A Strategic Overview of the Business Plan Presentation to: Public Hearings on Housing Budget Vote No April 2005 Presented By: Laura Msimang Communications Manager 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 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 Key Points of Corporate Plan Upgrading of informal settlements Social and community facilities Social (medium density) housing Job creation Appropriate technology Delivery enhancing interventions Strategic Interest in 6 elements of Comprehensive Plan Key Points of Corporate Plan Resuscitating slow moving or blocked projects Province No of ProjectsNo of UnitsExpenditure % Free State64 12,25274% Eastern Cape23 7,48776% Gauteng16 5,75130% Kwazulu Natal85 25,41253% Mpumalanga13 7,02973% North West35 20,96456% Northern Cape57 6,03353% Western Cape (excl Hostel Upgrades)109 26,19160% Totals ,119 Average Expenditure % 60% Source : National DoH October 2004 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 Services Provided Project & construction management Subsidy administration Beneficiary relocations Support Organisation for managed PHP projects Community liaison Contractor development & skills transfer Measurable Outputs Serviced stands Completed top structures Output Stands serviced3,0005,8006,1606,370 Houses constructed3,6745,1767,69011,130 Major Clients National DoH Provincial DoHs Local Authorities Ministry of Housing Note : No more Servcon 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 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 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 Key Financial Assumptions cont. ACTIVITY2004/052005/062006/072007/08 1. Revenue (Rm) Gross Profit (Rm) Operating costs (Rm) Surplus/(Deficit) (Rm)(4)(33)35 5. Investment (Rm) Compensation: Revenue (%) Capex (Rm) 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 Summary Description Stands serviced3,0005,8006,1606,370 Houses built3,6745,1767,69011,130 Revenue (Rm) Employees