Ensuring financial sustainability

Chief Financial Officer’s report

Financial performance

  Value added statement (IDC Company)  2013   2012  
  Figures in Rand million  
  Value created        
  Net interest income   1 327   1 225  
  Impairment losses on loans, advances and investments   (2 268)  (1 647) 
  Other income from lending activities   748   413  
  Other investment income   3 253   3 541  
  Operating expenditure and project feasibility expenses   (457)  (480) 
     2 603   3 052  
  Value allocated        
  Benefits to employees   801   750  
  Social spending in communities   74   59  
  To government as taxation and dividends   233   79  
  Taxation (including deferred tax)  183   29  
  Dividends to shareholders   50   50  
  Value reinvested in operations   1 495   2 164  
  Transfer to reserves (retained earnings)  1 470   2 143  
  Depreciation and amortisation   25   21  
     2 603   3 052  

Five-year financial overview – extracts from the Group’s financial statements

  Figures in Rand million   2013   2012   2011   2010   2009  
  Statement of financial position                 
  Cash and cash equivalents*   9 009   7 825   5 828   2 866   5 607  
  Loans and advances   18 666   15 978   12 053   10 374   8 820  
  Investments   84 116   80 231   81 971   68 891   53 059  
  Property, plant and equipment   7 913   4 772   4 587   4 136   3 038  
  Other assets   7 181   3 424   2 367   2 364   2 853  
  Total assets   126 885   112 230   106 806   88 631   73 377  
  Capital and reserves   96 766   91 862   92 726   79 189   64 687  
  Non-controlling interest   174   331   342   366   358  
  Other financial liabilities   19 025   9 923   6 677   3 527   5 165  
  Other liabilities   10 920   10 114   7 061   5 549   3 167  
  Total equity and liabilities   126 885   112 230   106 806   88 631   73 377  
  Statement of comprehensive income                 
  Operating profit   2 447   3 412   2 285   2 008   5 314  
  Income from equity-accounted investments   (466)  (2)  633   40   1 132  
  Profit before taxation   1 981   3 410   2 918   2 048   6 446  
  Taxation   (3)  (107)  (206)  181   (825) 
  Profit for the year   1 978   3 303   2 712   2 229   5 621  

* To be utilised to fund commitments of R30 027 million  

Revenue

Revenue for the year increased by 33% to R14 589 million from R10 985 million in 2012. This was mainly due to revenue of R2 197 million from a subsidiary acquired during the year, Scaw South Africa (Pty) Ltd (Scaw). No revenue from Scaw was accounted for in 2012. Revenue from Foskor reduced by 4% from the previous year to R4 942 million due to downward pressure on selling prices, despite the favourable impact of the Rand/US Dollar exchange rate. Interest income increased from R1 562 million in 2012 to R1 689 million in 2013 due to an increase in the loans and advances book. Dividends received were 28% higher than in the previous year, mainly as a result of a higher dividend received from Sasol Limited, and higher dividends received on preference share investments.

Operating profit

Operating profit for the year was down from R3 412 million in 2012 to R2 447 million in 2013, mainly due to a reduction in capital gains and an increase in impairments. In 2012 a gain of R966 million was recorded on the disposal of IDC’s investment in Metorex Limited. Only minor disposals were made in 2013, which resulted in a capital loss of R30 million. Impairments for the Group increased by 67% from R1 079 million to R1 736 million due to businesses that were funded experiencing significant stress in the year as a result of difficult trading conditions in the South African economy.

The IDC acquired the Small Enterprise Finance Agency (sefa) on 1 April 2013 for no consideration from the Government of the Republic of South Africa. Details of this acquisition are disclosed in note 37 to the financial statements. R171 million was received from the Government to fund sefa during the 2013 year.

The Export Credit Insurance Corporation of South Africa Limited (ECIC) operates an interest make-up scheme through which compensation is made to participating lenders for interest rate risk, liquidity risk, basis risk and credit risk assumed in the funding of export credit loans which are insured by ECIC. This is a scheme implemented by the South African Government to promote exports of South African goods and services. IDC received R78 million from the scheme in 2013 (2012: R33 million).

CASE STUDY

!Khi Solar One

Once completed, this concentrated solar tower power station will be one of the largest in the world. One of the benefits of this project relative to most other renewable energy projects is its ability to store energy and to deliver electricity to the grid during peak times.

Coega Dairy Holdings

The IDC has identified increased competition in the dairy value chain and import substitution in the cheese industry as key sector development goals. We also singled out the need for increased farmer (and specifically B-BBEE) participation in dairy value-adding initiatives.

Windtown Lagoon Resort 

The newly built Windtown Lagoon Resort and Spa reflects the IDC’s focus to funding community-based projects that have potential to create employment opportunities in far-flung regions.


APPROVALS
R13.1 billion
DISBURSEMENTS
R16.0 billion
JOBS FACILITATED
18 922
JOBS SAVED
3 950
© The IDC 2013. All rights not expressly allowed are reserved. P.O. Box 784055, Sandton, 2146, South Africa