thubelisha homes presentation to the portfolio committee on housing
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Thubelisha Homes Presentation to the Portfolio Committee on Housing. Presented by: Kevin Duncan Chief Executive Officer 10 May 2006. Agenda. Establishment of Thubelisha Mandate Funding Framework Board members Corporate Governance Strategic Plans Key Challenges Delivery Challenges - PowerPoint PPT PresentationTRANSCRIPT
Thubelisha HomesThubelisha HomesPresentation to the Portfolio Presentation to the Portfolio
Committee Committee on Housingon Housing
Presented by: Kevin Duncan
Chief Executive Officer10 May 2006
AgendaAgenda Establishment of Thubelisha Mandate Funding Framework Board members Corporate Governance Strategic Plans Key Challenges Delivery Challenges Contributions to BNG/ASGISA Employment Equity/Procurement Way forward
IntroductionIntroduction Established in 1997 as a Housing Support Institution of the
National Department of Housing
CEO appointed in January 1999, operations commenced soon after
Section 21 company, registered under Section 3(a) of the PFMA with Independent Board of Directors and 3 “classes” of members
Original mandate was primarily to provide housing stock for Servcon’s Rightsizing programme
Minister’s decision in October 2004 to “rightsize” the remaining Servcon portfolio in-situ, forced the creation of an alternative future for Thubelisha
MandateMandate New mandate received on 22nd February 2006
“To undertake the construction of affordable housing projects and related services”
“To provide project management services”
Now required to do actual construction of houses and installation of engineering services
Requires a different business model to manage the higher risk profile associated with construction activities
Appointed as “Implementing Agent” for the Western Cape DoH on the N2 Gateway
Funding FrameworkFunding FrameworkInitial R50 million GrantInitial R50 million Grant
Used as a revolving fund to bridge finance project costs, and then later collect subsidies.
Reduced to R39 m due to R11 m in losses accumulated since inception
Included in the Debtors that still need to be collected from Provinces.
R30 million Capacitation R30 million Capacitation GrantGrant
Since 1 November 2005, R14m used for capacitation purposes including: Recruitment of new staff and salaries Opening of new offices and office rentals Marketing and communicating new role for Thubelisha Travel costs Telephones, equipment rental, capital expenditure
The balance will be spent on further recruitment, capital expenditure, and installation of new IT systems in 2006/7.
Transfers from NDoH for Transfers from NDoH for Overhead RecoveryOverhead Recovery
No transfers for overheads up to year 2006/7
Transfers are expected to take place quarterly starting from 1 April 2006
New Corporate FormNew Corporate Form According to new legislation, public entities
will not be allowed to be section 21 companies.
Thubelisha has made suggestions to the NDoH for a suitable new corporate form.
Whatever corporate form is approved will determine how Thubelisha will be capitalised.
Board of DirectorsBoard of Directors
Mr D M Thompson (Chairman) Mr J L Bartlett Mr K C Duncan (CEO) Ms C L Mdaka Ms D E Moraka Mr V P Maluleke Mr P Chauke (recently resigned) Mr W A Odendaal
Corporate GovernanceCorporate Governance Independent board with relevant committees
that meet regularly Audit 4x pa Executive 12x pa Investment 4x pa Remuneration 2x pa
Reduced number of directors has necessitated urgent changes to Articles of Association
Corporate Governance Corporate Governance contd.contd.
More appropriate corporate form in accordance with Treasury/DPSA governance framework required for new mandate
Will also require transformation of Board in terms of appropriate skills
Generally compliant with King 2 Code
Corporate Governance Corporate Governance contd.contd.
PFMA non-compliant areas: Loans, guarantees & other commitments Investment of surplus funds with Corporation
for Public Deposits Audit Committee should not have same Chair
as Board of Directors Audit committee to meet annually with Auditor
General Payments in excess of R2,000 to be effected
electronically
Scope of ActivitiesScope of Activities Land identification Feasibility Studies Project/technical audits Construction of houses Installation of engineering services Project and Construction management Subsidy and claims administration Beneficiary relocations Support organisation for “managed” PHPs Community liaison Accounts Administrator Contractor development & skills transfer Turnkeys
2005/06 Results2005/06 Results
HOUSES APPROVED BY MANEX / EXCO
0
2,000
4,000
6,000
8,000
10,000
12,000
Actual Cumulative 0 1,962 5,347 5,347 5,997 6,950 7,431 8,506 8,506 9,738 9,738 11,077
Budget Cumulative 417 834 1,252 1,935 2,619 3,537 4,606 5,674 6,425 7,342 8,477 9,612
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2005/06 Results2005/06 Results
SERVICED STANDS SECURED or PRODUCED
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Actual Cumulative 83 167 2,654 2,654 2,654 3,951 4,093 4,533 4,975 5,136 5,603 5,864
Budget Cumulative 119 238 358 642 926 1,210 1,559 2,383 3,070 3,822 4,811 5,800
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2005/06 Results2005/06 ResultsHOUSES CONSTRUCTED
0
1,000
2,000
3,000
4,000
5,000
6,000
Actual Cumulative 174 452 638 918 1,316 1,686 1,928 2,443 2,808 3,036 3,544 4,226
Budget Cumulative 212 423 775 1,176 1,578 2,019 2,486 2,952 3,419 3,964 4,570 5,176
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2005/06 Results2005/06 Results
SUBSIDY APPLICATIONS COMPLETED
0
2,000
4,000
6,000
8,000
10,000
12,000
Actual Cumulative 327 638 1,038 1,910 4,582 5,188 5,840 6,584 6,870 7,911 8,552 9,900
Budget Cumulative 261 521 937 1,379 1,822 2,309 2,823 3,362 3,888 4,442 5,074 5,707
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2005/06 Results2005/06 Results
SUBSIDY APPROVALS RECEIVED
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Actual Cumulative 191 530 855 1,121 3,289 4,668 5,016 5,794 6,084 6,323 7,101 7,952
Budget Cumulative 248 497 892 1,314 1,735 2,199 2,689 3,178 3,668 4,215 4,825 5,435
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2005/06 Results2005/06 Results
HOUSES HANDED OVER TO BENEFICIARIES
0
1,000
2,000
3,000
4,000
5,000
6,000
Actual Cumulative 188 440 642 910 1,204 1,433 1,569 1,821 2,029 2,176 2,530 2,880
Budget Cumulative 212 423 775 1,176 1,578 2,019 2,486 2,952 3,419 3,964 4,570 5,176
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2005/06 Results2005/06 ResultsREVENUE (Turnover)
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
Actual Cumulative 3.4 9.5 45.5 50.6 56.4 62.8 67.6 78.9 106.4 120.5 139.9 159.6
Budget Cumulative 6.1 12.2 22.9 36.4 49.9 64.5 80.0 96.7 112.7 131.6 152.6 173.6
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2005/06 Results2005/06 ResultsOPERATIONS RECEIPTS (Collections)
0.0
50.0
100.0
150.0
200.0
250.0
Actual Cumulative 1.8 9.8 15.0 52.7 57.8 62.0 95.9 99.0 103.0 108.5 146.6 199.3
Budget Cumulative 7.7 15.3 28.1 44.4 60.8 78.4 97.2 117.4 136.9 160.1 185.8 211.4
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2005/06 Results2005/06 ResultsOVERHEAD EXPENSES
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Actual Cumulative 2,024 4,628 7,179 9,951 12,583 15,376 18,071 22,400 25,450 28,597 32,125 36,584
Budget Cumulative 2,634 5,246 8,027 11,065 14,110 17,246 20,510 23,782 27,194 31,072 34,956 38,841
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Key Strategic ObjectivesKey Strategic Objectives2006/07 – 08/092006/07 – 08/09
Short term: To successfully re-brand Thubelisha by 30
September 2006 To successfully restructure Thubelisha by 30
June 2006 To secure 2 new “mega projects” under the
UISP by 30 September 2006 To reach agreement on a new corporate form by
30 June 2006 To have the funding arrangements to support
this Business Plan approved by NDoH, by 30 April 2006
Key Strategic ObjectivesKey Strategic Objectives2006/07 – 08/092006/07 – 08/09
Medium Term: To contribute 20% of the national “subsidised”
housing delivery by 31 March 2009
To be recognised by the NDoH as the Government’s specialist implementing agent for “mega projects”
2006/07 - 08/09 2006/07 - 08/09 Operational IndicatorsOperational Indicators
ACTIVITY 2006-07 2007-08 2008-09
Houses built 20,300 30,000 40,000
Stands serviced 10,000 20,000 30,000
Revenue (Rm) 606 1,152 1,762
Subsidies secured 30,000 40,000 50,000
Employees 209 287 355
2006/07 – 08/092006/07 – 08/09Financial IndicatorsFinancial IndicatorsACTIVITY 2006/07 2007/08 2008/09
1. Revenue (Rm) 606 1,152 1,762
2. VAT (Rm) 84 158 240
3. Operating costs (Rm) 98 123 156
4. Transfers from NDoH (Rm) 47 50 54
5. Investment (Rm) 95 79 54
6. Compensation : Revenue (%) 10,3 7,2 6,1
7. Capex (Rm) 6,8 1,7 0.1
Budgets:Budgets:Implications & AssumptionsImplications & Assumptions
Subsidy (sales) value and Cost Of Sales increase by 12% per annum
Various forms of tranche payments for all “unblocking” projects
No more P1 to P5 progress payments Operating costs to be partially covered by annual
transfers from NDoH; R47m, R50m and R54m Operating expenses increase by 9% per annum,
compensation by 7% Mega projects increased share of total turnover;
34%, 46%, 49%
Budgets : Budgets : Implications & Assumptions Implications & Assumptions
cont.cont. Revenue recognised in accordance with AC 109
“stage of completion” 10% margin on “unblocking” projects Zero margin on UISP projects, but monthly
retainer and project management fee per unit 4% fee on social & other facilities Accounts Receivable balance at 31 March 2006,
collected by 31 March 2007
Key ChallengesKey Challenges Controls must not be compromised as a result of
decentralised operations, and huge increase in Company output
New IT systems must be timeously developed and implemented
Brand awareness and public relations must be enhanced to obtain successful repositioning
Relationships with some Provinces and Local Authorities must be strengthened
Seen as a “total solutions provider” for socio-political problems, yet measured narrowly in terms of houses built
Key Challenges cont.Key Challenges cont. Management and controls of new construction
activities need special attention to mitigate against new risk areas
Appropriate technical staff will be recruited at an “affordable” cost, and current staff retained, considering the demand for their skills
Additional funding will be made timeously available for projects under the UISP, to enable implementation as per the requirements of the BNG
Stakeholders must not have unreasonable expectations of what is realistically achievable
Contribution to Contribution to BNG/ASGISABNG/ASGISA
Upgrading of informal settlements Provision of social and community facilities Social (medium density) Housing Job creation Unblocking of housing projects Capacity building in Local Authorities Rectification of houses built between 1994 and
2002
Employment EquityEmployment Equity Thubelisha has adopted targets for
employment equity as per the Construction Industry Charter
30% black people at all management levels 12% black women at all management
levels
“Black” = Africans, Coloureds and Indians i.t.o. BBBEE Act 53 of 2003
Employment Equity Employment Equity 2005/062005/06
0
10
20
30
40
50P
erce
nta
ge
Charter Targets 30 12
Thubelisha 41 11 23
Black ManagementBlack Female Management
Total Female Management
Employment Equity Employment Equity by Raceby Race
0
10
20
30
40
50
60
70P
erc
en
tag
e
Nat. Demographic 21 62 10 4
Thubelisha 17 63 8 12
White Black Indian Coloured
Employment Equity Employment Equity by Genderby Gender
0
10
20
30
40
50
60
70P
erce
nta
ge
Nat. Demographic 48 52
Thubelisha 66 34
Male Female
ProcurementProcurement
Our procurement targets are in line with the Construction Industry Charter.
Industry target is to achieve a weighted target of procurement spend from BBEEE suppliers of 70% by December 2013.
Our goal is to increase the procurement of women service providers to 15%, and HDIs to 30% in the next three years.
Way ForwardWay Forward
Reinstatement as a VAT vendor Conversion to a more appropriate corporate
form Communiqué from Minister to Provinces and
Local Authorities regarding Thubelisha’s new mandate
Standardisation of contractual agreements with Provinces, particularly in terms of “tranche payment” arrangements
Thank YouThank You