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Preliminary summary audited consolidated results for the year ended 31 March 2015
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 SUMMARY AUDITED CONSOLIDATED RESULTS for the year
ended 31 March 2015
SUMMARY CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH
% 2015 2014
change R’000 R’000
Revenue 0 10 459 567 10 464 511
Gross profit 7 3 088 626 2 899 658
Operating profit (3) 1 014 179 1 042 950
Interest and dividends received 666 151 633 556
Finance costs (843 863) (827 966)
Share of profits of associates 5 206 2 150
Profit before taxation (1) 841 673 850 690
Taxation (150 548) (140 779)
Profit for the year (3) 691 125 709 911
Other comprehensive income
Items that will be reclassified
to profit or loss
Exchange differences on
translating foreign operations 33 834 74 615
Total comprehensive income for
the year 724 959 784 526
Profit attributable to:
Owners of the Company 0 578 642 580 107
Non-controlling interest (34) 42 287 64 016
Preference shareholders 7 70 196 65 788
691 125 709 911
Total comprehensive income
attributable to:
Owners of the Company 598 348 629 158
Non-controlling interest 56 415 89 580
Preference shareholders 70 196 65 788
724 959 784 526
Earnings per share (cents) (6) 742 788
Diluted earnings per share
(cents) (6) 741 788
Normalised earnings per
share (cents) (6) 742 788
Determination of headline earnings
Attributable earnings 578 642 580 107
Adjustments
– Impairment of intangible assets 203 –
– Net impairment of property,
plant and equipment 327 66
– Profit on disposal of investment (14 996) (4 032)
– Net loss (profit) on disposal of
property, plant and equipment 653 (16 298)
Total adjustments before taxation
and non-controlling interest (13 813) (20 264)
Taxation (310) 2 809
Non-controlling interest 2 625 96
Total adjustments (11 498) (17 359)
Headline earnings 567 144 562 748
Headline earnings per share (cents) 727 765
Diluted headline earnings
per share (cents) 726 765
Shares in issue
Weighted average (000s) 77 965 73 592
At the end of the year (000s) 108 495 75 551
Number of shares used for diluted
earnings per share (000s) 77 476 73 531
Headline earnings per
share (cents) (5) 727 765
Earnings per share (cents) (6) 742 788
Dividends per share* (cents) 2 220,32 286,65
– Interim (18) 84,00 102,00
– Special 2 024,33 –
– Final (36) 111,99 184,65
* In accordance with IAS10, the final dividend of 111,99 cents
per share proposed by the directors has not been reflected in the
final results.
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
31 MARCH
2015 2014
R’000 R’000
Cash flows from operating activities
Cash generated from operations 979 254 715 160
Finance costs (843 863) (827 966)
Dividends paid to Group shareholders
and non-controlling interest (1 799 165) (281 367)
Taxation paid (134 567) (142 910)
Interest and dividends received 666 151 633 556
Net cash (outflow) inflow from
operating activities (1 132 190) 96 473
Cash flows from investing activities
Net cash effects of acquisitions and
disposals of property, plant and
equipment and intangible assets (222 710) (216 181)
Acquisition of subsidiaries and
associates (111 166) (97 456)
Acquisition of non-controlling
interests in subsidiaries (371 941) (1 670)
Disposal of investment 22 804 –
Increase in long-term receivables
including current portion (573 687) (339 327)
Net decrease (increase) in financial
investments 408 046 (11 968)
Dividend received from associate 1 496 1 947
Net cash outflow from investing
activities (847 158) (664 655)
Cash flows from financing activities
Net cash effects of liabilities raised 198 218 237 066
Employees tax on share appreciation
rights exercised (17 868) (39 299)
Ordinary shares issues 2 217 100 321
Net cash inflow from financing
activities 2 397 450 198 088
Net increase (decrease) in cash and
cash equivalents 418 102 (370 094)
Cash and cash equivalents at the
beginning of the year 139 496 487 718
Effects of foreign exchange rate
movement on cash balances 15 789 21 872
Cash and cash equivalents at the end
of the year 573 387 139 496
OTHER INFORMATION
2015 2014
Operating net debt: equity ratio
(excluding long-term funding debt
secured by investments and loans) (%) 30 37
Depreciation and amortisation (R’000) 130 703 135 102
Net asset value per share (cents) 4 117 4 073
Tangible net asset value per share (cents) 3 344 3 025
Capital expenditure (R'000) 240 035 258 661
Capital commitments (R'000) 356 607 51 936
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT
31 MARCH
2015 2014
R’000 R’000
Assets
Non-current assets 6 586 957 6 563 637
Property, plant and equipment 1 274 365 1 170 577
Financial investments and investment
in associates 1 638 830 2 032 223
Goodwill and other intangible assets 839 090 791 632
Financial assets, finance lease
and long-term receivables 2 669 357 2 324 107
Deferred taxation 165 315 245 098
Current assets 7 704 220 6 885 035
Inventories 3 803 416 3 478 732
Trade and other receivables 1 941 824 1 844 072
Taxation prepaid 18 855 21 547
Current portion of financial
investments, finance lease and
long-term receivables 1 219 107 1 014 315
Bank balances and cash 721 018 526 369
Total assets 14 291 177 13 448 672
EQUITY AND LIABILITIES
Capital and reserves 4 635 652 3 559 020
Equity attributable to the
equity holders 4 459 973 3 077 073
Non-controlling interest 175 679 481 947
Non-current liabilities 5 670 556 6 120 618
Long-term borrowings, guaranteed
repurchase liabilities and financial
liabilities 5 637 801 6 093 891
Deferred taxation 32 755 26 727
Current liabilities 3 984 969 3 769 034
Trade, other payables and provisions 2 594 415 2 334 597
Taxation liabilities 37 918 112 042
Current portion of long-term borrowings
and guaranteed repurchase liabilities 1 205 005 935 522
Bank overdrafts 147 631 386 873
Total equity and liabilities 14 291 177 13 448 672
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR
ENDED 31 MARCH
2015 2014
R’000 R’000
Share capital
Balance at the beginning of the year 3 777 3 743
Shares issued 1 647 34
Balance at the end of the year 5 424 3 777
Share premium
Balance at the beginning of the year 410 897 331 515
Shares issued 2 242 254 79 382
Balance at the end of the year 2 653 151 410 897
Treasury shares
Balance at the beginning of the year (80 098) (80 098)
Balance at the end of the year (80 098) (80 098)
Preference shares
Balance at the beginning of the year 750 000 750 000
Balance at the end of the year 750 000 750 000
Retained earnings
Balance at the beginning of the year 2 275 702 2 014 469
Earnings attributable to ordinary
shareholders 578 642 580 107
Share appreciation rights exercised (34 635) (110 085)
Reallocation to non-distributable
reserve (6 890) –
Re-measurement of employee obligation 803 –
Change in non-controlling interest 1 352 –
Ordinary dividends paid (1 703 718) (208 789)
Balance at the end of the year 1 111 256 2 275 702
Other reserves
Balance at the beginning of the year (283 205) (329 552)
Share appreciation rights issued 17 222 5 926
Share appreciation rights exercised (4 928) (8 630)
Foreign currency translation reserve
attributable to non-controlling
interest (14 128) –
Change in ownership of subsidiaries (116 009) –
Derecognition of put liability reserve 380 564 –
Allocation from retained earnings 6 890 –
Translation of foreign operations 33 834 49 051
Balance at the end of the year 20 240 (283 205)
Attributable to equity shareholders 4 459 973 3 077 073
Non-controlling interest
Balance at the beginning of the year 481 947 405 135
Earnings attributable to non-controlling
interest 42 287 64 016
Share of foreign currency translation
reserve 14 128 25 564
Non-controlling interest arising on
acquisitions and purchases of
non-controlling interests (334 129) 1 770
Preference shares issued – 321
Ordinary dividends paid (28 554) (14 859)
Balance at the end of the year 175 679 481 947
SUMMARY SEGMENT INFORMATION FOR THE YEAR ENDED 31 MARCH
Engineering Capital Building
Consumables equipment supplies
R’000 R’000 R’000
2015
Segment revenue 4 208 678 4 606 646 1 638 592
Segment operating profit 499 175 456 945 87 435
Segment assets 2 622 897 3 851 849 848 177
Segment liabilities 827 079 1 959 965 520 344
Group,
financing
and other
operations Total
R’000 R’000
Segment revenue 5 651 10 459 567
Segment operating profit (29 376) 1 014 179
Segment assets 6 968 238 1 429 161
Segment liabilities 6 348 137 9 655 525
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 3 789 321 693 971
Segment liabilities 729 493 2 137 727 455 152
Group,
financing
and other
operations Total
R’000 R’000
Segment revenue 4 219 10 464 511
Segment operating profit 19 567 1 042 950
Segment assets 6 681 002 13 448 672
Segment liabilities 6 567 280 9 889 652
NOTES TO THE FINANCIAL INFORMATION
Basis of preparation
The Group’s audited summary consolidated annual financial
statements (results) are prepared in accordance with the
requirements of the JSE Limited Listings Requirements for
preliminary 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 minimum requirement 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 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 audited summary consolidated 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
2015, amounting to R111 million.
The most significant acquisition was SA Tool (Pty) Ltd and the
buy-out of the remaining non-controlling interest of Invicta
Asian Holdings.
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
2015 key inputs
Financial assets at fair value
Financial assets 131 555 1
Trade and other receivables 1 941 824 2
Financial liabilities at fair value
Financial liabilities 131 496 1
Trade and other payables 1 146 871 3
Foreign trade payables 1 168 849 4
Level 1 Level 2 Level 3
Financial assets at fair value
Financial assets – 131 555 –
Trade and other receivables – – 1 941 824
Financial liabilities at fair value
Financial liabilities – 131 496 –
Trade and other payables – – 1 146 871
Foreign trade payables – 1 168 849 –
Valuation
technique(s)
31 Mar and
2014 key inputs
Financial assets at fair value
Financial assets 155 405 1
Trade and other receivables 1 844 072 2
Financial liabilities at fair value
Financial liabilities 182 211 1
Trade and other payables 913 048 3
Foreign trade payables 1 157 892 4
Level 1 Level 2 Level 3
Financial assets at fair value
Financial assets – 155 405 –
Trade and other receivables – – 1 844 072
Financial liabilities at fair value
Financial liabilities – 182 211 –
Trade and other payables – – 913 048
Foreign trade payables – 1 157 892 –
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 Group has delivered a very respectable result for the year to
March 2015 despite extremely challenging market conditions. The
global slowdown in mining, industrial, agricultural and
construction markets affected the Group and its businesses
negatively in the period. In addition, local factors such as
debilitating labour unrest, lack of infrastructure spend,
drought, power constraints and currency weakness affected the
Group’s South African businesses. The Group’s Engineering
Consumables segment and its Building Supplies segment both showed
growth in revenue and operating profit which was offset by a
decline in the Group’s Capital Equipment segment. All businesses
showed good growth in African countries outside of South Africa
which helped to offset the difficulties and weakness experienced
in the South African economy.
Group revenue of R10,460 billion for the year was level with the
prior period. Operating profit declined by 3% to R1,014 billion,
a very pleasing recovery from the first half which was 13% down
on the prior trading period. The Group’s operating margin
declined to 9,7% from 10,0% in the prior period. A 9% reduction
in net finance costs, including dividends received, and a
significant 34% reduction in outside shareholders’ interests were
offset by a 7% increase in tax and 7% increase in preference
shareholders’ dividends in the year. Outside shareholders’
dividends were reduced by the acquisition of the remaining 25%
effective interest in Invicta Asian Holdings (Pte) Ltd., the
holding company of Kian Ann Engineering in Singapore (increasing
the Group’s interest from 75% to 100% with effect from 1 October
2014) and the acquisition of the remaining 40% interest in BMG’s
largest agency, also with effect from 1 October 2014. The Group’s
preference shareholders’ interests increased in line with the
increase in prevailing interest rates. The profit attributable to
ordinary shareholders of the Group at R579 million was level with
the prior period, a considerable improvement from the first half
where the Group reported attributable profit down 17% on the
prior six-month period. EPS and HEPS decreased by 6% and 5%
respectively due to the 6% increase in the weighted average
number of shares in issue.
Excellent management of working capital resulted in the cash
generated by the Group’s operations increasing by 37% to R979
million. R240 million was spent on capital expenditure and R483
million on acquiring business interests.
The Group announced a significant restructuring and capital
raising in November 2014. Between then and March 2015, the
Group’s legal structure was simplified, a special dividend of R20
per share was declared (amounting to approximately R1,5 billion)
and a rights issue to raise R2,25 billion was concluded
successfully. The rights offer price of R69,00 per share resulted
in the issue of an additional 33 million shares, increasing the
shares in issue by 44% to 108,5 million shares. The net proceeds
of the restructuring have been used to retire debt in the short-
term with the net-debt-to-equity ratio for the Group reducing
from 37% to 30%. This positions the Group very favourably to take
advantage of acquisition opportunities in future.
ENGINEERING CONSUMABLES
Excellent performances from BMG and Man-Dirk helped the
Engineering Consumables segment post growth in revenue and
operating profit. Revenue grew 6% to R4,2 billion and operating
profit grew 6% to R499 million. Operating profit would have grown
in line with revenue were it not for provisions taken on the news
of BMG’s customer, Evraz Highveld Steel and Vanadium entering
business rescue. The segment operating margin declined marginally
to 11,9% from 12,0% in the prior period. This performance,
against the backdrop of extremely challenging conditions in their
primary markets of mining and heavy industry, shows the
resilience of the business achieved through the breadth of its
product offering and the strength of its branch networks. In the
past eight years, this segment has tripled both revenue and
operating profit. Highlights of the year were the growth in sales
of consumable products, especially tools, the acquisition of SA
Tool and Klep Valves, the 25% growth in sales into Africa and the
good cash generation through excellent working capital
management. Good progress was made with the R350 million
expansion programme at BMG’s central facilities. This project is
expected to unlock significant supply chain efficiencies and is
expected to be complete by Q3 2016.
CAPITAL EQUIPMENT
Revenue in the Group’s capital equipment segment reduced by 10%
to R4,6 billion and operating profit reduced by 6% to R457
million. The businesses in this segment increased their operating
margin to 9,9% from 9,4% in the prior period.
This was due to the higher mix of parts (including Kian Ann) as
equipment sales reduced. The operating profit of this segment was
also boosted by a once-off profit of R69 million which was
realised upon the acquisition of the remaining 25% of Kian Ann.
The agricultural businesses in CEG were adversely affected by the
significant drop in the maize price in the first half of the year
followed by the serious drought that commenced in the second half
of the financial year. Agricultural equipment supply around the
world is in over-supply with resultant pressure on selling
prices. The construction equipment businesses did well to
maintain their position in a very competitive market. The parts
businesses in South Africa performed well. Kian Ann’s performance
disappointed as the market for spare parts in China, Indonesia
and Malaysia contracted sharply on the severe slowdown of
construction activity in China and resource-based activity levels
in Malaysia and Indonesia. Nevertheless, Kian Ann’s operating
margin remains above the Group’s target for this segment through
the cycle and its cash generation has been strong as management
reduced inventory levels to match the lower level of revenue. In
addition, the acquisition return has been enhanced by the 30%
depreciation of the Rand against the Singapore dollar in the two
years since the acquisition became effective.
BUILDING SUPPLIES
The building supplies segment grew revenue by 18% to R1,6 billion
in a very competitive market. Operating profit grew 31% to R87
million with the segment operating margin improving to 5,3% from
4,8% in the prior period. Excellent performances from MacNeil’s
wholesale business and Brands 4 Africa were offset by challenges
experienced at MacNeil’s plastics factory as strikes and load-
shedding affected operations. Management is committed to
improving the operating margin to 6% in the short-term and 8% in
the medium-term.
PROSPECTS
The Group expects trading conditions to remain very challenging
in the year ahead. The markets that drive the Group’s
performance, namely mining, industry, agriculture, building and
construction are not expected to grow and as such the Group will
seek growth through market share gains, growth into Africa and
select acquisitions. Management will continue to focus on margin
and expense management, working capital control and cash flow in
existing operations, whilst continuing to look for acquisition
opportunities that fit the Group’s target profile.
The Group continues to evaluate several acquisition
opportunities, both locally and internationally. Review and
consideration for a secondary listing abroad remains on the
Board's agenda. The strong fundamentals of the Group's
operations, together with the Group’s new streamlined structure,
enhanced balance sheet and operating base will facilitate the
Group’s strategic goals.
MANAGEMENT
On 1 November 2014, Byron Nichles joined the Group as CEO of BMG,
replacing Charles Walters who became CEO of the Group on 1 May
2015. Charles Walters replaces Arnold Goldstone who became
Executive Deputy Chairman on 1 May 2015. The Board welcomes Byron
to the Group and wishes Arnold, Charles and Byron well in their
new roles. The Board would like to express its gratitude to
Arnold Goldstone for leading the Group so capably over the past
15 years. The Board also expresses its sincere thanks and
appreciation to the management of all its businesses for
producing commendable results in such difficult economic times
and looks forward to supporting the management team as they
tackle yet another difficult year ahead.
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the
Group’s complete financial statements for the year ended 31 March
2015. 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. The auditor’s report does not necessarily
report on all of the information contained in this announcement.
PREFERENCE share cash dividend
Notice is hereby given that the Directors of the Company have
declared a gross cash dividend of 571,27 cents per preference
share for the period from 4 November 2014 to 12 June 2015.
Dividends are to be paid out of distributable reserves.
Dividends tax (DT) of 15% will be withheld in terms of the Income
Tax Act for those shareholders who are not exempt from the DT.
Accordingly, shareholders who are not exempt from DT will receive
a net dividend of 485,5795 cents per preference share.
Invicta has 7 500 000 preference shares in issue.
Invicta’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, 26 June 2015
Shares commence trading “EX” dividend Monday, 29 June 2015
Record date Friday, 3 July 2015
Payment date Monday, 6 July 2015
Share certificates may not be dematerialised or rematerialised
between Monday, 29 June 2015 and Friday, 3 July 2015, both days
inclusive.
Ordinary share cash dividend
The Board has declared a final gross cash dividend of 111,99
cents per share for the year ended 31 March 2015. Dividends are
to be paid out of distributable reserves. Dividend tax (DT) of
15% will be withheld in terms of the Income Tax Act for those
shareholders who are not exempt from DT. 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 gross local dividend amount is 111,99 cents per ordinary
share for shareholders exempt from the Dividend Tax;
• The net local dividend amount is 95,1915 cents per ordinary
share for shareholders liable to pay the Dividend Tax;
• Invicta Holdings Limited has 108 494 738 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 to receive a dividend Friday, 10 July 2015
Shares commence trading “EX” dividend Monday, 13 July 2015
Record date Friday, 17 July 2015
Payment date Monday, 20 July 2015
Share certificates may not be dematerialised or rematerialised
between Monday, 13 July 2015 and Friday, 17 July 2015, both days
inclusive.
By order of the Board
GM Chemaly
Company Secretary
Cape Town
22 June 2015
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 (Deputy Executive
Chairman), CE Walters (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.invictaholdings.co.za
Date: 22/06/2015 07:17:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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