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ICC
ICC
ICC - Industrial Credit Company Africa Holdings Limited - Audited results for
the year ended 31 December 2007, notice Pf general meeting and renewal of
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
Audited results for the year ended 31 December 2007, notice pf general meeting
and renewal of cautionary announcement
BALANCE SHEET Audited Audited
AT 31 DECEMBER 2007 2006
R`000 R`000
ASSETS
Non current assets 59 178 107 144
Property, plant and 22 480 14 869
equipment
Loans receivable - 1 246
Goodwill on acquisition - 32 000
Net investment in finance 36 698 59 029
leases
Current assets 70 014 93 252
Due from related companies 19 895
Inventories - 461
Net investment in finance 55 666 43 700
leases
Loans receivable 44 93
Trade and other 7 370 45 842
receivables
Cash and cash equivalents 6 915 2 261
Total assets 129 192 200 396
EQUITY AND LIABILITIES
Shareholders Funds (37 930) 36 186
Share capital and premium 132 297 132 297
General risk reserve 2 620 2 620
Revaluation reserve 1 542 148
Accumulated loss (157 045) (78 548)
Foreign currency (17 344) (20 331)
translation reserve
Non current liabilities 83 076 83 916
Long term loans 82 693 74 491
Deferred tax 383 9 425
Current liabilities 84 046 80 294
Short term borrowings 62 328 64 671
Due to related companies 2 604 1 122
Taxation 297 149
Trade and other payables 10 849 7 333
Cash and cash equivalents 7 968 7 019
Total equity and 129 192 200 396
liabilities
Shares in issue at year 116 667 116 667
end (`000)
Net asset value per share (32,5) 31,0
(cents)
Net tangible asset value (32,5) 3,6
per share (cents)
INCOME STATEMENTS Audited Audited
FOR THE YEAR ENDED 31 DECEMBER 2007 2006
R`000 R`000
Revenue 23 517 36 082
Staff costs (5 750) (4 382)
Depreciation (3 239) (3 152)
Other operating expenses (85 (25 564)
473)
- Impairment of loans extended to (1 457) (207)
discontinued operations
- Impairment of Goodwill (32 (6 388)
000)
- Normal operating expenditure (52 (18 969)
016)
Total operating expenses (94 (33 098)
462)
(Loss)/profit from operating activities (70 2 984
945)
Finance costs (17 (17 998)
696)
Loss before taxation (88 (15 014)
641)
Taxation 10 145 1 264
Net loss for the year (78 (13 750)
496)
Basic and diluted loss per share (cents) (67,28) (11,79)
Headline loss per share (cents) (39,85) (6,31)
Weighted average number of shares (`000) 116 667 116 667
CASH FLOW STATEMENTS Audited Audited
FOR THE YEAR ENDED 31 DECEMBER 2007 2006
R`000 R`000
Cash flow generated from operating 22 760 33 601
activities
Cash flow utilised in investing activities (6 671) (6 343)
Cash flow utilised in financing activities (11 (17 270)
682)
Net movement in cash and cash equivalents 4 407 9 988
Cash and cash equivalents at beginning of (4 758) (15 968)
year
Foreign exchange movements on cash and cash (702) 1 222
equivalents
Cash and cash equivalents at end of year (1 053) (4 758)
(net)
STATEMENT OF CHANGES IN EQUITY
Foreign
Share Share translation General
Capital Premium reserve reserves
R`000 R`000 R`000 R`000
Balance at 1 11 667 120 630 (18 603) 2 620
January 2006
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
Net loss for the - - - -
year
Foreign currency - - 2 986 -
translation
reserve
Revaluation of - - - -
buildings
Balance at 31 11 667 120 630 (17 345) 2 620
December 2007
Table continues:...
Revaluation Acc Total
reserve Loss
R`000 R`000 R`000
Balance at 1 - (65 576) 50 738
January 2006
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
Net loss for the - (78 496) (78 496)
year
Foreign currency - - 2 986
translation
reserve
Revaluation of 1 394 - 1 394
buildings
Balance at 31 1 542 (157 044) (37 930)
December 2007
COMMENTS
The Board of Directors presents the audited financial results for the Group for
the year ended 31 December 2007. The results have changed from the financial
information published in the provisional report dated 25 April 2008 as follows:
1. In the group income statement, revenue increased by R1,83 million due to
the correction of an expense incorrectly allocated to revenue in the
provisional results. Costs decreased by R484 000 due to a R 2,28 million
reduction in the provision for bad debts on lease debtors and the increase
of R1,83 million incorrectly allocated to revenue. Taxation in the income
statement changed by R10,14 million due to the reversal of the deferred tax
liability of ICC Zambia in the audited results.
2. As far as the balance sheet goes the major change relates to the reversal
of the deferred tax liability of ICC Zambia of R10,14 million with the
corresponding decrease in the accumulated loss. Other changes regarding to
the balance sheet relate to reclassification between line items.
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, 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 2007 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 Kwacha, 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 R78,5 million, which incorporates the
following:
- Revenue decreased by 35% 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 31% resulting from assets
purchased during the year. The revenue from operating leases contributed
33% towards the total revenue of ICC Zambia, compared to 19% in the prior
year.
- The carrying value of goodwill arising upon consolidation of ICC Zambia,
was totally impaired due to the large losses incurred in ICC Zambia. This
resulted in a charge of R32 million to the income statement.
- A large increase was required in the bad and doubtful debts of ICC Zambia
(equivalent to R34 million). Included in the bad debts expense is a change
in estimate of R24,6 million arising on the decision to provide for
doubtful debts on the lease book in terms of IAS36 instead of in terms on
the Zambian Banking and Financial Services act 1994 requirements.
- Finance charges remained consistent with the previous year.
- Normal operating expenditure can be further analysed as follows:
Audited Audited
2007 2006
R`000 R`000
Bad and doubtful debts 34 394 8 270
Foreign exchange loss 3 800 16
Other operating 13 823 10 683
expenditure
Total normal operating 52 017 18 969
expenditure
The other operating expenditure increased by 29%. The main contributors to this
increase is the loss on sale of property, plant and equipment of R1,8 million
and an increase in legal fees of R1,5 million.
The high foreign exchange loss was due to the leases being raised in US Dollars,
which depreciated against the Zambian Kwacha during the year, resulting in a
loss upon conversion to Zambian Kwacha.
- Property, plant & equipment increased during the year due to net additions
of R7,2 million. This was required to expand the operating lease product
line. ICC Zambia`s leasehold buildings were revalued by Anderson &
Anderson, independent registered valuation surveyors, on 15 October 2007 on
the basis of open market values for existing use. This resulted in a
revaluation surplus of R1,39 million.
- The decrease in loans receivable resulted from the impairment of loan due
by a related company.
- The large decrease in net investment in finance leases, and decrease in
lease debtors resulted from few new leases being written during 2007, as
well as the exceptional provision for doubtful debts. 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 increased during the year as a result of the renegotiation of
loans and lines of credit.
- Foreign translation reserves decreased by a R2,98 million as a result of
the exchange rate fluctuations.
HEADLINE EARNINGS PER SHARE
The calculation of headline earnings per share is based on a loss of R46,496
million (2006: R7,362 million), and a weighted average of 116 666 753 shares.
2007 2006
R`000 R`000
Reconciliation of headline
loss:
Net loss for the year (78 496) (13 750)
Adjusted for:
Impairment of Goodwill 32 000 6 388
Headline loss (46 496) (7 362)
BASIS OF PREPARATION OF THE AUDITED RESULTS
Statement of Compliance
The audited results are presented in accordance with IAS 34: Interim Financial
Reporting and the annual financial statements have been prepared in accordance
with accounting policies that comply with International Financial Reporting
Standards ("IFRS"), JSE Listings Requirements and the South African Companies
Act.
The accounting policies applied for the year are consistent with those of the
previous year.
Basis of measurement
The annual financial statements have been prepared on the historical cost basis.
AUDIT OPINION
The annual financial statements have been audited by the company`s auditors Van
Dyk & Associates. The audit opinion is available for inspection at the
company`s registered office.
CORPORATE GOVERNANCE
The group subscribes to the principles of, and where possible, the
recommendations of the King II code on Corporate Governance.
DIVIDENDS
No dividends will be paid for the foreseeable future.
SUBSEQUENT EVENTS AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcements dated 12 June 2008 and
24 July 2008 in which shareholders were advised that the company is in
negotiations which may affect the price at which the company`s securities trade.
Shareholders are also reminded that an offer has been received and accepted by
the board of directors of ICC from Vehicle Finance Limited, a Zambian registered
company, for the purchase of 100% of the shares in Zambia. A circular to
shareholders is being prepared and will be posted to shareholders in due course.
Accordingly, shareholders are advised to exercise caution when dealing in the
company`s securities until a full announcement is made.
ANNUAL GENERAL MEETING
The annual report, incorporating a notice convening the annual general meeting
of the company, has been posted to shareholders. The Annual General Meeting
will be held at 10h00 at Arcay House II, Number 3 Anerley Road, Parktown,
Johannesburg on Wednesday, 03 September 2008.
For and on behalf of the board of directors
N. Justin Chinyanta
Chairman
1 August 2008
Registered office: 2nd Floor, East Wing, 11 Alice Lane, Sandton
Transfer secretaries: Computershare Investor Services (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: 01/08/2008 17:52:01 Produced by the JSE SENS Department.
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