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 BUSINESS/PARTNERS financial results reveal resilience and appetite for growth among SMEs

 

 Despite the challenging economic conditions facing the South African small and medium enterprise (SME) sector, the appetite for finance and growth amongst these businesses still seems to be healthy and robust, which is a positive indication for the industry going forward. This is according to Nazeem Martin, Managing Director of BUSINESS/PARTNERS, a specialist risk finance company for formal SMEs, who says that the company’s financial results for the year ended 31 March 2015 highlight this positive trend in the marketplace

The company’s 2014 / 2015 financial results revealed that, in total, an impressive 380 business investments valued at R 1 117.0 million were approved during the financial year. According to Martin this is an 8.8 % year-on-year increase in investment activity, up from R1 082.5 million in the previous financial year. “This is a significant achievement in the wake of challenging economic conditions, uncertain power supply and sluggish consumer demand, and reinforces the appetite for funding and risk amongst South African SMEs.”

During the 2014 / 2015 financial year total income increased from R470.1 million in the prior year to R513.2 million for the year under review, which is a direct result of double digit growth in all revenue lines excluding interest. Net profit for the group amounted to R182.7 million, 18% higher than the previous financial year.

Of the 380 investments approved, 147 investments to the value of R403.9 million were approved for black entrepreneurs, an increase of 22.7% from the R 329.1 million approved in 2014. During the 2014/2015 financial year, 160 investments amounting to R357 million were approved for female entrepreneurs, and more than 17 200 employment opportunities were facilitated through the company’s investment activities.

“These employment statistics underline the crucial role that small businesses play in creating jobs and boosting economic growth, and is exactly the reason why the public and private sector need to continually support local small businesses.”

Martin says that SMEs in the manufacturing sector are generally recognised for being businesses that are efficient and effective job creators. It is therefore pleasing that this sector attracted more investment from the group than any other during the financial year, with more than R257.5 million in new investments approved. “During a year in which SMEs were experiencing tough trading conditions, the strong financial results and volume of new business concluded exceeded the company’s expectations.”

He says that credit losses came down significantly in the past financial year, and that the credit risk in the investment portfolio was surprisingly low. “Net credit losses decreased by 22.7% percent to R36.1 million with bad debts sharply lower. The risk profile of investment portfolio, as measured by the repayment performance of the investments, also improved over the period. These achievements are primarily the result of diligent investment decisions and post-investment support provided to clients.

“During the 2014/2015 financial year 290 BUSINESS/PARTNERS mentors were available to provide valuable mentorship and consulting services to our clients, which resulted in many SMEs surviving and also flourishing in tough trading conditions. We extended this support service beyond our client base by establishing the Entrepreneurs Growth Centre in 2014, which is a free mentorship and support service available to all entrepreneurs.”

Martin says that having reported strong operational results, they are confident of meeting the investment targets for the 2015/2016 financial year, set at more than R1.1 billion. “We launched two funds in the last financial year, a Manufacturing Fund and an Education SME Fund, and we expect these funds to provide traction to the investment efforts in the current financial year.

“Despite the challenges facing the South African economy, we expect that entrepreneurs will continue to work hard and seek growth opportunities. Affectionately referred to as ‘square pegs’ at BUSINESS/PARTNERS, these individuals are eternal optimists and are confident in their own abilities to perform,” Martin concludes.

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