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Unaudited Interim results for the half year ended 30 September 2018 - BILB
The Land and Agricultural Development Bank of South Africa
(JSE Code: BILB)
(“the Land Bank”)
Land and Agricultural Development Bank of South Africa: Unaudited Interim results for the half
year ended 30 September 2018
Preparation of this report
The Chief Financial Officer, Mr. Bennie van Rooy CA (SA) was responsible for the preparation of the
unaudited interim results.
Basis of preparation
The condensed consolidated financial statements have been prepared, based on certain guidelines
contained in International Financial Reporting Standards (IFRS) and the interpretations issued by the
International Financial Reporting Interpretations Committee (IFRIC), by applying the accrual basis of
accounting, the going concern principle and using the historical cost basis except where specifically
indicated otherwise in the accounting policies. Accounting policies adopted and methods of
computation are consistent with those applied to the annual financial statements at 31 March 2018.
The preparation of interim financial statements requires management to make judgments, estimates
and assumptions that affect the application of accounting policies and reported amounts of assets and
liabilities, income and expenses. Actual results may differ from these estimates.
The key Group performance highlights are as follows:
FY2018H1 FY2019H1 FY2018H1 FY2018
Unaudited Unaudited Unaudited Audited
Restated Disclosed
Statement of Profit and Loss and Other Comprehensive Income
Profit after Other Comprehensive 63 055 52 257 52 764 193 859
Income (R’000)
Net interest margin (%) 2.8% 2.9%1 3.0% 2.9%1
Statement of Financial Position
Total Assets (R’000) 48 499 273 45 523 134 45 523 134 49 487 020
Gross Loans and Advances (R’000) 44 055 545 41 983 063 41 983 063 45 551 319
Total Capital Adequacy Ratio (%) 17.2% 17.3% 17.3% 17.3%
Liquidity Coverage Ratio (%) 394.4% 339.6% 339.6% 214.3%
Net Stable Funding Ratio (%) 110.7% 107.1% 107.1% 108.6%
1
Adjusted with the reclassification of the out of mandate LDFU portfolio from a disposal group to a discontinued operation during FY2018 under the requirements
of IFRS5. The resulted in the interest expense on the associated liabilities being reclassified from discontinued operations to net interest income.
Six months review
The Group generated profit after other comprehensive income of R63.1 million compared to the
R52.3 million reported in the comparative prior year period. The Bank generated favorable results,
despite general uncertainty in the agricultural sector. Market volatility is expected to continue to cause
some fluctuations in the Group`s performance, particularly due to policy uncertainty, insurance claims
and unpredictable weather conditions. The Bank generated net interest income of R580.4 million, which
is 0.5% lower than the comparative period, this slight decrease is as a result of the Bank’s funding
strategy, converting short dated funding to longer dated in order to match the asset profile. Operating
expenses at a growth rate of 4.7%, year on year, are well contained.
Funding initiatives have been very positive during FY2019H1 with strong Debt and Capital Market
support received during the period under review. As of FY2019H1, the Land Bank’s reliance on short-
term funding with an effective time to maturity of less than 12 months, reduced to 42.9%, which is below
its medium-term target of 50%. Cash and liquidity levels remain healthy with access to cash of R3.22
billion and further liquidity through R2.15 billion committed and R0.5 billion uncommitted facilities.
The performance of the two Insurance subsidiaries, Land Bank Life Insurance and Land Bank
Insurance, were adversely affected by market volatility and unfavorable weather conditions
respectively.
The Group operates as a going concern and there is no reason to believe that the Group will not
continue to operate as a going concern over the foreseeable future.
Unaudited Results
The condensed interim financial results of the Land Bank for the six months ended 30 September 2018
are unaudited and have not been reviewed by an independent auditor.
Outlook
The financial success for the year ending 31 March 2019 is likely to be impacted by the uncertain
economic environment, government policies and unpredictable weather conditions.
Condensed consolidated Statement of Profit and Loss and Other Comprehensive Income for
the six months ended 30 September 2018
Notes FY2019H1 FY2018H1 FY2018H1
R’000 R’000 Var R’000
Unaudited Unaudited1 % Disclosed
(like for like)
Net interest Income 580 442 583 066 (0.5%) 632 230
Operating income from Banking 339 640 303 496 11.9% 352 660
Activities
Net insurance (loss)/ income (45 335) (3 185) (+100%) (3 185)
Total Operating Income 294 305 300 311 (2.0%) 349 475
Operating Expenses (298 921) (285 412) (4.7%) (307 185)
Other Income 44 552 74 039 (39.8%) 74 039
Net Profit before Other Comprehensive 17 002 56 788 (+100%) 57 252
Income
Other Comprehensive Income 46 054 (4 531) +100% (4 531)
Net Profit after Other Comprehensive 63 055 52 257 20.7% 52 721
Income
1
Adjusted with the reclassification of interest expense from discontinued operations and arranging fees from operating expenses to Interest expense from
continuing operations.
During the FY2018 financial year-end, the Land Bank reclassified the funding liabilities related to the
LDFU portfolio to continuing operations resulting in the related interest expense moving into continuing
operations and thus reducing net interest income. This was because of the said portfolio no longer
meeting the definition of a disposal group under the requirements of IFRS5.
Condensed consolidated Statement of Financial Position as at 30 September 2018
Notes FY2019H1 FY2018
R’000 R’000 Var
Unaudited Audited %
Assets
Cash and cash equivalents 3 215 562 2 421 069 32.8%
Investments 2 421 181 2 619 887 (7.6%)
Net Loans and Advances 1 41 817 152 43 418 462 (3.7%)
Short-term Insurance Assets 129 304 282 382 (54.2%)
Long-term Insurance Assets 10 753 10 753 0%
Discontinued operations (IFRS5) 2 9 900 188 900 (94.8%)
Other Assets 895 421 545 567 64.1%
Total Assets 48 499 273 49 487 020 (2.0%)
Equity and Liabilities
Equity 6 705 652 6 648 703 0.9%
Funding Liabilities 40 944 438 41 576 302 (1.5%)
Short-term Insurance Liabilities 3 156 134 398 859 (60.9%)
Long-term Insurance Liabilities 56 121 55 939 0.3%
Other liabilities 636 928 807 217 (21.1%)
Total Equity and Liabilities 48 499 273 49 487 020 (2.0%)
1 Loans and advances declined due to the seasonal repayment of summer grain production credit
facilities.
2 During FY2019, the Land Bank managed to conclude the disposal of the majority of its significant
assets related to the legacy out of mandate LDFU portfolio, resulting in the decline in the value of the
said asset group. These disposals did not result in any fair value losses to the Bank.
3 Seasonal reduction in statutory liabilities following the end of the underwriting season in the summer
grain areas
Subsequent events.
Subsequent to 30 September 2018, the Land Bank issued an R500m Floating Rate Bond (LBK32) by
way of private placement.
Changes to the Board
Advocate S. Coetzee and Ms M. Makgatho were reappointed to the Board for a 3-year term.
29 November 2018
Enquiries
Land and Agricultural Development Bank of South Africa
TP Nchocho, Chief Executive Officer
Bennie van Rooy, Chief Financial Officer
Rebecca Phalatse, General Manager: Marketing and Communications – Tel: 012 686 0921
Date: 29/11/2018 05:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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