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IVT - Invicta Holdings Limited - Audited group results for the year ended 31
March 2012
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 2012
Revenue increased by 24%
Operating profit increased by 26%
Profit for the year increased by 21%
Earnings per share increased by 38%
Final dividend increased by 40%
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March
% 2012 2011
change R`000 R`000
Revenue 24 5 599 464 4 533 801
Operating profit 26 634 585 505 493
Interest and dividends
received 546 947 490 132
Finance costs (598 354) (545 242)
Share of profits of associate 1 022 871
Profit before taxation 29 584 200 451 254
Taxation (69 572) (25 032)
Profit for the year 21 514 628 426 222
Other comprehensive income
Profit on treasury shares
utilised to settle share
appreciation rights 15 670 -
Profit on disposal of
treasury shares to
directors 9 303 -
Gain on change in control
in subsidiaries 21 347 -
Exchange differences on
translating foreign
operations 4 763 (833)
Total comprehensive income
for the year 565 711 425 389
Profit attributable to:
Owners of the company 491 596 354 155
Non-controlling interest 23 032 72 067
514 628 426 222
Total comprehensive income
attributable to:
Owners of the company 542 255 353 630
Non-controlling interest 23 456 71 759
565 711 425 389
Earnings per share (cents) 38 698 504
Diluted earnings per
share (cents) 36 652 480
Determination of headline
earnings
Attributable earnings 491 596 354 155
Adjustments
- Net impairment of property,
plant and equipment 13 554 (4 271)
- Goodwill impaired 1 137 -
- Release of deferred profit
on issue of shares by
subsidiaries (11 610) (3 870)
- Profit on disposal of
investment (5 914) -
- Net profit on disposal of
property,
plant and equipment (2 625) (117)
Total adjustments before
taxation and
non-controlling interest (5 458) (8 258)
Taxation (345) 1 853
Non-controlling interest (1 800) 632
Total adjustments (7 603) (5 773)
Headline earnings 39 483 993 348 382
Headline earnings per
share (cents) 39 687 496
Diluted headline earnings
per share (cents) 36 642 473
Shares in issue
Weighted average (000s) 70 405 70 211
At the end of the year (000s) 72 123 69 954
Number of shares used for
diluted earnings
per share (000s) 75 416 73 720
Earnings per share (cents) 38 698 504
Dividends per share* (cents) 39 254 183
- Interim 35 77 57
- Final 40 177 126
* In accordance with IAS 10 the final dividend of 177 cents per share proposed
by the directors has not been reflected in the year-end results.
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) of the International
Accounting Standards Board, 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 the requirements of 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 2011, except for the adoption
of IFRS 9, IFRS 10, IFRS 12, IFRS 13 IAS 1, IAS 12, IAS 16, IAS 27, IAS 28,
IAS 32 and IAS 34 and has been prepared under the supervision of Craig Barnard
CA(SA), the Executive Director - Financial and Commercial. The financial
information has been audited in compliance with the Companies Act, (Act 71 of
2008).
ACQUISITIONS
Various acquisitions were made during the year ended 31 March 2012, amounting
to R139 million.
Events after the reporting date
Acquisition of the shares in Operational Marketing (Pty) Ltd and OMSA Valves
and Instruments (Pty) Ltd (OMSA Group) with effect from 1 April 2012. All
conditions precedent have been met so the sale is unconditional, although the
final purchase price must still be determined based on the final year-end
earnings of the OMSA Group.
The Group has issued a domestic medium-term note to the value of R150 million
on 16 May 2012.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
as at 31 March
2012 2011
R`000 R`000
ASSETS
Non-current assets 4 637 190 4 262 675
Property, plant and equipment 391 018 353 953
Financial investments and
investment in associate 3 042 793 2 965 674
Goodwill and other
intangible assets 416 606 362 453
Financial asset, finance lease and
long-term receivables 701 776 510 655
Deferred taxation 84 997 69 940
Current assets 3 722 236 2 626 192
Inventories 2 084 662 1 381 615
Trade and other receivables 869 184 698 526
Current portion of finance lease,
long-term receivables and
financial investments 125 605 99 498
Taxation prepaid 1 694 14 150
Bank balances and cash 641 091 432 403
Total assets 8 359 426 6 888 867
EQUITY AND LIABILITIES
Capital and reserves 2 011 658 1 854 849
Equity attributable to the
equity holders 1 952 337 1 611 265
Non-controlling interest 59 321 243 584
Non-current liabilities 4 298 580 3 659 362
Long-term borrowings, guaranteed
repurchase liabilities and
financial liabilities 4 293 813 3 653 114
Deferred taxation 4 767 6 248
Current liabilities 2 049 188 1 374 656
Current portion of long-term
borrowings and guaranteed
repurchase liabilities 163 049 126 071
Trade, other payables and
provisions 1 804 728 1 211 786
Taxation liabilities 26 328 13 052
Bank overdrafts 55 083 23 747
Total equity and liabilities 8 359 426 6 888 867
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
for the year ended 31 March
2012 2011
R`000 R`000
Cash flows from operating
activities
Cash generated from operations 534 218 697 053
Finance costs (598 354) (545 242)
Dividends paid to Group
shareholders and
non-controlling interest (155 633) (114 586)
Share appreciation rights exercised (86 932) (70 506)
Profit on treasury shares disposed
in terms of the directors`
loan scheme 9 303 -
Profit on treasury shares utilised
to settle share appreciation rights 15 670 -
Taxation paid (62 466) (48 377)
Interest and dividends received 546 947 490 132
Net cash inflow from operating
activities 202 753 408 474
Cash flows from investing activities
Net cash effects of acquisitions of
property, plant and equipment and
intangible assets (95 154) (95 038)
Acquisition of subsidiaries (152 808) (134 646)
Acquisition of non-controlling
interest (177 525) -
Increase in long-term receivables
including current portion (335 398) (437 448)
Dividend received from associate 1 100 800
Treasury shares purchased (7 985) (23 239)
Treasury shares disposed in terms of
directors` loan scheme 17 497 -
Treasury shares utilised to settle
share appreciation rights 16 366 -
Net cash outflow from investing
activities (733 907) (689 571)
Cash flows from financing activities
Net cash effects of liabilities
raised 718 919 475 046
Cancellation of issued shares (10 413) -
Net cash inflow from financing
activities 708 506 475 046
Net increase in cash and cash
equivalents 177 352 193 949
Cash and cash equivalents at the
beginning of the year 408 656 214 707
Cash and cash equivalents at the end
of the year 586 008 408 656
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March
2012 2011
R`000 R`000
Share capital
Balance at beginning of the year 3 724 3 724
Cancellation of issued shares (18) -
Balance at end of the year 3 706 3 724
Share premium
Balance at beginning of the year 282 715 282 715
Cancellation of issued shares (10 395) -
Balance at end of the year 272 320 282 715
Treasury shares
Balance at beginning of the year (119 809) (96 570)
Treasury shares disposed in terms of
directors` loan scheme 17 497 -
Treasury shares utilised to settle
share appreciation rights 16 366 -
Treasury shares purchased (7 985) (23 239)
Balance at end of the year (93 931) (119 809)
Retained earnings
Balance at beginning of the year 1 391 305 1 198 882
Earnings attributable to ordinary
shareholders 491 596 354 155
Share appreciation rights exercised (67 315) (50 920)
Profit on treasury shares disposed
in terms of the directors` loan
scheme 9 303 -
Profit on treasury shares utilised
to settle share appreciation
Rights 15 670 -
Acquisition of non-controlling
interest 21 347 961
Dividends paid (145 684) (111 773)
Balance at end of the year 1 716 222 1 391 305
Other reserves
Balance at beginning of the year 53 330 54 215
Share appreciation rights issued 11 433 19 226
Share appreciation rights exercised (19 617) (19 586)
Fair value of put option in terms
of the directors` loan scheme 4 535 -
Translation of foreign operations 4 339 (525)
Balance at end of the year 54 020 53 330
Attributable to equity
shareholders 1 952 337 1 611 265
Non-controlling interest
Balance at beginning of the year 243 584 170 297
Earnings attributable to
non-controlling interest 23 456 71 759
Non-controlling interest acquired
during the year (202 570) -
Net investment in subsidiaries - 8 435
Dividends paid (5 149) (6 907)
Balance at end of the year 59 321 243 584
SEGMENT INFORMATION
for the year ended 31 March
Group,
financing
Engineering Capital and other
consumables equipment operations Total
R`000 R`000 R`000 R`000
2012
Segment revenue 2 742 046 2 548 888 308 530 5 599 464
Segment
operating
profit 371 458 246 783 16 344 634 585
Segment assets 1 723 928 1 556 429 5 079 069 8 359 426
Segment
liabilities 510 138 1 295 827 4 541 803 6 347 768
2011
Segment revenue 2 387 363 1 876 542 269 896 4 533 801
Segment
operating
profit 319 665 157 525 28 303 505 493
Segment assets 1 450 792 1 081 667 4 356 408 6 888 867
Segment
liabilities 414 378 778 091 3 841 549 5 034 018
OTHER INFORMATION
2012 2011
Net interest-bearing debt:equity
Ratio (excluding long-term
funding debt secured by
investments and loans) (%) 25 3
Depreciation and
amortisation (R`000) 61 365 81 289
Net asset value per share (cents 2 707,0 2 303,3
Tangible net asset value per
share (cents) 2 129,3 1 785,2
Capital expenditure (R`000) 109 278 114 374
Contingent liabilities (R`000) 240 252
Capital commitments (R`000) 6 014 7 121
COMMENTS
FINANCIAL OVERVIEW
The Group has once again produced excellent results. Trading conditions were
generally favourable during the year and demand for Group products, on the
whole, was better than the prior year. Acquisitions also contributed to the
performance.
In the CEG, agricultural machinery sales remained strong due largely to good
grain prices and high farming yields, construction machinery sales have
continued to recover and the materials handling operation has settled down and
is beginning to contribute to profits. In BMG, the Group`s industrial
consumables business, global demand for resources was steady, which
underpinned demand for BMG`s products, although trading in certain sectors was
challenging. Historic bolt-on acquisitions in this division also contributed
to earnings for the full year.
Group revenue grew by 24% to R5,599 billion. An improvement in the mix of
products sold and control of costs resulted in operating profit increasing by
26% to R635 million.
Profit before tax increased by 29% to R584 million, while a higher tax charge
resulted in the after tax profit for the year increasing by 21% to R515
million. The consolidation of the 25% (2011: 5%) BEE stake in Humulani
Investments (Pty) Ltd in terms of IFRS SIC12 (Consolidation - Special Purpose
Entities) assisted in lifting headline earnings by 39% to R484 million. A
circular to shareholders dated 1 August 2011 sets out the background to this.
Headline earnings per share grew by 39% to 687 cents per share, whilst
earnings per share grew by 38% to 698 cents per share. Working capital
management was very good, however the Group consciously increased its
investment in inventory by 50,9% (R703 million) but still managed to generate
cash from operations of R534 million.
The Group continued to take advantage of growth opportunities and made a
number of strategic acquisitions totalling R139 million. The most significant
of these was the acquisition by CEG of Equipment Spare Parts (Africa) (Pty)
Ltd (ESP).
BEARING MAN GROUP (BMG)
BMG continues to be the core profit base of the Invicta Group, contributing
59% of operating income for the year. Market demand for BMG`s products and
services improved in the year. A combination of a modest improvement in
volumes sold, supplier price increases passed on to customers and gains in
market share in certain sectors led to a satisfactory growth in revenue.
Revenue increased by 14,9% from R2,387 billion to R2,742 billion, attributable
to organic growth. This represents a doubling of revenue over the past 5
years.
Good margin and cost management helped to increase operating profit by 16,2%
to R371 million.
During the year, a strategic decision was taken to increase inventory which
has resulted in inventory in BMG increasing by 21%. During the year BMG was
accredited as a level 3 contributor in terms of the government`s Black
Economic Empowerment (BEE) codes which strengthened BMG`s position with its
customers.
CAPITAL EQUIPMENT GROUP (CEG)
The Capital Equipment Group (CEG) performed beyond expectation. The year
started off with good prospects in all parts of the division and with a
continuous focus on after sales support, customer communication and cost
control, the margins improved, resulting in best ever operating profits being
achieved. The acquisition of ESP in the last quarter of the financial year
will strengthen the Group`s future income from spare parts.
Total revenue of the CEG increased by 35,8% to R2,549 billion - 99,97% (R2 480
million) from organic growth and 0,03% (R69 million) from acquisitions. This
also represents a doubling of revenue over the past 5 years, whilst operating
profit tripled over the same period. A greater contribution from spares and
service revenue resulted in operating profit increasing by 56,7% to R247
million. The segment`s annualised operating profit return on capital employed
was 95%, up from 52% last year, an exceptional result. Overall, an excellent
performance by the CEG.
OTHER OPERATIONS
The Group has now bedded down its outlet distribution network for Tiletoria,
and although it did not make a material contribution to the Group during the
period, it is profitable and is projected to continue growing steadily.
PROSPECTS
Trading conditions in the sectors in which the Group operates appear to be
levelling off. The Group is concerned about the lack of investment in mining
in South Africa and the apparent gradual de-industrialisation of the country,
which, factors, inter alia, are prompting Invicta to look beyond the borders
of South Africa for growth in its core businesses.
BMG acquired Operational Marketing (Pty) Ltd and OMSA Valves and
Instrumentation (Pty) Ltd (OMSA Group) with effect from 1 April 2012. OMSA
adds a leading position in lubrication equipment, systems and field service to
BMG. In addition it brings significant potential for BMG to expand in
filtration, valves and instrumentation. BMG expects trading conditions for the
coming year to be more challenging than the past year.
In the CEG, grain prices (a big driver of demand for agricultural machinery in
South Africa) have softened since the end of the financial year. This may lead
to a decline in demand for agricultural machinery. Currently demand in the
construction equipment market is showing some improvement on last year.
However, if government`s commitment to infrastructure expenditure becomes a
reality, then demand should improve further.
In keeping with its stated dividend cover policy of 2,75 times cover for the
full year, the Board has declared a final dividend of 177 cents per share, an
increase of 40% over last year`s 126 cents per share.
The Board remains confident of the continued success of the Group.
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the Group`s
financial statements for the year ended 31 March 2012. 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 approved and declared a final dividend of 177 cents per ordinary
share (gross) in respect of the year ended 31 March 2012.
The dividend will be subject to the new Dividends Tax that was introduced with
effect from 1 April 2012. In accordance with paragraphs 11.17(a)(i) to (x) and
11.17(c) of the JSE Listings Requirements the following additional information
is disclosed:
- The dividend has been declared out of income reserves;
- The local Dividends Tax rate is 15% (fifteen per centum);
- Secondary Tax on Companies (STC) credits of 177 cents per
share will be utilised;
- The gross local dividend amount is 177 cents per ordinary
share for shareholders exempt from the Dividends Tax;
- The gross and net local dividend amount is 177 cents per
ordinary share for shareholders liable to pay the Dividends
Tax;
- Invicta Holdings has 74 112 523 ordinary shares in issue
(which includes 1 989 484 treasury shares); and
- Invicta Holdings Limited`s income tax reference number is
9400/012/03/6.
In compliance with the requirements of Strate the following dates are
applicable:
Last date to trade "CUM" dividend Friday, 29 June 2012
First date of trading "EX" dividend Monday, 2 July 2012
Record date Friday, 6 July 2012
Payment date Monday, 9 July 2012
Share certificates may not be dematerialised or rematerialised between Monday,
2 July 2012 and Friday, 6 July 2012, both days inclusive.
By order of the Board
C Barnard Cape Town
Secretary 5 June 2012
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#, J Mthimunye, DI Samuels, LR Sherrell*, AM Sinclair, CE
Walters, Adv JD Wiese*
* Non-executive # Alternate Independent non-executive
Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited
www.invictaholdings.co.za
www.bmgworld.net
www.capitalequipmentgroup.co.za
Date: 05/06/2012 17:30:01 Supplied by www.sharenet.co.za
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