Reviewed interim results for the half year ended 30 September 2015 The Development Bank of Southern Africa Reviewed interim results for the half year ended 30 September 2015 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 2015. 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 10.4% from 31 March 2015 - Development bonds and loan book net growth of 13.4% from 31 March 2015 - Profit for the interim period R1.430bn (September 2014: R572m) - Included in profit is an unrealised foreign exchange gain amounting to R680m (September 2014: R255m) - Cash flow from operations R1.178bn (September 2014: R980m) - Capital injection received from National Treasury of R1bn (September 2014: R900m) - Sustainable earnings for the interim period R592m (September 2014: R376m) - Cost to income ratio for the interim period 28% (September 2014: R30%) - Funding raised for the interim period R11.331bn (September 2014: R8.933bn) Six months overview The DBSA generated a profit of R1 430 million, a 149.9% increase from the profit reported as at 30 September 2014. The DBSA continues to implement its new strategy and had a net 13.4% growth in development bonds and loan book assets since 31 March 2015. Total assets grew by 10.4% from R70.9bn to R78.3bn. Impairment charge for the interim period amounting to R454 million (2014: R389m) is 16% above the prior comparative interim period, however impairment as a % of gross loan book decreased by 0.8% to 4.5%. The level of impairment has decreased in comparison by 0.4% from March 2015. The National Treasury in support of the new strategy and growth prospects provided a capital injection of R1bn during the period under review. Further injection of R2bn is expected by 31 March 2016. 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 2015 30 Sept 2014 Reviewed Reviewed Net interest income 1 406 102 1 118 596 Other income 916 134 237 387 Grants (6 858) (12 530) Net impairment loss on financial assets (453 978) (389 246) Personnel expenses (320 436) (287 180) Other expenses (96 020) (83 904) Depreciation and amortisation (15 299) (11 040) Profit for the period 1 429 645 572 083 Six months Six months ended ended Condensed statement of comprehensive income 30 Sept 2015 30 Sept 2014 Reviewed Reviewed Profit for the period 1 429 645 572 083 Other comprehensive profit/(loss) (56 243) 36 083 Total comprehensive income 1 373 402 608 166 Statement of Financial Position As at As at 30 September 31 March in thousands of rand 2015 2015 Reviewed Audited Assets Cash and cash equivalents 3 795 426 3 901 663 Other receivables 105 057 227 880 Investment securities 1 433 374 2 009 916 Derivative assets held for risk management 1 142 706 1 036 624 Post-retirement medical benefits investment 53 337 59 536 Home ownership scheme loans 4 822 5 462 Equity investments 5 547 273 5 092 061 Development bonds 1 290 637 1 290 390 Development loans 64 354 045 56 740 219 Property and equipment 502 348 502 976 Intangible assets 74 673 77 412 Total assets 78 304 698 70 944 139 Liabilities Other payables 843 392 811 755 Provisions 127 575 122 711 Liability for funeral benefits 3 100 3 100 Liability for post-retirement medical benefits 161 971 160 412 Funding: debt securities 35 481 321 33 353 036 Funding: lines of credit 15 275 889 12 565 895 Derivative liabilities held for risk management 355 363 244 545 Total liabilities 52 248 611 47 261 454 Equity Share capital 200 000 200 000 Retained earnings 13 508 679 12 260 565 Permanent government funding 9 692 344 8 692 344 Revaluation reserve on land and buildings 269 256 269 256 Hedging reserve 60 680 116 288 Reserve for general loan risks 2 325 506 2 143 975 Fair value reserve (378) 257 Total equity 26 056 087 23 682 685 Total liabilities and equity 78 304 698 70 944 139 Condensed statement of changes in equity Six months Six months in thousands of rand ended ended 30 Sept 30 Sept 2015 2014 Reviewed Reviewed Balance at beginning of the period 23 682 685 19 900 573 National Treasury capital injection 1 000 000 800 000 Profit and total comprehensive income for the period 1 429 645 572 083 Net unrealized gain on cash flow hedges (55 608) 38 847 Change in value of available for sale financial assets (635) (2 764) Total equity at end of the period 26 056 087 21 308 739 Condensed statement of cash flow Cash flows generated from operating activities 1 178 393 979 771 Cash flows used in development activities (6 009 365) (4 652 393) Cash flows generated from investing activities 505 971 86 835 Cash flows generated from financing activities 4 193 794 2 664 646 Effect of exchange rate movement on cash balances 24 969 32 606 Net increase/(decrease) in cash and cash equivalents (106 237) (888 535) Cash and cash equivalents at the beginning of the period 3 901 663 4 135 667 Cash and cash equivalents at the end of the period 3 795 426 3 247 132 Issued by the Development Bank of Southern Africa Dated: 26 November 2015 The Standard Bank of South Africa Limited, Natalie Di-Sante 011 721 6125 Date: 26/11/2015 11:15:00 Produced by the JSE SENS Department. 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