Reviewed interim results for the six months ended 30 September 2013 The Development Bank of Southern Africa Reviewed interim results for the six months ended 30 September 2013 Preparation of this report The following individuals were responsible for the preparation of the reviewed interim results: Boitumelo Mosako CA (SA), General Manager: Finance Kameshni Naidoo CA (SA), Chief Financial Officer Introduction The Development Bank is a leading Development Finance Institution (DFI) in Africa, playing the roles of Financier, Advisor, Partner, Implementer and Integrator. The Bank maximises its contribution to sustainable development in the region by mobilising financial, knowledge and human resources to support Government and other development role-players in improving the quality of life of people in the region through funding infrastructure projects; accelerating the sustainable reduction of poverty and inequity; and promoting broad-based economic growth and regional economic integration.” Key Highlights - Total asset growth of 9.5% from 31 March 2013 - Development bonds and loan book net growth of 14% from 31 March 2013 - Profit for the interim period R629m - Cash flow from operations R1.035bn - Capital Injection received from National Treasury of R2.4bn Six months overview The DBSA generated a profit of R629 million, a significant turnaround from the loss position reported as at 31 March 2013. In addition, the DBSA completed the organization review process that focused on improving the impact and effectiveness of the Bank. The DBSA continues to implement its new strategy and had a net 14% growth in development bonds and loan book assets since 31 March 2013. Total assets grew by 9.5% from R54bn to R59 billion and impairment charge for the interim period amounting R279 million (2012: R1.454bn) is significantly lower when compared to the prior comparative interim period. The National Treasury in support of the new strategy and growth prospects provided a capital injection of R2.4bn during the period under review, being the first tranche of the R7.9bn capital injection commitment. Outlook Whilst the financial position of the Bank remains strong, the DBSA expects strong growth in development assets to continue and should this be achieved, this will vastly improve the Bank’s developmental reach as it continues to play a leading role in taking forward national and continental development objectives. Basis of preparation Accounting policies adopted and methods of computation are consistent with those applied to the annual financial statements at 31 March 2013. The condensed interim financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments, financial instruments at fair value through profit and loss, available-for-sale financial assets, land and buildings, post-retirement medical benefit and funeral benefit obligations measured at actuarial values. The interim financial statements are in conformity with IAS 34, Interim Financial Reporting. The preparation of interim financial statement 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. Independent Review of results by Auditors The condensed interim financial results of DBSA for the six months ended 30 September 2013 have been reviewed by the Bank’s auditor, Nkonki Inc. In their review report, which is available for inspection at the Company's Registered Office, Nkonki Inc stated that their review was conducted in accordance with International Standard on Review Engagements 2410, Review of Interim Information Performed by the Independent Auditor of the Entity, and have expressed an unmodified conclusion on the condensed interim financial statements. Condensed income statement Six months Six months ended ended 30 Sept 2013 30 Sept 2012 Reviewed Reviewed R'000 R'000 Net interest income 913 713 817 333 Other income/ (loss) 362 814 (59 866) Grants (13 864) (612) Net impairment on financial assets (278 723) (1 453 712) Personnel expenses (260 914) (269 372) Other expenses (84 151) (76 040) Depreciation & amortisation (9 341) (9 930) Grant to Development Fund - (96 000) Profit/ (loss) for the period 629 534 (1 148 199) Condensed statement of comprehensive income Six months Six months ended ended 30 Sept 2013 30 Sept 2012 Reviewed Reviewed R'000 R'000 Profit/ (Loss) for the period 629 534 (1 148 199) Other comprehensive loss (222) (4 772) Total comprehensive income 629 312 (1 152 971) Condensed statement of financial position As at As at 30 September 31 March 2013 2013 Reviewed Audited R'000 R'000 Assets Cash and cash equivalents 1 220 865 1 252 142 Other receivables 153 935 123 443 Investment securities 2 270 553 3 435 922 Derivative assets held for risk management 1 346 395 1 422 719 Post retirement medical benefits investment 63 893 64 848 Home ownership scheme loans 8 329 8 932 Equity investments 4 844 058 4 455 721 Development Bonds 772 875 - Development Loans 47 847 927 42 619 769 Property, plant and equipment 465 912 470 298 Intangible assets 81 544 86 499 Total assets 59 076 286 53 940 293 Liabilities Other payables 704 181 771 651 Provisions 94 904 151 009 Liability for funeral benefits 4 300 4 300 Liability for post retirement medical benefits 148 421 148 421 Debt securities 26 584 821 25 790 079 Medium to long term funding lines of credit 11 728 989 10 081 507 Funding under repurchase agreements - 201 752 Derivative liabilities held for risk management 75 633 85 849 Total liabilities 39 341 249 37 234 568 Equity Share capital 200 000 200 000 Retained earnings 11 282 094 11 031 631 Permanent government funding 6 192 344 3 792 344 Revaluation reserve on land & buildings 253 487 253 487 Hedging reserve 49 856 40 617 Reserve for general loan risks 1 750 797 1 371 726 Fair value reserve 6 459 15 920 Total equity 19 735 037 16 705 725 Total equity and liabilities 59 076 286 53 940 293 Condensed statement of changes in equity Six months Six months ended ended 30 Sept 30 Sept 2013 2012 Reviewed Reviewed R'000 R'000 Balance at beginning of the period 16 705 725 17 527 572 National Treasury capital injection 2 400 000 - Profit/(loss)and total comprehensive income for the period 629 312 (1 152 971) Total equity at end of the period 19 735 037 16 374 601 Condensed statement of cash flow Six months Six months ended ended 30 Sept 30 Sept 2013 2012 Reviewed Reviewed R'000 R'000 Cash flows generated from operating activities 1 035 064 29 954 Cash flows used in development activities (5 828 290) (923 759) Cash flows generated from/(used in) investing activities 635 259 (2 266 022) Cash flows generated from financing activities 4 252 896 1 631 230 Effect of exchange rate movement on cash balances (126 206) (71 985) Net increase/decrease) in cash and cash equivalents (31 277) (1 600 582) Cash and cash equivalents at the beginning of the period 1 252 142 2 113 154 Cash and cash equivalents at the end of the period 1 220 865 512 572 Date: 03/12/2013 05:38:00 Produced by the JSE SENS Department. 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