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







6. Properties

7. Challenges


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







6. Properties

7. Challenges


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


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

12


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.







6. Properties

7. Challenges


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







6. Properties

7. Challenges


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)


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


women-owned businessesR 398 430 000 R 474 193 759 Yes


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


Objectives (2)

29

Objective 2: Building sefa's financial sustainability


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.


Objectives (3)

30

Objective 3: Improve turnaround time


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.


Objectives (4)

31

Objective: 4: Alignment, Development and Motivation of

Human Capital


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


Objectives (5)







6. Properties

7. Challenges


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







6. Properties

7. Challenges


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.







6. Properties

7. Challenges


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







6. Properties

7. Challenges


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

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