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Audited Annual Financial Results For The Year Ended 31 March 2018 - BILB
The Land and Agricultural Development Bank of South Africa
(JSE Code: BILB)
(“Land Bank”)
The Land and Agricultural Development Bank of South Africa: Audited annual financial results
for the year ended 31 March 2018
Overview
Land Bank is a state owned, agricultural development finance institution, whose only shareholder is the
Government of the Republic of South Africa. The summary of Annual Financial results is published on
SENS to provide information to holders of Land Bank’s debt instruments. The full set of financial
statements is available on Land Bank’s website at: www.landbank.co.za
Preparation of the financial statements
The Annual Financial Results have been prepared under the supervision of the Chief Financial Officer,
Mr. Bennie van Rooy CA (SA).
The directors take full responsibility for the preparation of the summary of annual financial results and
for correctly extracting the financial information from the underlying audited financial statements for
inclusion in the SENS announcement.
Basis of preparation
Accounting policies adopted and methods of computation are consistent with those applied to the
Annual Financial Statements at 31 March 2017. The Annual Financial Statements are prepared on the
historical cost basis except for the following assets and liabilities which are stated at their fair value:
financial assets or financial liabilities held-for-trading; financial assets or financial liabilities designated
at fair value through profit or loss; financial assets or financial liabilities designated at fair value through
other comprehensive income; investment properties; and post-retirement medical benefit which is
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 Land Bank Act, 2002.
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 the financial results
The Annual Financial Results of Land Bank for the year ended 31 March 2018 have been audited by
Auditor-General of South Africa. In their audit report, which is available for inspection at the Company's
Registered Office, the Auditor-General 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.
Salient features of the Bank’s solid financial performance
During FY2018, Land Bank continued to create value for its stakeholders and deliver on its strategy
through the strong commitment of our executive management team and employees. Despite a
challenging external environment, we persisted in our endeavours to contribute to the long-term
transformation and resilience of the sector. Our strategy is aligned to national and global priorities, we
are making steady progress in terms of delivering on our development mandate and we continue to
develop the skills of our employees to improve divisional performance.
We are delighted to report on a continuation of the trend of strong financial results, notwithstanding a
turbulent FY2018. During FY2018 South Africa experienced heightened political uncertainty, continuous
credit ratings action and further volatile weather conditions affecting the agricultural sector. It is against
this background that we focused on achieving two main objectives, namely improved financial
sustainability and increased development effectiveness.
The performance highlights include the following:
Sound capital adequacy position: CAR of 17.3% (FY2017: 17.7%)
Strong liquidity position: LCR of 214.3% (FY2017: 85%)
Stable funding position: NSFR of 108.6% (FY2017: 86.7%)
Reduced reliance on short term funding 43.2% (FY2017: 56.4%)
Increased loan book: Gross Loans of R45.5bn (FY2017: R43.3bn)
Reduced non-performing loans: NPL of 6.7% (FY2017: 7.1%)
Increase in net interest income: R1.26bn (FY2017: R1.20bn)
Increase in Bank profit from continuing operations: R278.7m (FY2017: R268.8m)
We are pleased to report on a successful FY2018. Notwithstanding the challenging external
environment, the Bank achieved satisfying financial results, enhanced its reputation and funder
perception, further improved its transparency, and positioned itself as a credible investment destination
for debt investors.
We have also made significant strides in concluding a number of ground-breaking development
transactions, which contributed to the disbursement of approximately R1.5billion to qualifying
development assets during FY2018. More information on these transactions is available in our
Integrated Report at: www.landbank.co.za.
The Bank strengthened its sources of development funding during FY2018 by concluding a number of
multilateral transactions with specific development objectives:
• US$93 million 25-year Government Guaranteed World Bank facility;
• US$300 million 10-year Multilateral Investment Guarantee Agency (MIGA) backed facility;
• EUR55 million unguaranteed 10-year KfW (German Development Bank) loan, and
• EUR50 million unguaranteed 12-year European Investment Bank (EIB) Climate Adaption
facility.
These facilities were only approved following comprehensive due diligence investigations conducted by
the multilateral organisations. They indicate the level of comfort in the high levels of corporate
governance, strong financial position and our ability to achieve our mandate and the objectives set out
in the facility agreements.
Further key impressions of the financial results and activities
Land Bank continued to focus on its developmental mandate role, whilst
maintaining financial sustainability as follows:
Developmental portion of loans increased to R5.4bn (12.0%), up from R4.9bn (11.3%) in FY2017
Total developmental equity investments of R0.5bn (FY2017: R nil)
Development loans and equity investment disbursement of R1.5bn
Interest rate subsidies to emerging farmers of R74m
Total insured crops to the value of R13bn of which R500m insured value was provided to 239
smallholder farmers
R513m crop insurance claims paid during the year
A total of R334m drought relief loans approved of which R240m was disbursed by year-end, with
the balance awaiting fulfilment of loan conditions before disbursements
Land Bank Insurance Company introduced the first Black Broker programme in the crop insurance
sector during FY2017 and in its second season of operation, the programme continues to deliver
results. Sixteen agencies consisting of 28 Black brokers participated during the recent season
compared to 18 brokers in the previous season.
Events after the reporting period
The Bank’s Board have been strengthened with the reappointment of the
following Non-Executive Directors of Land Bank for a period of three years
with effect from 1 June 2018:
• Mr MA Moloto (Chairperson of the Board);
• Ms D Hlatshwayo (Newly appointed Deputy Chairperson of the Board and
Chairperson of Land Bank Insurance Companies’ Boards); and
• Ms SA Lund (Chairperson of the Risk and Governance Committee)
Dr ST Cornelius and Mr M Makgoba have been appointed as new Board members
for a period of three years, effective 1 June 2018, as replacements to the
outgoing Non-Executive Directors, Prof. ASM Karaan (resigned 31 August 2017)
and Ms N Zwane (term expired 30 June 2018).
Subsequent to year-end, the following changes were made to Land Bank
Insurance Board:
• Mr M Scharneck was appointed effective 01 April 2018 as a board member
and as a member of the Investment and Actuarial Committee and Audit
and Risk Committee.
• Mr S Masuku was appointed effective 01 April 2018 as a board member
and as the Chairperson of the Audit and Risk Committee.
Mr Gary Conway, the Executive Manager: Corporate Banking and Structured
Investments resigned with effect from 13 July 2018.
Outlook & Economic conditions
The prevailing economic- and weather conditions, together with policy uncertainty regarding land
expropriation without compensation are expected to impact negatively on Land Bank’s business. The
Bank is however well positioned to navigate these stormy waters through its renewed focus on
partnerships throughout the agricultural value chain and key stakeholders.
Statement of Financial Position as at 31 March 2018 (R’000)
Group Bank
FY2018 FY2017 FY2018 FY2017
Assets
Cash and cash equivalents 2 421 069 1 520 331 2 362 130 1 211 305
Trade and other receivables 320 171 385 043 131 302 138 949
Short-term insurance assets 282 382 178 527 - -
Repurchase agreements 15 706 15 149 15 706 15 149
Investments 2 619 887 1 860 074 1 406 650 983 184
Strategic trading assets - 9 617 - 9 617
Hedging derivative assets 8 106 - 8 106 -
Loans and advances 43 418 462 40 975 554 43 418 462 40 975 554
Assets of discontinued operations classified 147 328 197 139 147 328 197 139
as held-for-sale
Long-term insurance assets 10 753 12 098 - -
Non-current assets held-for-sale 10 085 47 993 10 085 47 993
Investment Property 174 590 167 800 174 590 167 800
Property and equipment 38 202 45 326 37 996 45 053
Intangible assets 20 279 27 275 20 279 27 275
Total Assets 49 487 020 45 441 836 47 732 634 43 819 018
Equity
Distributable reserves 6 547 725 6 317 349 5 445 930 5 227 078
Other reserves 100 978 137 495 100 978 137 495
Liabilities
Trade and other payables 355 404 379 782 160 715 163 998
Strategic trading liabilities - 5 533 - 5 533
Short-term insurance liabilities 398 859 260 264 - -
Long-term policyholders’ liabilities 55 939 54 762 - -
Funding liabilities 41 576 302 37 839 610 41 576 302 37 839 610
Provisions 82 632 108 831 79 528 107 094
Post-retirement obligation 369 181 338 210 369 181 338 210
Total Equity and Liabilities 49 487 020 45 441 836 47 732 634 43 819 018
Statement of Profit or Loss and Other Comprehensive Income for the year ended
31 March 2018 (R’000)
Group Bank
FY2018 FY2017 FY2018 FY2017
Continuing Operations
Net interest income 1 278 405 1 213 347 1 261 391 1 196 541
Interest income 4 846 716 4 256 564 4 826 977 4 234 811
Interest expense (3 568 310) (3 043 217) (3 565 586) (3 038 270)
Net impairment charges, claims and (55 524) (81 543) (55 524) (81 543)
recoveries
Total income from lending activities 1 222 882 1 131 804 1 205 867 1 114 998
Non-interest expense (313 627) (270 240) (308 015) (269 071)
Non-interest income 89 855 62 900 85 727 60 613
Operating income from banking activities 999 110 924 464 983 579 906 540
Net insurance premium income 143 002 135 720 - -
Net insurance claims (153 008) (114 548) - -
Other costs from insurance activities (41 073) (25 675) - -
Investment income and fees 62 639 71 946 16 584 11 468
Interest in post-retirement obligation (29 757) (29 775) (29 757) (29 775)
Fair value gains 34 027 7 865 7 219 5 877
Operating income 1 014 940 969 997 977 625 894 110
Operating expenses (654 531) (587 551) (628 740) (562 339)
Net operating income 360 409 382 446 348 885 331 771
Non-trading and capital items (1 247) 5 888 (1 247) 5 888
Net profit before indirect taxation 359 162 388 334 347 638 337 659
Indirect taxation (68 922) (68 863) (68 922) (68 863)
Net profit from continuing operations 290 240 319 471 278 716 268 796
Net (loss)/ profit from discontinued operations (36 023) 47 519 (36 023) 47 519
Profit for the year 254 217 366 990 242 693 316 315
Other comprehensive income
Items that will be reclassified into profit or
loss
Net losses on financial assets designated at (44 892) 440 (44 892) 440
fair value through other comprehensive
income
Cash flow hedges: gains on cash flow hedging 8 106 - 8 106 -
instruments
Items that will not be reclassified
subsequently to profit or loss
Actuarial loss on the post-retirement (23 841) (12 981) (23 841) (12 981)
obligation
Revaluation of land and buildings 269 1 983 269 1 983
Total other comprehensive income (60 358) (10 558) (60 358) (10 558)
Total comprehensive income for the year 193 859 356 432 182 335 305 757
Condensed statement of changes in equity as at 31 March 2018 (R’000)
Group Bank
FY2018 FY2017 FY2018 FY2017
Balance at the beginning of the year 6 454 844 6 098 412 5 364 573 5 058 816
Profit/ (loss) for the year 254 217 366 990 242 693 316 315
Other comprehensive income for the year (60 358) (10 558) (60 358) (10 558)
Balance at the end of the year 6 648 703 6 454 844 5 546 908 5 364 573
Summarised Statement of Cash Flows for the year ended 31 March 2018 (R’000)
Group Bank
FY2018 FY2017 FY2018 FY2017
Cash flows from operating activities 3 827 271 3 049 173 3 811 150 3 170 270
Cash flows from operations (6 040 830) (7 968 206) (6 038 106) (7 963 259)
Cash flows from investing activities (622 395) 116 423 (358 911) 68 236
Cash flows from financing activities 3 736 692 3 815 478 3 736 692 3 815 478
Net increase/ (decrease) in cash and cash 900 738 (987 132) 1 150 825 (909 275)
equivalents
Cash and cash equivalents at the beginning of 1 520 331 2 507 463 1 211 305 2 120 580
the year
Cash and cash equivalents at the end of 2 421 069 1 520 331 2 362 130 1 211 305
the year
20 August 2018
Enquiries
Land and Agricultural Development Bank of South Africa
TP Nchocho, Chief Executive Officer
Bennie van Rooy, Chief Financial Officer
Rebecca Phalatse – Tel: 012 686 0921
Debt Sponsor
The Standard Bank of South Africa Limited
Date: 20/08/2018 10:17:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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