Wrap Text
Unaudited condensed group interim results for the six months ended 30 September 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”)
UNAUDITED CONDENSED GROUP INTERIM RESULTS FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2014
FINANCIAL HIGHLIGHTS
REVENUE up by 3%
ORDINARY DIVIDEND 84 cents per share
HEPS 292 cents
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sep 30 Sep 31 Mar
Change 2014 2013 2014
% R’000 R’000 R’000
Revenue 3 5 269 649 5 128 724 10 464 511
Gross profit 1 423 630 1 428 062 2 899 658
Operating profit (13) 426 603 492 663 1 042 950
Interest and
dividends received 320 176 286 062 633 556
Finance costs (397 814) (355 774) (827 966)
Share of profits
of associates 2 500 731 2 150
Profit before
taxation (17) 351 465 423 682 850 690
Taxation (62 840) (90 513) (140 779)
Profit for the
period (13) 288 625 333 169 709 911
Other comprehensive
income:
Items that will be
reclassified to
profit or loss
Exchange differences
on translating
foreign operations 61 463 31 785 74 615
Total comprehensive
income for
the period 350 088 364 954 784 526
Profit attributable to:
Owners of the Company 216 939 263 077 580 107
Non-controlling interest 36 760 37 490 64 016
Preference shareholders 34 926 32 602 65 788
288 625 333 169 709 911
Total comprehensive
income attributable to:
Owners of the
Company (3) 264 536 271 417 629 158
Non-controlling
interest (15) 50 626 60 935 89 580
Preference
shareholders 7 34 926 32 602 65 788
350 088 364 954 784 526
Earnings per
share (cents) (18) 293 358 788
Diluted earnings per
share (cents) (18) 292 356 788
Normalised earnings
per share (cents) (18) 293 358 788
Determination of
normalised earnings
per share
Profit attributable
to owners of the
Company 216 939 263 077 580 107
Normalised profit
attributable to
owners of the
Company 216 939 263 077 580 107
Determination of
headline earnings
Attributable earnings 216 939 263 077 580 107
Adjustments
– Net impairment of
property, plant and
equipment – – 66
– Profit on disposal
of investment – – (4 032)
– Profit on sale of
fixed assets held
for sale – (6 048) -
– Net profit on
disposal of property,
plant and equipment (622) (844) (16 298)
Total adjustments before
taxation and
non-controlling
interest (622) (6 892) (20 264)
Taxation 172 1 572 2 809
Non-controlling
interest 3 1 489 96
Total adjustments (447) (3 831) (17 359)
Headline earnings 216 492 259 246 562 748
Headline earnings
per share (cents) (17) 292 353 765
Diluted headline
earnings per
share (cents) (17) 292 351 765
Normalised headline
earnings per
share (cents) (17) 292 353 765
Determination of
normalised headline
earnings per share
Profit attributable
to owners of the
Company 216 492 259 246 562 748
Normalised headline
earnings 216 492 259 246 562 748
Shares in issue
Weighted average (000s) 74 098 73 427 73 592
At the end of the
period (000s) 74 887 73 434 75 551
Number of shares used
for diluted earnings
per share (000s) 74 223 73 906 73 531
Headline earnings
per share (cents) (17) 292 353 765
Earnings per
share (cents) (18) 293 358 788
Dividends per
share* (cents) 84 102 286,65
– Interim (18) 84 102 102
– Final – – 184,65
* In accordance with IAS10, the interim dividend of 84 cents per
share proposed by the directors has not been reflected in the
interim results.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sep 30 Sep 31 Mar
2014 2013 2014
R’000 R’000 R’000
Cash flows from operating
activities
Cash generated from
operations 280 589 386 105 715 160
Finance costs (397 814) (355 774) (827 966)
Dividends paid to
Group shareholders and
non-controlling interest (192 575) (179 039) (281 367)
Taxation paid (66 738) (89 428) (142 910)
Interest and dividends
received 320 176 286 062 633 556
Net cash (outflow) inflow
from operating activities (56 362) 47 926 96 473
Cash flows from investing
activities
Net cash effects of
acquisitions of property,
plant and equipment and
intangible assets (139 652) (114 994) (216 181)
Acquisition of subsidiaries
and associates (18 700) (98 028) (97 456)
Acquisition of non-controlling
interests in subsisiaries 21 – (1 670)
(Increase) decrease in
long-term receivables
including current portion (133 869) 4 936 (339 327)
Net decrease (increase) in
financial investments 85 947 (53 955) (11 968)
Dividend received from
associate 748 1 198 1 947
Net cash outflow from
investing activities (205 505) (260 843) (664 655)
Cash flows from financing
activities
Net cash effects of
liabilities raised 191 774 260 065 237 066
Net settlement of share
appreciation rights and
employees tax on share
appreciation rights
exercised – – (39 299)
Ordinary shares and preference
shares issued – 2 379 321
Net cash inflow from
financing activities 191 774 262 444 198 088
Net (decrease) increase in
cash and cash equivalents (70 093) 49 527 (370 094)
Cash and cash equivalents at
the beginning of
the period 139 496 487 718 487 718
Effect of foreign exchange
rate movement on cash
balances – – 21 872
Cash and cash equivalents
at the end of the period 69 403 537 245 139 496
OTHER INFORMATION
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sep 30 Sep 31 Mar
2014 2013 2014
R’000 R’000 R’000
Net interest-bearing debt:
equity ratio (excluding
long-term funding debt
secured by investments
and loans) (%) 38 34 37
Depreciation and
amortisation (R’000) 67 647 68 003 135 102
Net asset value per
share (cents) 4 280 3 868 4 073
Tangible net asset value
per share (cents) 3 229 2 804 3 025
Capital expenditure (R’000) 143 049 116 912 258 661
Capital commitments (R’000) 124 435 58 640 51 936
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 Sep 30 Sep 31 Mar
2014 2013 2014
R’000 R’000 R’000
ASSETS
Non-current assets 6 817 341 6 314 650 6 563 637
Property, plant and
equipment 1 237 889 1 100 676 1 170 577
Financial investments and
investment in associates 2 109 977 2 143 118 2 032 223
Goodwill and other
intangible assets 787 495 781 350 791 632
Financial assets, finance
lease and long-term
receivables 2 499 325 2 137 824 2 324 107
Deferred taxation 182 655 151 682 245 098
Current assets 6 953 877 7 076 717 6 885 035
Held for sale assets 14 849 3 478 –
Inventories 3 600 000 3 794 381 3 478 732
Trade and other
receivables 2 144 916 1 865 432 1 844 072
Current portion of
financial investments,
finance lease and
long-term receivables 817 561 756 360 1 014 315
Taxation prepaid 10 075 6 238 21 547
Bank balances and cash 366 476 650 828 526 369
Total assets 13 771 218 13 391 367 13 448 672
EQUITY AND LIABILITIES
Capital and reserves 3 722 834 3 298 621 3 559 020
Equity attributable to
the equity holders 3 205 251 2 840 295 3 077 073
Non-controlling interest 517 583 458 326 481 947
Non-current liabilities 6 128 876 6 453 690 6 120 618
Long-term borrowings,
guaranteed repurchase
liabilities and
financial liabilities 6 097 033 6 426 584 6 093 891
Deferred taxation 31 843 27 106 26 727
Current liabilities 3 919 508 3 639 056 3 769 034
Current portion of
long-term borrowings
and guaranteed repurchase
liabilities 1 115 950 592 028 935 522
Trade, other payables
and provisions 2 477 970 2 895 003 2 334 597
Taxation liabilities 28 515 38 442 112 042
Bank overdrafts 297 073 113 583 386 873
Total equity and
liabilities 13 771 218 13 391 367 13 448 672
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sep 30 Sep 31 Mar
2014 2013 2014
R’000 R’000 R’000
Share capital
Balance at the beginning
of the period 3 777 3 743 3 743
Shares issued – 2 34
Balance at the end of
the period 3 777 3 745 3 777
Share premium
Balance at the beginning
of the period 410 897 331 515 331 515
Shares issued – 2 377 79 382
Balance at the end of
the period 410 897 333 892 410 897
Treasury shares
Balance at the beginning
of the period (80 098) (80 098) (80 098)
Balance at the end of
the period (80 098) (80 098) (80 098)
Preference shares
Balance at beginning
of the period 750 000 750 000 750 000
Balance at the end of
the period 750 000 750 000 750 000
Retained earnings
Balance at the beginning
of the period 2 275 702 2 014 469 2 014 469
Earnings attributable to
ordinary shareholders 216 939 263 077 645 895
Share appreciation rights
exercised – (15 700) (110 085)
Change in non-controlling
interest 49 2 351 –
Dividends paid (137 616) (131 180) (274 577)
Balance at the end of
the period 2 355 074 2 133 017 2 275 702
Other reserves
Balance at the beginning
of the period (283 205) (329 552) (329 552)
Share appreciation
rights issued 593 1 866 5 926
Share appreciation rights
exercised – (4 360) (8 630)
Translation of foreign
operations 48 213 31 785 49 051
Balance at the end of
the period (234 399) (300 261) (283 205)
Attributable to equity
shareholders 3 205 251 2 840 295 3 077 073
Non-controlling interest
Balance at the beginning
of the period 481 947 405 135 405 135
Earnings attributable to
non-controlling interest 36 760 37 490 64 016
Share of foreign currency
translation reserve 13 866 23 445 25 564
Non-controlling interest
arising on acquisitions
and purchases of
non-controlling interests 409 (2 351) 1 770
Change in non-controlling
interest – 2 114 –
Preference shares issued – – 321
Dividends paid (15 399) (7 507) (14 859)
Balance at the end of
the period 517 583 458 326 481 947
SEGMENT INFORMATION
Engineering Capital Building
consumables equipment supplies
R’000 R’000 R’000
Unaudited six months ended
30 September 2014
Segment revenue 2 027 951 2 404 046 837 237
Segment operating profit 209 285 180 234 48 316
Segment assets 2 251 399 3 816 132 824 952
Segment liabilities 658 560 2 152 287 542 402
Unaudited six months ended
30 September 2013
Segment revenue 1 977 776 2 583 203 565 214
Segment operating profit 219 549 251 415 31 990
Segment assets 2 105 126 4 251 606 662 365
Segment liabilities 729 770 2 664 684 463 042
Audited year ended
31 March 2014
Segment revenue 3 954 572 5 122 299 1 383 421
Segment operating profit 472 773 483 641 66 969
Segment assets 2 284 378 3 897 441 693 971
Segment liabilities 729 493 2 245 847 455 152
SEGMENT INFORMATION (continued)
Group,
financing
and other
operations Total
R’000 R’000
Unaudited six months ended
30 September 2014
Segment revenue 415 5 269 649
Segment operating profit (11 232) 426 603
Segment assets 6 878 735 13 771 218
Segment liabilities 6 695 135 10 048 384
Unaudited six months ended
30 September 2013
Segment revenue 2 531 5 128 724
Segment operating profit (10 291) 492 663
Segment assets 6 372 270 13 391 367
Segment liabilities 6 235 250 10 092 746
Audited year ended
31 March 2014
Segment revenue 4 219 10 464 511
Segment operating profit 19 567 1 042 950
Segment assets 6 572 882 13 448 672
Segment liabilities 6 459 160 9 889 652
NOTES TO THE FINANCIAL INFORMATION
BASIS OF PREPARATION
The Group's condensed consolidated interim financial statements
(results) are prepared in accordance with the requirements of the
JSE Limited Listings Requirements for interim reports, the
requirements of the Companies Act applicable to condensed
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
2015 financial year onwards were applied and did not have a
material impact on the Group results.
PREPARED BY
These Group condensed consolidated interim financial statements
have been prepared under the supervision of Craig Barnard CA(SA),
the Executive Director – Financial and Commercial.
Events after the reporting period
After the reporting period the shares held by the minority
shareholders in Kian Ann Engineering Limited (Kian Ann) were
purchased by companies within the Group.
Fair value disclosure
The following is as 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.
Valua-
tion
tech-
nique(s)
30 Sep and key
2014 inputs Level 1 Level 2 Level 3
Financial
assets at
fair value
Financial
assets 1 264 725 1 – 1 264 725 –
Trade and
other
recei-
vables 2 144 916 2 – – 2 144 916
Financial
liabilities
at fair
value
Financial
liabi-
lities 146 491 1 – 146 491 –
Trade and
other
payables 1 079 938 3 – – 1 079 938
Foreign trade
payables 1 398 032 4 – 1 398 032 –
Valua-
tion
tech-
nique(s)
30 Sep and key
2013 inputs Level 1 Level 2 Level 3
Financial
assets at
fair value
Financial
assets 124 082 1 – 124 082 –
Trade and
other
recei-
vables 1 865 432 2 – – 1 865 432
Financial
liabilities
at fair value
Financial
liabilities 133 080 1 – 133 080 –
Trade and
other
payables 831 191 3 – – 831 191
Foreign trade
payables 2 063 592 4 – 2 063 592 –
Valua-
tion
tech-
nique(s)
31 Mar and key
2014 inputs Level 1 Level 2 Level 3
Financial assets
at fair value
Financial
assets 155 405 1 – 155 405 –
Trade and
other
recei-
vables 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 –
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
Trading conditions in the six months under review were the most
challenging experienced by the Invicta Group in a long while. The
combined effect of the six-month strike in the platinum mining
industry (which ended in June 2014) and the nationwide NUMSA
strike in July hurt the South African economy, especially the
mining and manufacturing industries. GDP growth estimates for
South Africa have been revised downwards to 1,4% for 2014,
reflecting the anaemic conditions in the domestic economy.
Maize prices, a big driver of agricultural sales in South Africa,
have declined by about 50% since March 2014. This put pressure on
liquidity in the agriculture market and reduced demand for
agricultural machinery, which accounts for a sizeable part of the
Capital Equipment Group. Demand for Kian Ann products in South
East Asia was also subdued due to lower growth rates in the
region.
It is most pleasing, therefore, to report that, notwithstanding,
the Invicta Group managed to increase its revenue by 3% for the
six months to R5,27 billion. Gross margins reduced minimally, but
expenses increased in line with inflation, resulting in operating
profit declining by 13%.
Commensurately, profit for the period decreased by 13% to R289
million, whilst profit attributable to ordinary shareholders
decreased by 18%, as did earnings per share.
No material acquisitions were made during the period under
review.
BEARING MAN GROUP (BMG)
BMG has performed well under the circumstances. Revenue increased
by 3% to R2,03 billion, and, despite the disruption of the
aforementioned strikes, operating profit declined by only 5% to
R209 million. It is worth noting that the division enjoyed only
one “normal” month of trading out of the six months under review
– the rest being affected by industrial action.
BMG’s resilient performance was helped by the growth in new
product lines and the contribution from new branches opened
during the period under review.
Working capital continued to be well managed with inventories
only marginally up despite the marked decline in the exchange
rate relative to the comparative period.
CAPITAL EQUIPMENT GROUP (CEG)
CEG was, unfortunately, impacted by a material decline in the
maize price, a big driver of agricultural machinery sales, flat
conditions in the construction machinery market and poor economic
growth in the markets serviced by Kian Ann in these tough market
conditions.
CEG’s revenue declined by 7% to R2,4 billion, gross margins were
under severe pressure, and, whilst management managed to reduce
expenses below the comparative period’s expenses, operating
profit declined by 28% to R180 million. CEG has continued to
manage working capital well and significantly reduced its
inventory levels in line with the decline in the market.
Kian Ann Engineering, the Group’s Singapore-based company,
continued to experience tough trading conditions in its main
market, South East Asia, due to poor economic growth in the
region. Once-off gains from the sale of unproductive property in
the prior corresponding period by Kian Ann were not repeated,
resulting in an exaggerated decline in the performance of Kian
Ann.
The Group has acquired the 25% of Kian Ann held by minority
shareholders, allowing Invicta to attribute 100% of Kian Ann’s
earnings effective from 1 October 2014.
BUILDING SUPPLIES GROUP (BSG)
BSG was one of the positive lights in this rather tough period.
Revenue increased by 48% to R837 million and operating profit
increased by 51% to R48 million. Some minor acquisitions were
made in the second half of last year and are therefore not
included in the comparative figures. Further investment has been
made in building up the base and the support structures of BSG.
While this business currently makes a limited contribution to the
Group’s attributable profit, the Group is committed to growing
BSG’s contribution to a meaningful level and believes it has good
growth prospects.
PROSPECTS
Trading conditions in the second half of the year are expected to
continue to be tough, but slightly better.
Volumes in BMG seem to be returning to normal, although margins
are still under pressure. BMG is improving its distribution
capabilities and is expanding its warehouse facilities in
Johannesburg. It is planning to re-locate some of its head office
functions from Durban to Johannesburg.
In CEG, the agricultural machinery market volumes are expected to
continue declining in the short term, and gross margins are
likely to continue to be under pressure. Construction machinery
volumes are expected to remain constant, but better sourcing
should improve margins. Growth in Africa is a focus, but is
expected to be slow.
The markets serviced by Kian Ann are not expected to improve much
in the short term, but recent steps taken at Kian Ann should
improve performance. The 25% held by minority shareholders has
been acquired by the Invicta Group, management has been
restructured and an underperforming subsidiary in Kian Ann was
disposed of effective 1 October 2014.
On the domestic front, the Group is in the process of concluding
the acquisition of a number of bolt-on businesses. None of these
acquisitions are large enough to require specific SENS
announcements, however, voluntary notifications will be made
where deemed appropriate.
Any forward-looking statements in this announcement have not been
reviewed nor audited by the Company’s Auditors.
BOARD RE-STRUCTURE
Further to the prior announcements made in respect of the Board
structure, the Board is pleased to confirm that Byron Nichles has
been appointed to the Board effective 1 November 2014 as CEO of
BMG. He takes over from Charles Edward Walters who will assume
the role of Deputy Group CEO until 1 April 2015, when he takes
over as Group CEO, replacing Arnold Goldstone, who will continue
as Group Deputy Executive Chairman.
Rashid Ahmed Wally, an independent non-executive director, has
also been appointed to the Remuneration Committee with immediate
effect.
JSE TOP 100 AWARDS
The Board is pleased to report that the Group was placed 7th in
the recent Sunday Times Business Times Top 100 JSE Companies
awards. This is the 20th year that the Group has been placed in
the Top 100 and it is the only JSE-listed company to achieve this
for 20 years in a row – a unique and very commendable
performance. The Board wishes to thank all its employees,
customers and suppliers for their dedication, commitment and
support in achieving this result.
CAPITAL RAISING
The Group intends raising capital to fund operational growth and
acquisitions. Further announcements in this regard will be made
shortly.
PREFERENCE SHARE CASH DIVIDEND
Notice is hereby given that the Directors have declared a gross
cash dividend on 3 November 2014 of 387,39 cents (329,2815 cents
net of dividend withholding tax) per preference share for the
period from 6 June 2014 to 3 November 2014.
Invicta Holdings Limited has 7 500 000 preference shares in
issue.
Invicta Holdings Limited’s income tax reference number is
9400/012/03/6.
The salient dates for the preference share dividend will be as
follows:
Last day of trade to receive
a dividend Friday, 21 November 2014
Shares commence trading “EX” dividend Monday, 24 November 2014
Record date Friday, 28 November 2014
Payment date Monday, 1 December 2014
Share certificates may not be dematerialised or rematerialised
between Monday, 24 November 2014 and Friday, 28 November 2014,
both days inclusive.
ORDINARY SHARE CASH DIVIDEND
The Board has declared a gross interim dividend on 6 November
2014 of 84 cents per share (71,4000 cents net of dividend
withholding tax).
The dividend will be subject to Dividends Tax. 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);
– The gross local dividend amount is 84 cents per ordinary share
for shareholders exempt from the Dividend Tax;
– The local dividend amount is 71,4000 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.
The normalised earnings and earnings per share are the
responsibility of the issuer and they have been prepared for
illustrative purposes.
In compliance with the requirements of Strate the following dates
are applicable:
Last date of trade “CUM” dividend Friday, 28 November 2014
First date of trading “EX” dividend Monday, 1 December 2014
Record date Friday, 5 December 2014
Payment date Monday, 8 December 2014
Share certificates may not be dematerialised or rematerialised
between Monday, 1 December 2014 and Friday, 5 December 2014, both
days inclusive.
By order of the Board
GM Chemaly Cape Town
Company Secretary 6 November 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 (Chief Executive
Officer and Deputy Executive Chairman), CE Walters (Deputy Chief
Executive Officer), C Barnard, R Naidoo^, B Nichles, DI Samuels^,
LR Sherrell*, AM Sinclair, RA Wally^, Adv JD Wiese*
* Non-executive ^ Independent non-executive
Company Secretary: GM Chemaly
Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd
www.bmgworld.net
www.capitalequipmentgroup.co.za
www.macneil.co.za
www.invictaholdings.co.za
Date: 10/11/2014 07:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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