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INVICTA HOLDINGS LIMITED - Preliminary audited summarised consolidated results for the year ended 31 March 2016

Release Date: 14/06/2016 07:12
Code(s): IVT IVTP     PDF:  
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Preliminary audited summarised consolidated results for the year ended 31 March 2016

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 SUMMARISED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2016

FINANCIAL HIGHLIGHTS

TURNOVER UP     TOTAL DIVIDENDS PER SHARE
2%              142c

PROFIT TO ORDINARY   OPERATING PROFIT
SHAREHOLDERS DOWN    DOWN

28%                  17%

AUDITED SUMMARISED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME

                                                                      %         2016          2015
                                                                 change        R'000         R'000
Revenue                                                                2   10 635 850    10 459 567
Gross profit                                                               3 049 442     3 088 626
Operating profit                                                    (17)      846 265     1 014 179
Interest and dividends received                                              831 321       666 151
Finance costs                                                            (1 068 195)     (843 863)
Share of profits of associates                                                 5 607         5 206
Profit before taxation                                              (27)      614 998       841 673
Taxation                                                                   (105 539)     (150 548)
Profit for the year                                                 (26)      509 459       691 125
Other comprehensive income                                                                        
Items that will not be reclassified to profit or loss                                             
Exchange differences on translating foreign operations                       164 129        33 834
Total comprehensive income for the year                                      673 588       724 959
    Profit attributable to:                                                                       
    Owners of the company                                                    418 709       578 642
    Non-controlling interest                                                  17 043        42 287
    Preference shareholders                                                   73 707        70 196
                                                                            509 459       691 125
    Total comprehensive income attributable to:                                                   
    Owners of the company                                                    584 770       598 348
    Non-controlling interest                                                  15 111        56 415
    Preference shareholders                                                   73 707        70 196
                                                                            673 588       724 959

Earnings per share (cents)                                         (47)           391           742   
Diluted earnings per share (cents)                                 (47)           391           741   
Normalised earnings per share (cents)                              (47)           391           742   
Determination of headline earnings                                                                 
Attributable earnings                                                        418 709       578 642   
Adjustments                                                                                        
– Net impairment of intangible assets                                         12 935           203   
– Net (reversal) / impairment of property, plant and equipment               (2 663)           327   
– Profit on disposal of investment                                              (35)      (14 996)   
– Net (profit) / loss on disposal of property, plant and equipment          (62 552)           653   
Total adjustments before taxation and non-controlling interest              (52 315)      (13 813)   
Taxation                                                                      17 117         (310)   
Non-controlling interest                                                         142         2 625   
Total adjustments                                                           (35 056)      (11 498)   
Headline earnings                                                            383 653       567 144   
Determination of normalised headline earnings                                                      
Headline earnings                                                            383 653       567 144   
Relocation cost                                                               18 000             –   
Normalised headline earnings                                                 401 653       567 144   
Headline earnings per share (cents)                                              359           727   
Diluted headline earnings per share (cents)                                      358           726   
Normalised headline earnings per share (cents)                                   375           726   
Shares in issue                                                                                    
Weighted average (000s)                                                      107 013        77 965   
At the end of the period (000s)                                              108 495       108 495   
Number of shares used for diluted earnings per share (000s)                  107 018        77 476   
Headline earnings per share (cents)                                (51)           359           727   
Earnings per share (cents)                                         (47)           391           742   
Dividends per share* (cents)                                                     142         2 220   
– Interim                                                          (20)            67            84   
– Special                                                                          –         2 024   
– Final                                                            (33)            75           112   

* In accordance with IAS 10, the final dividend of 75.28 cents per share proposed by the directors has not been reflected in the final results.

AUDITED SUMMARISED CONSOLIDATED STATEMENT OF
CASH FLOWS

                                                                                       2016          2015
                                                                                      R'000         R'000

Cash flows from operating activities                                                                      
Cash generated from operations                                                       585 599       979 254
Finance costs                                                                    (1 068 195)     (843 863)
Dividends paid to Group shareholders and non-controlling interest                  (269 262)   (1 799 165)
Taxation paid                                                                      (146 539)     (134 567)
Interest and dividends received                                                      831 321       666 151
Net cash outflow from operating activities                                          (67 076)   (1 132 190)
Cash flows from investing activities                                                                      
Effects of acquisitions of property, plant and equipment and intangible
assets                                                                             (180 247)     (222 710)
Acquisition of subsidiaries and associates                                          (81 921)     (111 166)
Net change in non-controlling interests in subsidiaries                               18 487     (371 941)
Disposal of investment                                                                     –        22 804
Decrease / (increase) in long-term receivables including current portion              28 659     (573 687)
Net decrease in financial investments                                                      –       408 046
Dividend received from associate                                                       3 262         1 496
Net cash outflow from investing activities                                         (211 760)     (847 158)
Cash flows from financing activities                                                                      
Net cash effects of liabilities raised                                               206 826       198 218
Share appreciation rights exercised and employees tax; treasury shares acquired      (8 931)      (17 868)
Ordinary shares issued                                                                     –     2 217 100
Net cash inflow from financing activities                                            197 895     2 397 450
Net decrease in cash and cash equivalents                                           (80 941)       418 102
Cash and cash equivalents at the beginning of the year                               573 387       139 496
Effect of foreign exchange rate movement on cash balances                             63 688        15 789
Cash and cash equivalents at the end of the year                                     556 134       573 387

AUDITED SUMMARISED CONSOLIDATED STATEMENT
OF FINANCIAL POSITION

                                                                                       2016          2015   
                                                                                      R'000         R'000   
ASSETS                                                                                                     
Non-current assets                                                                 7 399 648     6 586 957   
Property, plant and equipment                                                      1 495 251     1 274 365   
Financial investments and investment in associates                                 1 808 135     1 638 830   
Goodwill and other intangible assets                                                 832 137       839 090   
Financial assets, finance lease and long-term receivables                          3 075 413     2 669 357   
Deferred taxation                                                                    188 712       165 315   
Current assets                                                                     7 495 486     7 704 220   
Held for sale assets                                                                  12 058             –   
Inventories                                                                        4 092 849     3 803 416   
Trade and other receivables                                                        1 970 914     1 941 824   
Taxation prepaid                                                                      27 137        18 855   
Current portion of financial investments, finance lease and long- 
term receivables                                                                     610 606     1 219 107   
Bank balances and cash                                                               781 922       721 018   
Total assets                                                                      14 895 134    14 291 177   
EQUITY AND LIABILITIES                                                                                     
Capital and reserves                                                               5 050 090     4 635 652   
Equity attributable to the equity holders                                          4 866 780     4 459 973   
Non-controlling interest                                                             183 310       175 679   
Non-current liabilities                                                            6 193 333     5 670 556   
Long-term borrowings, guaranteed repurchase liabilities and 
financial liabilities                                                              6 164 339     5 637 801   
Deferred taxation                                                                     28 994        32 755   
Current liabilities                                                                3 651 711     3 984 969   
Trade, other payables and provisions                                               2 406 441     2 554 310   
Taxation liabilities                                                                  32 124        37 918   
Shareholders for dividends                                                            48 082        40 105   
Current portion of long-term borrowings and guaranteed repurchase 
liabilities                                                                          939 276     1 205 005   
Bank overdrafts                                                                      225 788       147 631   
Total equity and liabilities                                                      14 895 134    14 291 177   

AUDITED SUMMARISED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY

                                                                                      2016          2015   
                                                                                     R'000         R'000   
SHARE CAPITAL                                                                                             
Balance at the beginning of year                                                      5 424         3 777   
Shares issued                                                                             –         1 647   
Balance at the end of the year                                                        5 424         5 424   
SHARE PREMIUM                                                                                             
Balance at the beginning of year                                                  2 653 151       410 897   
Shares issued                                                                             –     2 242 254   
Balance at the end of the year                                                    2 653 151     2 653 151   
TREASURY SHARES                                                                                           
Balance at the beginning of year                                                   (80 098)      (80 098)   
Shares acquired                                                                     (4 913)             –   
Balance at the end of the year                                                     (85 011)      (80 098)   
PREFERENCE SHARES                                                                                         
Balance at the beginning of year                                                    750 000       750 000   
Balance at the end of the year                                                      750 000       750 000   
RETAINED EARNINGS                                                                                         
Balance at the beginning of year                                                  1 111 256     2 275 702   
Earnings attributable to ordinary shareholders                                      418 709       578 642   
Share appreciation rights exercised                                                       –      (34 635)   
Reallocation from/(to) other reserves                                              1 367       (6 890)   
Re-measurement of employee obligation                                                     –           803   
Change in non-controllng interest                                                    17 086         1 352   
Ordinary dividends paid                                                           (193 930)   (1 703 718)   
Balance at the end of the year                                                    1 354 488     1 111 256   
OTHER RESERVES                                                                                            
Balance at the beginning of year                                                     20 240     (283 205)   
Share appreciation rights issued                                                      7 667        17 222   
Share appreciation rights exercised                                                 (4 018)       (4 928)   
Other reserves attributable to non-controlling interest                               3 331      (14 128)   
Change in ownership of subsidiaries                                                   1 942     (116 009)   
Derecognition of put liability reserve                                                    –       380 564   
Allocation (to)from retained earnings                                               (4 563)         6 890   
Translation of foreign operations                                                   164 129        33 834                                                                                      
Balance at the end of the year                                                      188 728        20 240   
Attributable to equity shareholders                                               4 866 780     4 459 973   
NON-CONTROLLING INTEREST                                                                                  
Balance at the beginning of year                                                    175 679       481 947   
Earnings attributable to non-controlling interest                                    17 043        42 287   
Share of other reserves                                                             (3 331)        14 128   
Non-controlling interest arising on acquisitions and purchases of non-
controlling interests                                                                   324     (334 129)   
Dividends paid                                                                      (6 405)      (28 554)   
Balance at the end of the year                                                      183 310       175 679   

AUDITED SUMMARISED SEGMENT INFORMATION
     
                                                                           Group,
                                                                        financing
                                Engineering      Capital    Building    and other
                               consumables    equipment    supplies   operations          Total
                                      R'000        R'000       R'000        R'000          R'000
     
2016                                                                                       
Segment revenue                   4 298 874    4 483 878   1 836 606        16 492    10 635 850
Segment operating profit            406 226      361 989      75 204         2 846       846 265
Segment assets                    2 729 534    3 850 263     995 453     7 319 884    14 895 134
Segment liabilities                 793 788    1 595 349     603 431     6 852 476     9 845 044
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     6 968 254    14 291 177
Segment liabilities                 827 079    1 959 965     520 344     6 348 137     9 655 525

OTHER INFORMATION
                                                                                 2016      2015
                                                                                R'000     R'000
Net interest-bearing debt: equity ratio (excluding long-term debt secured by
investments and loans) (%)                                                         34%       30%
Depreciation and amortisation (R'000)                                          151 790   130 703
Net asset value per share (cents)                                                4 486     4 117
Tangible net asset value per share (cents)                                       3 719     3 344
Capital expenditure (R'000)                                                    319 375   240 035
Capital commitment (R'000)                                                     182 344   356 607

NOTES TO THE FINANCIAL INFORMATION

Basis of preparation
The Group's audited summarised consolidated 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 summarised 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 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 audited summarised financial statements have been prepared under the supervision of Craig Barnard CA(SA), Executive Director -
Financial and Commercial.

Acquisitions
Various acquisitions were made during the year ended 31 March 2016, amounting to R114 million.

Events after the reporting date
There were no events to report on or after the reporting period to the date of this report.

Disclosure note
A reportable irregularity was reported to the Independent Regulatory Board of Auditors with respect to a general repurchase of shares by
the Company in the open market. After considering the circumstances of the transactions, as a matter of good governance, the relevant
transactions were cancelled at no cost to the Company.

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. There has been no transfer of financial assets
or liabilities between the categories.

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 March 2016  and key inputs   Level 1     Level 2      Level 3
Financial assets at fair value                                                                          
Financial assets                                103 234               1         –     103 234            –
Trade and other receivables                   1 970 914               2         –           –    1 970 914
Financial liabilities at fair value                                                                     
Financial liabilities                           100 252               1         –     100 252            –
Trade and other payables                      1 126 628               3         –           –    1 126 628
Foreign trade payables                        1 024 388               4         –   1 024 388            –
                                                              Valuation
                                                           technique(s)
                                         31 March 2015  and key 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.

COMMENTS

OVERVIEW OF THE YEAR
The Group has delivered a disappointing result for the year to March 2016. The markets served by the Group's diverse businesses all
proved to be extremely challenging. The past year was characterised by a further dramatic weakening in mining and construction activity
in Africa and South East Asia. Further, the deterioration in industrial and manufacturing activity in South Africa and a severe drought
which gripped the southern African region and suppressed the agricultural industry likewise impacted on the Group results. The volatility
that prevailed in emerging market currencies and the lack of global growth, affected confidence and investment flows into the markets
served by the Group. All of these negative factors contributed to depressed demand for the Group's products and services in the year.

ENGINEERING CONSUMABLES
The Engineering Consumables segment grew revenue by 2% to R4,299 billion. The acquisition of Hansen Transmissions SA, Hyflo and
Sibuyile Industrial Supplies in the second half of the period under review added R189 million of revenue during the period. Excluding
acquisitions, revenue declined by 2% compared with the prior period. Operating profit in the segment declined by 19% to R406 million as
gross profit growth was more than offset by an increase in overheads. The organic overhead increase was significantly less than prevailing
inflation as costs were well controlled. The segment operating margin declined from 11.9% to 9.4% in the period and the return on
capital employed declined from 29.8% to 21.8%
The R350 million expansion programme at BMG in Johannesburg is on track for completion in late 2016 with the relocation of several
operations into the new facilities scheduled for December 2016. Once settled in mid-2017, this investment is expected to start realising
significant supply-chain efficiencies within the BMG business.

CAPITAL EQUIPMENT
The Capital Equipment segment saw revenue decline by 3% to R4,484 billion. A 4% decline in the South African businesses was offset by
a small growth in revenue recorded by Kian Ann Engineering in Singapore. Operating profit in the South African markets declined by 2%
while the total segment declined by 20.8% to R362 million. The segment operating margin declined from 9.9% to 8.1% in the period
and the return on capital employed declined from 25.8% to 17.5% in the period. Excluding the one-off profit realised in the prior period
of R69 million, the operating profit declined by 6.5%.

BUILDING SUPPLIES
The Building Supplies segment grew revenue by 11% to R1,837 billion. Exports into Africa grew by 22%. Significant pressure on gross
margins and difficulties experienced in the plastic pipe factory in the earlier part of the year resulted in operating profit declining by 14%
to R75 million. The segment operating margin declined from 5.3% to 4.1% and return on capital employed declined from 30.6% to
20.8%

Significant restructuring was undertaken in the year and these benefits will manifest in the coming year. An investment in facilities in
Midrand, Johannesburg to the value of R150 million is under consideration to facilitate the continued strong growth expected from the
Gauteng market and exports of building and related products into southern African territories.

ACQUISITIONS
Three major acquisitions were concluded during the year under review, all in the Engineering Consumables segment.
Sibuyile Industrial Supplies, a leading regional distributor of tools and equipment was acquired with effect from 1 September 2015.
Hansen Transmissions SA, a leading player in the industrial gear unit market in southern Africa was acquired with effect from 1 October
2015.

Hyflo, a leading player in the fluid power sector in southern Africa was acquired with effect from 1 November 2015.

STRATEGIC FOCUS
The Group's strategic focus is to generate cash in its existing businesses and to deploy this in making sound acquisitions that diversify
the Group's revenue streams geographically. It is important that acquisitions made have a good strategic and cultural fit with the Group.

PROSPECTS
The Group expects trading conditions to remain very challenging in the year ahead. Whilst there are signs of improvement in certain areas
of the business, management is preparing for yet another difficult year and will continue its focus on margin management, cost control
and working capital optimisation. The Group expects that the current difficult time being experienced in the economic cycle will present
opportunities to make meaningful acquisitions at reasonable valuations.

The businesses that make up the Invicta group have strong fundamentals and enjoy significant competitive advantage. Management will
continue to build on the strengths of the current businesses in the year ahead and cautiously seek value-accretive, strategic acquisitions.

APPRECIATION
The board is grateful to the executive management, the respective management teams of our businesses and all our loyal and hard-
working colleagues for seeing the business through these extremely challenging times.

The board is confident that, with the strengths the Group possesses and the exciting strategic plans being developed, we will deliver
sustainable value to all our stakeholders for many years to come.

AUDIT OPINION 
The auditors, Deloitte & Touche, have issued their opinion on the consolidated financial statements for the year ended 31 March 2016.
The audit was conducted in accordance with International Standards on Auditing. They have issued an unmodified audit opinion, which
includes a reportable irregularity discussed in the disclosure note above. These summarised financial statements have been derived
from the consolidated financial statements and are consistent in all material respects, with the consolidated financial statements. This
auditor's report does not necessarily report on all of the information contained in this announcement /financial results. Shareholders are
therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of
the unmodified ISA 810 audit report together with the consolidated financial statements and/financial information from 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.

PREFERENCE SHARE CASH DIVIDEND
Notice is hereby given that the Directors have declared a gross cash dividend on 10 June 2016 of 630,93 cents (12 June 2015: 571.27 cents)
per preference share for the period from 1 November 2015 to 10 June 2016. 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 536,2905 cents per preference share.
- 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, 1 July 2016
Shares commence trading "EX" dividend       Monday, 4 July 2016
Record date                                 Friday, 8 July 2016
Payment date                               Monday, 11 July 2016

Share certificates may not be dematerialised or rematerialized between Monday, 4 July 2016 and Friday, 8 July 2016, both days inclusive.

ORDINARY SHARE CASH DIVIDEND
The Board has declared a final gross cash dividend of 75.28 cents per share for the year ended 31 March 2016. 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 75.28 cents per ordinary share for shareholders exempt from the Dividend Tax;
- The net local dividend amount is 63.9883 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 1 541 823 treasury shares); and
- Invicta Holdings Limited's income tax reference number is 9400/012/03/06.

In compliance with the requirements of Strate the following dates are applicable:                                          

Last date of trade "CUM" dividend        Tuesday, 26 July 2016
First date of trading "EX" dividend    Wednesday, 27 July 2016
Record date                               Friday, 29 July 2016
Payment date                             Monday, 1 August 2016

Share certificates may not be dematerialised or rematerialized between Wednesday, 27 July 2016 and Friday, 29 July 2016, both days
inclusive.

By order of the board
GM Chemaly                                                                                                             Cape Town
Company Secretary                                                                                                   13 June 2016

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



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