IDC Integrated Results for the year ended 31 March 2017 31 July 2017 - - PowerPoint PPT Presentation
IDC Integrated Results for the year ended 31 March 2017 31 July 2017 Advancing Transformative Industrialisation Outline 1 Overview of the Year 2 Financial Performance 3 Operational Performance 4 Conclusion Advancing Transformative
IDC Integrated Results for the year ended 31 March 2017
31 July 2017
Advancing Transformative Industrialisation
Outline
Overview of the Year
Operational Performance
Advancing Transformative Industrialisation
Financial Performance
Conclusion
2
About Advancing Transformative Industrialisation
Industrialisation Transformative Advancing Transformation of the South African economy has several facets:
women and youth to encourage tomorrow’s leaders of industry;
in the economy;
increase income levels and reduce poverty;
sectors in the future;
infrastructure development and beneficiation.
3
The year under review was again a challenging
GLOBAL DOMESTIC
2016, was the weakest since the global financial crisis in 2009.
developments dominated international headlines, thereby affecting investor and business confidence.
impacting on performance of many export- reliant economies.
during the year, underlying market fundamentals have not yet supported a sustained recovery.
exports, Sub-Saharan Africa’s subdued growth has been of particular concern.
gradually declining for a number of years – with GDP increasing by only 0.3% in 2016 – the lowest rate of expansion since the 2009 recession.
the 2nd half of the reporting period, whereas concerns over the country’s sovereign credit ratings continued to loom large.
sector declined by 5% in real terms.
5
Most South African sectors performed below expectations
Real GDP growth by main economic sector
2 4 6 Agriculture (2.4%) Mining (8.1%) Manufacturing (13.7%) Electricity (2.3%) Construction (3.9%) Trade (15.3%) Transport (9.4%) Finance (22.1%) Government (17.0%) Personal services (6.0%) Total GDP
% Change 2015 2016
Figures in brackets refer to contribution to overall GDP Source: IDC, compiled from Stats SA data
slow
contracted by 7.8% and mining’s gains
performance of sub-sectors shown below:
albeit low levels of growth.
Manufacturing sub-sector Weight in manufactu- ring Growth in
2016 Food & beverages 24.4%
Textiles & clothing 3.2%
Wood & paper 12.7% 3.4% Chemicals 22.1% 3.8% Non-metallic mineral products 3.9%
Metals & machinery 19.6%
Electrical machinery 1.7%
Radio & TV 1.4% 7.9% Transport equipment 7.4%
Furniture & other industries 3.6%
6
The IDC continued to balance its priorities
We achieved commendable results in a year characterised by high levels of uncertainty and slow global economic growth
Financial Sustainability Developmental Outcomes
IDC continued to achieve record- levels of funding approvals with an all time high of R15.3 billion supporting transformative industrialisation IDC remained financially sustainable through recording a group profit of R2.2 billion 7
Performance Highlights for 2016/17 R15.3bn
175 TRANSACTIONS APPROVED
R11.0bn
TOTAL FUNDING DISBURSED
20 881
JOBS EXPECTED TO BE CREATED OR SAVED
R7.7bn
APPROVED FOR THE MANUFACTURING SECTOR (126 Deals)
R10.1bn
APPROVED FOR BLACK- EMPOWERED COMPANIES (117 Deals)
R4.7bn
APPROVED FOR BLACK INDUSTRIALISTS (83 Deals)
R3.2bn
APPROVED FOR BUSINESSES WITH WOMEN OIWNERSHIP OF >25% (46 Deals)
R2.3bn
APPROVED FOR BUSINESSES WITH YOUTH OWNERSHIP OF >25% (52 Deals)
(↑6%) (↓3%) (↑37%) (↓14%) (↑104%) (↑178%)
R2.2bn
NET PROFIT AFTER TAX
R129.8bn
TOTAL ASSETS
(↑887%) (↑63%) (↑142%)
We advanced transformative industrialisation, whilst remaining financially sustainable
(↑7%)
8
Ensuring financial sustainability
IDC Group Structure
Mini Group
IDC Ltd
Findevco (Pty) Ltd Impofin (Pty) Ltd Konoil (Pty) Ltd
100% 100% 100%
Other subsidiaries
Scaw South Africa (Pty) Ltd
Associates
Mozal SARL Incwala Resources (Pty) Ltd Hulamin (Pty) Ltd Ka Xu Solar One (Pty) Ltd Other subsidiaries Other associates
74% 24% 24% 30% 29%
various various
sefa
100%
Foskor (Pty) Ltd
59%
Palabora Copper (Pty) Ltd
20%
KHI Solar One (Pty) Ltd
29% 10
Summary of IDC Group Financial Performance
IDC Mini-Group IDC Group
REVENUE
R17.4bn
REVENUE
R7.5bn
From R6.3bn
NET PROFIT FOR THE YEAR
R2 200m
NET PROFIT FOR THE YEAR
R2.8bn
From R1.2bn
ASSETS BASE
R130bn
FAIR VALUE OF FINANCIAL ASSETS
R83bn
From R76bn
PROFIT FROM EQUITY ACCOUNTED INVESTMENTS
R963m
IMPAIRMENT AS A % OF BOOK AT COST
16.7%
From 16.9% 11
IDC Group – Actual profit year-on-year
Group Income Statement (R‘ million) Group 2016 2017 % Actual Actual change Revenue 19 408 17 372 (10) Cost of sales (11 918) (9 010) (26) Financing costs (1 317) (2 607) 98 Gross profit after financing costs and cost of sales 6 173 5 755 (2) Net capital gains 453 1 688 273 Other income 581 329 (43) Non-administrative expenses
nmf Loss from discontinued operations
nmf Operating expenses (7 701) (6 416) (13) Operating profit (494) 616 nmf Income from associates and JVs 557 963 73 Profit before taxation 63 1 579 2 406 Taxation 160 621 nmf Profit/(loss) for the year 223 2 200 887 Other comprehensive (loss)/income (5 612) 956 nmf Total comprehensive (loss)/income (5 389) 3 156 nmf 12 * Non-administrative expenses relate to a tax provision for an exit from an investment which qualifies for recognition in the financial year, however, tax triggers are not met to disclose the provision in the tax line
Mini Group Foskor Scaw sefa Other subsidia- ries, JVs & associates Consolida- tion journals Group Figures in Rand million 2016 2017 2017 2017 2017 2017 2017 2016 2017 Actual Actual Actual Actual Actual Actual Actual Actual Actual Revenue 6 330 7 482 5 637 3 041 170 2 403 (1 361) 19 408 17 372 Cost of sales
(2 631)
2 (11 918) (9 010) Financing costs (1 300) (2 679) (123) (329) (32) (141) 697 (1 317) (2 607) Gross profit after financing costs 5 030 4 803 799 81 138 596 (662) 6 173 5 755 Net capital gains 410 1 688
1 688 Other income 406 213 55 17 65 (21) 581 329 Non-administrative expenses
Loss from discontinued operations
Operating expenses (4 709) (3 687) (2 179) (506) (417) (575) 948 (7 701) (6 416) Operating profit 1 137 2 639 (1 325) (787) (262) 86 265 (494) 616 Income from associates and JVs
950
963 Profit before taxation 1 137 2 639 (1 327) (787) (247) 1 036 265 63 1 579 Taxation 25 195 425
31 (54) 160 621 Profit/(loss) for the year 1 162 2 834 (902) (787) (223) 1 067 211 223 2 200 Other comprehensive (loss)/income (6 023) 1 362 (2) 17 14
(5 612) 956 Total comprehensive (loss)/income (4 861) 4 196 (904) (770) (209) 1 067 (224) (5 389) 3 156
Statement of Comprehensive Income
3 110 3 246 2 744 1 438 1 403 1 041 670 758 1 105 1 057 65 (147) (119) 328 (145) 1 492 2 071 2 157 2 705 4 297 540 587 692 570 533 390 367 417 423 442 197 251 371 169 108
6 835 7 045 7 020 6 736 7 695
(1 000)
2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 2013 2014 2015 2016 2017 R’m Mozal metal income Money market income Fee and other income Interest earned on loans to clients Preference share income Dividends - unlisted Dividends - listed
14
Mini-Group – Sources of Income
47 269 54 199 61 278 69 564 73 646 69 904 75 731 55 637 47 224 53 344 18,2% 18,2% 16,7% 16,9% 16,7% 7,4% 7,6% 8,8% 10,1% 9,7% 0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0% 35,0% 40,0%
40 000 60 000 80 000 100 000 120 000 140 000 2013 2014 2015 2016 2017
R’m
Fair value adjustment Cost of investments Impairments as a % of cost Impairments as a % of market value
Impairments Charge (R‘ million) 2016 2017 Actual Actual Impairments and write offs: 3 644 2 086 Impairments 1 626 772 Project impairments
Write-offs 2 045 1 328 IDC Mini Group Impairments by Sector (R' million) 2016 2017 Agro, Infrastructure & New Industries 1 274 (137) Mining & Metals 2 592 9 Chemicals & Textiles 113 1 863 High Impact (334) 351 Total 3 644 2 086
Mining & Metals:
Chemicals & Textiles
15
Impairments as a % of Total Financing
Figures in Rand million 2016 2017 % Change
Statement of financial position Cash and cash equivalents 6 865 7 699 12% Loans and advances 23 928 25 802 8% Investments 71 586 78 266 9% Property, plant and equipment 10 626 12 384 17% Other assets 8 343 5 685
Total assets 121 348 129 836 Capital and reserves 84 717 88 097 4% Non-controlling interest 102 193 89% Other financial liabilities 27 984 30 367 9% Other liabilities 8 545 11 179 31% Total equity and liabilities 121 348 129 836 16
Statement of Financial Position
126 885 138 593 122 289 121 348 129 836 96 766 106 769 89 797 84 715 88 097 19,7% 20,1% 26,8% 33,0% 34,5% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 20 000 40 000 60 000 80 000 100 000 120 000 140 000 160 000 2013 2014 2015 2016 2017 R’m Total assets Capital and reserves Debt/equity
Total assets increased from R121 billion in 2016 to R130 billion during the review period mainly as a result of the increase in the fair value of BHP Billiton and Kumba Iron Ore Limited (mainly due to higher iron ore prices). Our borrowings have grown in line with the growth in loans and advances resulting in an increase in debt/equity ratio from 33% in 2016 to 34.5% in 2017. 17
IDC Group – Financial Base
21 698 31 405 21 955 23 519 20 806 20 146 15 686 6 474 3 301 8 420 9 217 10 996 8 986 5 612 7 004 1 801 2 005 2 202 1 857 1 509 4 015 5 219 5 352 5 675 7 100
56 877 65 310 44 969 39 964 44 839
10 000 20 000 30 000 40 000 50 000 60 000 70 000
Mar 13 Mar 14 Mar 15 Mar 16 Mar 17
R’m
Sasol Kumba Iron Ore BHP Billiton Life Healthcare Other
18
The Listed Portfolio
30 027 28 996 27 442 33 982 30 914 16 023 11 171 10 901 11 380 10 974 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 31.03.13 31.03.14 31.03.15 31.03.16 31.03.2017 R’m
Commitments - undrawn facilities Advances Commitments by Value Chain R'million % Split Industrial Infrastructure 9,388 30% New Industries 245 1% Agro-processing & Agriculture 907 3% Chemicals and Textiles Industries 5,378 17% High Impact and Regions 3,154 10% Mining and Metals Industries 11,842 38% Grand Total 30,914, 100%
19
Commitments and Advances
Leading industrial capacity development
(of which 91% is dti funds) was approved from funds managed on behalf of third parties.
Implementation of REIPPP programme stalling:
agreements. 21
Our proactive approach increased approvals while disbursements remained flat
Value Chains New Industries Special High Impact Sectors High Impact Sectors Industrial Infrastructure
Products, Machinery & Equipment, Transport Equipment and Mining
& Pharmaceuticals
Agriculture
determined by forward looking trends and innovation, and could develop into significant
entertainment
footwear and leather products
mandate that offer high volume of
contribute to IDC development goals, but where IDC does not play a proactive role. These include industries such as tourism, ICT, furniture and other manufacturing industries not covered elsewhere.
unlocks industrial development: electricity, water, telecommunications and logistics.
22
We have prioritised a number of sectors and value chains
Utilisation of funds approved (2017)
R8 498m Metals & mining R55m Agro-processing & agriculture R2 051m Chemicals & pharmaceuticals R1 840m Industrial infrastructure R434m Clothing, textiles, leather& footwear R161m Media & motion pictures R222m New industries R2 024m Other manufacturing, tourism & services
Value approved by sectoral focus area (2017)
pharmaceuticals value chains attracted the largest portion of funding
to the agro-processing and agriculture value chain was disappointing due to conditions in the sector and cancellations
funding approved in previous years (since all the reported activities reflect net approvals).
projects and start-ups, followed by capacity expansions.
29% Capacity expansions 46% Projects & new start-ups 10% Ownership changes 13% Distressed businesses 2% Expansionary ownership changes
23
Our proactive investment approach resulted in an increase in funding approvals
Basic Metals and Mining Value Chain
Other transport equipment Motor vehicles and parts Machinery and equipment Fabricated metals Basic metals Mining
Development Outcomes
JOBS EXPECTED TO BE CREATED AND SAVED IN SOUTH AFRICA JOBS CREATED AND SAVED PER R’M APPROVED IN SOUTH AFRICA
9 240 1.1
FUNDING TO BLACK- EMPOWERED COMPANIES FUNDING TO BLACK INDUSTRIALISTS
R5 178m R3 269m
FUNDING TO WOMEN ENTREPRENEURS FUNDING TO YOUTH ENTREPRENEURS
R2 194m R286m
Remarks
disbursements were lower by 28.5%,
BAIC to establish a new car plant in Port Elizabeth.
can factory to be built in Germiston by a Black Industrialist. 24
The mine’s production of anthracite coal (low sulphur and phosphorous), enables it to operate in a niche market, with a high-demand from the metallurgical industry. South Africa is currently a net importer of anthracite, a situation which this transaction assisted to address. South Africa’s consumption of anthracite is primarily driven by demand by ferrochrome producers. The availability of locally produced anthracite reduces the input costs to these industries and improve their competitiveness. Nkomati is a sizeable employer in the Mpumalanga region, which employed 233 people. Funding from the IDC created an additional 100 new jobs through the expansion project. Nkomati is owned by the Mpumalanga Economic Growth Agency (MEGA) and Benicon Coal Limited (Benicon) in a 40:60 split respectively. Benicon is a wholly-owned subsidiary of the JSE-listed Sentula Mining Limited.
Nkomati is an opencast and underground coal mine exploiting anthracite along the Kangwane Coalfield near Komatipoort in Mpumalanga Province.
Sought funding to establish its make-safe ramp-up plan. This operation included blasting to recover left behind coal on the mine’s roof and floor, cutting uneven sides of tunnels, pillar design, roof stability and installation of new conveyor and ventilation systems. Direct Jobs:
IDC’s funding to Nkomati Anthracite supported the development of strategic minerals to lower cost for beneficiation industries.
CASE STUDY
25
Development of strategic minerals to lower cost for beneficiation industries
Ronewa Analytical Laboratory was established in 2012 offering analytical services in the mineral industry mainly the coal industry. Ronewa is a sought-after analytical services corporation that offers excellent services in the field of chemistry. They are a proudly South African company empowered by a woman and youth. The partnership with IDC is to fund the purchase of equipment and vehicles required to set-up an independent coal analytical laboratory in Polokwane, Limpopo province. Ronewa has secured a two year contract from a major coal producer mining over 2 million tonnes p.a. Ronewa will carry out laboratory coal testing services at coal projects in Limpopo and
the mining company within 2 working days. Ronewa is to deliver services following standards of practice recognised by one or more first-class laboratories performing similar work under similar
enterprise development initiative.
Ronewa Analytica Laboratory Polokwane, Limpopo Basic Metals & Mining
Women: 50% Youth: 100% IDC has committed R5 million to fund a youth driven start-up. The proposed funding will assist in establishing youth entrepreneurs and complies with IDC’s Gro-e Youth Scheme.
CASE STUDY
Direct Jobs:
26
Ronewa Analytica is boosting black women ownership and youth ownership into the mining industry
Development Outcomes
JOBS EXPECTED TO BE CREATED AND SAVED IN SOUTH AFRICA JOBS CREATED AND SAVED PER R’M APPROVED IN SOUTH AFRICA
1 023 6.6
FUNDING TO BLACK- EMPOWERED COMPANIES FUNDING TO BLACK INDUSTRIALISTS
R77m R45m
FUNDING TO WOMEN ENTREPRENEURS FUNDING TO YOUTH ENTREPRENEURS
R36m R79m
Remarks
Horticulture Beverages Food Processing Agriculture, forestry and fishing Gross approvals Net approvals Funds disbursed
from the Agro-Processing Competitiveness Fund was approved for projects in this value chain, a drop of 28% from the previous
abattoir in Klerksdorp 27
Agro-processing and Agriculture Value Chain
Maneli Pets, Gauteng Agro-processing
Black Industrialist: 78% Women: 4% Youth: 65%
Maneli Pets is a black youth-
manufacturer, and the first South African pet treat company to secure access to the United States market.
Direct Jobs:
In addition to the funding being supplied by the IDC, Maneli Pets also received grant funding through the dti’s Black Industrialist Scheme.
Maneli Pets is a business initiative of the Maneli Group, a newly established agro-processing holding company, with initiatives aimed at exploring other business ventures. The company is being established to produce
treats for dogs, branded under the label Roam to be sold in retail stores in the United States. The treats will be sold in over 100 regional pet speciality chain stores in high-end suburban areas across the country.
CASE STUDY
The company will source its raw materials from the Karoo and Limpopo, thus assisting in the development of rural areas, with its processing facility to be established in Sebenza, Johannesburg.
28
Supporting youth empowerment, rural development and promoting SA exports
Development Outcomes
JOBS EXPECTED TO BE CREATED AND SAVED IN SOUTH AFRICA JOBS CREATED AND SAVED PER R’M APPROVED IN SOUTH AFRICA
1 169 0.7
FUNDING TO BLACK- EMPOWERED COMPANIES FUNDING TO BLACK INDUSTRIALISTS
R1 110m R384m
FUNDING TO WOMEN ENTREPRENEURS FUNDING TO YOUTH ENTREPRENEURS
R219m R110m
Healthcare Oil and gas transport and storage Plastics and other products Chemical products & pharmaceuticals Fertilisers Basic chemicals
compared with R4.8 billion in 2016, the change mostly due to last year’s recapitalisation of Foskor;
Energy, a liquefied petroleum gas import and storage terminal, also funded by the IDC, establishment of a pipeline and compression infrastructure to distribute natural gas from wells in the Free State to industrial users.
Remarks
29
Chemicals and Pharmaceuticals Value Chain
Tetra4 beneficiates natural gas to offer Compressed Natural Gas (CNG) solutions for the transport, mining and industrial
substitute for petrol, diesel and propane (LPG). It is considered to be a more cost-effective and environmentally friendly alternative to other liquid fuels, as it produces less pollutants. IDC assisted Tetra4 with funding for the first phase of a project to construct a pipeline linking up 13 existing gas wells to the mother-station compressor and dispenser. Gas emanating from a specific well can only be used if that well is piped to an appropriate
Tetra 4 aims reticulate the existing 13 wells to a central processing facility or mother- station compressors and dispensers.
Tetra4, Free State Chemicals Value Chain Women: 10%
The IDC's support of Tetra 4, a natural gas producer that provides a sustainable, clean energy solution to large scale users in the Free State Goldfields region, is in line with our strategy to diversify energy resources. Direct Jobs:
CASE STUDY
Tetra4 currently has a total of 14 employees, with an additional 15 new permanent jobs to be created through IDC’s funding.
30
IDC remains committed to energy resource diversification
Industrial Infrastructure
Electricity generation and distribution Transport and logistics Other infrastructure
Development Outcomes
JOBS EXPECTED TO BE CREATED AND SAVED IN SOUTH AFRICA JOBS CREATED AND SAVED PER R’M APPROVED IN SOUTH AFRICA
2 864 1.4
FUNDING TO BLACK- EMPOWERED COMPANIES FUNDING TO BLACK INDUSTRIALISTS
R1 966m R9m
FUNDING TO WOMEN ENTREPRENEURS FUNDING TO YOUTH ENTREPRENEURS
R297m R948m
Remarks
approved in 2016.
for two coal-fired independent power stations for SA;
maintenance services for Transnet, funding for a black woman-
100% black youth-owned company servicing the rollout of fibre to homes.
31
Delta Zero Corporation
Johannesburg, Gauteng Delta Zero Corporation is a newly-formed company. IDC has a call option in Delta Zero Corporation and provided development funding towards completing units to be tested at Harmony Gold and another mine for six months
aims to manufacture and rent the units commercially to the mining industry. Direct Jobs:
CASE STUDY
Delta Zero Corporation slurry pumps are an innovative way of pumping large volumes of slurry at high pressure that significantly reduce the load on the
by conventional systems and require no gland seal water. In addition, conventional system energy efficiency reduces rapidly as wear takes place on rotating impellers in direct contact with abrasive slurries. The rotating impellers in Delta Zero systems operate in non-abrasive clean water with minimal wear rates, thus maintaining high energy efficiencies over the life of the system. Delta Zero’s patented technology is locally-developed and 80% of the components supporting it are locally produced, with the potential of being exported.
32
Our funding of Delta Zero Corporation prioritises the security of water supply as a scarce resource
The technology supports the mining value chain by reducing the cost of production through lower water and energy consumption, of which slurry pumping is a large component. The funding has created five jobs, with three additional jobs expected to be created for every 10 pumps installed. In addition, 37 indirect jobs were created through the associated supply companies, who manufacture the units.
Clothing, Textiles, Leather and Footwear
Leather and footwear Clothing Textiles
Development Outcomes
JOBS EXPECTED TO BE CREATED AND SAVED IN SOUTH AFRICA JOBS CREATED AND SAVED PER R’M APPROVED IN SOUTH AFRICA
852 1.9
FUNDING TO BLACK- EMPOWERED COMPANIES FUNDING TO BLACK INDUSTRIALISTS
R271m R120m
FUNDING TO WOMEN ENTREPRENEURS FUNDING TO YOUTH ENTREPRENEURS
R26m R33m
Remarks
and footwear industries declined by 22% to R433.5 million.
guarantees.
funding for a business operating from Zwelitsha, Eastern Cape, that we helped to establish in the 1940s.
while 22% was allocated to the Clothing sector.
33
The business was acquired in 2015 by a Black Industrialist. Prior to that it had been in operation for 10 years. Polyfabrics has been operating successfully due to its lean operations, allowing it to cater to clients’ needs with short lead times and competitive pricing. Due to its success, the company has been facing capacity constraints at its plant in KwaZulu- Natal. In order to meet rising demand, the company has identified a need to move to a larger premises. During the move, the company will replace some of its ageing machines and some other additional equipment. The company has also identified an opportunity to purchase a raw material manufacturing plant, which will allow it to backward integrate its operations, improve reliability of its raw material supply, and increase its competitiveness.
Polyfabrics Unlimited KwaZulu-Natal Youth: 100% Trading as Polyfabrics Unlimited, a youth-
manufactures webbing from synthetic fibres such as polypropylene, nylon and polyester. This is predominantly used in packaging for the agricultural, chemical, mining and construction industries and logistics.
Direct Jobs:
CASE STUDY Our funding for these business- improvements will help this young entrepreneur create 47 new jobs.
34
The youth we are investing in are contributing to job creation
Media and Motion Pictures
Development Outcomes
JOBS EXPECTED TO BE CREATED AND SAVED IN SOUTH AFRICA JOBS CREATED AND SAVED PER R’M APPROVED IN SOUTH AFRICA
126 1.2
FUNDING TO BLACK- EMPOWERED COMPANIES FUNDING TO BLACK INDUSTRIALISTS
R80m R79m
FUNDING TO WOMEN ENTREPRENEURS FUNDING TO YOUTH ENTREPRENEURS
R59m R62m
Remarks
Television and radio broadcasting Film and video production
down 22% from the last year, while R350.3 million was disbursed.
production of a television series, a full length 3D animated film, and three lower-budget films that will be licensed for broadcast by pay television.
interests in a number of radio stations in Gauteng, Limpopo, the Free State, and the Eastern Cape.
35
Over and above the film market, Octopus Vision have developed networks with local upcoming musicians, who want to break into the mass market and promote their material on video channels such as Channel 116, Vuzu. IDC’s funding of Octopus Vision created 10 jobs and is in support of the aggressive drive by South Africa’s three broadcasters, SABC, M-Net and e.tv, to promote local content. Octopus Vision is targeting the entry-level film category, in which films are not sold, but exclusively licensed out for three years to broadcasters. Breaking into the local film production sector remains a challenge for young film makers, especially since production companies typically require production equipment such as cameras, computers and editing suites and seed capital to fund start-up losses as broadcasters usually only make their buying decisions once they have seen the finished productions. Octopus Vision aims to produce and license between four and five films per year. The two producers are skilled in movie and video production and have produced four movies and two music videos, which was well received in the market.
Octopus Vision
Sebokeng, Gauteng
Youth: 100%
Octopus Vision, 100%
black entrepreneurs, approached the IDC to fund the purchase of film equipment and working capital to produce content mainly for television and to provide production services for music artists. The company produces TV shows that are based on local stories and filmed in Sebokeng, Gauteng, using local actors. Direct Jobs:
CASE STUDY
Funding young emerging black film- makers to enter the sector is one of our key developmental areas in establishing and growing a sustainable local film industry.
36
Funding the youth to enter a niche market
New Industries
Other industries ICT-related Machinery Electronics Medical equipment
Development Outcomes
JOBS EXPECTED TO BE CREATED AND SAVED IN SOUTH AFRICA JOBS CREATED AND SAVED PER R’M APPROVED IN SOUTH AFRICA
478 2.2
FUNDING TO BLACK- EMPOWERED COMPANIES FUNDING TO BLACK INDUSTRIALISTS
R31m R79m
FUNDING TO WOMEN ENTREPRENEURS FUNDING TO YOUTH ENTREPRENEURS
R3m R108m
Remarks
2016, while disbursements increased by 10% to R110.9 million.
produces light-emitting electronic devices using standard silicon- based manufacturing processes, the commercialisation of toilet valves and funding a company that will produce metal-mould tooling using additive manufacturing.
clients in the medical equipment industry.
37
Metal Heart is a start-up company which was established to provide a service using additive manufacturing to produce, inter alia, specialised metal components to industry which cannot be manufactured through conventional methods.
The capability of the proposed 3D printing equipment is not available in South Africa at present. This investment will facilitate localisation opportunities and import replacement.
Metal Heart Randburg, Gauteng New Industries Youth: 100%
IDC advanced R17 million for key technologies that are enabling the Fourth Industrial Revolution
CASE STUDY
Direct Jobs:
38
Metal Heart is at the heart of technological advancement with additive manufacturing
Metal Heart intends starting its venture into additive manufacturing by supplying improved tooling to an established DIY fasteners and fixers company, for whom they will manufacture metal mould inserts. The company has also received interest from
components, automotive applications to air shafts.
Other Manufacturing Industries, Tourism and Other Services
39
ICT Tourism Construction Recycling Furniture & other manufacturing Electronics Non-metallic mineral products Wood & paper products
Development Outcomes
JOBS EXPECTED TO BE CREATED AND SAVED IN SOUTH AFRICA JOBS CREATED AND SAVED PER R’M APPROVED IN SOUTH AFRICA
5 115 2.6
FUNDING TO BLACK- EMPOWERED COMPANIES FUNDING TO BLACK INDUSTRIALISTS
R1 364m R796m
FUNDING TO WOMEN ENTREPRENEURS FUNDING TO YOUTH ENTREPRENEURS
R390m R717m
Remarks
disbursements increased to R1.3 billion.
Umhlanga Village in KwaZulu-Natal and a mid-market hotel in Mthatha in the Eastern Cape.
porcelain tile manufacturer in Bronkhorstspruit, Gauteng, for an establishment of a new tissue paper mill, and for modernisation of production equipment at a leading paper sack manufacturer.
Fair Price Furnishers was started to manufacture goods for its affiliate company, FP Retail through its 90 stores. Fair Price Furnishers has grown quickly as a result of both the increasing range of goods it produces, as well as the growing number of stores it supplies through FP Retail. Fair Price Furnishers’ products are aimed at the low- to mid-income market. The company needed to expand its manufacturing capacity to meet local consumer demand for quality products at reasonable prices. IDC’s funding capacitated the company to purchase plant and equipment and property in Brits, North West. In addition, the funding provided working capital.
Fair Price Furnishers Vereeniging, Gauteng
With its 100% black
the company to increase capacity in a struggling industry, whilst growing the number of Black Industrialists entering the manufacturing market. Fair Price Furnishers manufactures a range of furniture products for low-to middle income groups. In addition to the factory in Brits, the company has three
Devland, Nancefield and Qwaqwa. Direct Jobs:
CASE STUDY
The South African furniture manufacturing industry has been constrained by declining competitiveness, low economic growth and the influx of cheap imports.
40
Growing Black Industrialists in a labour-intensive industry
MTC converts paper wadding into 1-ply and 2-ply toilet paper, serviettes, paper towels and wipes for its industrial and retail clients, as well as its own brand, Cloud Nine™. Its array of SABS-approved products appeals to both the high-end and low- end markets. The company employs 18 people in the KZN Province. When Nampak exited its converting plant facility in 2005, it entered into an Enterprise Development Agreement with MTC and undertook to supply paper wadding to MTC as well as to purchase converted products on a take-or-pay basis. The contract was renewed after five years and the assets were transferred to MTC. Upon renewal, the conversion volumes were increased and the term was changed from fixed term to evergreen. Twincare Group acquired Nampak Tissue in 2014 and the company signed an addendum taking over the agreement with MTC to continue converting TwinSaver products for its KZN market.
MTHEMBU TISSUE CONVERTING Kwazulu-Natal
Mthembu Tissue Converting (MTC), an established manufacturer and seller of tissue products in KwaZulu- Natal. The company was established in 2005 by a visionary Black Industrialist, who started his career at Nampak as a packer, only to become its converting plant manager and later owner of his own company, MTC. Direct Jobs:
CASE STUDY
This 100% black-
has received funding to purchase energy- efficient, modern equipment to expand its production capacity.
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Empowering Black Industrialists whilst creating jobs through expansion
(2016: 3 439 jobs).
Number of jobs expected to be created and saved Number of jobs expected to be created and saved per sector
Agriculture, hunting, forestry and fishing; 1 023 Mining and quarrying; 4 326 Manufacturing; 9 086 Electricity, gas and water supply; 2 632 Construction; 1 914 Other; 1 900
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The number of jobs expected to be created and saved represents a 37% increase on 2016
The OTMS project is a new entrant into the local crude oil storage industry. IDC provided a plant and equipment loan for the first construction phase, which includes building eight crude oil storage tanks with capacity of 1.1 million barrels each and the full infrastructure for Phase 2, which includes building an additional four storage tanks. The storage tanks will be built from concrete and will be above ground and
where it will connect to an existing pipeline from the Strategic Fuel Fund Association (SFF). The pipeline currently runs between the adjacent SFF strategic crude oil storage facility to the existing oil jetty in the Port of Saldanha. Oiltanking MOGS Saldanha (OTMS) Saldanha Bay, Western Cape Chemicals Value Chain
Black Industrialist: 50% IDC partnered with project oil company Oiltanking MOGS Saldanha (OTMS) to fund the construction of the first phase of an open access commercial crude oil blending and storage terminal adjacent to the Port
Cape Province. Direct Jobs:
The project will create 70 permanent jobs as well and 650 annualised construction jobs. Additional benefits on a national, regional and local level include procurement of cement and steel and using regional skilled labour from a talent pool created by previously funded IDC projects.
CASE STUDY
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Oiltanking MOGS Saldanha, is expected to contribute towards energy security and the creation of 720 jobs
Value of funding for black-empowered and black-owned companies
R10.1 billion (2016:R4.9 billion).
This amount is triple the R1.1 billion approved in 2016.
These results demonstrate our commitment towards economic transformation
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We continued to increase funding for black-empowered and black-owned businesses whilst prioritising women- empowered businesses
The company received funding from the IDC to construct and install a section of the Ariadne Venus 400KV transmission line in Estcourt, KwaZulu-Natal. Transmission Worx was awarded a subcontract to erect and string electricity transmission lines, maintain electricity transmission live lines, install fibre optic cables and maintain the telecommunication optic fibre infrastructure. The contract was to construct 30km of the 123 km long transmission line. Transmission lines and installation of optic fibre falls within the IDC’s Industrial Infrastructure mandate in support of the corporation’s aim to increase its impact in the transmission space, largely through support of specialist sub-contractors such as Transmission Worx. In developing local skills, companies like Transmission Worx plays a meaningful role in the National Development plan deliverables and facilitates the export of South African skills in delivering on transmission projects in the Rest of Africa.
TRANSMISSION WORX Howick, Kwazulu-Natal Industrial Infrastructure
Black Industrialist: 51% Women: 51% Youth: 26% A majority black women-
power line and telecommunications infrastructure space. Direct Jobs:
The IDC’s investment in Transmission Worx supports the value created by Black Industrialists in the energy sector, where black-owned companies have historically not featured and continue to face high barriers to entry due to a lack of financial resources.
CASE STUDY
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Supporting Black Industrialists in our quest for infrastructure development
R2.3 billion in 52 transactions (2016: R970 million, 19 transactions).
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We remain committed to our target to support youth enterprises to the value of R4.5 billion from 2016 – 2020
2Ten Hotel CC is a youth-owned family business that started trading in 2008 as a four star hotel with 34 rooms, conference facilities for 750 guests, two restaurants and other amenities. The hotel is ideally located in Sibasa Town, Thohoyandou in Limpopo province. It is positioned to attract Government, business and leisure travellers as an ideal location for hosting events and conferences. With the growth in businesses and services sectors in Thohoyandou, 2Ten has benefited from the limited supply of upscale hotel accommodation and is considered a flagship hotel among the locals in and around Thohoyandou.
2Ten Hotel CC, Limpopo Province Light Manufacturing & Tourism
Black Industrialist: 100% Youth: 49% IDC’s funding of 2Ten Hotel CC included a senior loan facility to complete the structural work of a 61 key room hotel expansion with associated facilities, furniture, fittings, equipment and operating supply and equipment. Direct Jobs:
CASE STUDY
One of the IDC’s key deliverables is to invest in tourism businesses that increase accommodation in priority provinces, such as 2Ten Hotel CC in Limpopo Province.
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IDC supported a youth-owned business to play a meaningful role in the tourism sector
Approvals to Black Industrialists increased significantly
the development of the productive sectors of the economy.
with an emphasis on industrial development thus placing the Corporation in an excellent position to assist with the implementation of this policy.
Industrialists which covers several areas including opportunity identification, identification of Black Industrialists, facilitating access to finance and increased business support.
Since inception in 2014/15, the IDC approved:
(net) 203 deals to Black Industrialists, with a value of
creating and saving 11 725 jobs. 48
Wagienience, based in Gauteng, developed a unique patented product, WHC Leak- less Valve™. WHC Leak-less Valve™ is a water-control mechanism that is placed in toilet cisterns to stop the influx of water at a pre-determined level, thereby reducing water loss due to outlet valve leaks. The IDC supported Wagienience through its New Industries Strategic Business Unit (SBU) in providing funding that enabled the company to execute client orders, pilot projects with municipalities, Massmart and Public Private Partnership CSI Projects that target water savings. In addition to the funding, the IDC has played a pivotal role in formulating Wagienience’s strategy to commercialise and promote this locally designed, patented and manufactured product. The technology will be rolled out to public buildings.
WAGIENIENCE Pretoria, Gauteng New Industries Youth: 100%
As part of its focus on promoting young entrepreneurs, the IDC funded Water, Hygiene and Convenience (WHC) trading as Wagienience, a 100% black youth-owned company founded by technopreneur Paseka Lesolang. Direct Jobs:
The company has significant job creation and export potential and the business is currently underway to establish itself as a manufacturing entity for its own products.
CASE STUDY
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The Wagienience investment compliments our water conservation strategy whilst creating 462 jobs
Local production Energy security IDC’s funding of AVK Holdings is in line with its objectives to replace imported machinery and equipment that can be manufactured locally in support of Government’s infrastructure programmes.
AVK Holding Southern Africa Alrode, Gauteng Mining & Metals Value Chain
AVK Holdings and PV combined will have a strong position in South Africa for both water and industrial segments based on present market position and localisation, which is expected to reduce competition from cheaper imports. Direct Jobs:
CASE STUDY
development programmes are providing
production of goods and services.
towards coal for electricity generation.
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R4.9 billion was approved for localisation
Mpumalanga Gauteng North West Northern Cape Kw aZulu-Natal Eastern Cape Western Cape Limpopo Free State
Funding approved for the 5 years from 2013 to 2017 Jobs expected to be created and saved for the 5 years from 2013 to 2017 Total exposure at cost:
R15.1 bn 5 890 R12.3 bn
Northern Cape
Total exposure at cost:
R1.2 bn 9 664 R6.4 bn
North West
Total exposure at cost:
R9.3 bn 15 790 R9.2 bn
Limpopo
Total exposure at cost:
R3.2 bn 7 065 R3.2 bn
Mpumalanga
Total exposure at cost:
R18.5 bn 25 605 R18.2 bn
Gauteng
Total exposure at cost:
R5.7 bn 14 059 R3.7 bn
KwaZulu-Natal
Total exposure at cost:
R0.6 bn 1 075 R0.6 bn
Free State
Total exposure at cost:
R5.3 bn 8 050 R4.2 bn
Eastern Cape
Total exposure at cost:
R6.7 bn 11 806 R4.6 bn
Western Cape
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Our funding continues to promote regional growth
IDC subsidiaries continue to play a crucial role in the economy
Phosphoric Acid prices are forecast to remain depressed in the medium term, thus requiring a significant change in the way Foskor operates. Initiatives include:
Strengthening Existing Market Base
Management
New Projects
Loss: (R902 mill.)
Scaw is not sustainable in its current form due to the continued weak financial performance. In
the IDC is in the process
introducing Strategic Equity Partners (SEPs) who will bring focused operational know-how and capital injection into different divisions of Scaw. Initiatives include:
Grinding Media and Cast Products division’s operations from Scaw to
as independent entities and introduce SEPs with industry know-how to
Scaw divisions with industry know- how to introduce alternative markets and
efficiencies and consequently performance
the remaining business divisions.
Loss: (R787 mill.)
sefa continues to focus on strengthening its sustainability initiatives especially in light of the reduced government grant. Initiatives include:
reducing impairments especially in the Direct Lending businesses channel.
to achieve the cost to income ratio
income
developmental returns through leveraging existing partnerships, and growing the private sector networks.
Loss before grant: (R223 mil.)
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Approvals Target: R885m Achieved: R827m
93.5%
Disbursements Target: R704m Achieved: R1,075b
152.8%
Number SMME Target: 47 055 Achieved: 43 211
91.9%
Jobs Target: 73 862 Achieved: 55 997
76.7%
Youth Target: R211m Achieved: R222m
105.4%
Rural Target: R313m Achieved: R365m
116.8%
Women Target: R317m Achieved: R406m
128.3%
Black Target: R493m Achieved: R759m
154.1%
Productive sectors (Approvals)
Target: R354m Achieved: R359m
101.6%
Disabilities Target: R14m Achieved: R3m
21.7%
Cost-to-income Target: 157% Achieved: 161%
98%
Impairment Target: 29% Achieved: 47%
62%
Interest & fee income growth Target: 6% Achieved:
Turnaround time (average) Target: 32 days Achieved: 31 days
103%
IDP implementation Target: 80% Achieved: 93%
116%
77% (vs target of 70%)
achieved 77% (vs target of 70%). Small (< R500k) Target: R369m Achieved: R451m
122.3%
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sefa performance – As at 31st March 2017
Transforming Communities Social Enterprise Initiatives
Education & Skills Development
Entrepreneurship and Job Creation Initiatives
2016: R15 million 2016: R27 million 2016: R2.5 million 54
We remain committed to transform communities: CSI & Social Enterprises
Partnerships Leadership and Change Management
IDC has invested approximately R88 million in this school-based support project which aims to improve the functionality of schools.
support, as well as
governance of schools.
part of the programme (20 secondary and 10 primary schools) impacting on 41 429 learners and 552 educators and management.
Our CSI flagship project, is currently in its fourth year of implementation. IDC has:
facilities
existing facilities
Programme in all adopted Primary Schools
Technology (ICT) Programme within adopted schools
Cape) to navigate the process of changing to a digital classroom;
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Whole School Development project (in partnership with Adopt-a-School Foundation)
Through its Corporate Social Investment (CSI) initiatives, the IDC is crafting a brighter future for unemployed youth, by supporting the Technical Vocational Education and Training (TVET) Colleges sector.
Ekurhuleni East College’s Kwa-Thema Campus, Gauteng T Northern Cape Urban College’s (NCUC) Galeshewe Campus Waterberg College’s Lebowakgomo engineering campus, Limpopo Port Elizabeth College’s Ohayiya Campus, Eastern Cape
In 2017 the IDC set aside grant funding to support projects at four TVET colleges
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Support for TVET Colleges aims to upskill youth
SINAKHO Langa, Western Cape CSI
To establish a holistic, multi-purpose skills development centre, aimed at developing entrepreneurial skills, to train and equip unemployed persons and vulnerable youth and women in various hard and soft skills such as basic business skills, computer skills, food technology and confectionary - all through experiential learning.
supporting stakeholders, Nedbank and the Cape Town Fashion Council, the goal is to support Sinakho to open a mini-clothing and textiles factory.
In 2015 and 2016, 45 youth and women completed a Level 3 certificate training in all aspects of garment-making, delivered by “I Love Sewing”, an accredited industrial training service provider.
CASE STUDY
The organisation was established to improve the quality of leadership support, skills development and entrepreneurial skills that are lacking in our historically disadvantaged communities, in order to restore self-respect and dignity.
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Sinakho Skills Development Centre and Entrepreneurship Training Academy
Buhle Farmers Academy
Delmas, Mpumalanga; Mkhondo, KwaZulu-Natal
Community Development Programme, CSI
2017
vegetable, poultry, livestock production, and mixed farming.
viable business plan and market their produce, learning how to access markets and price the goods.
CASE STUDY
We support community entrepreneurial projects which are aligned to the IDC’s mandate, targeting women and youth.
After the training, the Farmer Support Programme supports approximately 100 graduates per annum with technical advice and business set up, bridging the gap between the information and experience gained.
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Buhle Farmers Academy (BFA) is a non-profit
The initiative supports the protection of plant biodiversity in compliance with the Nagoya protocol and promotes the protection of threatened indigenous plant species through engagement of rural communities in cultivation and value addition rather than wild harvesting. Partnerships are crucuial to Zuplex: 27 ha of land from the iNgonyama Trust via the Ntuli Traditional Authority has been signed with the Edakeni Muthi Futhi Trust (shareholder in Zuplex). All surpluses will be reinvested into the Edakeni Muthi Futhi Trust for socio-economic development within the community. 18 permanent jobs and 26 temporary jobs have been created.
Zuplex (Muthi Futhi)
Eshowe, KwaZulu-Natal
Social Enterprise Initiative IDC approved: R 4 998 000,00
The main environmental
create rural jobs through sustainable use of indigenous plant species, as an alternative to income generation through wild harvesting. Direct Jobs:
CASE STUDY
This initiative manufactures indigenous plant extracts targeting the international market, whilst also achieving tangible social and environmental benefits.
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We created rural jobs through sustainable use of indigenous plant species
In conclusion
The IDC journey ahead is still ambitious and bold; our goal is a substantially more proactive IDC, focused on sectors that exhibit the highest potential for sustainable and jobs-rich industrial development.
environment.
including the downgrades of South Africa’s sovereign credit ratings, our high unemployment rate and the fact that we have entered a technical recession.
during the upcoming period.
financially sustainable.
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Advancing Transformative Industrialisation