National enterprise developer the Industrial Development Corporation (IDC) this week joined the growing list of struggling state-owned entities that are nearly broke, flagging that its net income fell 78 percent to R720 million during the year to the end of March from R3.2 billion a year earlier.
The IDC said while its profits increased from R2.2bn to R3.2bn during the period, it missed its own crucial targets that include job creation.
The group said the job-creation target declined 35 percent in a performance mimicking its flamboyant peers, Eskom and SAA. It said its debt-to-equity ratio increased 36.1 percent from 34 percent in the previous year.
The enterprise developer wrote off R2.43bn in financial assets during the period and saw impairment charges increase from R2.1bn in the prior year to R4.9bn.
It noted a significant portion of the impairments were incurred in phosphates and phosphoric acid producer Foskor – which it is trying to turn around – as well as steel producer Scaw Metals.
The group explained while Foskor’s loss was “significantly lower” than budgeted for, investments in other companies, such as Grinding Media and Cast Products, experienced worse-than-expected performances.
It said Grinding Media recorded a R55m profit compared with the base target of R215m profit, while Cast Products’ loss of R380m was much worse than the budgeted R254m loss.
The Foskor loss, which the IDC said was significantly lower, “compares favourably with the R763m loss recorded last year”.
The value of the group’s listed shares decreased by R5.8bn to R50.4bn between the financial year-end and the approval of the financial statements on July 29 this year. The main driver of the decrease was the drop in Sasol’s share price, which was attributed to delays at its Lake Charles Chemicals Project in Louisiana, US.
The IDC paid a dividend of R50m during the period.
It said the total number of jobs to be created and saved from its funding approvals that were signed during the year decreased by 35 percent to 17 887, which was significantly lower than the base level of 28 262.
Of the total number of jobs, 13 329 were expected to be created and 4 558 saved.
The IDC said it was difficult for it to meet the 80 percent threshold for jobs expected to be created against those saved in the current economic environment.
Leveraging external funding thus still required it to increase its share.
The value of reserves on March 31, 2019 increased by 4.9 percent compared with a year ago, far lower than the yield on long-term government bonds, which means that the IDC does not achieve the base for this indicator.
Over the past five years to March, the IDC approved funding totalling R71.1bn and cumulative disbursements of R60.4bn. –BusinessReport
