LAND D BANK K ANNUAL AL REPOR ORT T FY201 017 7 LAUNCH: 3 AUGUST 2017
CONTENT ENT 1. Opening Remarks by Programme Director, Mrs. Konehali Gugushe 2. Remarks by Land Bank Board Member, Mrs. Sue Lund 3. Presentation by The CEO, Mr. TP Nchocho 4. Presentation by The CFO, Mr. Bennie van Rooy 5. Q&A 6. Lunch Land Bank Presentation 2
3. R . Report of The Chie ief f Execut cutive ive Offi fice cer Presen enter er: : Mr. T . TP Nch choch cho Land Bank Presentation 3
Introdu oduct ctor ory y Ove verview iew 1. Institutional Consolidation Post the 2015 Restructuring 2. Key Perspectives: The Year in Context 3. The Financial Sustainability Trajectory 4. Governance Integrity & Investor Confidence 5. Development Impact Outcomes 6. Looking Forward 7. Conclusion Land Bank Presentation 4
Institut itution ional Conso solida datio tion n Post st the e 2015 15 Restru ruct ctur uring ing • Developmental Effectiveness Giving ng effect to the • Financial Sustainability Corpo porate e Strateg rategy • Governance Integrity Ongo going ing inv nves estmen tment in • Credit Risk moder ernisa nisation ion of the • Operations / Enterprise Risk Risk Mana nagem emen ent • Portfolio Management Archit hitec ectur ure • Successful recruitment: Specialised Finance Attra racting ing and d inv nves esting ing • Successful recruitments: Credit & Portfolio Management in the Best Talent lent • Deepening Agricultural Economics Land Bank Presentation 5
Key Perspect pectives s on the Agricul cultural ral Sect ctor or Placing the Financial Results in Context • Sector still recovering from the 2 years of Drought The sector was in recession o • The excellent rainfalls starting last quarter of 2016 and into first quarter 2017 Sharp recovery as more hectares were planted o • Pressures have continued on the Poultry industry Few assets in our portfolio came under distress o • An industry-wide decline in quantities of animals (livestock units) Upward pressures on meat prices (Food inflation: 10.8%) o • Export Performance SA Agri exports up at R79bn (R64bn year before) o • Pressures on the financials of the Land Bank Insurance Company (LBIC) Drought led to higher claim ratios o Premium Income basically flat (re: hectares planted) o Land Bank Presentation 6
The Impera rativ ive for an Upwar ward d Traj aject ector ory in Financ ancial ial Sustain stainab ability ity High • Growth • Transformation Development Impact Returns • Employment Land Bank Land Bank Low High Financial Returns Reliant on Government Financially Self Sustaining Highly Profitable Grants Land Bank Presentation 7
The Impera rativ ive for an Upwar ward d Traj aject ector ory in Financ ancial ial Sustain stainab ability ity • Investing in the sector prudently • Effective Structuring of Credit Risk • Robust Portfolio Management • Access to Funding • Managing Margins & Costs Land Bank Presentation 8
Govern vernance ce Integrit tegrity y & Inve vest stor or Confi fidence dence • We continue to maintain Clean Audits • The Mid-Year incident by FutureGrowth and the decision on SOE’s Our response was swift and effective • Transparency on our Governance, Policies and Structures • Prompt action to mace requisite Enhancements • • Comprehensive revisions to our Domestic Medium Term Note (DMTN) Programme • Our National Scale rating maintained at Investment Grade • Results: Substantial Capital Raising Capacity Over R7bn for the year under review • Land Bank Presentation 9
Deve velopment lopment Impact act Outcomes comes Highlights R4.8bn in new disbursements New jobs created: (excluding Revolving facilities) 15 360 R2.4bn growth in our Loan Book Black Brokers Development Poultry sector jobs maintained: to the Development Sector Programme 3 500 (Target: R2bn) R100m disbursed under Drought Projects to expand irrigated land: Relief Facility 13 000 hectares Land Bank Presentation 10
Deve velopment lopment Impact act Outcomes comes Financing Models for Improved Effectiveness “Full Service” Value Chain Financing Financial Intermediaries Partnerships Joint Ventures / Equity Empowerment Finacning Investment Partnerships (For Growth ) Land Bank Presentation 11
Looki oking g Forwar ward The Country can do better to enhance Growth & Inclusivity • Institutional synergies to deliver Land Reform projects on a sustainable basis • Promoting more Joint Ventures / Investment Partnerships with established Commercial Agriculture • Better use of Blended Financing Techniques • A National Agricultural Insurance subsidy scheme • A Special Programme for Youth Enterprise Development, premised on Skills & Support Land Skills Markets Capital Management Support Land Bank Presentation 12
Conclus clusion on Our Sincere Appreciation Ministry of Finance and the Treasury Team • Sector Departments: DRDLR, DAFF & DWS • The Board of Directors • Our Funders • Our Channel Partners (Financial Intermediaries) • The Employees of the Land Bank • Land Bank Presentation 13
4. An . Annual l Fin inanci cial al Result lts Presen enter er: : Mr. B . Bennie nie van Rooy Land Bank Presentation 14
CONTENT ENT 1. Salient Features 2. Statement of Profit & Loss and Other Comprehensive Income 3. Statement of Financial Position Land Bank Presentation 15
Salie ient Featur atures es Group Published basis Like-for-like basis Salient features Var % FY2017 FY2016 Var % FY2017 FY2016 Net interest margin 0.3% 3.1% 3.0% 0.3% 3.1% 3.0% Impairments 9.8% R 81.5m R 74.2m 9.8% R 81.5m R 74.2m Operating expenses (14.4%) R 595.2m R 695.5m 5.9% R 564.1m R 532.8m Cost-to-income ratio (23.1%) 56.8% 73.9% (5.0%) 53.8% 56.6% Profit for the year +100% R 367.0m R 182.0m 0.7% R 398.1m R 395.5m - Banking Operations +100% R 316.3m R 94.0m 13.0% R 347.4m R 307.5m - Insurance Operations (42.4%) R 50.7m R 88.0m (42.4%) R 50.7m R 88.0m Cash (40%) R 1.52bn R 2.5bn (40%) R 1.51bn R 2.5bn Net loans and advances 12.6% R 41.0bn R 36.4bn 12.6% R 41.0bn R 36.4bn Impairment ratio (19.1%) 5.5% 6.8% (19.1%) 5.5% 6.8% Non-performing loans (19.3%) 7.1% 8.8% (19.3%) 7.1% 8.8% NPL coverage ratio - 77.1% 77.2% - 77.1% 77.2% Total assets 9.7 % R 45.4bn R 41.4bn 9.7% R 45.4bn R 41.4bn Land Bank Presentation 16
Salie ient Featur atures es Bank Published basis Like-for-like basis Salient features Var % FY2017 FY2016 Var % FY2017 FY2016 Net interest margin 0.3% 3.1% 3.0% 0.3% 3.1% 3.0% Impairments 9.8% R 81.5m R 74.2m 9.8% R 81.5m R 74.2m Operating expenses (15.9%) R 570.0m R 678.0m 4.6% R 538.9m R 515.2m Cost-to-income ratio (26.1%) 54.4% 73.7% (8.2%) 51.4% 56.0% Profit for the year +100% R 316.3m R 94.0m 13.0% R 347.4m R 307.5m Total comprehensive income +100% R 305.8m R 71.8m 11.0% R 314.6m R 283.5m Cash (42.9%) R 1.2bn R 2.1bn (42.9%) R 1.2bn R 2.1bn Net loans and advances 12.6% R 41.0bn R 36.4bn 12.6% R 41.0bn R 36.4bn Impairment ratio (24.7%) 5.5% 7.3% (24.7%) 5.5% 7.3% Non-performing loans (19.3%) 7.1% 8.8% (19.3%) 7.1% 8.8% NPL coverage ratio - 77.1% 77.2% - 77.1% 77.2% Total assets 10.1% R 43.8bn R 39.8bn 10.1% R 43.8bn R 39.8bn Total CAR – Basel Standardised Approach (5.9%) 17.7% 18.8% (5.9%) 17.7% 18.8% Land Bank Presentation 17
Stat atement ement of Profit fit & Loss ss and d OCI Profit fit for the ye year Published on a like-for-like basis Published basis Organisational review Like-for-like basis 350 The Bank’s performance during FY2017 was impacted by additional 31.1 costs incurred in relation to the Organisational Review as undertaken 300 during FY2016. 250 R million Although these costs are not significant, a “like -for- like” comparison is 200 required to fully appreciate the results achieved in FY2017 150 100 50 FY2017 0 IFRS 9: FV designation 316.3 347.4 Published basis Organisational review to amortised cost Like-for-like basis 350 +10% 300 50.8 Profit for the year Var % FY2017 FY2016 250 Published basis +100% 316.3 94.0 200 R million Organisational review (80.9%) 31.1 162.7 162.7 150 IRFS 9 – FV designation to amortised cost (+100%) - 50.8 100 Like-for-like basis 13.0% 347.4 307.5 FY2016 50 0 94.0 307.5 +227% Land Bank Presentation 18
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