presentation to the portfolio committee on human settlements annual performance report 2014/2015 14...

Presentation tothe Portfolio Committee on Human Settlements

ANNUAL PERFORMANCE REPORT 2014/2015

14 October 2015

2

STRUCTURE OF PRESENTATION

1. Purpose and introduction

2. Mandate, Vision and Mission

3. Core products

4. Impact since inception

5. Business Performance

6. Affordable Housing Programme

7. Subsidy Housing Programme

8. Programme and Fund Management

9. Financial Performance

10.Conclusions

3

PURPOSE AND INTRODUCTION

• Presentation of Annual Performance Report 2014/2015

• Celebrating a 20 years in advancement of development finance in the Human Settlement sector, in two eras:

– Enticing commercial lenders to broaden access to finance for households, contractors and developers

– Provided guarantees to loans issued by commercial lenders towards housing– Introduced savings schemes to facilitate access to housing finance by poor

households– In 2002 converted to direct lending, indicative slow traction by commercial lenders in

opening access to finance– Fruitful partnership international Donor Agencies and DFIs and, commercial lenders– Celebrating 20 years of good governance and unqualified audits

• Outline the way-forward in pursuit of business targets and DFI consolidation

4

NURCHA IS ….

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”

5

CORE PRODUCTS AND SERVICES

LENDING BUSINESS

Affordable Housing

Ownership

Rental – conventional and student accommodation (short term finance)

Bridging finance to Contractors delivering subsidy housing,

PROGRAMME MANAGEMENT

Programme management support

Fund management

CFDP

6

IMPACT SINCE INCEPTION

AS AT 31 MARCH 2015 AFFORDABLE HOUSING

SUBSIDY HOUSING

INFRASTRUCTURE & COMMUNITY

FACILITIESTOTAL

NUMBER OF LOANS SIGNED 191 959 283 1 433

HOUSES IN LOAN SIGNED 38 326 353 819 N/A 392 145

HOUSES/ PROJECTS COMPLETED 31 317 256 095 184 287 596

VALUE OF LOANS R1,743 Billion R1,417 Billion R647,4 Million R3,807 Billion

VALUE OF PROJECTS R6,738 Billion R9,776 Billion R3,905 Billion R20,419 Billion

7

BUSINESS PERFORMANCE

8

TWO KEY DRIVERS OF STRATEGY

1. Relevance to developmental mandate

(OUTCOME 8, NDP, MTSF).

2. Maintain organisational sustainability.

9

KEY HIGHLIGHTS

• Focus and progress on amalgamation of DFIs

• Revision and easing of credit rules for Subsidy Housing and Affordable Housing • Achieved a surplus of R10.5 million after impairments

• Achieved net increase in provisions for losses of R2.4 million for the year

• Successful implementation and closure of Bucket Eradication Programme in the EC

• Intensified organisational change readiness interventions

• Approval of R61m for 2015/16 to repay SEDF loan

• Achieved unqualified Audit result with an Emphasis of Matter related to DFI consolidation.

10

CHALLENGES

• Lending capacity challenges,

• Slow progress in securing commonly agreed lending protocols and collaborations around contractor finance

– Opening greater access to bridging finance– Mitigation of diversion of funds– Contractor development enablers

• Managing staff anxieties around DFI consolidation

11

FINANCIAL PERFORMANCE TRENDSSINCE 2008/09

ACTUAL AU-

DITED (R'000) 2008/09

ACTUAL AU-

DITED (R'000) 2009/10

ACTUAL AU-

DITED (R'000) 2010/11

ACTUAL AU-

DITED (R'000) 2011/12

ACTUAL AU-

DITED (R'000) 2012/13

ACTUAL AU-

DITED (R'000) 2013/14

Latest Est.

2014/15

BUDGET (R'000) 2015/16

BUDGET (R'000) 2016/17

BUDGET (R'000) 2017/18

Surplus/(deficit) before impairments

15830 6733 -5696 -789 408 9788 12878 19896 14074 17195

Surplus/(deficit) after impairments

3,149 (18,826) (61,315) (45,359) (35,707) 7,178 10,526 14,666 15,765 18,332

-65,000-55,000-45,000-35,000-25,000-15,000

-5,0005,000

15,00025,000

3,149

(18,826)

(61,315)

(45,359)(35,707)

7,17810,526 14,66615,765

18,332

Financial performance since 2008/09 FY R

'0

00

12

HISTORICAL INCOME

2011/12 2012/13 2013/14 2014/15 -

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Money market interestLending programme incomeProgramme management incomeOther income

13

OUTPUT RESULTS – MARCH 2015

CORE BUSINESSCurrent Year

APRIL 2014 TO MARCH 2015

Previous Year APRIL 2013 TO MARCH

2014 BUDGET ACTUAL ACTUAL1. AFFORDABLE HOUSING: HOUSES , SITES SERVICED, RENTAL HOUSES & MINING TOWNS1.1. Contracts Signed 20 16 14

1.2Houses & Sites in Signed Contracts

2 800 2 564 1 983

1.3. Value of Loans 300 000 000 246 625 590 230 729 4331.4. Value of Projects 440 000 000 925 805 198 873 072 4451.5 Houses Built & Sites Serviced 1 950 1 606 1 6192. SUBSIDY HOUSING: HOUSES & SITES SERVICED2.1. Contracts Signed 28 15 11

2.2.Houses & Sites in Signed Contracts

9 660 9 773 4 428

2.3 Value of Loans 112 000 000 81 791 461 55 481 8612.4. Value of Projects 724 500 000 864 035 302 349 911 4602.5. Houses Built & Sites Serviced 5 500 5 962 3 1083. INFRASTRUCTURE AND COMMUNITY FACILITIES3.1. Contracts Signed 4 2 03.2. Value of Loans 17 380 000 15 109 078 03.3. Value of Projects 88 000 000 56 647 370 03.4. Projects Completed 8 0 8

14

ACTIVITY VS PERFORMANCE – LENDING PORTFOLIO

AFFORDABLE HOUSING PROGRAMME

• Loans approved: R490,4M (23 loans)

• Loans signed: R246,6M (16 loans)

• Approved but not yet signed: R125,4M (3 loans)

• Approved but not taken up: R119M (4 loans)

SUBSIDY HOUSING PROGRAMME

• Applications received R231,2M (46 loans)

• Loans approved: R131,5M (23 loans)

• Loans signed: R81,8M (15 loans)

• Approved but not taken up: R49,7M (8 loans)

• Unable to assess due to lack of information: R91,9M (21 loans)

• Applications declined: R7,8M (2 loans)

15

SUMMARY OF LOAN AGING –MARCH 2015

R’000 Not Yet Due Total Overdue Total Debtors Outstanding

Impairments

Affordable Housing

R 218 919

R 14 314

R 233 234

R 7 348

94% 6% 78% 18%

Subsidy Housing

R 24 955 R 8 767 R 33 721 R 3 694

74% 26% 11% 9%

Infrastructure R 3 521 R 29 343 R 32 865 R 29 588

11% 89% 11% 73%

Total NURCHA Debtors

R 247 395 R 52 424 R 299 820 R 40 630

82% 18% 100% 14%

16

TOTAL PROVISIONS VERSUSTOTAL DEBTORS

R0

R50,000,000

R100,000,000

R150,000,000

R200,000,000

R250,000,000

R300,000,000

R350,000,000

R400,000,000

R450,000,000 Total Impairments Total Overdue Debtors

Total Book Debts

17

DISTRIBUTION OF DEBTS BY PROGRAMME

2012/2013 2013/2014 2014/2015 R0

R50,000,000

R100,000,000

R150,000,000

R200,000,000

R250,000,000

R300,000,000

R350,000,000

INFRASTRUCTURE

SUBSIDY HOUSING

AFFORDABLE HOUSING

78%

11%

11%

18

PERFORMANCE AND DISTRIBUTIONOF DEBTS – MARCH 2015

83%

2%

1%1%

14% Not Yet Due1-9091-180366+

18%

9%

73%

Affordable Housing Subsidy Hous-ing Infrastructure

19

PROVINCIAL SPREAD

Western Cape6%

Eastern Cape17%

KwaZulu Natal15%

Free State5%North West

5%Mpumalanga

6%

Gauteng42%

Limpopo5%

WC EC NC KZN FS NW MP GP LP

CONTRACTORS

Loan values per province R 7 468 545 R 43 179 775 0 R 41 558 298 R 18 602 747 R 13 300 000 R 10 800 000 R 37 896 610 0

Number of houses per province

1 169 4 543 0 3 113 2 128 2 538 750 3 177 0

DEVELOPERS

Loan values per province R 26 284 000 0 0 R 36 447 143 0 0 R 41 885 564 R 423 215 987 R 49 071 396

Number of houses & serviced sitesper province

220 0 0 183 0 0 375 4 117 614

20

AFFORDABLE HOUSING LENDING PROGRAMME

21

AFFORDABLE HOUSING SINCEINCEPTION

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/150

200

400

600

800

1000

1200

1400

1600

1800

2000

26.6 152.3 49 69 9988

240

84.9

279

157.8

230.73

246.63178.9 227.9

296.9395.9

483.9

723.9808.8

1087.8

1245.6

1476.33

1722.96

Value of loans signed Cumulative value of loans signed

22

SPREAD OF AFFORDABLE HOUSINGBOOK

PROJECTS UNITSPERCENTAGE OF

BOOK

Sectional Title Units 7 443 9%

GAP Housing 4 1,418 28%

Affordable Housing 16 3,140 63%

TOTAL 27 5,001 100%

23

ACTIVE LOAN COMMITMENTS

LENDING PROGRAMME

TOTAL ACTIVE

PROJECTS

LOAN VALUE COMMITMENT

LOAN EXPOSURE

LENDING CAPACITY

ALLOCATION

SET COMMITMENT

CEILING

No. (%) (R'm) (%) (R'm) (%) (R'm) (%) (R'm) (%)

Subsidy Housing 27 41% 141 19% 31 11% 80 13% 200 21%Affordable Housing 32 48% 573 77% 233 84% 475 80% 665 70%

Infrastructure 7 11% 35 5% 12 4% 40 7% 80 8%

TOTAL 66 100% 749 100% 276 100% 595 100% 945 100%

24

HOUSES AND SITES SERVICES BY PROVINCE – AFFORDABLE HOUSINGProject Name GP KZN LP MP WC Grand Total"The Gayles" in Evander 324 324202 On Corronation Setional title units - Phase 2 34 34Alliance Ext 1 & 2 593 593Alra Park Ext 5 - Phase 1 247 247Atteridgeville Ext 34 152 152Atteridgeville Ext 34 "A" 165 165Bloubosrand Extension 21 195 195Devland Ext. 33 245 245Empangeni Ext 26 51 51Empangeni Old Mill Houses 80 80Gem Valley Ext 2 353 353Gold Lake Estate, Phase 1 18 18Grootvlei Houses 187 187Hendrina Ext 4 51 51IvyPark Ext 44 75 75Lilyfield Sectional Title Units Phase 1& 2 198 198Linden Lane Sectional Title Units 161 161Loerie's Park Sectional Title Units 50 50Old Mill Sectional Title Units 52 52Orchards Ext 52 291 291Orchards Exts 89 & 90 192 192Protea Glen Ext 27 210 210Rosslyn Extension 45 303 303Southern Gateway - Phase 2 & 3 300 300Witfield Ridge 82 82Rosslyn Extension 46 228 228202 On Corronation Phases 1 & 2 14 14Gold Lake Estate, Phase 2 18 18Eden Gardens - Phase 1 239 239Powerville Park Ext 4 189 189Amberg Paarl 172 172Te Nita Lane Sectional title Units 40 40

Grand Total 4 117 183 614 375 220 5 509

25

KEY VARIABLES IN AFFORDABLEHOUSING

ECONOMIC FACTORS• Performance of the economy generally

• Banks’ willingness to lend

• Household Affordability

MINING AND FAST GROWING TOWNS• Forward planning and availability of proclaimed land• Bulk infrastructure• Speed of critical property development related approvals• Capacity of less resourced Municipalities to fulfill the

function

FINANCING CAPACITY

• Access to funding at concessionary rate

26

LENDING TO HUMAN SETTLEMENTS CONTRACTORS

27

CATEGORIES OF CONTRACTORS

Developer/ Contractor Tier 1

Traditional contractor Tier 2

CFDP Tier 3

Turnover < R300m Average 10 projects 5000 units per annum National presence

Turnover R100m 3 projects at a time 600 units per annum Provincial focus

Turnover of R0 >R5M 1 project 40 units per annum Municipal focus

28

CONTRACTOR FINANCE DEVELOPMENT PROGRAMME

• The CFDP programme provides bridging finance, construction and enterprise development support to small contractors

• In year 1 of the programme, which ended in March 2014, the programme enrolled 13 contractors NMBMM of whom 80% were women

• Renewed engagements at advanced stages of implementation readiness between NURCHA, the HDA, NMBMM and Mzingisi Trust

• Challenges faced by NURCHA in current reporting period:– Misalignment of approaches to contractor development – The commencement of the programme is dependent upon the conclusion of

a MOU between NURCHA and the participating government entity

29

NUMBER OF HOUSES - SUBSIDY HOUSING

Project Name EC FS GP KZN MP NW WC Grand TotalNUR / Matimatolo 600 600 600NUR / Matjhabeng 1700 1700 1700NUR/ Bhekumthetho 1000 1000 1000NUR/ Grabouw/ Rooidakkei 1169 1169NUR/ Rocky Park 224CRU 224 224NUR/ Rocky Park 49LIU 49 49NUR/Cala 420 420NUR/Cedarville 201 201 201NUR/Cradock 1350 1350NUR/Dundee 250 250 250NUR/Edenville 134 134 134NUR/Heilbron 294 294 294NUR/Jouberton 220 220NUR/Ntsongeni 882 882NUR/Osizweni 1240 1240NUR/Soshanguve 1662 1662 1662NUR/Victor Khanye 500 500 500Tusk / RUSTENBURG 550 550 550Tusk / SOWETO-ON-SEA 500 500 500NUR/Motherwell 550 550 550NUR/ Lukhanji 200 200 200NUR/ Tinasonkhe Ext 4 515 515 515NUR/ Atteridgeville 1000 1000Tusk/ Letlhabile 1768 1768 1768MampondiseniTusk/ Sea Vista 157 157 157CALA

Grand Total 4 260 2 128 3 177 3 113 750 2 538 1 169 17 135

30

PROGRAMME AND FUND MANAGEMENT SERVICES

31

PROGRAMME AND FUNDMANAGEMENT

• Three years into programme management and built strong capabilities to support delivery efforts in the sector

• Have managed multi-year programmes in support on National and Provincial departments

• Generated 31% of NURCHA’s gross income

Clients Programme Scope

NDHS • Bucket Eradication Programme• Contractor Finance and Development Programme

EC • Bucket Eradication Programme• Rural Housing Development Programme

KZN • Vulindlela PHP – Paymaster (CRO)

FS • Programme management support and systems development.

32

EASTERN CAPE BUCKETERADICATION PROGRAMME

• A total of 10 projects across 8 municipalities were implemented with a budget of R106m

• NURCHA has concluded the ECBEP and submitted the close out report that has been accepted by the department

• NURCHA eradicated 2 676 buckets out of 3118 • An investigation on the adequacy of a sewer network to 1245 sites in Sundays River

Municipality (Paterson) was completed and a repair or replace approach was determined

• A total of 40 SMMEs were employed in Makana Municipality (Grahamstown) to implement 737 toilet top structures

• A total of 8 SMMEs were employed in Ndlambe Municipality (Port Alfred) to erect 967 toilet top structures

• The remainder of the projects will be implemented by the Department of Water and Sanitation

33

NURCHA CONTRIBUTION TONDOHS MTSF

CONTRIBUTION FROM BEGINNING OF MTSF PERIOD TO 31 March 2015

# OF LOANS SIGNED

# OF HOUSES IN CONTRACTS

SIGNED

VALUE OF LOANS (RAND)

MINING TOWNSTOTAL 15 5,906 137.3MAffordable Housing 8 1,177 95.6MSubsidy Housing 7 4,729 41.7M

GAP HOUSINGTOTAL 3 884 83.2M

WOMEN EMPOWERMENTTOTAL 6 2,034 23M Affordable Housing 0 0 0 Subsidy Housing 6 2,034 23M

MILITARY VETERANSTOTAL 1 200 4.5M

34

NURCHA PROGRESS ON COMMITTED MTSF TARGETS

OUTPUTS MTSF TARGETS %

PROGRESS TO DATE

FY 2014/15 % ACHIEVED FY 2014/15 FY 2015/16

% PROGRESS

YTD FY 2015/16

AFFORDABLE HOUSING FINANCE: GROW THE SUPPLY OF AFFORDABLE HOUSING STOCK

TARGET NUMBER OF CONTRACTS SIGNED 114 20 21

ACTUAL 23 20% 16 80% 7 33%

TARGET HOUSES AND SITES IN SIGNED CONTRACTS 16,900 2,800 3,150

ACTUAL 4,151 25% 2,564 92% 1,587 50%

- HOUSES 781 459 322

- SERVICED SITES 3,370 2,105 1,265

TARGET VALUE OF LOANS R 1,710,000,000 R 300,000,000 R 315,000,000

ACTUAL R 436,693,248 26% R 246,625,590 82% R 190,067,658 60%

TARGET VALUE OF PROJECTS FINANCED R 3,500,000,000 R 440,000,000 R 630,000,000

ACTUAL R 1,341,015,254 38% R 925,805,198 210% R 415,210,056 66%

TARGET HOUSES BUILT AND SITES SERVICED 12,100 1,950 2,200

ACTUAL 2,339 19% 1,606 82% 733 33%

- HOUSES BUILT 552 475 77

- SITES SERVICED 1,787 1,131 656

SUBSIDY HOUSING FINANCE: IMPROVE DELIVERY OF SUBSIDY HOUSING

TARGET NUMBER OF CONTRACTS SIGNED 173 28 32

ACTUAL 20 12% 15 54% 5 16%

TARGET HOUSES AND SITES IN SIGNED CONTRACTS 82,160 9,660 16,000

ACTUAL 12,748 16% 9,773 101% 2,975 19%

TARGET VALUE OF LOANS R 692,000,000 R 112,000,000 R 128,000,000

ACTUAL R 110,491,461 14% R 81,791,461 73% R 28,700,000 22%

TARGET VALUE OF PROJECTS R 7,574,500,000 R 724,500,000 R 1,200,000,000

ACTUAL R 1,082,472,080 13% R 864,035,302 119% R 218,436,778 18%

TARGET HOUSES BUILT AND SITES SERVICED 60,374 5,500 7,044

ACTUAL 6,565 11% 5,962 108% 603 9%

35

FINANCIAL PERFORMANCE

36

BREAKDOWN OF INCOME SOURCES

18%

43%

31%

8%

Interest on money market investments

Lending Programme income

Programme Man-agement fees

Other fees

37

BREAKDOWN OF INCOME SOURCES

Subsidy Housing Affordable Hous-ing

Infrastructure Programme Management

Money Market Invest.

Other

Actual 2015/03 5925 29481 655 24294 14670 8896

Budget 2015/03 7764 13977 1793 44138 17063 14900

5,000

15,000

25,000

35,000

45,000

Am

ount

in R

'000

38

ABRIDGED INCOME STATEMENTMARCH 2015

Budget Actual % - Achieved 2014

R'000Revenue from exchange transactions 87 555 78 298 89% 70 049 Other income 14 900 5 623 38% 5 055 Net surplus before administration expenses 102 455 83 921 75 104 Administration expenses -104 948 -70 963 68% -65 311 Operating surplus -2 493 12 958 9 793 Impairment of assets 4 402 -2 353 -53% -2 962

1 909 10 605 6 831 Share of profit of associate company - -79 100% 347 Surplus / (deficit) for the year 1 909 10 526 551% 7 178

39

ABRIDGED BALANCE SHEETMARCH 2015

Budget Actual % - Achieved 2014

R'000ASSETSCurrent Assets 600 990 481 286 80% 646 334 Non-current Assets 13 182 100 717 764% 26 553 Total Assets 614 172 582 003 672 887

EQUITY & LIABILITIESCurrent Liabilities 154 944 135 619 88% 184 716 Non-current Liabilities 32 824 8 000 24% 60 313 Net Assets 426 404 438 384 103% 427 858 Total Net Assets and Liabilities 614 172 582 003 672 887

40

ABRIDGED CASH FLOW – MARCH 2015

41

FINANCIAL RATIOS

• Net working capital (R’000) R 345,667

• Current ratio 3.55 : 1

• Debt equity ratio 0.11 : 1

• Return on asset ratio 12.37%

• Interest cover ratio 2.94

• Cost to income ratio 91%

NURCHA’s financial position remains sound as reflected in a positive net working capital of R345 million, and the current ratio of 3.55 : 1 demonstrates that the company has sufficient current assets to meet its current liabilities.

A return on asset ratio of 12,37% is reasonable. The cost to income ratio is high and that is to be expected for a DFI

42

CONCLUSION: 2015/16 FOCUS AREAS

• Consolidation and ensure sustainable results in line with MTSF targets,- Generation of business volumes and keeping market and stakeholders engaged

across provinces,

- Improve and sustain credibility of our systems and services to stakeholders, clients and shareholders; i.e. performance to desired standards, improved financial reporting and supply chain management

- Operational presence in provinces in line with business activity and keep the market and stakeholders engaged.

- Strengthen skills base in key areas of the business.

• Intensify activities on the DFI consolidation process and risk mitigations during the transitional period.

43

BUCKET ERADICATION PROGRAMMEGALLERY

44

DUVHA PARK, WITBANK

Where: Witbank, Mpumalanga ProvinceNumber of Units: 128Average Size: 48m2

Loan Value: R 33.1 millionProject Value: R 191.6 millionAverage Selling Price: R 350 000.00

45

LILYFIELD PROJECT, MIDRAND

Where: Midrand, Gauteng ProvinceNumber of Units: 198Average Size: 50m2


46

EMPANGENI SECTIONAL TITLE UNITS

Where: Empangeni, KwaZulu-NatalNumber of Units: 51Average Size: 55m2


47

THANK YOU

presentation to the portfolio committee on human settlements annual performance report 2014/2015 14...

Documents

housing finance

affordable housing programme

subsidy housing programme

business performance

nurcha mandate nurcha

moderate income housing

sustainable flow of

commercial lenders