Wrap Text
Provisional Reviewed Condensed Consolidated Results 2019
INVICTA HOLDINGS LIMITED and its subsidiaries
("Invicta" or "the Company" or "the Group")
(Incorporated in the Republic of South Africa)
Registration number 1966/002182/06
Share code: IVT | ISIN: ZAE000029773
Preference share code: IVTP | ISIN: ZAE000173399
PROVISIONAL REVIEWED CONDENSED CONSOLIDATED RESULTS 2019
Financial highlights
The 31 March 2019 results disclosed below represent the total continuing operations:
Revenue*
R10.4 billion
Up 5%
Profit attributable to ordinary
shareholders**
R135 million
Up 61%
Profit for the year**
R229 million
Up 21%
Headline earnings per share**
112 cents
Up 93%
*Re-presented
** Re-presented and restated
***Restated
Executive review of our performance
Overview of the year
This has been one of the toughest years on record for the Group. Almost every sector served by the Group in South Africa
(from which the Group derives about 76% of its revenue), has been under severe economic pressure. The generally poor
economic conditions in South Africa, and months of uncertainty leading up to a general election in May 2019, contributed to
a general decline in demand for products across our product range.
It is therefore most pleasing to report that revenue for the Group increased by 5% to R10.450 billion. A number of acquisitions
were made during the year, which contributed R254 million to revenue. The challenging trading conditions resulted in a
decline in gross margin, whilst overheads increased due to take-on and rationalisation costs of acquisitions and once-off costs
of right sizing some existing underperforming businesses. As a result, operating profit declined from R839 million to R690 million.
The tax dispute with SARS was settled for R750 million during the year and has been fully provided for in the accounts, of
which R550 million was provided in prior years and R200 million in this year. R450 million of the settlement has been paid to
SARS to date and the balance is payable over the next 4 years.
Group performance
The operations comprise:
- ESG (Engineering Solutions Group) - distributor of engineering products (bearings, belts, tools, electric motors,
hydraulics), technical services and solutions.
- CEG (Capital Equipment Group) - distributor of agricultural machinery, construction and earthmoving machinery, forklifts
and related parts, including Kian Ann Engineering, which is based in Singapore.
Profit for the year grew by 21% to R229 million with basic earnings per share up 62% and headline earnings per share up 93%.
The interest received/paid and dividends received from financial investments have reduced substantially in the year under
review due to the settlement of financial transactions.
The Group has reassessed the accounting treatment of the repurchase of agency distribution rights agreements within the
ESG operations and the amortization of intangible assets primarily related to these rights. This has resulted in the restatement
of financial information in the prior periods. The comparative financial information has accordingly been restated and is
detailed in the relevant notes to the financial statements.
ESG
Revenue grew by 15% to R5.238 billion, of which R254 million came from acquisitions during the year. Trading conditions were
challenging, with the significant sectors which are serviced by ESG (mining, manufacturing, agriculture, general industry,
construction) all experiencing headwinds during the year. These market conditions presented good acquisition opportunities,
which ESG took advantage of. The acquisition of the Forge Industrial Group, which operates mainly in the Tool and Belting
sectors of the economy, and the Driveshafts Parts business, operating in South Africa and Poland in the replacement drive
shaft parts sectors, were concluded during the year. A total investment of R331 million was made in these businesses. The tool
business was amalgamated with ESG's Mandirk (tool) business, but major restructuring was required to turn the business
around. The turnaround strategy has, unfortunately, taken longer than expected to implement, but the combined tool business
is expected to be profitable during the first quarter of the new financial year. The other core businesses in ESG have
grown and the first phase of the consolidation and rationalisation of the logistics operations at BMG World are finally being
completed and bedded down.
CEG
CEG revenue declined by 5% to R4.831 billion largely due to an overall decline in demand. The sectors serviced by CEG -
agricultural machinery, construction machinery and the forklift sector - all experienced a significant decline in unit sales and
gross margin in South Africa, due to the prevailing market conditions. CEG's focus on annuity type business gave it protection
and the improved contribution from Kian Ann Engineering Group (based in Singapore) helped CEG to limit its decline in
segment operating profit before interest on financing transactions and foreign exchange movements to 17%. CEG has
managed to maintain its market shares in South Africa and has once again managed to contain costs and generate cash.
Strategic focus and prospects
Trading conditions have settled since the elections in May 2019, but they still remain challenging. Management expects the
coming year to be more positive than the year under review, but anticipates a slow return to growth. Management will focus
on bedding down acquisitions, prioritising cash generation and return on equity.
Changes to the board and board committees
Ms. N Rajmohamed was appointed as the Group Financial Director effective 1 July 2018. Mr. LR Sherrell was appointed to the
audit committee on a temporary basis with effect from 16 November 2018. The board is in the process of appointing a new
independent non-executive director to serve on the audit committee, which will bring its composition back in line with the
recommendations of King IV. Ms. R Naidoo resigned effective 25 September 2018 as an independent non-executive director.
There have been no further changes to the board or the membership of its committees.
Dividend policy
In light of the tax settlement and the resultant higher gearing in the group, the board has resolved not to declare a final
dividend. It is anticipated that the normal dividend policy (of a total dividend cover ratio of 3.5 times at interim results adjusted
to 2.75 times at year-end) will be resumed once cash flows and gearing permit.
Appreciation
The board is once again highly appreciative to the executive management, the respective management teams of our
businesses and most importantly all the staff, for the excellent commitment and performance in what can only be described
as difficult and uncertain economic times.
The board is confident that, with the strengths the Group possesses and the strategic plans, the Group will continue to
deliver sustainable value to all stakeholders going forward.
Approval
The provisional reviewed condensed consolidated financial statements of the Group were authorised for issue in accordance
with a resolution of the directors on 23 June 2019.
On behalf of the board
Arnold Goldstone Nazlee Rajmohamed
Chief Executive Officer Group Financial Director
Condensed consolidated statement of profit or loss and other comprehensive income
31 March
% 2019 2018*
change R'000 R'000
Continuing operations
Revenue 5 10,449,704 9,994,103
Gross profit 2,987,824 3,041,222
Operating profit before interest on financing transactions and foreign exchange movements (23) 699,364 905,220
Interest received from financing transactions 16,158 11,335
Finance costs on financing transactions (8,315) (6,502)
Net foreign exchange cost (17,317) (71,421)
Operating profit (18) 689,890 838,632
Interest received and dividends received from financial investments 128,572 813,253
Finance costs (242,811) (941,267)
Equity accounted earning from investment in associates 27,171 13,593
Equity accounted earning from investment in joint ventures 11,630 -
Profit before taxation from continuing operations (15) 614,452 724,211
Taxation (385,838) (535,623)
Profit for the year from continuing operations 21 228,614 188,588
Discontinued operations
Profit for the year from discontinued operations - - -
Profit for the year 228,614 188,588
Other comprehensive income
Other comprehensive income that may be reclassified to profit or loss in
subsequent periods (net of tax):
Exchange differences on translation of equity loans** 3,979 (2,923)
Exchange differences on translation of foreign operations 238,455 (65,122)
Changes in the fair value of financial investments 5,927 -
Total comprehensive income for the year 476,975 120,543
Profit attributable to:
Owners of the Company 134,555 83,538
Non-controlling interest 11,195 20,993
Preference shareholders 82,864 84,057
228,614 188,588
Total comprehensive income attributable to:
Owners of the Company 377,982 17,092
Non-controlling interest 16,129 19,394
Preference shareholders 82,864 84,057
476,975 120,543
* Prior year restated and re-presented to account for discontinued operations, refer to the restatement note 8 and representation
of discontinued operations note 9 disclosed.
** The equity loans form part of the net investment in foreign subsidiaries.
Basic earnings per share (cents) 62 126 78
Diluted earnings per share (cents) 62 126 78
Condensed consolidated headline earnings and earnings per share
31 March
Earnings per share (cents) 2019 2018*
Basic earnings per share 126 78
Diluted basic earnings per share 126 78
Headline earnings per share 112 58
Diluted headline earnings per share 112 58
Ordinary shares ('000)
In issue 108,495 108,495
Weighted average 106,953 106,953
Diluted weighted average 106,953 106,953
The 1 517 704 share options issued to executive directors have been assessed and are considered to be non-dilutive, as the
options are currently 'out of the money'.
31 March
2019 2018*
Headline earning per share R'000 R'000
Earnings
Profit from continuing operations attributable to owners of the Company 134,555 83,538
Adjusted for: Profit/(loss) for the year from discontinued operations - -
Profit for the year attributable to owners of the Company 134,555 83,538
Headline adjustments
Adjustments for:
Gain from bargain purchase price recognised (10,377) -
Net profit on disposal of property, plant and equipment (7,285) (13,335)
Taxation on disposal of property, plant and equipment 1,786 3,239
Profit on disposal of investment (2,270) (24,440)
Taxation on disposal of investment - 8,202
Impairment of investment in associate 2,849 -
Profit on disposal of other assets - (326)
Taxation on disposal of other assets - 91
Impairment of goodwill - 4,767
Headline earnings from continuing operations 119,258 61,736
Headline adjustments from discontinued operations - -
Headline earnings 119,258 61,736
* Prior year restated and re-presented to account for discontinued operations, refer to the restatement note 8 and representation
of discontinued operations note 9 disclosed.
Condensed consolidated statement of financial position
31 March
2019 2018* 2017*
R'000 R'000 R'000
ASSETS
Non-current assets 3,193,159 2,807,755 8,067,817
Property, plant and equipment 1,942,332 1,720,797 1,640,530
Investment in associates and joint ventures 216,167 119,180 103,448
Financial investments 958 4 1,981,805
Goodwill 662,927 660,844 615,354
Other intangible assets 62,241 54,082 61,306
Other financial assets 99,506 52,979 3,484,113
Deferred taxation 209,028 199,869 181,261
Current assets 8,079,043 7,213,859 7,010,138
Inventories 4,543,864 3,917,689 3,662,856
Trade and other receivables 1,890,432 1,605,461 1,527,405
Current portion of financial assets 679,699 648,138 751,247
Taxation 29,333 25,236 16,113
Bank and cash balances 935,715 1,017,335 1,052,517
Assets classified as held for sale - 157,978 1,073,053
Total assets 11,272,202 10,179,592 16,151,008
EQUITY AND LIABILITIES
Capital and reserves 5,182,056 4,877,699 5,094,780
Equity attributable to the equity holders 5,060,541 4,778,226 4,942,696
Non-controlling interest 121,515 99,473 152,084
Non-current liabilities 2,620,353 1,685,318 6,892,355
Long-term borrowings and financial liabilities 2,271,858 1,609,811 6,813,650
Finance lease liabilities 95,377 37,420 43,663
Long-term taxation liabilities 200,000 - -
Deferred taxation 53,118 38,087 35,042
Current liabilities 3,469,793 3,498,883 3,491,751
Trade, other payables and provisions 2,119,751 1,862,731 2,136,640
Share appreciation rights liability - 851 5,443
Taxation liabilities 158,621 583,170 170,052
Shareholders for dividends 47,263 48,995 49,593
Current portion of long-term borrowings 812,241 709,777 813,964
Current portion of finance lease liabilities 68,787 46,123 50,247
Other financial liabilities 79,890 76,819 59,361
Bank overdrafts 183,240 170,417 206,451
Liabilities associated with assets held for sale - 117,692 672,122
Total liabilities 6,090,146 5,301,893 11,056,228
Total equity and liabilities 11,272,202 10,179,592 16,151,008
* Restated, refer to note 8.
Condensed consolidated statement of changes in equity
31 March
2019 2018
R'000 R'000
Share capital, share premium and preference share capital
Share capital 5,424 5,424
Share premium 2,653,151 2,653,151
Treasury shares - Balance at the beginning of the year (68,057) (68,057)
Treasury shares - Movement for the year 18,651 -
Treasury shares - Balance at the end of the year (49,406) (68,057)
Preference shares 750,000 750,000
Retained earnings
Balance at the beginning of the year* 1,419,989 1,556,942
Total comprehensive income* 223,346 167,595
Transfers between reserves and other reserve movements (15,112) (42,269)
Effect of adoption of new accounting standards (IFRS 9) (5,589) -
Ordinary and preference dividends paid (192,384) (262,279)
Balance at the end of the year* 1,430,250 1,419,989
Foreign currency translation reserve
Balance at the beginning of the year* 117,114 183,560
Total comprehensive income* 237,500 (66,446)
Balance at the end of the year* 354,614 117,114
Other reserves
Balance at the beginning of the year (99,395) (138,324)
Share appreciation rights issued 4,342 2,031
Non-controlling interest arising on issue of additional share capital and purchases of
non-controlling interests 330 (5,976)
Transfers between reserves and other reserve movements 11,231 42,874
Balance at the end of the year (83,492) (99,395)
Attributable to equity shareholders 5,060,541 4,778,226
Non-controlling interest
Balance at the beginning of the year 99,473 152,084
Total comprehensive income 16,129 19,394
Transfers between reserves and other reserve movements 3,881 -
Non-controlling interest arising on issue of additional share capital and purchases of
non-controlling interests 4,277 10,232
Disposal of subsidiary - (81,567)
Ordinary dividend paid (2,245) (670)
Balance at the end of the year 121,515 99,473
Total equity 5,182,056 4,877,699
* 2018 restated, refer to note 8.
Condensed consolidated statement of cash flows
31 March
2019 2018*
Notes R'000 R'000
Cash flows from operating activities
Cash generated from operations 5 545,063 427,974
Finance costs (251,126) (977,487)
Dividends paid to Group shareholders and non-controlling interest (196,361) (263,547)
Taxation paid 6 (612,977) (163,206)
Interest and dividends received 144,730 841,799
Net cash outflow from operating activities (370,671) (134,467)
Cash flows from investing activities
Proceeds on sale of property, plant and equipment and other intangible assets 66,553 51,265
Additions to property, plant and equipment (209,727) (258,938)
Additions to intangible assets (23,158) (44,518)
Acquisition of subsidiaries (314,818) (99,484)
Acquisition of associate and joint venture (36,918) -
Cash (outflow)/inflow on sale on subsidiaries (3,231) 503,776
Increase in long-term receivables (5,911) (421,924)
Settlement of loans 6,394 -
Increase in financial investments (954) (212,731)
Decrease in current portion of financial investments and other receivables 964 103,109
Net cash outflow from investing activities (520,806) (379,445)
Cash flows from financing activities
Increase in long-term borrowings 635,218 844,594
Cash outflow on financial transaction - (5,129)
Non-controlling interest arising on issue of shares 6,236 12,201
Increase/(decrease) in current portion of long-term borrowings and financial
liabilities 105,558 (154,725)
Acquisition of non-controlling interest (1,629) (6,453)
Net cash inflow from financing activities 745,383 690,488
Net (decrease)/increase in cash and cash equivalents (146,094) 176,576
Cash and cash equivalents at the beginning of the year 858,102 701,081
Effect of foreign exchange rate movement on cash balance 40,468 (19,555)
Cash and cash equivalents at the end of the year 752,476 858,102
Cash and cash equivalents
Bank and Cash balances 935,715 1,017,335
Bank overdrafts (183,240) (170,417)
Cash and cash equivalents of continuing operations 752,475 846,918
Cash and cash equivalents classified as held for sale - 11,184
Total 752,475 858,102
* 2018 restated, refer to note 8.
Other information
31 March
Restated
2019 2018
Net interest-bearing debt:equity ratio (excluding long-term debt secured by investments and loans) (%) 44% 28%
Depreciation and amortisation (R'000) 139,480 183,814
Net asset value per ordinary share (cents) 4,085 3,805
Tangible net asset value per ordinary share (cents) 3,420 3,146
Capital expenditure (R'000) (209,727) (258,938)
Capital commitment (R'000) 45,182 20,568
Segment information
31 March
Corporate
and inter-
segment Total
Engineering Capital eliminations continuing Discontinued Total
Solutions Equipment * operations Operations operations
R'000 R'000 R'000 R'000 R'000 R'000
2019
Segment revenue 5,238,443 4,830,981 380,280 10,449,704 - 10,449,704
Segment operating profit before interest
on financing transactions and foreign 342,061 373,581 (16,278) 699,364 - 699,364
exchange movements
Segment assets 3,694,574 4,419,505 3,158,123 11,272,202 - 11,272,202
Segment liabilities 1,439,742 1,650,763 2,999,641 6,090,146 - 6,090,146
2018
Segment revenue^ 4,558,638 5,073,506 361,959 9,994,103 749,434 10,743,537
Segment operating profit before interest
on financing transactions and foreign 478,700 451,746 (25,226) 905,220 12,276 917,496
exchange movements**
Segment assets*** 3,072,211 3,775,020 3,174,383 10,021,614 157,978 10,179,592
Segment liabilities*** 891,658 1,437,370 2,855,173 5,184,201 117,692 5,301,893
* The corporate segment is comprised of MacNeil Plastics and all the Group financing, investment, property and support
service operations.
** Prior year restated and re-presented to account for discontinued operations, refer to the restatement note 8 and
representation of discontinued operations note 9 disclosed.
*** Restated refer to note 8.
^ Re-presented refer to note 9.
Notes to the provisional reviewed condensed consolidated results
1.Basis of preparation
These provisional reviewed condensed consolidated results (pages 3 to 17) have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of International Financial Reporting Standards
(IFRS), its interpretations issued by the IFRS Interpretations Committee, the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council,
presentation and disclosure as required by International Accounting Standard (IAS) 34 'Interim financial reporting', the JSE
Limited Listings Requirements and the requirements of the Companies Act 71 of 2008 of South Africa. The accounting
policies and methods of computation used in the preparation of the provisional reviewed condensed consolidated results
are in terms of IFRS and are consistent in all material respects with those applied in the most recent Annual Financial
Statements, except for restatement in note 8 and the changes in accounting policies listed below.
2.Prepared by
These provisional reviewed condensed consolidated results have been prepared under the supervision of Ms. Nazlee
Rajmohamed CA (SA), the Group Financial Director.
3.Changes in accounting policies
The Group has applied both IFRS 9 'Financial instruments' and IFRS 15 'Revenue from contracts with customers' using the
modified retrospective approach, by recognising the cumulative effect of initially applying IFRS 9 and IFRS 15 as an
adjustment to the opening balance of equity at 1 April 2018. Therefore, the comparative financial information has not been
restated and continues to be reported under IAS 18 'Revenue' and IAS 39 'Financial instruments'.
IFRS 9 Financial instruments
Impact of adopting new standard
The most significant impact of IFRS 9 has been the change to the group's policies regarding the measurement of the
impairment of trade debtors. The impairment for trade receivables is now measured using an expected credit loss ('ECL')
model using the simplified approach instead of an incurred loss model. ECLs are calculated using a provision matrix, which
applies a historic loss ratio to the aged balance of trade receivables at each reporting date. In instances where there was
no evidence of historical write-offs, management's judgement is applied to assess potential write-offs. The historic loss
ratio is also adjusted for forward-looking information to determine the lifetime ECL for the portfolio of trade receivables,
this includes taking into account factors such as inflation, the debtors' reputation, the market the debtors' operates in.
Furthermore, financial investments (FirstRand Bank listed bonds) previously measured at fair value through profit and loss
are now measured at fair value through other comprehensive income, the classification of the remaining financial assets
and liabilities has remained unchanged.
The table below is a summary the impact of the transition to IFRS 9 on the opening balance of retained earnings as at
1 April 2018. The adjustment to retained income is due to the change in the accounting policy for impairing financial assets.
Impact of adopting IFRS 9 at 1 April 2018 (R'000)
Increase in expected credit loss (5 589)
Decrease in retained earnings (5 589)
IFRS 15 Revenue from contracts with customers
Impact of adopting new standard
The adoption of IFRS 15 has had an insignificant impact on the Group, as the Group does not sell products based on
multiple-element arrangements or on a provisional or variable pricing basis.
IFRS 16 Leases
The Group anticipates a material change as a result of the adoption of IFRS 16 'Leases' from 1 April 2019 using the modified
retrospective approach. The material change relates to the capitalising of leased properties (branches), vehicles and
equipment onto the balance sheet in the form of a right of use asset, together with the corresponding lease liability.
Changes to the Statement of profit or loss will result in the current operating lease costs being replaced by an amortisation
of the right-of-use asset and calculated lease finance costs on the interest line. Other areas of the statutory metrics that
will be impacted by the adoption of the standard include operating profit, EBITDA, earnings per share and derived KPIs.
We will provide first time disclosure in the publication of our 2019 annual financial statements.
4.Events after the reporting date
There were no events to report on after the reporting period to the date of this report.
5.Reconciliation of profit before taxation to cash generated from operations
31 March
2019 2018*
R'000 R'000
Profit before taxation 614,452 724,973
Adjusted for:
Depreciation and amortisation 139,480 184,256
Impairment of assets 2,849 4,767
Exchange differences on translating capitalised loans 3,979 (2,923)
Value recognised as a result of the derecognition of the put option on directors' loans 18,351 -
Net profit on disposal of assets (9,555) (37,707)
Loss on realisation of financial transaction - 20,002
Gain on bargain purchase price recognised (10,377) -
Finance costs 251,126 977,487
Interest and dividend received (144,730) (841,799)
Net share of profits of associates and joint ventures (32,132) (13,657)
Share appreciation rights movement (851) (4,592)
Share appreciation rights issued 4,342 2,031
Other non-cash items 527
Cash generated before movements in working capital 836,934 1,013,365
Working capital changes: (291,871) (585,391)
Increase in inventories (298,210) (266,303)
Increase in trade and other receivables (101,418) (135,970)
Increase/(decrease) in trade and other payables and provisions 100,744 (161,779)
Increase in finance lease receivables (73,608) (10,972)
Increase/(decrease) in financial lease liabilities 80,621 (10,367)
Cash generated from operations 545,063 427,974
* Restated, refer note 8
6.Taxation paid
31 March
2019 2018
R'000 R'000
Amounts unpaid at the beginning of the year (557,934) (155,270)
Acquisition of subsidiary (2,669) (45)
Charged to the statement of comprehensive income (381,662) (563,477)
Disposal of subsidiary - (2,348)
Amounts unpaid at the end of the year 329,288 557,934
Total (612,977) (163,206)
Comprising:
Payment of specific tax expense (450,000) -
Normal tax paid (162,977) (163,206)
Total (612,977) (163,206)
7.Acquisitions of subsidiaries and businesses
The current year acquisitions detailed below were acquired by the Group, as they are complementary to existing segments
in the Group, thus the board identified these operations based on their ability to assist the Group with its expansion and
growth. The goodwill recognised is based on the final fair values of the assets and liabilities, including identifiable intangible
assets at acquisition date. Goodwill arose on these acquisitions because the cost of these combinations included a control
premium. In addition, the consideration paid for these combinations 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.
Subsidiary/business Acquisition type Acquisition date Purchase consideration
7.1 Forge Industrial Group Acquisition of business assets 3 September 2018 R175 million
7.2 Rustenburg Engineering 100% of issued share capital 1 July 2018 R10 million
Group (Rustenburg Engineers
and Foundry (Pty) Ltd and
Joerg Foundry (Pty) Ltd)
7.3 Propshaft Rebuilders 100% of issued share capital 1 December 2018 R146 million
Group (Propshaft Rebuilders
(Pty) Ltd)
31 March
Propshaft Rustenburg Forge
Rebuliders Engineering Industrial Total
Group Group Group
2019
A summary of the financial impact of the acquisitions is
disclosed below: R'000 R'000 R'000 R'000
Fair value of net assets acquired:
Property, plant and equipment 3,554 8,748 8,541 20,843
Intangible assets 264 - - 264
Bank and cash balances 4,414 1,157 10,783 16,354
Inventories 109,363 7,490 149,770 266,623
Trade and other receivables 51,467 19,680 49,673 120,820
Deferred taxation 240 515 300 1,055
Long-term borrowings (1,230) (932) - (2,162)
Trade, other payables and provisions (21,991) (16,399) (43,272) (81,662)
Taxation liabilities (2,487) (182) - (2,669)
Fair value of net assets acquired 143,594 20,077 175,795 339,466
Purchase price 145,677 10,000 175,495 331,172
Fair value of net assets acquired (143,594) (20,077) (175,795) (339,466)
Total goodwill 2,083 - - 2,083
Total gain on bargain purchase price - (10,077) (300) (10,377)
Purchase price 145,677 10,000 175,495 331,172
Bank and cash balances acquired (4,414) (1,157) (10,783) (16,354)
Cash outflow on acquisitions of subsidiaries and businesses 141,263 8,843 164,712 314,818
8. Restatement
We have reconsidered our accounting with respect to the reacquired agency rights and related contracts, as well as the
amortisation period of other intangible assets. The reassessed accounting for the contracts resulted in the recognition of
current liabilities which were previously considered to be discretionary and partly net accounted in receivables. Previously
the reacquired agency rights were amortised over a period of 15 years, whilst certain distribution agreements, trademarks
and brands and contractual and non-contractual customer relationships were amortised over a period of 10 - 27 years.
The Group's accounting policy prescribes that the reacquired agency rights should be amortised over the remaining
contract period and distribution agreements, trademarks and brands and contractual and non-contractual customer
relationships over a period of 5 -7 years.
We have amended the application of the amortisation period for the Group's other intangible assets in line with
management's estimation of expected useful lives of the intangible assets and the Group's accounting policy. The errors
have been corrected in accordance with "IAS 8: Accounting policies, changes in accounting estimates and errors". There
were no deferred taxation implications. The correction to the accounting treatment is effective for the year ended 31
March 2019 and has been applied retrospectively. This has therefore resulted in a restatement of the comparative 2018
and 2017 periods. The aggregate effect of the restatement for these periods is as follows:
The correction of the above results in adjustments as follows:
31 March
As previously Restatement
reported adjustments As restated
2018 R'000 R'000 R'000
Statement of financial position
Non-current assets
Other intangible assets 174,780 (120,698) 54,082
Current assets
Trade and other receivables 1,620,016 (14,555) 1,605,461
Capital and reserves
Retained earnings 1,635,776 (215,787) 1,419,989
Foreign currency translation reserve 113,399 3,715 117,114
Current liabilities
Other financial liabilities - 76,819 76,819
Statement of profit or loss
Selling, administration and distribution costs* (2,093,325) (42,677) (2,136,002)
Other note disclosure
Basic earnings per share (cents) 118 (40) 78
Diluted earnings per share (cents) 118 (40) 78
Business segment information
Operating profit before interest on financing transactions and foreign
exchange movements
Corporate 17,451 (42,677) (25,226)
Segment assets
Engineering Solutions 3,135,526 (63,315) 3,072,211
Capital Equipment 3,846,958 (71,938) 3,775,020
Segment liabilities
Engineering Solutions 814,839 76,819 891,658
As previously Restatement
reported adjustments As restated
2017
Statement of financial position
Non-current assets
Other intangible assets 160,721 (99,415) 61,306
Current assets
Trade and other receivables 1,541,960 (14,555) 1,527,405
Capital and reserves
Retained earnings 1,730,052 (173,110) 1,556,942
Foreign currency translation reserve 183,781 (221) 183,560
Current liabilities
Current portion of financial liabilities - 59,361 59,361
* The previously reported results are presented after the re-presentation of the discontinued operation, refer to re-presentation
of discontinued operations in note 9 for further detail.
9.Re-presentation of discontinued operations
The Building Supply Group Proprietary Limited and its subsidiaries was disposed of on 30 September 2017, the MacNeil
Plastics business ("the business") was classified and accounted for as held for sale for the year ended 31 March 2018. The
sale of the business is subsequently no longer viewed as highly probable and as a result, the business is no longer classified
as a disposal company held for sale for the year ended 31 March 2019.
The results of the business previously presented in discontinued operations have been re-presented in accordance with
IFRS 5 (par 36) and the impact on the reported financial results has been disclosed below:
31 March
As previously Re-presented As
reported amount re-presented
2018
Consolidated statement of profit or loss R'000 R'000 R'000
Revenue 9,639,807 354,296 9,994,103
Cost of sales (6,660,734) (292,147) (6,952,881)
Gross profit 2,979,073 62,149 3,041,222
Selling, administration and distribution cost (2,038,798) (54,527) (2,093,325)
Operating profit before interest on financing transactions and foreign
exchange movements 940,275 7,622 947,897
Interest received from financing transactions 11,335 - 11,335
Interest paid on financing transactions (6,175) (327) (6,502)
Net foreign exchange cost (71,421) - (71,421)
Operating profit 874,014 7,295 881,309
Finance costs (940,916) (351) (941,267)
Dividends received from financial investments 332,099 - 332,099
Share of profits of associates 13,593 - 13,593
Interest received 481,129 25 481,154
Profit before taxation 759,919 6,969 766,888
Taxation (536,351) 728 (535,623)
Profit for the year from continuing operations 223,568 7,697 231,265
Discontinued operations
Profit for the year from discontinued operations 7,697 - -
Profit for the year 231,265 7,697 231,265
Business segment information
Segment revenue
Corporate 48,581 354,296 402,877
Total continuing 9,639,807 354,296 9,994,103
Discontinued operations 1,103,730 (354,296) 749,434
Total 10,743,537 - 10,743,537
Operating profit before interest on financing transactions and foreign
exchange movements
Corporate 9,829 7,622 17,451
Total continuing 940,275 7,622 947,897
Discontinued operations 19,898 (7,622) 12,276
Total 960,173 - 960,173
10.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
31 March
Valuation
technique(s)
and key inputs Level 1 Level 2 Level 3
2019
Financial assets at fair value
FirstRand Bank Bonds 593,208 2 - 593,208 -
Forward exchange contract asset 8,127 2 - 8,127 -
Financial liabilities at fair value
Other financial liabilities 79,890 3 - - 79,890
Foreign exchange contract liability 9 2 - 9 -
31 March
Valuation
technique(s)
and key inputs Level 1 Level 2 Level 3
2018
Financial assets at fair value
FirstRand Bank Bonds 588,241 2 - 588,241 -
Forward exchange contract asset 144 2 - 144 -
Financial liabilities at fair value
Other financial liabilities 76,819 3 - - 76,819
Foreign exchange contract liability 31,112 2 - 31,112 -
Valuation technique(s) and key inputs:
1. Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that
the entity can access at the measurement date;
2. Quoted prices.
3. Expected settlement value.
There have been transfers from level 1 to 2 during the financial year disclosed.
11.Auditor's review
These provisional reviewed condensed consolidated results (pages 3 to 17) have been reviewed by independent external
auditors, Ernst & Young Inc. and their unmodified review report is available for inspection at the Company's registered
office. The review was performed in accordance with ISRE 2410'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity'. Any reference to future financial performance included in this announcement has not
been reviewed or reported on by the Group's external auditors. The 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 auditor's report
together with the accompanying financial information from the Group's registered office.
Preference share cash dividend
As announced on SENS on 3 June 2019 the Directors of the Company have declared a gross cash dividend of 617,06943 cents per
preference share for the period from Tuesday, 13 November 2018 to Monday, 3 June 2019. Dividends are to be paid out
of distributable reserves.
- Dividends tax (DT) of 20% 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 493,65554 cents per preference share;
- Invicta Holdings Limited has 7 500 000 preference shares in issue; and
- Invicta Holdings Limited's income tax reference number is 9400/012/03/6.
The salient dates for the preference share cash dividend will be as follows:
Last day of trade to receive a dividend Tuesday, 18 June 2019
Shares commence trading "ex" dividend Wednesday, 19 June 2019
Record date Friday, 21 June 2019
Payment date Monday, 24 June 2019
Share certificates may not be dematerialised or rematerialised between Wednesday, 19 June 2019 and Friday, 21 June 2019,
both days inclusive.
Ordinary share cash dividend
In light of the tax settlement and the resultant higher gearing in the group, the board has resolved not to declare a final dividend.
It is anticipated that the normal dividend policy (of a total dividend cover ratio of 3.5 times at interim results adjusted to 2.75
times at year-end) will be resumed once cash flow and gearing permit.
By order of the board
L Dubery Cape Town
Group company secretary 21 June 2019
Date of publication 24 June 2019
Administrative and corporate information
Registered office: Invicta Holdings Limited, 3rd Floor, Pepkor House, 36 Stellenberg Road, Parow Industria, 7493.
PO Box 6077, Parow East, 7501
legal@invictaholdings.co.za www.invictaholdings.co.za
Transfer secretaries: Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue,
Rosebank, Johannesburg, 2196. PO Box 61051, Marshalltown, 2107
Tel: 011 370 5000 www.computershare.com
Sponsor: Deloitte & Touche Sponsor Services Proprietary Limited, Deloitte Place, Building 8, The Woodlands, 20 Woodlands
Drive, Woodmead, Johannesburg, 2196
Directors: Dr CH Wiese* (Chairman), A Goldstone (Chief Executive Officer), C Barnard, N Rajmohamed,
B Nichles*, GM Pelser, DI Samuels^, LR Sherrell*, AM Sinclair, RA Wally^, Adv JD Wiese*
* Non-executive ^ Independent non-executive
Group company secretary: L Dubery
Date: 24/06/2019 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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