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ICC
ICC
ICC - Reviewed Provisional Results for the year ended 31 December 2005
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
Reviewed Provisional Results for the year ended 31 December 2005
BALANCE SHEET Reviewed Restated
AT 31 DECEMBER 2005 2004
R"000 R"000
ASSETS
Non-current assets 138 559 133 351
Property, plant and equipment 11 839 8 624
Loans receivable 763 2
Goodwill on acquisition 38 388 38 388
Net investment in finance leases 87 569 86 337
Current assets 75 435 81 720
Due from related companies 891 788
Net investment in finance leases 56 953 60 598
Loans receivable 973 -
Trade and other receivables 16 271 19 202
Cash and cash equivalents 347 1 132
Total assets 213 994 215 071
EQUITY AND LIABILITIES
Shareholders Funds 47 408 47 192
Share capital and premium 132 297 132 297
General risk reserve 2 620 2 620
Accumulated loss (65 818) (64 619)
Foreign currency translation reserve (21 691) (23 106)
Non-current liabilities 72 108 84 638
Long term loans 65 989 78 346
Deferred tax 6 119 6 292
Current liabilities 94 478 83 241
Short-term borrowings 72 176 68 691
Due to related companies 1 135 1 721
Taxation 71 182
Trade and other payables 8 915 10 271
Cash and cash equivalents 12 181 2 376
Total equity and liabilities 213 994 215 071
Shares in issue at year end (`000)
116 667 116 667
Net asset value per share (cents) 40,5
40,6
Tangible net asset value per share 7,5
(cents) 7,7
INCOME STATEMENTS Reviewed Restated
FOR THE YEAR ENDED 31 DECEMBER 2005 2004
R"000 R"000
Revenue 33 577 30 114
Staff costs (4 018) (3 865)
Depreciation and amortisation (1 926) (962)
Other operating expenses (12 802) (12 652)
- Impairment of loans extended to (963) (1 747)
discontinued operations
- Impairment of investment in Lengana - (20)
- Normal operating expenditure (11 839) (10 885)
Total operating expenses (18 746) (17 479)
Profit from operating activities 14 831 12 635
Finance costs (12 566) (11 144)
Profit before taxation 2 265 1 491
Taxation (3 464) (2 058)
Net loss for the year (1,199) (567)
Basic and diluted loss per share (0,48)
(cents) (1,03)
Headline loss per share (cents) (1,03) (0,48)
Weighted average number of shares
(`000) 116 667 116 667
CASH FLOW STATEMENTS FOR THE YEAR Reviewed Restated
ENDED 31 DECEMBER 2005 2004
R"000 R"000
Cash flow generated from/(utilised
in) operating activities 21 985 (23 992)
Cash flow utilised in investing
activities (5 824) (6 442)
Cash flow (utilised in)/generated
from financing activities (26 569) 30 954
Net movement in cash and cash
equivalents (10 408) 520
Cash and cash equivalents at
beginning of year (1 244) (1 830)
Foreign exchange movements on cash
and cash equivalents (182) 64
Cash and cash equivalents at end of
year (net) (11 834) (1 244)
STATEMENT OF CHANGES IN EQUITY
Share Share Foreign General Acc Total
Capital Premium trans- reserves Loss
lation
reserve
R"000 R"000 R"000 R"000 R"000 R"000
Balance at 1 11 667 120 630 (19 639) 2 620 (59 530) 55 748
January 2004 -
as previously
reported
Correction of - - - - (4 522) (4 522)
error
Adjusted opening 11 667 120 630 (19 639) 2 620 (64 052) 51 226
balance
Net loss for the - - - - (567) (567)
year - restated
As previously (5 180) (11 793)
reported
Correction of - - - - (185) (4 426)
error
Transitional
adjustment in - - - - 4 798 4 798
terms of IFRS
Foreign currency - - (3 467) - - (3 467)
translation
reserve
Balance at 31 11 667 120 630 (23 106) 2 620 (64 619) 47 192
December 2004
Net loss for the - - - - (1 199) (1 199)
year
Foreign currency - - 1 415 - - 1 415
translation
reserve
Balance at 31 11 667 120 630 (21 691) 2 620 (65 818) 47 408
December 2005
COMMENTS
The Board of Directors is pleased to present the reviewed provisional financial
results for the Group for the year ended 31 December 2005.
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
2005 saw the Group now focusing on developing and expanding the leasing
products and markets. ICC Holdings has been able to expand its product line in
respect of operating leases which contributed R2,7 million towards the total
revenue of the Group. This represents 10% of the total revenue generated by ICC
Zambia. ICC Holdings was able to increase its revenue by 11,5% as compared to
an increase of 1,7% in 2004 despite a weakening in the Rand against the US
Dollar. This is largely due to the revenue derived from operating leases as
noted above.
The South African Rand weakened against the US Dollar during the period under
review and has traded in a broad band between R5,86 and R6,34. 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 Kwatcha, before translation of the
figures into South African Rand.
ICC South Africa generated a profit before tax and management fees of R143k,
however the contribution towards Group revenues still remains immaterial.
FINANCIAL REVIEW
ICC reported a profit before taxation of R2,2 million for the year under
review, compared to a restated profit before taxation of R1,4 million in the
prior year. Revenue increased by 11,5% from the previous year despite the
appreciation of the USD against the South African Rand, due to the expansion of
ICC"s product line as noted above. Normal operating expenditure has increased
as a result of the increase in revenue. The large tax charge results from the
payment of withholding tax on the inter-company dividend paid by ICC Zambia to
ICC Holdings.
Property, plant and equipment increased significantly due to the expansion of
the product line to incorporate operating leases, as well as the transfer of
assets which were previously incorrectly included in Net investment in Finance
Leases. Goodwill arising on the consolidation of ICC Zambia, remained
consistent with the previous year, as it is no longer being amortised in order
to comply with IFRS 3: Business Combinations. An impairment test was performed
on the carrying value of Goodwill at year end, and it is considered to fairly
reflect the value of the underlying business of ICC Zambia. No impairment
provision has thus been recognised.
The increase in loans receivable is due to a loan advanced by ICC South Africa
to an unlisted entity, Independent Solutions Group. The decrease in net
investment in finance leases and current assets, which largely represent lease
debtors, is due to the fluctuation in the exchange rate upon conversion from
USD to Zambian Kwatcha. The increase in revenues has not resulted in an
increase in Net investment in Finance Leases, due to the fact that the increase
in revenue is attributable to operating leases, with little incremental revenue
from finance leases being derived.
Borrowings decreased as a result of the repayment conditions attached to loans
held by ICC Zambia, which required significant repayments during the year,
amounting to the equivalent of R8,9 million. This resulted in the large bank
overdraft balance at the end of the year, which was largely attributable to the
cash outflow in respect of financing activities amounting to R26,5 million. The
Group reported negative cash balances of R12,1 million as compared to R1,4
million in the previous year, resulting from the increased capital expansion
required to finance operating leases negotiated during the period. This is
considered to be temporary as the investment in operating leases is expected to
significantly increase the revenue of the Group in future periods.
Foreign translation reserves decreased by a R1,4 million profit as a result of
the exchange rate fluctuations and the pricing of the Kwatcha against the Rand
during the year under review.
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 International
Financial Reporting Standards ("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.
INTERNATIONAL FINANCIAL REPORTING STANDARDS AND COMPANIES ACT REQUIREMENTS
The reviewed provisional results for the year ended 31 December 2005 were
prepared in compliance with International Financial Reporting Standards (IFRS)
for the first time, as well as the Companies Act. The disclosures required by
IFRS1 concerning the transition from South African Statements of Generally
Accepted Accounting Practice to IFRS are as follows:
Reconciliation of equity at 1 January 2004 (date of transition to IFRS)
No adjustment was required at 1 January 2004.
Reconciliation of equity at SA GAAP Effect of IFRS
31 December 2004 transition
to IFRS
Property, plant and equipment 4 740 - 4 740
Loans 2 - 2
Goodwill on acquisition of 33 590 4 798 38 388
ICC Zambia
Net investment in finance 90 220 - 90 220
leases
Current assets 81 720 - 81 720
Total assets 210 272 4 798 215 070
Shareholders funds 42 394 4 798 47 192
Share capital and premium 132 297 - 132 297
General risk reserve (23 106) - (23 106)
Foreign translation reserve 2 620 - 2 620
Accumulated loss (69 417) 4 798 (64 619)
Non-current liabilities 84 638 - 84 638
Long term loans 78 346 - 78 346
Deferred taxation 6 292 - 6 292
Current liabilities 83 240 - 83 240
Total equity and liabilities 210 272 4 798 215 070
Reconciliation of profit for the year ended 31 December 2004
Effect of
SA GAAP transition IFRS
to IFRS
Revenue 30 114 - 30 114
Operating expenses (22 277) 4 798 (17 479)
Profit before finance costs 7 837 4 798 12 635
Finance costs (11 144) - (11 144)
(Loss)/Profit before taxation (3 307) 4 798 1 491
Taxation (2 058) - (2 058)
Net loss for the year (5 365) 4 798 (567)
Loss per share (cents) (4.60) (0.48)
The adjustment is as a result of Goodwill no longer being amortised commencing
on the date of transition.
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.
CHANGE IN AUDITORS
The company changed its auditors from Gobodo Chartered Accountants (SA) to
Sizwe Ntsaluba ES Incorporated on 2 January 2006.
REVIEW OPINION
Sizwe Ntsaluba"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
10 April 2006
Registered office:
c/o Loita Capital Partners International, 2nd Floor, East Wing, 11 Alice Lane,
Sandton
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limited, Ground Floor, 70 Marshall
Street, Johannesburg
Sponsor:
Arcay Corporate Services, Number 3 Anerley Road, Parktown, Johannesburg
Directors:
J Chinyanta*, Y Bazian, CM Van Nieuwkerk, A Fletcher*, A Karrim*, N Molver*
*Non-executive
Date: 12/04/2006 07:00:15 AM Produced by the JSE SENS Department
