IDC remains a strong institution with a healthy balance sheet

By Kabelo Khumalo Time of article published Aug 16, 2019

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JOHANNESBURG – Industrial Development Corporation (IDC) chief executive Tshokolo Nchocho said on Thursday that the company was well poised to assist the country grow the economy on the back of a healthy balance sheet.

Nchochosa said despite the ailing local economy, the firm’s financing and investment contribution to the South African economy had been sustained at meaningful levels over the years.

“We are mindful of both the domestic and global economic outlook; however, the IDC remains a strong institution which is well capitalised, with deep skills and sound governance structures and we will focus on the levers that are within our control as we continue to deliver on our mandate,” Nchocho said.

The group’s total assets grew 6 percent in the year to end March to R144.6 billion, and its liabilities stood at R49.3bn, while its reserves grew 3 percent to R95.5bn.

Nchoko said the results demonstrated that IDC retained a strong and well managed capital base.

The IDC in the year under review disbursed a total of R11.8bn to beneficiaries, while creating nearly 20 000 jobs. The corporation approved funding for black industrialists over the past four years now totalled R21.4bn of the five-year target of R23bn set in the 2016 financial year.

The IDC has also approved women-empowered enterprises to the value of R12.2bn over the five-year period to March 2019 and R5.2bn to youth-empowered enterprises over the same period.

The corporation’s normalised revenue grew by 2 percent to R17.2bn. The main driver in the increase in revenue was higher interest income in the IDC and higher dividend income from listed investments such as Kumba and BHP Billiton.

However, the company’s normalised profits dropped 14 percent to R720 million in the period.

Nonkululeko Dlamini, the chief financial officer of the IDC, said the adoption of a new accounting standard, IFRS9, had had a major impact on the financials of the corporation.

“Operating profits included capital gains in prior years in line with our business model, whereby we exit mature investments for new funding requirements and thereby realising capital gains,” Dlamini said.

“IFRS9 adoption has resulted in capital gains no longer being recycled back to profits based on the election to revalue equity investments through other comprehensive income; the group profit after tax of R720m for 2019, therefore, excludes capital gains of R2.3bn from current year exits.”

She added that all fund raising during the period was on the strength of the IDC balance sheet and no guaranteed debt, indicating continued investor confidence in IDC.

The troubles facing petrochemical giant Sasol over the escalating costs and delays at the Lake Charles Chemicals Project in Louisiana in the US saw the IDC’s listed shares decreased by R5.8bn to R50.8bn.

Sasol saw its share price plunge more than 10 percent in May after it once again revised the cost of its ambitious Lake Charles Chemicals Project by a further $1bn.

Three months earlier, Sasol had said it expected the project to cost between $11.6bn to $11.8bn, but in May revised the figure to $12.9bn. 

The mega project had an initial price tag of $8.9bn at the time the final investment decision was made in 2014, taking the total cost overruns over the years to $4bn. 


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