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Audited abridged Group results for the year ended 31 March 2013
INVICTA HOLDINGS LIMITED
Registration number: 1966/002182/06
(Incorporated in the Republic of South Africa)
Share code: IVT
ISIN: ZAE000029773
(Invicta or the Group or the Company)
AUDITED ABRIDGED GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2013
REVENUE up by 35%
NORMALISED EARNINGS PER SHARE up by 14%
PROFIT FOR THE YEAR up by 55%
FINAL DIVIDEND 179 cents
OPERATING PROFIT up by 47%
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March
2012
% 2013 Restated
change R000 R000
Revenue 35 7 557 899 5 599 464
Operating profit 47 883 759 601 081
Interest and dividends received 531 673 546 947
Negative goodwill 52 066
Finance costs (651 760) (598 354)
Share of profits of associate 3 018 1 022
Profit before taxation 49 818 756 550 696
Taxation (75 224) (71 921)
Profit for the year 55 743 532 478 775
Other comprehensive income
Exchange differences on
translating foreign operations 26 810 4 763
Total comprehensive income
for the year 770 342 483 538
Profit attributable to:
Owners of the Company 693 152 455 743
Non-controlling interest 28 468 23 032
Preference shareholders 21 912
743 532 478 775
Total comprehensive income
attributable to:
Owners of the Company 741 874 460 082
Non-controlling interest 28 468 23 456
770 342 483 538
Earnings per share (cents) 48 955 647
Diluted earnings per
share (cents) 57 948 604
Normalised earnings per
share (cents) 14 737 647
Determination of headline
earnings
Attributable earnings 693 152 455 743
Adjustments
Impairment of property,
plant and equipment 18 13 554
Release of deferred profit on
issue of shares by subsidiary (5 914)
Goodwill impaired 2 791 1 137
Negative goodwill (52 066)
Release of deferred profit on
issue of shares by subsidiaries (11 610)
Net profit on disposal of
property, plant and equipment (3 551) (2 625)
Total adjustments before
taxation and non-controlling
interest (52 808) (5 458)
Taxation 989 (345)
Non-controlling interest 747 (1 800)
Total adjustments (51 072) (7 603)
Headline earnings 43 642 080 448 140
Headline earnings per
share (cents) 885 637
Diluted headline earnings per
share (cents) 878 594
Shares in issue
Weighted average (000s) 72 588 70 405
At the end of the year (000s) 73 409 72 123
Number of shares used for diluted
earnings per share (000s) 73 125 75 416
Headline earnings per
share (cents) 39 885 637
Earnings per share (cents) 48 955 647
Dividends per share* (cents) 6 268 254
Interim 16 89 77
Final 1 179 177
* In accordance with IAS 10 the final dividend of 179 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
2012
2013 Restated
R000 R000
Cash flows from operating activities
Cash generated from operations 732 078 489 281
Finance costs (651 760) (598 354)
Dividends paid to Group shareholders and
non-controlling interest (198 433) (155 633)
Taxation paid (161 137) (62 466)
Interest and dividends received 531 673 546 946
Net cash inflow from operating activities 252 421 219 774
Cash flows from investing activities
Net cash effects of acquisitions of
property, plant and equipment and
intangible assets (131 724) (95 154)
Acquisition of subsidiaries and
associates (1 496 282) (152 808)
Acquisition of non-controlling interest (177 525)
Increase in long-term receivables
including current portion (1 060 115) (335 398)
Dividend received from associate 425 1 100
Net cash outflow from investing
activities (2 687 696) (759 785)
Cash flows from financing activities
Net cash effects of liabilities raised 1 676 334 797 207
Settlement of share appreciation
rights (148 581) (69 431)
Ordinary shares and preference shares
issued 809 232
Cancellation of issued shares (10 413)
Net cash inflow from financing
activities 2 336 985 717 363
Net (decrease) increase in cash
and cash equivalents (98 290) 177 352
Cash and cash equivalents at the
beginning of the year 586 008 408 656
Cash and cash equivalents at the end
of the year 487 718 586 008
OTHER INFORMATION
2012
2013 Restated
Net interest-bearing debt:equity
ratio (excluding long-term funding
debt secured by investments and
loans) (%) 39 29
Depreciation and amortisation (R000) 86 814 61 365
Net asset value per share (cents) 3 664,5 2 581,7
Tangible net asset value per
share (cents) 2 610,4 2 014,2
Capital expenditure (R000) 152 276 109 278
Contingent liabilities (R000) 240
Capital commitments (R000) 81 770 6 014
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
as at 31 March
2012
2013 Restated 2011
R000 R000 R000
Assets
Non-current assets 6 080 956 4 658 373 4 262 675
Property, plant and
equipment 1 010 636 391 018 353 953
Financial investments and
investment in associate 2 018 353 3 042 793 2 965 674
Goodwill and other
intangible assets 773 815 416 606 362 453
Financial asset, finance
lease and long-term
receivables 2 117 013 701 776 510 655
Deferred taxation 161 139 106 180 69 940
Current assets 6 123 855 3 722 236 2 626 192
Held for sale assets 9 957
Inventories 2 913 052 2 084 662 1 381 615
Trade and other
receivables 1 619 567 869 184 698 526
Current portion of
finance lease, long-term
receivables and financial
investments 883 599 125 605 99 498
Taxation prepaid 18 831 1 694 14 150
Bank balances and cash 678 849 641 091 432 403
Total assets 12 204 811 8 380 609 6 888 867
EQUITY AND LIABILITIES
Capital and reserves 3 095 212 1 954 552 1 854 849
Equity attributable to
the equity holders 2 690 077 1 895 231 1 611 265
Non-controlling interest 405 135 59 321 243 584
Non-current liabilities 5 679 828 4 298 580 3 659 362
Long-term borrowings,
guaranteed repurchase
liabilities and financial
liabilities 5 654 572 4 293 813 3 653 114
Deferred taxation 25 256 4 767 6 248
Current liabilities 3 429 771 2 127 477 1 374 656
Current portion of
long-term borrowings
and guaranteed
repurchase liabilities 1 137 908 243 600 133 133
Trade, other payables and
provisions 2 070 533 1 802 466 1 204 724
Taxation liabilities 30 199 26 328 13 052
Bank overdrafts 191 131 55 083 23 747
Total equity and
liabilities 12 204 811 8 380 609 6 888 867
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March
2012
2013 Restated
R000 R000
Share capital
Balance at beginning of the year 3 706 3 724
Cancellation of issued shares (18)
Ordinary shares issued 37
Balance at end of the year 3 743 3 706
Share premium
Balance at beginning of the year 272 320 282 715
Ordinary shares issued (cancelled) 59 195 (10 395)
Balance at end of the year 331 515 272 320
Treasury shares
Balance at beginning of the year (93 931) (119 809)
Treasury shares disposed in terms of
directors loan scheme 17 497
Treasury shares utilised to settle
share appreciation rights 51 958 16 366
Treasury shares purchased (38 125) (7 985)
Balance at end of the year (80 098) (93 931)
Preference shares
Balance at beginning of the year
Preference shares issued 750 000
Balance at end of the year 750 000
Retained earnings
Balance at beginning of the year 1 676 751 1 391 305
Restatement due to modification of
share appreciation rights (52 033)
Earnings attributable to ordinary
shareholders 693 152 455 743
Net share appreciation rights exercised (150 043) 6 073
Change in non-controlling interest (12 128) 21 347
Dividends paid (193 263) (145 684)
Balance at end of the year 2 014 469 1 676 751
Other reserves
Balance at beginning of the year 36 385 53 330
Restatement due to modification of
share appreciation rights (27 096)
Share appreciation rights issued 4 990 9 121
Share appreciation rights exercised (17 361) (7 844)
Fair value of put option in terms of
the directors loan scheme 4 535
Fair value of put option on
non-controlling interest (380 376)
Translation of foreign operations 26 810 4 339
Balance at end of the year (329 552) 36 385
Attributable to equity shareholders 2 690 077 1 895 231
Non-controlling interest
Balance at beginning of the year 59 321 243 584
Earnings attributable to
non-controlling interest 28 468 23 456
Change in non-controlling interest 327 076 (202 570)
Dividends paid (9 730) (5 149)
Balance at end of the year 405 135 59 321
SEGMENT INFORMATION
for the year ended 31 March
Group,
Engi- financing
neering and other
consu- Capital Building ope-
mables equipment supplies rations Total
R000 R000 R000 R000 R000
2013
Segment
revenue 3 424 847 3 502 965 625 141 4 946 7 557 899
Segment
operating
profit 390 047 339 338 38 610 115 764 883 759
Segment
assets 2 189 286 3 215 154 502 070 6 298 301 12 204 811
Segment
liabilities 867 637 1 874 215 325 923 6 041 823 9 109 598
2012 (Restated)
Segment
revenue 2 742 046 2 548 888 306 771 1 759 5 599 464
Segment
operating
profit 371 458 246 783 14 127 (31 287) 601 081
Segment
assets 1 723 928 1 556 429 191 505 4 908 747 8 380 609
Segment
liabilities 510 138 1 295 827 97 602 4 522 490 6 426 057
PRO FORMA FINANCIAL INFORMATION
The pro forma financial information below has been prepared to provide information on how the normalised earnings adjustments might have impacted on the financial results of the Group. Because of its nature, the pro forma financial information may not be a fair reflection of the Groups results of operations, financial position, changes in equity or cash flows. The underlying information used in the preparation of the audited pro forma financial information has been prepared using the accounting policies that comply with International Financial Reporting Standards. These are consistent with those applied in the published audited consolidated results of the Group for the year ended 31 March 2013. The directors of the Group are responsible for the compilation, contents and preparation of the
pro forma financial information contained in the announcement. Their responsibility includes determining that: the pro forma financial information has been properly compiled on the basis stated; the basis is consistent with the accounting policies of the Group; and the pro forma adjustments are appropriate for the purposes of the pro forma financial information disclosed in terms of the JSE Limited Listings Requirements.
The pro forma financial information should be read in conjunction with the Deloitte & Touche independent reporting accountants report thereon, which is available for inspection at Invictas
registered office.
STATEMENT OF NOMALISED EARNINGS
for the year ended 31 March 2013
2013 2013
Normalised Audited %
Notes R000 R000 change
Revenue 1 7 557 899 7 557 899 0,0
Operating profit 1 883 759 883 759 0,0
Gain on partial
derecognition of
financial investments 2 (158 172) (100,0)
Interest and dividends
received 1 531 673 531 673 0,0
Negative goodwill 1 52 066 52 066 0,0
Finance costs 1 (651 760) (651 760) 0,0
Share of profits of
associate 1 3 018 3 018 0,0
Profit before taxation 660 584 818 756 (19,3)
Taxation 1 (75 224) (75 224) 0,0
Profit for the year 585 360 743 532 (21,3)
Profit attributable to:
Owners of the Company 534 980 693 152 (22,8)
Non-controlling
interest 1 28 468 28 468 0,0
Preference shareholders 1 21 912 21 912 0,0
585 360 743 532 (21,3)
Shares in issue
Weighted average (000s) 1 72 588 72 588
At the end of the
year (000s) 1 73 409 73 409
Number of shares used
for diluted earnings
per share (000s) 73 124 73 124
Earnings per
share (cents) 3 737 955 (22,8)
Diluted earnings per
share (cents) 3 732 948 (22,8)
Notes:
1 As per the audited statement of comprehensive income for the year ended 31 March 2013.
2 Exclusion of once-off gain on partial derecognition of financial investment, as disclosed in the notes to the annual financial statements at 31 March 2013.
3 Per share calculation is based on normalised earnings.
NOTES TO THE FINANCIAL INFORMATION
Basis of preparation
The Groups audited summary consolidated annual financial statements (results) are prepared in accordance with the requirements of the JSE Limited Listings Requirements for provisional reports, the requirements of the Companies Act applicable to summary financial statements, the framework, measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council and the requirements of IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the results are in terms of IFRS and are consistent with the accounting policies applied in the preparation of the Groups previous consolidated annual financial statements, except for the modifications for the accounting for Share appreciation rights settled in cash during the prior and current financial year. These were accounted for on the cash settled method from 1 April 2011, resulting in the restatement of the prior year. All accounting policies effective for the 2013 financial year onwards were applied and did not have a material impact on the Group results.
These audited financial statements have been prepared under the supervision of Craig Barnard CA(SA), the Executive Director Financial and Commercial.
ACQUISITIONS
Various acquisitions were made during the year ended 31 March 2013, amounting to R1,6 billion.
The significant acquisitions include Operational Marketing (Pty) Ltd, ManDirk (Pty) Ltd, Kian Ann Engineering (Pte) Ltd and MacNeil (Pty) Ltd. The Board identified these businesses based on their ability to assist the Group with its expansion and growth. The provisional goodwill and provisional negative goodwill arises after the fair valuing of all identifiable tangible and intangible assets and liabilities at acquisition date. The transaction costs for these acquisitions amount to R50 million.
EVENTS AFTER THE REPORTING PERIOD
There were no events to report on after the reporting period to the date of this report.
MARKET OVERVIEW
The Group has again delivered very good results despite markets which experienced mixed fortunes.
Group revenue grew by 35% to R7 558 million, of which R1 026 million (18%) was from acquisitions. Operating profit, which included a once-off gain of R158 million, was 47% higher at R884 million. Excluding this once-off gain, operating profit was R726 million, an increase of 21%, which is reflective of the strong trading performance in market conditions which put pressure on gross margins and inflationary pressure on costs. R46 million of operating profit came from acquisitions.
Profit (after tax) for the year increased by 55% to R744 million. A once-off gain resulted in headline earnings growing by 43% to R642 million. Normalised earnings per share grew by 14% from 647 cents per share to 737 cents per share. Working capital management was excellent, resulting in cash generated from operations of R732 million, up 50% from R489 million.
The Group announced the 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 which was listed on the Singapore Stock Exchange, with an annual turnover of more than R1,1 billion. The acquisition was included in the Invicta results from 1 February 2013. The purchase price of Kian Ann was SGD192,6 million of which the founding management contributed SGD31,16 million for a 25% stake and the balance was entirely funded with debt.
The acquisition of Kian Ann takes the Group to the global stage of distribution of heavy earthmoving equipment parts and diesel engine spares as the company distributes to over 50 countries worldwide. Since June 2012 the markets serviced by Kian Ann have experienced challenging trading conditions, which are expected to continue for the short-term. Kian Ann is only expected to start making a meaningful contribution to Group profits over time as the debt for its acquisition is repaid.
The Group continued to take advantage of domestic growth opportunities and made a number of strategic acquisitions totalling R223 million. The most significant of these was the acquisition by BMG of ManDirk, a leading industrial distributor of tools and equipment to the mining and industrial sector.
In order to strengthen its balance sheet the Group issued perpetual preference shares for R750 million on 28 November 2012.
BEARING MAN GROUP (BMG)
BMG experienced tough trading from the second quarter onwards. Strikes in the mining and freight transport industries had a negative knock-on effect on the manufacturing sector. Notwithstanding, it is most pleasing to report that BMG grew revenue by 25% to R3 425 million, of which 8% came from organic growth and 17% from acquisitions.
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. ManDirk, 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. It continues to be a leading player in the industries in which it operates and a significant core profit generator of the Group.
CAPITAL EQUIPMENT GROUP (CEG)
CEG has had another excellent trading year resulting in a strong performance for the year under review. Revenue grew by 37% to R3 503 million and operating profit grew by 38% to R339 million. Acquisitions contributed for 7% of both revenue and operating profit growth.
Key ratios in CEG were all healthy and cash generation was good.
CEG continues to outperform its benchmarks and to be a major contributor to the Invicta stable.
BUILDING MATERIALS
On 1 October 2012 the Invicta Group acquired an effective 53,4% of the issued shares of MacNeil (Pty) Ltd. MacNeil is a leading wholesale supplier of sanitary ware, brassware, taps, plumbing fixtures, plastic piping and related products to the building materials sector of South Africa and neighbouring countries. It operates through seven branches in South Africa. The combined annual revenue of Invicta building materials segment after this acquisition is expected to exceed R1 billion per annum. Invicta plans to grow further in this sector.
PROSPECTS
Invicta is a robust business with proven management. Invicta has a strong balance sheet, which will ensure that it is able to weather economic storms and to fund significant growth opportunities as they arise. Invicta has embarked on a path of growing its Rand hedge business with the acquisition of Kian Ann and by developing its business in Africa.
Given the aforegoing, managements focus will be on containing costs, growing the Groups after-sales and spares business in South Africa, growing in the building materials industry, growing into Africa and developing Kian Anns global business.
Trading conditions are expected to be challenging in the coming year, but the Board remains confident of the continued success of the Group.
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the Groups financial statements for the year ended 31 March 2013. The audit was conducted in accordance with International Standards on Auditing. They have issued an unmodified audit opinion. These summarised 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 Companys registered office. Any reference to future financial performance included in this announcement, has not been reviewed or reported on by the Companys auditors.
DIVIDENDS
The Board has declared a final gross dividend of 179 cents per share for the year ended 31 March 2013, in keeping with the dividend policy of 2,75 times normalised earnings per share.
The dividend will be subjet to the new Dividends Tax that was introduced with effect from 1 April 2012. In accordance with paragraphs 11.17(a)(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 179 cents per share will be utilised;
The gross local dividend amount is 179 cents per ordinary share for shareholders exempt from the Dividend Tax;
The gross and net local dividend amount is 179 cents per ordinary share for shareholders liable to pay the Dividend Tax;
Invicta Holdings Limited has 74 862 305 ordinary shares in issue (which includes 1 452 920 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, 28 June 2013
First date of trading EX dividend Monday, 1 July 2013
Record date Friday, 5 July 2013
Payment date Monday, 8 July 2013
Share certificates may not be dematerialised or rematerialised between Monday, 1 July 2013 and Friday, 5 July 2013, both days inclusive.
By order of the Board
C Barnard Cape Town
Secretary 11 June 2013
INVICTA HOLDINGS LIMITED
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^#, JS 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
www.bmgworld.net
www.capitalequipmentgroup.co.za
Date: 11/06/2013 02:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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