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business plan

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by

Hani Daghistani

on 12 April 2015

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Transcript of business plan

Chemical & Electricity Savings Plan
Value Engineering (Procurement, Prof essional Services)
Groundwater and aquifer recharge.
fire hydrants
toilet flushing
car washing
Environment preventive &non potable
Cooling factories and plants
Mining industry
refineries
industrial process
City Landscapes
Crops
Recreational parks
District cooling
public fountain



Thank you

-without bulk water cost and depreciation
TSE BU & O &M BU costs in 2013 shared with corporate, non-staff costs

All cost in SAR/m3 billed
Citywise OPEX unit cost : Riyadh, Jeddah and Makkah / Taif
Assumptions 2013 to 2020 – Riyadh, Jeddah & Makkah / Taif
2013 : As per budget
2014 to 2020 : Revenues based on NWC BOD KPIs in 2013 and 15 % growth YOY
Cost assumed at 0.61 SAR/m3 based on 2013 budget and 2013 BoD KPIs TSE volume
TSE Sales cost estimated at 1.80 SAR/m3 based on NWC BoD KPIs
Non-core Assumptions – TSE : 2013 to 2020
Others
TSE net Revenue
Total NWC Revenue
W & WW Connections
Tankers
Non-Domestic Water Sales
Domestic Water Sales
All cost in MSAR
Scenario – 1 (Without Tariff change)
Assumptions

No Tariff Change
TSE Net Revenue
Excluding government revenue
NWC Revenues : 2013 to 2020
M/T
Jeddah
Riyadh
Water supply Share
(2013 to 2020)
Million M3
Water Supply– Riyadh + Jeddah + Makkah / Taif
Water supply Share
(2013 to 2020)
Million M3
GW
Desalination
Water Supply & Billed – Riyadh + Jeddah + Makkah / Taif
Assumptions

ND Tariff Change in 2014 at 9 SAR /m3 for all ND customers (Government, commercial & industrial)
TSE Net Revenue
Excluding government revenue
Scenario – 2 (With ND Tariff change in 2014)
All cost in MSAR
NWC Operating Income - EBITDA : 2013 to 2020
Assumptions

ND Tariff Change in 2014 at 9 SAR /m3 for all ND customers (Government, commercial & industrial)
TSE Net Revenue
Excluding government revenue
Scenario – 2 (With ND Tariff change in 2014)
NWC Total Revenue
Additional revenue due to ND tariff revision in 2014
NWC Core Revenues without tariff Change
TSE Net Revenue
NWC OPEX (w/o bulk water)
All cost in MSAR
NWC Revenues & OPEX * : 2013 to 2020
Assumptions

ND Tariff Change in 2014 at 9 SAR /m3 for all ND customers (Government, commercial & industrial)
TSE Net Revenue
Excluding government revenue
Total NWC Revenue
TSE net Revenue
Others
W & WW Connections
Tankers
Domestic Water Sales
Scenario – 2 (With ND Tariff change in 2014)
All cost in MSAR
NWC Revenues (2013 to 2020)
Non-Domestic
Water Sales
Thank You
Share current Business Plan with all executives

Identify opportunities to reduce the gap between revenues & costs, involving all functions and CBUs

Address for cash flow

Agree on an updated plan based on the opportunities identified

Validate the Business Plan by BoD

Enforce the plan to the different functions in the organization and make them responsible and accountable for their scope
Next Steps
Next Steps
Cash Flow : 2013 to 2020
Operating Income : 2013 to 2020
RAS AL-KHAIR : 800,000 M3/DAY (2015)
RAS AL-KHAIR DESALINATION PLANT
RWS : 220,000 M3/DAY (2013)
WASIA – 2 : 300,000 M3 /DAY (2016)
HUNAI-NEW : 147,417 M3/DAY (2019)
GW PROGRAM IN RIYADH
All cost in SAR/m3 billed
OPEX – Without bulk water cost & Depreciation
Unit operational Cost – SAR/m3 billed
NWC operations currently limited to Riyadh, Jeddah and Makkah / Taif cities only


No OPEX reduction envisaged


No tariff revision considered


TSE revenues projected 15 % growth YOY based on 2013 BoD KPIs
General Assumptions
NWC Financial Outlook (2013 to 2020)

(Riyadh, Jeddah and Makkah / Taif)
Around 51 BSAR required until 2020
All cost in MSAR
NWC CAPEX : Riyadh, Jeddah and Makkah / Taif
37%
33%
10.6%
28%
Riyadh : Riyadh Water Supply not included
Only 20 % of CAPEX approved by MoWE / MoF
2013 CAPEX Allocation
2013 CAPEX
Non-OPEX Optimization
Focus Area
77% of Non-Staff OPEX
Note : The OPEX shares are based on 2013 budget
No Bulk water purchase cost considered
Depreciation not considered
2013 Non-Staff OPEX Details
(Riyadh + Jeddah + Makkah / Taif)
Total 3 Cities + Corporate Non-Staff OPEX = 48 % of Total OPEX
Customer Service
Call Centre
Customer Satisfaction
Leakage Reduction
Continuity of Supply
Water Quality Compliance
Environmental Compliance
OPEX optimization
Service Levels
Water
Water Supply
Water Network, Reservoirs & Pumping Stations
New Water Connections
Wastewater
Wastewater Treatment Volume
Wastewater Network & Lift Stations
New Wastewater Connections
Infrastructure
Population
Water Demand
New Recruitments & compensation
Growth
NWC OPEX Impact Drivers
2013 OPEX
2013 Revenues
Present NWC’s financial outlook for 2013 and for the period 2013-2020

Analyze revenues & costs breakdowns

Analyze growth drivers

Identify next steps
Objectives
Strategic Planning Division
February, 2013

NWC operations limited to Riyadh, Jeddah and Makkah / Taif cities only
RAS AL-KHAIR : 800,000 M3/DAY (2015)
RAS AL-KHAIR DESALINATION PLANT
RWS : 220,000 M3/DAY (2013)
WASIA – 2 : 300,000 M3 /DAY (2016)
HUNAI-NEW : 147,417 M3/DAY (2019)
GW PROGRAM IN RIYADH
Operational Growth 2012 to 2020
Scenario – 1 (Without Tariff change)
NWC Revenue without Tariff Change – Riyadh + Jeddah + Makkah / Taif
Hunai (147,000 m3/day)
Wasia (300,000 m3/day)
WW connections (37,000)
Reduction of tanker sales
RWS
WW connections (109,000)
Ras al-Khair (800,000 m3/day)
WW connections (76,000)
Revenue from Non-Domestic sales
With TSE
All costs in MSAR
Growth line insight
Core Revenues only
Needed Actions
Additional revenues from TSE & O & M
Proper metering
Proper customer category
Domestic WW conn. Fees revision
Water connection fees revision
Tanker Tariff revision
Revision of penalty fees structure
Scenario – 1 (Without Tariff change)
Mitigation
Additional revenues from TSE & O & M
Proper metering
Proper customer category
Domestic WW conn. Fees revision
Water connection fees revision
Tanker Tariff revision
Revision of penalty fees structure
All costs in MSAR
NWC Revenue without Tariff Change – Riyadh + Jeddah + Makkah / Taif
Set-up functional accountability on budget as well as BUs accountability

Set-up Shared Services to optimize support function costs

Budget to be based on unit cost per M3 as well as activity based costing for easy benchmarking for budget monitoring and controlling

Review different cost elements of OPEX to identify significant savings in Non-Staff OPEX

Setting up a value engineering team for reviewing RFPs, contracts, and suggest various optimization techniques, etc

During the selection of EPC bidders, NWC may consider the long term O & M cost as one of criteria

Revenues enhancement plan to be developed (SPVs…)
Preliminary Suggestions to reduce the gap
AA) Without Tariff change including TSE Net Revenue
NWC Financial Outlook : 2013 to 2020
Assumptions
No Tariff Change
TSE Net Revenue
Without bulk water cost
Government revenue with 5 % growth YOY
Scenario – 1 (Without Tariff change)
All cost in MSAR
NWC Cash Flow : 2013 to 2020
Scenario – 1 (Without Tariff change)
Assumptions
No Tariff Change
TSE Net Revenue
Without bulk water cost
Excluding government loan
All cost in MSAR
NWC Operating Income - EBITDA : 2013 to 2020
Scenario – 1 (Without Tariff change)
All costs in MSAR
NWC Revenue without Tariff Change – Riyadh + Jeddah + Makkah / Taif
Total NWC
Corporate
Makkah / Taif
Jeddah
Riyadh
-without bulk water cost and depreciation
TSE BU & O &M BU costs in 2013 shared with corporate, non-staff costs
All cost in MSAR
Citywise OPEX * : Riyadh, Jeddah and Makkah / Taif
Without bulk water cost
Depreciation not considered
All cost in MSAR
NWC OPEX * : Riyadh, Jeddah and Makkah / Taif
GROWTH FORECAST
2013 Non-Staff Details
Note : The OPEX shares are based on 2013 budget
No Bulk water purchase cost considered
Depreciation not considered
2013 OPEX Details
All cost in MSAR
2013 Total Revenue ~ 1,881 MSAR
2013 CBUs & others
Revenue Details
2013 Revenue Details
“TO BE A WORLD-CLASS WATER UTILITY COMPANY”
The transformation principles are all aiming at achieving Financial Viability and Operational Excellence
NWC Core Revenues
TSE Net Revenue
NWC OPEX (w/o bulk water)
NWC Total Revenue
All cost in MSAR
Scenario – 1 (Without Tariff change)
NWC Revenues & OPEX * : 2013 to 2020
+ 2,371
+ 451,000
Wastewater Connections
+ 7,400
Wastewater Network
+ 200,000
Water Connections
NWC Growth Drivers
Staff Level
After Phase 1 (2 years) NWC will look like this
The transformation is a key enabler to reduce the gap between revenues and costs
MTCBU
JCBU
RCBU
NWC Revenues
O & M Contracts
Utilities
Network Maintenance & Chemicals
Professional Services
Management Contract Fees
Office Supplies & Maintenance
G & A Expenses
IT Services
Rent / Insurance Expenses
G & A
Others
NWC Costs
M/T
Jeddah
Riyadh
Water billed Share
(2013 to 2020)
Million M3
Water Billed – Riyadh + Jeddah + Makkah / Taif
Tankers
Royal
Government
Industrial
Commercial
Domestic
TSE Revenue, 53, 3%
RAS AL-KHAIR : 800,000 M3/DAY (2015)
RAS AL-KHAIR DESALINATION PLANT
RWS : 220,000 M3/DAY (2013)
WASIA – 2 : 300,000 M3 /DAY (2016)
HUNAI-NEW : 147,417 M3/DAY (2019)
GW PROGRAM IN RIYADH
+ 1,891,000
+ 1,864,000
Billed Volume
Water Supply
+ 3,700
Water Network
+ 753,000
Ground Water
NWC Growth Drivers
RAS AL-KHAIR : 800,000 M3/DAY (2015)
RAS AL-KHAIR DESALINATION PLANT
RWS : 220,000 M3/DAY (2013)
WASIA – 2 : 300,000 M3 /DAY (2016)
HUNAI-NEW : 147,417 M3/DAY (2019)
GW PROGRAM IN RIYADH
+ 1,891,000
+ 1,864,000
Billed Volume
+ 3,700
Water Network
+ 753,000
Ground Water
Water Supply
NWC Growth Drivers
Assumptions
No Tariff Change
TSE Net Revenue
Without bulk water cost
Excluding government revenue
NWC Core Revenues
TSE Net Revenue
NWC OPEX (w/o bulk water)
NWC Total Revenue
All cost in MSAR
Scenario – 1 (Without Tariff change)
NWC Revenues & OPEX * : 2013 to 2020
Assumptions
No Tariff Change
TSE Net Revenue
Without bulk water cost
Excluding government revenue
NWC Core Revenues
TSE Net Revenue
NWC OPEX (w/o bulk water)
NWC Total Revenue
All cost in MSAR
Scenario – 1 (Without Tariff change)
NWC Revenues & OPEX * : 2013 to 2020
Thank you
Assumptions
No Tariff Change
TSE Net Revenue
Without bulk water cost
Excluding government loan
BB) with ND Tariff change revision in 2014 including TSE Net revenue
tankers
Assumptions
ND Tariff Change in 2014 at 9 SAR /m3 for all ND customers (Government, commercial & industrial)
TSE Net Revenue
Without bulk water cost
Government revenue with 5 % growth YOY
with TSE
NWC Financial
NWC Business Plan2013 to 2020
Present NWC’s financial outlook for 2013 and for the period 2013-2020

Analyze revenues & costs breakdowns

Analyze growth drivers

Identify next steps
Objectives
Present NWC’s financial outlook for 2013 and for the period 2013-2020

Analyze revenues & costs breakdowns

Analyze growth drivers

Identify next steps
Objectives
Present NWC’s financial outlook for 2013 and for the period 2013-2020

Analyze revenues & costs breakdowns

Analyze growth drivers

Identify next steps

Objectives
NWC Financial
Revenue 2013
2013 Revenue Details
2013 Total Revenue ~ 1,881 MSAR
All cost in MSAR
2013 Total Revenue ~ 1,881 MSAR
2013 CBUs & others
Revenue Details
2013 Revenue Details
2013 CBUs & others
Revenue Details
2013 Non-Staff OPEX Details (Riyadh + Jeddah + Makkah / Taif)
Objective
Present NWC’s financial outlook for 2013 and for the period 2013-2020

Analyze revenues & costs breakdown

Analyze growth drivers

Identify next steps

NWC OPEX Impact Drivers
OPEX 2013
2013 OPEX Details
Note : The OPEX shares are based on 2013 budget
No Bulk water purchase cost considered
Depreciation not considered
CAPEX 2013
2013 Non-Staff Details
Total 3 Cities + Corporate Non-Staff OPEX = 48 % of Total OPEX
Note : The OPEX shares are based on 2013 budget
No Bulk water purchase cost considered
Depreciation not considered
2013 CAPEX Allocation
Riyadh : Riyadh Water Supply not included
Only 20 % of CAPEX approved by MoWE / MoF
GROWTH FORECAST
2013 NWC revenue
2013 Total OPEX 3,588 MSAR
Staff level
(Excl outsourced employees
Per 1,000 Population served – Water : 0.70
Per 1,000 Connections : 11.45
Note: 2013 including previous years backlog
All cost in MSAR
NWC Revenues
Makkah / Taif
Take over
Including TSE revenues
Madinah And
Greater Dammam
Assumptions
Madinah and Greater Dammam taken over by NWC in 2013
All MoWE staff (100 %) in Madinah and Greater Dammam will be transferred to NWC
20 Technical experts will be hired to support EACH city newly taken over by NWC
Additional cost of 200 MSAR per year required for each city to cover enabling projects
100 MSAR per year for leakage detection
100 MSAR per year for existing infrastructure rehabilitation
Around 6 BSAR required as OPEX and CAPEX for next 5 years
Madinah
Strategic Planning - December 2012
Around 13 BSAR required as OPEX and CAPEX for next 5 years(2013 to 2017)
A) OPEX without Bulk water cost : Madinah and Greater Dammam
B) CAPEX without Bulk water cost : Madinah and Greater Dammam
Around 6.6 BSAR required as OPEX and CAPEX for next 5 years
Greater Dammam
Operating Income – EBITDA (Without tariff change)
*
Full transcript