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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
Date: 14/06/2016 07:12:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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