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ICC
ICC
ICC - Reviewed interim results for the six months ended 30 June 2006
Reviewed interim results for the six months ended 30 June 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
Reviewed interim results for the six months ended 30 June 2006
CONSOLIDATED GROUP Reviewed for Unaudited Audited
INCOME STATEMENT the 6 months restated for restated for
ended the 6 months the year
30 June 2006 ended ended
R"000 30 June 2005 31 Dec 2005
R"000 R"000
Revenue 20 036 15 019 39 253
Staff costs (2 499) (1 837) (4 262)
Depreciation (1 580) (457) (2 041)
Other operating expenses (5 804) (4 695) (26 078)
- Impairment of loans extended (106) (666) (963)
to discontinued operations
- Prior year adjustment - - (8 737)
- Normal operating expenditure (5 698) ( 4,029) (16 378)
Total operating expenses (9 883) (6 989) (32 381)
Profit before finance costs 10 153 8 030 6 872
Finance Costs (11 151) (5 864) (13 313)
(Loss)/profit before taxation (998) 2 166 (6 441)
Taxation (64) (2 124) (3 490)
Net (loss)/profit for the (1 062) 42 (9 931)
period
Earnings per share information
(Loss)/earnings per share (0.91) 0.04 (8.51)
(cents)
Headline (loss)/earnings per (0.91) 0.04 (8.51)
share (cents)
Weighted average number of 116 667 116 667 116 667
shares (`000)
CONSOLIDATED GROUP BALANCE Reviewed for Unaudited Audited
SHEET the 6 months restated for restated for
ended the 6 months the year
30 June 2006 ended ended
R"000 30 June 2005 31 Dec 2005
R"000 R"000
Assets
Property, plant and equipment 19 487 11 336 15 539
Loans 888 2 763
Goodwill on acquisition of ICC 38 388 38 388 38 388
Zambia
Net investment in finance 124 853 112 150 115 291
leases
Current assets 112 171 122 466 92 937
Total assets 295 787 284 342 262 918
Equity and liabilities
Shareholders funds 41 097 50 447 41 764
- Share capital and premium 132 297 132 297 132 297
- General risk reserve 2 620 2 620 2 620
- Foreign translation reserve (18 208) (19 894) (18 603)
- Accumulated loss (75 612) (64 576) (74 550)
Non-current liabilities 119 429 103 009 103 935
- Long-term loans 104 572 95 597 91 550
- Deferred taxation 14 857 7 412 12 385
Current Liabilities 135 261 130 886 117 218
Total equity and liabilities 295 787 284 342 262 918
Shares in issue (`000) 116 667 116 667 116 667
Net asset value per share 35,23 43,24 35,80
(cents)
Net tangible asset value per 2,32 10,34 2,89
share (cents)
CONSOLIDATED GROUP CASH FLOW Unaudited Audited
STATEMENT Reviewed for restated for restated for
the 6 months the 6 months the year
ended ended ended
30 June 2006 30 June 2005 31 Dec 2005
R"000 R"000 R"000
Cash Flow from Operating 7 297 (26 088) 19 597
activities
Cash Flow from Investing 1 413 (6 532) (2 258)
activities
Cash Flow from Financing 631 24 476 (28 443)
activities
Net movement in cash and cash
equivalents for the period 9 342 (5 144) (11 104)
Cash and cash equivalents at
beginning of period (15 968) (1 245) (1 245)
Foreign exchange movements on
cash and cash equivalents (2 381) (830) (3 620)
Cash and cash equivalents at (9 008) (7 218) (15 968)
end of period
CONSOLIDATED GROUP Share Share Foreign General Acc Total
STATEMENT OF Capital Premium Trans- Reserve Loss
CHANGES IN EQUITY lation
R"000 R"000 Reserve R"000 R"000 R"000
R"000
Balance at 1
January 2005 - as 11 667 120 630 (23 106) 2 620 (69 417) 42 394
previously
reported
Transitional
adjustment in - - - - 4 798 4 798
terms of IFRS
Adjusted opening 11 667 120 630 (23 106) 2 620 (64 619) 47 192
balance
Net profit for the - - - - 42 42
period - restated
As previously 50 50
reported
Change in foreign (8) (8)
exchange rates
Foreign - - 3 212 - - 3 212
translation
reserve - restated
As previously - - 3 104 - - 3 104
reported
Change in foreign - - 108 - - 108
exchange rates
Balance at 30 June 11 667 120 630 (19 894) 2 620 (64 577) 50 446
2005
Net loss for the - - - - (9 973) (9 973)
period - restated
As previously - - - - (1 249) (1 249)
reported
Change in foreign - - - - 13 13
exchange rates
Prior year - - - - (8 737) (8 737)
adjustment
Foreign - - 1 291 - - 1 291
translation
reserve
As previously - - (1 688) - - (1 688)
reported
Change in foreign - - 2 979 - - 2 979
exchange rates
Balance at 31 11 667 120 630 (18 603) 2 620 (74 550) 41 764
December 2005
Net loss for the - - - - (1 062) (1 062)
period
Foreign - - 395 - - 395
translation
reserve
Balance at 30 June 11 667 120 630 (18 208) 2 620 (75 612) 41 097
2006
COMMENTS
The Board of Directors is pleased to present the reviewed interim financial
results for the Group for the period ended 30 June 2006. The results have been
reviewed by SizweNtsaluba ES Inc. and their unqualified review opinion is
available for inspection at the registered office of the company.
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
2006 saw the Group maintaining its finance leasing products, and further
developing and expanding its operating leasing products and markets. The
management of ICC has extensive knowledge of trading patterns in Africa, which
has enabled it to take advantage of beneficial investment opportunities. ICC"s
dominant position in the leasing market in Zambia (75% market share) as well as
the establishment of the operating lease product line in 2005, enabled it to
increase revenues in USD terms by 26% from the prior year.
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 R7,27. 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.
ICC South Africa generated a profit before tax and management fees of R126k,
however its contribution towards Group results still remains immaterial.
FINANCIAL REVIEW
The ICC Group reported a loss before taxation of R998k for the six months under
review, compared to a restated profit before taxation of R2,2 million in the
prior year. In order to provide shareholders with comparable information, the
following table has been extracted from the Group Income Statement.
Reviewed for Audited
the 6 months Restated for
ended the year ended
30 June 2006 31 Dec 2005
R"000 R"000
Normal operating expenditure 5 698 16 378
Adjusted for: (Profit)/Loss on foreign
exchange (272) 5 442
Adjusted balance 5 426 10 936
The loss on foreign exchange incurred in 2005 resulted from the appreciation of
the Zambian Kwacha against the US Dollar, which had a direct impact on lease
income recognised on leases quoted in US Dollars. The loss is not expected to
be repeated in the current year.
Revenue has increased from the prior year due to the introduction of operating
leases as described above. The increase in normal operating expenditure from
the prior year is largely due to foreign exchange differences on translation of
the ICC Zambia results to South African Rand. The operating expenditure in ICC
Zambia increased by 11% in Zambian Kwacha terms for the six month period.
The large increase in finance charges is due to the following reasons:
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 the second half of 2006.
Large deposits were received from customers on money market instruments,
resulting in increased finance charges being paid on these instruments.
No dividends were paid by ICC Zambia to the holding company in the current
period, resulting in a minimal tax charge being incurred in the current period.
Property, plant and equipment increased significantly due to the continued
expansion of the operating leases product line. Net investment in finance
leases decreased significantly from the prior year due to the decline in
business during the previous year (2005), however this has now stabilised which
is evident if it is compared to the balances reported at 31 December 2005, as
follows:
Reviewed Audited
June 2006 restated
R"000 Dec 2005
R"000
Non-current portion of Net investment in
finance leases 124 853 115 291
Current portion of Net investment in 65 539 77 257
finance leases
Total 190 392 192 548
The decrease in current assets from the previous year is largely due to the
decrease in the short term portion of Net investment in finance leases.
Long term and short term borrowings increased from the previous year as a
result of the replacement of borrowings which had been fully repaid at the end
of 2005.
The Group reported negative cash balances of R9 million in comparison to
negative cash balances of R15,9 million as at 31 December 2005. The decrease in
negative cash balances is due to the negotiation of additional long term loan
facilities which replaced loans fully repaid in 2005, and thus released
pressure on short term funding requirements.
Foreign translation reserves decreased by a R365k profit as a result of the
exchange rate fluctuations and the pricing of the Kwacha against the Rand
during the period under review.
PRIOR YEAR ADJUSTMENT
The prior year numbers have been restated to reflect an adjustment required by
the Bank of Zambia (Central Bank and the supervisory authority), due to more
stringent provisioning policies being applied in terms of collateral offered by
lessees. However, management is of the opinion that these amounts are
recoverable in the normal course of business. The effect of the adjustment was
to increase the provision for doubtful debts by R8,7 million.
The foreign currency translation reserve was adjusted due to a difference in
the foreign exchange rates applied in prior periods The directors changed the
valuation method used in converting the Zambian Kwacha to South African Rand
from using a website to convert foreign exchange to foreign exchange rates
obtained from a major financial institution. The prior periods" balances have
been appropriately restated.
INTERNATIONAL FINANCIAL REPORTING STANDARDS AND COMPANIES ACT REQUIREMENTS
The reviewed interim financial statements were prepared in compliance with
International Financial Reporting Standards (IFRS) and the Companies Act. The
accounting policies for the period are consistent with those applied for the
year ended 31 December 2005.
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.
For and on behalf of the Board
N. Justin Chinyanta
Chairman
09 October 2006
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 Corporate Services
Nieuwkerk, A Fletcher*, A Karrim*, N Number 3 Anerley Road
Molver* Parktown
*Non-Executive JOHANNESBURG
Date: 09/10/2006 05:08:08 PM Produced by the JSE SENS Department
