Annual Report 2015/16 Presentation - Amazon Web...
Transcript of Annual Report 2015/16 Presentation - Amazon Web...
Annual Report 2015/16 Presentation
12 October 2016
Presentation outline
1. Economic Environment
2. Operational performance
3. Development impact
4. Performance against predetermined objectives
5. Financial performance
6. Properties
7. Challenges
8. 2016/17 focus areas
2
Presentation outline
1. Economic Environment
2. Operational performance
3. Development impact
4. Performance against predetermined objectives
5. Financial performance
6. Properties
7. Challenges
8. 2016/17 focus areas
3
Impact of the Economy on SMMEs & Co-operatives
4
• Reduced business confidence results in lower
investment activity
• Increased unemployment compels people to
seek self-employment (entrepreneurship out of
necessity)
• Rising costs - Inability of SMMEs & Co-
operatives to pass inflationary pressures to
consumers
• Weak demand conditions result in longer
payment lead times (cash flow constraints) &
reduced market access opportunities
• Increased competition due to tight market
conditions and cheaper imports
• Weaker exchange rates increased the cost of
imported capital goods
• Cut back on enterprise development initiatives
by larger corporates
• Drought impacts negatively on rural economies
& agricultural sector output
• Reduced business opportunities from
government in light of tighter fiscal stance.
-3
-1
1
3
5
Q1 Q22010
Q3 Q4|
Q1 Q22011
Q3 Q4|
Q1 Q22012
Q3 Q4|
Q1 Q22013
Q3 Q4|
Q1 Q22014
Q3 Q4|
Q1 Q22015
Q3 Q4|
Q1
% C
ha
ng
e (
q-o
-q)
*
Gross Domestic Product (GDP)
Source: IDC, compiled from SARB data
Presentation outline
1. Economic Environment
2. Operational performance
3. Development impact
4. Performance against predetermined objectives
5. Financial performance
6. Properties
7. Challenges
8. 2016/17 focus areas
5
6
Performance highlights
R923 mDisbursed to
53 063 black
owned
businesses
75 670Jobs
facilitated
R1.1bnFunding
approvals
R1.2bnTotal loan
disbursement
to SMMEs &
Co-operatives
R739 mApproved to the
productive
sector of the
economy
R275 mDisbursed to 13
111 youth
owned
businesses
R474 mDisbursed to 52
988 women-
owned
businesses
54 825Number of
businesses
financed
Funding activities
440
1 065 1 0091 109
198
822
1 2941 168
2013 2014 2015 2016
Approvals Disbursements
7
sefa has increased funding approvals, playing its counter cyclical role in the economy
Approvals increased 9.9% year on year to a record level of R1.1 billion in 2015/16.
Disbursements declined by 9.7% year on year to R1.16 billion.
Since inception sefa disbursed R3,4 billion into the economy
R’million
Funding activities
8
• sefa makes use of a variety of distribution channels
• During 2016 Direct Lending represented 36% of the overall approvals. The approval value
declined due to tough economic environment as well as an deliberate tightening of credit
following the high impairment levels.
• SME Wholesale is reflective of new innovative approaches being followed
• Approvals to co-operatives increased by 45% from the previous year.
• Support to the informal sector also increased by 120% during the current reporting year.
407383
58
130106
20
Direct SME
Lending
SME Wholesale Co-operatives Agri-Business Informal sector
(micro)
KCG
Approvals per Distribution Channel
(R'm)
2016
Funding activities
9
Disbursements to co-operatives increased from R2 million
(2014/15) to R37 million (2015/16) in replicable projects
(funding approvals = R58 million)
During the year under review, sefa laid the foundation for growth of local
communities by increasing the co-operatives loan book.
sefa developed financing package programmes in partnership with
municipalities and/ or with other strategic partners to support co-
operatives.
sefa focusses on sectors such as agriculture and waste recycling in its co-
operative development efforts. However, in the financial year we funded co-
operatives in clothing manufacturing as well as the provision of municipal
services.
A few case studies are discussed in the next slides.
Increased support to co-operatives
• sefa approved R9.6 million loans for 2 incubation sites
involved in cash crop production (Indalo & Lukhanji Secondary
Co-operatives to cover operational and capital expenditure
• 13 Primary Co-operatives are members of the 2 Secondary
Co-operatives
• Incucop is a Technical Partner that facilitates market access for
the Secondary Co-operatives and will be responsible for the
repayment of sefa loans from the proceeds of the produce
• An incubation entity called Incucop (Pty) Ltd (Incucop) is a
CDC together with Dicla strategic partnership that facilitates
the establishment of Agro Clustering Incubation Models in the
CHDM area in the Eastern Cape.
• CDC plays an oversight role for implementation of the project
and other similar projects in CHDM.
Key information
• Location: Chris Hani District Municipality
(CHDM)
• Jobs created: 32
• Funding amount: R9.6 million
• Key Partners: Chris Hani Co-operative
Development Centre; Incucop (technical
support), 2 Secondary Co-operatives
(Incubators) supporting 13 Primary Co-
operatives, off-take by Pick n Pay and Spar
Chris Hani Co-operative Development Centre
Funding activitiesIncreased support to co-operatives
• A group of co-operatives in Mpumalanga and Limpopo
provinces are participating in broiler production activities for
commercial purposes. The Department of Agriculture provided
a R3.5 million grant in 2010 to build broiler production houses
on the land reform farms that the Co-operatives were leasing.
These projects experienced challenges due to lack of technical
experience, high input costs and a lack of markets.
• Super Grand (Pty) Ltd, a 100% black-owned investment
holding company that manages and operates agricultural assets,
partnered with these co-operatives in 2013. It provided
technical support and inputs to run these projects successfully
and create market access.
• These projects have proved to be very successful. The co-
operatives approached sefa for funding to expand their
operations. During the past financial year, sefa approved R20
million in funding of four Primary co-operatives.
• sefa has entered into a partnership agreement with Super
Grand to serve as a technical partner in the project.
Key information
• Location: Mpumalanga and Limpopo
• Primary Co-operatives supported: 4
• Jobs created: 27 created
• Funding amount approved: R20 million
Super Grand Supports Co-operatives
11
Funding activitiesIncreased support to co-operatives
KWE Cooperative• The co-operative was established in 2010 and has been
operating for over 5 years in Thaba Nchu.
• The business was appointed by SASSA in partnership with
Department of Social Development for production of
school uniform for orphaned & vulnerable children in Free
State & Northern Cape.
• The co-operative was referred to sefa by the Free State
Development Corporation.
• sefa funding was used to buy material of school uniform
hampers to be supplied to various schools within the Free
State and for labour and transportation costs.
• The co-operative is 100% black owned, 80% women and
20% youth owned.
• The business was able to successfully deliver on their
contracts with all the SASSA offices in various towns
across Free State, and has potential to secure more
orders.
Key information
• Location: Thaba Nchu,
Free State
• Job creation: 65 new jobs
• Funding amount: R475 690
• Sector: School clothing
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Funding activitiesIncreased support to co-operatives
Funding activities
13
Funding approvals to the informal micro-enterprises increased
from R48 million (2014/15) to R106 million (2015/16)
Direct Lending to fruit traders – sefa developed a direct lending channel for traders at
the Durban and Mangaung Fresh Produce Markets and approved micro-enterprise
partnerships with corporates in the retail sector and an international organisation. An
IT-based lending platform has been developed to provide quick and affordable credit to
informal business buyers at the markets.
Provincial expansion - Inroads into previously unsupported provinces such as Northern
Cape, Western Cape and Eastern Cape were made through relationships with Northern
Cape SMME Trust, Siza Capital (Pty) Ltd, Y2K10 (Pty) Ltd and AJ Containers.
Value chain linkages - sefa’s partnership with Siza Capital (Pty) Ltd enabled the
institution to reach a small and almost forgotten town of Pofadder in the Northern
Cape. There are hopes of catalysing strong and sustainable economic activity in
conjunction with the huge solar projects of Abengoa/Kaxu Solar One.
Additional support was provided to the two largest sefa micro finance intermediaries
(MFI) partners, the Small Enterprise Foundation and Phakamani Foundation.
New approaches to fund the informal economy
14
Key information• Location: Durban and
Mangaung
• Jobs maintained: 11 600 over 3 years
• Funding amount: R20m for loans and
R4.5m for
establishment costs
• Key Partners: Durban & Mangaung
Fresh Produce
Markets,
Traders Associations,
Freshmark Systems
Project Description
sefa approved a R24.5m pilot project for the provision of
affordable credit to the informal traders of the Fresh Produce
Markets (FPM) of Durban and Mangaung.
The management of the two pilot markets agreed to assist sefa
with the implementation and facilitation of this project.
The project in essence entails the provision of affordable credit
to the informal traders.
• Weekly loans between R500 and R10 000 will be made
available to successful applicants.
• As long as the client repays the loan on the set date, that
same amount will be made available again on a revolving
basis, for a six-month period.
Traders/successful applicants will only be able to purchase fresh
produce with the loan from sefa, because the money will be
disbursed directly to the buyer’s market card. If repayments are
not being made, the buyer’s card will be blocked immediately,
thus minimising the risk of non-payments.
After a successful pilot, informal sector operators will be enabled
access over R3 billion worth of turnover from the Fresh Produce
Markets around South Africa
Durban/Mangaung Fresh Produce Market Pilot Project
Funding activitiesNew approaches to fund the informal economy
Siza Capital• The facility provides aspiring entrepreneurs with short-
term business start -up credit in form of production
equipment, tools, raw materials and trading stock thereby
giving them an opportunity to experience
entrepreneurship first hand and to horn and sharpen
essential business skills.
• Siza Capital will link the micro-entrepreneurs to business
skills training and mentorship opportunities and support in
developing viable business plans
• Micro entrepreneurs will be linked to appropriate financial
and communication technology to bridge the information
gap and to reduce business transactional costs.
• 12, 430 informal businesses owners and their families will
benefit directly from the credit programme in 5 years.
• All the above beneficiaries will be in Soweto townships.
• Equipment loans attract very low interest rates of not
more than 10% per annum
Key information• Location: Soweto focusing on
Freedom Park, Orange Farm and
the Orlando
• Jobs maintained: 12,430
enterprises by 2020
• Funding amount: R11m for loans
15
Funding activitiesNew approaches to fund the informal economy
Mr Nkhwashu obtained a loan from SizaCapital to support his wooden pallets manufacturing business in Soweto
16
Funding activitiesThe Credit Indemnity Scheme
New applications of the Khula Credit Guarantee
KCG has created appetite of the scheme with non-banking financial
institutions and these included micro-enterprise funding companies and
private corporates.
The following guarantees were approved during the year under review:
Portfolio Guarantees - R20 million was approved for Real People micro-
enterprise Funding;
Supplier Credit Guarantee - R30 million was approved for Macsteel and
this was piloted at R10 million. The approved credit guarantees approved
during the year were R12 million and a total of R10.2 million was taken
up.
Presentation outline
1. Economic Environment
2. Operational performance
3. Development impact
4. Performance against predetermined objectives
5. Financial performance
6. Properties
7. Challenges
8. 2016/17 focus areas
17
Development impact
28 362
46 407
68 724
54 833
19 853
46 402
60 169
75 670
2013 2014 2015 2016
Enterprises Funded Jobs created
18
sefa facilitated an increasing number of jobs since inception. An acceleration in jobs
recorded in the year under review is an indication that at least most jobs are being
maintained despite the economic headwinds being experienced.
The number of enterprises funded have also been increasing, however, the impact of the
economic slump is evident in recent times.
19
Development impact (Spatial)(% of 2015/16 disbursements)
6%
5%
31%
11%
15%
12%
2%
7%
10%
sefa investments are situated across
South Africa, providing local jobs and
supporting local economies.
47% of disbursements went to
SMMEs & co-operatives in targeted
provinces.
Of the priority provinces, the Limpopo
and Mpumalanga are the largest
beneficiaries.
sefa is implementing a co-location
geographic expansion plan to
improve its accessibility.
Development impact (Targeted Groups)(% of disbursements)
2013 2014 2015 2016
Youth-owned
enterprises16% 21% 23% 24% R275m
Women-ownedbusinesses
39% 49% 37% 41% R474m
Black-owned businesses 78% 81% 74% 79% R923m
Facilities less than R250K 45% 34% 21% 24% R281m
Enterprises owned by
People Living with
Disabilities
Not measured 0% 1% R8.5m
20
Support to black industrialists (National Gazelle)
21
• Ordained Trading (Pty) Ltd is a 100% youth and black owned
business by Mr Bhekenkosini Mkhondo.
• The client is part of the National Gazelle programme, an
initiative of the Dept. of Small Business Development.
• Ordained Trading was awarded a contract of R27,497,842 over
a 3 year period. by Arcelor Mittal South Africa to design,
construct and commission an abatement plant for VOC (volatile
organic compound) emissions. This reduces the plant emissions
to an acceptable environmental level. This project took place at
the Vanderbijl Park plant, under the Works, Coke and Chemicals
Department.
• A sefa funding of R4, 8 million was utilised to purchase
electrical equipment, material and payment of salaries.
• To date the project has been successfully completed with the
assistance of sefa funding. 20 jobs were created and maintained.
KEY INFORMATION• Location: Gauteng,
Centurion
• Jobs: 20
• Funding amount:: R4, 8 million
• Sector: Engineering
Ordained Trading (Pty) Ltd
Development impact
Sihlalo Trading cc
• Entrepreneurs living with disabilities need support toensure enterprise sustainability and growth.
• Sihlalo Trading CC, which trades as Webster Butcher y, isa start-up business founded by Mr Webster Cele. Theentrepreneur registered the company in 2001, but ithad been inactive due to an incident that led topermanent damage to Mr Cele’s spinal cord.
• The business supplies a large retail group with beef andlamb carcasses.
• Mr Cele approached sefa after battling to obtainfunding from other financial institutions. sefa assistedhim with a term loan facility of R1 677 570 to fund start-up operating costs and working capital requirements.
• A specialist mentor was appointed to assist Mr Cele inmeeting his objectives.
• The sefa loan enabled Mr Cele to create three jobs, andhe is hoping to increase this when he realises his plan toopen up a meat-processing facility to vertically integratehis business.
Key information• Location: Glencoe
KwaZulu Natal• Job creation: 3 jobs• Funding amount: R 1 677 570• Sector: Wholesale Trade
22
Support to entrepreneurs living with disabilitiesDevelopment impact
Proactive Milling Solutions cc• Proact mining solutions cc herein referred to as “Proact” is a
100% female owned company that was registered in 2010.
• Proact 100% owned by Mashudu Caroline Mulaudzi whoholds a degree in Bachelor of earth science in mining andenvironmental Geology (BESMEG) as well as BSc (Hons)Geology degree from University of Witwatersrand.
• The company specialises in manufacturing and supplyingrespective industries with women protective clothing (PPE)and hygiene products.
• Sectors targeted includes women in mining, women in construction, women in energy sectors, women in defence force, women in policing forces as well as women that work for public works across South Africa.
• With sefa’s help she managed to create 17 new jobs.
• The funds were utilized to purchase few office equipment’s,small sewing machines, inventory for samples and businessoverheads.
Key information• Location: Gauteng• Job creation: 17 jobs• Funding amount: R 1 945 511• Sector: Clothing
23
Backing women entrepreneursDevelopment impact
Mokete Farming Co-operative Limited
24
• Mokete Farming Co-operative Limited was registered with
CIPC in 2013 by five (5) siblings of Mokete family and is
100% youth owned. The co –operative was established for
the purposes of agriculture and farming related activities.
• Business Description:Agriculture.
• The co-operative learnt about sefa through LEDA.
• A loan amounting to R308 433 was approved for the
purchase of production inputs and the provision of working
capital in order to plant white maize on a 40 hectare in
Veeplaas.
• The co-operative is 100% owned by youth and is operating at
Veeplaas situated at Makhudu thamaga local Municipality in
the greater Sekhukhune District. The project created 15
permanent jobs.
Key information
• Location: Limpopo, Veeplas
• Job creation: 15 jobs
• Funding amount: R308 433
• Sector: Agriculture
Investing with youthDevelopment impact
Support inclusive models for the new economy
25
Dr Kenneth Kaunda District Municipality Waste Recycling Project
• sefa and the Dr Kenneth Kaunda District Municipality entered into
a waste recycling joint venture to benefit eight recycling co-
operatives operating in four local municipalities in the district.
• The eight Primary co-operatives have established a Secondary co-
operative which, will own and operate the bailing plant. Fifty- six
Primary co-operatives will collect and sort the waste from different
wards and supply the eight Primary co-operatives for bailing. The
project will create 320 jobs. The project is 100% black owned, and
shareholders include women and the youth.
• sefa approved R25 million in business loans to establish a waste
recycling plant in the municipality. The municipality committed R6.2
million in funding to finance the building renovation costs.
• The project demonstrates that municipalities and government
agencies can successfully work together to empower local
communities and improve their livelihoods by creating jobs.
Key information
• Location: Dr Kenneth
Kaunda District
Municipality, North West
• Primary Co-operatives
supported: 64
• Jobs created: 320 created
• Funding amount approved:
R25 million
Development impact
Presentation outline
1. Economic Environment
2. Operational performance
3. Development impact
4. Performance against predetermined objectives
5. Financial performance
6. Properties
7. Challenges
8. 2016/17 focus areas
26
27
Performance Against Predetermined
Objectives (1)
Objective 1: Access to finance by SMMEs and developmental
impact
KPI Target Actual Achieved
Total Approvals through Wholesale
and Direct Lending portfolios R 1 267 124 790 R 1 108 653 334 No
Under achievement in
approvals due to tough
economic environment,
lack of bankable quality
applications and slow
down in the Direct
Lending loan book. The
pilot Credit Guarantee
scheme took longer than
anticipated.
Total Approvals via Direct LendingR 540 600 000 R 407 288 800 No
Total Approvals via Wholesale
Lending R 726 524 790 R 701 364 534 No
Total Disbursements to SMMEs via all
loan product channels R 885 400 000 R 1 168 164 837 Yes
Overachievement is linked
to targeted marketing and
outreach campaigns
particularly to our
targeted groups.
Approvals in terms of productive to
industrial sectors identified in IPAP
and NGP 20%R 253 424 958 R 738 658 237 Yes
Number of SMMEs financed 41 798 54 833 Yes
Number of Jobs facilitated67 912 75 670 Yes
28
Objective 1: Access to finance by SMMEs and developmental
impact (continue)
KPI Target Actual Achieved
Facilities disbursed must be
youth-owned - 18-35 years old R 265 620 000 R 274 787 197 Yes
Overachievement is linked to
targeted marketing and outreach
campaigns particularly to our
targeted groups. Furthermore, most
SMMEs and Co-operatives
supported are in the informal and
microenterprise sector where the
cost of job creation is lower and
the loan amount averages R4 500
per SMME/ Co-operative.
Facilities disbursed to
enterprises in rural and peri-
urban areas
R 398 430 000 R 549 851 015 Yes
Facilities disbursed must be
women-owned businessesR 398 430 000 R 474 193 759 Yes
Facilities disbursed must be
black-owned businesses R 619 780 000 R 922 566 767 Yes
Facilities less than R250K
disbursed to end-usersR 177 080 000 R 280 661 969 Yes
Facilities to People Living with
DisabilitiesR 17 706 748 R 8 512 633 No
Under-achievement is due to a lack
of application from entrepreneurs
living with disability.
Level of Customer Satisfaction 60% 77% Yes
Over-achievement is due to the
strengthening of the customer
management processes (policy,
processes and systems
Performance Against Predetermined
Objectives (2)
29
Objective 2: Building sefa's financial sustainability
KPI Target Actual Achieved
Cost to income ratio (excluding
Impairments & finance charges and
the effects of the grant subsidy)
157% 130% Yes
Over-achievement is due to cost
containment programme and increase
collection on the sefa property
portfolio.
Accumulated Impairment provision
as a percentage of total loans and
advances –Wholesale SME
17.50% 23% NoUnder-achievement in this area
underpinned by tough operating
economic conditions. Most start-ups
face high failure rate of +/- 70%.
Collections book too faced non or
delayed payments, thus negatively
impacting on the cash-flow and
overall business performance of the
sefa funded clients. Three
Intermediaries also had impaired loan
books.
Accumulated Impairments
provision as a percentage of total
loans and advances – Wholesale
Microfinance
10.90% 24% No
Accumulated Impairments
provision as a percentage of total
loans and advances – Direct
Lending
39% 67% No
Growth in interest and admin fees
generated from loans76% 41% No
Under-achieved is due to the reversal
of interest income on impaired loans.
Performance Against Predetermined
Objectives (3)
30
Objective 3: Improve turnaround time
KPI Target Actual Achieved
Number of days bridging
loans10 25 No Low quality of applications received by
sefa. The figures include waiting time
for clients to respond. Internal capacity
constraintsNumber of days for terms
loans 20 36 No
Number of days for
wholesale application50 27 Yes
Overachievement as a result of
stronger WL application and due
diligence procedure.
Uptime/availability of critical
business information systems99.90% 99.9% Yes
Enhancement to sefaLas and
the development of portfolio
management system facilitate
better reporting on the
quality of the sefa loan book.
100% 100% Yes
Proactive monitoring, effective & timely
maintenance of all IT systems helped.
Performance Against Predetermined
Objectives (4)
31
Objective: 4: Alignment, Development and Motivation of
Human Capital
KPI Target Actual Achieved
Labour Turn Over Rate (LTO) of
critical/ strategic positions7.0% 5.5% Yes
Achievement is linked to maturity of the organisational Human Capital policies and procedures, building and strengthening of the organisational culture and team cohesion and implementation of the performance management system.
80% of Staff have Individual
Development Plans (IDPs)
received and implemented
80.0% 109.0% Yes
Formal Performance management
assessments of all staff conducted
by 31 March 2016.
100.0% 100.0% Yes
Performance Against Predetermined
Objectives (5)
Presentation outline
1. Economic Environment
2. Operational performance
3. Development impact
4. Performance against predetermined objectives
5. Financial performance
6. Properties
7. Challenges
8. 2016/17 focus areas
32
Corporate structure
33
Subsidiaries
Joint Operations
Associates Joint Ventures
sefa BotalaGreen Fund
Identity Development
Fund Partnership
Khula Akwandze Fund (Pty) Ltd
Khula Institutional Support Services
NPC
Khula Business Premises (Pty) Ltd
Khula Credit Guarantee (SOC)
Ltd
Small Business Growth Fund
Business Partners Ltd
The Utho SME Infrastructure
Fund
Anglo American sefa Mining Fund (Pty) Ltd
Cytobix (Pty) Ltd trading as Godisa Supplier Development Fund
sefa Awethu Youth Fund (Pty) Ltd
Corporate structure (details)
Name Objective PartnersCurrent
interest (%)
Investment
date
Current
Exposure
Botala Green FacilityTo fund the SMMEs using short-term financing instruments in
the Green Economy Sector
DBSA
Dept
Environmental
Affairs
50% 2016 R12 m
Identity Development Fund
Partnership
IDF provides a combination of loan and equity funding targeted
at black women and youth-owned business enterprises and
focuses on start-up and early expansion.
100% 2007 R44.5 m
Khula Akwandze Fund
The purpose of the Fund is to finance small and medium scale
sugar-cane growers in the Malelane and Nkomati areas in the
Mpumalanga Province. Specific financing needs catered for
small scale sugar-cane growers
Akwandze
Agricultural
Finance
75% 2007 R35.8 m
Khula Business Premises Investment Property Holding Company 100% 2003 R 45.5 m
Khula Credit Guarantee
Khula Credit Guarantee (KCG) was established with the
purpose of providing commercial banks and other financial
institutions with a Credit Indemnity Scheme (Scheme)/partial
credit guarantee as additional collateral cover.
100% 1996 R55m
Khula Institutional Support
Services NPCTo advance monies received by donors to entrepreneurs, and
for capacity building and mentorship100% 1997 R38m
Small Business Growth Fund Vehicle to fund SMMEs directly
Fabvest Investment
Holdings
Sisonke
81% 2009 R13m
34
Corporate structure (details)
Name Objective PartnersCurrent
interest (%)
Investment
date
Current
Exposure
Business Partners Legacy investment in SME financing
Remgro Limited
Old Mutual
Barclays
Others
21% Legacy R98,6m
Utho Infrastructure FundThe fund provides support to BEE SMEs in infrastructure
development, construction relatedindustries and
property development.
IDC
Utho Capital49% 2010 R19.7m
Anglo American sefa Mining
Fund
The fund provides equity and/or
debt instruments, with equity stakes taken not
exceeding 49% of the issued share capital of investees.
Anglo American 50% 2002 R70m
Godisa Supplier
Development FundSupply chain financing to SMMEs
Anglo American
Zimele
Transnet
50% 2012 R310k
sefa Awethu Youth Fund
The Fund is utilised as a vehicle to harness
entrepreneurial talent in under-resourced communities
with a main focus on youth in townships within the
Gauteng
Awethu Projects 50% 2014 R60 m
35
36
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
2016 2015 2016 2015
R'000 R'000 R'000 R'000
Interest and dividend income 137,476 106,303 121,364 91,090
Fee income from loans and indemnities 12,927 17,439 12,173 16,302
Interest expense on shareholder's loan (29,751) (22,455) (29,751) (22,455)
Net interest and dividend income 120,652 101,287 103,786 84,937
Movement on impairments and bad debt provisions (379,868) (220,326) (340,998) (225,902)
Net interest and dividend income after impairments (259,216) (119,039) (237,212) (140,965)
Investment property rental income 29,580 33,484 29,580 33,484
Investment property expenses (43,151) (47,962) (43,151) (47,962)
Net fair value (loss)/gain on investment properties 39,842 (13,057) 39,842 (13,057)
(232,945) (146,574) (210,941) (168,500)
Other income 15,446 10,486 19,144 10,442
Personnel expenses (155,802) (122,303) (155,592) (122,300)
Other operating expenses (95,185) (94,613) (78,036) (65,973)
Operating loss (468,486) (353,004) (425,425) (346,331)
Profit from equity accounted investments, net of tax 39,417 31,235 - -
Profit/(loss) on disposal of investment 42,880 - - -
Loss before tax (386,189) (321,769) (425,425) (346,331)
Income tax credit/(charge) 7,756 (29,662) - -
Loss and total comprehensive loss for the year (378,433) (351,431) (425,425) (346,331) Loss and total comprehensive loss attributable to:
Owners of the parent (378,433) (350,841)
Non-controlling interest (I/S) - (590)
Total comprehensive loss and loss for the year (378,433) (351,431)
Government Grant 406,397 283,844
Profit/loss after government grant 27,964 (67,587)
GROUP COMPANY
37
Sources of Revenue - R’000
• Revenue from loans and receivables remain the primary driver of income and saw an increase of 55% from 2015 to 2016.
• Other key sources of income include Rental Income and Interest from cash and cash equivalents.
-
20 000
40 000
60 000
80 000
100 000
120 000
Interestreceived on
cash andcash
equivalents
Interestreceived onloans and
advances toclients
Otherinterestearned
RentalIncome
Fee income Indemnitypremiums
earned
Bad debtsrecovered
Managementfee - Related
parties
Other sundryincome
2015 2016
38
Sources of Cash Funding – R’m
0
100
200
300
400
500
600
700
800
2014 2015 2016
Government grant: MTEF Government grant: ECSP
Collections: Loans, advances & investments Collections on: Properties
• Highest allocation of government grant
in 2016., driven by ECSP grant which
has come to an end in 2016
39
R’m 2014 2015 2016
Collections on: Loans, advances and investments 123 258 331
Collections on: Properties 36 33 30
Government grant: MTEF 181 208 202
Government grant: ECSP 50 76 204
IDC Loan - - -
Sources of Cash Funding
40
Revenue Mix
15%
17%
54%
6%
3%
2%
3%
Interest received on cash and cash equivalentsRental IncomeInterest received on loans and advances to clientsFee incomeBad debts recoveredManagement fee - Related partiesOther sundry income
41
-
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
Movement onimpairments and
bad debtprovisions
Investmentproperty expenses
Personnelexpenses
Other operatingexpenses
2015 2016
Expenditure - R’000
• Impairments
increased significantly
year on year, mostly
driven by Direct
Lending operations.
• Personnel costs
increased in line with
the Gearing for
Growth strategy –
and was driven by
filling up of vacancies
and recovery of
salaries for IDC staff
• Operating expenses
remained stable over
the last 3 years
42
2016 2015 2016 2015
R'000 R'000 R'000 R'000
ASSETS NOTE
Cash and cash equivalents 4. 551,667 534,199 420,048 396,180
Trade and other receivables 5. 36,657 34,586 32,304 30,579
Current tax asset 33. - 37 - -
Loans and advances 6. 562,349 652,772 485,644 553,985
Investment properties held-for-sale 14. 13,621 17,420 207,806 17,420
Equipment, furniture and other tangible assets 15. 9,012 10,833 8,758 10,111
Intangible assets 16. 1,090 89 1,089 84
Investment properties 13. 194,186 152,381 - 152,381
Investments 7. 7,799 7,350 7,799 7,350
Investments in subsidiaries 8. - - 123,432 151,805
Investments in joint operations 9. - - 3,978 -
Investments in associates 10. 721,613 679,087 126,929 115,509
Investments in joint ventures 11. 203,116 173,256 164,082 129,437
TOTAL ASSETS 2,301,110 2,262,010 1,581,869 1,564,841
EQUITY AND LIABILITIES
Share capital 17. 308,300 308,300 308,300 308,300
Shareholder Reserves 18.3 1,092,551 686,154 1,092,551 686,154
Retained earnings 308,125 686,558 (368,005) 57,421
Equity attributable to owners of the parent 1,708,976 1,681,012 1,032,846 1,051,875
Non-controlling interest - 5,662 - -
Total equity 1,708,976 1,686,674 1,032,846 1,051,875
Liabilities
Trade and other payables 19. 131,174 133,761 119,229 112,901
Tax payable 33. 188 - - -
Deferred tax liability 12. 21,427 29,380 - -
Outstanding claims reserve 20. 6,686 6,881 - -
Unearned risk reserve 20. 2,865 5,249 - -
Post-retirement medical l iability 21. 415 437 415 437
Shareholder's loans 18.2 429,379 399,628 429,379 399,628
Total liabilities 592,134 575,336 549,023 512,966
TOTAL EQUITY AND LIABILITIES 2,301,110 2,262,010 1,581,869 1,564,841
STATEMENTS OF FINANCIAL POSITIONAS AT 31 March 2016
GROUP COMPANY
• Cash holdings of sefa remain stable in the short term, but forecast to
deteriorate in the future if current challenges on collections of loans and
advances prevail.
• Accumulated Impairments as a percentage of loans and receivables
increased from 33% (2015) to 50% (2016), mostly driven by Direct
Lending operations.
• sefa property portfolio value increased year-on-year. In 2016 financial
year sefa forged strategic partnerships with the Gauteng Economic
Development Department to revitalize industrial parks in Gauteng.
• In 2016, sefa received a significantly higher allocation from the MTEF
budget amounting to R406 m compared to R283.8 million in previous
years. The ECSP budget though came to an end in 2017, and budget
allocation for the upcoming years will significantly decrease.
43
Notes on Financial Position
Presentation outline
1. Economic Environment
2. Operational performance
3. Development impact
4. Performance against predetermined objectives
5. Financial performance
6. Properties
7. Challenges
8. 2016/17 focus areas
44
45
Properties
Refurbishments and other efforts resulted in an increase in a net
fair value on properties of R39.8 million.
• The strategic objective of the sefa property portfolio is to preserve, maintain and
strategically utilise the properties to provide affordable infrastructure to SMMEs.
• The Portfolio at year end was valued at R207 million and it consisted of 53 properties.
• sefa forged a strategic partnership with the Gauteng Economic Development Department
to revitalise the industrial parks. The total value refurbishments done were valued at R37.1
million.
• sefa also aligned itself with the dti’s Programme on Industrial Property Revitilisation and an
application for grant funding of R165 million was submitted.
• The Gelvandale Shopping Centre (Nelson Mandela Bay, Port Elizabeth) suffered a fire
damage during 2013 and was reinstated at a cost of R6.5 million.
Presentation outline
1. Economic Environment
2. Operational performance
3. Development impact
4. Performance against predetermined objectives
5. Financial performance
6. Properties
7. Challenges
8. 2016/17 focus areas
46
47
• Maximise development impact (incl. people with disability)
• Reducing impairments & increasing collections
• Achieving financial sustainability
• Improve client orientation
• Optimise utilization of strategic intermediary partnerships
• Increase the uptake of Khula Credit Guarantee
• Improve returns on contract-based finance
• Turnaround of the property portfolio
• Developing internal human capacity
Main Challenges
Presentation outline
1. Economic Environment
2. Operational performance
3. Development impact
4. Performance against predetermined objectives
5. Financial performance
6. Properties
7. Challenges
8. 2016/17 focus areas
48
49
Strategic Risks(key focus areas)
Corporate Plan - Strategic objectives
Expand access to credit and
finance to finance informal and
micro-enterprise sector
Consolidate the Direct Lending
activities, improve the portfolio
quality and redirect investment
activities to proactively support
government policy initiatives
Facilitate a programme of
Wholesale Lending through
strategic partnerships
Increase the utilisation of
guarantee indemnity scheme. Grow the customer base
Build a financially sustainable
and viable sefa.
Improve financial ratios.
Build efficient and effective
processes and systems. Adopt best practice
governance..
Build a high performance
organisation.
Build one sefa culture.
Building and consolidating for growth
50
Corporate Plan - Strategic Programmes
51
Thank you
52