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INDUSTRIAL CREDIT COMPANY AFRICA HOLDINGS LIMITED - PROVISIONAL RESULTS FOR THE
YEAR ENDED 31 DECEMBER 2003
INDUSTRIAL CREDIT COMPANY AFRICA HOLDINGS LIMITED
(formerly Explorer Corporation Holdings Limited)
("ICC" or "the Company")
(Incorporated in the Republic of South Africa)
(Registration Number: 1997/010950/06)
Share Code:ICC
ISIN Code:ZAE000053203
PROVISIONAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
BALANCE SHEETS AT 31 DECEMBER
Reviewed Audited
2003 2002
R"000 R"000
ASSETS 102,546 111,142
Property, plant and equipment 2,727 3,729
Loans 2 2,626
Intangibles - 2,835
Goodwill on acquisition 38,388 43,186
Development expenditure - 1,708
Net investment in finance leases 61,429 57,058
Current assets 114,657 90,942
Due from related companies 603 313
Net investment in finance leases 91,476 81,341
Short term deposits 844 846
Trade and other receivables 17,970 6,519
Cash and cash equivalents 3,764 1,923
Total assets 217,203 202,084
EQUITY AND LIABILITIES
Shareholders Funds 55,748 67,893
Share capital and premium 132,297 127,297
General risk reserve 2,620 -
Accumulated loss (59,530) (46,953)
Foreign currency translation (19,639) (12,451)
reserve
Non current liabilities 57,514 31,189
Long term loans 50,759 23,991
Deferred tax 6,755 7,198
Current liabilities 103,941 103,002
Short term borrowings 87,771 77,596
Due to related companies 3,084 -
Taxation 186 75
Trade and other payables 7,306 11,905
Bank overdrafts 5,594 13,426
Total equity and liabilities 217,203 202,084
Shares in issue at year end 116,666 111,600
(`000)
Net asset value per share (cents) 47,8 60,8
INCOME STATEMENTS FOR THE YEAR Reviewed Audited
ENDED 31 DECEMBER 2003 2002
R"000 R"000
CONTINUING OPERATIONS
Revenue 29,616 34,287
Staff costs (3,290) (2,554)
Depreciation and amortisation (5,244) (5,790)
Other operating expenses (21,629) (7,571)
- Impairment of loans extended (14,625) -
to discontinued operations
- Normal operating expenditure (7,004) (7,571)
Total operating expenses (30,163) (15,915)
(Loss)/ profit from operating (547) 18,372
activities
Finance costs (10,172) (10,828)
(Loss)/ profit before taxation (10,719) 7,544
Taxation (1,173) (2,830)
Net (loss)/ profit for the year (11,892) 4,714
DISCONTINUED OPERATIONS
Revenue 514 50
Staff costs (4,006) (3,328)
Depreciation and amortisation (165) (2,309)
Other operating expenses (5,435) (5,340)
Total operating expenses (9,606) (10,977)
Loss from operating activities (9,092) (10,927)
Finance costs (30) (306)
Loss before taxation (9,122) (11,233)
Taxation - -
Loss for the year (9,122) (11,233)
After-tax gain on 9,221 -
discontinuance of card business
Gain on discontinuance of card 9,221 -
business
Tax thereon - -
TOTAL GROUP
Loss for the year (11,793) (6,519)
Basic and diluted loss per (10,3) (10,4)
share (cents)
Weighted average number of 114,404 62,851
shares (`000)
Reconciliation of headline
(loss)/ earnings
Headline (loss)/ earnings per
share has been
calculated in terms of Circular
7 of 2002
Attributable loss for year (11,793) (6,519)
Adjusted for:
Goodwill amortisation 4,798 5,038
Impairment of goodwill (1) -
Impairment provision against 1,708 1,708
development costs
Impairment provision against 1,395 1,395
trademarks
Gain on discontinuance of card (9,221) -
business
Headline (loss)/ earnings (13,114) 1,622
Headline (loss)/ earnings per (11,5) 2,6
share (cents)
ABRIDGED CASH FLOW STATEMENTS FOR THE Reviewed Audited
YEAR ENDED 31 DECEMBER 2003 2002
R"000 R"000
Cash flows from operating activities (29,016) (46,852)
Cash flows from investing activities 556 (8,820)
Cash flows from financing activities 37,111 42,861
Net movement in cash and cash 8,651 (12,811)
equivalents
Cash and cash equivalents at (10,481) 2,330
beginning of year
Cash and cash equivalents at end of (1,830) (10,481)
year
STATEMENT OF CHANGES IN EQUITY
Share Share FCTR General Acc Total
Capital Premium Risk Loss
Reserve
R"000 R"000 R"000 R"000 R"000 R"000
Balance as 2,580 49,642 (40,434) 11,788
at 1
January
2002
Net loss (6,519) (6,519)
for the
year
Foreign (12,451) (12,451)
currency
translation
reserve
Issue of 8,580 66,495 75,075
shares
Balance as
at 31
December
2002
- as 11,160 116,137 (12,451) (46,953) 67,893
previously
reported
AC133
adjustments
to opening
balance
- 1,836 1,836
impairment
of debtors
- transfer 1,836 (1,836) -
to general
risk
reserve
Adjusted 11,160 116,137 (12,451) 1,836 (46,953) 69,729
opening
balance
Net loss (11,793) (11,793)
for the
year
Foreign
currency (7,188) (7,188)
translation
reserve
Transfer to 784 (784) -
general
risk
reserve
Issue of 506 4,494 5,000
shares
Balance as 11,666 120,631 (19,639) 2,620 (59,530) 55,748
at 31
December
2003
COMMENTS
The Board of Directors is pleased to
present the reviewed provisional
financial results for the Group for
the year ended 31 December 2003.
BACKGROUND
Industrial Credit Company Africa
Holdings Limited "ICC", formerly
Explorer Corporation Holdings Limited
"Explorer", is the holding company of
Industrial Credit Company Zambia "ICC
Zambia", which in turn owns all the
shares in Industrial Credit Company
South Africa "ICC South Africa".
Explorer"s name change to ICC was
effected by way of a special
resolution of the shareholders in
March 2004.
SOUTH AFRICAN STATEMENTS OF GAAP AND
COMPANIES ACT REQUIREMENTS
The provisional financial statements
were drawn up in compliance with
South African Statements of Generally
Accepted Accounting Practice. The
Group has complied with the
requirements of the Companies Act.
The accounting policies for the year
are consistent with those applied for
the year 31 December 2002, except for
the adoption of AC 133 on financial
instruments, recognition and
measurement during the current
financial year.
BUSINESS REVIEW
2003 saw a number of changes within
the Group, in line with the vision to
create a Pan African financial
services presence. Following the
successful acquisition of ICC Zambia
in 2002, a South African subsidiary
was created namely ICC South Africa.
In line with this strategy, the
shares in the subsidiaries housing
the card operations were distributed
to existing shareholders during
September 2003 via a dividend in
specie. It is expected that as a
result of successful card roll out
programs as secured on the African
continent, this card business will
realise its full potential within
three to five years.
The continuing operations were
successful in securing significant
funding from two partners namely the
Development Bank of South Africa
"DBSA" and Norsad during the course
of 2003. These funds will be utilised
to maximise the profitability of the
leasing credit lines and to assist
with the expansion of the Group into
other geographical areas and markets.
The Zambian economy has performed as
expected during 2003 and year on year
inflation reflected at 18%. Tobacco
production increased by more than a
100% during 2003 mainly as a result
of tobacco farmers relocating from
Zimbabwe. This trend is expected to
have a positive influence on the
Zambian leasing operations.
ICC Zambia continues to lead the
market in Zambia with the creation of
innovative products and service
ethics.
ICC South Africa has done well in the
first few months of operation
illustrating the need for innovative
leasing products in niche market
segments within South Africa. In line
with the Group"s commitment to
upliftment and the social
responsibility awareness, the first
leases concluded in South Africa were
for the provision of commercial
vehicles to an owner-driver
programme. This resulted in the
creation of approximately 26
sustainable small companies for
previously disadvantaged individuals,
backed at all times by guarantees and
security as provided by the listed
innovators of such programmes.
ICC South Africa is looking at
forming strategic partnerships with
major international truck
manufacturers to manage and
administer their vehicle lease
requirements.
FINANCIAL REVIEW
The Provisional Group Income
Statements are presented separately
for continuing operations and
discontinued operations and include a
total of the net group income
position.
Provisional Balance Sheets at 31
December 2003, relate to the
continuing operations only.
Shareholders are also referred to the
Annual Report for 2003, which will be
completed and distributed shortly,
for more detailed disclosures.
Where appropriate prior year income
statements figures have been
reclassified to present more
meaningful comparatives. More
detailed disclosures on this will be
provided in the annual report.
No segmental reporting has been
provided as the figures mainly relate
to one geographic region. However,
net profit after tax, generated by
ICC Zambia and ICC South Africa, is
disclosed separately below. The
Zambian leasing business was the main
contributor for the year under
review, with ICC South Africa"s
contribution still being immaterial.
Headline earnings
The impairment of the loans to the
discontinued operations will not
recur in the continuing operations,
as these loans have been fully
provided for. The headline earnings
on a continuing basis are R7,5m or
6,5 cents per share. The net asset
value per share on a continuing basis
is 60,3 cents.
Income Statement - continuing
operations
The continuing operations" net loss
can be allocated as follows. This
disclosure is presented to ensure
shareholders" understand the future
earnings potential of the Group.
R"000
Net loss for the year - (11,892)
continuing operations
Holding company consolidation and other provisions (20,978)
Impairment provision against long term loans to discontinued (14,625)
operations (non recurring)
Depreciation and amortisation (5,244)
Other (1,109)
Net profit after tax generated by South African leasing operations 95
Net profit after tax generated by Zambian leasing operations 8,991
Revenue decreased by R5m as a result
of the continued strengthening of the
Rand against the US Dollar despite a
10% growth in US Dollar revenue.
Operating expenses and the cost of
financing have increased
substantially compared to the prior
year. This increase is due to an
impairment provision of R14,6m raised
against loans extended to
discontinued operations. All the
loans extended to discontinued
operations in prior years have been
fully provided for.
It is the Group"s policy to amortise
goodwill over 10 years, with an
annual impairment review.
Income Statement - discontinued
operations
The Group completed the unbundling of
the card business during September
2003.
The card operations continued to
reflect a loss, with the loss for the
period up to September 2003 being
R9,1m, before the R9,2m gain on
discontinued operations compared to a
loss of R11,2m for the prior year.
Provisional Income Statement - total
group
The total Group reported a headline
loss of R13,1m for year ended 31
December 2003
Provisional Balance Sheets
The book value of property, plant and
equipment decreased by 27%, mainly
due to the Rand strengthening against
the Kwacha.
Intangibles were written off in full
in the current year. Included in
long term loan assets was an amount
extended to fund the card operations
of R2,4m, fully impaired in 2003.
Net investments in finance leases
increased by R4,4m (long term) as a
result of the growth in leasing
business. The R10,3m increase in
trade receivables as well as the
R11,5m increase in short term portion
of leases, account for the increase
in current assets.
Long term loans are interest bearing
and increased significantly due to
the increased facilities from DBSA
and Norsad amounting to 10 million
USD made available during the year
ended 2003.
It is anticipated that the additional
revenue generated from these
facilities will have a positive
impact on earnings and headline
earnings for the financial year
ending 2004.
Share capital and premium increased
due to shares issued for a strategic
acquisition within the card business.
The issue related to 5,066,752 shares
with a par value of 10 cents issued
at 0,9868 cents. This investment was
subsequently sold to the unbundled
operations at the net book value of
R5m.
A general risk reserve was created in
2003 in the accounts of ICC Zambia,
as a result of an AC133 adjustment.
This adjustment relates to loan loss
reserve requirements in excess of the
specific impairment amounts required
under AC 133.
Cash flow statements
The Group repaid R8,6m of its short-
term bank overdraft, decreasing it
from R10,5m in the previous year to
R1,8m in the current year. This was
funded by the cash flows from
financing activities.
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 REVIEW OPINION
PricewaterhouseCoopers Inc."s
unmodified review 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
20 April 2004
Registered office
Transfer secretaries
c/o Loita Capital Partners
International
Computershare Limited
2nd Floor, East Wing
Ground Floor
11 Alice Lane
70 Marshall Street
Sandton
Johannesburg
Directors
J Chinyanta*, Y Bazian, CM van
Nieuwkerk, A Fletcher*, A Karrim*, N
Molver*, K. Jones*
*Non-executive
Date: 20/04/2004 12:49:02 PM Produced by the JSE SENS Department
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