presentation to the parliamentary portfolio committee on human settlements on human settlements five...

PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEEPRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON HUMAN SETTLEMENTS ON HUMAN SETTLEMENTS

Five Year Strategic Plan and Annual Performance Plan Five Year Strategic Plan and Annual Performance Plan 2014-15 to 2017-182014-15 to 2017-18

25 March 201525 March 2015

MANDATE, VISION AND MISSIONMANDATE, VISION AND MISSION

NURCHA 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.”

NURCHA VISION

“To be regarded as a partner of choice for those seeking innovative bridging finance solutions”

NURCHA MISSION

“NURCHA initiates programmes and takes considered risks to ensure a sustainable flow of finance for

the construction of low-income and affordable housing, community facilities and infrastructure. We

work in partnership with all role-players in these markets to maximize the development of

sustainable human settlements”

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PURPOSEPURPOSE

To present the Strategic Plan and the Annual

Performance Plan to the Portfolio Committee,

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INTRODUCTIONINTRODUCTION

• NURCHA’s business:– short term project finance (24 months), to developers in the affordable housing segment, – Bridging finance to contractors,– Targeted programmes to finance and develop small contractors focusing on youth and

women,– Deploy programme and fund management capabilities to support sector development

efforts.

• NURCHA works on a ‘balanced budget principle’:– Administrative costs must be covered by budgeted income from operations

• Sources of income are:– Interest and fees from lending activities,– Fees from programme and management support activities,– Money market investments.

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STRATEGY PILLARSSTRATEGY PILLARS

1) Increase development impact in line MTSF Targets and Mandate. – Increased lending towards delivery affordable housing,

• Grow loan book in the gap category of the market,

• Participate in sector initiatives on mining towns’ and respond to lending opportunities,

• Provide short term finance to rental projects (including student accommodation),

• Develop lending products that facilitate settlement consolidation and densification.

– Improved access to finance for subsidy housing contractors:

• Consolidate the lending model and build provincial capabilities

• Secure buy-in of NDHS, Provincial Departments and Municipalities on an acceptable lending framework and

sign protocols with provinces and Metros

• Implementation of Contractor Finance and Development Programme to focus women and youth owned small

and medium contractors,

• Develop a lending product to enable women owned contractors to gainfully respond to business opportunities

in the sector.

– Review current lending facilities with financing partners,

– Employ programme and fund management capabilities to provide strategic support in human settlement

development programmes.

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STRATEGY PILLARS Cont.STRATEGY PILLARS Cont.

2) Restore organisational sustainability:

- Sustain positive financial results,

- Improve sustainability of business streams,

- Strengthen operations to support provincial lending and development

support activities

- Establish provincial capabilities to interface with stakeholders and clients, and manage provincial development activities,

- Continue with critical processes, controls and systems’ development to

support business,

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SOCIO-ECONOMIC BACKDROPSOCIO-ECONOMIC BACKDROP

NDP AND MTSF

•Policy and the programmatic measures to provide adequate shelter and of living environments,

•State interventions to address and counter market dysfunctions that perpetuates inequality and

inefficient urban environments and weaken survival economic activities of majority of citizens.

ECONOMIC FACTORS

•Performance of the economy generally and muted international and national growth

projections,

•Banks’ willingness to lend and affordability amidst high demand in the affordable housing

market,

•Interventions to improved affordability – (FLISP, MDI, Employer Supported Housing Schemes),

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SOCIO-ECONOMIC BACKDROP Cont. SOCIO-ECONOMIC BACKDROP Cont.

GOVERNMENT INTERVENTION IN MINING AND FAST GROWING TOWNS

•Forward planning and availability of land,

•Bulk infrastructure,

•Speed of critical property development related approvals,

FINANCING CAPACITY

•Access to funding at concessionary rate,

•Leveraging and funding mix between grant funding and private sector.

•Availability of takeout finance for rental projects,(long term finance).

STATUTORY AND FINANCIAL INSTRUMENTS ANABLING NEW DFI TO REALISE THE

DESIRED CAPACITY AND IMPACT

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CORE BUSINESSCORE BUSINESS

1. LENDING BUSINESS

* Affordable Housing,

Full and Sectional title,

Rental – conventional and student accommodation

* Bridging finance to Contractors

2.PROGRAMME MANAGEMENT

* Programme management support

* Fund management

* CFDP

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AFFORDABLE HOUSING OBJECTIVES AND TARGETSAFFORDABLE HOUSING OBJECTIVES AND TARGETS

PROGRAMME KEY PERFORMANCE INDICATOR BASELINE 2019 PERFORMANCE TARGET

Affordable Housing Finance:

Grow the supply of affordable housing stock

Value of loans R1.0 billion R1.7 billion

Loans/projects approved for financing 65 112

Housing units in projects financed 10,656 units 16000 affordable housing units

Value of projects financed R3.5 billion R3.5 billion

Improved geographical spread of financed projects beyond Gauteng

28%of loan book shared by 8 provinces

40% of loans book disbursed outside of Gauteng

Grow the GAP housing component of the loan book

28% of the loan book

40% of the loan book by 2019

Develop new products and innovations

Adopt energy efficiency measurement on projects financed

Benchmark energy efficiency of the loan book by March 2016

Adapt financing mechanisms to respond to medium and high density housing developments

New funding mechanism in place by September 2015

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PROGRAMME KEY PERFORMANCE INDICATOR BASELINE 2019 PERFORMANCE TARGETS

Subsidy Housing Finance:

Improved delivery of subsidy housing

Value of loans R491 million R684 million

Loans/projects approved for financing 127 171

Housing units in projects financed 45,326 62,000

Value of projects financed R3.2 billion R7.4 billion

Develop new products and innovations in business fulfilment.

Develop financing mechanisms targeted to benefit women owned contractors.

New funding mechanism in place by September 2015

Sign protocols for collaboration in lending with provincial human settlement departments and Metros

80% of protocols signed

SUBSIDY HOUSING OBJECTIVES AND TARGETSSUBSIDY HOUSING OBJECTIVES AND TARGETS

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PROGRAMME AND FUND MANAGEMENT PROGRAMME AND FUND MANAGEMENT OBJECTIVES AND TARGETSOBJECTIVES AND TARGETS

PROGRAMME KEY PERFORMANCE INDICATOR BASELINE 2019 PERFORMANCE TARGETS

Programme and Fund Management Portfolio:

Provide programme management and fund management services to provincial and municipal level development programmes.

Provincial department of human settlements supported in execution of programme and mainstreaming youth

• 4 multi-years provincial support initiatives

• 1 PHP multi-year project

10 programmes supported across provinces 2 of which are PHP

Establish collaborations with community based organisations and/or co-ops to deliver PHP programmes

Manage R1 Billion of client programme funds in execution of programmes

Small contractors benefiting from the contractor support programme

CFDP pilot project in the EC, with 70% women contractors

150 contractors supported 70% youth

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BUDGETED OUTPUTS 2014/15 TO 2018/19BUDGETED OUTPUTS 2014/15 TO 2018/19

OUTPUTS - APP

2014/2015 2015/2016 2016/2017 2017/2018 2018/2019

Year Budget Budget Budget Budget Budget

1. AFFORDABLE HOUSING (Houses and Serviced Sites)

1.1 Contract Signed 20 21 23 24 26

1.2 Houses and sites in signed contracts 2 800 3 150 3 450 3 600 3 900

1.3 Value of Loans (Rands) 300 000 000 315 000 000 345 000 000 360 000 000 390 000 000

1.4 Value of Projects (Rands) 440 000 000 630 000 000 690 000 000 720 000 000 780 000 000

1.5 Houses built and Sites serviced 1 950 2 200 2 500 2 650 2 800

2. SUBSIDY HOUSING (Houses and Serviced Sites)


2.2 Houses and sites in signed contracts 9 660 16 000 17 500 19 000 20 000


2.4 Value of Projects (Rands) 724 000 000 1 200 000 000 1 750 000 000 1 900 000 000 2 000 000 000


3. INFRASTRUCTURE & COMMUNITY FACILITIES (Houses and Serviced Sites)




3.4 Project Completed 8 2 4 4 4

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BUDGETED OUTPUTS FOR 2015/16 - QUARTERLY BREAKDOWNBUDGETED OUTPUTS FOR 2015/16 - QUARTERLY BREAKDOWN

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Year Budget 1st Q Budget 2nd Q Budget 3rd Q Budget 4th Q Budget

1.


1.2 Houses and sites in signed contracts3 150 750 900 600 900



1.5 Houses built and Sites serviced 2 200 600 360 900 340

2.


2.2 Houses and sites in signed contracts16 000 4 500 4 500 3 000 4 000


2.4 Value of Projects (Rands)1 200 000 000 337 500 000 337 500 000 225 000 000 300 000 000


3.




3.4 Project Completed 2 1 1

AFFORDABLE HOUSING (Houses and Serviced Sites)

SUBSIDY HOUSING (Houses and Serviced Sites)

INFRASTRUCTURE & COMMUNITY FACILITIES (Houses and Serviced Sites)

2015/2016OUTPUTS - APP

RISKS AND ENABLERSRISKS AND ENABLERS

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• Economic conditions– Affordability and creditworthiness,– Traction of state interventions to counter impact of economic

constraints and stimulate the market,

• Financing capacity to meet anticipated lending demand from Developers and Contractors,

• Management of DFI amalgamation process,– Continuation of funding partnerships through the transition,– Staff turnover and challenges of attracting talent,

CRITICAL INDICATORS IN PERFORMANCE TRENDS

PROGRESS AND PERFORMANCE – LENDING PORTFOLIOPROGRESS AND PERFORMANCE – LENDING PORTFOLIO

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LENDING CAPACITY AND COMMITMENTSLENDING CAPACITY AND COMMITMENTS

LENDING PROGRAMME

TOTAL ACTIVEPROJECTS

LOAN VALUE COMMITMENT

LENDING CAPACITY ALLOCATION

SET COMMITMENT CEILING

No. (%) (R‘Million) (%) (R‘Million) (%) (R‘Million) (%)

Subsidy Housing 24 41% 115 18% 80 13% 200 21%

Affordable Housing 27 47% 494 77% 475 80% 665 70%

Infrastructure 7 12% 35 5% 40 7% 80 8%

TOTAL 58 100% 644 100% 595 100% 945 100%

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FINANCIAL RECOVERY TRENDFINANCIAL RECOVERY TREND

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GROSS REVENUE PROJECTIONS 2014/15 TO 2018/19GROSS REVENUE PROJECTIONS 2014/15 TO 2018/19

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FINANCIAL PERFORMANCE PROJECTIONS

STATEMENT OF FINANCIAL PERFORMANCE FOR THE PERIOD STATEMENT OF FINANCIAL PERFORMANCE FOR THE PERIOD 2014/15 TO 2017/182014/15 TO 2017/18

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LATEST BUDGET FORECAST FORECASTESTIMATES - - -

2014/15 2015/16 2016/17 2017/18

INCOME FROM OPERATIONS 82 977 308 110 536 233 111 355 248 119 654 818Interest on money market investments 11 398 255 9 198 512 9 195 333 8 700 504

Interest on loans for construction projects 34 342 867 48 034 091 45 228 341 49 492 693

Fees on loans for construction projects 8 324 361 7 150 000 7 731 750 8 325 810

Programme management fees 35 808 460 54 603 552 53 819 854 58 125 442

Less: Interest paid (6 896 635) (8 449 922) (4 620 029) (4 989 631)

OTHER INCOME 8 262 613 3 741 007 2 429 533 2 566 290

Net surplus before administration expenditure 91 239 921 114 277 239 113 784 782 122 221 108

Administration expenses (80 035 898) (94 381 388) (99 711 127) (105 026 339)Net operating surplus before project losses 11 204 023 19 895 852 14 073 654 17 194 769

Provision for project losses and losses (4 207 012) (5 229 922) 1 691 174 1 137 133(Increase) / decrease in provisions for project losses (4 060 346) (5 229 922) 1 691 174 1 137 133

Project losses written off (146 666) - - -

6 997 011 14 665 929 15 764 828 18 331 902

Impairments - - - -

(DEFICIT) / SURPLUS FOR THE YEAR 6 997 011 14 665 929 15 764 828 18 331 902

STATEMENT OF FINANCIAL PERFORMANCE

STATEMENT OF FINANCIAL POSITION AS AT 2014/15 TO 2017/18 STATEMENT OF FINANCIAL POSITION AS AT 2014/15 TO 2017/18

STATEMENT OF FINANCIAL POSITION LATEST BUDGET FORECAST FORECASTESTIMATES -

2014/15 2015/16 2016/17 2017/18ASSETS

Current assets 631 056 179 599 611 859 620 324 899 643 269 101

Loans for construction projects 407 798 392 386 279 375 417 365 721 449 569 811 Trade and other receivables 11 288 346 7 139 133 6 191 133 6 253 133 Cash and cash equivalents 211 969 441 206 193 351 196 768 045 187 446 157

Non-current assets 5 436 375 5 652 275 4 856 243 4 667 676

Loans for construction projects - - 0 0Investments in associates 3 216 992 3 216 992 3 216 992 3 216 992Property, plant and equipment 578 552 456 129 383 749 350 988Intangible assets 1 640 832 1 979 154 1 255 502 1 099 696

TOTAL ASSETS 636 492 554 605 264 133 625 181 142 647 936 777

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STATEMENT OF FINANCIAL POSITION AS AT 2014/15 TO 2017/18 STATEMENT OF FINANCIAL POSITION AS AT 2014/15 TO 2017/18 continuedcontinued

LIABILITIES

Current liabilities 105 716 339 50 599 830 50 999 829 51 591 925

Trade and other payables 17 304 727 17 104 727 17 504 727 18 096 822Taxation payable - - 0 0Provision for leave 2 450 946 2 450 946 2 450 946 2 450 946Managed funds 85 960 666 31 044 157 31 044 157 31 044 157Bank loans to finance projects - - (1) 0

Non Current Liabilities 95 921 138 44 143 297 47 895 477 51 727 115

SEDF Loan 57 220 674 - - - Futuregrowth Loan 2 376 734 - - - Cadiz Facility 12 170 710 17 483 641 18 969 751 20 487 331PIC Loan 24 153 020 26 659 656 28 925 726 31 239 784

NET ASSETS 434 855 079 510 521 008 526 285 836 544 617 738

Formation grants 38 300 000 38 300 000 38 300 000 38 300 000Capital contributed by Government 300 000 000 361 000 000 361 000 000 361 000 000Other reserves 199 284 442 199 284 442 199 284 442 199 284 442Accumulated surplus / (deficit) (102 729 363) (88 063 434) (72 298 606) (53 966 704)

TOTAL NET ASSETS AND LIABILITIES 636 492 556 605 264 135 625 181 142 647 936 777

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STATEMENT OF CASH FLOWS LATEST BUDGET FORECAST FORECAST

ESTIMATES - 2014/15 2015/16 2016/17 2017/18

Cash generated/(utilised) in operating activities (59 068 779) (25 205 518) 16 532 685 18 226 431 Cash flow from funds (Deficit) / surplus for the period 6 997 012 14 665 929 15 764 828 18 331 902 Adjusted for non cash flow items: - Depreciation 357 925 344 923 262 379 245 762 - Amortisation 899 316 1 081 678 848 652 255 806 - Interest on SEDF loan 4 907 351 4 439 326 - - - Impairments - - - - - Increase / (decrease) in provision for project losses 4 060 348 5 229 922 (1 691 174) (1 137 133) (Profit)/ loss on disposal of fixed assets - - - - Movement in gross accounts receivables 2 508 121 4 149 213 948 000 (62 000) Movement in accounts payables (7 695 770) (200 000) 400 000 592 095 Movement in managed funds (71 103 081) (54 916 509) - - Cash flows from investing activities (216 972 719) 14 646 595 (29 710 172) (31 379 957) Loan disbursements for construction projects (215 971 425) 16 289 095 (29 395 172) (31 066 957) Acquisition of fixed assets (251 186) (222 500) (190 000) (213 000) Acquisition of intangible assets (750 108) (1 420 000) (125 000) (100 000) Proceeds on disposal of fixed assets - - - - Cash flows from financing activities 30 500 202 4 782 833 3 752 180 3 831 638 Grants received - Nat. Dept. of Human Settlements - 61 000 000 - - Increase / (decrease) in loans obtained 30 700 464 (56 217 167) 3 752 180 3 831 638 Increase / (decrease) in overdraft facilities (200 262) - - - Net cash (used)/generated (245 541 296) (5 776 090) (9 425 306) (9 321 888) Balance at beginning of year 457 510 737 211 969 441 206 193 351 196 768 045 Balance at end of the period 211 969 441 206 193 351 196 768 045 187 446 157

STATEMENT OF CASH FLOWS FOR THE PERIOD 2014/15 TO STATEMENT OF CASH FLOWS FOR THE PERIOD 2014/15 TO 2017/182017/18

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CONCLUDING REMARKSCONCLUDING REMARKS

The Five Year Plan and APP are hereby presented for discussion and to note the socio-economic conditions that define frame conditions and impacting on performance.

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CONCLUSION CONCLUSION

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presentation to the parliamentary portfolio committee on human settlements on human settlements five...

Documents

provincial lending

lending activities

development support

lending opportunities

lending model

lending products

increased lending

systems development