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2019 Annual ReportPresentation to Parliamentary Committee on Small Business

Development

9th October 2019

Content1. sefa Overview

2. Loan Performance Overview

3. Development Impact – Spatial

4. Operational Performance

5. Financial Performance

6. Performance Against Pre-determined Objectives

2

sefa Overview

3

Vision, Mission & ValuesV

alu

es

Vis

ion

To be the leading catalyst for the development of sustainable Small Medium and Micro Enterprises and Co-operative

Enterprises through the provision of finance.

Mis

sio

n

To provide simple access to finance in an efficient and sustainable manner to SMMEs and Co-operatives throughout

South Africa by:

• providing loan and credit facilities to SMMEs and Co-operative enterprises;

• providing credit guarantees to SMMEs and Co-operative Enterprises;

• creating strategic partnerships with a range of institutions for sustainable SMME and Co-operative enterprise development and support;

• developing, through partnerships, innovative finance products, tools and channels to catalyse increased market

participation in the provision of affordable finance.

Ob

jecti

ve

• Increase access and provision of finance to SMMEs & Co-operatives and contribute towards job creation

• Build an effective and efficient sefa that is sustainable and performance driven

Kuyasheshwa!Passion for

developmentIntegrity Transparency Innovation

4

Lending Model

5

Operational footprint

6

• sefa has around 82 access

points throughout South

Africa.

• The 24 specialised access

points (via our strategic

funding partners) have not

been included on the map.

Main Business & Funding activities

• Direct Loans (asset finance, Term

Loans, Revolving loans & Bridging

loans, Purchase Order Product &

Amavulandlela Scheme for

entrepreneurs with disabilities)

• Wholesale Loans and Equity

(on-lending facilities, Funds & joint

ventures, Micro-finance, Structured

Finance Solutions)

• Business Support (Institutional

strengthening, technical support &

mentorship)

• Credit Guarantees (Credit

Indemnity guarantees & Supplier

guarantees)

• Rental Property

• SMMEs & co-operatives

that are unserved and

underserved by commercial

lenders

− women,

− black people,

− youth,

− Township enterprises,

− rural communities and

− people with disabilities.

Products Targeted

ownership groups

• Services (including retail,

wholesale, IT and tourism,

transport logistics);

• Manufacturing (including agro-processing);

• Agriculture (specifically land

reform beneficiaries and small-farming activities).

• Construction (small

construction contractors);

• Mining (specifically small

miners) and

• Green industries (renewable

energy, waste and recycling

management).

Sectoral

involvement

7

Strategic Differentiation

▪ High appetite for risk in exchange for high developmental impact

▪ Provision of capital and/or interest moratorium up to 12 months (for term loans)

▪ Financing SMMEs including start up businesses that are often perceived as high risk

▪ Addressing the financing gap for loans below R500k

▪ Provision of pre and post loan business support

▪ Provision of funding to entrepreneurs with adverse credit records provided they can demonstrate active

remedy of their indebtedness

▪ Lending not solely based on security backing

▪ Specific focus on targeted groups

▪ Own contribution dependent on entrepreneurs financial ability

8

Group Structure

Joint Operations Subsidiaries Associates Joint Ventures

sefa Botala Green FundIdentity Development

Fund Business Partners

Anglo American sefa

Mining Fund

Khula Akwandze FundUtho SME

Infrastructure Fund

Cytobix (Pty) Ltd

trading as Godisa

Supplier Development

FundKhula Business Premises

(Pty) Ltdsefa Awethu Youth

Fund (Pty) Ltd Khula Credit Guarantee

(SOC) Ltd

Khula Institutional

Support Services NPC

Small Business Growth

Fund

9

2018/19 Organisational Strategic Map

DEVELOPMENT IMPACT SUSTAINABLE ORGANISATION

A. Upscale and deepen its

development impact

B. Support client sustainability

C. Turnaround of under-performing portfolios to

reduce leakage

D. Move towards financial sustainability

1. Intensify leverage (financial & non-

financial) through eco-system partnerships & donors

2. Extend our geographic reach

and impact in under-served provinces

3. New innovative product development (blended financing)

4. Strategic market outreach

1. Implement integrated service

delivery model with Seda & IDC

2. Implement Small Business online service (call Centre, online SMME portal,

Small Business App, One Stop Shop SMME Centre)

3. Improve intermediary sustainability through

capitalization and business support

1. Work towards attaining a 100%

cost-to-income ratio

2. Income enhancement through review of pricing model, new income generating

products & fund management (such as SME Innovation Fund)

3. Cost containment measures (staff, shared services, new

regional delivery model and reduced lease costs)

4. Differentiated approach to funding

1. Reduce Loan impairments

through post loan mentorship support and other post loan support strategies.

2. Improved investment quality

through risk-based portfolio construction & cession of payments

3. Enhanced collections & pro-active monitoring

4. Phased sale of the property portfolio

5. Redevelopment of

properties with potential and ultimate exit

E. Improved efficiency & effectiveness

1. Programme reviews & improved product

design through EU technical assistance & IFC support

2. IT system automation

3. Human capital development

10

Loan Performance Overview

11

sefa’s Performance Journey

Approvals: R440

million

Disbursements: R198 million

Businesses financed: 28 362

Jobs facilitated: 19 853

2018

2017

2015

2013

Approvals: R1 billion

Disbursements: R1.3 billion



Approvals: R827

million

Disbursements: R1 076 million



Approvals: R446

million




2016

Approvals: R1.1 billion




2014

Approvals: R1.1

billion

Disbursements: R549 million



Approved an aggregate of R5,6 billion

in 7 years;

Disbursed a total of R6,8 billion;

Financed 359 575 businesses; &

Facilitated 401 112 jobs over the same

period.

R1.955 billion

From 2012 up to Mar 2019, sefa collected R1.955bn (excl. re-advancements made to MFIs & RFIs)

2019 Approvals: R703

million




12

Performance Highlights (2018/19)

R897 mDisbursed to black owned businesses

88 632Jobs facilitated

R703 mFunding approvals

R1.219 bnTotal loan disbursement to SMMEs & Co-operatives

R375 mApproved to the productive sector of the economy

R198 mDisbursed to youth owned businesses

R481 mDisbursed to women-owned businesses

72 897Number of

businesses

financed

13

Funding Activities (2018/19)Different funding channels

14

• The largest portion of the funding

activities were conducted through

the Wholesale SME funding followed

by the Informal Sector.

• This helps improve the financial

inclusion of most enterprises that

are not ordinarily served by the

conventional lenders.

• The minimal activity in the support

to Co-operatives is in line with the

organisational move to focus more

on resuscitating existing projects

instead of taking more new ones

given the challenges that this target

group is facing.

197

273

210

48

0.8

614

156135

314

1

SME

Wholesale

SME Direct

Lending

KCG Informal

Sector

Co-operatives

R million

Approvals Disbursements

Disbursement (R )

Eastern Cape 107 547 291

Free State 36 061 093

Gauteng 262 974 597

KwaZulu Natal 177 873 265

Limpopo 214 130 895

Northern Cape 11 664 458

Western Cape 214 067 075

Mpumalanga 81 137 403

North West 82 792 570

Development Impact - Spatial(% of 2018/19 disbursements)

15

In Mpumalanga and Limpopo, the funding activity is largely focused on Informal and

Microfinance programmes.

The strategic partnerships with the Intermediaries play a crucial role in enabling sefa

to reach out to majority of the small businesses in the rural and village communities.

A total of circa 73 000 clients were funded via different loan programmes.

LP

R214m

MP

R81mGP

R263mNW

R83m

FS

R36mKZN

R178mNC

R12m

WC

R214m

EC

R108m

16

Operational Performance

17

Strategic initiatives1. Increased Development Impact2. Improved Financial Sustainability3. Client-Centricity Towards Client-

Sustainability4. Enhancing Operational Efficiencies and

Effectiveness

Indicator Target Achieved

Approvals R242m R272m

Disbursements R231 R158m

Productive sectors

R128m R109m

Black-entrepreneurs

R162m R250m

Female entrepreneurs

R103m R36m

Number of enterprises

190 190

Jobs 1072 3124

Youth entrepreneurs

R69m R39m

Direct Lending Performance 2018/19

18

Direct Lending performance 2018/19 (cont.)

Highlights

• Direct Lending achieved 39% increase in approvals year on year at R272mil and 33% increase in

disbursements year on year at R158mil. Reversing the declining trend of Direct Lending Approvals and

Disbursements that had been in place for 3 years.

• Introduced & implemented a strategic partnership with Pick n Pay that resulted in a R60mil facility for

investment in the townships - a key targeted development focus for sefa. During the financial year R30mil

worth of individual stores were approved to be disbursed in Q2 FY19/20. This partnership not only

ensured achievement of Direct Lending approval targets for the year but also ensured traction in a key

targeted development economic area for sefa.

• Developed and implemented a new strategy for Direct Lending embedded in a sector driven investment

strategy that will lead to ensuring portfolio diversification, technical skills specialization and sustainable

portfolio construction. The sector investment strategy also seeks to ensure that sector concentration is

mitigated and income for Direct Lending is generated through a bias towards medium term investments

that yield longer interest income and sustainable jobs.

Funded Clients – Direct Lending

19

Abbot Francis Fast Foods Pty Ltd

20

Abbot Francis Fast Foods Pty Ltd was established

to set up and operate a Plan B Dessertery

franchised store in Pietermaritzburg, KZN. This

business is owned and operated by a young

entrepreneur Mr Shikar Singh, with over 14

years’

experience in the Quick Serve Restaurant (QSR)

franchise industry.

Plan B Dessertery sells street food dessert items

such as bubble waffles, churros, dessert tacos, ice

creams and a range of hot and cold drinks to

the public in Pietermaritzburg. sefa funding went

towards set up costs and operational capital.

Funding activities (2018/19)Direct Lending Clients

Pan African Development (Pty) Ltd

21

Pan African Development Pty Ltd (“PAD”) is a 100%

black-owned company, co-owned

by Ms Nonjabulo Hadebe, Mr Hlubi Hadebe and Project 5

Construction CC.

The KwaZulu-Natal based company has been in operation

for over 17 years. PAD was awarded an 18-month

contract by the Development Bank of Southern Africa for

the construction of Cookhouse Primary School a small

town in the Eastern Cape. sefa funding was mainly utilised

for buying building materials and salaries / wages for the

project. Through this project, about 50 new jobs were

created.


Hedgehocks Projects & Trading CC

22

Hedgehocks Projects & Trading CC (“Hedgehocks”)

operates in Polokwane, Limpopo was funded by sefa to

expand an existing sand, crushed stone and ready-mix

supply business.

The business has been experiencing significant growth and

approached sefa to help fund the expansion its

operational capacity and funding was approved. sefa

funding helped grow the business and it now employs an

extra ten staff members.


Falaz General Trading and Construction Pty Ltd

23

Falaz General Trading and Construction Pty Ltd (“Falaz”) was

registered in 2012 by Mr Matome Sefalafala. The Limpopo based

company provides waste management services.

sefa awarded funding for the purchase of four (4) Freightliner

Argosy trucks and three (3) Top Trailer Links Side Tippers to

service the waste management contract from Lepelle Northern

Water in Polokwane.


Vhamabula Enterprise (Pty) Ltd

24

Vhamabula Enterprise Pty Ltd (“Vhamabula”) trades as

Steers, Debonairs & Fish-Aways franchise combo and is

based in Bryanston, Gauteng.

sefa funded Vhamabula for the acquisition of the business

from another franchisee. The business employs a total of

nine staff members.


Top Secret Legal Services CC

25

Top Secret Legal Services CC (“Top Secret”) is a 100% black-owned, 100% black female-owned entity that was

established by Ms Vasikie Govinder-Padayachy. The Gauteng based business provides legal, debt collecting and

tracing services to both public and private sector clients. The business is currently managing in excess of 70 000

accounts from its current client base.

Top Secret has recently signed additional contracts with municipalities such as: the City of Ekurhuleni

Metropolitan Municipality and Merafong City Local Municipality. An existing client of Top Secret, FNB, also

increased the scope of work.

The Office of the Presidency of the Republic of South Africa is also a client of Top Secret. The business was

funded to increase capacity by acquiring extra IT equipment , extra furniture, increase software capacity, salaries

for additional staffing requirements to cater for the expansion plan.


Tshimoloho Group Pty Ltd

26

Tshimoloho Group Pty Ltd (“Tshimoloho”) is a black-

owned, female-owned logistics company which was

established in 2016. This Gauteng based logistics company

was awarded a three-year transport contract by the

SABMiller for the transportation of its products within

the Gauteng province.

sefa funding went towards the acquisition of three trucks

and working capital for the first few months to enable

Tshimoloho to service the SABMiller contract. Having

been funded Tshimoloho was able to employ three

people to help execute the SABMiller contract.


Elephante Trading Pty Ltd

27

ElephanteTrading Pty Ltd (“Elephante”) operates in

Gauteng and has been in business since 2013. The

company is owned by Mr Lufuno Ndou and it provides

environmental management and infrastructure

operations and maintenance services.

sefa funded Elephante for equipment and working

capital to service a contract it had secured. sefa funding

also assisted Elephante to maintain much needed 45

jobs.


The Loft Salon Pty Ltd

28

The Loft Salon Pty Ltd (“The Loft”) is a Black female-owned

company that offers manicure, pedicure, eyelash and eye

brow tinting and threading services.

The Loft Salon has been operational since 2015 and has an

online booking service for clients. sefa funded this Gauteng

based salon for equipment and working capital. Through

sefa funding, eleven jobs were maintained and six new jobs

were created.


Mafu Enterprise Pty Ltd

29

Mafu Enterprises Pty Ltd (“Mafu Enterprises”) was

established in 2014 by Mr Mafu Zwane and

operates in Cape Town, Western Cape. Amongst

others, the company has interests in waste

management services. Mafu Enterprises was

awarded a waste management contract by the City

of Cape Town in January 2018.

Later in the year, Mafu Enterprises approached sefa

for funding that was utilised to purchase waste

management equipment, tools, vehicle, protective

clothing as well as working capital. Mafu Enterprises

is already an established player in this space and

employs a lot of people in Cape Town.


30

Informal Sector & Micro-Enterprises performance 2018/19

Strategic initiatives

1. Consolidate and strengthen strategic partnerships in under-served provinces & roll out approved projects.

2. Support MFI growth and development, new product development and new partnerships.

3. Partner with private and public institutions to offer crucial business development services needed by informal business that sefa cannot provide directly.


Approvals R96m R48m

Disbursements to end users

R200m R314m

Number of enterprises

71 500 72 183

Jobs facilitated 71 500 80 594


R90m R310m

Youth entrepreneurs

R60m R49m

Black-

entrepreneurs

R140m R313m

31

Informal Sector & Micro-Enterprises performance 2018/19 (cont.)

The Informal and Micro sector programme is geared at building financial inclusivity and facilitating entry of previously

disadvantaged individuals particularly women, residing in the rural areas and township communities.

Highlights:

• 68 032 number of enterprises (or 99.8%) supported were women-owned based in rural areas to the value of R240

million.

• A 32% growth in the amount disbursed to micro-enterprises compared to the previous year;

• The Micro Finance and Informal Sector lending programme is channelled through micro financing institutions and

partnerships with corporates who implement enterprise and supplier development programmes;

• A value-adding partnership with the Wholesale and Retail (W&R) seta was established, resulting in the training of

some sefa supported microenterprises at the Mangaung Fresh Produce Market;

32

Wholesale SME Lending performance 2018/19

Strategic initiatives1. Improve the sustainability of end

users through the use of equity/quasi equity.

2. Expand the Structured Finance Solution (SFS) offering, in partnership with Direct Lending.

3. Build value adding partnerships to expand outreach to under-served Provinces.

4. Increase revenues through leveraging government, DFI, Donor, and ESD Resources.

5. Managing costs by maintaining a lean Wholesale Lending structure.

6. Preserve capital in Wholesale Lending business.



Disbursements R305m R613m

Black-entrepreneurs

R214 R332m


R137m R106m

Youth Entrepreneurs

R92m R98m

Jobs 1357 3 832

Number of SMEs

271 487

Funding activities (2018/19)Wholesale SME & Co-operatives

33

The SME Wholesale Lending provides funding to intermediaries and specialised funds that share sefa’s objective of increasing access

to finance to SME’s. sefa also enters into joint ventures and strategic partnerships to crowd-in financial and business support as well

as technical resources from the public and private sectors.

Highlights:

• sefa has developed an in-house fund management capacity to deliver third-party funds. The management of third-party funds is

intended to leverage existing financial and non-financial resources in order to improve access to funding for SMEs.

• The European Union Commission has allocated budget support of €30m of the “Employment Promotion through SMME support

Programme” (EPSSP) to sefa. €10m for ESD projects and €20m is earmarked Innovation projects in the outer years. This funding

affords sefa to increase access to finance, crowd-in private sector investment and scale up support to SMMEs.

• Small Business and Innovation Fund: sefa has been appointed as the implementing agency for an R3.2bn Small Business and

Innovation Fund commencing in 2019/20 FY.

Funded Clients – Wholesale Lending

34

Antoinette Robela (Ma Robela)

35

Antoinette Robela (Ma Robela)

“The seeds of success in every nation on Earth are best

planted in women and children.”- Honourable Joyce Banda.

The quote resonates with the vision that Ma Robela has for

her farm. Maria Antoinette Goitsemang Robela, a tunnel

vegetable farmer in Magaliesberg started farming few years

ago. She was funded by Capital Harvest.

Her dream was to turn around her farm in a short space

time, but she soon learnt that farming was a serious

challenge as it needed finance and a determination to

succeed. Despite setbacks and ongoing challenges she is

determined to realise her dream and to swing wide open

farming doors to the younger generation and women.


Avant Garde Autobody Specialist (Pty) Ltd

36

Avant Garde is a panel beating business based in

Johannesburg, Kya Sands. It is operated by Kevin

Berma who received financial assistance from sefa’s

retail intermediary, Mettle, in 2008. This financial

assistance allowed the company to get contracts for

major structural repairs to vehicles from various

insurance companies, as well as repairs to panels

(parts) of a number of motor vehicle manufacturers.

The business has since refurbished its offices and

premises and has shown significant growth in

turnover. It currently employs 13 people.


Fortuin Rankapiet (a beneficiary of Ditsobotla Co-operate Financial Institution)

37

Fortuin Rankapiet is from Bospoort in the North West. He started

his rental business from home. His main challenge was to obtain

furnishings for his house, which needed to attractive to

prospective tenants and to enable him to raise rental in the

business.

Ditsobotla Co-operative Bank assisted him with a loan of R50 000

to buy furniture for his business and an additional R50 000 to

furnish rooms in another house in Boikhutso. His business has

shown to be profitable, allowing him to purchase livestock.


John Lekoma (Ditsobotla CFI beneficiary)

38

John Lekoma resides in Ditsobotla. In becoming a small

business owner, he borrowed R65 000 from Ditsobotla

Co-operative Bank and bought mobile toilets which he

rents out for funerals, government events and weddings.

The establishment of his business has been a personal

success.


Bathabile Zulu (Phakamani MFI beneficiary)

39

Bathabile was born in Pinnaar and has two older brothers.

Their parents passed away when they were very young

and as the only female member of her family, she took

responsibility for the family’s household. In her endeavour

to make ends meet, she started selling vetkoek.

Bathabile approached Phakamani in 2015 for a loan of R1

200 which allowed her to purchase more stock and in so

doing, sell more products. Her business has grown over the

years.

She will pay off her current loan of R7 000, her 12th loan

with Phakamani, and plans to apply for an additional R9 800.

Her business has grown into a fast food shop and her

turnover has quadrupled since 2015.


https://drive.google.com/file/d/1BSzWa8mk8FQH73_rIdeQPkeR97e_DyNH/view?usp=sharing_eil&ts=5d964481&authuser=0

Zodwa Magagula (Small Enterprise Foundation (SEF) end-user)

40

Growing from Strength to Strength!

Zodwa Magagula, is a self-made female farmer and a member of Ziyas group at

Mangweni centre. A proud mother of seven and two grandchildren, she started her

farming business in order to support her family. In the year 2000, she received a

piece of land and started cotton farming.

In 2015 she joined the Small Enterprise Foundation (SEF)’s programme and is

currently on a loan seven (7) cycle. Zodwa employs seven (7) people and is a

supplier of cotton to the Johannesburg market.


41

Khula Credit Guarantee Performance 2018/19

Strategic initiatives1. Extend coverage to include a wider

range of financial institutions and commercial suppliers of inputs to SMEs

2. Introduce flexibility of terms and conditions to increase attractiveness of products and services to targeted SME financiers

3. Develop, pilot and market new products and services to facilitate increased uptake of the indemnity facility.



Supplier Credit R34m R91m

Portfolio guarantees

R52m R46m


R38m R29m

Youth Entrepreneurs

R26m R11m

Jobs 575 2401

Number of SMMEs

134 204

Funding activities (2018/19)Khula Credit Guarantee (KCG)

Khula Credit Guarantee programme is designed to facilitate lending from commercial banks and other non-banking institutions

to indemnify them from potential default by the SMMEs. The South African financial system contains a highly developed and

well-capitalized banking sector, which caters mainly for the advanced segments of the economy. The financial sector is highly

concentrated and dominated by four large banks, which cater to the higher-end segments of the economy, leaving the middle

segment (SME’s) underserved. KCG was established to address this gap.

Highlights:

• The portfolio guarantee facilities approved in 2018/19 amounted to R210m against a target of R182m. These facilities were

granted to financial institutions in the Agribusiness and SME sectors.

• Indemnities taken up amounted to R135 million, with supplier credit guarantees accounting for 67%, Corporates 14%,

Commercial Banks 10% and Non-Bank Financial Institutions 9%.

42

Funding activities (2018/19)Post Investment Monitoring, Workout & Restructuring

43

The PIM and Workout Division focuses on supporting clients’ sustainability,

collections, review and restructuring of loan facilities of clients under

distress in order to minimise impairment rates and increase collections. The

loan book under review was negatively impacted by the low growth

economic environment which adversely impacted on the clients

performance.

Highlights:

sefa’s total Portfolio amounted to R1.9bn as at 31 March 2019. This

consists of R1.2bn in Wholesale Lending and R726m in Direct Lending. The

portfolio remained unchanged year-on-year largely on the back of a decrease

in Direct Lending. sefa is the appointed fund manager of the Land Reform

Empowerment fund with a portfolio of R285m (2018: R272m).

sefa, through the Wholesale Lending channel, collected R197m against an

expected collection of R172m, whilst through Direct Lending, the

organisation collected R150m against the target of R193m during the year

under review.

365

347

Target Actual

Total Collections 2018/19 (Rmn)

Financial Performance

44

sefa Financial Performance as at 31 March 2019

45

Highlights• Unqualified clean audit opinions since sefa’s inception 1 April 2012

• Direct Lending attracts lower impairments on new disbursements (28% of loans disbursed in 2019)

• Operating expenses contained at approximately R79 million over the past 5 years. In addition sefa

incurred a R7 million cost saving from 2018 financial year.

• Raised €35m European Union facility & R3 billion SBIF facility

• R28m improvement year on year in net investment property results

• Reduced reportable irregularities and fruitless expenditure from R4 million in 2014 to R16k in 2019.

Main challenges• The low growth macroeconomic environment is adversely impacting on the performance of sefa funded

clients, resulting in the impairment coverage ratio of 47% and negative loan book growth (29% decline in

Loans and Advances, year on year)

• Cost to income ratio remains high (105% per BSC)

• Reduction in interest income generated by sefa over 5 years

• The fiscal constraints and reprioritisation of government expenditure resulted in lower MTEF allocation

than in previous years (i.e. below inflation increases)

Ratio Analysis

2016 AUDITED

2017 AUDITED

2018 AUDITED

2019 AUDITED

FINANCIAL RATIOS

Cost: income ratio (All inclusive) 106% 87% 101% 105%

Total sefa Group company accumulated impairment % (Including equities and loans) 44% 39% 46% 47%Accumulated impairment % - loans 53% 49% 54% 66%

Accumulated impairment % - equity investments 28% 14% 27% 34%

Personnel Expenses as a % of total loan bookna na 11% 13%

46

Statement of Comprehensive Income

47

2016

AUDITED

2017

AUDITED

2018

AUDITED

2019

AUDITED

2020

FORECAST

2020

BUDGET

Interest received on loans and advances to

clients 107 100 95 67 65 78

MTEF allocation 406 213 224 229 241 241

Interest received on cash and cash

equivalents 30 33 29 43 42 41

Income from equity accounted investees 39 29 36 18 50 40

Investment property rental income 30 29 27 28 28 25

Other income 29 26 24 26 33 30

TOTAL INCOME 641 430 435 411 459 455

Impairments on loans and advances, and

investments (337) (68) (128) (133) (118) (92)

Interest expense on shareholder's loan (30) (32) (34) (41) (46) (11)

Net fair value (loss)/gain on investment

properties 40 (17) (7) 5 0 0

Personnel expenses (156) (168) (179) (177) (198) (212)

Investment property expenses (55) (86) (74) (54) (59) (60)

Other operating expenses (83) (79) (85) (79) (73) (104)

Income tax credit/(charge) 8 24 (1) 4 0 4

TOTAL EXPENSES (613) (426) (508) (475) (494) (475)

NET PROFIT/ (LOSS) 28 4 (73) (64) (35) (20)

Statement of Comprehensive Income analysis

Interest from loans and advances

• The R28m (30%) decline in interest from loans, was as a result of lower than budgeted

approvals. On the other hand, the low approvals resulted in high cash balances, and thus

positive variances on cash balances.

Profit from equity accounted investments

• Although the investment in Business Partners Ltd. continued to report profits, other

associates and joint ventures reported significant losses.

Investment property expenses

• The property portfolio’s performance improved with R28m year on year and an

upwards fair value gain of R5m is included.

Personnel costs

• The freezing of vacancies resulted in a R2m saving in personnel costs.

Other operating expenses

• Cost containment measures have resulted in positive cost savings on other operating

expenses of R7m.

48

Statement of Financial Position

49

2016

AUDITED

2017

AUDITED

2018

AUDITED

2019

AUDITED

2020

FORECAST

2020

BUDGET

ASSETS

Cash and cash equivalents (Group) 489 391 422 593 512 559

Cash and cash equivalents (Managed Funds) 63 66 70 72 14 74

Trade and other receivables 37 35 29 33 38 44

Current tax asset 0 0 0 1 1 0

Loans and advances 562 689 550 389 502 609

Investment properties 208 190 183 187 187 169

Equipment, furniture and other tangible assets 9 7 7 6 9 14

Intangible assets 1 1 1 1 3 21

Deferred tax asset 0 3 1 4 4 3

Equity investments 933 868 954 926 934 1 129

TOTAL ASSETS 2 301 2 250 2 217 2 212 2 205 2 621

EQUITY AND LIABILITIES

Share capital 308 308 308 308 308 308

Shareholder reserves 1 093 1 306 1 529 1 863 2 137 2 453

Retained earnings and other reserves 308 3 (293) (709) (999) (486)

Equity attributable to owners of the parent 1 709 1 617 1 544 1 462 1 447 2 276

Liabilities 0 0 0 0 0 0

Trade and other payables 131 163 166 146 70 154

Deferred tax liability 21 0 0 0 0 0

Outstanding claims reserve 7 4 4 8 9 9

Unearned risk reserve 3 4 7 13 13 10

Post-retirement medical l iability 0 0 1 1 1 1

Shareholder's loans 429 461 496 583 665 172

Total liabilities 592 633 672 750 758 346

TOTAL EQUITY AND LIABILITIES 2 301 2 250 2 217 2 212 2 205 2 621

Statement of Financial Position analysis

Loans and advances • The increase in impairments and credit losses, and low disbursement levels

contributed to a decline in the carrying value of loans and advances. Impairment levels continue to remain high, though Direct Lending has started to show improvement, and is attracting lower impairments on new disbursements (28% of loans disbursed in 2019).

Investments• Investments include those in associates and JV’s as well as investments held

by IDF (subsidiary). The decline relates to the poor performance of investments and a net disposal of R27m.

Cash and cash equivalents• Cash balances over 2 years have remained stable, and is in correlation to the

low level of disbursements made in 2019 financial year, and also partly due to the draw-down of R150 million on the IDC facility done in April 2018.

50

Performance Against Predetermined Objectives

51

Performance Against Predetermined Objectives (1)

52

Objective 1: Access to finance by SMMEs and Developmental Impact

KPI Target Actual Achieved

Total Disbursements to SMMEs and Co-

operatives (R'000)

841 602 1 219 943 Yes

Approvals in terms of productive sectors of the

economy - (60% of the loan book approvals)

(R'000)

515 495 374 905 No

Number of SMMEs and Co-operatives financed

(#)

72 293 72 897 Yes

Number of jobs facilitated (#) 74 443 88 632 Yes


53

Objective 1: Access to finance by SMMEs and Developmental Impact (cont.)


Facilities disbursed to youth-owned businesses

18-35 years old (R'000)

221 941 197 689 No

Facilities disbursed to township-based

enterprises (R'000)

200 391 107 475 No

Facilities disbursed to women-owned businesses

(R'000)

332 911 481 963 Yes

Facilities disbursed to black-owned businesses

(R'000)

517 861 897 199 Yes

Facilities disbursed to rural & village-based

enterprises (R'000)

332 911 549 444 Yes

Facilities disbursed to entrepreneurs with

disabilities (R'000)

18 261 2 386 No


54

Objective 2: Financial Perspective


Cost-to-income ratio 100% 105% No

Accumulated Impairment provision as a % of total loans and

advances

26% 47% No

Personnel Expenses as a % of total loan book 29% 13% Yes


55

Objective 3: Internal Business Processes & People Learning & Growth


Number of days bridging loans 20 13% Yes

Number of days for terms loans 30 25 Yes

Number of days for wholesale applications 40 50 No

Labour turnover Rate (LTO) of critical strategic positions 7% 3% Yes

“Percentage of staff (P band and above) that scores 3.1 or

more in the annual performance assessment

Calculation: Staff Performance (in P- band and above)

= (Total Number of employees ÷ Number of employees

with Performance Score of 3.1 or above) x 100”

80% 77% No

Summary of sefa’s Performance

56

Performance Measurement

# of Indicators Partially Achieved75% – 99%

% Achieved100% +

Customer 12 2 7

Financial 3 1 1

Internal Processes 3 1 2

People Learning & Growth

2 1 1

Total 20 5 11

The summary of the organisational performance against pre-determined target is as

per the table above. Of the 20 indicators, sefa outperformed on 11 (i.e. those above

100%) and partially achieved on 5 indicators.

Thank YouSmall Enterprise Finance Agency

2019 annual report - amazon web...

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