This is according to Business Partners Limited (BUSINESS/PARTNERS) – a leading risk financier for SMEs in South Africa and selected African countries – who today released their 2015/2016 financial results, which reported a 35,5% increase in the value of funding disbursed to local SMEs during the 12 month period.
Under testing economic conditions, BUSINESS/PARTNERS disbursed R966,2 million in funding through 307 investment transactions for the year under review, 1 April 2015 – 31 March 2016. This level of investments substantially exceeded the 2014/2015 financial year period, during which R713,1 million was disbursed via 278 investments.
Ben Bierman, MD of BUSINESS/PARTNERS, says that these results highlight that local specialist financiers continue to play a key role in developing the local SME sector by providing funding for businesses that may not have been able to expand without additional investment. “During a year when SMEs experienced tough trading conditions, the volume of business concluded exceeded our expectations.”
Operationally, BUSINESS/PARTNERS also achieved its annual projection of approving more than
R1,1 billion in new investments to SMEs across South Africa.
The company increased the profit before tax by 9.1% to R260,3 million, up from R238,6 million during the previous financial year. “Given market conditions over the past year, the company’s financial position was strengthened by its prudent expense management, increasing revenue lines as well as the growth in our asset base. The majority of the company’s revenue lines – net interest revenue, fees revenue and property revenue, and property management service income – all showed healthy increases.”
The net profit was impacted by changes in the inclusion rate for capital gains tax for companies from 66.6% to 80%. The profit after tax increased by 2.1% to R186,5 million.
Bierman adds that associated company income – the percentage of profits belonging to BUSINESS/PARTNERS from clients in which the company has an equity stake – was the only revenue line that decreased (14,4% year-on-year). “This is a strong indication that clients are experiencing less than ideal conditions, and are not performing as well as during prior periods,” says Bierman.
Assessing the competitive SME environment, he says that given the declining economic conditions over the past year, including the drought, political uncertainty and sluggish growth, banks seemingly became more risk adverse and cautious in funding SMEs, thereby allowing BUSINESS/PARTNERS to benefit by funding more of these businesses.
He adds that placing R966m in the hands of SMEs is no mean feat, and it is something that the company is especially proud of, as by doing so it has provided SMEs with the opportunity to grow.
“Since inception in 1981, we have aspired to ‘do good’ and ‘to do well’. By financing and empowering SMEs, thereby ensuring a positive developmental impact, we do good. By being profitable, thereby ensuring our sustainability and providing a real return to our shareholders, we do well.
Through the funding disbursed this financial year, 14 221 jobs were either sustained or created. Bierman adds that while this figure is below the number jobs created during the previous financial year (17 231), it represents a material effort in addressing South Africa’s unemployment challenge.
“In line with our ‘do good’ philosophy, over and above the funding, we seek to assist and aid entrepreneurs with technical assistance and solutions that enable them to navigate the challenges of operating small and medium enterprises so that they can thrive and support job creation,” says Bierman.
Bierman concludes that the company seeks to invest in excess of R1,2 billion in SMEs during the 2016/2017 financial year. “Given the current environment, it will be challenging, but we are positive this is achievable if we adopt a similar investment strategy.”
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