THUBELISHA HOMES CLOSURE

REPORT

Presented to the Portfolio Committee on

8 July 2009

Thubelisha’s Closure Plan prepared in Sept 08.

Approved by the Minister of Housing on 15 Dec 08

Delay in approval resulted in:•Revised closure timeframe•Updated closure cost estimates

Updated Closure Plan submitted to NDoH on 28 Jan 2009

Steering Committee request for commitment from NDoH to fund closure costs received on 3 March 2009

Implementation of closure process commenced on 9 March 2009 with a guarantee of closure costs by NDoH

Background

The Closure Steering Committee established the following Task Teams:

• Human Resources

• Projects

• Facilities & Assets

• Finance & Accounting

Closure Task Teams

The following processes have been completed: • H D A confirmed all staff in WC offered positions

• Firm undertaking from North West Province to absorb 5 staff; 2 still to be redeployed • Northern Cape Province will absorb 2 staff; 1 staff being offered a position by the H D A • Voluntary severance package taken up by 30 staff

• Staff where no commitments have yet been made (40): (See table attached)

Human Resources Task Team …

Human Resources Task Team …

Province Number of Staff

VSPs Boarded/Died/Resig

HDA ProvinceCertain

Balance

Head Office

30 13 1 1 15

Gauteng 20 8 12

EasternCape

1 1

Zanemvula

13 1 12 0

WesternCape

10 2 8 0

N2 Gateway

23 1 22 0

NorthernCape

5 2 1 2 0

North West

10 2 1 5 2

Limpopo 4 4

KwazuluNatal

8 1 1 6

Total 124 30 3 44 7 40

• Redeployment of staff to Gauteng & KZN is dependent on NDoH to funding these staff placements for the balance of the financial year

• Good progress made i.t.o. staff changes in provident funds and medical aid. Consultants made available to all staff

• All Stannic garage cards cancelled at the beginning of June; Nashua 3G contracts have yet to be cancelled

Human Resources Task Team … (con’t)

• Way Forward:

• Approval by NDoH regarding the payment of subventions particularly to Gauteng & KZN

• Alternate to above, commitment by NDoH to take over 40 remaining staff if not employed

• Meetings with Limpopo/KZN/Gauteng Provinces to have follow up meetings

• Finalisation of VSP, including application for tax directives

• Finalisation of offers of employment from H D A & Provinces where redeployments have been arranged

Human Resources Task Team … (con’t)

The following processes are underway / have been completed: • All rental agreements have been cancelled or agreed to be paid to lease termination. Negotiations with Nasdhua have been finalised and settlement agreed

• Negotiations with Telkom finalised; letters sent to Telkom cancelling remaining contracts; transfer of certain contracts for telephone and data lines to H D A

• All furniture for transfer to H D A from HO and Gauteng branch identified. Balance of furniture to be auctioned to staff or disposed of per Closure Plan with treasury approval

• Western & Eastern Cape assets will be transferred to the H D A with treasury approval

• Transfer of assets to N Cape and N West Provinces proposed along with transfer of staff with treasury approval

• Assets in Limpopo/KZN/E London with be dealt with at meetings with the Provinces

Facilities Task Team

• All loan contracts such as coffee and water machines cancelled from 31 July 2009

• Way Forward:

• Cancellation of Nashua 3 G cards to be formalised by no later then 31 July 2009;

• Timing of collection of unused Nashua printers to be handled by Thubelisha staff

• Thubelisha Management undertakes to facilitate auction of Head Office and Gauteng Offices assets

Facilities Task Team ….(Cont)

Way Forward:

• Response from Thubelisha regarding status of projects in EC/WC/Mpumulanga/Limpopo

• Meetings planned as follows:Eastern Cape - 30 JuneLimpopo - 30 JuneWestern Cape - 8 JulyMpumulanga - still to be

determined

• Draft contracts i.r.o. cessions to be approved by Legal

• Notification to all creditors to be sent out by 31 July 2009 notifying them of closure of operations

• Key focus of project closure team will be financial reconciliation of all projects after discontinuation of operations on 31 July 2009

Project Task Team ….

• NHFC loan repaid• MIG debtors of approximately R60 M still not received• VAT verification process is almost complete which will enable further negotiations with SARS regarding recovery• Claim submitted to NDoH for first portion of Closure Cost (VSP & contract terminations). No amount received from NDoH yetWay Forward•Bring financial records up to date•Analyze and collect all debts•Meet with NHFC regarding settlement of Interest of loan•Negotiate with H D A regarding future of MIG debtors•Progress the VAT refund

Finance & Accounting

Thank you