Organisational Performance Report

Transcription

1 Organisational Performance Report Portfolio Committee Small Business Development 8 November 2017

2 Table of contents Introduction Loan book performance Approvals Disbursements Development impact SMMEs financed and jobs facilitated Support to targeted groups Post-Investment Monitoring Total Portfolio Portfolio at risk Collections Financial performance Progress on pilot projects Balance scorecard Annexure: sample of sefa funded clients 2

3 Introduction An overview of the 2 nd quarter organisational performance against the approved corporate plan for the financial year 2017/18. The total approvals during the quarter under review came in below the targeted amount by registering only R32 million or 13% of the quarterly targeted amount. With respect to year-to-date performance, total approvals reached R111 million. During quarter two, sefa disbursed R156 million, whilst on a year-to-date basis, the disbursements stood at R481 million. The under-performance on both fronts can be largely attributed to the sluggish economic performance of the South African economy and the consequent subdued demand for our loans. Notwithstanding the number of enquiries received, 62 new applications were processed, 38 (or 61%) of them were approved, whilst only 3 were declined. The other 14 have been withdrawn largely following failure by the clients to provide the requested information. With respect to sectoral performance, the organisation saw a significant drop in the construction sector projects, which is largely reflective of the overall moderation in the industry, with its outlook also remaining subdued. 3

4 Loan book performance 4

5 Total Loan book performance Total Loan Book Approvals (000) Target Actual Q1 Q2 Annual Target-YTD Both the external and internal factors are at play with respect to the under-performance observed thus far this year: On the external front, business is difficult and demand remains weak. Internally, the organisation is doing its level best to reduce impairments so as to become sustainable. To this end, the initiatives taken include insisting on obtaining cessions from our clients customers, who in the main are government entities. However, we are getting limited success in this regard. 5

6 Direct Lending Approvals Direct Lending: Approvals (000) Q2 Q1 Achieved Target Direct Lending approved R32 million in Q2, thus helping support 34 SMMEs and Co-operatives. The productive sectors accounted for 47% of approvals to date and this contributed to the creation and maintenance of 647 jobs. 6

7 Wholesale Lending Approvals Wholesale Lending: Approvals (000) Q2 Achieved Q1 Target Wholesale Lending book achieved R39.8 million in approvals so far this year against the annual target of R561 million. No approvals were made in Q2, however, the following was accomplished during the quarter: The takeover of the Godisa Supplier Development Fund from Anglo Zimele. A dedicated Relationship Manager has been appointed to implement this programme. Documents required for the first EU 10m drawdown have been submitted to DSBD. sefa began building a 30m equivalent (R487m) pipeline in preparation for the transfer of 10m in Jan

8 Total sefa Loan Book Disbursements Total Loan Book disbursements (000) Target Actual Q1 Q2 Annual Target-YTD The total disbursements of R481 million as at 30 th September 2017, represented 70% of the annual target. sefa has done well in disbursing money into the economy despite the low approvals, thanks to the revolving nature of sefa s investment to its financial intermediaries. 8

9 Direct Lending Disbursements Direct Lending: Disbursements (000) Target Achieved Q1 Q2 Direct Lending disbursed R42 million in Q2 or 61% of its quarterly target. These disbursements in turn represented 69% of the divisional year-to-date annual target. 9

10 Wholesale Lending Disbursements Wholesale Lending: Disbursements (000) Q2 Achieved Target Q Disbursements for Q2 stood at R132 million and represented 79% of the quarterly target. The composition was as follows: R17 million through the microfinance channel, R97 million wholesale SMEs channel, and R14.7 million taken up through the supplier credit program. 10

11 Development impact 11

12 Development impact: SMMEs & Co-operatives financed & jobs facilitated Q1 Target Number of SMMEs & Co-ops Q1 Achieved Q2 Target 5436 Q2 Achieved Number of jobs facilitated Q1 Target Q1 Achieved Q2 Target 6675 Q2 Achieved During the opening quarter of the 2018FY, sefa outperformed the targeted number of SMMEs & Cooperatives supported by registering 410% of the quarterly target. This also translated into a significant number of jobs facilitated. However, in Q2, less than half of the targeted number of SMMEs and Co-operatives were assisted and this in turn resulted in significantly less number of jobs facilitated at the same time. On a year-to-date basis, the organisation achieved 96% of the annual target of SMMEs & Cooperatives to be supported and almost 72% of the annual targeted jobs. 12

13 Development Impact: Priority Provinces Priority Provinces (R 000 Lhs) Q1 Q2 Q3 Q4 Total Target Actual Number of SMMEs Target Actual Number of SMMEs The priority provinces claimed R65.6 million of the overall disbursement during Q2. This financial support helped SMMEs and Co-operatives in these provinces. Both the amount disbursed and the number of businesses financed fell short of target. To date, disbursements to Priority Provinces have reached R220.7 million or 73% of the annual target. 13

14 Development Impact : Township-owned Enterprises Township-owned Enterprises (R 000 Lhs) Q1 Q2 Q3 Q4 Total Target Actual Number of SMMEs Target Actual Number of SMMEs This newly introduced indicator is steadily picking up with R10.6 million disbursed to 13 Township Enterprises in Q2. The majority of these enterprises are in the services sector, particularly retail trade in the Gauteng region. On a year-to-date basis, at least 84 enterprises based in townships received a total of R14.3 million. 14

15 Development impact: Youth-owned Enterprises Youth-Owned finance (R 000 Lhs) Q1 Q2 Q3 Q4 Total Target Actual Number of SMMEs Target Actual Number of SMMEs Youth-owned enterprises received just above R21million in disbursements during Q2. Most of the enterprises run by youth participated in the services sector in Q2, particularly the supply and deliver. The cumulative financial support so far this year to this targeted group stood at R63.7 million, representing almost 32% of the annual target. 15

16 Development Impact: Disability-owned Enterprises Disabled-owned Enterprises (R 000 Lhs) Q1 Q2 Q3 Q4 Total Target Actual Number of SMMEs Target Actual Number of SMMEs The organisational support to entrepreneurs with disabilities remains subdued. However, Q2 disbursement of R3.8 million is a notable improvement when compared to Q1 performance of only R1 million. On a year-to-date basis, the enterprises supported under this category have already received R4.8 million. 16

17 Development impact - spatial (% of Q2 2017/18 disbursements) Disbursement (R ) Eastern Cape Free State Gauteng Kwazulu Natal Limpopo Northern Cape Western Cape Mpumalanga North West % 13.2% 14.7% 12.2% The strong performance in terms of 3.1% 2.4% 20.6% developmental impact in the Western Cape (26.8% of total) can be largely ascribed to CapeX performance (RFI) as well as Capital 2.8% Harvest through the Land Reform Empowerment Facility. 26.8% Although other provinces experienced muted disbursements during Q2, their business development plans were approved in July and expectations are that implementation thereof will begin to pay off before the end of the current financial year. 17

18 Post-Investment Monitoring 18

19 Total Portfolio Composition Per Product Performance Per Product 2017/18 Outstanding Provision/ Provision/ Disbursed Repayments Balance Sep Impaired Impaired Sep Product YTD Sep20 17 YTD Sep March Retail Financial Intermediaries Joint Venture Funds Land Reform Empowerment Facility Micro Finance Institutions Co-Operatives Total The LREF loan portfolio grew by 3% since the beginning of the current financial year. This growth was driven largely by disbursements to Akwandze and First Rand Bank (Agro-business). With respect to other products, provision for impairment has been made in line with accounts in arrears. 19

20 Portfolio at risk - 30 September 2017 Per investment date Investment date Portfolio at Balance Portfolio at Portfolio at Portfolio at Risk (R'000) Number risk (R'000) Risk (R'000) Risk (%) (Number) FY % 11 FY % 39 FY % 111 FY % 138 FY % 37 Total % 336 Older loans pose the greatest challenge in collections, however, efforts are being applied to collect on this book. The older the loans the higher the portfolio at risk and vice versa. 20

21 Total sefa Collections in Q2 2018FY Month Expected During Period Receipts Monthly Rate July R R % August R R % September R R % Total R R % sefa collected R92 million in Q2. Notwithstanding the variance between what was actually collected vs the expected collections in any given month, on aggregate, we collected more than anticipated for the quarter. Often times, our clients pay capital prior to the scheduled time, resulting in us collecting more than anticipated in any given month. 21

22 Direct Lending Collections Q2 2018FY Month Expected During Period Receipts Monthly Rate July R R % August R R % September R R % Total R % Monthly collections rates have been satisfactorily met during the quarter. This is indicative that the collections strategy currently being implemented has begun to pay-off. Consequently, of the R43.7 million that was planned to be collected in Q2, close to R44 million was actually collected. 22

23 Wholesale Lending Collections Q2 2018FY Month Expected During Period Receipts Monthly Rate July August R R % R R % September R R % Total R R % The wholesale Lending collected R48 million from clients during quarter 2 with the bulk of these collections taking place in the month of July. Periodically, we receive capital repayments on the revolving loans to strategic partners these tend to have significant impact on our collections. 23

24 Financial Performance 24

25 sefa s Financial Performance sefa Group (sefa/kcg/kis) Abdridged Consolidated Statement of Comprehensive Income For the period ended 30 September YTD YTD YTD Full Year Year End Actual Budget Actual Budget Actual R'000 R'000 R'000 R'000 R'000 Income Movement on impairments & Bad debt Written-off (22 303) (35 825) ( ) (77 823) (68 094) Personnel expenses (88 287) ( ) (80 820) ( ) ( ) Other operating expenses ( ) (82 322) (92 973) ( ) ( ) Operating income/(loss) ( ) ( ) ( ) ( ) ( ) MTEF Grants received Net operating income /(loss) + MTEF grants (16 999) (24 735) (74 307) (1 383) (4 283) Operating expenses are made up of Property expenses of R75m, Interest on shareholders loan of R16 million and other operating expenses of R38 million. The movement on impairments and bad debts written-off as at 30 September 2017 stood at R22.3 million. 25

26 sefa s Financial Performance Area Indicator Description 2017/18 Annual Target YTD Achieved Cost-to-income after MTEF allocation and impairments 100% 108% Actual operating expenses, excluding financing and impairments (R m) Accumulated impairment provision as % of total loans and advances 26% 46% Personnel expenses as a percentage of total loan book (loans and equities). 29% 7% Personnel expenses as a percentage of net loans and advances (R m) 32% 14% Income Net profit(loss)(r m) ( ) ( ) The income of R111 million includes interest and dividend income amounting to R73m; rental income of R25m; fee income of R3m and other income to the value of R10m. Interest and dividend income of R73 million comprises of interest from lending operations and cash investments. Personnel expenses as at 30 September 2017 amounted to R88 million. This was R14 million or (13%) below budget, mainly as a result of delays in filling certain positions. 26

27 Progress on pilot initiatives to increase access and reduce the cost of finance Fresh produce markets Supplier credit program 27

28 Microenterprise Finance: Fresh produce markets A joint venture between sefa and municipal fresh produce market to facilitate access credit to informal traders. A new channel to increase access to credit and reduce the cost of accessing credit for microenterprises 2 pilots: Durban and Mangaung Fresh produce markets 212 participating microenterprises Total disbursed - R4.9 Million 314 Jobs facilitated 65 Participating youth R1.5 Million 53 participating Women R1.3 Million 15 disabled micro-entrepreneurs R206K 28

29 Microenterprise Finance: Supplier Credit program The Supplier Credit Guarantee program indemnifies suppliers who extends trade credit to microenterprises. It is a cost effective vehicle to reach Micro Enterprises by using the balance sheet and infrastructure of the private sector to extend credit. 2 pilot projects Pilot Program Performance Criteria Facility Approvals Total R60 million Taken up R Development Impact Due to the revolving nature of the facility, R128m was already taken up by end of Sept 2017 (Year-to-date). Program to be roll-out to other sectors of the economy. Trade credit extended at 0% interest for 30 days. Program default is at 3.25% of the Total Guarantee Facility. No of SMMEs participating under the pilot facility 152 Jobs Facilitated 876 Women owned participating SMMEs 39 (29%) Black owned participating SMMEs 151 (99%) Youth owned participating SMMEs 39 (29%) 29

30 Balance Scorecard 30

31 CUSTOMER PERSPECTIVE Access to finance by SMMEs and development Impact Balance scorecard: progress against predetermined objectives Perspective Objective Measure Annual Target/ Indicator Q1 Target Q1 Achieved Q2 Target Q2 Achieved Ytd Achievement % of Q1 Target % of Q2 Target achieved achieved % of annual Target achieved Total Approvals (R'000) R % 13% 14% Total Disbursements (R'000) R % 84% 70% Approvals in terms of productive sectors of the Economy (60% of loa book approvals) % 35% 17% Number of SMMEs and Co-operatives financed % 48% 96% Number of Jobs facilitated % 38% 72% Facilities disbursed to youth-owned businesses (R'000) R % 35% 32% Facilities disbursed to enterprises in priority rural provinces (R'000) R % 72% 73% Facilities disbursed to Women-owned businesses (R'000) R % 51% 67% Facilities disbursed to Black-owned businesses (R'000) R % 66% 64% Disbursements to Township-based Enterprises (R'000) R % 22% 9% Facilities to Enterprises owned by entrepreneurs with Disabilities (R'000) R % 75% 29% * Facilities equals/less than R500K disbursed to endusers - Number of enterprises financed % 77% 142% Level of Customer Satisfaction 75% annual Target 31

32 PEOPLE LEARNING AND GROWTH Alignment, Development and Motivation of Human Capital INTERNAL BUSINESS PROCESSES Financial Perspective Balance scorecard: progress against predetermined objectives Sub-Total Building sefa financial sustainability Cost to income ratio (excluding Impairments, & finance charges and the effects of the grant subsidy) 100.0% 100.0% 128% 100% 108% 78% 108% 93% Accumulated Impairments provision as a percentage of total loans and advances. 26.0% 50% 46% 0% 46% 56% ** Personnel expenses as a percentage fo total loan book (loans and equities). 29.0% 4% 14% 0% 207% 48% Number of days bridging loans % 105% 59% Improve turnaround Number of days for terms loans times for application % 108% 94% approvals Number of days for wholesale applications % 0% 115% Sub-Total System Development Enhancement to sefalas and the loan management system and key business processes automated. 40% of key business processes automated (reduction in the business process cost & process times) Annual Target Labour Turn Over Rate (LTO) of critical/ strategic positions 7% 7% 0.0% 700% 700% Improvement in the Employee Satisfaction Survey 60% Annual Target ** Percentage of staff (P - Band and above) that scores 3.1 or more in the annual perofrmance assessment 80% Annual Target RAG Indicator Description % performance 100% and above 4 Between 75% and 99% 3 Below 75% 10 Not measurement 4 32

33 Annexure: Success stories Sefa funded clients case studies 33

34 Intermediary: Phakamani Foundation Enduser Thokozile Madonsela group name: MADK001-9 Banjalo bomake Thokozile, together with her group members, used to borrow money from the Women s Development Bank (WDB). After the WDB closed in their area they joined Phakamani in She runs a spaza shop at her house. Her group members have been together since the WDB days and encourage one another in the pursuit for business success. In peak times she takes a R loan. KEY INFORMATION Location Mpumalanga When started Prior 2009 when she joined Phakamani Foundation Amount funded: Has been revolving facilities since 2009 Jobs: She has one full-time assistant and her kids help when they are home Achievement : In her own words, Thokozile said, Phakamani is the husband I do not have because my business has enabled me to educate my children, build a house, and never go to bed hungry. In her own words, Thokozile said, Phakamani is the husband I do not have because my business has enabled me to educate my children, build a house, and never go to bed hungry. She has, however, indicated that most of the spaza shops in the area have been leased to foreigners and because they buy together in bulk they are able to out-price her in most instances. 34

35 Intermediary: Capital Harvest Emerging Farmer Finance (CHEFF) End user Blompot, trading as Sunnyside Eggs, 100% Black owned Blompot, trading as Sunnyside Eggs, is an egg production company which is 100% Black owned by Kobus Van den Heever and his family. Kobus worked in a supervisory position for, Pioneer Foods, and in 1998 the company sold portions of its farms to the employees. Kobus and his wife bought the 35 hector farm in Stellenbosch, Western Cape. To assist the employees in developing their businesses, the company signed 10 year supplier contracts with the new entrepreneurs. In Kobus s words, this was the worst 10 years of business in my life bad experience. The reasons for Kobus s sentiment is that the company supplied and controlled the prices of the layers (chickens) & feed and also controlled the price with which they procured the end product eggs. With so much control of prices in the value chain, the company could manipulate any price to their benefit to the detriment of the supplier farm owner. At termination of the supplier contract, in 2008, Kobus did not renew it but rather preferred to approach banks for financing. This arrangement gave him the independence to procure supplies from alternative sources where he could negotiate prices based on quantity and then determine the price of the endproduct. KEY INFORMATION Location: Stellenbosch Western Cape Business : An egg production company When started : 1998 Amount funded: Facility as at June 2017 is R The above facility is secured by: i) Registered Mortgage Bond of R17million and ii) Notarial bonds over equipment of R4 million Jobs 50 jobs (45 permanent & 5 seasonal) 35

36 Intermediary: Capital Harvest Emerging Farmer Finance (CHEFF) (Cont.) End user Blompot, trading as Sunnyside Eggs, However, his experience with the banks was that the loan products were not particularly flexible for a growing agricultural business in that repayments were due at a particular period not considering the business cycle and growth requirements and as a result his cash flow was always compromised. In 2012, Kobus made an application to Capital Harvest and he switched his loan from the Bank. He is happy that the loan facility is favourable to the business cycle and that CHEFF has assisted him in growing the business. From inception Kobus was working with his wife and has since been joined by his two sons making it a family business. One of the sons is a qualified Engineer and responsible for the operations of the business. He has been instrumental in the implementation of new technology in the business. The second son, is an Advocate and is responsible for marketing. The team was informed that the daughter is contemplating to resign her job and join the family business as well. Blompot has grown from only producing eggs to packaging and distribution. Current status As the end of August 2017 the farm had production hens. During September 2017 the entire farm was placed under quarantine, due to the outbreak of avian flu, forcing the business to a standstill, with 100% mortalities. sefa has been informed that it is too early to calculate the full impact of the disaster on the business, but the minimum loss due to livestock mortalities and loss in production, is estimated at R10 million. The business employed 45 x permanent employees, and 5 x seasonal employees before the outbreak of avian flu, and possible retrenchments can follow. KEY INFORMATION Location: Stellenbosch Western Cape Business :an egg production company When started : 1998 Amount funded: Facility as at June 2017 is R The above facility is secured by: i) Registered Mortgage Bond of R17million and ii) Notarial bonds over equipment of R4 million Jobs 50 jobs (45 permanent & 5 seasonal) 36

37 Intermediary: Anglo American sefa Mining Fund End-User Manngwe Mining (Pty) Ltd (Manngwe) 100% Black owned A wholly black-owned exploration, mining, and trading company was established in The company can be described as exploration, mining, and trading in mineral(s) commodities. It is through partnering with large companies that Manngwe is able to add value to insignificant or small projects that have no chance of being developed by major companies. The project entails the mining of detrital iron ore and processing in through a dense medium separation plant. Manngwe holds a prospecting right and received R20 million in funding from the Anglo American sefa Mining Fund (AAsMF) to establish an Iron Ore Mine in the Limpopo Province over which the Department of Mineral Resources issued a bulk sampling and mining permit. The AAsMF holds a 20% equity in the company. The investment date for the project was 05 December KEY INFORMATION Location: Brits, North West Jobs: Currently the mine employs 220 people including 50 from the local communities. When Started: 2016 (Operations) Amount Funded: R Achievements The mine has already build a school within the community that it operates and has also provided the community with a bus to ferry school children from home to school as they travel long distances. 37

38 Intermediary: CapX Invoice Discounting End user Blink Creative Studio: 100 % Woman Owned Blink Creative Studio is a woman owned enterprise. The company manufactures promotional material printed on boards. In the first three years, the business operated from home until the owner was certain that the business could carry all operational costs. KEY INFORMATION Location: Western Cape When started: 2009 Business : Amount funded: received R Manufacturing Since trading invoices with sefa funding the client has Jobs: 11 permanent with casuals brought in when there are large orders 38

39 Direct Lending 39

40 Majestic Art (Pty) Ltd Majestic Art (Pty) Ltd has been in business since The business is 100 % owned by a youth entrepreneur. Majestic Art s supplies Personal Protective Equipment (PPE) to key customers mainly in Richards Bay and Empangeni. The client was referred to sefa by Umhlathuze Municipality and a Purchase Order Product deal was structured. sefa funded R which went towards facilitating a Purchase Order (500 PPE uniforms) secured from umhlathuze Municipality. The transaction was referred by Seda Key development impact information Location: Richards Bay Job maintained: 1 Funding amount: R (small loan) Sector: Services Age category: Youth 40

41 Sojija Trading (Pty) Ltd Soji Fresh has been in business since The business is 100 % owned by a youth, a qualified chef who has over 10 years experience. The key focus is the supply of processed fruit and vegetables to key customers in Durban which includes Durban International Convention Centre and several restaurants in the Spur Group. The business is based within the Durban CBD and provides employment to 7 individuals. sefa has funded R which was used to meet increased orders from Durban s ICC and restaurants. Key development impact information Location: Durban CBD Job maintained: 7 Funding amount: R (small loan) Sector: Agro-processing Age category: Youth 41

42 Sasamela Trading Enterprises CC Sasamela Trading Enterprises and Projects CC was established and registered in 2007 Sasamela Trading Enterprise is 100% black-owned family (husband and wife) construction business Key Information Location: Ga-Ntata Funding amount: R Sector: Manufacturing Jobs Created: 50 The business is owned by Mrs. Ms. Phindile (60%) and Mr. Ronald Machweu (40%) The business is involved in brick manufacturing The enterprise is an accredited member of the National Gazelles top 160 for the year 2017 The business also received an incentive grant for machinery from the Black Business Supplier Development Programme (BBSDP) to the value of R A loan amounting to R was approved by sefa to acquire a brickmaking machine, transportation of the machine, crane hire for installation and site layout preparation 42

43 Sarisha Haripershad Optomerist (Pty) Ltd Sarisha Haripershad Optometrist is a start up company which was set up to trade as Torga Cornubia franchise within the new Cornubia Mall. The business is 100 % owned by a female youth, a qualified optometrist who has over 10 years experience. The business key focus is to render comprehensive visual examination service and to supply optometric related products to customers in Cornubia and surrounds. sefa has funded R which went toward setting up the practice. Key development impact information Location: Cornubia (KwaZulu- Natal) Job created : 7 Funding amount: R Sector: Healthcare Age category: Youth Gender: Female 43

44 Ukhansi Construction (Pty) Ltd Ukhansi Construction was established in The business is 100% black owned and 20% youth-owned. The business specialises in building construction, civil engineering, road and earthworks, mechanical & electrical engineering and High Pressure Cleaning. The company was awarded a contract by Umngeni Water for the upgrade of the Water Treatment Plant in Umzinto. sefa has funded initial project costs. The transaction was sourced through a proactive engagement with Umgeni Water. Key development impact information Location: KwaZulu -Natal Job created: 14 Job maintained: 5 Funding amount: R Sector: Construction 44

45 Majahabesutfu Trading (Pty) Ltd Majahabesutfu Trading (Pty) Ltd is a transport and logistics company. The business is 100% black and youthowned This company secured a 5 year contract with Pioneer Foods Ltd to transport nonperishable food stuffs. sefa funding amounted to R The business will maintain 3 permanent jobs and will create 12 with sefa funding. Key development impact information Location: Vosloorus Township Jobs created: 12 Jobs maintained: 3 Funding amount: R Sector: Transport and logistics 45

46 Thank you! 46