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IVT - Invicta - Audited group results for the year ended 31 March 2011 and
Further Cautionary Announcement
INVICTA HOLDINGS LIMITED
Registration number: 1966/002182/06
(Incorporated in the Republic of South Africa)
Share code: IVT
ISIN: ZAE000029773
("Invicta" or "the Group")
AUDITED GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2011 AND FURTHER CAUTIONARY
ANNOUNCEMENT
REVENUE INCREASED BY 14,2%
PROFIT FOR THE YEAR INCREASED BY 16,6%
HEADLINE EARNINGS PER SHARE INCREASED BY 12,5%
FINAL DIVIDEND INCREASED BY 23,5%
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March
% 2011 2010
change R`000 R`000
Revenue 14,2 4 533 801 3 968 872
Operating income 11,5 505 493 453 293
Interest and dividends received 490 132 408 498
Finance costs 545 242 432 886
Share of associate 871 639
Profit before taxation 5,1 451 254 429 544
Taxation 25 032 64 155
Profit for the year 16,6 426 222 365 389
Non-controlling interest 72 067 44 493
Attributable to ordinary
shareholders 10,4 354 155 320 896
Earnings per share (cents) 11,3 504 453
Diluted earnings per share (cents) 8,8 480 441
Determination of headline earnings
Attributable earnings 354 155 320 896
Adjustments
- Negative goodwill on business
combination - (7 952)
- Net impairment of property, plant
and equipment (4 271) 190
- Goodwill impaired - 3 442
- Release of deferred profit on
issue of shares by subsidiaries (3 870) (3 870)
- Profit on disposal of property,
plant and equipment (117) (3 732)
Total adjustments before taxation and
non-controlling interest (8 258) (11 922)
Taxation 1 853 1 616
Non-controlling interest 632 1 412
Total adjustments (5 773) (8 894)
Headline earnings 11,7 348 382 312 002
Shares in issue
Weighted average (000`s) 70 211 70 779
At the end of the year (000`s) 69 954 70 712
Number of shares used for diluted
earnings per share (000`s) 73 720 72 767
Headline earnings per share (cents) 12,5 496 441
Diluted headline earnings
per share (cents) 10,3 473 429
Dividends per share* (cents) 21,2 183 151
- Interim 16,3 57 49
- Final 23,5 126 102
* In accordance with IAS10 the final dividend of 126 cents per share proposed by
the directors has not been reflected in the year-end results.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
for the year ended 31 March
2011 2010
R`000 R`000
Cash flows from operating activities
Cash generated from operations 626 547 590 226
Finance costs (545 242) (432 886)
Dividends paid (114 586) (96 389)
Taxation paid (48 377) (25 329)
Interest and preference dividends received 490 132 408 498
Net cash inflow from operating activities 408 474 444 120
Cash flows from investing activities
Net cash effects of asset acquisitions (95 038) (74 458)
Net cash effects of other investing
activities (315 241) (191 556)
Increase in long-term receivables (256 053) (6 721)
Net cash effects of treasury share
investments (23 239) (2 323)
Net cash outflow from investing activities (689 571) (275 058)
Cash flows from financing activities
Net cash effects of liabilities raised 475 046 177 104
Net cash inflow from financing activities 475 046 177 104
Net increase in cash and cash equivalents 193 949 346 166
Cash and cash equivalents at the
beginning of the year 214 707 (131 459)
Cash and cash equivalents at the
end of the year 408 656 214 707
SEGMENT INFORMATION
for the year ended 31 March
Group,
Capital financing
Engineering equipment and other
Consumables and spares operations Total
R`000 R`000 R`000 R`000
2011
Revenue 2 387 363 1 876 542 269 896 4 533 801
Operating income 319 665 157 525 28 303 505 493
Total assets 1 450 792 1 081 667 4 356 408 6 888 867
Total liabilities 414 378 778 091 3 841 549 5 034 018
2010
Revenue 2 018 304 1 749 538 201 030 3 968 872
Operating income 292 673 123 441 37 179 453 293
Total assets 1 233 928 884 232 3 818 954 5 937 114
Total liabilities 300 217 631 884 3 391 750 4 323 851
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
as at 31 March
2011 2010
R`000 R`000
ASSETS
Non-current assets 4 262 675 3 706 514
Property, plant and equipment 353 953 312 860
Financial investments 2 965 674 2 882 206
Goodwill and other intangible assets 362 453 255 326
Long-term loans and financial asset 510 655 186 270
Deferred taxation 69 940 69 852
Current assets 2 626 192 2 230 600
Inventories 1 381 615 1 298 795
Trade and other receivables 698 526 670 979
Short-term receivables 99 498 -
Tax prepaid 14 150 273
Bank balances and cash 432 403 260 553
Total assets 6 888 867 5 937 114
EQUITY AND LIABILITIES
Capital and reserves 1 854 849 1 613 263
Attributable to ordinary shareholders 1 611 265 1 442 966
Non-controlling interest 243 584 170 297
Non-current liabilities 3 659 362 3 223 347
Long-term and financial liabilities 3 653 114 3 209 058
Deferred taxation 6 248 14 289
Current liabilities 1 374 656 1 100 504
Short-term borrowings and financial
liabilities 126 071 18 056
Trade, other payables and provisions 1 211 786 1 023 315
Tax liabilities 13 052 13 287
Bank overdrafts and bankers` acceptances 23 747 45 846
Total equity and liabilities 6 888 867 5 937 114
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March
2011 2010
R`000 R`000
Share capital
Balance at beginning and end of the year 3 724 3 724
Share premium
Balance at beginning and end of the year 282 715 282 715
Treasury shares
Balance at beginning of the year (96 570) (94 247)
Treasury shares acquired (23 239) (2 323)
Balance at end of the year (119 809) (96 570)
Retained earnings
Balance at beginning of the year 1 198 882 972 824
Earnings attributable to ordinary
shareholders 354 155 320 896
Share appreciation rights exercised (50 920) -
Change in degree of control
in subsidiaries 961 -
Dividends paid (111 773) (94 838)
Balance at end of the year 1 391 305 1 198 882
Other reserves
Balance at beginning of the year 54 215 41 039
Arising from the issue of share
appreciation rights 19 226 22 045
Arising from share appreciation
rights exercised (19 586) -
Revaluation reserve written off
on liquidation of Group company - (3 169)
Arising on translation of foreign
operations (525) (5 700)
Balance at end of the year 53 330 54 215
Attributable to equity shareholders 1 611 265 1 442 966
Non-controlling interest
Balance at beginning of the year 170 297 130 196
Earnings attributable to outside
shareholders 72 067 44 493
Share of foreign currency translation
reserve (308) (1 949)
Net investment in subsidiaries 8 435 1 510
Dividends paid (6 907) (3 953)
Balance at end of the year 243 584 170 297
OTHER INFORMATION
2011 2010
Net interest-bearing debt:equity ratio
(excluding long-term funding debt
secured by investments and loans) (%) 3 -
Depreciation and amortisation (R`000) 81 289 32 356
Net asset value per share (cents) 2 303,3 2 040,6
Tangible net asset value per share (cents) 1 785,2 1 679,5
Capital expenditure (R`000) 114 374 83 424
Contingent liabilities (R`000) 252 313
Capital commitments (R`000) 7 121 988
NOTES TO THE FINANCIAL INFORMATION
Basis of Preparation
The condensed financial information has been prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), the AC500 standards as
issued by the Accounting Practices Board, the information as required by IAS 34:
Interim Financial Reporting, the JSE Limited`s Listings Requirements and in the
manner required by the Companies Act of South Africa. The report has been
prepared using accounting policies that comply with IFRS which are consistent
with those applied in the financial statements for the year ended 31 March 2010,
except for the adoption of IAS2, IFRS5, IAS7, IAS28, IAS31, IAS38 and IAS39.
COMMENTS
FINANCIAL OVERVIEW
The Group has once again delivered good results. Global markets have started to
recover from the recent financial crisis, leading to increased demand for
products supplied by the Group. The strong Rand continues, however, to put
pressure on margins.
Group revenue grew by 14,2% to R4,534 billion, of which R227 million (5,0%) was
from acquisitions. As a result of continued margin and inflationary pressures,
operating income increased by only 11,5% to R505 million, still an acceptable
performance.
Profit for the year increased by 16,6% to R426 million, resulting in headline
earnings per share increasing by 12,5% to 496 cents per share. Good working
capital management resulted in cash generated from operations reaching a record
R627 million, an increase of 6,2% over the prior year.
The Group continued to take advantage of growth opportunities and made a number
of strategic acquisitions totalling R135 million. The most significant of these
were the acquisitions by BMG of some of its strategic agency outlets, 70% of
Wegezi Power Holdings (Pty) Limited and a number of smaller hydraulics
businesses. Wegezi manufactures and repairs transformers, electric motors and
pumps.
BMG (Bearing Man Group)
BMG continues to be the core profit contributor to the Invicta Group,
contributing 63,2% of the operating income for the year. The industrial
consumables trading environment continued to prove challenging, with areas of
improvement in some sectors offset by weakness in others. Under the
circumstances, BMG has produced a most satisfactory set of results.
Volumes have generally increased, but the strong Rand resulted in a decline in
gross margins. Revenue increased by 18,3% from R2,018 billion to R2,387 billion;
7,6% (R154 million) from organic growth and 10,7% (R215 million) from
acquisitions. Reduced gross margins and higher operating costs resulted in
operating income increasing by only 9,2%. During the year, a strategic decision
was taken to increase selected inventory categories which has resulted in BMG
being well stocked at year-end and, as a result, the earthquake in Japan has had
a relatively minor impact on BMG`s operations.
CEG (Capital Equipment Group)
The CEG has again delivered an overall pleasing result. Total revenue of the
Capital Equipment Group increased by 7,3% to R1,877 billion. A minor acquisition
was made during the year, but did not have any impact on the results. A greater
contribution from spares and service revenue combined with good cost control
resulted in operating profit increasing by 27,6% to R158 million. The segment`s
annualised operating profit return on capital employed continued to be at
excellent levels.
Volumes in the agricultural machinery sector have improved marginally over last
year, ensuring consistent performance in this division. There has been a gradual
recovery of volumes in the construction equipment sector, albeit from a very low
base. However, the steps taken by CEG in its construction equipment division
following the global financial crisis have resulted in a material improvement in
its contribution to CEG`s operating profit. The materials handling division
(Criterion Equipment) also made a good contribution to profits.
OTHER OPERATIONS
Tiletoria expanded its distribution network by moving to new premises in Durban
and opening a branch in Johannesburg. The Group has continued to invest in the
infrastructure of Tiletoria and, whilst not contributing in any significant way
at present, Tiletoria should grow substantially in the next few years.
PROSPECTS
Trading conditions in the sectors in which the Group operates appear to be
improving gradually. The current strength of the Rand continues to be a source
of concern as it is likely to maintain pressure on margins and reduce the income
of key customers who operate in export orientated sectors. The Group will
continue to focus on improving operational efficiencies and to make acquisitions
to grow steadily.
BMG has grown its base by making strategic acquisitions and will continue to do
so as and when opportunities arise.
In the CEG, agricultural equipment conditions are better than anticipated. Grain
prices have recovered from last year`s lows and should support a steady demand
for agricultural equipment. Conditions in the construction equipment market are
gradually improving, albeit off a low base.
The recent earthquake in Japan has affected some of the Group`s suppliers, but
not materially. The resultant effect on the Group has been minimal. About 21% of
the Invicta Group`s revenue is from Japanese products. The Group`s supplier
factories are, in the main, based in the southern part of Japan, which is well
away from the north-eastern area which was affected by the disaster. Some have
been affected by disruption in supply to them from component manufacturers, but
disruption to supply to the Invicta Group has so far been minimal. The Invicta
Group is well stocked and does not anticipate any material disruption due to the
consequences of the earthquake in Japan.
In keeping with its intention of growing the Group, the Board has decided to
strike a balance between retaining cash for growth and paying dividends. In the
result, the annual dividend cover has henceforth been fixed at 2,75 times
earnings per share, resulting in a final dividend of 126 cents per share, an
increase of 23,5%.
The Board remains confident of the continued success of the Group.
FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement dated 13 April 2011
where they were advised that Invicta has entered into negotiations with their
BEE partners, aloeCap (Pty) Limited, for the possible restructuring of their 20%
interest in Humulani Investments (Pty) Limited, an Invicta subsidiary, which, if
successfully concluded, may have a material effect on the price of the Company`s
securities.
Shareholders are advised that negotiations are still in progress, and must
continue to exercise caution when dealing in the shares of Invicta until a
further announcement is made.
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the Group`s
financial statements for the year ended 31 March 2011. The audit was conducted
in accordance with International Standards on Auditing. They have issued an
unmodified audit opinion. These summarised provisional financial statements
have been derived from the Group financial statements and are consistent in all
material respects, with the Group financial statements. A copy of their audit
report is available for inspection at the Company`s registered office. Any
reference to future financial performance included in this announcement, has not
been reviewed or reported on by the Company`s auditors.
DIVIDENDS
The Board has declared a final dividend of 126 cents per share for the year
ended 31 March 2011.
The following dates are applicable:
Last date to trade "CUM" dividend Friday, 1 July 2011
First date to trade "EX" dividend Monday, 4 July 2011
Record date Friday, 8 July 2011
Payment date Monday, 11 July 2011
Share certificates may not be dematerialised or rematerialised between Monday, 4
July 2011 and Friday, 8 July 2011, both days inclusive.
By order of the Board
C Barnard
Secretary
Cape Town
1 June 2011
Registered office: Invicta Holdings Limited, 3rd Floor, Pepkor House, 36
Stellenberg Road, Parow Industria, 7493
PO Box 6077, Parow East, 7501
Transfer secretaries: Computershare Investor Services (Pty) Limited, Ground
Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Directors: Dr CH Wiese* (Chairman), A Goldstone (Managing),
C Barnard, AK Masuku*#, JS Mthimunye*, DI Samuels*, LR Sherrell*, AM Sinclair,
CE Walters, Adv JD Wiese*
* Non-executive
# Alternate
Company Secretary: C Barnard
Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited
www.invictaholdings.co.za
Date: 01/06/2011 08:00:05 Supplied by www.sharenet.co.za
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