Wrap Text
Unaudited summary group results for the six months ended 30 September 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")
UNAUDITED SUMMARY GROUP RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
HIGHLIGHTS
Turnover up 1 % R5.3 billion
Operating profit up 7% R457 million
Profit attributable to ordinary shareholders up 17% R253 million
Interim dividend declared up 15% R72 million
CONSOLIDATED SUMMARY
STATEMENT OF COMPREHENSIVE INCOME
Unaudited six Audited
months ended year ended
30 Sep 30 Sep 31 Mar
% 2015 2014 2015
change R'000 R'000 R'000
Revenue 1 5 324 697 5 269 649 10 459 567
Gross profit 1 473 453 1 423 630 3 088 626
Operating profit 7 456 929 426 603 1 014 179
Interest and dividends received 386 096 320 176 666 151
Finance costs (460 773) (397 814) (843 863)
Share of profits of associates 3 201 2 500 5 206
Profit before taxation 10 385 453 351 465 841 673
Taxation (82 484) (62 840) (150 548)
Profit for the period 5 302 969 288 625 691 125
Other comprehensive income
Items that will be reclassified to profit or loss
Exchange differences on translating foreign operations 79 878 61 463 33 834
Total comprehensive income for the period 9 382 847 350 088 724 959
Profit attributable to:
Owners of the Company 17 252 794 216 939 578 642
Non-controlling interest (61) 14 320 36 760 42 287
Preference shareholders 3 35 855 34 926 70 196
302 969 288 625 691 125
Total comprehensive income attributable to:
Owners of the Company 24 329 303 264 536 598 348
Non-controlling interest 65 17 689 50 626 56 415
Preference shareholders 3 35 855 34 926 70 196
382 847 350 088 724 959
Earnings per share (cents) (19) 236 293 742
Diluted earnings per share (cents) (19) 236 292 741
Normalised earnings per share (cents) 4 236 226 742
Determination of normalised earnings per share
Profit attributable to owners of the Company 252 794 216 939 578 642
Normalised profit attributable to owners of the Company 252 794 216 939 578 642
Determination of headline earnings
Attributable earnings 252 794 216 939 578 642
Adjustments
– Impairment of intangible assets – – 203
– Net impairment of property, plant and equipment – – 327
– Profit on disposal of investment – – (14 996)
– Profit on sale of fixed assets held for sale – (622) –
– Net (profit) loss on disposal of property, plant and equipment (55 182) – 653
Total adjustments before taxation and non-controlling interest (55 182) (622) (13 813)
Taxation 10 204 172 (310)
Non-controlling interest (1 371) 3 2 625
Total adjustments (46 349) (447) (11 498)
Headline earnings 206 445 216 492 567 144
Headline earnings per share (cents) (34) 193 292 727
Diluted headline earnings per share (cents) (34) 193 292 726
Normalised headline earnings per share (cents) (7) 210 226 727
Determination of normalised headline earnings per share
Profit attributable to owners of the Company 206 445 216 492 567 144
Once-off relocation cost 18 000 – –
Normalised headline earnings 224 445 216 492 567 144
Shares in issue
Weighted average (000s) 107 042 74 098 77 965
At the end of the period (000s) 108 495 74 887 108 495
Number of shares used for diluted earnings per share (000s) 107 097 74 223 78 073
Weighted average used for normalised earnings per share and
headline earnings per share (000s) 107 042 95 838 77 965
Earnings per share (cents) (19) 236 293 742
Headline earnings per share (cents) (34) 193 292 727
Normalised earnings per share (cents) 4 236 226 742
Normalised headline earnings per share (cents) (7) 210 226 727
Dividends per share* (cents) 67 84 2 220
Interim (20) 67 84 84
Special – – 2 024
Final – – 112
Adjustment – (19) (19)
Interim – (19) (19)
Special – – –
Final – – –
Normalised dividend per share* (cents) 67 65 2 201
Interim 3 67 65 65
Special – – 2 024
Final – – 112
* In accordance with IAS10, the interim dividend of 67 cents per share proposed by the directors has not been reflected in
the interim results.
CONSOLIDATED SUMMARY
STATEMENT OF CASH FLOWS
Unaudited six Audited
months ended year ended
30 Sep 30 Sep 31 Mar
2015 2014 2015
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 143 995 280 589 979 254
Finance costs (460 773) (397 814) (843 863)
Dividends paid to Group shareholders and non-controlling interest (174 619) (192 575) (1 799 165)
Taxation paid (79 089) (66 738) (134 567)
Interest and dividends received 386 096 320 176 666 151
Net cash outflow from operating activities (184 390) (56 362) (1 132 190)
Cash flows from investing activities
Net cash effects of acquisitions of property, plant and equipment and
intangible assets (140 964) (139 652) (222 710)
Acquisition of subsidiaries and associates (3 495) (18 700) (111 166)
Acquisition of non-controlling interests in subsidiaries (24 559) 21 (371 941)
Disposal of investment – – 22 804
Increase in long-term receivables including current portion (143 895) (133 869) (573 687)
Net (increase) decrease in financial investments (84 757) 85 947 408 046
Dividend received from associates 630 748 1 496
Net cash outflow from investing activities (397 040) (205 505) (847 158)
Cash flows from financing activities
Net cash effects of liabilities raised 115 729 191 774 198 218
Employees tax on share appreciation rights exercised – – (17 868)
Ordinary shares issued and related expenses (1 076) – 2 217 100
Net cash inflow from financing activities 114 653 191 774 2 397 450
Net (decrease) increase in cash and cash equivalents (466 777) (70 093) 418 102
Cash and cash equivalents at the beginning of the period 573 387 139 496 139 496
Effect of foreign exchange rate movement on cash balances 39 204 – 15 789
Cash and cash equivalents at the end of the period 145 814 69 403 573 387
OTHER INFORMATION
Unaudited six Audited
months ended year ended
30 Sep 30 Sep 31 Mar
2015 2014 2015
R'000 R'000 R'000
Operating net debt: equity ratio (excluding long-term funding debt
secured by investments and loans) 22 38 30
Depreciation and amortisation (R'000) 72 578 67 647 130 703
Net asset value per share (cents) 4 281 4 280 4 117
Tangible net asset value per share (cents) 3 524 3 229 3 344
Capital expenditure (R'000) 154 920 143 049 240 035
Capital commitments (R'000) 420 024 124 435 356 607
CONSOLIDATED SUMMARY
STATEMENT OF FINANCIAL POSITION
Unaudited six Audited
months ended year ended
30 Sep 30 Sep 31 Mar
2015 2014 2015
R'000 R'000 R'000
ASSETS
Non-current assets 7 049 882 6 817 341 6 586 957
Property, plant and equipment 1 355 480 1 237 889 1 274 365
Financial investments and investment in associates 1 725 840 2 109 977 1 638 830
Goodwill and other intangible assets 821 394 787 495 839 090
Financial assets, finance leases and long-term receivables 2 883 802 2 499 325 2 669 357
Deferred taxation 263 366 182 655 165 315
Current assets 7 437 551 6 953 877 7 704 220
Held for sale assets – 14 849 –
Inventories 3 713 800 3 600 000 3 803 416
Trade and other receivables 2 144 069 2 144 916 1 941 824
Taxation prepaid 19 572 10 075 18 855
Current portion of financial investments, finance leases and
long-term receivables 1 136 691 817 561 1 219 107
Bank balances and cash 423 419 366 476 721 018
Total assets 14 487 433 13 771 218 14 291 177
EQUITY AND LIABILITIES
Capital and reserves 4 834 219 3 722 834 4 635 652
Equity attributable to the equity holders 4 645 050 3 205 251 4 459 973
Non-controlling interest 189 169 517 583 175 679
Non-current liabilities 5 743 902 6 128 876 5 670 556
Long-term borrowings and financial liabilities 5 619 607 6 097 033 5 637 801
Deferred taxation 124 295 31 843 32 755
Current liabilities 3 909 312 3 919 508 3 984 969
Trade, other payables and provisions 2 254 540 2 477 970 2 594 415
Taxation liabilities 50 046 28 515 37 918
Current portion of long-term borrowings and guaranteed
repurchase liabilities 1 327 121 1 115 950 1 205 005
Bank overdrafts 277 605 297 073 147 631
Total equity and liabilities 14 487 433 13 771 218 14 291 177
CONSOLIDATED SUMMARY
STATEMENT OF CHANGES IN EQUITY
Unaudited six Audited
months ended year ended
30 Sep 30 Sep 31 Mar
2015 2014 2015
R'000 R'000 R'000
Share capital
Balance at the beginning of the period 5 424 3 777 3 777
Shares issued – – 1 647
Balance at the end of the period 5 424 3 777 5 424
Share premium
Balance at the beginning of the period 2 653 151 410 897 410 897
Shares issued – – 2 242 254
Share issue expenses (1 076) – –
Balance at the end of the period 2 652 075 410 897 2 653 151
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 the 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 1 111 256 2 275 702 2 275 702
Earnings attributable to ordinary shareholders 252 794 216 939 578 642
Share appreciation rights exercised – – (34 635)
Reallocation from (to) non-distributable reserve 3 505 – (6 890)
Re-measurement of employee obligation – – 803
Change in non-controlling interest (4 009) 49 1 352
Ordinary dividends paid (119 875) (137 616) (1 703 718)
Balance at the end of the period 1 243 671 2 355 074 1 111 256
Other reserves
Balance at the beginning of the period 20 240 (283 205) (283 205)
Share appreciation rights issued 2 491 593 17 222
Share appreciation rights exercised – – (4 928)
Foreign currency translation reserve attributable to
non-controlling interest (3 369) – (14 128)
Change in ownership of subsidiaries (21 757) – (116 009)
Derecognition of put liability reserve – – 380 564
Allocation (to) from retained earnings (3 505) – 6 890
Translation of foreign operations 79 878 48 213 33 834
Balance at the end of the period 73 978 (234 399) 20 240
Attributable to equity shareholders 4 645 050 3 205 251 4 459 973
Non-controlling interest
Balance at the beginning of the period 175 679 481 947 481 947
Earnings attributable to non-controlling interest 14 320 36 760 42 287
Share of foreign currency translation reserve 3 369 13 866 14 128
Non-controlling interest arising on acquisitions and purchases
of non-controlling interests (2 181) 409 (334 129)
Ordinary dividends paid (2 018) (15 399) (28 554)
Balance at the end of the period 189 169 517 583 175 679
SUMMARY
SEGMENT INFORMATION
Group,
financing
Engineering Capital Building and other
consumables equipment supplies operations Total
R'000 R'000 R'000 R'000 R'000
Unaudited six months ended
30 September 2015
Segment revenue 2 084 675 2 284 946 935 933 19 143 5 324 697
Segment operating profit 193 502 181 036 45 620 36 771 456 929
Segment assets 2 382 649 3 753 154 898 772 7 452 858 14 487 433
Segment liabilities 612 537 1 654 164 579 769 6 806 744 9 653 214
Unaudited six months ended
30 September 2014
Segment revenue 2 027 951 2 404 046 837 237 415 5 269 649
Segment operating profit 209 285 180 234 48 316 (11 232) 426 603
Segment assets 2 251 399 3 816 132 824 952 6 878 735 13 771 218
Segment liabilities 658 560 2 152 287 542 402 6 695 135 10 048 384
Audited year ended 31 March
2015
Segment revenue 4 208 678 4 606 646 1 638 592 5 651 10 459 567
Segment operating profit 499 175 456 945 87 435 (29 376) 1 014 179
Segment assets 2 622 897 3 851 849 848 177 6 968 238 14 291 161
Segment liabilities 827 079 1 959 965 520 344 6 348 137 9 655 525
NOTES TO THE FINANCIAL INFORMATION
Basis of preparation
The Group's summary 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 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 2016 financial year onwards were applied and
did not have a material impact on the Group results.
Prepared by
These Group summary consolidated interim 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 period ended 30 September 2015, amounting to R7,9 million of which Allegiance Parts &
Service Company Limited, acquired on 1 August 2015, is the more significant acquisition. This subsidiary is operational within the same
segment as the current Group, thus the Board identified this business based on its ability to assist the Group with its expansion and growth.
The goodwill is based on the provisional fair values of the assets and liabilities including identifiable intangible assets at acquisition date.
Effective control was obtained through the purchase of the majority equity. Non-controlling interest is measured as a percentage of the
equity of the subsidiary. Goodwill arose on this acquisition because the cost of this combination included a control premium. In addition,
the consideration paid for this combination effectively included amounts in relation to the benefit of expected synergies, revenue growth
and future market development. These benefits are not recognised separately from goodwill because they do not meet the recognition
criteria for identifiable intangible assets.
Events after the reporting date
Refer to the commentary for details of events after the reporting date.
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)
30 September and key
2015 inputs Level 1 Level 2 Level 3
Financial assets at fair value
Financial Assets 119 689 1 – 119 689 –
Trade and other receivables 2 144 069 2 – – 2 144 069
Financial liabilities at fair value
Financial liabilities 119 689 1 – 119 689 –
Trade and other payables 771 714 3 – – 771 714
Foreign trade payables 1 158 606 4 – 1 158 606 –
Valuation
technique(s)
30 September 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 receivables 2 144 916 2 – – 2 144 916
Financial liabilities at fair value
Financial liabilities 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 –
Valuation
technique(s)
31 March and key
2015 inputs Level 1 Level 2 Level 3
Financial assets at fair value
Financial Assets 131 555 1 – 131 555 –
Trade and other receivables 1 941 824 2 – – 1 941 824
Financial liabilities at fair value
Financial liabilities 131 496 1 – 131 496 –
Trade and other payables 1 146 871 3 – – 1 146 871
Foreign trade payables 1 168 849 4 – 1 168 849 –
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.
Commentary
FINANCIAL OVERVIEW
The board is pleased to announce that the Group has delivered a strong set of results in the six
months to September 2015 with attributable profit and dividend proposed both up 15%.
Group revenue of R5.3 billion increased by 1% compared to the prior period. Operating profit
increased by 7% to R457 million. Operating profit was boosted by a profit resulting from the sale of
property (less related costs) which formed part of the BMG supply chain restructure project. The
Group's operating margin improved to 8.6% from 8.1% in the prior period. A 4% reduction in net
finance costs increased profit before tax by 10% to R385 million. Due to a higher tax provision, the
profit after tax increased by 5% to R303 million. Following the acquisition of the minority interests in
Kian Ann and SET (BMG's largest agency branch business) with effect from 1 October 2014, the profit
attributable to minority interests dropped 61% in the period which improved profit attributable to
ordinary shareholders by 17% to R253 million.
Shareholders are referred to the restructuring and capital raising which the Group concluded in
February 2015 which comprised a special dividend of R1.5 billion and a rights issue of R2.25 billion,
the combination of which resulted in a net inflow of R750 million into the Group. This resulted in the
issue of an additional 33 million shares, effectively increasing the number of shares in issue by
approximately 43%, from 75.6 million shares to 108.2 million shares. The weighted average number
of shares in this reporting period is 107 million shares compared to the same period last year of 74
million shares. Accordingly, earnings per share ("EPS") for the period declined by 19% to 236c.
However, in order to provide a meaningful comparison, the Group's comparative weighted average
number of shares in issue in the prior period have been restated in determining the Normalised EPS.
The restatement takes into account that of the 33 million additional shares issued, only 11
million thereof resulted in a fresh inflow of R750 million. As such the comparative number of
shares in the prior period has been increased by 22 million shares. The restated number of shares in issue
in the prior period is therefore 96 million shares for purposes of calculating Normalised EPS.
Normalised EPS of 236c was effectively 4% higher than the restated normalised EPS in the prior period.
The Group's balance sheet remains strong with net operational debt at September 2015 of R1.1
billion compared to R1.4 billion at September 2014. Accordingly, the Group's operating net debt:
equity ratio has declined from 38% to 22% from the previous reporting period.
ENGINEERING CONSUMABLES
Trading conditions for BMG and Man-Dirk were very challenging. The Engineering Consumables
segment grew revenue by 3% to R2.1 billion. The lack of project activity and capital spend by
customers had an adverse impact on the operating margins with the segment reporting a fall in
operating profit of 7.5% to R194 million. The operating margin decreased from 10.3% in the prior
period to 9.3% in the current period.
CAPITAL EQUIPMENT
The Capital Equipment Group ("CEG") produced an excellent result in the challenging market
conditions experienced in the period. Revenue in CEG reduced by 5% to R2.3 billion and operating
profit increased marginally to R181 million. The businesses in CEG increased their operating margin
to 7.9% from 7.5% in the prior period. This was due to an improved mix of sales, combined with very
good cost containment.
BUILDING SUPPLIES
The Building Supply Group ("BSG") grew revenue by 12% to R936 million in a competitive market.
Operating profit declined 6% to R46 million with the segment operating margin declining to 4.9%
from 5.8% in the prior period. Good performances from Tiletoria and Brands 4 Africa were offset by
challenges experienced at MacNeil Plastics' factory, as strikes and load-shedding affected
operations.
EVENTS AFTER THE REPORTING DATE
The Group concluded three bolt-on acquisitions within the Engineering Consumables segment,
which are all events after the reporting date. Bearing Man Group ("BMG"), acquired 100% of Hansen
Transmissions South Africa (Pty) Ltd with effect from 1 October 2015, from the Sumitomo Drive
Technologies Group. The Hansen acquisition positions BMG as market leader in the industrial gear
unit ("IGU") sector whilst securing distributorships of both the Hansen and Sumitomo brands for the
southern African region. BMG also acquired 100% of the Hyflo Group of companies, including its
strategic properties, with effect from 1 November 2015. This leader in the hydraulics and
pneumatics market strengthens BMG's existing fluid technology market position. Lastly, Man-Dirk (a
subsidiary of BMG) acquired 100% of Sibuyile Industrial Supplies (Pty) Ltd ("Sibuyile") with effect
from 1 October 2015. Sibuyile is the regional leader in the tools and equipment market in the Vaal
triangle and adds strategic presence in the region, as well as additional purchasing power to Man-
Dirk.
PROSPECTS
The Group expects trading conditions to remain challenging in the period ahead. The markets that
drive the Group's performance, namely mining, industrial, agriculture, building and construction
remain depressed and extremely competitive. The Group will continue to seek growth through
market share gains, growth into Africa and select strategic acquisitions. Management remains
intensely focused on margin and expense management, working capital control and cash generation
in existing operations.
The Group continues to evaluate several acquisition opportunities, both locally and internationally.
Any forward looking statements in this announcement have not been reviewed nor audited by the Company's Auditor.
ORDINARY SHARE CASH DIVIDEND
The Board has declared an interim gross dividend of 67 cents per share for the period ended 30 September 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 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 67 cents per ordinary share for shareholders exempt from the Dividend Tax;
- The net local dividend amount is 56,9500 cents per ordinary share for shareholders liable to pay the Dividend Tax;
- Invicta has 108 494 738 ordinary shares in issue (which includes 1 452 920 treasury shares); and
- Invicta'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, 27 November 2015
First date of trading "EX" dividend Monday, 30 November 2015
Record date Friday, 4 December 2015
Payment date Monday, 7 December 2015
Share certificates may not be dematerialised or rematerialised between Monday, 30 November 2015 and Friday, 4 December 2015, both
days inclusive.
By order of the board
GM Chemaly Cape Town
Company secretary 11 November 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
Date: 12/11/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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