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ICC
ICC
ICC - Industrial Credit Company Africa Holdings - Unaudited Interim Results And
Cautionary Announcement
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
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND CAUTIONARY
ANNOUNCEMENT
CONSOLIDATED GROUP Unaudited Reviewed Audited
INCOME STATEMENT for the 6 for the 6 restated for
months ended months ended the year
30 June 2007 30 June 2006 ended
R`000 R`000 31 Dec 2006
R`000
Revenue 12 165 20 036 36 082
Staff costs (2 320) (2 499) (4 382)
Depreciation (1 401) (1 580) (3 152)
Other operating expenses (20 765) (5 804) (25 565)
- Impairment of loans extended (76) (106) (207)
to discontinued operations
- Impairment of loan to ISG (1 339) - -
- Impairment of goodwilll (13 038) - (6 388)
- Normal operating expenditure (6 312) (5 698) (18 970)
Total operating expenses (24 486) (9 883) (33 099)
(Loss)/profit before finance (12 321) 10 153 2 983
costs
Finance Costs (7 488) (11 151) (17 998)
Loss before taxation (19 809) (998) (15 015)
Taxation (32) (64) 1 264
Net loss for the period (19 841) (1 062) (13 751)
Loss per share information
Loss per share (cents) (17,01) (0,91) (11,79)
Headline loss per share (cents) (4,68) (0,91) (6,31)
Weighted average number of 116 667 116 667 116 667
shares (`000)
CONSOLIDATED GROUP BALANCE Unaudited Reviewed for Audited
SHEET for the 6 the 6 months restated for
months ended ended the year
30 June 2007 30 June 2006 ended
R`000 R`000 31 Dec 2006
R`000
Assets
Property, plant and equipment 18 128 19 487 14 869
Loans - 888 1 246
Goodwill on acquisition of ICC 18 961 38 388 32 000
Zambia
Net investment in finance 45 747 124 853 33 955
leases
Current assets 115 341 112 171 118 325
Total assets 198 177 295 787 200 395
Equity and liabilities
Shareholders funds 17 486 41 097 36 185
- Share capital and premium 132 297 132 297 132 297
- General risk reserve 2 620 2 620 2 620
- Foreign translation reserve (19 189) (18 208) (20 331)
- Revaluation reserve 148 - 148
- Accumulated loss (98 390) (75 612) (78 549)
Non-current liabilities 98 493 119 429 83 916
- Long-term loans 86 990 104 572 74 491
- Deferred taxation 11 503 14 857 9 425
Current Liabilities 82 198 135 261 80 294
Total equity and liabilities 198 177 295 787 200 395
Shares in issue (`000) 116 667 116 667 116 667
Net asset value per share 14,99 35,23 31,02
(cents)
Net tangible asset value per (1,26) 2,32 3,59
share (cents)
CONSOLIDATED GROUP CASH FLOW Audited
STATEMENT Unaudited Reviewed for restated for
for the 6 the 6 months the year
months ended ended ended
30 June 2007 30 June 2006 31 Dec 2006
R`000 R`000 R`000
Cash (utilised in)/generated (8 523) (26 088) 34 432
from Operating Activities
Cash utilised in Investing (1 727) (6 532) (7 174)
Activities
Cash generated by/(utilised in) 21 510 24 476 (17 270)
Financing Activities
Net movement in cash and cash 11 260 (5 144) 9 988
equivalents for the period
Cash and cash equivalents at (4 758) (1 245) (15 968)
beginning of period
Foreign exchange movements on 1 304 (830) 1 222
cash and cash equivalents
Cash and cash equivalents at 7 806 (7 218) (4 758)
end of period
CONSOLIDATED GROUP Foreign
STATEMENT OF CHANGES Share Share Trans- General
IN EQUITY Capital Premium lation Reserve
R`000 R`000 Reserve R`000
R`000
Balance at 1 January 11 667 120 630 (18 603) 2 620
2006
Net loss for the - - - -
period
Foreign translation - - 395 -
reserve
Balance at 30 June 11 667 120 630 (18 208) 2 620
2006
Net loss for the - - - -
period
Revaluation of - - - -
buildings
Transfer to - - - -
accumulated loss
Deferred tax
movement on - - - -
revaluation reserve
Foreign translation - - (2 123) -
reserve
Balance at 31 11 667 120 630 (20 331) 2 620
December 2006
Net loss for the - - - -
period
Foreign translation - - 1 142 -
reserve
Balance at 30 June 11 667 120 630 (19 189) 2 620
2007
Continued
CONSO-LIDATED GROUP
STATEMENT OF CHANGES Acc Revaluation
IN EQUITY Loss reserve Total
R`000 R`000 R`000
Balance at 1 January (65 576) - 50 738
2006
Net loss for the (1 062) - (1 062)
period
Foreign translation - - 395
reserve
Balance at 30 June (66 638) - 50 071
2006
Net loss for the (12 689) - (12 689)
period
Revaluation of - 1 091 1 091
buildings
Transfer to 778 (778) -
accumulated loss
Deferred tax
movement on - (165) (165)
revaluation reserve
Foreign translation - - (2 123)
reserve
Balance at 31 (78 549) 148 36 185
December 2006
Net loss for the (19 841) - (19 841)
period
Foreign translation - - 1 142
reserve
Balance at 30 June (98 390) 148 17 486
2007
COMMENTS
The Board of Directors present the unaudited interim financial results for the
Group for the period ended 30 June 2007 which have been prepared in accordance
with IAS 34 - Interim Financial Reporting, on the basis of accounting policies
that comply 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. ICC 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
2007 saw the Group maintaining its finance leasing products, and further
developing and expanding its operating leasing products and markets.
The South African Rand fluctuated against the US Dollar during the period under
review in a broad band between R6,91 and R7,53. 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
USD and Zambian Kwacha, before consolidation of the figures into South African
Rand.
FINANCIAL REVIEW
The ICC Group reported a loss before taxation of R19,8 million for the six
months under review, compared to a restated loss before taxation of R1,062
million in the prior year.
The reason for the large loss in the current period is as follows:
ICC Zambia`s revenue decreased by 27% from the prior year, due to the lack of
new finance leases being written during the period. The income from finance
leases decreased by 38%, whereas the income from operating leases increased by
53%, and now represents 12% of the total revenue of the company.
ICC South Africa`s revenue decreased by 17% during the year due to lack of new
leases being written during the period. ICC South Africa`s contribution towards
Group results remains immaterial.
Goodwill arising on the acquisition of ICC Zambia was impaired, due to the
impairment of the investment held by ICC in ICC Zambia. This was necessary to
restate the carrying value of the investment to the fair value of ICC Zambia.
Impairment of loan to ISG, which is not considered recoverable by the directors.
Total operating expenses increased by 2,3% compared to the comparative period.
The only abnormal item included therein represents the bad debt provision as
required by the Bank of Zambia amounting to R1 million.
Finance costs decreased by 32,8% compared to the comparative period. This is due
to the finance charges in the previous period being abnormally high, due to bank
overdraft facilities being used to finance the operations in Zambia, as long
term credit lines had been fully repaid at 31 December 2005, and needed to be
re-
negotiated.
Property, plant and equipment remained relatively consistent with the previous
year, as no significant new acquisitions were made during the year. Net
investment in finance leases decreased significantly from the prior year due to
the decline in business during the previous year (2006), however this has now
stabilised which is evident if it is compared to the balances reported at 31
December 2006, as follows:
Unaudited Audited
June 2007 Restated
R`000 December
2006
R`000
Non-current portion of Net 45 747 33 955
investment in finance leases
Current portion of Net investment 71 020 68 773
in finance leases
Total 116 767 102 728
Long term and short term borrowings increased from the previous year as a result
of the re-negotiation of borrowings during the period.
Unaudited Audited
June 2007 Restated
R`000 December
2006
R`000
Long term borrowings 86 990 74 491
Short term borrowings 73 993 65 792
Total 160 983 140 283
The Group reported positive cash balances of R7,8 million in comparison to
negative cash balances of R7,2 million as at 31 December 2006. The increase in
the cash balance is due to the negotiation of additional long term loan
facilities, and thus released pressure on short term funding requirements. In
addition the decrease in new leases being written resulted in the Group building
up its cash resources.
Foreign translation reserves decreased by a R1,1 million profit as a result of
the exchange rate fluctuations and the pricing of the Kwacha against the Rand
during the period under review.
Headline loss per share
30 June 30 June 31 December
2007 2006 2006
Reconciliation of headline
loss:
Net loss for the year (19 841) (1 062) (13 751)
Adjusted for:
Impairment of goodwill 13 038 - 6 388
Impairment of loan to ISG 1 339 - -
Headline loss (5 464) (1 062) (7 363)
INTERNATIONAL FINANCIAL REPORTING STANDARDS AND COMPANIES ACT REQUIREMENTS
The unaudited interim financial statements were prepared in compliance with IFRS
and the Companies Act. The accounting policies for the period are consistent
with those applied for the year ended 31 December 2006.
CORPORATE GOVERNANCE
The group fully subscribes to the principles of, and implements where possible,
the recommendations of the King II Code on Corporate Governance.
DIVIDENDS
Dividends will not be paid in respect of the current financial year. Cash
generated will be retained and utilised to grow and expand the business of the
ICC group.
LITIGATION
During 2003, SAEDF extended a loan of R5 million to ICC which is subject to a
dispute. Interest has not been accrued on this loan as the terms of the
contract are being disputed by the parties and ICC has a counter claim against
SAEDF.
FUTURE PROSPECTS
The prospects of ICC Zambia is sound as the economy is growing despite
competitive pressure. ICC will consolidate its market share in Zambia as it has
now renegotiated its lines of credit and will now be able to re-establish its
leasing book to match the liquidity level of the company.
CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the company has entered into negotiations which if
successfully concluded, may have a material effect on the price at which the
company`s securities trade on the JSE Limited. Shareholders are accordingly
advised to exercise caution when dealing in the company`s securities until a
full announcement is made.
For and on behalf of the Board
N. Justin Chinyanta
Chairman
18 October 2007
Registered Office: Transfer Secretaries:
C/o Loita Capital Partners SA Limited Computershare Investor Services 2004
2nd Floor, East Wing (Proprietary) Limited
11 Alice Lane 70 Marshall Street
SANDTON JOHANNESBURG
2001
Directors: Sponsor
N J Chinyanta*, Y Bazian, C Van Arcay Moela Sponsors (Proprietary)
Nieuwkerk, A Fletcher*, A Karrim*, Limited
N Molver* Number 3 Anerley Road
*Non-Executive Parktown
JOHANNESBURG
Date: 18/10/2007 11:56:01 Produced by the JSE SENS Department.
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