Reviewed interim results for the half year ended 30 September 2014 The Development Bank of Southern Africa Reviewed interim results for the half year ended 30 September 2014 Preparation of this report The Chief Financial Officer, Kameshni Naidoo CA (SA) was responsible for the preparation of the interim results. Basis of preparation Accounting policies adopted and methods of computation are consistent with those applied to the annual financial statements at 31 March 2014. 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. Key Highlights - Total asset growth of 6.9% from 31 March 2014 - Development bonds and loan book net growth of 12% from 31 March 2014 - Profit for the interim period R572m - Included in profit is an unrealised foreign exchange gain amounting to R255m - Cash flow from operations R980m - Capital injection received from National Treasury of R800m Six months overview The DBSA generated a profit of R572 million, a R28 million decrease from the profit reported as at 30 September 2013. The DBSA continues to implement its new strategy and had a net 12% growth in development bonds and loan book assets since 31 March 2014. Total assets grew by 6.9% from R63.8bn to R68.2bn. Impairment charge for the interim period amounting to R389 million (2013: R279m) is 39% above the prior comparative interim period, however impairment as a % of gross loan book remained stable at 4.6%. The level of impairment has decreased in comparison by 0.8% from March 2014. The National Treasury in support of the new strategy and growth prospects provided a capital injection of R800m during the period under review. Further injection of R1.7bn is expected by 31 march 2015. 1 Independent Review of results by Auditors The condensed interim financial results of DBSA for the six months ended 30 September 2014 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. 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 in a financially sustainable manner. Condensed income statement Six months Six months in thousands of rand ended ended 30 Sept 2014 30 Sept 2013 Reviewed Reviewed Net interest income 1 118 596 913 713 Other income 237 387 362 814 Grants (12 530) (13 864) Net impairment loss on financial assets (389 246) (278 723) Personnel expenses (287 180) (260 914) Other expenses (83 904) (84 151) Depreciation and amortisation (11 040) (9 341) Profit for the period 572 083 629 534 Six months Six months ended ended Condensed statement of comprehensive income 30 Sept 2014 30 Sept 2013 Reviewed Reviewed Profit for the period 572 083 629 534 Other comprehensive profit/(loss) 36 083 (222) Total comprehensive income 608 166 629 317 2 Statement of Financial Position As at As at 30 September 31 March in thousands of rand 2014 2014 Reviewed Audited Assets Cash and cash equivalents 3 247 132 4 135 667 Other receivables 125 789 145 296 Investment securities 1 812 028 2 161 341 Derivative assets held for risk management 1 284 909 1 308 325 Post-retirement medical benefits investment 61 484 63 209 Home ownership scheme loans 7 148 7 544 Equity investments 4 794 158 4 610 448 Development bonds 1 290 855 772 743 Development loans 54 804 802 50 076 235 Property and equipment 477 477 461 873 Intangible assets 79 406 82 860 Total assets 67 932 846 63 825 541 Liabilities Other payables 750 752 813 665 Provisions 62 868 55 998 Liability for funeral benefits 3 100 3 100 Liability for post-retirement medical benefits 173 367 165 051 Funding: debt securities 32 269 341 29 216 814 Funding: lines of credit 13 244 942 13 606 441 Derivative liabilities held for risk management 119 737 63 899 Total liabilities 46 624 107 43 924 968 Equity Share capital 200 000 200 000 Retained earnings 11 719 900 11 296 416 Permanent government funding 6 992 344 6 192 344 Revaluation reserve on land and buildings 253 487 253 487 Hedging reserve 100 805 61 958 Reserve for general loan risks 2 042 582 1 893 983 Fair value reserve (379) 2 385 Total equity 21 308 739 19 900 573 Total liabilities and equity 67 932 846 63 825 541 3 Condensed statement of changes in equity Six months Six months in thousands of rand ended ended 30 Sept 30 Sept 2014 2013 Reviewed Reviewed Balance at beginning of the period 19 900 573 16 705 725 National Treasury capital injection 800 000 2 400 000 Profit/ (loss) and total comprehensive income for the period 572 083 629 312 Net unrealized gain on cash flow hedges 38 847 - Change in value of available for sale financial assets (2 764) - Total equity at end of the period 21 308 739 19 735 037 Condensed statement of cash flow Cash flows generated from operating activities 979 771 1 035 064 Cash flows used in development activities (4 652 393) (5 828 290) Cash flows generated from investing activities 86 835 635 259 Cash flows generated from financing activities 2 664 646 4 252 896 Effect of exchange rate movement on cash balances 32 606 (126 206) Net increase/(decrease) in cash and cash equivalents (888 535) (31 277) Cash and cash equivalents at the beginning of the period 4 135 667 1 252 142 Cash and cash equivalents at the end of the period 3 247 132 1 220 865 4 Date: 20/11/2014 05:10:00 Produced by the JSE SENS Department. 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