IDC’s financial performance affected by poor global economic climate

30 August 2016 - 20:27 By Mpho Sibanyoni

Mining and steel producing firms‚ which are at the receiving end of a poor global economic climate‚ have impacted negatively on a state-owned financier's financial performance. The Industrial Development Corporation (IDC) saw its profit for the financial year 2015/2016 plummet to R223-million from R1.7-billion in 2014/15.The biggest contributors to the decreased profit were IDC's major subsidiaries - Scaw SA‚ which made a loss of R1.1-billion‚ Foskor a R568-million loss and Small Enterprise Funding Agency a R378-million loss.Speaking at the IDC's annual results presentation in Port Elizabeth on Tuesday‚ chief financial officer Nkululeko Veleti said a significant increase in impairment of R1.6-billion reflected the challenging trading conditions faced by many sectors.She said Hans Merensky generated a profit of R306-million‚ Merafe Resources a R75-million profit and Columbus a R56-million profit‚ while Mozal made a loss of R56-million.The IDC also saw the operating expenses of its mining group‚ which includes Foskor‚ Scaw‚ Sefa and other subsidiaries rise to R4.7-billion from R3.4-billion.Veleti said the corporation takes a long term view on borrowing and the types of business it pumps funds into.She said the IDC will continue to supplement its internally generated funds with funding from long-term lenders based locally who will supply funds at favourable rates which could be passed on to businesses depending on IDC funding.She said there was a long term plan to drop the level of impairments to below 15%."There are interventions being driven internally to try and manage impairments in the long-term within the levels that are acceptable‚" she said.IDC chief executive Geoffrey Qhena said the corporation was going to deal with impairments by working more closely with companies when it has injected cash."It is a reality that we are going to have a level of impairment which will be higher than the banks because we are coming in a little bit earlier‚ particularly when times are as tough as these ones‚" he said...

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