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ICC
ICC
ICC - Industrial Credit Company Africa Holdings Limited - Audited Provisional
Results for the year ended 31 December 2006
Industrial Credit Company Africa Holdings Limited
("ICC" or "the Company")
(Incorporated in the Republic of South Africa)
(Registration Number: 1997/010950/06)
Share Code: ICC
ISIN Code: ZAE000053203
Audited Provisional Results for the year ended 31 December 2006
BALANCE SHEET AT 31 DECEMBER Audited Restated
2006 2005
R`000 R`000
ASSETS
Non current assets 107 144 171 008
Property, plant and equipment 14 869 16 565
Loans receivable 1 246 763
Goodwill on acquisition 32 000 38 388
Net investment in finance leases 59 029 115 292
Current assets 93 252 101 059
Due from related companies 895 1 108
Inventories 461 -
Net investment in finance leases 43 700 77 440
Loans receivable 93 1 187
Trade and other receivables 45 842 20 873
Cash and cash equivalents 2 261 451
Total assets 200 396 272 067
EQUITY AND LIABILITIES
Shareholders Funds 36 186 50 738
Share capital and premium 132 297 132 297
General risk reserve 2 620 2 620
Revaluation reserve 148 -
Accumulated loss (78 548) (65 576)
Foreign currency translation reserve (20 331) (18 603)
Non current liabilities 83 916 103 990
Long term loans 74 491 91 550
Deferred tax 9 425 12 439
Current liabilities 80 294 117 339
Short term borrowings 64 671 92 968
Due to related companies 1 122 1 135
Taxation 149 354
Trade and other payables 7 333 6 463
Cash and cash equivalents 7 019 16 419
Total equity and liabilities 200 396 272 067
Shares in issue at year end (`000) 116 667 116 667
Net asset value per share (cents) 31,0 43,5
Net tangible asset value per share (cents) 3,6 10,6
INCOME STATEMENTS Audited Restated
FOR THE YEAR ENDED 31 DECEMBER 2006 2005
R`000 R`000
Revenue 36 082 39 614
Staff costs (4 382) (4 262)
Depreciation (3 152) (2 041)
Other operating expenses (25 564) (18 226)
- Impairment of loans extended to discontinued (207) (963)
operations
- Impairment of Goodwill (6 388) -
- Normal operating expenditure (18 969) (17 263)
Total operating expenses (33 098) (24 529)
Profit from operating activities 2 984 15 085
Finance costs (17 998) (12 428)
(Loss)/profit before taxation (15 014) 2 657
Taxation income/(expense) 1 264 (3 614)
Net loss for the year (13 750) (957)
Basic and diluted loss per share (cents) (11,79) (0,82)
Headline loss per share (cents) (6,31) (0,82)
Weighted average number of shares (`000) 116 667 116 667
CASH FLOW STATEMENTS Audited Restated
FOR THE YEAR ENDED 31 DECEMBER 2006 2005
R`000 R`000
Cash flow generated from operating activities 33 601 19 597
Cash flow utilised in investing activities (6 343) (2 258)
Cash flow utilised in financing activities (17 270) (28 443)
Net movement in cash and cash equivalents 9 988 (11 104)
Cash and cash equivalents at beginning of year (15 968) (1 244)
Foreign exchange movements on cash and cash 1 222 (3 620)
equivalents
Cash and cash equivalents at end of year (net) (4 758) (15 968)
STATEMENT OF CHANGES IN EQUITY
Share Share Foreign General
Capital Premium translation reserves
reserve
R`000 R`000 R`000 R`000
Balance at 1 January 11 667 120 630 (23 106) 2 620
2005 - as previously
reported
Transi-tional - - - -
adjustment in terms
of IFRS
Adjusted opening 11 667 120 630 (23 106) 2 620
balance
Net loss for the year - - - -
- restated
As previously - - - -
reported
Change in foreign - - - -
exchange rates
Foreign translation - - 4 503 -
reserve - restated
As previously - - 1 416 -
reported
Change in foreign - - 3 087 -
exchange rates
Balance at 31 11 667 120 630 (18 603) 2 620
December 2005
Net loss for the year - - - -
Foreign currency - - (1 728) -
translation reserve
Revaluation of - - - -
buildings
Transfer to - - - -
accumulated loss
Deferred tax movement - - - -
on revaluation
reserve
Balance at 31 11 667 120 630 (20 331) 2 620
December 2006
STATEMENT OF CHANGES IN EQUITY (Contd)
Revaluation Acc Total
reserve Loss
R`000 R`000 R`000
Balance at 1 January - (69 417) 42 394
2005 - as previously
reported
Transi-tional - 4 798 4 798
adjustment in terms
of IFRS
Adjusted opening - (64 619) 47 192
balance
Net loss for the - (957) (957)
year - restated
As previously - (1 199) (1 199)
reported
Change in foreign - 242 242
exchange rates
Foreign translation - - 4 503
reserve - restated
As previously - - 1 416
reported
Change in foreign - - 3 087
exchange rates
Balance at 31 - (65 576) 50 738
December 2005
Net loss for the - (13 750) (13 750)
year
Foreign currency - - (1 728)
translation reserve
Revaluation of 1 091 - 1 091
buildings
Transfer to (778) 778 -
accumulated loss
Deferred tax (165) - (165)
movement on
revaluation reserve
Balance at 31 148 (78 548) 36 186
December 2006
COMMENTS
The Board of Directors presents the audited provisional financial results for
the Group for the year ended 31 December 2006 which have been prepared in
accordance with International Financial Reporting Standards ("IFRS").
NATURE OF THE BUSINESS
The primary business of the Group is the financing of secured structured leases
to clients. Industrial Credit Company Africa Holdings Limited "ICC Holdings", is
the holding company of Industrial Credit Company Zambia "ICC Zambia", which in
turn owns all the shares in Industrial Credit Company South Africa (Proprietary)
Limited "ICC South Africa".
BUSINESS REVIEW
The Group focus during 2006 was to maintain leasing products and markets, and to
further develop and expand its product line in respect of operating leases.
The South African Rand weakened against the US Dollar during the period under
review and has traded in a broad band between R6,34 and R7,05. The fluctuation
is largely due to the instability of the US Dollar. The stability of the Rand
is important for shareholders to draw comparatives as the major trading currency
of the Group is US Dollars and Zambian Kwatcha, before translation of the
figures into South African Rand.
ICC South Africa`s contribution towards Group revenues remains immaterial.
FINANCIAL REVIEW
ICC reported a net loss for the year of R13,75 million, which incorporates the
following:
Revenue decreased by 9% from the prior year, due to the company focusing on
improving its cash flow and re-negotiating its borrowings, thus few new finance
leases were written during the year. However the revenue attributable to
operating leases increased by 57,5% resulting from assets purchased during the
prior year. The revenue from operating leases contributed 19% towards the total
revenue of ICC Zambia.
Impairment of goodwill of R6,4 million, which was necessary to restate the
carrying value of goodwill arising upon consolidation of ICC Zambia, calculated
based on estimates of future cash flows in ICC Zambia as required in terms of
IFRS 3: Business Combinations.
A large increase was required in the provision for doubtful debts of ICC Zambia
(equivalent to R8,2 million), due to the Bank of Zambia (Central Bank and the
supervisory authority) changing its methodology of provisioning policies, in
terms of acceptable collateral offered by lessees. The directors of ICC Zambia
consider this expense to be of an exceptional nature, as it will not be repeated
in the future.
The increase in finance costs is due to the following:
Bank overdraft facilities were required to be used to finance operations in
Zambia, as long-term credit lines had been fully repaid as at 31 December 2005.
The bank overdraft facilities in Zambia carry a much higher cost of funding than
the long-term credit lines. The long-term borrowings have now been
renegotiated, the benefit of which will be seen in 2007.
Large deposits were received from customers on money market instruments,
resulting in increased finance charges being paid on these instruments.
Normal operating expenditure decreased by 15% due to the decrease in revenue as
well as fluctuation in foreign exchange rates.
The large movement in the tax charge is due to no withholding tax being paid as
a dividend was not declared by Zambia during the current year.
In order to provide shareholders with comparable information, the following
table has been extracted from the Group Income Statement.
Audited Restated
2006 2005
R`000 R`000
Net loss for the year (13 750) (957)
Adjusted for:
Impairment of goodwill 6 388 -
Provision for doubtful debts 8 270 1 416
Adjusted balance 908 459
Property, plant and equipment decreased due to the disposal of non-operating
assets during the year. ICC Zambia`s leasehold buildings were revalued by
Anderson & Anderson, independent registered valuation surveyors, on
11 December 2006 on the basis of open market values for existing use. This
resulted in a revaluation surplus of
R1 091 million.
The decrease in loans receivable resulted from the repayment of loans and
advances in ICC Zambia. The large decrease in net investment in finance leases,
and increase in lease debtors resulted from few new leases being written during
2006, as a result of the attempts to improving the cash flow of ICC Zambia
during the year. In addition to this, the appreciation of the Zambian Kwacha
against the US Dollar had a negative effect on the lease book during the year.
Borrowings decreased during the year as a result of the decreased activity in
the lease book during the year, and cash generated from existing leases was used
to meet capital commitments and decrease the bank overdraft.
Foreign translation reserves increased by a R1,7 million loss as a result of the
exchange rate fluctuations.
During 2002, SAEDF extended a loan of R5 000 000 to ICC Africa Holdings Limited.
The terms of the contract are currently being disputed by the parties.
Shareholders will be kept abreast of developments, as they take place.
HEADLINE EARNINGS PER SHARE
The calculation of headline earnings per share is based on a loss of R7,362
million (2005: R957 000), and a weighted average of 116 666 753 shares.
2006 2005
R`000 R`000
Reconciliation of headline loss:
Net loss for the year (13 750) (957)
Adjusted for:
Impairment of Goodwill 6 388 -
Headline loss (7 362) (957)
TRANSITIONAL ADJUSTMENT IN TERMS OF IFRS
The prior year numbers have been restated to reflect the transition from South
African Statements of Generally Accepted Accounting Practice, to IFRS. The
adjustment represents:
- The reversal of amortization of goodwill which arose on the acquisition of
ICC Zambia, as goodwill is not required to be amortised in terms of IFRS 3:
Business combinations. The effect of the adjustment has been disclosed in
the transitional reconciliations presented below.
- The adoption of the new interpretation of IAS17 (AC105) - Operating leases,
which includes fixed rental increases. The rental expense pertaining to the
Zambian subsidiary is not currently covered by a lease agreement, as the
contract is being re-negotiated with the landlord and therefore there was
no commitment at year end. The two South African entities have entered into
a month-to-month rental contract, with no fixed escalation clauses, which
results in no material adjustment required.
CORPORATE GOVERNANCE
The Group will provide a full Corporate Governance report in its Annual Report.
DIVIDENDS
No dividends will be paid for the foreseeable future, as cash generated will be
retained and utilised to grow and expand the business of the Group.
AUDIT OPINION
Sizwe Ntsaluba`s unmodified audit report on these provisional condensed
financial statements is available for inspection at the company`s registered
office.
For and on behalf of the board of directors
N. Justin Chinyanta
Chairman
7 May 2007
Registered office:
2nd Floor, East Wing, 11 Alice Lane, Sandton
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limited
Ground Floor, 70 Marshall Street, Johannesburg
Sponsor:
Arcay Moela Sponsors (Pty) Ltd
Number 3 Anerley Road, Parktown, Johannesburg
Directors:
J Chinyanta*, Y Bazian, CM Van Nieuwkerk, A Fletcher*, A Karrim*, N Molver*
*Non-executive
Date: 10/05/2007 09:34:01 Produced by the JSE SENS Department.
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