A Strategic Overview of the 2005-08 Business Plan

1
A Strategic Overview of the 2005-08 Business
Plan

• Presentation to
• Public Hearings on Housing Budget Vote No 28
• 12 - 14 April 2005
• Presented By
• Laura Msimang
• Communications Manager

2
Key Points of Corporate Plan

• Two-Stage Repositioning Strategy
• Short Term
• Specific interventions commencing immediately
• Maximum impact on the new plan
• Identified priority interventions (low-hanging
  fruit)
• Broad-based and diverse approach
• Leverage off current skills and capacity

3
Key Points of Corporate Plan

• Two-Stage Repositioning Strategy
• Medium Term
• Fully repositioned by 1 April 2006
• Total transformation and repositioning of
  Thubelisha
• Establish a Government agency to implement
  specific affordable housing projects
• Implemented in parallel with short term
  initiatives

4
Key Points of Corporate Plan
Strategic Interest in 6 elements of
Comprehensive Plan

• Upgrading of informal settlements
• Social and community facilities
• Social (medium density) housing
• Job creation
• Appropriate technology
• Delivery enhancing interventions

5
Key Points of Corporate Plan

• Resuscitating slow moving or blocked
  projects

Province No of Projects No of Units Expenditure
Free State 64 12,252 74
Eastern Cape 23 7,487 76
Gauteng 16 5,751 30
Kwazulu Natal 85 25,412 53
Mpumalanga 13 7,029 73
North West 35 20,964 56
Northern Cape 57 6,033 53
Western Cape (excl Hostel Upgrades) 109 26,191 60
Totals 402 111,119  
Average Expenditure     60
Source National DoH October 2004
6
Key Points of Corporate Plan

• Entirely new business model, with no more
  rightsizing for Servcon clients
• Decentralised structure with Head Office plus six
  provincial offices by March 2006
• Strong emphasis on partnerships with Provinces
  Local Authorities
• Trade out of current contractual commitments by
  31 March 2006
• Primary outputs will be houses constructed
  stands serviced

7
Services Provided

• Project construction management
• Subsidy administration
• Beneficiary relocations
• Support Organisation for managed PHP projects
• Community liaison
• Contractor development skills transfer

8
Measurable Outputs

• Serviced stands
• Completed top structures

Output 2004-05 2005-06 2006-07 2007-08
Stands serviced 3,000 5,800 6,160 6,370
Houses constructed 3,674 5,176 7,690 11,130
9
Major Clients

• National DoH
• Provincial DoHs
• Local Authorities
• Ministry of Housing

Note No more Servcon
10
Key Operating Assumptions

• Provinces and LAs will recognise the value
  added by Thubelisha
• Provinces and LAs will not dump all their
  lemons and then expect miracles
• Competent management and staff will be able to be
  recruited and retained
• Provinces will accept that additional costs are
  necessary to unblock some projects

11
Key Financial Assumptions

• P1-P5 progress payments on current projects
• T1-T3 tranche payments for all new interventions
• Operating costs to be covered by annual NDoH
  grant, from 1 April 2006
• R20m NHFC loan repaid on 31 March 2006
• Remain a VAT vendor

12
Key Financial Assumptions cont.

• Revenue recognised in two stages stand serviced
  and house completed
• 10 margin on current projects
• Zero margin on interventions, with 5 contingency
  to be utilized
• All underclaims on current projects converted to
  debtors and collected by 31 March 2008

13
Key Financial Assumptions cont.
ACTIVITY 2004/05 2005/06 2006/07 2007/08
1. Revenue (Rm) 112 174 235 340
2. Gross Profit (Rm) 15 4 1 0
3. Operating costs (Rm) 21 39 50 59
4. Surplus/(Deficit) (Rm) (4) (33) 3 5
5. Investment (Rm) 24 11 42 67
6. Compensation Revenue () 12.4 14.0 13.9 11.6
7. Capex (Rm) 0.8 2.3 0.7 0.3
14
Critical Success Factors

• Controls must not be compromised
• IT systems must be timeously developed
• Brand awareness must be enhanced
• Our prospecting skills must be improved
• Relationships with provinces and LAs must be
  strengthened

15
Summary
Description 2004-05 2005-06 2006-07 2007-08
Stands serviced 3,000 5,800 6,160 6,370
Houses built 3,674 5,176 7,690 11,130
Revenue (Rm) 112 174 235 340
Employees 59 92 111 124