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INVICTA HOLDINGS LIMITED - Preliminary Audited Group results for the year ended 31 March 2014

Release Date: 17/06/2014 08:40
Code(s): IVT IVTP     PDF:  
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Preliminary Audited Group results for the year ended 31 March 2014

INVICTA HOLDINGS LIMITED
Registration number: 1966/002182/06 
(Incorporated in the Republic of South Africa)
Share code: IVT 
ISIN: ZAE000029773 
Preference share code: IVTP 
ISIN: ZAE000173399
(“Invicta” or “the Group” or “the Company”)
PRELIMINARY AUDITED GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2014
REVENUE up by 38%
OPERATING PROFIT up by 18%
NORMALISED EARNINGS PER SHARE up by 7%
NORMALISED HEADLINE EARNINGS PER SHARE up by 15%
FINAL ORDINARY DIVIDEND 184,65 cents per share
CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March
                                                 %         2014         2013 
                                            change        R’000        R’000
Revenue                                         38   10 464 511    7 557 899 
Gross profit                                          2 899 658    2 158 809
Operating profit                                18    1 042 950      883 759 
Interest and dividends received                         633 556      531 673 
Negative goodwill                                             –       52 066 
Finance costs                                          (827 966)    (651 760) 
Share of profits of associates                            2 150        3 018 
Profit before taxation                           4      850 690      818 756 
Taxation                                               (140 779)     (75 224) 
Profit for the year                             (5)     709 911      743 532 
  Other comprehensive income
  Items that will be reclassified to 
    profit or loss
  Exchange differences on translating 
    foreign operations                                   74 615       26 810 
  Total comprehensive income for the year               784 526      770 342 
  Profit attributable to:
  Owners of the company                                 580 107      693 152 
  Non-controlling interest                               64 016       28 468 
  Preference shareholders                                65 788       21 912 
                                                        709 911      743 532 
  Total comprehensive income attributable to:
  Owners of the company                                 629 158      719 962
  Non-controlling interest                               89 580       28 468
  Preference shareholders                                65 788       21 912 
                                                        784 526      770 342 
Earnings per share (cents)                     (17)         788          955 
Diluted earnings per share (cents)             (17)         788          948 
Normalised earnings per share (cents)            7          788          737 
Determination of normalised earnings per share 
Profit attributable to Owners of the company            580 107      693 152 
Gain on partial derecognition of 
  financial investments                                       –     (158 172) 
Normalised profit attributable to Owners 
  of the company                                 8      580 107      534 980 
Determination of headline earnings
Attributable earnings                                   580 107      693 152 
Adjustments
–  Net impairment of property, plant and equipment           66           18 
–  Goodwill impaired                                          –        2 791 
–  Negative goodwill                                          –      (52 066) 
–  Profit on disposal of investment                      (4 032)           –
–  Net profit on disposal of property, plant 
    and equipment                                       (16 298)      (3 551) 
Total adjustments before taxation and 
  non-controlling interest                              (20 264)     (52 808) 
Taxation                                                  2 809          989 
Non-controlling interest                                     96          747 
Total adjustments                                       (17 359)     (51 072) 
Headline earnings                                       562 748      642 080 
Headline earnings per share (cents)            (14)         765          885 
Diluted headline earnings per share (cents)    (13)         765          878
Normalised headline earnings per 
  share (cents)                                 15          765          667 
Determination of normalised headline 
  earnings per share
Headline earnings                                       562 748      642 080
Gain on partial derecognition of 
  financial investments                                       –     (158 172) 
Normalised headline earnings                            562 748      483 908 
Shares in issue
Weighted average (000s)                                  73 592       72 588 
At the end of the year (000s)                            75 551       73 409
Number of shares used for diluted earnings 
  per share (000s)                                       73 531       73 125 
Headline earnings per share (cents)            (14)         765          885 
Earnings per share (cents)                     (17)         788          955 
Dividends per share* (cents)                     7          287          268 
   – Interim                                    15          102           89 
   – Final                                       3       184,65          179 
* In accordance with IAS10, the final dividend of 184,65 cents per share 
proposed by the directors has not been reflected in the year-end results.
CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS 
for the year ended 31 March
                                                           2014         2013
                                                          R’000        R’000
Cash flows from operating activities
Cash generated from operations                          715 160      732 078 
Finance costs                                          (827 966)    (651 760) 
Dividends paid to Group shareholders and 
  non-controlling interest                             (281 367)    (198 433) 
Taxation paid                                          (142 910)    (161 137) 
Interest and dividends received                         633 556      531 673 
Net cash inflow from operating activities                96 473      252 421 
Cash flows from investing activities
Net cash effects of acquisitions of property, plant 
  and equipment and intangible assets                  (216 181)    (131 724) 
Acquisition of subsidiaries and associates              (97 456)  (1 496 282) 
Acquisition of non-controlling interests in 
  subsidiaries                                           (1 670)           –
Decrease in long-term receivables including 
  current portion                                      (339 327)  (1 060 115) 
Net increase in financial investments                   (11 968)           – 
Dividend received from associate                          1 947          425 
Net cash outflow from investing activities             (664 655)  (2 687 696) 
Cash flows from financing activities
Net cash effects of liabilities raised                  237 066    1 676 334 
Settlement of share appreciation rights and 
  employees tax on share appreciation 
  rights exercised                                      (39 299)    (148 581) 
Ordinary shares and preference shares issued                321      809 232
Net cash inflow from financing activities               198 088    2 336 985
Net decrease in cash and cash equivalents              (370 094)     (98 290) 
Cash and cash equivalents at the beginning of 
  the year                                              487 718      586 008 
Effect of foreign exchange rate movement on 
  cash balances                                          21 872            –
Cash and cash equivalents at the end of the year        139 496      487 718
OTHER INFORMATION
                                                           2014         2013
Net interest-bearing debt: equity ratio 
  (excluding long-term funding debt secured 
  by investments and loans) (%)                              37           39
Depreciation and amortisation (R'000)                   135 102       86 814 
Net asset value per share (cents)                         4 073        3 665 
Tangible net asset value per share (cents)                3 025        2 610 
Capital expenditure (R'000)                             258 661      152 276 
Capital commitments (R'000)                              51 936       81 770 
CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION
as at 31 March
                                                           2014         2013
                                                          R’000        R’000 
ASSETS
Non-current assets                                    6 563 637    6 080 956 
Property, plant and equipment                         1 170 577    1 010 636 
Financial investments and investment in associates    2 032 223    2 018 353 
Goodwill and other intangible assets                    791 632      773 815 
Financial assets, finance leases and long-term 
  receivables                                         2 324 107    2 117 013 
Deferred taxation                                       245 098      161 139 
Current assets                                        6 885 035    6 123 855 
Held for sale assets                                          –        9 957
Inventories                                           3 478 732    2 913 052 
Trade and other receivables                           1 844 072    1 619 567 
Current portion of financial investments, 
  finance leases and long-term receivables            1 014 315      883 599 
Taxation prepaid                                         21 547       18 831 
Bank balances and cash                                  526 369      678 849 
Total assets                                         13 448 672   12 204 811 
EQUITY AND LIABILITIES
Capital and reserves                                  3 559 020    3 095 212 
Equity attributable to the equity holders             3 077 073    2 690 077 
Non-controlling interest                                481 947      405 135 
Non-current liabilities                               6 120 618    5 679 828 
Long-term borrowings, guaranteed repurchase 
  liabilities and financial liabilities               6 093 891    5 654 572 
Deferred taxation                                        26 727       25 256 
Current liabilities                                   3 769 034    3 429 771 
Current portion of long-term borrowings 
  and guaranteed repurchase liabilities                 935 522    1 137 908 
Trade, other payables and provisions                  2 334 597    2 070 533 
Taxation liabilities                                    112 042       30 199 
Bank overdrafts                                         386 873      191 131 
Total equity and liabilities                         13 448 672   12 204 811
CONSOLIDATED SUMMARISED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March
                                                           2014         2013
                                                          R’000        R’000 
Share capital
Balance at the beginning of year                          3 743        3 706 
Shares issued                                                34           37 
Balance at the end of the year                            3 777        3 743 
Share premium
Balance at the beginning of year                        331 515      272 320 
Shares issued                                            79 382       59 195 
Balance at the end of the year                          410 897      331 515 
Treasury shares
Balance at the beginning of year                        (80 098)     (93 931) 
Treasury shares utilised to settle share 
  appreciation rights                                         –       51 958 
Treasury shares purchased                                     –      (38 125) 
Balance at the end of the year                          (80 098)     (80 098) 
Preference shares
Balance at the beginning of the year                    750 000            –
Preference shares issued                                      –      750 000
Balance at the end of the year                          750 000      750 000
Retained earnings
Balance at the beginning of year                      2 014 469    1 676 751 
Earnings attributable to ordinary shareholders          645 895      693 152 
Share appreciation rights exercised                    (110 085)    (150 043) 
Change in non-controlling interest                            –      (12 128) 
Dividends paid                                         (274 577)    (193 263) 
Balance at the end of the year                        2 275 702    2 014 469 
Other reserves
Balance at the beginning of year                       (329 552)      36 385 
Share appreciation rights issued                          5 926        4 990 
Share appreciation rights exercised                      (8 630)     (17 361) 
Fair value of put option on non-controlling interest          –     (380 376) 
Translation of foreign operations                        49 051       26 810 
Balance at the end of the year                         (283 205)    (329 552) 
Attributable to equity shareholders                   3 077 073    2 690 077 
Non-controlling interest
Balance at the beginning of year                        405 135       59 321 
Earnings attributable to non-controlling interest        64 016       28 468 
Share of foreign currency translation reserve            25 564            – 
Non-controlling interest arising on acquisitions 
  and purchases of non-controlling interests              1 770      327 076 
Preference shares issued                                    321 
Dividends paid                                          (14 859)      (9 730) 
Balance at the end of the year                          481 947      405 135
SUMMARISED SEGMENT INFORMATION
for the year ended 31 March
                                                          Group,
                                                       financing
           Engineering       Capital      Building     and other
           consumables     equipment      supplies    operations         Total
                 R’000         R’000         R’000         R’000         R’000
2014
Segment 
 revenue     3 954 572     5 122 299     1 383 421         4 219    10 464 511 
Segment 
 operating 
 profit        472 773       483 641        66 969        19 567     1 042 950 
Segment 
 assets      2 284 378     3 897 441       693 971     6 572 882    13 448 672 
Segment 
 liabilities   729 493     2 245 847       455 152     6 459 160     9 889 652 
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     6 041 824     9 109 599
NOTES TO THE FINANCIAL INFORMATION
BASIS OF PREPARATION
The Group’s audited summary consolidated 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 contains the information required by 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 Group’s previous consolidated annual 
financial statements. All accounting policies effective for the 2014 financial 
year onwards were applied and did not have a material impact on the Group 
results. 
PREPARED BY
These Group audited summary consolidated financial statements and Group 
complete financial statements have been prepared under the supervision of Craig 
Barnard CA(SA), the Executive Director – Financial and Commercial.
ACQUISITIONS
Various acquisitions of subsidiaries, associates and non-controlling interests 
were made during the year ended 31 March 2014, amounting to R99 million.
The most significant acquisition was High Power Equipment Africa (Pty) Ltd.
Events after the reporting period
There were no events to report on or after the reporting period to the date of 
this report.
FAIR VALUE DISCLOSURE
The following is an analysis of the financial instruments that are measured 
subsequent to initial recognition at fair value. They are grouped into levels 1 
to 3 based on the extent to which the fair value is observable.
The levels are classified as follows:
Level 1 – fair value is based on quoted prices in active markets for identical 
financial assets or liabilities
Level 2 – fair value is determined using directly observable inputs other than 
Level 1 inputs
Level 3 – fair value is determined on inputs not based on observable market 
data
                                    Valuation
                                  technique(s)
                      31 Mar              and
                        2014       key inputs    Level 1    Level 2    Level 3
Financial assets at 
 fair value
Financial assets     155 405                 1         –    155 405          –
Trade and 
 other 
 receivables       1 844 072                 2         –          –  1 844 072
Financial 
 liabilities at 
 fair value
Financial 
 liabilities         154 695                 1         –    154 695          –
Trade and other 
 payables          2 070 940                 3         –          –  2 070 940
Foreign trade 
 payables            301 860                 4         –    301 860          –
                                    Valuation
                                  technique(s)
                      31 Mar              and
                        2013       key inputs    Level 1    Level 2    Level 3
Financial assets 
 at fair value
Financial assets     156 922                1          –    156 922          –
Financial 
 liabilities at fair 
value
Financial 
 liabilities         165 030                1          –    165 030          –
Trade and other 
 payables            615 434                4          –    615 434          –
1.  Discounted contractual stream payments using the zero swap curve at the 
valuation date.
2.  Face value less specific related provision.
3.  Determined by the spot rate at year-end.
4.  Expected settlement value.
COMMENTS
FINANCIAL OVERVIEW
The Invicta group (“the Group”) has again delivered good results under 
challenging circumstances. Labour unrest in South Africa, a marked 
deterioration in the Rand and subdued trading conditions in South East Asia 
have characterised the year under review.
Tough trading conditions in the industrial consumables market in South Africa 
(served by BMG) prevailed during the year. Labour unrest was particularly 
debilitating in the mining industry and in the early part of the financial 
year, the automotive industry. Labour unrest in the platinum mining sector has 
continued into the new financial year, which has contributed to a contraction 
in GDP in South Africa in the first quarter of the 2014 calendar year. 
The capital equipment markets (served by CEG) experienced mixed conditions – 
demand for earthmoving machinery continued to grow throughout the year, while 
demand for agricultural machinery declined year-on-year. Trading conditions in 
markets in South East Asia, in which Kian Ann Engineering operates, continued 
to be subdued. BSG grew much faster than the industry it serves, due mainly to 
acquisitions.
Acquisitions made by the Group during the prior financial year bolstered 
performance and provided a solid platform for future growth.
Group revenue grew R2,907 billion (38%) to R10,465 billion, of which R610 
million (6%) was from acquisitions made this year and R9,854 billion (94%) was 
organic. Operating profit, which includes a non-recurring profit on sale of 
fixed assets of R14 million, increased by R159 million (18%) to R1,043 billion. 
A number of once-off, non-trading transactions occurred during the year under 
review and during the prior year, which obscure the trading figures. For this 
reason, the normalised earnings have been presented. The normalised EPS 
increased by 7% from 737 cents to 788 cents per share, while the normalised 
HEPS increased by 15% from 667 cents to 765 cents per share. Working capital 
management was good, resulting in cash generated from operations of R715 
million.
Management resolved at the beginning of the year under review to restrict 
acquisition activity and to bed down the acquisitions of the prior year. The 
only significant acquisition during this financial year was that of HPE Africa, 
the distributor of Hyundai earthmoving machinery in South Africa.  
BEARING MAN GROUP (BMG)
BMG performed extremely well, given the challenging market conditions. Market 
demand for BMG’s products and services was negatively impacted by depressed 
conditions in mining and manufacturing in South Africa. BMG, however services a 
diversified range of industries and customers. This put it in good stead to 
achieve a modest growth in volumes sold and to grow its revenue by 15% to 
R3,956 billion. Excluding acquisitions made during the course of the prior 
period, revenue increased by 10%. No acquisitions were made during the year 
under review. Excellent management of costs and gross margins resulted in BMG’s 
operating profit increasing by 21% to R473 million. Working capital management 
was good.
CAPITAL EQUIPMENT GROUP (CEG)
CEG grew significantly during the year, aided by the acquisitions of Kian Ann 
Engineering in Singapore, which was included for 2 months of the prior year and 
HPE Africa, which was included from 1 April 2013.
Earthmoving machinery sales in the country grew throughout the year, whilst 
agricultural machinery sales, measured by tractor unit sales, declined by 6,3% 
during the year under review. ESP, the quality replacement parts business made 
a good contribution to CEG.
Trading conditions in the regions of South East Asia serviced by Kian Ann 
Engineering continued to be challenging.
CEG’s revenue increased by 46% to R5,122 billion. Only a small percentage of 
this growth was organic, with the bulk emanating from the acquisition of HPE 
Africa and Kian Ann Engineering. Operating profit increased to R484 million, a 
very good result. CEG continued to outperform its benchmarks and to be a major 
contributor to the Invicta stable. 
BUILDING SUPPLIES GROUP (BSG)
BSG, comprising Tiletoria and MacNeil Distributors (which was acquired on 1 
October 2012), was bolstered by two acquisitions during the year. Revenue 
increased by R759 million (121%) to R1,383 billion, R1,083 billion (78%) of the 
growth being organic and R300 million (22%) from acquisitions made during the 
year under review. Although not  a major contributor to the profits of the 
Invicta Group, BSG is settling down well. It has significant potential and is 
expected to make a greater contribution to the Group in future.
PROSPECTS 
Trading conditions remain challenging. At the time of drafting this report, 
labour unrest in the platinum mines appears to be close to resolution, but 
there are threats of strikes in other industries served by the Group. GDP in 
South Africa in the first quarter of the 2014 calendar year shrunk by 0,6%. 
Numerous public holidays in April and May 2014 compounded the situation, which 
has resulted in a slow start to the new financial year. 
The maize price, a big driver of sales of agricultural machinery, has dropped 
significantly, giving rise to the expectation of a decline in agricultural 
machinery demand in South Africa in the coming financial year. Demand for 
earthmoving machinery is primarily dependent on mining, construction activity 
and infrastructural spend, none of which are flourishing at the moment. Group 
management are experienced in managing fluctuating markets and have shown 
resilience in the past in dealing with these challenging conditions, which 
management believe will inevitably change for the better and business is 
expected to improve accordingly. 
The global markets serviced by the Group (mainly South East Asia) are erratic 
with growth likely to be muted in the coming financial year. 
Notwithstanding the above, the Group will continue to do what is has done well 
in the past – manage its operations soundly while seeking out acquisitions and 
opportunities for growth. Current conditions are expected to give rise to 
acquisition opportunities domestically and internationally. Invicta will also 
use the opportunity to look inwardly to streamline its businesses, improve 
supply chain management and efficiencies.
The Group will focus on diversifying its businesses geographically and has 
strategically decided to become a more global business in sectors in which it 
has operated historically. Business in Africa is being pursued vigorously.  
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the Group’s 
complete financial statements for the year ended 31 March 2014. 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 complete financial statements and are consistent in 
all material respects, with the Group financial statements. A copy of their 
unmodified ISA 700 and ISA 810 audit reports are 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.
ORDINARY SHARE CASH DIVIDEND
The Board has declared a final gross dividend of 184,65 cents per share for the 
year ended 31 March 2014, in keeping with the dividend policy of 2,75 times 
normalised earnings per share. The dividend will be subject to Dividends Tax. 
In accordance with paragraphs 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 R17 705 817,04 (23,44 cents per 
share) will be utilised;
The gross local dividend amount is 184,65 cents per ordinary share for 
shareholders exempt from the Dividend Tax;
The net local dividend amount is 160,4685 cents per ordinary share for 
shareholders liable to pay the Dividend Tax;
Invicta Holdings Limited has 75 551 393 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 of trade “CUM” dividend                 Friday, 4 July 2014
First date of trade “EX” dividend                 Monday, 7 July 2014
Record date                                      Friday, 11 July 2014
Payment date                                     Monday, 14 July 2014
Share certificates may not be dematerialised or rematerialised between Monday, 
7 July 2014 and Friday, 11 July 2014, both days inclusive.
By order of the Board
GM Chemaly                                       Cape Town
Company Secretary                             12 June 2014
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, 
R Naidoo^, DI Samuels^, LR Sherrell*, AM Sinclair, RA Wally^, CE Walters, Adv 
JD Wiese*                             
* Non-executive        ^ Independent non-executive
Company Secretary: GM Chemaly
Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd
www.invictaholdings.co.za

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