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Unaudited interim results for the six months ended 30 September 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”)
UNAUDITED INTERIM RESULTS for the six months ended
30 September 2012
Revenue UP 37%
Operating profit UP 21%
Earnings per share UP 16%
Dividend UP 16%
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept 30 Sept 31 Mar
Change 2012 2011 2012
% R’000 R’000 R’000
Revenue 37 3 514 126 2 563 000 5 599 464
Operating income 21 314 709 260 915 634 585
Interest and
dividends received 261 980 319 698 546 947
Finance costs (318 908) (351 324) (598 354)
Share of profits
of associate 671 587 1 022
Profit before
taxation 12 258 452 229 876 584 200
Taxation (21 530) (26 204) (69 572)
Profit for the period 16 236 922 203 672 514 628
Other comprehensive
income:
Profit on treasury
shares utilised
to settle share
appreciation rights 16 669 19 567 15 670
Profit on disposal of
treasury shares to directors – – 9 303
Net (loss) gain on change
in control in subsidiaries (2 166) 15 452 21 347
Exchange differences on
translating foreign
operations (1 706) 3 624 4 763
Total comprehensive
income for the period 249 789 242 315 565 711
Profit attributable to:
Owners of the company 225 880 189 286 491 596
Non-controlling interest 11 042 14 386 23 032
236 922 203 672 514 628
Total comprehensive income
attributable to:
Owners of the company 238 274 227 412 542 255
Non-controlling interest 11 515 14 903 23 456
249 789 242 315 565 711
Earnings per
share (cents) 16 312 269 698
Diluted earnings
per share (cents) 18 298 252 652
Determination of
headline earnings
Attributable earnings 225 880 189 286 491 596
Adjustments
– Net impairment of
property, plant and
equipment – – 13 554
– Goodwill impaired 569 – 1 137
– Release of deferred profit
on issue of shares by
subsidiaries – (11 610) (11 610)
– Profit on disposal of
investment – – (5 914)
– Net profit on disposal
of property, plant
and equipment (13) (1 456) (2 625)
Total adjustments before
taxation and non-controlling
interest 556 (13 066) (5 458)
Taxation 4 2 280 (345)
Non-controlling interest – – (1 800)
Total adjustments 560 (10 786) (7 603)
Headline earnings 226 440 178 500 483 993
Headline earnings per
share (cents) 23 313 254 687
Diluted headline
earnings per
share (cents) 25 298 238 642
Shares in issue
Weighted average (000’s) 72 433 70 356 70 405
At the end of the
period (000’s) 72 531 71 916 72 123
Number of shares used
for diluted earnings
per share (000’s) 75 918 74 993 75 416
Headline earnings per
share (cents) 23 313 254 687
Earnings per
share (cents) 16 312 269 698
Dividends per
share* (cents) 89 77 254
– Interim 16 89 77 77
– Final – – 177
* In accordance with IAS 10, the interim dividend of 89 cents per
share proposed by the directors has not been reflected in the
interim results.
OTHER INFORMATION
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept 30 Sept 31 Mar
2012 2011 2012
R’000 R’000 R’000
Net interest-bearing
debt:equity ratio
(excluding long-term
funding debt secured
by investments and loans) (%) 35 3 25
Depreciation and
amortisation (R’000) 33 869 27 938 61 365
Net asset value per
share (cents) 2 685,4 2 433,9 2 707,0
Tangible net asset value
per share (cents) 1 756,4 1 939,4 2 129,3
Capital expenditure (R’000) 47 491 34 829 109 278
Contingent liabilities (R’000) – 252 240
Capital commitments (R’000) 7 118 22 700 6 014
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 Sept 30 Sept 31 Mar
2012 2011 2012
R’000 R’000 R’000
Assets
Non-current assets 5 202 148 4 554 795 4 637 190
Property, plant and
equipment 467 616 367 427 391 018
Financial investments and
investment in associate 3 167 283 3 064 579 3 042 793
Goodwill and other
intangible assets 673 859 355 628 416 606
Financial asset, finance
lease and long-term
receivables 806 015 693 520 701 776
Deferred taxation 87 375 73 641 84 997
Current assets 3 901 746 2 611 883 3 722 236
Inventories 2 247 242 1 304 191 2 084 662
Trade and other
receivables 1 134 491 896 519 869 184
Current portion of financial
investments, finance
lease and long-term
receivables 68 134 48 999 125 605
Taxation prepaid 27 093 – 1 694
Bank balances and cash 424 786 362 174 641 091
Total assets 9 103 894 7 166 678 8 359 426
EQUitY AND LiABILITIES
Capital and reserves 2 020 009 1 805 178 2 011 658
Equity attributable to
equity shareholders 1 951 319 1 750 379 1 952 337
Non-controlling interest 68 690 54 799 59 321
Non-current liabilities 4 845 376 4 126 541 4 298 580
Long-term borrowings,
guaranteed repurchase
liabilities and financial
liabilities 4 839 789 4 120 805 4 293 813
Deferred taxation 5 587 5 736 4 767
Current liabilities 2 238 509 1 234 959 2 049 188
Current portion of
long-term borrowings
and guaranteed repurchase
liabilities 124 290 48 999 163 049
Trade, other payables and
provisions 2 066 646 1 144 318 1 804 728
Tax liabilities 3 307 17 442 26 328
Bank overdrafts 44 266 24 200 55 083
Total equity and
liabilities 9 103 894 7 166 678 8 359 426
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept 30 Sept 31 Mar
2012 2011 2012
R’000 R’000 R’000
Cash flows from operating
activities
Cash generated from
operations 275 746 99 273 534 218
Finance costs (318 908) (351 324) (598 354)
Dividends paid to Group
shareholders and
non-controlling interest (136 003) (94 580) (155 633)
Share appreciation rights
exercised (156 228) – (86 932)
Profit on treasury shares
disposed in terms of
the directors’ loan scheme – – 9 303
Profit on treasury shares
utilised to settle share
appreciation rights 16 669 – 15 670
Taxation paid (55 895) (11 877) (62 466)
Interest and dividends
received 261 980 319 698 546 947
Net cash (outflow) inflow
from operating activities (112 639) (38 810) 202 753
Cash flows from investing
activities
Net cash effects of
acquisitions of property,
plant and equipment and
intangible assets (35 531) (28 754) (95 154)
Net cash effects of other
investing activities – (290 336) –
Acquisition of subsidiaries (255 153) – (152 808)
Acquisition of
non-controlling interest – – (177 525)
Increase in long-term
receivables including
current portion (102 489) (75 005) (335 398)
Increase in investments (80 854) – –
Dividends received from
associate 500 – 1 100
Treasury shares purchased – (7 985) (7 985)
Treasury shares disposed in
terms of directors’
loan scheme – 17 497 17 497
Treasury shares utilised to
settle share appreciation
rights 24 464 19 654 16 366
Net cash outflow from
investing activities (449 063) (364 929) (733 907)
Cash flows from financing
activities
Net cash effects of
liabilities raised 356 214 333 057 718 919
Cancellation of issued shares – – (10 413)
Net cash inflow from financing
activities 356 214 333 057 708 506
Net (decrease) increase in
cash and cash equivalents (205 488) (70 682) 177 352
Cash and cash equivalents at
the beginning of the
period 586 008 408 656 408 656
Cash and cash equivalents at
the end of the period 380 520 337 974 586 008
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept 30 Sept 31 Mar
2012 2011 2012
R’000 R’000 R’000
Share capital
Balance at the beginning
of period 3 706 3 724 3 724
Cancellation of issued shares – – (18)
Balance at the end of
the period 3 706 3 724 3 706
Share premium
Balance at the beginning of
period 272 320 282 715 282 715
Cancellation of issued shares – – (10 395)
Balance at the end of
the period 272 320 282 715 272 320
Treasury shares
Balance at the beginning
of period (93 931) (119 809) (119 809)
Treasury shares disposed in
terms of directors’
loan scheme – – 17 497
Treasury shares utilised to
settle share appreciation
rights 7 795 – 16 366
Treasury shares disposed
(purchased) – 9 599 (7 985)
Balance at the end of
the period (86 136) (110 210) (93 931)
Retained earnings
Balance at the beginning of
period 1 716 222 1 391 305 1 391 305
Earnings attributable to
ordinary shareholders 225 880 189 286 491 596
Share appreciation rights
exercised (106 242) (4 901) (67 315)
Profit on treasury shares
disposed in terms of the
directors’ loan scheme – – 9 303
Profit on treasury shares
utilised to settle share
appreciation rights 16 669 – 15 670
Profit on issue of treasury shares – 19 567 –
(Increase) decrease of
non-controlling interest (2 166) 15 452 21 347
Dividends paid (128 381) (90 234) (145 684)
Balance at the end of the
period 1 721 982 1 520 475 1 716 222
Other reserves
Balance at the beginning of
period 54 020 53 330 53 330
Share appreciation rights
issued 2 395 4 511 11 433
Share appreciation rights
exercised (18 674) (14 685) (19 617)
Fair value of put option in
terms of the directors’
loan scheme – 4 600 4 535
Translation of foreign
operations 1 706 5 919 4 339
Balance at the end of the
period 39 447 53 675 54 020
Attributable to equity
shareholders 1 951 319 1 750 379 1 952 337
Non-controlling interest
Balance at the beginning
of period 59 321 243 584 243 584
Earnings attributable to
non-controlling interest 11 042 14 386 23 032
Share of foreign currency
translation reserve 473 1 170 424
Non-controlling interest acquired
during the period – (202 617) (202 570)
Change in non-controlling
interest (396) – –
Dividends paid (1 750) (1 724) (5 149)
Balance at the end of the
period 68 690 54 799 59 321
SEGMENT INFORMATION
Group,
financing
Engineering Capital and other
consumables equipment operations Total
R’000 R’000 R’000 R’000
Unaudited six months
ended 30 September
2012
Segment revenue 1 635 046 1 682 982 196 098 3 514 126
Segment operating
profit 174 099 148 466 (7 856) 314 709
Segment assets 2 011 529 1 713 103 5 379 262 9 103 894
Segment liabilities 884 159 1 283 480 4 916 246 7 083 885
Unaudited six months
ended 30 September
2011
Segment revenue 1 301 801 1 119 116 142 083 2 563 000
Segment operating
profit 159 393 93 904 7 618 260 915
Segment assets 1 479 687 1 071 338 4 615 653 7 166 678
Segment liabilities 374 870 706 977 4 279 653 5 361 500
Audited year ended
31 March 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
COMMENTS
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 2012, except for the
adoption of IFRS9, IFRS10, IFRS12, IFRS13, IAS1, IAS16, IAS19,
IAS27, IAS28, IAS32 and IAS34 and has been prepared under the
supervision of Craig Barnard CA(SA), the Group Financial
Director.
ACQUISITIONS
Various acquisitions were made during the period ended 30
September 2012, amounting to R394 million.
EVENTS AFTER THE REPORTING DATE
The Group has announced the proposed acquisition of Kian Ann
Engineering Limited for an amount of approximately R1 360 million
as announced on 15 October 2012.
FINANCIAL OVERVIEW
The Group has again delivered outstanding results in markets
which experienced mixed fortunes. The industrial consumables
market in South Africa (served by BMG) experienced tough trading
conditions, which was worsened by labour unrest in the mining and
freight transport sectors. The capital equipment markets (served
by CEG) enjoyed relatively better conditions with sustained
demand for product, especially in the agricultural machinery
market.
Group revenue grew by 37% to R3,514 billion, of which R323
million (13%) was from acquisitions. Margin pressure, the
acquisition of lower gross margin businesses and inflationary
increases in costs resulted in operating income growing by 21% to
R315 million.
Profit for the period increased by 16% to R237 million, while
headline earnings per share grew by 23% to 313 cents per share.
Working capital management was good, resulting in cash generated
from operations of R276 million, up from R99 million in the
comparable period last year.
The Group announced the proposed acquisition of Kian Ann
Engineering Limited (Kian Ann) on 15 October 2012. Kian Ann is a
large distributor of heavy earthmoving equipment parts and diesel
engine spares listed on the Singapore Stock Exchange, with an
annual turnover of more than R1,1 billion. The Kian Ann
acquisition will take the Invicta Group to the global stage of
distribution of these products as Kian Ann distributes to over 50
countries worldwide. The transaction is subject to various
conditions precedent which are expected to be concluded in early
2013.
The Group continued to take advantage of domestic growth
opportunities by making a number of strategic acquisitions
totalling R394 million. The most significant of these was the
acquisition by BMG of Man-Dirk, a leading industrial distributor
of tools and equipment to the mining and industrial sector.
The Group has also recently announced a Capital raising of at
least R600 million of perpetual preference shares, in order to
strengthen its equity base.
BEARING MAN GROUP (BMG)
BMG experienced tough trading conditions during the period under
review. The mining strikes also affected many support industries
to mining. The period also saw weakness in the steel and
automotive sectors, significant market segments for BMG.
Notwithstanding, it is most pleasing to report that BMG grew
revenue by 26%, of which 12% came from organic growth and 14%
from acquisitions.
Gross margins remain under pressure, whilst domestic inflationary
pressure resulted in the increase in operational expenses. In the
result operating profit only grew by 9% of which 2% was organic.
BMG made two significant acquisitions in the period. OMSA, a
leading player in lubrication and filtration systems with a
strong field service presence was acquired with effect from 1
April 2012. Man-Dirk, a leading industrial distributor of tools
and equipment to the mining and industrial sector was acquired
with effect from 1 August 2012. Both these acquisitions
strengthen BMG’s product breadth and service depth.
BMG continues to reposition its offering from one of product
supply to one of technical value-added solutions and services for
customers.
BMG continues to be a leading player in the industries in which
it operates and a significant core profit generator of the
Invicta Group.
CAPITAL EQUIPMENT GROUP (CEG)
The Capital Equipment Group (CEG) produced exceptional results
during the period under review. Revenue grew by 50% to R1,68
billion and operating profit grew by 58% to R148 million. Organic
growth saw revenue increase by 37% and operating profit by 38%.
All acquisitions have performed within expectations.
The period under review started off slowly, but demand for
capital equipment in all sectors grew steadily month by month,
culminating in the best first-half results ever. All divisions
performed well, especially service and spare parts, which have
continued to provide a strong platform for sustainability and
growth within CEG.
The annualised return on net assets employed was 69%. CEG
inventories were at satisfactory levels and within the Group’s
parameters. Overall working capital management continues to be a
key focus of management and is well under control.
Further capital investments are intended to be made in the
remainder of the year to extend the central spare parts
distribution warehouse and for a receiving and assembly plant in
the Durban area.
CEG continues to outperform its benchmarks and to be a major
contributor to the Invicta stable.
OTHER OPERATIONS
Tiletoria has settled down and is producing satisfactory profits.
It is growing steadily and, whilst not material to the Group yet,
an acquisition in the building materials sector is imminent,
which will grow Invicta’s presence in this sector and provide the
platform for further growth.
PROSPECTS
Trading conditions in the sectors in which the Group operates
appear to be tracking the same path as in the first half of the
year. The mining strikes have largely abated, although some mines
are still experiencing unrest. Confidence in the mining sector
has suffered a set-back though and management expects that it
will take some time for things to return to normal. Conditions in
the agricultural machinery sector should remain strong. The
construction machinery sector appears to have tapered off
slightly, but is stable.
The weakening and volatile Rand is expected to keep pressure on
margins as the resultant price increases are difficult to pass on
to customers in the current climate.
The strategic acquisition of Kian Ann should be completed in
early 2013. The business is the first step in the Group’s
strategy to diversify its base beyond the borders of South Africa
in order to sustain its historic growth and to seek new markets.
The Board remains confident of the continued success of the
Group. This forecast has not been reviewed or reported on by the
Company’s auditors.
DIVIDEND
The Board has declared an interim gross dividend of 89 cents per
share.
The dividend will be subject to the new Dividends Tax that was
introduced with effect from 1 April 2012. In accordance with
paragraph 11.17(1)(i) and (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 Dividend Tax rate is 15% (fifteen per centum);
– Secondary Tax on Companies (STC) credits of 89 cents per share
will be utilised;
– The gross local dividend amount is 89 cents per ordinary share
for shareholders exempt from the Dividend Tax;
– The gross and net local dividend amount is 89 cents per
ordinary share for shareholders liable to pay the Dividend Tax;
– Invicta Holdings Limited has 74 112 523 ordinary shares in
issue (which includes 1 581 167 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 of trade “CUM” dividend Friday, 30 November 2012
First date of trading “EX” dividend Monday, 3 December 2012
Record date Friday, 7 December 2012
Payment date Monday, 10 December 2012
Share certificates may not be dematerialised or rematerialised
between Monday, 3 December 2012 and Friday, 7 December 2012, both
days inclusive.
By order of the Board
C Barnard
Secretary
Cape Town
9 November 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) Ltd,
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) Ltd
www.invictaholdings.co.za
Date: 12/11/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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