Advanced Education in Human Settlements, Urbanism and Strategic Planning Department ASRO
DEPARTMENT OF HUMAN SETTLEMENTS: PORTFOLIO COMMITTEE MEETING 2011-2012 STRATEGIC BUSINESS PLAN
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DEPARTMENT OF HUMAN SETTLEMENTS: PORTFOLIO COMMITTEE MEETING 2011-2012 STRATEGIC BUSINESS PLAN WEDNESDAY, 16 MARCH 2011
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DEPARTMENT OF HUMAN SETTLEMENTS: PORTFOLIO COMMITTEE MEETING 2011-2012 STRATEGIC BUSINESS PLAN WEDNESDAY, 16 MARCH 2011. THE MANDATE. - PowerPoint PPT Presentation
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DEPARTMENT OF HUMAN SETTLEMENTS: PORTFOLIO COMMITTEE MEETING2011-2012 STRATEGIC BUSINESS PLAN
WEDNESDAY, 16 MARCH 2011
THE MANDATE
NURCHA ensures the availability of bridging finance to small, medium and established contractors building low and moderate income housing and related community facilities and infrastructure
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UPDATE ON ENVIRONMENT Weak international environment
Funding DOHS – R100m (2011) + R200m Cadiz R75 Public Investment Corporation R100m
Increased pressure from construction industry on poor payment from
government Provincial and local authorities struggling with project procurement Operations rejecting more than 70% of projects Cost of NURCHA products and services is perceived to be expensive National Treasury and DOHS engaged in non payment of loans Completed research on fee based opportunities Role in MIG & USDG (R6b)
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THE 2011 – 2012 BUSINESS PLAN
CORE STRATEGY IS THREE-FOLD:
Deal with collections as a dedicated effort with
resources and targets
Adapting, modifying and tuning the existing business
to the changing environment
Augmenting current revenue stream with fee based
opportunities within the context of current mandate
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UNPACKING THE KEY OBJECTIVES (1) PRIORITY ONE: To collect all outstanding debt to the fullest extent
possible. Healthy Book (What are we doing different?)
Improved policies and procedures for new projects Better Irrevocable legal recourse Move to quality loans as opposed to volumes
Delinquent book Dedicated resources project manager and credit analyst Additional legal capacity both at Tusk and NURCHA Use DOHS and NT to put pressure on public employers
Setting Targets Provisions raised to R86m Collectable R41m 2010/11 – R9.7m 2011/12 – R42m 2012/13 – R33m
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UNPACKING THE KEY OBJECTIVES (2) PRIORITY TWO: Refocusing the Subsidy housing programme
Few larger contractors to deliver on scale (Dezzo- 10 000
units, Stedon- 4000 units) Base of 4 projects per month with a potential to deliver
18 000 units/ sites – upgrades of services Reduced internal capacity to manage this business Reshape subsidy programme to interface with informal
settlement upgrading programme Traditional contractor financing
Programme implementation for small Municipalities
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SUBSIDY HOUSING IMPACT
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0
2
4
6
8
10
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2007/8 2008/9 2009/10 2010/2011 2011/12
Actual 17579 27672 18893 6501 Budget 18480
UNPACKING THE KEY OBJECTIVES (3) PRIORITY THREE: Increase volume and lending into Affordable Housing market
Focus on established developers with track record and
strong pipeline of projects (Cosmopolitan, MDV, JFS etc
established pipeline) Set up programme for small scale developers (4 Projects for
possible PIC funding) Government guarantee may assist market Link Banks to specific projects Increase approvals form 12 to 19 projects will result in peak
cash flow on book of R285m and production of 2850
homes/sites Need to increase internal capacity, improve systems and risk
management88
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AFFORDABLE HOUSING LOANS SIGNED
0
2
4
6
8
10
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2007/8 2008/9 2009/10 2010/2011 2011/12
Actual 3239 1184 4665 826 Budget 2850
UNPACKING THE KEY OBJECTIVES (4) PRIORITY FOUR: Maintain volumes of loans in infrastructure
programme.
Attract more private sector employers (MTN, Mining companies,
large construction companies)
Public works, Human Settlements, Local Government – select
employers and contractors with track record
Leverage of MIG and USDG projects
Enforce additional credit guidelines
The different sectors can support at least 6 projects per month –
“Pressure to deliver”
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1111
INFRASTRUCTURE LOANS SIGNED
0
2
4
6
8
10
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2007/8 2008/9 2009/10 2010/2011 2011/12
Actual 42 64 57 26 Budget 84
UNPACKING THE KEY OBJECTIVES (5)
PRIORITY FIVE: Secure fee based income to augment current revenue stream.
Assist National Department of Human Settlements with
implementation of Contractor Development Programme
(270 contractors-R35m to finance support-DOHS) Finalize and implement deferred payment facility with DBSA
(size of facility is linked to project) Finalize and implement Khula fund and risk management
arrangement (R30m fund) Potential revenue – net R2.3m – 2011/12 Chase other opportunities identified and structure fee based deal
(DOHS Programme Implementation) Use current staff – only appoint when deal flow and revenues
are guaranteed
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INTERNAL IMPLICATIONS Rationalized subsidy unit Dedicated resources redeployed to assist with collections Additional capacity for affordable housing (initially will use
existing capacity) New business will be handled using current skills and transferred
to operations Existing vacancies (except IT specialist) to be frozen If adverse trading conditions persist NURCHA and TUSK will
reduce head count by 30% Consult government on possible retrenchments Role in MIG and USDG to be clarified and agreed during 2011
financial year
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Combined programmes will create 10348 jobs
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EMPOWERMENT
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STATEMENT OF COMPREHENSIVE INCOME 2011/12
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Budget
2011/12
INCOME FROM OPERATIONS 35,800,849 49,803,225
OTHER INCOME 385,281 -
ADMINISTRATION EXPENSES (41,844,255) (48,585,414)
Net operating surplus / (deficit) before project losses (5,658,125) 1,217,811
PROVISIONS FOR PROJECT LOSSES AND LOSSES (36,298,386) (6,682,857)
(DEFICIT) / SURPLUS FOR THE YEAR (41,956,511) (5,465,045)
Latest Estimate 2010/11
STATEMENT OF FINANCIAL POSITION
2011/12
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Budget
2011/12ASSETS
Non-current assets 16,906,842 16,199,742
Current assets 405,551,542 583,012,496
TOTAL ASSETS 422,458,384 599,212,238
EQUITY AND LIABILITIES
Equity 223,640,331 318,175,286
Non Current Liabilities 54,299,892 133,037,839
Current liabilities 144,518,161 147,999,113
TOTAL EQUITY AND LIABILITIES 422,458,384 599,212,238
Latest Estimate 2010/11
EXPENDITURE COMPARISON
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BUDGET NOTES AND ASSUMPTIONS 2013 - 2015
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% % %
Outputs and Loan Balances 2012/13 2013/14 2014/15
Affordable Housing 8.0% 8.0% 8.0%
Infrastructure 6.0% 6.0% 6.0%
Subsidy Housing 2.0% 2.0% 2.0%
Fee based Business 1.0% 1.0% 1.0%
- It is assumed that interest income and fees will also increase by the same growth rate.
Income
Prime lending rate 10.5% 12.0% 12.5%
Money market interest rate 6.5% 8.0% 8.5%
CPI inflation rate 5.6% 5.5% 5.9%
Expenses
Fixed staff costs & expenses CPI + 2% 7.6% 7.5% 7.9%
Variable staff costs & expenses CPI + 1% 6.6% 6.5% 6.9%
Directors fees & expenses CPI + 2% 7.6% 7.5% 7.9%
Other Overhead Expenses CPI + 0% 5.6% 5.5% 5.9%
Note :
Percentages listed above are yearly averages.
Provisions
It is projected that R42m will be collected form the delinquent book. Only half of this amount has been factored
into the budget. Administration expenses have also been increased as there are plans to use outside agencies in
order to bolster the collection efforts.
BUDGET STATEMENT OF FINANCIAL POSITION 2013-2015
2020
Forecast Forecast Forecast
2012/13 2013/14 2014/15ASSETS
Non-current assets 15,201,362 24,510,561 34,218,157
Current assets 701,734,951 810,923,659 827,717,831
TOTAL ASSETS 716,936,313 835,434,220 861,935,988
EQUITY AND LIABILITIES
Equity 420,083,850 526,443,407 539,458,948
Non Current Liabilities 143,083,320 153,916,996 165,602,911
Current liabilities 153,769,142 155,073,816 156,874,131
TOTAL EQUITY AND LIABILITIES 716,936,313 835,434,220 861,935,989
BUDGET STATEMENT OF COMPREHENSIVE INCOME: 2013 - 2015
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Forecast Forecast Forecast
2012/13 2013/14 2014/15
INCOME FROM OPERATIONS 53,806,060 63,532,604 74,580,624
OTHER INCOME - - -
ADMINISTRATION EXPENSES (51,915,938) (55,197,876) (58,916,849)
Net operating surplus / (deficit) before project losses 1,890,122 8,334,728 15,663,775
PROVISIONS FOR PROJECT LOSSES AND LOSSES 18,443 (1,975,171) (2,648,235)
(DEFICIT) / SURPLUS FOR THE YEAR 1,908,565 6,359,557 13,015,540
Bridging FinanceApartments
KwaZulu-Natal Naledi (New Castle)
GautengThokoza Police Station
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KwaZulu-Natal Bulk Water installation (Edendale)
Gauteng Brentwood Park (Benoni)
HEIDEDAL – FREE STATE 23
AFFORDABLE HOUSING MARKET – MAHUBE VALLEY GAUTENG
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THANK YOU
