Availability of Annual Financial Statements - BIDBS The Development Bank of Southern Africa (Registration number 1600157FN) JSE Company Code: BIDBS Audited results for the year ended 31 March 2016 Preparation of the financial statements The following individual was responsible for the oversight and preparation of the financial statements for the year ended 31 March 2016: Kameshni Naidoo CA (SA), Chief Financial Officer 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 financial statements are prepared on the historical cost basis except for the following assets and liabilities which 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 measured at actuarial values. The Annual Financial Statements have been prepared in accordance with the recognition, measurement and disclosure requirements of International Financial Reporting Standards (“IFRS”), Public Finance Management Act of South Africa (“PFMA”), Section 27 to 31 of the Companies Act of South Africa and the Development Bank of Southern Africa Act, 1997. The Preparation of Annual 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. Audit of results The financial results of DBSA for the year ended 31 March 2016 have been audited by the Bank’s auditor, Nkonki Inc. In their audit report, which is available for inspection at the Company's Registered Office, Nkonki Inc. stated that their audit was conducted in accordance with International Standards on Auditing, and have expressed an unmodified audit report on the year-end financial statements. Key Highlights - Record disbursement of R17.1bn (31 March 2015: R13bn) main contributors were to loans and equity disbursements. - Increased in profitability for the year R2.6bn (31 March 2015: R1.2bn). - Included in profit is an unrealised foreign exchange gain amounting to R1bn (31 March 2015: R490m). - Cost to income ratio including IDD 28.7% (31 March 2015: 34.4%). Core banking business (excluding IDD) cost to income ratio of 25% (31 March 2015: 31%). - Cash flow from operations R3bn (31 March 2015: R2.7bn). 1 - Capital injection received from National Treasury of R3bn in support of the growth strategy (31 March 2015: R2.5bn). - 71% increase in sustainable earnings (net profit adjusted for: foreign exchange adjustment, revaluation of financial instruments and grants, but includes revaluation on equity investment). Overview of the Financial results and activities The Bank continues to implement its new business strategy and the key financial indicators for the year under review are: - Operating income increased by 75% to R5.0bn (2014/15: R2.9bn) on the back of an increase in net interest income to R3.2bn (2014/15: R2.3bn), increase in foreign exchange gain to R1bn (2014/15: R490m) and gains on financial instruments to R442m (2014/15 loss: R300m). - Cost-to-income ratio improved to 28.7% (2014/15: 34.4%). - DBSA profitability increased to a net profit of R2.6bn compared to R1.2bn in 2014/15. - Development loans, bonds and equity investments disbursements of R17.1bn, an increase of 32% compared to the R13bn disbursed during 2014/15. A new record level of disbursements. - Impairment charge for the year amounting to R1.43bn (2015: R743m) is 91% above the prior comparative period. Provision for loan impairment increased by: 30% to R3.8bn (2014/15: R2.9bn) although the provision for loan impairment increased, the quality of the loan book remains within acceptable parameters with non-performing loans at 3.7% of the total loan book (2014/15: 5.08%), 1.4% improvement from prior year. - Debt-to-equity ratio improved to 177.8% (2014/15: 195.6%). - The National Treasury in support of the strategy and growth prospects provided a capital injection of R3bn during the period under review (2014/15: R2.5bn), being the last tranche of the R7.9bn capital injection commitment. - Appropriate measures to improve the long-term financial sustainability of the Bank are currently in implementation. Outlook The financial position of the DBSA remains strong. The Bank continues to implement its strategy in delivery of developmental impact in a financially sustainable manner. 2 Statement of Financial Position as at 31 March 2016 2016 2015 in thousands of rand Assets Cash and cash equivalents 2 084 565 3 901 663 Trade and other receivables 138 533 227 880 Investment securities 1 265 218 2 009 916 Derivative assets held for risk management 1 163 533 1 036 624 Post-retirement medical benefits investment 49 978 59 536 Home ownership scheme loans - 5 462 Equity investments 6 278 575 5 092 061 Development bonds 1 290 296 1 290 390 Development loans 69 494 954 56 740 219 Property, plant and equipment 501 202 502 976 Intangible assets 79 142 77 412 Total assets 82 345 996 70 944 139 Liabilities Trade and other payables 894 795 811 755 Provisions 152 533 122 711 Liability for funeral benefits 3 100 3 100 Liability for post-retirement medical benefits 239 289 160 412 Debt securities held at fair value through profit or loss 6 188 780 6 837 095 Debt securities held at armotised cost 29 082 355 26 515 941 Funding: lines of credit 16 371 534 12 565 895 Derivative liabilities held for risk management 148 551 244 545 Total liabilities 53 080 937 47 261 454 Equity Share capital 200 000 200 000 Retained earnings 14 544 861 12 260 565 Permanent government funding 11 692 344 8 692 344 Revaluation reserve on land and buildings 269 256 269 256 Hedging reserve 123 050 116 288 Reserve for general loan risks 2 436 358 2 143 975 Fair value reserve (810) 257 Total equity 29 265 059 23 682 685 Total liabilities and equity 82 345 996 70 944 139 3 Statement of Comprehensive Income for the year ended 31 March 2016 in thousands of rand 2016 2015 Interest income 6 541 028 5 327 312 Interest expense (3 355 429) (3 002 929) Net interest income 3 185 599 2 324 383 Net fee income 275 914 232 928 Net foreign exchange gain 1 002 172 489 673 Net gain/(loss) from financial assets and liabilities 442 630 (299 832) Other operating income 134 355 139 971 Other income 1 855 071 562 740 4 Operating income 5 040 670 2 887 123 Project preparation (14 651) (6 138) Development expenditure (43 869) (35 015) Net impairment loss on financial assets (1 426 159) (743 361) Personnel expenses (730 937) (607 271) Other expenses (213 653) (253 175) Depreciation and amortisation (30 593) (25 108) Profit from operations 2 580 808 1 217 055 Grants (4 129) (2 914) Profit for the year 2 576 679 1 214 141 Statement of Other Comprehensive Income for the year ended 31 March 2016 in thousands of rand 2016 2015 Profit for the year 2 576 679 1 214 141 Items that will not be reclassified to profit and loss Gain on revaluation of land and buildings - 15 769 Items that may be reclassified subsequently to profit and loss Unrealised gain/(loss) on cash flow hedges 142 063 (88 253) (Loss)/gain on cash flow hedges reclassified to statement 5 of comprehensive income (135 301) 142 583 Unrealised loss on available-for-sale financial assets (1 067) (2 128) 5 695 52 202 Other comprehensive income 5 695 67 971 Total comprehensive income for the year 2 582 374 1 282 112 Condensed statement of changes in equity 2016 2015 in thousands of rand Balance at beginning of the year 23 682 685 19 900 573 Government recapitalisation 3 000 000 2 500 000 Profit for the year 2 576 679 1 214 141 Unrealised gain/(loss) on cash flow hedges 142 063 (88 253) (Loss)/gain on cash flow hedges reclassified to statement of comprehensive income (135 301) 142 583 Unrealised loss on available for sale financial assets (1 067) (2 128) 6 Gain on revaluation of land and buildings - 15 769 Total equity at end of the year 29 265 059 23 682 685 Summarised Statement of Cash Flows for the year ended 31 March 2016 Cash flows generated from operating activities 3 025 315 2 660 756 Cash flows used in development activities (11 199 428) (6 397 688) Cash flows generated from investing activities 167 432 (730 188) Cash flows generated from/(utilised in) financing 6 085 967 4 199 575 activities Effect of exchange rate movement on cash balances 103 616 33 541 Net decrease in cash and cash equivalents (1 817 098) (234 004) Cash and cash equivalents at the beginning of the 3 901 663 4 135 667 year Cash and cash equivalents at the end of the year 2 084 565 3 901 663 The full Annual Report is available for download on the following link: http://www.dbsa.org/EN/InvestorRelations/Pages/Investor-Relations.aspx 22 September 2016 Debt Sponsor: The Standard Bank of South Africa Limited 7 Date: 22/09/2016 09:54:00 Produced by the JSE SENS Department. 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