of types of risks that can be expected to be enduring elements of its businesses. The Council and management seek to identify, analyze, evaluate and remedy the following risks: strategic risks, operational risks, information technology risks, market structure and regulation risks, compliance risks, human resource risks, capital adequacy risks, business continuity risks, economic risks, reputation risk, accounting and financial control risk.
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The Council, directly and via the Audit and Risk Management Committee, work with management on an ongoing basis within the risk policy framework outlined above to mitigate the risks to the organizations businesses as they may evolve over time. NHBRC reports on strategic, business and process risks as part of the risk profile. The risk dashboard reflects the likelihood and impact of each of the risks facing the entity. Outsourced inspectorate contractual risks, sustainable inspection model, Oracle/Seibel not fully operational, performance management system, stakeholders confidence, declining revenue, above inflation increase in operational expenses, and operational expenses not variably responding to declining business volumes, are key risk areas of Council and Management focus. The level of commitment by management and employees of NHBRC on risk management principles, standards and regulatory requirement is slowly improving and therefore requires a boost to achieve a highly integrated, effective and efficient enterprise-wide risk management programme contributing towards achieving of a more stable internal control environment of all identifiable risks to which the organization is exposed. The Risk Management Section therefore aims to ensure that divisions and sections integrate the risk management and compliance processes in their divisional, sectional and individual scorecards, thereby ensuring that all employees are committed, participate and contribute towards the risk management process in their day-to-day activities. Adoption of risk methodology, Business Continuity Management (BCM) Impact and Risk Assessment report, BCM strategy, Business Continuity Plans, risk awareness, standardized cura risk reports, completions of all strategic and operational risk assessment across the organization, integration of the compliance function within risk management, were some of the key achievements in the year under review. Health and Safety The NHBRC respects the rights of employees and stakeholders to work in a clean, safe and healthy environment and took all necessary measures to ensure their protection and comfort.
NHBRC High RisKs

Outsourced Inspectorate contractual risks Non-compliance to legislation, acts, policies and procedures Fraud, corruption, theft Lack of Information Security Oracle/Siebel not fully functional Low staff morale Failure to produce financial statements
Poor customer care
Non sustainable inspection payment model Ineffective implementation of the Oracle and Siebel Information System ICT Service Provider inadequacy
Duplicate payments on inspections Business Information reports not available on Oracle Capital projects delivery
Decline in enrolment and registration revenue Ineffective stakeholder relations
NHBRC Medium RisKs

Economic recession and financial sustainability and insolvency Lack of succession planning Ineffective performance management system Ineffective Corporate Strategy development and implementation Internal audit function inadequate and ineffective Potential for fraud in the awarding of training tenders
Sustainability of the warranty fund
Leadership and accountability
Lack of marketing strategy and plan
Audit plan not fully executed Quality assessment of training providers and fraudulent training claims Non-alignment between strategic objectives and balance scorecards
Poor corporate culture
Inadequate talent Management Non-compliance to corporate governance guidelines
Poor quality management
NHBRC Low RisKs

Enrolled houses not inspected timeously Data Integrity, IT infrastructure and IT innovation Payroll and employee benefit fraud Fixed assets on the asset register, but not physically identified or located Lack of Business Continuity Planning Enrolment of houses not meeting minimum technical requirements
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INTERNAL AUDIT
The NHBRC has established an internal audit function in compliance with the Treasury Regulations of the Public Finance Management Act, 1999 (Act No. 1 of 1999). The purpose of the internal audit function is to continuously provide independent, objective assurance and consulting services to all divisions and sections of the Council, to ensure adequate and effective systems, corporate governance, risk management and internal control. The function reports directly to the chief executive officer and has direct access to the audit committee, its chairperson and the Council. The internal audit function is guided by a rolling three-year strategic audit plan in its operations. The strategic plan focuses on the high-risk areas of the organisation and is reviewed regularly to ensure relevance in terms of focus. Internal audits responsibilities include evaluating controls to determine their effectiveness and efficiency in order to provide management with the assurance that internal controls are functioning as intended. Furthermore, the internal audit function evaluates financial and operational performance information in a bid to assist management in ensuring that the strategic and operational objectives of the Council are achieved. Through the performance audits any gaps that may exist are identified early and remedial action taken to ensure the attainment of strategic and operational objectives. In its contribution to the strategic focus of the organisation, the internal audit function also assists management by evaluating the process through which strategic objectives are established and communicated; the accomplishment of objectives is monitored; accountability is ensured; and corporate values are preserved. Improvements in the governance of all areas of the NHBRC have come about due to ongoing periodic audit reviews and risk, controls and governance campaigns conducted by the internal audit function as well as management efforts and commitment.
COUNCIL
Chief Audit Executive
CEO
Audit Manager
Legal Manager
Risk Manager
Executive Manager Technical Marketing Manager Company Secretary
Executive Manager Customer Care Executive Manager Finance
Executive Manager Corporate Services
Strategic Planning and Information Reporting Manager
THE NHBRC MANAGEMENT STRUCTURE
East London Regional Ofce Information Technology Manager Facilities Manager Procurement Manager
Gauteng Regional Ofce
Free State Regional Ofce West Cape Regional Ofce
Finance Manager
NB: The structure was approved by Council on 29 January 2010.
CHPE Manager
Research & Subsidy Manager
Training Manager
Human Capital Manager
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NON-FINANCIAL PERFORMANCE INFORMATION REPORT

New registration and renewal of registration for home builders (non-subsidy and subsidy) In terms of Section 10(1) of the act, any person in the business of home building must register with the NHBRC. Evaluation of registration is based on technical and construction capabilities, and the financial and credit worthiness of the applicant. A nonrefundable registration fee of R750 is payable to NHBRC before registration. During the 2009/10 financial year, 3,616 new home builders were registered and 10,366 home builders renewed their registration. This represents 5% performance decline in registrations and 8% decline in renewals as compared to the 2008/09 financial year. Home builders continue to register and renew their membership on an annual basis in order to comply with the act. The performance of the NHBRC on new home builder registrations and home builder renewals for the financial year 2009/10 is shown in the figure below. Chart for the registration and renewals of registration
Registration 14, 000 12, 000 10, 000 8, 000 6, 000 4, 000 2, 000 0 2007/08 2008/09 2009/10 3, 628 3, 788 3, 616 12, 390 11, 326 10, 366 Renewal of registration
Enrolment and late enrolment of homes (non-subsidy) Section 14 of the act requires that all new homes must be enrolled with the NHBRC 15 days prior to construction. For homes under R500,000, the enrolment fee is calculated as 1.3% of the value of the property including land. For houses above R500,000, a sliding scale is used to calculate the enrolment fee. The NHBRC has enrolled 26,903 new homes. This represents 36% reduction in household income and stringent lending requirements used by banks especially for first time homeowners. Eskom paid with the 2008/09 financial year. The economic meltdown has contributed to the decline of enrolments.
The household sector continued to experience a fair amount of financial pressure on the back of major job losses over a wide front, declining real disposable income and relatively high debt. The NHBRC caters for late enrolment where home builders start construction without prior enrolling such homes. The NHBRC has 2,130 homes that were enrolled late for the 2009/10 financial year.
Chart for the enrolment and late enrolment of homes

Enrolment 90, 000 80, 239 80, 000 70, 000 60, 000 50, 000 40, 000 30, 000 20, 000 10, 000 0 2007/08 2008/09 26, 903 Late Enrolment
42, 228
4, 132
3, 085
2, 130 2009/10
Applications for enrolment exclusions: mixed-use developments In terms of the provisions of sub regulation 2(a) of GNR1406 in GG 20658 of 1 December 1999, a home does not include boarding houses; hostels; institutional facilities such as hospitals, prisons, orphanages and other welfare accommodation; time share accommodation; hotels or any residential structure which is constructed with less than 75% of the floor designed for residential purposes. During the period under review, four applications for exclusions from enrolment were received from the Western Cape provincial customer care centre. Three applications were approved and one was rejected. Complaints (non-subsidy and subsidy) The housing consumer is entitled to lodge a complaint where the home builder is in contravention of Section 13 of the act for failing to respond to legitimate complaints by the housing consumer. The NHBRC has indicated that decreased late enrolments would result in reduced numbers of complaints. If a builder enrols before construction, that affords the NHBRC an opportunity to inspect the house, thus limiting future complaints from the home owner. Complaints usually arise when home builders deviate from the set home building standards by the NHBRC. These are complaints lodged by housing consumers after they took occupation of their homes. A housing consumer can lodge a complaint against a home builder where a home has been constructed and occupied and is still under the five year warranty period. A total of 1,186 complaints were received during 2009/10. Of these, 1,168 were closed and 18 were escalated and subjected to remedial works process.
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Chart for the complaints lodged with the NHBRC
3, 000 2, 500 2, 000 1, 500 1, 000 500 0
2, 607
1, 239
1, 186
2007/08
2008/09
2009/10
Conciliations (non-subsidy and subsidy) During the 2009/10 financial year, 374 conciliations were received and 193 were finalised and closed. There are however, 181 files where further mediation between the home builder and housing consumer is in progress. Files accrued over the years 193 in total are currently subject to a remedial work process through the NHBRC home warranty fund. These are files where home builders are unwilling or unable to rectify defects. The delay in approving remedial works is due to prolonged mediation where home builders and housing consumers are not agreeing on a number of things such as contractual obligations. Chart for conciliations handled by the NHBRC
883
900 800 700 600 500 400 300 200 100 0
424 374
2007/08
2008/09
2009/10
Remedial work completed by the NHBRC (subsidy and non-subsidy) Where home builders are unable or unwilling to take liability for major structural defects as reported by housing consumers, the NHBRC undertakes remedial work in accordance with the act. The NHBRC has spent R14.1 million on remedial works in the financial year 2009/10. This represents a 104% increase as compared to remedial work costs in 2008/09. The NHBRC has, however, spent more than R72 million in mitigation of risks through inspections conducted during the period under review. This represents a 13% reduction in inspection fees as compared to 2008/09. Chart for the remedial works settled by the NHBRC
Inspections (subsidy and non-subsidy)
Remedial work Rm
16, 000, 000 14, 000, 000 12, 000, 000 10, 000, 000 8, 000, 000 6, 000, 000 4, 000, 000 2, 000, 000 0 2007/08 2008/09 2009/10 4, 522, 327 6, 884, 517 14, 100, 000
In terms of the act, every new house enrolled and under construction must be inspected. If the house is enrolled prior to construction, the first inspection includes the foundation. The number of inspections conducted per house is a function of the size and the complexity of the design of the house. As part of its risk management strategy, the NHBRCs target is to have a minimum of four inspections per house. The chart on the next page indicates the number of inspections completed for the year. A total of 237,400 inspections were conducted on 76,337 houses during 2009/10 financial year. For the financial year ending 2008/09, 547,960 inspections were conducted on 158,680 houses. The decline in the number of inspections conducted was 26% and 57% for the 2007/08 to 2008/09, and for the 2008/09 to 2009/10, financial years respectively. The reduction is due to a decline in home building activities for the year under review. The decline is also in line with the decreased number of approved house plans in major cities. The inspection ratio increased from 3.1 in 2008/9 financial year to 3.6 in 2009/10 financial year.
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Chart for inspection carried out by the NHBRC
800, 000 700, 000 600, 000 500, 000 400, 000 300, 000 200, 000 100, 000 0
738, 001
547, 960
237, 400
2007/08
2008/09
2009/10
Suspensions, deregistration and withdrawals (subsidy and non-subsidy) If a home builder is deregistered or withdraws from the home building industry, this poses a huge risk to the NHBRC because, in the event that there are structural defects, recourse to the home builder would be difficult. A home builder is suspended for a number of reasons, one of which is non-compliance with the NHBRCs technical requirements, as stipulated in the home building manual. In the 2009/10 financial year, there was no voluntary deregistration of home builders. A total of 452 home builders were suspended. This represents an increase of 136 home builders suspended as compared to 2008/09. The increase in number of suspensions is due to the inability of home builders to meet their obligations in terms of Section 13 of the act. Suspensions are also a function of complaints lodged by housing consumers. With fewer complaints, fewer suspensions were realised during the year. The chart below indicates the number of home builders suspended in the past three financial years. Chart of suspended home builders
700 600 500 452 316 645
400 300 200 100 0
2007/08
2008/09
2009/10
SUBSIDY SECTOR
Since 31 March 2006, subsidy projects are subject to a two-phase enrolment process in order for the NHBRC to achieve the required risk management before a home enrolment certificate is issued. These phases include project enrolment and home enrolment. In terms of the act and Part 3, Chapter 3 of the Housing Code, developers of subsidy projects are required to register and enrol all projects with the NHBRC. Project enrolment phase During the project enrolment phase, NHBRC assesses the submitted projects with particular emphasis on the phase one geotechnical investigation report. In this financial year, NHBRC received seventy four (74) projects with a combined total of 29,846 housing units for the project enrolment phase. Forty three (43) projects with a total of 24,564 housing units were approved. Below is a chart showing the performance for the past three years. Chart of project enrolment for Phase 1
Project received 90, 000 80, 000 70, 000 60, 000 50, 000 40, 000 30, 000 20, 000 10, 000 0 2007/08 2008/09 2009/10 29, 846 24, 564 63, 848 89, 997 75, 633 67, 706 Project approved
Also, it should be noted that most of the projects submitted for project enrolment in this financial year will only commence construction in the next financial year. The project enrolment numbers are low in provinces like KwaZulu-Natal, Eastern Cape and North West because the provinces are enrolling rural projects. Rural projects are only assessed for home enrolment status because in most cases there are no services to be installed and therefore the phase two geotechnical report is not required. The provincial departments of human settlements enrol for projects once-off and the roll-out for construction over two financial years.
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Home enrolment phase Prior to the construction of homes, the developer or home builder prepares comprehensive designs based on each erf soil class designation, certified by a competent person for the different typologies in accordance with the provisions of the NHBRC home building manuals. This year, one hundred and fifteen (115) projects were submitted for the home enrolment phase with a combined total of 69,456 units. Out of the 115 projects, 78 projects with 41,616 housing units were approved as presented in chart below. Chart of home enrolment for Phase 2
Project received 80, 000 70, 000 60, 000 50, 000 40, 000 30, 000 20, 000 10, 000 0 2007/08 2008/09 2009/10 30, 678 55, 755 41, 616 72, 929 70, 087 Project approved
69, 456
No projects were received for home enrolment from Limpopo during the period of review. However, indications from the province were that submissions would be made beginning the next financial year. The implication of non-enrolment is that none of the projects under construction are inspected by the NHBRC and therefore not covered by the warranty scheme. The NHBRC is, however, engaging the provincial human settlements departments and assisting them in getting projects enrolled and inspected. The provincial departments of human settlements enrol for projects once-off and roll-out for construction over two financial years
TECHNICAL AND INFORMATION TECHNOLOGY DIVISION

The Council is empowered by Section 5 of the act to:
engage in undertakings to promote improved structural quality of homes constructed in the Republic; engage in undertakings to improve ethical and technical standards in the home building industry; and generally do all things necessary or expedient to achieve its objects and the objectives of this act.
Based on the above objects, the strategy of NHBRC technical division is: to position the NHBRC as a leader in knowledge creation, technical and technological building solutions through strategic partnerships; and to provide diversified services and products in line with changing building requirements and sustainable human settlements. The following summary highlights the major activities and achievements of the division during the current financial year.
Centre for housing performance eXcellence section

Finalisation of Eric Molobi Housing Innovation Hub Notwithstanding the dire need for speedier and heightened delivery, all housing projects ought to be geared towards meeting NHBRC technical requirements and National Building Regulations. This, however, should not detract from exploring the use of alternative innovative building materials and methods whether for cost effectiveness, energy efficiency, environmentally friendly reasons or sustainable human settlements. This is principally why NHBRC and the national Department of Human Settlements established the Eric Molobi Housing Innovation Hub in Soshanguve, Pretoria. The innovation hub has the following in place: a show village of innovative housing systems; a training and conference centre; and a materials testing centre. In the current financial year, all necessary testing equipments were procured and installed, and the materials testing centre was commissioned in May 2010. It is envisaged that the materials testing centre will facilitate testing and evaluation of compliance of materials and products with the acceptable building standards, thereby ensuring that quality and functional housing products are delivered. The testing infrastructure will also assist other organisations, such as Agrment Board of South Africa, in the approval of innovative housing systems. Assistance to the provincial human settlements departments in geotechnical investigations As part of its strategic objective, NHBRC supports the governments initiative and strategy of sustainable human settlements by assisting the provincial human settlement departments and local authorities during all stages of housing developments and implementation of subsidy projects. One of the major initiatives of NHBRC was to assist the departments in the appointment and project management of geotechnical investigations. This resulted in an improved turnaround time for approval of subsidy enrolments. The NHBRC performed geotechnical investigations in the following provinces: Eastern Cape (7,819), Mpumalanga (11,702), Northern Cape (3,162) and Free State (4,600).
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International Innovative Housing and Sustainable Energy Efficiency Competition The International Innovative Housing and Sustainable Energy Efficiency Competition 2009/10 is collaboration between NHBRC, Absa Bank, the National Housing Finance Corporation (NHFC), Agrment Board of S.A., Agence Francaise De Development, Drakenstein Municipality, Department of Human Settlements, Swiss Development Corporation and the University of Pretoria. The competition kicked off in Wellington (Drakenstein Municipality), Western Cape, on 5 March 2009. Eighteen local and international finalists from Kuwait, Australia, Canada, Czech Republic, Netherlands and Namibia constructed green building systems that were energy efficient. The judging and social acceptance survey were conducted in January 2010 and a symbolic ceremony to hand over the houses to a number of beneficiaries took place in February 2010. The most innovative designs in the categories low cost (subsidy) and affordable housing were awarded prize money of R250 000 for first place, R100,000 for second place and R75,000 for third place, sponsored by Absa, in May 2010.
INFORMATION TECHNOLOGY
In the current financial year, the IT section engaged Oracle SA to assist in de-bugging the problems with Oracle finance and other modules. The mobile solution for the inspections has also been upgraded. Since the intervention of Oracle SA, the following achievements were made in the current financial year: 1. Upgrade of Oracle from version 12.01 to 12.06, which resulted in resolving a number of financial problems; 2. Set-up deficiencies in the Oracle financial modules have been addressed, and a number of financial controls have been put in place; and 3. The Siebel system has been stabilised. The following is still outstanding, and implementation will be complete in the next financial year: disaster recovery enterprise service framework electronic-VFP geographic information system
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MARKETING AND PUBLIC RELATIONS
The purpose of the marketing and public relations section is to inform housing consumers and home builders about their rights, obligations and responsibilities in terms of the HCPMA, as well as to promote the NHBRC warranty schemes to all customers and stakeholders. A multi-lingual national awareness roadshow was undertaken in April and May 2009 to ensure housing consumers and home builders were informed of their rights and responsibilities with regards to the act. It was a grassroots approach, targeting community venues. Participation in provincial consumer exhibitions increased this financial year, the largest exhibition being that at the Rand Show. This ensured the awareness roadshow was also taken to the public. The section supported youth training projects, media and celebrity builds in conjunction with the national Department of Human Settlements. An additional International Housing Innovation Hub Competition was initiated in the 2009/10 financial year. Competition winners will be awarded in the next financial year. The first Housing Innovation Hub was launched in 2007 in Soshanguve.
STRATEGIC PLANNING AND RESEARCH
The strategic planning and research section has a duty to conduct the performance information assessment for the level 1 scorecard; the level 2 scorecard, which covers the provincial customer care centres; and all the head office sections. The national Department of Human Settlements has emphasised that, on a quarterly basis, it needs a report from the NHBRC on the performance information against the set strategic objectives. The performance information assessment is accompanied by the portfolio of evidence which serves as proof that the set target has indeed been carried out. The strategic planning and research section has conducted workshops for the assessment of the level 1 scorecard for all the quarters of the 2009/10 financial year. Workshops were also conducted for purposes of carrying out the assessment for the provincial customer care centres and all the sections at head office in Bryanston. All the assessments were linked to the internal audit plan timeframes. The section has been conducting research as well; two fact sheets were produced in the 2009/10 financial year. The fact sheets were produced for the two semesters of the year. The section has a duty to draw comparisons between the number of building plans approved and the number of homes enrolled with the NHBRC. It also compares late enrolment with the effect this has on the amount of money the NHBRC spends on remedial works. The strategic planning and research section is responsible for the compilation of the organisational strategic corporate plan, and ensuring that such is submitted to the executive authority within the stipulated due dates. The section is also responsible for the promotion of access to information in the sense that all external information queries are channelled through it. The section has handled a number of queries from outside companies, which sought data needed to issue their publications. The strategic planning and research section is also responsible for the production of the quarterly reports that are sent to the executive authority on a quarterly basis. The quarterly reports comprise the performance of the valuable final product; performance of the subsidy sector; a report from human capital, training and legal services; the governance report; finance performance; and the performance assessment of the NHBRC in terms of the set strategic objectives.
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CORPORATE SERVICES DIVISION
The overarching vision of the corporate services division is to provide excellent end-to-end support services to the employees of the NHBRC through the growth and development of its people. Corporate services comprises the legal; human capital and education; and training and development sections. The corporate services division ensures that human capital is used wisely and managed, and that the NHBRC meets the mandate of the Housing Consumers Protection Measures Act,1998 (Act No.95 of 1998) through the provision of legal services.
NEW BEGINNINGS
A major project for the year under review was the organisational redesign project. Its goal was to realign the organisational design to the core business needs of the NHBRC. With the incoming Council, a focused effort was placed on completing the project and communicating the NHBRCs new vision and strategy to all employees. This was done through roadshows to each and every NHBRC office. Major achievements in the division have been: Completion of the organisation redesign project; Review of all human capital policies; Exceeding training of emerging home builder targets; CETA accreditation process fast-tracked; Inspector training module development; Fixing of the Oracle leave module; and A number of well-managed employee wellness programmes. Following the introduction of Oracle, payroll has run smoothly during this period but a constant need remains to monitor all Oracle-related payroll matters as troubleshooting reveals incidental problems relating to leave and other minor issues. Employee turnover for the period is 25 persons or 6.9% which shows minimal movement compared to the 2008/9 financial year, where we experienced 6.86% turnover of employees.
Training
Emerging home builder training A total of 7,555 emerging home builders were trained nationally during the 2009/10 financial year, which is 16% above the training target of 6, 500 which was set for the financial year. A year-on-year comparison made with the 2008/9 period, when 5,676 learners were trained, shows a 33% increase. The NHBRC trained 2,287 females and 5,268 males in the 2009/10 financial year. The chart below indicates the performance for the past three years. Chart of home builders trained for the three years
Training
Training
8, 000 6, 000 4, 000 2, 000 0 2007/08 2008/09 2009/10 5, 676 4, 512 7, 555
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Special ministerial projects The NHBRC conducts the following special Ministerial Projects: Youth-in-Human Settlements (YiHS) Training Programme Community Development Programmes
EMPLOYMENT EQUITY
The NHBRC employee complement as at the end of 31 March 2010 is 354. The number of posts on the new organogram is 391. The new vacancy rate is therefore 7.9%. The national distribution of race categories is presented below. The NHBRC has exceeded its overall race targets but an analysis of the data presents the following: Too few disabled employees; Too few women in management posts; Too large female skew in the organisation; and 93.5% black generic i.e. African, coloured and Indian.
The 2009 employment equity report and plan was submitted on time to the Department of Labour. Employment equity report by gender: Male Senior management Management and qualified staff Semi-skilled support staff TOTAL 3 141 2 146 Female 2 186 20 208 Total 5 327 22 354
The above table indicates that 146 males and 208 females are employed by the NHBRC. The total number of employees as indicated in the table stands at 354. Employee equity report by race African Senior management Management and qualified staff Semi-skilled support staff TOTAL 3 271 22 298 Coloured Indian 1 23 0 24 0 10 0 10 White 1 23 0 24 Total 5 327 22 354
The table above indicates that of the 354 employees of the NHBRC, 298 are African, 24 are coloured, 10 are Indian and 24 are white.
STAFF MOVEMENT
A total of 17 new appointments were made by the NHBRC for the 2009/10 financial year. A total of 29 employees terminated their services with the NHBRC; employees equalling 29 resigned from the employ of the NHBRC, one staff member retired and five staff members were dismissed.
LEGAL SERVICES
AMENDMENTS TO THE ACT

The legislative review process relating to the act has commenced. During the fourth quarter of the 2009/10 financial year, two legislative task team meetings were held and a meeting with the national Department of Human Settlements legislative drafters was held. The terms of reference were approved by Council to appoint an external service provider through an open tender process.
LITIGATION AND INTERDICTS

One of the inherent objectives of the legal services section is the duty to maintain a comprehensive litigation management programme, in order to reduce litigation, litigation costs, negligence and acts or omissions by staff employed by the NHBRC without sacrificing a case or litigation results. The section dealt with four new litigation matters, bringing the total to 19 matters. As litigation is ongoing and it is often impossible to predict the period within which such matters will be finally adjudicated upon by courts of law, the section still has on record civil actions that were instituted since the 2005/06 financial year. The table hereunder shows the number of pending matters that were instituted during the calendar years 2005 until 2010. Full details relating to all matters are available on request. Table indicating litigation matters Calendar year 2005 2006 2007 2008 2009 2010 TOTAL Number of subjudice matters 4 2 2 2 5 4 19 Percentage of current matters 21% 10.5% 10.5% 10.5% 26% 21% 100%
Overall, not excluding matters that are finalised, the causes of action in respect of all litigation for the period 2005 2010 range from bank financial guarantees, tender awards, defamation, breach of contract, non-compliance with the provisions of Section 3(8) of the act, contractual claims relating to rectification and suspensions of home builders. More than 50% of sub judice matters are for the period prior to the 2009 calendar year and concerted efforts have been made to ensure that they are finalised during the 2010/11 financial year. The NHBRC has had to pay substantial amounts in respect of two matters, i.e. the Kenosi matter, which related to tender procurement processes and awards, and the Eezybuilt matter, which arose as a result of breach of contract occasioned by failure to provide specific contractual obligations in terms of certain provisions in the signed contract. The settlements amounted to approximately R5.7 million paid by the NHBRC.
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ANNUAL FINANCIAL STATEMENTS

for the year ended 31 March 2010
Report of the Auditor-General Accounting Authoritys report Statement of Responsibility Statement of financial position Statement of financial performance Statement of changes in net assets Cash flow statement Notes to the annual financial statements Report of the Audit and Risk Committee 47 51 55 56 57 58 59 60 90
REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE FINANCIAL STATEMENTS OF THE NATIONAL HOME BUILDERS REGISTRATION COUNCIL FOR THE YEAR ENDED 31 MARCH 2010
REPORT ON THE FINANCIAL STATEMENTS

Introduction I have audited the accompanying financial statements of the National Home Builders Registration Council, which comprise the statement of financial position as at 31March2010, and the statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, a summary of significant accounting policies and other explanatory information, as set out on pages 56 to 89. Accounting Authoritys responsibility for the financial statements The accounting authority is responsible for the preparation and fair presentation of the financial statements in accordance with South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and in the manner required by the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor-Generals responsibility As required by section 188 of the Constitution of South Africa, section 4 of the Public Audit Act of South Africa 2004 (Act No. 25 of 2004) (PAA) and section 15 (6) (c) of the Housing Consumer Protection Measures Act (Act No. 95 of 1998), my responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards on Auditing and General Notice 1570 of 2009 issued in Government Gazette 32758 of 27 November 2009. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
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I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements present fairly, in all material respects, the financial position of the National Home Builders Registration Council as at 31 March 2010, and its financial performance and its cash flows for the year then ended in accordance with SA Standards of GRAP and in the manner required by the PFMA. Emphasis of matter I draw attention to the matters below. My opinion is not modified in respect of these matters: Restatement of corresponding figures As disclosed in note 28 to the financial statements, the corresponding figures for 31 March 2009 have been restated as a result of an error discovered during 2010 in the financial statements of the National Home Builders Registration Council at, and for the year ended 31 March 2010. Fruitless and wasteful as well as irregular expenditure As disclosed in note 23 to the financial statements, fruitless and wasteful expenditure to the amount of R8 879 510 was incurred due to interest payments to suppliers, penalty payments to the South African Revenue Service and out of court settlements. As disclosed in note 23 to the financial statements, irregular expenditure to the amount of R397 893 was incurred as a proper tender process had not been followed.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In terms of the PAA and General notice 1570 of 2009, issued in Government Gazette No. 32758 of 27 November 2009, I include below my findings on the report on predetermined objectives, compliance with the PFMA and financial management (internal control).
Findings Predetermined objectives Non-compliance with regulatory and reporting requirements Public Finance Management Act (PFMA) Submission of strategic plan
The accounting authority of the National Home Builders Registration Council did not submit the proposed strategic plan at least six months before the start of the financial year of the designated department, or another time period as agreed to between the executive authority and the public entity, as required by Treasury Regulation 30.1.1. Inadequate quarterly reporting on performance information The format and content of the quarterly reports of the National Home Builders Registration Council were not consistent with the performance objectives, measures and targets as per the strategic plan of the entity. Compliance with laws and regulations Value-Added Tax (VAT) Act No. 89 of 1991 (as amended) Non-adherence The amount declared to the South African Revenue Service for output and input VAT was in contravention of section 28 of the act, due to an inaccurate VAT report being used to calculate amounts disclosed on the VAT returns. Housing Consumer Protection Measures Act (No. 95 of 1998) Non-adherence Contrary to the requirements of section 16(7) of the Housing Consumer Protection Measures Act, the National Home Builders Registration Council invested in equity instruments. Concurrence from the Minister has been requested but to date has not been obtained.
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INTERNAL CONTROL
I considered internal control relevant to my audit of the financial statements and the report on predetermined objectives and compliance with the PFMA and section 15 (6) (c) of the Housing Consumer Protection Measures Act, but not for the purposes of expressing an opinion on the effectiveness of internal control. The matters reported below are limited to the deficiencies identified during the audit.
Leadership The accounting authority exercised inadequate monitoring of controls to ensure adherence to the internal policies and procedures which in turn would have ensured that there was adequate compliance with specific laws and regulations and on reporting on predetermined objectives.
Pretoria 31 July 2010
ACCOUNTING AUTHORITYS REPORT

for the year ended 31 march 2010
The appointment of the current Council by the former Minister of Housing, (Hon. Dr. Lindiwe Sisulu), one month into the 2009/2010 financial year came at a critical time for the NHBRC. It is regrettable that the onset of the 2009/10 financial year bore testimony to the economic meltdown whose debilitating effects was experienced by various industries across the global spectrum. The growth of the residential property market was not spared the onslaught brought about by the stringent lending methods and the high prices of building materials. It is thus with a sense of gratification that this report of the organisation is presented. The role and responsibilities that are entrusted on public institutions like ours were discharged with a high sense of ethical and legal commitment. A thorough understanding and constant application of organisational success fundamentals had to be applied by the Council in order to achieve consistent results, consistent with the mandate of the NHBRC which is to ensure the protection of the rights, amongst others, of those who lack the powers and the influence to bring about meaningful change in their own lives. Council, together with the shareholder and the executive team embarked on and adopted policies that will ensure that the vision of the NHBRC continues to be relevant. The subsequent changes in the political authority and the name of the National Department of Housing to National Department of Human Settlements also contributed to this total review of the strategic direction of the organisation to fit into the strategic intent of government in the creation of sustainable human settlements. The NHBRC responded positively to the idea of human settlements as introduced by government by developing a Strategic Corporate Plan with one of the objectives thereof being that of contributing to the creation of sustainable human settlements by ensuring the delivery of quality homes to the housing consumers. The role of the department in its capacity as the executive authority and shareholder remained critical throughout this first financial year of the Councils term of office.
MANAGEMENT OF NHBRC
The Council inherited an organisation without a Chief Executive Officer (CEO), a situation which also presented itself as a huge challenge for the Council. The Council was, however, able to put in place an Interim CEO (Mr. Sipho Mashinini) who was appointed from amongst the Council members, whilst the Council proceeded with rigorous and transparent recruitment process to employ a new CEO. I am pleased to mention that Council was able to find, after the second round of interviews, a suitable candidate for this position and appointed Mr. Sipho Mashinini as the new CEO of the organisation effective from the start of the new financial year (2010/2011). Council also inherited two investigative reports which emanated from the work of the previous Council and the then National Department of Housing, which reports played an important part in the development of a strategy for the organisation. These reports related to the organisational redesign and health check of the organisation respectively and as such assisted the Council in the development of a working strategy for the organisation. The recommendations of the said reports are being implemented and phased into the strategy of the NHBRC.
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CORPORATE GOVERNANCE
One of the main objectives of the Council when it first met was to ensure that it puts governance structures in place, which will assist in the governance of the organisation. The Council is empowered in terms of the Housing Consumers Protection Measures Act (Act 95 of 1998) as amended (the Act) to establish a number of Committees which assist and advise Council on the appropriate functioning of the organisation to ensure full discharge of its mandate. Let me take this opportunity to thank members of the various committees for their vision and selfless dedication in ensuring that just one year into office, numerous policies were developed and adopted. The NHBRC regards the principles of sound corporate governance as an imperative in obtaining and retaining the trust of stakeholders, and the overarching objective of performance with integrity. These principles are also vital in securing respect from other key stakeholders, including customers, suppliers, government, employees and the homeowners. The NHBRC Council placed a great deal of importance on good corporate governance and remains committed to upholding the highest standards of business integrity and transparency in all aspects of governance of the organisation. The NHBRC endorses the tenets of the King II and King III Reports, Public Finance Management Act (PFMA) and protocol on Corporate Governance in the Public Sector. These tools have been adopted and integrated into the NHBRCs management philosophy and practices. The Council has also adopted these tools, which have been incorporated into the Shareholder Compact with the Executive Authority and into the NHBRC Council Charter. The Charter was developed in line with the Human Settlements Public Entities Charter Framework for Board Development as published by the Ministry of Human Settlements, and deals with all governance issues. These include management of disclosures of conflicts of interests in the Council as disclosed under the note (22) dealing with related parties transactions in the financial statements, and the subsequent reporting of such disclosures to the Minister, as the authority vested with the power of appointment and removal of Council Members.
WARRANTY PROTECTION
The NHBRCs obligation to represent the interest of housing consumers by providing warranty protection against defects in new homes remained one of our strategic focal points. Council put strategies in place for the preservation of capital so as to ensure that the NHBRC remained financially solvent to meet remedial claims against the warranty fund, with no recourse to the Honorable Minister of Human Settlements for additional funds. Council considered the recommendations arising from the annual actuarial assessment and it further reviewed its investments policy and strategy to ensure that the warranty fund remained sustainable and able to meet housing consumers claims. We are grateful to mention that the Warranty Fund remains solvent and the enrolment fees charged by the NHBRC are currently sufficient to provide warranty cover, with non-subsidy enrolments subsidising the subsidy sector. Council had proposed amendments to the Act which will ensure that enrolment fees in the future continue to be sufficient.
REGULATION OF THE HOME BUILDING INDUSTRY

While the training of home builders remained one of the NHBRCs statutory obligations, it became clear that the compelling negative economic reality required fortified alliances with strategic partners. In this regard the NHBRC continued to support the National Department of Human Settlements as a Service Provider Organisation in order to roll out the Youth-InHousing Training Project and deliver housing construction training to youths nationally. We continued to partner also with other industry players in respect of training of the youth and women. The NHBRC Education, Training and Development programmes were put in place for the purpose of benefiting the home builders with special emphasis on empowering and building capacity among the unemployed, women, people with disabilities and the youth. The challenge that faces the residential property industry remains one of ensuring that there is no mass exodus of home builders necessitated by the strict lending rates that constricts the growth of new residential properties. While it is evident that the demand for new houses remains, the stark reality remains to be the lack of supply thereof, which inevitably leads to liquidation of businesses of home builders and therefore, non-renewal of their registration with NHBRC. It remains our duty to ensure that strategic partnerships with other role players are fostered which will ensure viability, sustainability and an integrated regulation of the home building industry. International strategic partnerships have cemented the participation of the NHBRC in the International Housing and Home Warranty Conference which is a global platform for regulatory bodies in the home building industries to discuss issues relating to, amongst others, warranty fund models, inspections, the effect of the global economic factors on the residential industry and licensing of home builders. Our participation in this conference enables the NHBRC to continue to monitor its risk appetite by monitoring and being informed of the international standards, norms and practices relating to regulation of a home building industry. It was indeed an honour when the new Council was informed that the NHBRC will host the 11th International Housing and Home Warranty Conference in 2011. In this regard, Council has during this financial year established further strategic partnerships with NHBC (UK), Association of European Home Warranty Organisation and National Department of Human Settlements (co-host) in preparation for the 2011 conference, and we are confident that South Africa will successfully host a remarkable conference in 2011.
LEGISLATION
The current year has witnessed significant legislative changes being proposed as part of realigning the strategic intent of the NHBRC to the new strategy of government to deliver sustainable human settlements. These proposed changes have received the support of the National Department of Human Settlements which has undertaken to ensure that the amendments to the Act are processed to be ready for the Parliamentary Programme in the coming year. We are confident that the proposed amendments, once passed into law, will strengthen the operations of the organisation and provide housing consumers with more protection.
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CONCLUSION
The vibrant nature of the home building has afforded the NHBRC with an opportunity of identifying key industry stakeholders to be engaged in the discharge of the mandate of the organisation to ensure their full participation and transparency in how the Council discharges its mandate. While management of the NHBRC, like any other organisation, faces the task of remaining relevant and responsive to its key stakeholders, Council has confidence that it is a duty that will surely be discharged through enduring leadership. On behalf of Council, I thank the support of the Ministry of Human Settlements, the industry players and the management and staff of the NHBRC during this challenging first year of Councils term of office. Special thanks to the Parliamentary Portfolio Committee on Human Settlements for guidance. A special word of thanks to Council members for their decisiveness and unwavering support during crucial times. It was indeed a steep learning curve for Council Members. The infusion of the culture of excellence is our goal. I am confident that delivery of quality and sustainable human settlements will be the priority for this Council.
Ms. G.M. Seape Chairperson: Council
STATEMENT OF RESPONSIBILITY
The Council, which is the Accounting Authority of the National Home Builders Registration Council (NHBRC), is responsible for the preparation, integrity and fair presentation of the annual financial statements of the NHBRC. The annual financial statements for the year ended 31 March 2010 presented on pages 57 to 89 have been prepared in accordance with the effective Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. They are based on appropriate accounting policies which have been consistently applied and which are supported by reasonable and prudent judgements and estimates. The going concern basis has been adopted in preparing the annual financial statements. The Council have no reason to believe that the NHBRC will not be a going concern in the foreseeable future based on forecasts and available cash resources. The Council is also responsible for the NHBRCs system of internal controls. These are designed to provide reasonable, but not absolute, assurance as to the reliability of the annual financial statements and to adequately safeguard, verify and maintain accountability of assets. These controls are monitored throughout the NHBRC by management and employees, in an attempt to address the segregation of authority and duties with available resources. The Council continues to design and implement processes to monitor internal controls, to identify material breakdowns and implement timely corrective action. The Council, and NHBRC management, treat corporate governance matters seriously, and whenever any instances of non compliance to regulation are uncovered or reported, appropriate disciplinary measures in terms of policy and legislation are instituted. The annual financial statements were approved by the Council on 31 July 2010 and are signed on its behalf: Ms. G.M. Seape Chairperson: Council
Mr. S. Mashinini Chief Executive Officer
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NATIONAL HOME BUILDERS REGISTRATION COUNCIL STATEMENT OF FINANCIAL POSITION

as at 31 March 2010
Restated 2010 Notes ASSETS Non-current assets Property, plant and equipment Intangible assets Investments 2 3 4 37,875,184 34,438,206 1,775,427,363 1,847,740,753 36,741,921 44,182,540 1,652,183,084 1,733,107,545 R 2009 R
Current assets Investments Inventories Trade and other receivables Cash and cash equivalents 4 5 6 7 1,159,471,942 99,215 84,267,551 30,665,352 1,274,504,060 TOTAL ASSETS 3,122,244,813 1,126,500,406 308,615 87,734,886 27,084,595 1,241,628,502 2,974,736,047
EQUITY AND LIABILITIES Equity Accumulated surplus Emerging contractor reserve Non-distributable reserve 8 9 2,091,410,384 44,025,781 65,767,303 2,201,203,468 1,831,009,300 40,905,760 66,812,155 1,938,727,215
LIABILITIES Non-current liabilities Provision for outstanding claims Provision for unearned premium 10 10 10 50,799,602 176,703,943 319,894,396 547,397,941 Current liabilities Trade and other payables Provisions Provision for outstanding claims Provision for unearned premium 11 12 10 10 97,983,098 65,000 21,806,447 253,788,859 373,643,404 TOTAL EQUITY AND LIABILITIES 3,122,244,813 187,030,724 0 15,353,961 307,463,835 509,848,520 2,974,736,047 52,322,366 325,032,477 148,805,469 526,160,312
Provision for unexpired risk
NATIONAL HOME BUILDERS REGISTRATION COUNCIL STATEMENT OF FINANCIAL PERFORMANCE

Restated 2010 Notes R 2009 R
Insurance premium revenue Fee revenue Technical services revenue Investment income Realised profit on sale of available-for-sale investments Other income Net income
13 14 15 16 4
335,678,501 63,429,900 59,660,993 239,914,990 9,711,932 17,156,326 725,552,642
465,366,798 70,552,018 47,552,155 241,910,321 0 605,243 825,986,535
Insurance claims and loss adjustment expenses Realised loss on sale of available-for-sale investments Operating expenses Administration expenses Asset management services Expenses
17 4
19,048,250 0 111,408,266 322,140,024 9,426,212 462,022,752
27,251,292 601,183 118,408,229 258,907,592 6,765,701 411,933,997
Results from operating activities Finance costs Surplus for the year
18 19
263,529,890 (8,785) 263,521,105
414,052,538 (20,404) 414,032,134
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NATIONAL HOME BUILDERS REGISTRATION COUNCIL STATEMENT OF CHANGES IN NET ASSETS

Accumulated Surplus R Balance at 31 March 2008 as previously stated Restatement of revenue (note 28) Balance at 31 March 2008 restated Surplus for the year - restated (note 28) Transfer to reserve (note 8) Reserve utilised (note 18) Gain on available for sale investments taken to equity (note 4) Balance at 31 March 2009 restated Surplus for the year Transfer to reserve (note 8) Reserve utilised (note 18) Loss on available for sale investments taken to equity (note 4) Balance at 31 March 2010 1,402,307,973 18,368,946 1,420,676,919 414,032,134 (17,435,800) 13,736,047 0 1,831,009,300 263,521,105 (35,950,800) 32,830,779 0 2,091,410,384 Emerging contractor reserve R 37,206,007 0 37,206,007 0 17,435,800 (13,736,047) 0 40,905,760 0 35,950,800 (32,830,779) 0 44,025,781 Nondistributable reserve R 0 0 0 0 0 0 66,812,155 66,812,155 0 0 0 (1,044,852) 65,767,303 Total
R 1,439,513,980 18,368,946 1,457,882,926 414,032,134 0 0 66,812,155 1,938,727,215 263,521,105 0 0 (1,044,852) 2,201,203,468
NATIONAL HOME BUILDERS REGISTRATION COUNCIL CASH FLOW STATEMENT

2010 Notes R 2009 R
Cash flows from operating activities Cash (utilised in) / generated from operations - Cash receipts from customers - Cash paid to suppliers and employees Interest paid Interest received 20.1 (78,884,471) 414,941,150 (493,825,621) (8,785) 239,914,990 161,021,734 5,266,864 509,224,018 (503,957,154) (20,404) 241,910,321 247,156,781
Net cash inflow from operating activities

Cash flows from investing activities Purchase of property, plant and equipment Proceeds on disposal of property, plant and equipment Purchase of intangible assets Purchase of financial assets Proceeds on sale of financial assets Net cash outflow from investing activities Net increase / (decrease) in cash and cash equivalents 20.3 20.2
(10,582,044) 994,531 (304,729) (1,594,996,699) 1,447,447,964 (157,440,977)
(17,543,225) 27,928 0 (1,656,021,630) 1,380,621,449 (292,915,478)
3,580,757
(45,758,697)
Cash and cash equivalents at beginning of year
27,084,595
72,843,292
Cash and cash equivalents at the end of the year
20.4
30,665,352
27,084,595
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NATIONAL HOME BUILDERS REGISTRATION COUNCIL NOTES TO THE ANNUAL FINANCIAL STATEMENTS
1. 1.1 Summary of significant accounting policies The NHBRC is a statutory body incorporated in terms of the Housing Consumers Protection Measures Act, (Act no. 95 of 1998). Its principle business is the protection of housing consumers by the establishment of a warranty fund. Basis of preparation In terms of section 55(1) of the Public Finance Management Act (Act No.1 of 1999) (PFMA), the NHBRC is required to comply with South African Statements of Generally Accepted Accounting Practice, unless the Accounting Standards Board approves the application of Generally Recognised Accounting Practice. The financial statements have been prepared in accordance with the effective Standards of Generally Recognised Accounting Practices (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. During the year, a number of standards of GRAP became effective for the current financial period. A brief description of these standards as well as an estimate of the impact is contained in Note 1.2. A full list of the GRAP Framework is contained in Directive 5. In the absence of a GRAP standard, the GRAP hierarchy in GRAP 3 - Accounting policies, changes in accounting estimates and errors are used to develop an appropriate accounting policy. In terms of GRAP 3, judgment must be used when developing an accounting policy. In applying judgement, GRAP 3 requires that management refers to and considers the applicability of the following sources in descending order: (a) the requirements and guidance in Standards of GRAP dealing with similar and related issues; and (b) the definitions, recognition criteria and measurement concepts for assets, liabilities, revenue and expenses set out in the Framework for the Preparation and Presentation of Financial Statements. These accounting policies are consistent with the previous period. The annual financial statements have been prepared on the historical cost basis, except for the measurement of certain financial instruments at fair value less point of sale costs, and incorporate the principal accounting policies set out below. The NHBRC concluded that the annual financial statements present fairly the Councils financial position, financial performance and cash flow. 1.2 Application of new accounting standards The following standards, amendments to standards and interpretations which are relevant to the Council, have been adopted in these financial statements: GRAP 9: Revenue from Exchange Transactions
The definition of revenue in terms of GRAP 9 incorporates the concept of service potential. Revenue is the gross inflow of economic benefits or service potential when those inflows result in an increase in net assets, other than increases relating to contributions from owners. Entities may derive revenue from exchange or non-exchange transactions. An exchange transaction is one in which the entity receives resources or has liabilities extinguished, and directly gives approximately equal value to the other party in exchange.
NATIONAL HOME BUILDERS REGISTRATION COUNCIL NOTES TO THE ANNUAL FINANCIAL STATEMENTS (Continued)
1. 1.2 Summary of significant accounting policies (continued) Application of new accounting standards (continued) GRAP 9: Revenue from Exchange Transactions (continued) Non-exchange revenue transaction is a transaction where an entity receives value from another entity without directly giving approximately equal value in exchange. An entity recognises revenue when it is probable that economic benefits or service potential will flow to the entity, and the entity can measure the benefits reliably. GRAP 9 clarifies that this Standard only applies to revenue from exchange transactions. This standard will not have a material impact on the NHBRC. GRAP 13: Leases GRAP 13 incorporates additional guidance on the concept of substance and legal form of a transaction, to illustrate the difference between lease and other contracts and on operating lease incentives. In certain circumstances, legislation may prohibit the entering into certain types of lease agreements. If the entity has contravened these legislative requirements, the entity is still required to apply the requirements of GRAP 13. Other than the abovementioned requirements, there is no other impact on the initial adoption of GRAP13. GRAP 14: Events after the reporting date An event, which could be favourable or unfavourable, that occurs between the reporting date and the date the annual financial statements are authorised for issue. The impact of the standard is not material. GRAP 16: Investment Property This standard prescribes the accounting treatment for investment property and related disclosure requirements. The impact of the standard is not material. GRAP 17: Property, Plant and Equipment GRAP 17 does not require or prohibit the recognition of heritage assets but if an entity recognises heritage assets the entity needs to comply with GRAP 17 disclosure requirements. Additional commentary has been included to clarify the applicability of infrastructure assets to be recognised in terms of GRAP 17. Where an entity acquires an asset through a non-exchange transaction, i.e. for a nominal or no consideration, its cost is its fair value as at the date of acquisition. The disclosure requirement for temporarily idle, fully depreciated property, plant and equipment and for property, plant and equipment that are retired from active use is required in GRAP 17 whereas IAS 16 only encourages this disclosure. The impact of the standard is not material but will result in additional disclosure.
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1. 1.2 Summary of significant accounting policies (continued) Application of new accounting standards (continued) GRAP 19: Provisions, Contingent Liabilities and Contingent Assets (continued) GRAP 19 excludes from its scope those provisions and contingent liabilities arising from social benefits for which it does not receive consideration that is approximately equal to the value of goods and services provided directly in return from the recipients of those benefits. For the purpose of GRAP 19, social benefits refers to goods, services and other benefits provided in the pursuit of the social policy objective of a government. This Standard includes guidance on the accounting of these social benefits. Outflow of resources embodying service potential also needs to be considered in when assessing if a present obligation that arises from past events exists or not. Additional disclosure for each class of provision regarding reductions in the carrying amounts of provisions that result from payments or other outflows of economic benefits or service potential made during the reporting period and reductions in the carrying amounts of provisions resulting from remeasurement of the estimated future outflow of economic benefits or service potential, or from settlement of the provisions without cost to the entity. The impact of the standard is not material. At the date of the authorisation of these financial statements the following standards have been approved but are not yet effective: GRAP 21 - Impairment of Non-cash-generating Assets GRAP 23 - Revenue from Non-exchange Transactions (Taxes and Transfers) GRAP 24 - Presentation of Budget Information in Financial Statements GRAP 25 - Employee Benefits GRAP 26 - Impairment of Cash-generating Assets GRAP 103 - Heritage Assets GRAP 104 - Financial Instruments Improvements are proposed to the following standards of GRAP: GRAP 1-4, 9-14, 16-17, 19 and 100 as part of the ASBs improvement project The impact of implementing these standards is expected to be immaterial. 1.3 Insurance technical result The technical result is determined on an annual basis whereby the incurred cost of insurance claims and related expenses, together with any change in other technical provisions is charged against the earned proportion of insurance premiums, as follows: Insurance premiums written Insurance premiums are defined as an enrolment fee in terms of Section 14 of the Housing Consumers Protection Measures Act. Insurance premiums written relate to business incepted during the year, together with any differences between booked insurance premiums for prior years and those previously accrued. They include the insurance premiums for the whole of the period of risk covered by the warranty regardless of whether or not these are wholly due for payment in the accounting period.
1. 1.3 Summary of significant accounting policies (continued) Insurance technical result (continued) Insurance premiums written (continued) Insurance premiums written comprise the total insurance premiums payable by the insured to which the insurer is contractually entitled and are shown net of insurance premium refunds. Insurance premiums written exclude value added taxation. Unearned insurance premiums In terms of the Housing Consumers Protection Measures Act (Act no. 95 of 1998), the Council shall provide a warranty to housing consumers for a maximum period of five years from the date of occupation. Insurance premiums are earned over the period of the policy commensurate with the expected incidence of risk. In reaching its assessment of the pattern of risk the Council makes reference to past insurance claims experience. Unearned insurance premiums represent the proportion of insurance premiums written that is held to cover expenses, claims and profits attributable for future years of warranty cover. In determining the unearned premium provision, initial expenses are deducted from the enrolment fee. The remaining portion of the enrolment fee is assumed to be earned over the life of the policy in accordance with the earnings curve. Initial expenses are earned uniformly over two quarters. The unearned premium provision includes an allowance for the future release of profits. Insurance claims incurred Insurance claims incurred, comprise insurance claims and related expenses paid in the year and changes in the outstanding claims provision, including provisions for insurance claims incurred but not reported and related expenses, together with any other adjustments to insurance claims from previous years. Insurance claims are typically reported relatively quickly after the insurance claims event and are therefore subject to significantly less uncertainty than future insurance claims events. Insurance claims outstanding represent the cost of settling all insurance claims arising from events that have occurred up to the balance sheet date, including the provision for insurance claims incurred but not reported, less any amounts paid in respect of those insurance claims. In estimating the cost of notified but not paid insurance claims, the Council has regard to the insurance claim circumstances as reported. Basic chain ladder techniques are applied to project outstanding remedial work payments for each complaint period. The difference between the ultimate claims and the claims paid to date produced a result which includes both the Incurred But Not Reported and Notified Outstanding Claims provisions. Unexpired risk provisions An unexpired risk provision is made where the estimated cost of insurance claims, related expenses and deferred acquisition costs exceed unearned insurance premiums, after taking account of future investment income. An assessment is made at the year-end for the estimated cost of insurance claims, which will arise during the unexpired terms of policies in force at the balance sheet date. The estimated cost of insurance claims includes expenses to be incurred in settling insurance claims. The provisions are inevitably subject to inherent uncertainties because of the range of factors, which could give rise to potentially significant insurance claims over the five year period covered by the unexpired risk provision. The time expected to elapse between the inceptions of policies, the
63
for the year ended 31 march 2010
1. 1.3 Summary of significant accounting policies (continued) Insurance technical result (continued) Unxpired risk provisions (continued) manifestation of events giving rise to insurance claims, and the notification to and settlement by the Council of such insurance claims accentuate these uncertainties. In calculating the estimated cost of future insurance claims, actuarial and statistical projections of the frequency and severity of future insurance claims events are used to project ultimate settlement costs. Such projections are based on current facts and circumstances. Due to inherent uncertainties a significant degree of caution has been included in exercising the judgement required for setting the unexpired risk provision at a level such that the Council is confident that it is not understated. Given the inherent uncertainty in estimating the cost of future insurance claims, it is likely that the final outcome will prove to be different from the estimate established at the balance sheet date. Any consequential adjustments to amounts previously reported will be reflected in the results of the year in which they are identified. Liability adequacy test The solvency of the warranty fund is tested annually by an independent actuarial service company. The assessment is to confirm the solvency of the organisation and its ability to meet its future obligations. The results of the actuarial valuation indicated that the NHBRC as a whole, including both subsidy and non-subsidy houses, is solvent and able to fund its liabilities on a run-off basis. The change in mix of business between subsidy and non-subsidy houses and enrolment fee structures will in future determine the solvency position of the NHBRC.
1.4
Revenue recognition Revenue arising from registration, renewal, late enrolment, document sales, technical services and subsidy project enrolments fees are recognised on the accrual basis. Revenue from the sale of goods and service are recognised when significant risks and rewards of ownership have been transferred to the buyer. Interest income is accrued on a time proportion basis, taking into account the principal outstanding amount and the effective interest rate over the period to maturity.
1.5
Irregular, fruitless and wasteful expenditure Irregular expenditure means expenditure incurred in contravention of, or not in accordance with, a requirement of any applicable legislation, including the PFMA, or any legislation providing for procurement procedures in Government.
Unauthorised expenditure is expenditure that has not been budgeted, expenditure that is not in terms of the conditions of an allocation received from another sphere of Government or organ of state and expenditure in the form of a grant that is not permitted in terms of the PFMA. Fruitless and wasteful expenditure means expenditure that was made in vain and could have been avoided had reasonable care been exercised. All irregular, unauthorised, fruitless and wasteful expenditure is accounted for as expenditure in the statement of financial performance and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.
1. 1.6 Summary of significant accounting policies (continued) Taxation No provision has been made for South African Normal Tax as the Council has been granted exemption in term of Section 10 (1) (cA) (i) of the Income Tax Act No 58 of 1962. 1.7 Property, plant and equipment Property, plant and equipment are tangible assets that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and are expected to be used during more than one period. Items of property plant and equipment are initially recognised at cost, being the cash price equivalent at the recognition date. Expenditure on additions and improvements to property, plant and equipment including the cost of related interest is capitalised as the expenditure is incurred. Subsequent to initial recognition, items of property plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is charged to surplus or deficit so as to allocate the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The following rates are used for the depreciation of property, plant and equipment: Computer equipment Office furniture and equipment Motor vehicles Buildings Land is not depreciated. The residual values, useful lives and economic consumption patterns for all items of property, plant and equipment are reviewed annually and, if necessary, the consequent depreciable amounts, rates and methods are adjusted at each balance sheet date. Any changes are accounted for as changes in accounting estimates and included in surplus or deficit for the current and future periods by adjusting the relevant future depreciation charges. The gain or loss arising from the disposal or retirement of an asset is determined by deducting the carrying value from the proceeds on the date of disposal and are included in surplus or deficit. 1.8 Intangible assets The intangible assets are purchased and have a finite life. Amortisation is recorded by a charge to income computed on the straight line basis, after adjusting for residual value at the end of their useful life, so as to write off the cost of the assets over their expected useful lives. The following rates are used for the amortisation of intangible assets: Computer software 1.9 Impairment The carrying value of assets are reviewed at each balance sheet date to assess whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment. Where the carrying value exceeds the estimated recoverable 20.0% p.a 33.3% p.a 16.7% p.a 20.0% p.a 5.0% p.a
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1. 1.9 Summary of significant accounting policies (continued)
Impairment (continued) amount, such assets are written down to their estimated recoverable amount. Impairment losses are recognised as an expense. Where it is not possible to estimate the recoverable amount for an individual asset, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income.
1.10
Inventories Inventories are initially measured at cost and subsequently written down to the lower of cost and estimated net realisable value. Any write-down is recognised in surplus or deficit. Cost is calculated using the first-in-first-out method and comprises direct purchase costs. Estimated net realisable value is the estimated selling price in the ordinary course of business, less any costs to be incurred in distribution.
1.11
Financial instruments Significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed below: Financial assets Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs. Financial assets are classified into the following specified categories: held-to-maturity, available-for-sale and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments. Held-to-maturity investments Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates that the Council has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-tomaturity investments are initially recorded at fair value, and subsequently at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis.
1. 1.11 Summary of significant accounting policies (continued) Financial instruments (continued) Financial assets (continued) Available For Sale (AFS) Unlisted shares and listed redeemable notes, traded in an active market are classified as being AFS and are stated at fair value. Fair value is determined in the manner described in note 24. Gains arising from changes in fair value are recognised directly in equity as a non-distributable reserve. Impairment losses are recognised directly in surplus or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the non-distributable reserve is included in surplus or deficit for the period. Loans and receivables Trade receivables, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. Impairment of financial assets Financial assets are assessed for indicators of impairment at each balance sheet date. For unlisted shares classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. For all other financial assets, including AFS, objective evidence of impairment could include: significant financial difficulty of the issuer or counterparty; or default or delinquency in interest or principal payments; or it becoming probable that the borrower will enter bankruptcy or financial re-organisation. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. For financial assets carried at amortised cost, the amount of the impairment is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the financial assets original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in surplus or deficit. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through surplus or deficit to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
67
1. 1.11 Summary of significant accounting policies (continued) Financial instruments (continued) Financial assets (continued) Impairement of financial assets (continued) In respect of AFS equity securities, impairment losses previously recognised through profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised directly in equity. Derecognition of financial assets Financial assets are derecognised when the contractual rights to the cash flows from that asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. Where the risks and rewards of ownership are not transferred or retained continue to control the transferred asset, the retained interest in the asset and the associated liability are recognised. Where risks and rewards of ownership are retained, the financial asset and a collateralised borrowing are recognised. Financial liabilities Financial liabilities are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Derecognition of financial liabilities Financial liabilities are derecognised when, and only when, the obligations are discharged, cancelled or they have expired. 1.12 Cash and cash equivalents For the purposes of the cash flow statement, cash includes cash on hand and short term bank deposits. 1.13 Leased assets Rentals payable under operating leases are charged to surplus or deficit on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term. Critical accounting judgements and key sources of estimation uncertainty Certain critical accounting policies require the use of judgement in their application or require estimates of inherently uncertain matters. Listed below are those policies that the Council believe are critical and require the use of complex judgement in their application.
1.14
1. 1.14 Summary of significant accounting policies (continued) Critical accounting judgements and key sources of estimation uncertainty (continued) Insurance technical result The accounting for the insurance technical result as disclosed in note 1.3 requires the Council to make certain assumptions that have a significant impact on the revenues, expenses and liabilities that are recorded for these insurance premiums. The expected impact as recorded in note 10 are based on historical performances, current and long-term outlooks and the actuarial statistics compiled and updated by the actuarial industry on an ongoing basis. Plant and equipment Residual values and estimated useful lives are assessed on an annual basis. The residual values of vehicles are estimated on published second hand vehicle values as well as trading history. The residual values of all other assets are estimated to be zero.
69
2. Property, plant and equipment
Computer Equipment Office Furniture and Equipment R Motor Vehicles Land Buildings Total
R Year ended 31 March 2010 Opening net book amount Additions Disposals Depreciation on disposal Depreciation charge Closing net book amount At 31 March 2010 Cost Accumulated depreciation Net book amount Year ended 31 March 2009 Opening net book amount Additions Disposals Depreciation on disposal Depreciation charge Closing net book amount At 31 March 2009 Cost Accumulated depreciation Net book amount 25,374,917 (17,032,025) 8,342,892 11,262,281 2,472,194 (30,770) 16,096 (5,376,909) 8,342,892 22,622,154 (18,534,542) 4,087,612 8,342,892 1,879,554 (4,632,317) 3,582,912 (5,085,429) 4,087,612
5,013,882 5,954,646 (937,404) 791,135 (1,973,781) 8,848,478
103,139 0 0 0 (44,945) 58,194
1,453,947 0 0 0 0 1,453,947
21,828,061 2,747,844 0 0 (1,148,952) 23,426,953
36,741,921 10,582,044 (5,569,721) 4,374,047 (8,253,107) 37,875,184
16,018,846 (7,170,368) 8,848,478
323,347 (265,153) 58,194
1,453,947 0 1,453,947
25,460,961 (2,034,008) 23,426,953
65,879,255 (28,004,071) 37,875,184
4,221,346 2,060,152 0 0 (1,267,616) 5,013,882
160,408 0 0 0 (57,269) 103,139
0 1,453,947 0 0 0 1,453,947
11,156,185 11,556,932 0 0 (885,056) 21,828,061
26,800,220 17,543,225 (30,770) 16,096 (7,586,850) 36,741,921
11,001,604 (5,987,722) 5,013,882
323,347 (220,208) 103,139
1,453,947 0 1,453,947
22,713,117 (885,056) 21,828,061
60,866,932 (24,125,011) 36,741,921
Land Land comprises of ERF's situated in Soshanguve A Township, Registration Division JR, Province of Gauteng; under General Plan No A9923/1996 and held by Certificate of Registered Title No. T4866/1997. The register of land is available at the Council's premises. Buildings Buildings comprise of show houses, a training centre and a conference centre at the Eric Molobi Housing Innovation Hub. The Hub was established towards the end of 2005 at Thorntree View, Soshanguve A, in the Tshwane Metropolitan Municipality in Gauteng. Useful lives The residual values and estimated useful lives are reflected under Critical accounting judgements and key sources of estimation uncertainty (note 1.14) in the summary of significant accounting policies.
3. Intangible assets
Computer software R Total R
Year ended 31 March 2010 Opening net book amount Additions Disposals Amortisation on disposals Amortisation charge Closing net book amount 44,182,540 304,729 (23,940) 23,940 (10,049,063) 34,438,206 44,182,540 304,729 (23,940) 23,940 (10,049,063) 34,438,206
At 31 March 2010 Cost Accumulated amortisation Net book amount 60,498,516 (26,060,310) 34,438,206 60,498,516 (26,060,310) 34,438,206
Year ended 31 March 2009 Opening net book amount Disposals Amortisation disposal Amortisation charge Closing net book amount 56,625,860 (11,547,325) 11,547,325 (12,443,320) 44,182,540 56,625,860 0 0 (12,443,320) 44,182,540
At 31 March 2009 Cost Accumulated amortisation Net book amount Impairment The carrying value of the assets are reviewed at each balance sheet date to assess whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. 60,217,727 (16,035,187) 44,182,540 60,217,727 (16,035,187) 44,182,540
4. Investments
Investments represent investments in cash, listed bond securities and equities, which generate interest income and trading gains/losses.
71
4. Investments (continued)
Restated 2010 R Available-for-sale investments carried at fair value comprise the following: Cash investments Listed bond securities - Short-term < 7 years - Medium-term 7 to 12 years - Long-term > 12 years - Inflation linked bonds Equity 734,480,112 391,353,333 386,294,059 221,183,596 42,116,263 2,934,899,305 Split between non-current and current Non-current portion Current portion Total Reconciliation of opening and closing balance Opening balance Additions Disposals Administration fee Fair value (loss) / gain on available-for-sale investments Realised profit / (loss) on sale of available-for-sale investments 2,778,683,490 1,594,996,699 (1,439,987,605) (7,460,359) (1,044,852) 9,711,932 2,934,899,305 2,437,072,337 1,656,021,630 (1,373,367,115) (7,254,334) 66,812,155 (601,183) 2,778,683,490 1,775,427,363 1,159,471,942 2,934,899,305 1,652,183,084 1,126,500,406 2,778,683,490 775,986,048 270,440,990 416,536,136 151,365,081 37,854,829 2,778,683,490 1,159,471,942 1,126,500,406 2009 R
A fair value loss of R1 044 852 (2009: gain of R66 812 155) was processed directly in equity during the year. The fair value adjustment decreased the carrying value of the investments to equal the market value as at 31 March 2010. Details of investments are available at the registered office of the NHBRC for inspection by authorised agents.
5. Inventories
Builders manuals carried at average cost 99,215 308,615
6. Trade and other receivables

Net trade receivables - Trade receivables - Less allowance for doubtful debt Other receivables: - Deposits - Staff loans - Value Added Taxation receivable - Sundry debtors - Accrued interest 299,620 358,552 97,983 348,439 91,096 84,267,551 223,880 501,856 1,529,427 3,093,661 94,301 87,734,886 83,071,861 95,677,858 (12,605,997) 82,291,761 82,291,761 0
2010 R Restated 2009 R
6. Trade and other receivables (continued)

Ageing of past due but not impaired: Amounts in 90 to 120 days Amounts in 120 days + 10,144,494 37,597,058 47,741,552 16,677,106 0 16,677,106
In determining the recoverability of a trade receivable, the NHBRC considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is high due to the customer base being provincial human settlement departments.
7. Cash and cash equivalents

Cash balances Short-term bank deposits 30,618,357 46,995 30,665,352 27,048,966 35,629 27,084,595
The reserve was estabished to develop programmes to assist home builders, through training and inspection, to achieve and to maintain satisfactory technical standards of home building in terms of Section 3(h) of the Housing Consumers Protection Measures Act (Act no. 95 of 1998). The emerging contractor reserve has been established, with ministerial approval, to develop programmes targeted at the empowerment of emerging home builders registered with the NHBRC, which will enable learners to be able to start and manage their own construction contracting businesses. The Council authorised the transfer of R35 950 800 (2009: R17 435 800) for this project in terms of Section 15(5) of the Housing Consumer peotection Measures Act. 9. Non-distributable reserve The non-distributable reserve relates to unrealised gains / losses earned on available for sale investments. This reserve is not substantiated by cash reserves, which makes it inaccessable to the NHBRC.
8. Emerging contractor reserve
10. Technical liabilities

Outstanding claims R Balance at 31 March 2008 Increase during the year (note 17) Utilised during the year (note 17) (Decrease) increase during the year (note 13) Balance at 31 March 2009 Increase during the year (note 17) Utilised during the year (note 17) (Decrease) increase during the year (note 13) Balance at 31 March 2010 10.1 Term of technical liabilities Balance at 31 March 2009 Current Non-current Balance at 31 March 2010 Current Non-current 21,806,447 50,799,602 72,606,049 253,788,859 176,703,943 430,492,802 0 319,894,396 319,894,396 275,595,306 547,397,941 822,993,247 15,353,961 52,322,366 67,676,327 307,463,835 325,032,477 632,496,312 0 148,805,469 148,805,469 322,817,796 526,160,312 848,978,108 47,309,552 27,251,292 (6,884,517) 0 67,676,327 19,048,250 (14,118,528) 0 72,606,049 Unearned premium R 870,449,816 0 0 (237,953,504) 632,496,312 0 0 (202,003,510) 430,492,802 Unexpired risk R 56,837,956 0 0 91,967,513 148,805,469 0 0 171,088,927 319,894,396 Total R 974,597,324 27,251,292 (6,884,517) (145,985,991) 848,978,108 19,048,250 (14,118,528) (30,914,583) 822,993,247
73
10. Technical liabilities (continued)
10.2 Basis and methodology of valuation Best practice actuarial techniques were applied to value the insurance liabilities of the NHBRC on a run-off basis, using best estimate assumptions per general practice in the South African short-term insurance industry. The Outstanding Claims Provision (OCP) is determined at a 99.5% sufficiency level. This is consistent with the Financial Services Boards proposed Financial Condition Reporting requirements, which will require companies to hold liabilities at the 75% level, and capital at 99.5%. The OCP has been estimated by applying chain ladder techniques to a run-off triangle of remedial work claims paid grouped by quarter of complaint. The Bornhuetter Ferguson (BF) method was used to calculate the OCP, as this method was most suitable to the data. The methodology is consistent with that applied in the prior year. The OCP includes insurance claims incurred, changes in outstanding claims provision, and provision for insurance claims incurred but not yet reported. The Unearned Premium Provision (UPP) has been estimated using the enrolment fee earnings curve, having deducted initial expenses which are assumed to be earned uniformly over the first two quarters following the enrolment date (estimated period between enrolment and occupation dates). This methodology is consistent with that used in the prior year. The unexpired risk provision (URP) is the sum of all UPPs plus any additional unexpired risk provision (AURP) that may be required if the unearned premium is considered to be inadequate to pay for the unexpired risks. 10.3 Assumptions The basis of assumptions used are consistent with those used in the prior year valuation. The discount rate and inflation rates are consistent with the market. The ultimate complaint rate is dependent on a run-off triangle (historical and projected) of complaints. Actuarial judgement was applied on setting other assumptions supported by internal data. Key assumption 2010 Non-subsidy Discount rate General price inflation Future building cost inflation Historical building cost inflation Ultimate complaint rate BF complaints loss ratio 7.6% 5.7% 6.7% 7.1% 2.9% 2.6% 2.0% R121,490 103.0% 2.5% 10.0% Per earnings curve (of complaints) Subsidy 7.6% 5.7% 6.7% N/A 2.9% N/A 2.0% R30,178 57.0% 2.5% 10.0% 2009 Non-subsidy 8.3% 6.0% 7.0% 10.0% 3.0% 2.8% 2.0% R108,946 102.0% 2.5% 15.0% Per earnings curve (of complaints) Subsidy 8.3% 6.0% 7.0% N/A 3.0% N/A 2.0% R23,758 47.0% 2.5% 15.0%
Remedial work rate Average claim cost Initial expense ratio BF method loss ratio BF method tail factor Spread of risk period
10. Technical liabilities (continued)
10.4 Sensitivity analysis The table below shows the key assumptions the liabilities are most sensitive to: Assumption change % Discount rate BF Tail Factor 1% -1% 1% -1% 10.5 Attribution analysis A change in the initial expense ratio and economic assumptions (inflation and discount rate) will have a negative impact of R172 409 956, and a positive impact of R7 002 983 on the balance sheet, respectively. 2010 R 2009 R Change in liability % -2.19% 2.28% 0.05% -0.05%
11. Trade and other payables

Trade payables and accrued expenses Operating lease accrual Income received in advance Unprescribed deposits Leave accrual Unidentified receipts Cash received in advance Other payables 27,218,470 952,675 0 0 8,063,629 8,240,173 53,497,170 10,981 97,983,098 35,892,352 1,168,066 5,764,713 3,822,660 6,135,537 41,320,840 88,991,647 3,934,909 187,030,724
The NHBRC has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. Due to the short-term nature of the payables, management believes that the carrying amount approximates the fair value.
12. Provisions
Balance at beginning of the year - Raised during the year - Reversed during the year - Utilised during the year Balance at the end of year 0 65,000 0 0 65,000 8,200,000 0 (2,000,000) (6,200,000) 0
The provision represents the best estimate of the future outflow of economic benefits that will be required to settle legal disputes in progress at year end.
75
Restated 2010 R 2009 R
13. Insurance premium revenue

Premium received Change in unearned premium provision (see note 10) Change in unexpired risk provision (see note 10) 304,763,918 202,003,510 (171,088,927) 335,678,501 319,380,807 237,953,504 (91,967,513) 465,366,798
14. Fee revenue

Annual registration fees Annual renewal fees Registration fees Builder manual fees Subsidy project enrolments fees Late enrollment fees Document sales 1,757,771 7,015,736 2,212,686 361,419 46,419,399 5,522,756 140,133 63,429,900 1,960,465 6,404,102 2,290,722 328,860 58,137,877 1,332,146 97,846 70,552,018
15. Technical services revenue

Forensic audit, Geo-tech and rectification work 59,660,993 59,660,993 47,552,155 47,552,155
16. Investment income

Investment income earned on financial assets, analysed by category of asset, is as follows: Interest from available for sale investments 239,160,497 754,493 239,914,990 237,657,936 4,252,385 241,910,321
Interest from loans and receivables (cash and cash equivalents)
17. Insurance claims and loss adjustment expenses

Current year warranty claims Increase in the outstanding claims provision 14,118,528 4,929,722 19,048,250 6,884,517 20,366,775 27,251,292
18. Results from operating activities

Results from operating activities is arrived at after taking into account the following: Auditor's remuneration Depreciation Computer equipment Office furniture and equipment Motor vehicles Buildings Amortisation of intangible assets Net loss / (profit) on disposal of property plant and equipment Emerging contractor training Rentals in respect of operating leases The Council leases various offices under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The future minimum lease payments are as follows: Not later than 1 year Later than 1 year and not later than 5 years Salaries and related costs Directors' emoluments Executive directors For managerial services Non-executive directors For services as directors World cup expenditure Purchase of apparel: T-shirts
2010 R
2009 R
127,612,7 8,253,107 5,085,429 1,973,781 44,945 1,148,952 10,049,063 201,143 32,830,779 11,264,888
721,912 7,586,850 5,376,909 1,267,616 57,269 885,056 12,443,320 (13,254) 13,736,047 10,198,892
26,463,065 10,332,138 16,130,927 147,723,586 12,004,253 10,342,790 1,661,463
20,722,723 10,078,491 10,644,232 134,024,298 11,007,820 8,345,020 2,662,800
126,600
19. Finance costs

Interest paid - late payments 8,785 20,404
77
Restated 2010 R 2009 R
20. Notes to the cash flow statement

20.1 Cash (utilised in) / generated from operations Surplus for the year Adjustments for: Depreciation Amortisation Net loss / (profit) on disposal of property plant and equipment Realised (profit) / loss on sale of available-for-sale investments Increase / (decrease) in provisions Decrease in technical liabilities Interest paid Interest received Operating income before working capital changes Decrease in inventories Decrease / (increase) in trade and other receivables (Decrease) / increase in trade and other payables 8,253,107 10,049,063 201,143 (9,711,932) 65,000 (25,984,861) 8,785 (239,914,990) 6,486,420 209,400 3,467,335 (89,047,626) (78,884,471) 20.2 Proceeds on disposal of property, plant and equipment Net book value Net (loss) / profit on disposal of property plant and equipment 1,195,674 (201,143) 994,531 20.3 Proceeds on sale of financial assets Net book value Realised profit / (loss) on sale of available-for-sale investments 1,437,736,032 9,711,932 1,447,447,964 20.4 Cash and cash equivalent Cash and cash equivalents consist of cash balances and short term bank deposits. Cash and cash equivalents included in the cash flow statement comprise the following amounts indicating financial position: Cash on hand and balances with banks 30,665,352 27,084,595 1,381,222,632 (601,183) 1,380,621,449 14,674 13,254 27,928 7,586,850 12,443,320 (13,254) 601,183 (8,200,000) (125,619,216) 20,404 (241,910,321) 58,941,100 31,121 (56,483,250) 2,777,893 5,266,864 263,521,105 414,032,134
Fees R Subsistence and travel R Total 2010 R Total 2009 R
21. Remuneration
21.1 Total cost - Non-executive council members S Nene2 C Cudmore
1
134,756 33,160 14,046 12,696 47,068

1
2,607 819 2,027 396 6,182 495 519 2,896 307 16,774 14,151 0.00 10,806 0 8,359 25,926 0.00 27,614 11,507 56,371 0 58,109 245,865
137,363 33,979 16,073 13,092 53,250 18,189 43,605 22,592 9,671 64,786 99,959 112,368 45,562 0 124,713 128,336 95,420 178,156 121,267 163,941 48,400 130,741 1,661,463
375,324 84,320 96,703 145,047 99,417 169,547 384,968 137,222 212,274 297,529 153,937 262,410 243,364 738 0 0 0 0 0 0 0 0 2,662,800
V Maluleke1 J Matthews1 S De Gois2 Y Jiya Tiba C Kadwa

1
17,694 43,086 19,696 9,364
S Moleshiwa1 F Ntumbu1 S Mojapelo A Goliger

2 1
48,012 85,808 112,368 34,756 0 116,354 102,410 95,420 150,542 109,760 107,570 48,400 72,632 1,415,598
3
O Shabangu1 M Venter1 A Dorrestein1 S P Hlahane V C Mehana M Mkhize

3
S M Maja-Masilo3
3
B A Mhlabeni3 G Seape (Chairperson)3 S Mashinini TD Silinda3

1 2 3 3
Contract expired on 31 March 2009 Re-appointed on 01 May 2009 Appointed on 01 May 2009 Fees R Subsistence and travel R Total 2010 R Total 2009 R
21.2 Total cost - Top management S Mashinini (Chief Executive Officer) P Makgathe (Ex Chief Executive Officer) K Mahlobo (Ex Chief Operating Officer)4 1,000,000 2,991,658 1,127,474 5,119,132 21.3 Total cost - Executive directors J Mahachi (Technical and Information Technology) C Thorp (Finance and Supply Chain) T Moshoeu (Customer Care) L Less (Corporate Services) 1,439,724 1,519,000 1,080,065 1,062,269 5,101,058 8,355 32,642 19,616 6,664 67,277 1,448,079 1,551,642 1,099,681 1,068,933 5,168,335 1,355,400 1,339,515 1,017,804 992,054 4,704,773 9,886 44,325 1,112 55,323 1,009,886 3,035,983 1,128,586 5,174,455 0 2,087,118 1,553,129 3,640,247
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2010 R 21. Remuneration (continued) 21.4 Bonuses Executive Directors S Mashinini (Chief Executive Officer) J Mahachi (Technical and Information Technology) C Thorp (Finance and Supply Chain) T Moshoeu (Customer Care) L Less (Corporate Services) 0 71,134 70,792 43,169 44,136 229,231 0 37,174 28,057 27,910 0 93,141 2009 R
22. Related Parties

22.1 Transactions with the Department of Human Settlements: Subsidy project enrolment fee (note 14) Insurance premium revenue Technical service revenue (note 15) Balances with the Department of Human Settlements: Trade receivable (note 6) Income received in advance (note 11) 95,677,858 0 82,291,761 5,764,713 46,419,399 60,817,636 59,660,993 12,054,918 0 47,552,155
The NHBRC provides a warranty for both non subsidy and government subsidised homes. The fee payable by government in the subsidy market comprises 1% project enrollment fee and 0.75 % home enrollment fee. The subsidy income is funded by national government through the Department of Human Settlements. 22.2 Transactions with other related parties are summarised below: Key management are individuals who have authority and responsibility for planning, directing and controlling the activities of the Board, directly or indirectly. Trading transactions During the current financial year, the NHBRC concluded the following trading transactions with related parties:
Expenses Related parties 1. Ahanang Hardware and Construction CC 2009/2010 R'000 28,231 2008/2009 R000 31,206
Balances 2009/2010 R000 0 2008/2009 R000 0
22. Related Parties (continued)
22.2 Transactions with other related parties are summarised below: (continued) 1. Ahanang Hardware and Construction CC (Ahanang) was contracted by the NHBRC to undertake inspections throughout the Gauteng Province on behalf of the NHBRC. This contract was awarded during 2005, and again during 2007 when re-advertised: o The Chairperson of the Council, Ms Granny Seape has an interest in Ahanang. She was appointed to serve as a member of Council and Chairperson of the NHBRC for a three year term commencing 1 May 2009 to 30 April 2012. Non-trading transactions Mr Sipho Mashinini, the Chief Executive Officer (CEO), was a director of Devgroep Investments (Proprietary) Limited (Devgroep). Devgroep was awarded a contract by the Department of Human Settlements to build RDP houses in January 2009. He was appointed a Council member of the NHBRC on 1 May 2009, and declared this interest. After the previous CEO was suspended, he was asked by Council to act as CEO until a full time CEO could be appointed. At no time did he apply for the position of CEO, as he was fulfilling the role at the request of Council. As such, he did not resign as Director of Devgroep. He was officially appointed as CEO of the NHBRC on 1 April 2010. He then resigned as Director from Devgroep on April 2010. The NHBRC has not, in any way, transacted with Devgroep.
23. Irregular, fruitless and wasteful expenditure

2010 R Conference centre cancellation fee Rental of Gauteng office Eric Molobi road design Interest paid to suppliers SARS Penalties (relating to prior 2008/09 tax year) SARS Penalties (relating to 2008/09 tax year) Kenosi Tladinyane Investment cc (out of court settlement)* Eezybuilt payment (out of court settlement)* Tau Pride Projects (Pty) Ltd (Out of court settlement)* Insurance (appropriate tender procedures not followed) Recruitment agency (close family member interest in supplier not declared) 0 0 0 8,785 28,721 642,004 4,600,000 1,100,000 2,500,000 44,094 353,799 9,277,403 * Council deliberated and approved this expenditure 2009 R 214,912 598,761 506,703 20,404 0 0 0 0 0 0 0 1,340,780
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24. Financial Instruments
24.1 Categories of financial instruments and maturity profile 0-1 Year 2010 FINANCIAL ASSETS Loans and receivables Trade and other receivables Cash and cash equivalents Available for sale financial assets Investments Total financial assets FINANCIAL LIABILITIES Financial liabilities at amortised cost Trade and other payables 2009 FINANCIAL ASSETS Loans and receivables Trade and other receivables Cash and cash equivalents Available for sale financial assets 86,205,459 27,084,595 0 0 86,205,459 27,084,595 89,919,469 0 89,919,469 1,159,471,942 1,274,306,862 1,775,427,363 1,775,427,363 2,934,899,305 3,049,734,225 84,169,568 30,665,352 0 0 84,169,568 30,665,352 R >1 Year R Total R
Investments Total financial assets FINANCIAL LIABILITIES Financial liabilities at amortised cost Trade and other payables
1,126,500,406 1,239,790,460
1,652,183,084 1,652,183,084
2,778,683,490 2,891,973,544
180,895,187
180,895,187
24. Financial instruments (continued)
24.2 Fair value of financial instruments The NHBRC considers that the carrying amounts of trade and other receivables, cash and cash equivalents and trade and other payables approximates their fair values due to the short term nature of these assets and liabilities. The fair values of financial assets represent the market value of quoted instruments and other traded instruments. For nonlisted investments and other non-traded financial assets fair value is calculated using discounted cash flows with market assumptions, unless the carrying amount is considered to approximate fair value. The fair values of financial liabilties carried at amortised cost is calculated based on the present value of the future principal and interest cash flows, discounted at the market rate of interest at the reporting date. 24.3 Foreign currency risk Foreign currency risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The NHBRC does not undertake transactions in foreign currencies and is thus not unduly exposed to foreign currency risk. 24.4 Capital risk The NHBRC manages its capital to ensure that the NHBRC will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The NHBRCs overall strategy remains unchanged from 2009. 24.5 Credit risk Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the NHBRC. Financial assets, which potentially subject the NHBRC to concentrations of credit risk, consists principally of cash and cash equivalents and trade and other receivables.
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24.5 Credit risk (continued) The NHBRCs cash and cash equivalents are placed with high credit quality financial institutions. Refer note 6 for further information on the NHBRCs exposure to credit risk with regards to trade and other receivables. There has been no significant change during the financial year, or since the end of the financial year, to the NHBRCs exposure to credit risk, the approach to the measurement or the objectives, policies and processes for managing this risk. 24.6 Liquidity risk Liquidity risk is the risk that the NHBRC will not be able to meet its financial obligations as they fall due. The NHBRC manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Refer note 24.1 for the maturity profile of financial instruments. 24.7 Management risk The key risk is underwriting risk, as the NHBRC is governed by the Act and the risk of defaulting home builders. Premiums for the non-subsidy markets are based on the selling price of the home to be constructed, and applied on a sliding scale limited to a maximum premium of R34 000 and a maximum claim of R500 000 per home. The premiums for the subsidy sector are based on 0,75% of the current subsidy cost per unit of R86 223.90. The risk to the NHBRC and housing consumers is managed primarily through the assessment and registration of home builders who have the appropriate financial, technical, construction and management capacity for their specific business. Within the insurance process, concentration of risks may arise in the subsidy market where a particular event or series of events could impact the NHBRC technical liabilities. Such concentrations may arise from a single contract or through a number of related contracts in concentrated housing developments and sectional title developments.
24.7 Management risk (continued) Approximately 99% of the assets of the NHBRC are invested in interest bearing instruments and 1% in equity instruments (shares and equity derivatives). Approximately R1.16 billion (40%) of financial assets are expected to realise within 12 months of year-end compared to approximately R373 million of liabilities expected to be settled within the same period. R1.77 billion (60%) of assets matures within 12 years, covering the remaining liability. Approximately 36% of bonds maturing in the following 12 months carry an AAA credit risk rating, equivalent to that of government (government, parastatal and quality senior corporate debt). 29% of bonds carry a rating higher than A. 35 % of bonds are rated BBB or have no rating. Approximately 76% of bonds maturing after 12 months carry an AAA credit risk rating, 20% of bonds carry a rating higher than A. 4% of bonds are rated BBB or have no rating. The results of the actuarial valuation indicate that the NHBRC as a whole, including both subsidy and non-subsidy houses, is solvent and in a sound financial position as at 31 March 2010 when valued on a run-off basis. The actuarial liabilities are 357% funded. However, for future business, the enrolment fees currently charged are inadequate to cover future expenses and liabilities for both subsidy and non-subsidy homes. Enrolment Fee Adequacy All Houses Utilisation Enrolments & inspections Complaints conciliations Remedial claims average 99.5% variation margin Total expenses & Claims Average fee per enrolment Surplus/(Deficit) Amount 4 134 420 69 % 97% 10% 2% Non-Subsidy Amount 8 697 487 128 % 101% 6% 1% Subsidy Amount 1 233 378 31 % 84% 26% 2%
37 32 4 623 4 253 -370.22 -9% 109%
69 59 9 312 8 629 -682.15 -8% 108%
17 14 1 642 1470 -171.9 -12% 112%
The key risk is that there is an emerging trend of above inflation increase in operational expenses. The budgeted expenses for 2008/09 were 44% higher than actual expenses of 2007/08 as well as budgeted expenses of 2009/10 being 28% higher than the 2008/09 budgets. For 2010/11, the budgeted expenses are 19% higher than the actual expenses in 2009/10. This has a potential impact of overstating the provisions if the budgeted expenses are not best estimates. The expense is not sufficiently variable to respond to declining new business volumes. 24.8 Insurance risk The primary insurance activity carried out by the NHBRC assumes that the risk to the warranty fund relates to the warranty cover as defined in the Housing Consumers Protection Measures Act (Act 95 of 1998) as amended (the Act). The insurance premiums are received in advance as a home enrolment fee and a portion of the insurance premium is invested in terms of the NHBRC investment policy to cover future rectification of homes paid out under the warranty scheme.
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24.8 Insurance risk (continued) The risks to the warranty fund are defined in section 3 of the Act Objects of Council which states: The Council shall: - represent the interests of housing consumers by providing a warranty protection against defects in new homes; - - - - - - regulate the home building industry; provide protection to housing consumers in respect of the failure of the home builders to comply with their obligations in terms of the Act;
establish and promote ethical and technical standards in the home building industry; improve structural quality in the interests of housing consumers and the home building industry; promote housing consumer rights and provide housing consumer information; assist home builders, through training and inspection, to achieve and to maintain satisfactory technical standards of home building;
- regulate insurers; and - achieve the stated objects in the subsidy housing sector. There is no risk categorisation in determining the enrolment fees charged. The enrolment fee structure is promulgated in the regulations to the Act. Enrolment fees are charged on the selling price of the home (including land value) so that equal value homes yield equal enrolment fees. The subsidy and non subsidy markets each have their own enrolment fee structure. The NHBRC is exposed to the uncertainty surrounding the timing and severity of claims under the warranty contract. The NHBRC also has exposure to market risk through its insurance and investment activities. The NHBRC uses several methods to assess and monitor insurance risk exposures for the protection of housing consumers. A home builder can only be registered if he has the appropriate financial, technical, construction and management capacity for the specific business carried on by the home builder in order to protect housing consumers and the Council from being exposed to unacceptable risks. The Council may withdraw the registration of a home builder where the home builder has been found guilty by the disciplinary committee as prescribed in the Act. The insurance risk is further mitigated by the inspection of houses under construction, interdicts issued against home builders who do not comply with the provisions of the Act and in cases of a late enrolments, a financial guarantee is required from the home builder, calculated on a risk model which takes the stage of completion of the house at enrolment date into account. The financial guarantee is held for the full five year warranty period. Risk to the warranty fund is further controlled by the inspection of the house during the construction phase, and rectifications are enforced when construction of the house does not comply with the provisions of the Act.
The NHBRC is an insurer of last resort, as claims, are only paid where a home builder fails to perform the necessary remedial work, due to liquidation or unavailability. The maximum claim per home is limited to the insured value up to a maximum claimable amount of R500 000 per home.
24.8 Insurance risk (continued) Underwriting strategy The registration of all home builders is prescribed in terms of section 10 of the Act. The NHBRC is obliged to register and insure all new homes constructed. The NHBRC may on the recommendation of the Council, on application made to it, in exceptional circumstances, exempt a person or home from any provision of the Act. Reinsurance strategy The NHBRC does not reinsure any portion of the risk it underwrites due to the current low claim rate experienced. Reinsurance of the exposure to losses has been identified as a medium term strategic objective. Terms and conditions of Insurance contracts The terms and conditions of insurance contracts that have a material effect on the amount, timing and uncertainty of future cash flows arising from insurance contracts are set out below: The NHBRCs main business is highly specialised, and covers the rectification of: - major structural defects in a home caused by non-compliance with the NHBRC technical requirements within a period of five years from the occupation date; - non-compliance with or deviation from the terms, plans and specification or the agreement of any deficiency related to design, workmanship or material notified to the home builder by the housing consumer within three months from the occupation date; and - repair roof leaks attributable to workmanship, design or materials occurring and notified to the home builder by the housing consumer within 12 months of the occupation date. The event giving rise to a claim occurs with the insolvency, liquidation and protracted default of the home builder. The claim will be notified to the NHBRC in terms of the specific regulations to the Act. The business of the NHBRC can be classified as short to long term as the NHBRC may only be notified of a claim up to five years after occupation of the home in the instance of structural defects. Concentration of insurance risk Insurance risk by geographical area The geographical concentration of home enrolments is predominantly in the Gauteng province (49%) and the Western Cape province (17%). Both Gauteng and the Western Cape have a lower complaints ratio relative to Northern Cape which has the highest complaints rate. Insurance risk by developer The risk per developer is ranked by units of exposure (enrolments after Sep 2004). Liquidation of the 15 largest developers constitute R329,7 million of sum insured (comparison of 350 051 home enrolments) which could potentially increase claims against the warranty fund.
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24.9 Interest rate and price risk
Interest rate risk Interest rate risk refers to the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. All cash surpluses are invested with investment fund managers in terms of the investment policy. The exposure to interest rate risk is determined by the maturity profile of investments (see note 4). Price risk Price risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices other than those arising from interest rate risk or foreign currency risk. The NHBRC is exposed to equity price risk as it holds equity securities classified as available for sale. However, due to the investments in equities being immaterial, the exposure to equity risk is limited. Sensitivity analysis
31-Mar-2010 Carrying Amount at 30 March 2010 Rand amount exposed to risk
Financial Assets Cash investments 1,159,471,942 1,159,471,942 1% 11,594,719 -1% (11,594,719)
Interest rate risk Reasonable Possible change Rate Increase Rate Decrease
Equity Risk Reasonable Possible change Rand amount exposed to risk Adverse impact Favourable Impact
Listed bond securities

- Short-term < 7 years - Medium-term 7 to 12 years - Long-term > 12 years - Inflation linked bonds Equity 734,480,112 391,353,333 386,294,059 221,183,596 42,116,263 734,480,112 391,353,333 386,294,059 221,183,596 1% 1% 1% 3% 7,344,801 3,913,533 3,862,941 6,635,508 -1% -1% -1% -3% (7,344,801) (3,913,533) (3,862,941) (6,635,508) 42,116,263 14% -14%
Impact of financial assets on: Statement of changes in net assets Statement of financial performance Impact on financial position 2,934,899,305 2,892,783,042 33,351,502 33,351,502 (33,351,502) (33,351,502) 42,116,263 (5,896,277) 5,896,277 (5,896,277) 5,896,277
31-Mar-2009
Carrying Amount at 30 March 2010 Rand amount exposed to risk
Financial Assets Cash investments 1,126,500,406 11,265,004 1% 11,265,004 -1% (11,265,004)
Interest rate risk Reasonable Possible change Rate Increase Rate Decrease
Equity Risk Reasonable Possible change Rand amount exposed to risk Adverse impact Favourable Impact
Listed bond securities

- Short-term < 7 years - Medium-term 7 to 12 years - Long-term > 12 years - Inflation linked bonds 775,986,048 270,440,990 416,536,136 151,365,081 37,854,829 7,759,860 2,704 4,165,361 4,540,952 1% 1% 1% 3% 7,759,860 2,704,410 4,165,361 4,540,952 -1% -1% -1% -3% (7,759,860) (2,704,410) (4,165,361) (4,540,952) 37,854,829 14% -14%
Equity
Impact of financial assets on: Statement of changes in net assets Statement of financial performance Impact on financial position 2,778,683,490 2,740,828,661 30,435,587 30,435,587 (30,435,587) (30,435,587) 37,854,829 (5,299,676) 5,299,676 (5,299,676) 5,299,676
25. Capital Commitments

Commitments in respect of Capital expenditure approved by council but not accrued at balance sheet date: - Contracted for - Not contracted for
2010 R 0 0 0
2009 R 18,981,736 0 18,981,738
26. Guarantees
2010 Expiry date Beneficiary Barinor Properties 30/11/2010 215,570 215,570 There are outstanding letters of credit to the value of R42 800. Amount
27. Contingent liabilities

There are outstanding claims pending in the Courts in relation to disputes between the NHBRC and service providers totallying R9 885 118, the outcome of which is unknown.
28. Restatements and reclassifications

The restatement relates to the understatement of subsidy project enrolment fees from prior years. This has been corrected and the prior year results have been restated. The impact on the Statement of financial performance and Statement of financial position is shown below: Balance previously stated Accumulated surplus at 31 March 2008 Subsidy project enrolments fees Trade receivables (1,402,307,973) (12,054,918) 17,839,856 (1,396,523,035) Adjustment (18,368,946) (46,082,959) 64,451,905 0 Restated balance (1,420,676,919) (58,137,877) 82,291,761 (1,396,523,035)
29. Post reporting date events

No material facts or circumstances have arisen after the reporting date which affects the financial position of the NHBRC as reflected in the financial statements.
30. Reconciliation of budget surplus with the surplus in the statement of financial performance are due to the following factors
Net surplus per the statement of financial performance Adjusted for: - Sale of assets - Movement in technical provisions - Emerging contractor reserve - Revenue - Expenditure - Realised profit on sale of financial assets - Interest received Net surplus per approved budget The major variances between the budgeted surplus and statement of financial performance are due to the following factors: Revenue Revenue decreased by R90.4 million compared to budget. The decease in enrolment fees in the non-subsidy sector due to the downturn in the construction of new residential units as a result of the continued economic recess contributed to this decrease. Twenty thousand fewer homes were enrolled lower than budget(R204 million). The loss in revenue in the non-subsidy sector was partly recovered by higher than budgeted subsidy home enrolment and project enrolments fees. Technical provisions The technical provisions are assessed annually by independent actuaries and are not budgeted. Expenditure Total operating expenditure and fixed expenditure were stringently managed by the organisation so as to ensure that the savings in expenditure could offset the decline in revenue, and that the budgeted surplus could be achieved. The savings in total expenditure compared to budget totalled R 87,6 million, and together with the savings in the emerging contractor reserve, the NHBRC was able to cover the loss of revenue compared to budget. Income from investments The investment strategy followed by the entity maximised the return on cash investments when the bond and equity market were declining, by locking into higher fixed term returns during the period of falling interest rates. 201,143 (11,866,333) (3,120,021) 93,059,709 (93,346,429) (9,711,932) (23,049,604) 215,687,638 263,521,105
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REPORT OF THE AUDIT AND RISK COMMITTEE OF THE NATIONAL HOME BUILDERS REGISTRATION COUNCIL
We are pleased to present our report for the financial year ended 31 March 2010 Audit and Risk Committee responsibility The Audit and Risk Committee is pleased to report that it is properly constituted as required by section 77 of the PFMA and has complied with its responsibilities arising from section 38(1)(a) of the PFMA and paragraph 3.1.13 of the Treasury Regulations. The Audit and Risk Committee also reports that it has adopted appropriate formal terms of reference as its Audit and Risk Committee Charter, and has regulated its affairs in compliance with this charter. As mandated, we hereby report on the functions of the Audit and Risk Committee for the year ended 31 March 2010. Audit and Risk Committee meetings and attendance The Audit and Risk Committee consists of the members listed below. The Committee meets at least four times per annum in line with its approved terms of reference. Nine (9) meetings were held during the year under review, six (6) scheduled and three (3) special. The attendance record of the different members is detailed below. AUDIT AND RISK COMMITTEE MEMBER Scheduled Meetings Mr. R. Moyo - CA (SA) Chairperson Independent Member Ms. S Rahiman - CA (SA) Independent Member *(Appointed on 21 July 2009) Mr. Z Fihlani - CA (SA) Independent member *(Appointed on 30 November 2009 to replace Mr. S. Mashinini who resigned as a Council Member in August 2009) Ms. S. de Gois B.Soc.Sc (Hons) Council Member Mr. M Mkhize Msc. Arch Council Member *(Appointed on 21 September 2009 to replace Mr. C. Kadwa who resigned as a Council Member in August 2009) Dr. A. Goliger PhD PrEng Council Member *(Appointed on 21 September 2009) 6 2 ATTENDANCE Special Total Number of Meetings Meetings Attended 3 2 9 4
5 1
0 1
5 2
Effectiveness of internal control In carrying out its mandate which is conferred by its terms of reference and section 27.1.8 of the Treasury Regulations (March 2005), the Committee confirms that taking into consideration the reports by both internal and external auditors, it has reviewed and assessed the following: the effectiveness of the internal control systems; the effectiveness of internal audit; the effectiveness of the risk management processes; the risk areas of the entitys operations to be covered in the scope of internal and external audits; the adequacy, reliability and accuracy of financial information provided to management and other users of such information; any accounting and auditing concerns identified as a result of internal and external audits; the entitys compliance with legal and regulatory provisions; the activities of the internal audit function, including its annual work programme, coordination with the external auditors, the reports of significant investigations and the responses of management to specific recommendations; and where relevant, the independence and objectivity of the external auditors.
Based on the information and explanations given by Management, Internal Audit function and discussions with the independent external auditors on the result of their audits, the Audit and Risk Committee is of the opinion that whilst there is a notable improvement in the overall internal control systems within the organisation in relation to previous financial year, there is however a need for significant improvement of internal controls across the organisation. Furthermore, the Audit and Risk Committee concludes that the internal accounting controls are adequately designed, but partially effective to ensure completeness, accuracy and reliability of financial records for preparing the annual financial statements, and that the accountability for assets and liabilities is maintained. The committee continues to be concerned about the gravity of some of the matters raised in the external and internal auditors reports to management. The Committee has engaged with management and is satisfied that the proposed management improvement plans appear to be adequate and relevant to prevent the recurrence of this position. Evaluation of financial statements and management reports In terms of section 3.1.13 of the Treasury Regulations (March 2005) the Committee has reviewed and evaluated the following: Effectiveness of internal control Quality of management reports The annual financial statements
Management reports The Audit and Risk Committee has noted that the Information Management system that produces management reports was not fully functional during the year under review. At year end the system was unable to produce a reliable set of annual financial statements due to the lack of certain functionality and errors in processing transactions; however this did not result in any delays in the submission of the annual financial statements to the Auditor General in terms of section 8(1) of the PFMA. The committee noted that remedial actions undertaken by management during the year resolved most of the significant challenges in respect of the management reports.
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Annual financial statements The Audit and Risk Committee has: Reviewed and discussed the audited financial statements to be included in the annual report with the AuditorGeneral and the Chief Executive Officer; Reviewed the Auditor-Generals management letter and the managements response thereto; Reviewed changes in accounting policies and practices; and Reviewed significant adjustments resulting from the audit.
The Audit and Risk Committee concurs and accepts the Auditor-Generals conclusions on the annual financial statements, and recommends that the audited financial statements be accepted by the Council and read together with the report of the Auditor General.
Mr. R. Moyo CA (SA) Chairman of Audit and Risk Committee 31 July 2010
ANNEXURE A: PERFORMANCE AGAINST STRATEGIC OBJECTIVES FOR FIRST QUARTER OF 2009/10
STRATEGIC OBJECTIVES 1. Contribute to the creation of sustainable human settlements through the delivery of quality homes.
PROGRAMS 1) Improve visibility & enhance accessibility (structure).
INDICATOR Q1 A report on conducted inspections workshops with municipalities & banks inspectors.
TARGET Q1 Interact with municipalities & government
TARGET MET / NOT MET Target met
ACTUAL ACHIEVEMENT Held inspection workshop in Limpopo, spearheaded by government, together with municipal & bank inspectors. Registration = 754; Renewals = 2558; Enrolments =5998; late enrolment= 564.
REASONS FOR VARIATION Interactions with municipalities & government are planned.
2) Establish delivery targets & measurement system requirements
Report on the number of new registration, renewals of registrations, home enrolments & late home enrolments. Designed one housing typology that is costed.
Registrations = 1000, Renewals = 3200; home enrolments = 13700; late home enrolments = 600 Produce one housing typology that is costed.
Target not met
High failure rate of home builders & inability of housing consumers to secure home loan
3) Promote breaking new ground architectural designs 4) Ensure subsidy projects are enrolled timeously 2. Effectively regulate the home building industry 1) Review valuable final products delivery processes / conducts Business Process ReEngineering.
Target met
Energy efficient typology designed & documented
The production of housing typologies is planned.
% of projects assessed timeously
100% compliance to turnaround times as per strategic corporate plan Review the script & formulas that were prescribed on Siebel & map them to our Business Processes
Target met
Projects enrolled within 14days as per agreement with the DOHS Working document developed; All provincial Managers work shopped.
Workshops conducted with the Provincial Subsidy Administrator Action is planned.
Review Business Process Maps in terms of aligning it to Business Intelligence Model & Oracle Financing Requirements Model Report on emerging home builders that are trained.
Target met
2) Establish training needs for emerging home builders.
Train 1625 Emerging Homebuilders in Quarter 1
Target not met (-28.12%)
Achieved training of 1167. This is -28.12% performance
We always experience a slow start up due to operational delays, but we are geared to achieving our annual target. Terms of reference were developed for the charter to enhance organizational efficiency of the NHBRC. Difficulty in completing this project in house & may need to outsource to legal drafting experts
3) Review enforcement policies & processes
Terms of reference
Develop Terms of Reference for the appointment of service provider
Target met
Terms of reference developed
3. Capacitate stakeholders
1) Enforcements of Regulations & Acts
Draft disciplinary procedures
- Legislative review - Develop manuals per province
Target not met
HCMP Act disaggregated & analysis started. Long term project. Internal workshops planned to fast track the legislative review process.
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STRATEGIC OBJECTIVES
PROGRAMS 2) Educate & capacitate consumers / builders
INDICATOR Q1 Report on conducted road shows & video.
TARGET Q1 Conduct road shows in 7 provinces & produce a video. Develop a questionnaire.
TARGET MET / NOT MET Target partially not met
ACTUAL ACHIEVEMENT Road shows held in all provinces except for Gauteng & KZN and video not produced The questionnaire has not been developed.
REASONS FOR VARIATION Budget cuts
4. Promote effective stakeholder relations
1) Stakeholder/ customer satisfaction surveys
Questionnaire on stakeholder/ customer satisfaction.
Target not met.
Due to short staffing (lack of capacity & competency, we requested outsourcing of this project). This was stopped due to lack of resources Budget cut
2) Corporate identity/branding 3) Update database & explore CRM system
Tender advertisement TOR
Appoint service provider for brand development Identify & develop TOR
Target not met
Service provider not appointed Developed terms of reference
Target met
To increase organizational efficiency of the NHBRC None
4) Establish partnerships
Draft SLA for NDoHS (Youth in Housing), NYSA, CETA Calendar of events Budget approved Questionnaire report No. of workshops held with stakeholders & workshop proceedings Draft report
SLA prepared
Target met
Developed MOU & is signed by NHBRC CEO Athletics & soccer events held regularly. Payments of entry fees & photos. Participated in Geosciences workshop
5) Calendar of events
- Spotting codes - Bring a girl child to work
Target met
None
6) Information sharing sessions with stakeholders (internal & external) 5. Promote established technical standards in the homebuilding industry that protects housing consumers 6. To design & develop new products & services in the home building industry 7. Provide effective strategic management of human resources 1) Develop a testing protocol for testing materials on site 2) Research on materials & product performance 1) Review & develop service needs.
Target met
On target
Draft Testing protocol report
Target not met
Collating information & draft research report not available Draft reports available Draft research report available
Research in progress
Draft Research report Draft Research report
2 Draft Research reports Draft Research reports
Target met
On target
Target met
On target
1) Human Resource Plan
Draft document of the HR plan
First draft completed
Target met
Completed an internal workshop as well with EE/ HRD committee. This feeds into the Human Resources plan. Completed training of 50% of target.
It must be noted that the new organogramme will play an important role in the completion of this plan. See attached signed attendance registers. The assessment is planned on a quarterly basis
2) Performance Management to increase productivity 3) Monitor & Evaluate Organizational Performance
Training report Attendance list
50% of staff trained
Target met
Report on performance information
A complete performance information document for Quarter one
Target met
All stakeholders were consulted on the matter.
PROGRAMS 5) Change Management & transformation
INDICATOR Q1 Develop terms of reference (ToR) as a 1st draft
TARGET Q1 Develop terms of reference
TARGET MET / NOT MET Target not met
ACTUAL ACHIEVEMENT JCP is assisting a task team with Communications service to keep all staff members updated. To date no proper change management programme has been put in place. Service provider appointed.
REASONS FOR VARIATION The Change Management programme has been placed on hold due to a lack of resources.
6) Policy development
ToR Procurement
Appoint a specialist to redraft all Conditions of Services Policies (CoSP) Establish a committee ToR for new service provider
Target met
Initial payment to be agreed on & sign off on SLA.
7) Internal service delivery Charter 8) Employee wellness programme (EWP)
Minutes of the established committee Wellness report to Exco
Target not met
The internal service delivery charter not developed. Provision of TOR to Supply chain. Lucy from SCM assisted to fast track process. Regular meetings held agreed to once a month meeting. Review of Recognition agreement (draft1 available) The QMS implementation plan was not done.
It will prioritized in the next quarter.
Target met
9) Establish Consultative forum
Minutes of workshop with labour
Review of recognition agreement
Target met
8. To develop effective governance structures, policies, process & ensure compliance.
1) Quality Management System
Report on QMS implementation plan
Develop a QMS implementation Plan
Target not met
The risk section was non-existent.
2) Simplify & standardize VFPs (BRP) 3) Review & update all processes, procedures & policies 4) Risk Management Plan 5) Business Continuity 6) Implement a new Inspection model 7) Clean Audit Report. 9. To ensure effective & integrated systems to support the business operations 1) Develop & implement Document Management System (DMS) 2) Develop a geographic Information (GIS) & Business Intelligence (BI) System 3) Implement the Oracle ERP System (Financial Module & e-VFP)
TOR
Establish TOR
Target met
TOR established
TOR
Establish TOR
Target not met
No TOR were developed for review of policies. The risk plan was not developed. NONE Draft model available NONE DMS is at a training phase The risk section did not exist. NONE On target NONE
Approved risk plan NONE Draft report NONE Sign-off report
Develop a risk plan NONE Draft inspection model NONE Business Requirements signed-off
Target not met NONE Target met NONE Target met
Sign-off report
Business Requirements signed-off
Target met
Requirements are still not finalized
Requirements are still not finalized
Sign-off report
Business Requirements signed-off
Target met
Phase 1 of Finance has been implemented & signed off by business.
e-VFP requirements have been signed off
95
STRATEGIC OBJECTIVES 10. To maintain & grow a sustainable warranty fund that protects consumers
PROGRAMS 1) Review enrolment fee structure 2) Review late enrolment fee structure 3) CETA accreditation.
INDICATOR Q1 Draft Research report Draft Research report Minutes
TARGET Q1 Draft Research report Draft Research report Meetings with CETA
ACTUAL ACHIEVEMENT Research in progress
REASONS FOR VARIATION Research in progress On target
Target met
Draft report available
Target met
Met with CETA, formed a task team to fast track implementation
Minutes available.
4) Risk Awareness Program 5) Outsource legal functions 11. To maintain & grow a sustainable warranty fund that protects consumer 1) Days debtors outstanding 2) Manage investment performance
Attendance register.
Conduct two workshops on risk awareness. None 120 days
Target not met
Nothing was done in the first quarter. None Days debtors outstanding 682 days. Performed below target by -,50%.
Risk section nonexistent None Government is slow to settle the bills of the NHBRC. The market was not doing very well at that time.
None ROI>NHBRC benchmark ROI>NHBRC benchmark
None Target not met
120 days
Target not met
ANNEXURE A: PERFORMANCE AGAINST STRATEGIC OBJECTIVES FOR SECOND QUARTER OF 2009/10
INDICATOR Q2 Minutes of meetings with resolutions for Mpumalanga & KZN Human Settlement Departments. Report on the number of new registration, renewals, home enrolments & late home enrolments Designed one housing typology that is costed.
TARGET Q2 Interact with municipalities & government
ACTUAL ACHIEVEMENT Interacted with Mpumalanga & KZN, Dept of Human Settlements in August.
REASONS FOR VARIATION The interactions with municipalities & government are planned.
Target met for registrations, target not met for renewals of registration, target not met for Home Enrolments. Target met
Registrations = 1100; Renewals of registration = 2874, Enrolment of homes = 6501, Energy efficient typologies designed & documented
Targets were not met due to the recession.
On target
100% compliance to turnaround times as per strategic corporate plan Test the Business Intelligence Module Reporting
Target met
Projects enrolled within 14 days as per agreement with the DOHS BI module developed & tested
Workshops conducted with the Provincial Subsidy Administrator BI Report from the system
Review Business Process Maps in terms of aligning it to Business Intelligence Model & Oracle Financing Requirements Model Report on emerging home builders that are trained Appointment of service provider
Target met
2) Establish training needs for emerging home builders. 3) Review enforcement policies & processes 3. Capacitate stakeholders 1) Enforcements of Regulations & Acts
Train 1625 Emerging Homebuilders in Quarter 2. Appoint services provider
Target met
Trained 3569 Emerging homebuilders Appointed JCP Company
Tenders were in place for training.
Target met
Service Level Agreement
Invites to stakeholders. Workshops held. Training Manual
- Train all critical Target not met stakeholders e.g. Conveyancers, Banking Council, Law Society, Justice College, - Disciplinary Steering Committee Induction Distribute brochures &publications brochures in all the PCCC. Target met
Induction to new Disciplinary Committee Chairpersons, training packs has been completed.
Planned to do two workshops in Q3 & Q4 with Justice College & Law Society.
2) Educate & capacitate consumers / builders
Report on brochures & publications that were distributed.
New brochures designed Training, Code of Conduct, Grading System
Delivery report from courier.
97
STRATEGIC OBJECTIVES 4. Promote effective stakeholder relations
PROGRAMS 1) Stakeholder/ customer satisfaction surveys
INDICATOR Q2 An approved questionnaire on stakeholder/ customer satisfaction Approved policy by Exco
TARGET Q2 Submit a questionnaire to Exco for approval
ACTUAL ACHIEVEMENT Questionnaire completed but not submitted to Exco for approval Policy submitted to Exco 16 November 09. Corporate Identity policy to be drafted with consultants Corrupt data compiled for investigation SLA not vetted by Exco 3 running events held & 2 soccer events done
REASONS FOR VARIATION Due to budgets cuts the questionnaire development could not be outsourced Branding tender no longer to be undertaken due to budget cuts Only CI to be developed Project plan
2) Corporate identity/branding
Develop policy on logo usage
Target not met
3) Update database & explore CRM system 4) Establish partnerships 5) Calendar of events
Database of corrupted data Legal editing
Compile all corrupt data SLA vetted by Exco & Legal Services - Wellness day - Spotting codes - Spring day
Target met
Target not met
- Medals, certificates - Pictures - Budget report - Quarterly report No of workshops held with stakeholders & workshop proceedings Draft report
5. Promote established technical standards in the homebuilding industry that protects housing consumers
6) Information sharing sessions with stakeholders (internal & external) 1) Develop a testing protocol for testing materials on site
Conduct one workshop with stakeholders
Target not met for wellness day, Target met for sporting code & Target not met for Spring Day Target met
Participated in Agrment conference
SLA was not submitted to Exco for vetting Held successful events with staff & adjudicated tender for new EWP service provider to appoint in Quarter 3 On target
Draft Testing protocol report
Target not met
Collating information
6. To design & develop new products & services in the home building industry 7. Provide effective strategic management of human resources
2) Research on materials & product performance 1) Review & develop service needs
Draft Research report Draft Research report
2 Draft Research reports Draft Research reports
Target met
Draft reports available Draft research report available
On target
Target met
On target
1) Human Resource Plan 2) Performance Management to increase productivity
Draft document circulated for comment - Training of all staff members - Attendance register
Completed final draft Complete 100% training on new policies
Target not met
HR plan is still in draft format Training on new policies conducted,100% completion on new Balance Score Card & implemented Performance Information is conducted with the relevant EDs & Managers
Target not met
HR plan will be submitted to Exco in the third quarter Training does not cover 100% because few managers attended from HO Performance Information is conducted on a quarterly basis
3) Monitor & Evaluate Organizational Performance
A complete performance information document for Quarter 2
Target met
PROGRAMS 4) Change Management & transformation
INDICATOR Q2 Approved ToR
TARGET Q2 Advertised ToR
ACTUAL ACHIEVEMENT Busy working on terms of reference for the Change Management Strategy. Only ten policies have been redrafted.
REASONS FOR VARIATION Terms of reference not completed.
Draft policy submitted
Completed redraft of CoSP & 1st draft of newly identified CoSP Develop TOR
Target not met
The policies are too many as such the redraft cant be completed. Awaiting implementation of new structure Tendering process is in progress.
6) Internal service delivery Charter
TOR
Target not met
Terms of Reference for Internal Service delivery Charter not developed. Tenders advertised and has be adjudicated and NHBRC ready to appoint. The recognition Agreement has not been signed, workshop has been held on recognition agreement & regular meetings held with labour. QMS plan has been approved by Exco. BI module developed & tested Task team to work on policies has been appointed & only a few has been done. Strategic risk register has been approved by Risk Management Committee. The implementation plan presented at EXCO of 22 September 2009. Draft model available Responses has been submitted to ED Finance on time.
7) Employee wellness programme (EWP)
- Advert - Supply chain management minutes - Workshop with labour - Exco minutes
Advertise and appoint new service provider
Target met.
- Approved consultative forum - Signed recognition agreement
Target not met
No dispute has been declared as of now.
1) Quality Management System 2) Simplify & standardize VFPs (BRP) 3) Review & update all processes, procedures & policies 4) Risk Management Plan
Report on QMS implementation plan Draft business plan
Approved QMS implementation plan To develop & simplify VFPs To develop & simplify VFPs
Target met
QMS is for ISO accreditation. BI Report from the system. Task Team to be effective in the next quarter. Risk register was approved by Exco already.
Target met
Draft business plan
Target not met
Approved strategic risk register.
Approved Strategic risk register
Target met
5) Business Continuity
Approved Business Continuity Plan
Develop a plan on Business Continuity. Approved inspection model Management responses submitted to Finance on time.
Target met
QMS id for ISO Accreditation.
6) Implement a new Inspection model 7) Clean Audit Report.
Report Managers to respond to AGs report. Management comments analyzed. Sign-off report
Target met Target met
On target. CEO instructed all to do same.
9. To ensure effective & integrated systems to support the business operations
1) Develop & implement Document Management System (DMS)
Functional requirements signed-off
Target met
DMS is at a training phase
99
PROGRAMS 2) Develop a geographic Information (GIS) & Business Intelligence (BI) System 3) Implement the Oracle ERP System (Financial Module & e-VFP)
INDICATOR Q2 Sign-off report
TARGET Q2 Functional requirements signed-off
ACTUAL ACHIEVEMENT Requirements are still not finalized
REASONS FOR VARIATION Requirements are still not finalized
Sign-off report
Functional requirements signed-off
Target met
Phase 1 of Finance has been implemented & signed off by business. Research in progress
e-VFP requirements have been signed off
10. To maintain & grow a sustainable warranty fund that protects consumers
1) Review enrolment fee structure 2) Review late enrolment fee structure 3) CETA accreditation. 4) Risk Awareness Program 5) Outsource legal functions
Draft Research report
Target not met
Draft Research report - Minutes - Exco submission Published articles.
Draft Research report Meetings with CETA Publish articles on risk awareness Outsource some legal functions 120 days
Target met
On target
Target met Target met
Contract drawn & submitted to Exco. Articles have been published on risk awareness. Structure not yet finalized for 2009 financial year Debtors have been outstanding for 161 days Government is slow to settle the NHBRC bills. The program has been planned & executed.
- Minutes - Structure ROI>NHBRC benchmark ROI>NHBRC benchmark
Target not met
11. To maintain & grow a sustainable warranty fund that protects consumers.
1) Days debtors outstanding 2) Manage Investment Performance
Target not met
120 days
ANNEXURE A: PERFORMANCE AGAINST STRATEGIC OBJECTIVES FOR THIRD QUARTER OF 2009/10
INDICATOR Q3 Minutes of meetings with resolutions.
TARGET Q3 Interact with banks on P A003 & cash guarantees.
ACTUAL ACHIEVEMENT Made presentation to Absa Bank Gauteng region on PA003, 11 December 2009. Did recorded SABC radio (Thobela FM) interviews in October 2009, which was aired in other radio stations; Attended Live interview with E-TV DSTV channel in November 2009. Registration = 810; Renewals= 2391; home enrolments =7707 & late home enrolment =521
REASONS FOR VARIATION Failure to engage banks on PA003 & cash guarantees.
Report on the number of new registration, renewals, home enrolments & late home enrolments.
Target not met
Failure by applicants to meet standard requirements & negative economic impact affecting home building industry None
Designed one housing typologies & costings
Target met
Energy efficient typologies designed & documented
100% compliance to turnaround times as per strategic corporate plan Map information that is on Siebel against information that is on Oracle BI System. Pilot & workshop Project Cost Module for complaints, conciliation & remedial works Train 1625 Emerging Home builders in Quarter 3 Review the policies, procedures & process maps for the following : Registration & Renewals, Enrolment & late enrolment of homes for Subsidy & Non-Subsidy, Complaints, Conciliation & Remedial Works.
Target met
All projects are enrolled within 14 days Oracle BI System in operation. Workshop on Project cost module, complaints, conciliation & Remedial work was conducted.
None
Review Business Process Maps in terms of aligning it to Business Intelligence Model & Oracle Financing Requirements Model
Target met
2) Establish training needs for emerging home builders
Report on emerging home builders that are trained
Target met
Trained 2151 versus actual 1625
Possible challenges with respect to financial resources going forward Need to reduce training Complaints, Conciliation & Remedial Works policy could not be finalized due to the pending mapping & users workshop on the system.
3) Review enforcement policies & processes
Documents on reviewed policies
Target met
- The following policies were approved by Registration Committee on 14th January 2010: - Registration of new home builders; Enrolment of new homes. - Procedures approved: - Registration procedures; - Renewal procedures
101
STRATEGIC OBJECTIVES 3. Capacitate stakeholders
PROGRAMS 1) Enforcements of Regulations & Acts
INDICATOR Q3 Adverts Final Appointment
TARGET Q3 Appoint new external assessors Induction of new DC Chairs assessors & DSL members Develop a stake holder magazine
ACTUAL ACHIEVEMENT External assessors & chairpersons appointed during Nov 09.
REASONS FOR VARIATION None
2) Educate & capacitate consumers / builders 4. Promote effective stakeholder relations 1) Stakeholder/ customer satisfaction surveys
Magazine
Target not met
Stakeholder magazine not developed Questionnaire done. Developed on a free website called, Free on line surveys.
It will be developed in the next quarter.
A developed functional automated link on NHBRC intranet
Develop the on line customer satisfaction survey Conduct survey
Target met
Lack of resources has resulted in delays, done in house. Did not administer questionnaire will do so in Q4. It will be developed in future. To increase the operational efficiency of the organization. The function will be done in the next quarters.
2) Corporate identity/branding 3) Update database & explore CRM system 4) Establish partnerships
Approved policy by Exco Approved Project plan
Develop a corporate identity policy Develop a project plan
Target not met
The policy has not been approved by Exco. All data migrated & new CRM system piloted & working No Youth & military vets Trained Q3 & discussions & meetings with NdoHS held. Held a very successful employee health & wellness day 5th Dec 2009. Held a year end party for all staff. Held 3 sporting events. Plans to host inter provincial soccer event. Participated in Limpopo Housing Indaba
Target met
Launch of partnership
Formal launch No. of youth exited
Target not met
Medals, certificates & photos Awards Quarter 3 reports
Spotting codes Awards evening (gala dinner)
Target met
The activity is planned
6) Information sharing sessions with stakeholders (internal & external) 5. Promote established technical standards in the home-building industry that protects housing consumers. 6. To design & develop new products & services in the home building industry. 7. Provide effective strategic management of human resources 1) Develop a testing protocol for testing materials on site 2) Research on materials & product performance 1) Review & develop service needs.
No. of workshops held with stakeholders & workshop proceedings Draft report
Target met
The activity is planned
Draft Testing protocol report 2 Draft Research reports
Target met
None
Target met
Draft research reports available
None
Draft Research reports
Target met
None
Final draft circulated for comment
Draft submitted to Exco & Union for deliberations
Target not met
Work in progress & draft is available. Working on statistics.
Delays due to the finalization of the new organogramme.
PROGRAMS 2) Performance Management to increase productivity
INDICATOR Q3 Exco report
TARGET Q3 All balanced score cards signed & submitted 1st semester review
ACTUAL ACHIEVEMENT A few Provinces have submitted & head office sections. Executives have delivered to CEO 1st Draft of their BSC. Actual no to be established All stakeholders have been consulted on the matter.
REASONS FOR VARIATION Major delay has been the revision & revision of the 2009/10 strategy & additional workshops.
3) Monitor & Evaluate Organizational Performance 4) Change Management & transformation 5) Policy development
A complete performance information document for Quarter 3 Strategy developed & discussed at Exco Workshop all policies with Union Submit to Exco
Target met
The assessment is planned
Strategy presented at Exco Exco minutes 2 work-shops conducted Workshop report Minutes of Exco
Target met
Strategy completed with the assistance of JCP. Cell phone policy completed & submitted to task team & EXCO. Code of Conduct completed first draft. Remuneration policy 1st draft.
The activity has been planned for. Policy review is consultative & many changes have taken place in the workplace resulting in major changes to all our HC policies e.g. SARS. Service Delivery Charter depends on the final approval & implementation of the new structure as processes will change.
Target not met
Document of draft service charter
Draft service charter
Target not met
- Minutes - Presentation
- Appointed service provider - Roll out new EWP
Target not met
- ICAS - Ingwe - Held a successful health day 5th December with Discovery & Bonitas Initial Plan presented at Exco & given the go-ahead
Delay due to low capacity in HC.
1) Quality Management System
Phase 1 implemented.
QMS implementation Phase 1
Target met
Activity increases the operational efficiency of the NHBRC.
2) Simplify & standardize VFPs (BRP)
Business process on system
Map all business process on system
Target met
Business Processes with regard to Registration of new home builders, Renewals, Enrolment of homes & Late Enrolment of homes have been simplified & the system mapped in line with the process.
Activity increases the operational efficiency of the NHBRC.
103
PROGRAMS 3) Review & update all processes, procedures & policies
INDICATOR Q3 Business process on system
TARGET Q3 Map all business process on system
ACTUAL ACHIEVEMENT Business Processes with regard to Registration of new home builders, Renewals, Enrolment of homes & Late Enrolment of homes have been simplified & the system mapped in line with the process 6 assessments completed & the remaining ones on schedule to be completed by year-end Business impact interviews done with all affected stakeholders Model approved by Council for implementation Audit findings are still being addressed.
REASONS FOR VARIATION Activity increases the operational efficiency of the NHBRC.
4) Risk Management Plan
Approved operational risk register
Assessment of operational risk
Target met
Activity increases the operational efficiency of the NHBRC. Activity increases the operational efficiency of the NHBRC. Delay in implementation due to Xmas shut down The matter is highly likely to be addressed in the next quarter.
5) Business Continuity
Business Impact report
Business Impact Assessment
Target met
6) Implement a new Inspection model 7) Clean Audit Report.
Report indicating provinces using the model Action plan. Follow up reports. Risk reports. IA reports.
Model implemented in at least 2 provinces Action plans developed & approved to address management letter findings. Attend to 100% all audit findings. User Acceptance signed off
Target met
Target not met
1) Develop & implement Document Management System (DMS) 2) Develop a geographic Information (GIS) & Business Intelligence (BI) System 3) Implement the Oracle ERP System (Financial Module & e-VFP)
Sign-off report
Target met
Business requirements DMS is at a training phase
Activity is planned for.
Sign-off report
User Acceptance signed off
Target met
Business requirements finalized
Functional requirements not finalized
Sign-off report
User Acceptance signed off & Finance in production Draft Research report Draft Research report Draft proposal Draft MoU Task team Publish articles on risk awareness Investigate cost benefit analysis
Target met
Phase 1 of Finance has been implemented & signed off by business. Research in progress
e-VFP requirements have been signed off Research in progress Research in progress To increase the operational efficiency of the organization. Activity planned for.
1) Review enrolment fee structure 2) Review late enrolment fee structure 3) CETA accreditation.
Draft Research report Draft Research report Exco minutes Draft documents
Target not met
Target met
Target met
MoU for CETA accreditation has been done. Articles published & circulated organization-wide Costing of the legal section vs number of staff completed.
4) Risk Awareness Program 5) Outsource legal functions
Published articles
Target met
Investigation report Findings
Target not met
Investigation incomplete. Need detailed financial analysis & market related studies. Improvement made on payments by the Provincial Human Settlement Department The market has improved since then.
1) Days debtors outstanding
ROI>NHBRC benchmark
60 days
Target not met
Debtors have been outstanding for 174 days.
2) Manage investment performance
ROI>NHBRC benchmark
60 days
Target not met
Exceeded the target by 2.5%.
ANNEXURE A: PERFORMANCE AGAINST STRATEGIC OBJECTIVES FOR FOURTH QUARTER OF 2009/10

STRATEGIC OBJECTIVES 1. Contribute to the creation of sustainable human settlements through the delivery of quality homes. PROGRAMS 1) Improve visibility & enhance accessibility (structure). INDICATOR Q4 Minutes of meetings with resolutions on PA003. TARGET Q4 Interact with banks on PA003 & cash guarantees TARGET MET / NOT MET Target met ACTUAL ACHIEVEMENT Met Nedbank for PA003 & cash guarantees. REASONS FOR VARIATION Enhance business processes.
Report on the number of new registration, renewals, home enrolments & late home enrolments
Registrations = 1048,
Target met for registrations of home builders,
952 registered home builders,
For registration there was a good follow up with builders, conducted stakeholder awareness with builders, low credit profile for builders.
Renewals = 3370;
Target not met for renewals of registrations, Target not met for Home Enrolment,
2543 renewed home enrolments,
Home enrolments = 14313;
6642 enrolled homes.
Provinces were busy clearing stock for 2008/09 for project enrolment & most of the projects for in fill, rural are assessed under home enrolment.
Late home enrolments = 899. Subsidy Project Enrolment= 31,035. Subsidy Home enrolment= 25,000 3) Promote breaking new ground architectural designs Designed one housing typology that is costed. Produce one housing typology that is costed.
Target not met for late enrolment of homes.
582 late enrolled homes.
Target not met
2,317 project enrolments were approved. 11,244 home enrolments were approved. A typology has been produced that is costed. Provinces were busy clearing up the 2008/09 stock. Typology enhances the delivery of homes.
Target not met
Target met
105

STRATEGIC OBJECTIVES PROGRAMS 4) Ensure subsidy projects are enrolled timeously INDICATOR Q4 % of projects assessed timeously TARGET Q4 100% compliance to turnaround times as per strategic corporate plan. TARGET MET / NOT MET Target met ACTUAL ACHIEVEMENT Turnaround times have been adhered to. REASONS FOR VARIATION Increase the operational efficiency of the NHBRC.
2. Effectively regulate the home building industry
1) Review valuable final products delivery processes / conducts Business Process Re-Engineering.
Review Business Process Maps in terms of aligning it to Business Intelligence Model & Oracle Financing Requirements Model Report on emerging home builders that are trained Approved policies by Council
Implement Project Cost Project Cost Module & measure its effectiveness against manual statistics Train 1625 Emerging Homebuilders in Quarter 4. Submit policies for approval to council
Target met
Conciliation project cost module has been developed & is under implementation.
Enhance efficiency & effectiveness in business processes.
2) Establish training needs for emerging home builders. 3) Review enforcement policies & processes 3. Capacitate stakeholders 1) Enforcements of Regulations & Acts
Target met
Trained 668 Emerging Home Builders.
Original training target was 9640 per annum which was later adjusted to 6500 due to cost cutting measure. Enhance efficiency & effectiveness in business processes.
Target met
Submitted registration, renewal, enrolment policies & their procedures to Council for approval. The stakeholders were not trained
Report on training workshops held & minutes of the Induction process that was conducted.
Train all critical stakeholders e.g. Conveyancers, Banking Council, Law Society, Justice College Disciplinary Steering Committee Induction Approved plans for stake holder summit.
Target not met for training of stakeholders & Target met for induction of the disciplinary Steering Committee.
Mass exodus of legal staff.
2) Educate & capacitate consumers / builders 4. Promote effective stakeholder relations 1) Stakeholder/ customer satisfaction surveys 2) Corporate identity/branding
Approved stakeholder Summit plan by Exco & Industry Advisory Council. Final report on the survey
Target not met
The plan for stakeholder summit has not been approved. Findings were analyzed & reported to Exco.
The stakeholder summit is meant to educate & capacitate consumers/ builders. Exco requested a workshop on the findings to develop an action plan prior submission to REMCO. Due to budgetary constraints.
Findings analyzed & findings reported to REMCO & Exco. Roll out corporate identity to all provinces Clean the data
Target met
Report for all provinces attended to. Report on cleaned data
Target not met
The corporate identity has not been rolled out to provinces. Home builder data is updated on a daily basis. 150 Youths currently being trained on OR Tambo Housing project Wellness day was conducted successfully.
3) Update database & explore CRM system
Target met
The cleaned data is meant to improve the operational efficiency of the NHBRC. Awaiting formal approval from the National Department of Human Settlement. Wellness day boosts staff morale & work life balance of employees.
4) Establish partnerships
Report on the no. exited into small, medium & macro enterprise - Medals - Pictures - No. of staff - Report to Exco - Quarterly report No. of workshops held with stakeholders & workshop proceedings
Report on the number exited into small, medium & macro enterprise - Wellness day - Sporting codes - Bring a girl child to work - Casual day Workshops to be held with stakeholders & workshop proceedings.
Target met
Target met for wellness day, sporting code and Casual day. Target met
6) Information sharing sessions with stakeholders (internal & external)
Workshops held with Women in Housing.
Invitation by Women in Housing to share information with them.
STRATEGIC OBJECTIVES 5. Promote established technical standards in the home-building industry that protects housing consumers. 6. To design & develop new products & services in the home building industry. 7. Provide effective strategic management of human resources
PROGRAMS 1) Develop a testing protocol for testing materials on site 2) Research on materials & product performance 1) Review & develop service needs.
INDICATOR Q4 Report
TARGET Q4 Testing protocol report
ACTUAL ACHIEVEMENT Report completed & submitted to Exco.
REASONS FOR VARIATION To enhance the operational efficiency of the NHBRC. To enhance the operational efficiency of the NHBRC. Report has not been approved since it was not complete.
Research reports
2 Research report
Target met
Two research reports on materials & product performance developed. Research report for new services developed & not yet approved.
Research reports
Approved Research report for new services
Target not met
Exco & HC REMCO minutes
Approved HR development plan submitted & approved by HC REMCO & Council Finalize Balanced Score Card. Completed 2nd review A complete performance information document for Quarter 4 Appointing a change management specialist Submit redrafted & new policies to HC REMCO & Council Charter submitted to Exco & Council
Target not met
The approved HR plan completed & in final draft to be submitted to Exco.
The HR plan was reworked in line with the recently approved organogramme.
2) Performance Management to increase productivity 3) Monitor & Evaluate Organizational Performance 4) Change Management & transformation
Report on finalized Balanced Score Card. Report on performance information
Target not met
Human Capital has only received 50 completed score cards. A complete performance information document produced for fourth quarter. Due to budget cut the change management specialist could not be appointed. The disciplinary steering committee has been redrafted (on-going). The service delivery charter not submitted to Exco & Council.
The deadline is end of April 2010.
Target met
To comply with the deadlines for submission of fourth quarterly report. NHBRCs revenue collection has decreased.
Supply chain management report Tender advertised
Target not met
Editing of all policies. Minutes of HC REMCO & council Approved Charter.
Target met
Portia & Awelani to populate.
Target not met
Legislation framework review & restructuring impacts on the charter.
- Host wellness day - EWP implemented - Financial planning Minutes of consultative forum meetings. Approval of recognition agreement - Finalized Recognition agreement. - Approved & finalized consultative forum (T0R)
Target met
Successful wellness day, EWP implemented ( task team in place).
Boosts staff morale
Target not met for recognition agreement & Target not met for development of terms of reference for the consultative forum.
Final draft recognition agreement approved at Exco, NEHAWU disputed two issues in the document.
The establishment of Consultative Forum was to form a working relationship with the NEHAWU.
107
STRATEGIC OBJECTIVES 8. To develop effective governance structures, policies, process & ensure compliance.
PROGRAMS 1) Quality Management System 2) Simplify & standardize VFPs (BRP) 3) Review & update all processes, procedures & policies 4) Risk Management Plan 5) Business Continuity 6) Implement a new Inspection model
INDICATOR Q4 Phase 2 implemented. Standardized business process Standardized business process
TARGET Q4 QMS implementation Phase 2 Implement business process re-engineering. Implement BPR
ACTUAL ACHIEVEMENT All policies aligned to ISO 9000 Reviewed & updated all Valuable Final Products forms Reviewed & updated all Valuable Final Products forms
REASONS FOR VARIATION Enhance the organizational efficiency & effectiveness. Enhance the organizational efficiency & effectiveness. Enhance the organizational efficiency & effectiveness.
Target met
Target met
Report on current status of risk. NONE Report indicating all provinces using model
Monitoring of all risk assessment. NONE Model implemented in all provinces
Target met
95% of the risk assessment captured & monitored. NONE The model has been approved by Council but to be implemented in the next financial year. They are monitoring against a year end timetable. NONE The model is meant to improve the operations of the organization.
NONE Target not met
7) Clean Audit Report.
Action plan progress report. Clean AG report. Clean IA report.
Implement the programme of action. To achieve 100% reduction of significant findings. DMS in production
Target date is May 2010
1) Develop & implement Document Management System (DMS) 2) Develop a geographic Information (GIS) & Business Intelligence (BI) System 3) Implement the Oracle ERP System (Financial Module & e-VFP)
Sign-off by business
Target met
Document Management System has been developed.
It will enhance the organizational efficiency.
GIS & BI in production
Target not met
Technical & functional specifications complete & implementation in progress. User acceptance sign-off for Oracle finance & e-VFP not done to be in production.
Delay in starting the project.
User acceptance sign-off & e-VFP in production
Target met for User acceptance sign-off for Oracle Finance Phase 1 & Target not met for e-VFP to be in production.
User acceptance sign-off & e-VFP in production enhance the organizational efficiency.
STRATEGIC OBJECTIVES 10. To ensure financial sustainability of the NHBRC.
PROGRAMS 1) Review enrolment fee structure 2) Review late enrolment fee structure 3) CETA accreditation.
INDICATOR Q4 Report
TARGET Q4 Approved enrolment fee structure Approved late enrolment fee structure Provisional accreditation
ACTUAL ACHIEVEMENT Enrolment fee structure not developed. Late enrolment fee structure approved at EXCO. Appointed external assessors & moderators as well as a service provider to design an accredited training programme (Signed MOU between NHBRC & CETA. Articles on risk awareness published.
REASONS FOR VARIATION The project will be done during the review of the Act & the regulations. To enhance compliance to regulations. Lack of capacity at CETA.
Report
Target met
CETA letter of providing accreditation
Target not met
4) Risk Awareness Program
Published articles
Publish articles on risk awareness
Target met
It will enhance the organizational resilience to uncertainty.
5) Outsource legal functions 11. To maintain & grow a sustainable warranty fund that protects consumers 1) Days debtors outstanding ROI>NHBRC benchmark 60 days
Target not met
Reduced number of legal posts. Return on investment > 3.4%
On-going organizational redesign process. It will enhance the organizational efficiency.
Target met
2) Manage investment performance
ROI>NHBRC benchmark
60 days
Target met
173.63 days
It will enhance the organizational efficiency.
109
NOTES
NOTES
NOTES

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2010 Annual Report

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KEY MOMENTS IN THE HISTORY OF THE NHBRC

GLOSSARY OF ACRONYMS & ABBREVIATIONS

ACRONYMS GLOSSARY OF TERMS

NHRBC ANNUAL REPORT 2010

PFMA PHD QMS SCM SCOPA SDA SDL UPP

NHRBC ANNUAL REPORT 2010

MESSAGE FROM THE MINISTER OF HUMAN SETTLEMENTS, MR TOKYO SEXWALE

CHIEF EXECUTIVE OFFICERS REPORT

NHRBC ANNUAL REPORT 2010

SOLVENCY OF THE NHBRC WARRANTY FUND

NHRBC ANNUAL REPORT 2010

Mr Sipho Mashinini Chief Executive Officer July 2010

NHRBC ANNUAL REPORT 2010

NHRBC ANNUAL REPORT 2010

FINANCIAL PERFORMANCE REVIEW

Results for the year

NHRBC ANNUAL REPORT 2010

NHRBC ANNUAL REPORT 2010

Revenue and Operating Expenditure (Excluding non cash flow items)

NHRBC ANNUAL REPORT 2010

Composition of the Council

NHRBC ANNUAL REPORT 2010

THE NHBRC COUNCIL

Mandate of the Council

Totals per member 10 3 8 9 2

NHRBC ANNUAL REPORT 2010

NHRBC ANNUAL REPORT 2010

NHRBC ANNUAL REPORT 2010

NHBRC High RisKs

Poor customer care

Decline in enrolment and registration revenue Ineffective stakeholder relations

NHBRC Medium RisKs

Sustainability of the warranty fund

Leadership and accountability

Lack of marketing strategy and plan

Poor corporate culture

Inadequate talent Management Non-compliance to corporate governance guidelines

Poor quality management

NHBRC Low RisKs

NHRBC ANNUAL REPORT 2010

Executive Manager Technical Marketing Manager Company Secretary

Executive Manager Customer Care Executive Manager Finance

Executive Manager Corporate Services

Strategic Planning and Information Reporting Manager

THE NHBRC MANAGEMENT STRUCTURE

Gauteng Regional Ofce

Free State Regional Ofce West Cape Regional Ofce

NB: The structure was approved by Council on 29 January 2010.

Research & Subsidy Manager

Human Capital Manager

NON-FINANCIAL PERFORMANCE INFORMATION REPORT

NHRBC ANNUAL REPORT 2010

Chart for the enrolment and late enrolment of homes

Chart for the complaints lodged with the NHBRC

3, 000 2, 500 2, 000 1, 500 1, 000 500 0

900 800 700 600 500 400 300 200 100 0

NHRBC ANNUAL REPORT 2010

Chart for inspection carried out by the NHBRC

NHRBC ANNUAL REPORT 2010

400 300 200 100 0

NHRBC ANNUAL REPORT 2010

TECHNICAL AND INFORMATION TECHNOLOGY DIVISION

Centre for housing performance eXcellence section