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ANNUAL REPORT AND FINANCIAL RESULTS 31 MARCH 2011
Standing Committee on Finance 18 October 2011
Delegation
Name Designation
Mr. Nhlanhla Nene Deputy Minister of Finance
Mr. Jabu Moleketi Chairman of the DBSA Board of Directors
Mr Paul Baloyi Chief Executive Officer and Managing Director: DBSA
Mr. Paul Kibuuka Group Executive and Managing Director: DBSA Development Fund
Mr. Luther Mashaba Group Executive: South Africa Operations
Mr. Anton Redelinghuis Acting Group Chief Financial Officer
Mr. Admassu Tadesse Group Executive: International Division Group Executive: Group Strategy, Marketing & Communication
Ms. Romeshni Govender Divisional Executive: Internal Audit
Ms. Bathobile Sowazi Corporate Secretariat
2
DBSA Governance and Organisational Framework
Finance
Institutional & human capacity failure/weakness
Treasury Risk Human Capital
Business Technologies &
Facilities
Strategy & Communication
SOUTH AFRICA OPERATIONS
INTERNATIONAL DIVISION
• Capacity Development & Deployment • Rural Development • Community Development Facilitation
Development
Fund
Go
vern
ance
Tra
nsf
orm
atio
n a
nd
M
anag
ing
De
velo
pm
en
t R
isk
Enab
lers
Development Planning
Regional dev’t & integration
• Development planning • Research • Policy • Advisory • Information
INVESTMENT BANKING
Enabling processes and systems
Financing in South Africa Financing outside SA
Board of Directors
Audit & Risk
Social Development &
Integration
Economic Development
Advocacy and
Influence Implementer
Finance HRMC DPC Board Sub-Committees
Management Committees
CCC, RCC, PRMC PC, FMC CKM EXCO ALCO DIC, IT HCMC
Office of the CEO/MD
Corp Sec
BCIC
Internal Audit
Mr Paul Baloyi
3
2010/11 Corporate Plan deliverables reflected in the Board approved Corporate Balanced Scorecard
A. Development impact B. Sustainability
C. Organisational capability
2. Rand value of total disbursements (13%)
3. Rand value of disbursements to identified public sector intermediaries in SA (8%)
5. Rand value of grants disbursed (3%)
1. Development Fund initiatives (20%) • Siyenza Manje Programme • Vullindlela Academy • Agencies • Sustainable Communities • Operations and maintenance
14. Quality of implemented research agenda (6%)
13. Non-performing book debt as a % of total book debt (5%)
11. Sustainable earnings (5%)
56%
20%
24%
10. Maintain corporate credit rating in line with sovereign rating (3%)
15. Value of spend on staff training (5%)
12. Cost to Income ratio (5%)
4. Number of projects in favour of low capacity municipalities (2%)
6. Projects originated in South Africa (approved and launched) (4%)
7. Number of jobs created (2%)
9. Customer and partner satisfaction (2%)
16. Level of staff engagement (5%)
17. % of unfilled vacancies at year-end (3%)
18. Staff satisfaction with internal knowledge management (2%)
19. Market perception of the Bank’s image in development finance (5%)
8. Number of households benefiting from access to basic services (2%)
4
DF Implementation Operations Dr Paul Kibuuka
Development Fund
Capacity Development &
Deployment Rural Development Division
Community Development &
Facilitation
Siyenza Manje Deployment of finance, engineering, town planning experts, artisans, young professionals to municipalities to transfer skills and implement projects to eradicate backlogs.
Vulindlela & PACBP
Capacity building & training providing short and long term accredited training courses in planning, management, finance and technical.
Agencies
Assists donors and development partners to
implement development initiatives using
DBSA corporate infrastructure.
Institutional Turnaround
Development & implementation of
institutional turnaround strategies in
collaboration with affected
municipalities.
Rural Development Solutions
Development & implementation of rural
economic turnaround strategies, MIG
leveraging instrument and solutions to
accelerate execution of rural
development programmes.
Rural Infrastructure
Identifies & facilitate implementation of
social and economic infrastructure
projects in rural municipalities.
Project Management Unit
Provides project management support
to different programmes, developing
systems, plans and frameworks for
managing programmes.
Project Development Unit
Conceptualisation, feasibility &
structuring economic development
projects.
Sustainable Communities Unit
Mobilisation of different stakeholders to
design sustainable development plans
that addresses short, medium and long
term development needs of
communities.
Operations & Maintenance
Building capacity for sustainable operation &
maintenance of municipal infrastructure,
SMME development and building an O&M
industry.
CDF 10% CDD (75%) RDD 15%
Bu
dge
t al
loca
tio
n
20
10
/20
11
Siyenza Manje
(63%) 5
Deployees categorised by expertise and municipalities supported
• 126 municipalities on direct deployment and 60 on shared services basis supported.
• A further 20 provincial departments supported.
144
84
134
431
-
100
200
300
400
500
Technical Experts Young professionals Artisans
Number of deployees FY 2009 FY 2010 FY 2011
186
-
50
100
150
200
250
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
Number of municipalities supported
• SM deployee support mostly maintained
• Artisans increased.
• Supported 2 984 and completed 1 114 technical projects .
• Supported 2 912 and completed 1 994 non-technical projects.
6 Annual report page(s): 170
National distribution of municipalities supported by Siyenza Manje
126 municipalities on direct deployment and 60 on shared
services basis supported
7 Annual report page(s): 169
Siyenza Manje outputs • MIG funds unlocked of R16.0 billion and MIG expenditure of R8.7 billion • Provided on-the-job training: o 1 037 technical o 870 financial o 772 planning
16.0
0
3
6
9
12
15
18 R billion
MIG/capex allocation unlocked
2006/07 2007/08 2008/09
8.7
0
1
2
3
4
5
6
7
8
9
10 R billion
MIG expenditure unlocked
2006/07 2007/08 2008/09
2009/10 2010/11
1,037
870
-
200
400
600
800
1,000
1,200
1,400
Technical Financial
On-the-job training
2006/07 2007/08 2008/09
2009/10 2010/11 8 Annual report page(s): 170,172
Development impact through Siyenza Manje programme
102,090
152,772
129,858
0
50,000
100,000
150,000
200,000
250,000
300,000
Jobs created Access to sanitation
Access to water
Households impacted & jobs facilitated
FY 2008 FY 2009 FY 2010 FY 2011 94
83
32 31 35
11
-
10
20
30
40
50
60
70
80
90
100
2008/09 Audit 2009/10 Audit
Improvement in audit findings
Number of municipalities supported by deployees
% of municipalities with improved audit findings
% municipalities with reduced number of audit queries
42% improvement in 83 SM municipalities with finance deployees
9 Annual report page(s): 170,171,172
A further 616 906 households were connected to new or upgraded bulk water systems and 432 432 households from
the upgrades in bulk sanitation infrastructure
Other Development Fund Projects
9,772
1,609
11,381
-
2,000
4,000
6,000
8,000
10,000
12,000
Municipal official (SA)
SADC and other Total
External learners trained (VA) FY 2008 FY 2009 FY 2010 FY 2011
2 2 3
4
8
13
16
19
25 26
30
24
31
35 35
-
5
10
15
20
25
30
35
40
-
200
400
600
800
1,000
1,200
FY 1
99
7
FY 1
99
8
FY 1
99
9
FY 2
00
0
FY 2
00
1
FY 2
00
2
FY 2
00
3
FY 2
00
4
FY 2
00
5
FY 2
00
6
FY 2
00
7
FY 2
00
8
FY 2
00
9
FY 2
01
0
FY 2
01
1
Nu
mb
er
R m
illio
n
Funds under management
Funds managed Nr of agencies
• 11 381 external learners trained during the financial year. • 9 772 of the delegates were identified by Siyenza Manje
deployees. • 81% of Siyenza Manje municipalities benefited from the
training programmes.
• 45% increase in Rand value of funds under management: R1.1 billion as at 31 March 2010 (FY 2010: R759 million).
• 35 active funds under management. • Facilitated the delivery of infrastructure to the value R2.6
billion – driven by IDIP programme (R998 million for education and R1.6 billion for health).
10 Annual report page(s): 167, 176
Approvals: Sector Focus Maintaining diversity
Education 3%
Energy 49%
Development funds
4%
Roads and Drainage
10%
Social infrastructure
4%
Sanitation 3%
Other 6%
Transportation 5%
Water 16%
Approvals per sector (value)
Metro's (SA) 13%
Secondary municipalities
(SA) 5%
Under resourced
municipalities (SA) 1%
Other public 68%
Private sector intermediaries
12%
Approvals per client category (value)
• DBSA continued to make infrastructure funding available, especially to the public sector.
• Driven by approvals in energy, water and roads & drainage. • SA approvals: R30.7 bn and SADC: R6.4 bn. • SA municipal approvals – very good progress in secondary and
under resourced municipalities: o Metro’s: R5 bn, secondary municipalities: R1.9 bn and under
resourced: R486 million.
Mr Anton Redelinghuis
11 Annual report page(s): 31
Diversity of business – disbursements
Diversity of new business:
Total disbursements of R8.3 billion.
Significant portion (67%) of business still focused on public sector.
Support to energy, transportation, ICT and roads & drainage.
Disbursed R903 million to secondary municipalities and R35 million to under-resourced municipalities.
Estimated number of jobs facilitated: South Africa: 22 032, Rest of SADC: 20 054.
Disbursements per client
Energy 27%
Transportation 15%
ICT 11%
Roads and drainage
9%
Development funds
8%
Social Infrastructure
6%
Water 5%
Sanitation 3%
Education 4%
Other 12%
Disbursements per sector
Metro's (SA) 7% Secondary
municipalities (SA) 11%
Under resourced
municipalities (SA) 1%
Other public 48%
Private sector intermediaries
33%
12
Total Beneficiation and Development Expenditure
-
100
200
300
400
500
600
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
R million
Development expenditure
DF Operating expenditure Research expenditure
Grants Capacity development
Subsidised lending rates Siyenza Manje
225 248
464 550 519
970
757
950
823 853
-
200
400
600
800
1,000
1,200
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
R million
Development expenditure
Development expenditure
Sustainable earnings
• Over the past few years total beneficiation and development expenditure greatly accelerated in value and number of initiatives
• During FY2011, 61% (FY2010:67%) of sustainable earnings was distributed on developmental initiatives
13
225 248 464 550 519
3,703
6,160
9,306 8,256 8,336 1,100
2,600
4,800
8,900 8,689
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
R million
Total Beneficiation
Development expenditure Loan equity disbursements
MIGs unblocked Annual report page(s): 31,32
Credit ratings Healthy credit ratings maintained in line with sovereign
Sovereign-Equivalent Ratings
Short term Long term Outlook
Fitch National F1+(zaf) AAA(zaf) Stable
Moody’s Foreign-currency Not rated A3 Stable
Standard & Poor’s
Foreign currency
Local currency
A-2
A-1
BBB+
A
Stable
Stable
S&P’s affirmation of ratings
Strong government support
Sound financial management and capitalisation
Good access to funding
14 Annual report page(s): 39
Financial Position Strong Balance Sheet
15 Annual report page(s): 33
27,878
33,246
40,382
45,056 47,397
20,197 23,288
29,449
32,969
37,845
1,026 2,042 2,548 3,165 3,478
6,655 7,916 8,385 8,923 6,074
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
FY-2007 FY-2008 FY-2009 FY-2010 FY-2011
R million Key Balance Sheet Accounts
Total assets Development loans Equities Liquidity and other assets
51.2% 53.1% 50.7% 45.3% 45.8%
107.6%
149.2%
161.1%
59.7% 66.2% 70.0% 72.9% 69.2%
88.3%
102.7%
95.2% 87.7%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
FY-2007 FY-2008 FY-2009 FY-2010 FY-2011
Leveraging the Balance Sheet
Net interest margin
Debt/Equity (excl callable capital)
Fin market liabilities to inv in development loans/equity
Debt/Equity (incl callable capital)
• Total assets up 5% to R47 billion.
• Development loans and equity investments grew 14,8% and 9,9% respectively.
• The growth in loan and equity disbursements funded mainly by borrowings, which accounts for increasing debt to equity ratio from 149% (2009/10) to 161% (2010/11).
• Net interest margin of 46% was affected by the lower short-term interest rates and higher long-term interest rates.
Financial Position and Operating Expenditure Sound financial health maintained
• The total impairment as a % of total book debt increased marginally to 2.3% (2009/10: 2.2%)
• The non-performing book debt as a % of total book remains managed at 4.2% (2009/10: 4.9%) despite increased risk. This ratio excluding new loans in the last 12-months remains lower than the previous year at 4.6%.
• Costs well managed and below prudential limit of 45%.
20,197
23,288
29,449
32,969
37,845
4.9% 5.2% 5.4% 4.9%
4.2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
FY-2007 FY-2008 FY-2009 FY-2010 FY-2011
R m
illio
n
Development Loans
Development Loans NPL % 16 Annual report page(s): 34, 37
33.8% 33.8% 36.0%
40.5% 41.2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
FY-2007 FY-2008 FY-2009 FY-2010 FY-2011
Cost-to-income ratio
Quarter 1 Financial Results: YTD 30 June 2011
Key Financial Indicators
Actual
YTD Jun-2011
Budget
YTD Jun-2011
Actual
FY 2011
R'm R'm R'm
Loans and equity disbursements 2,846 1,658 8,336
Total assets 49,045 - 47,397
Development loans 38,678 - 37,845
Equity investments 4,549 - 3,478
Net interest income 431 399 1,642
Net (loss)/gain from financial assets and liabilities (13) - (399)
Personnel expenses (124) (137) (566)
General and administration expenses (40) (66) (176)
Grants (10) (23) (65)
Impairment loss on f inancial assets (10) (27) (229)
Sustainable earnings 278 190 853
Profit before transfer to Development Fund 320 167 332
Debt to equity ratio (excluding callable capital) 164.3% - 161.1%
Debt to equity ratio (including callable capital) 78.2% - 87.7%
Net interest margin 45.1% 41.3% 45.8%
Cost to income 36.9% 49.0% 41.2%
Quarter 1 Financial Performance: YTD 30 June 2011
-
100
200
300
400
500
600
700
800
900
1,000
Sustainable Earnings (R'm)
The higher net interest income, and management of operating expenses accounted for the favourable cost to income ratio (Actual: 36.9%; Budget: 49%), and sustainable earnings (Actual: R278m; Budget: R190m)
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Cost to income
Quarter 2 Operating Expenses: YTD 30 Sep 2011
Expenses Actual YTD 30 Sep 2011
(R’m) Budget YTD 30 Sep 2011
(R’m)
Personnel expenses 256,8 274,0
General & admin 70,7 126,8
Depreciation 9,4 11,6
Operating expenses 336,8 412,4
Value Chain Providing integrated solutions to foster Centre of Excellence for Infrastructure Delivery
Appraise
Finance Plan &
Procure Identify
Operate &
Maintain
EXPANDED SCOPE OF DBSA ENTRY POINT (DBSA intervening across most of the value-chain)
1 2 5 6 3 4
Policy or sector level, pre-project Capital Markets & Commercial Banks
Conventional Development Bank
Construction Management & Monitoring
Review & Evaluate
2010: new programme approach and mandate origination
Dev Planning,
Mobilization Partnerships Facilitation
New Development
Fund Initiation
Mr Paul Baloyi
20
Supporting Government as Delivery Agent in priority sectors
National mandates
Education
Energy
Health
Human Settlement
Water
Transport
• During FY 2011 MOU’ s signed with National Departments of Water Affairs, Energy and Health, as well as the Provincial Departments of Health.
• Planning and scoping commenced.
• Investigating means of reducing overall cost-of-funding to optimally support role out of national programmes.
Progress during FY 2012
• Education: MOU signed and programme in initiation.
• Energy: OPP Refit Programme in implementation and Energy Efficiency Programme in design phase.
• Health: Capital projects at six hospitals in the initiation phase.
• Human Settlements: MOU under negotiation.
• Transport: MOU signed.
• Water: Programme in design phase.
21
