t Annual r - Invicta Holdings reports/MARCH... · 2018-05-14 · Nampak Tissue in 1995. Previously...
Transcript of t Annual r - Invicta Holdings reports/MARCH... · 2018-05-14 · Nampak Tissue in 1995. Previously...
2011
An
nu
al r
epo
rt
1 Financial highlights
2 Group at a glance
4 Board of directors
6 Joint report of the chairman and chief executive officer
9 Corporate structure
10 Humulani Investments board
11 Humulani Investments structure
12 Map of BMG distribution network
13 Map of CEG distribution network
14 Review of operations
25 Corporate governance
34 Integrated report
36 Value added statement
37 Approval of the annual financial statements
37 Certification by the company secretary
38 Report of the independent auditors
39 Report of the directors
42 Audit Committee report
44 Statements of comprehensive income
45 Statements of financial position
46 Statements of changes in equity
47 Statements of cash flows
48 Notes to the annual financial statements
87 Share information
88 Shareholders’ diary
89 Corporate information
90 Notice of annual general meeting of shareholders
Form of proxy (Attached)
CONTENTS
PROFILE
Invicta Holdings Limited is an investment holding and management company,
controlling and managing assets of R6 889 million (2010: R5 937 million). Its
operations comprise:
>> import and distribution of a comprehensive range of bearings, seals, power
transmission components, fasteners, drives, belting, filtration and hydraulics;
>> import and sale of machinery and related spare parts for the agriculture,
earthmoving, turf grooming and golf-car markets;
>> the distribution of a niche range of spare parts to the automotive industry
and niche products to the motorcycle industry;
>> import and distribution of wall and floor tiles and sanitary ware; and
>> import and distribution of leading materials handling equipment and
related spare parts.
Invicta Holdings Limited • Annual report 2011
FINANCIAL HIGHLIGHTS
for the year ended 31 March 2011
1Invicta Holdings Limited • Annual report 2011
2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
50
100
150
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250
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350
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450
500
550
0
500
1 000
1 500
2 000
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3 000
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4 000
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5 000
5 500
Earnings per share (cents) Dividends per share (cents) Share price at year-end (cents)
Share price
(cents)
EPS/DPS
(cents)
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 4 533 801 3 968 872 4 523 535 3 335 496 2 663 398 1 907 754 1 937 593 2 069 163 1 907 317 1 352 311
Operating profit
before finance costs,
interest and dividends
received 505 493 453 293 497 356 360 379 281 229 197 843 231 957 229 451 230 123 122 405
Profit for the year 426 222 365 389 362 812 300 856 217 724 125 165 108 507 99 631 96 502 45 991
Ordinary shareholders’
interest 1 611 265 1 442 966 1 206 055 1 025 591 886 161 716 296 365 075 312 339 343 665 268 783
Dividends per
share (cents) 183 151 138 138 104 68 77 66 45 24
Earnings per
share (cents) 504 453 437 356 292 170 190 164 133 60
Diluted earnings per
share (cents) 480 441 437 354 288 169 190 160 130 58
Share price at the
year-end (cents) 4 350 2 879 2 000 2 550 2 750 1 850 1 550 935 550 310
Invicta Holdings Limited • Annual report 20112
GROUP AT A GLANCE
BMG (BEARING MAN GROUP) PROFILE
Southern Africa’s leading distributor of bearings, seals, power transmission components, drives, belting, fasteners, filtration and hydraulics.
BMG BEARINGS BMG SEALSBMG POWER
TRANSMISSION BMG DRIVES BMG BELTING AUTOBAX
BMG FASTENERS BMG FILTRATION BMG HYDRAULICSBMG TECHNICAL
RESOURCES BMG SUBSIDIARIES
3Invicta Holdings Limited • Annual report 2011
CAPITAL EQUIPMENT GROUP (CEG) TILETORIA
A leading importerand distributor of wall and floor tiles
and sanitary ware in the
Western Cape andKwaZulu-Natal.
NORTHMEC CSE DOOSAN SANEW
HOLLAND SA
Importer and distributor of leading
materials handlingequipment and
related spare parts.
CRITERION
Distributor of leading agricultural
machinery,implements and
related spare parts.
Distributor of construction and
earthmoving machinery, turf
grooming machinery, golf
cars, utility vehicles and related
spare parts.
Distributor of excavators, wheel loaders, skid steer
loaders and hydraulic hammers.
Importers and wholesaler of New
Holland agriculturalequipment and
specialised Braud grape harvesters.
LANDBOU PART
Invicta Holdings Limited • Annual report 20114
BOARD OF DIRECTORS
Dr CH Wiese (69)Non-executive chairman
BA, LLB, DCom(h.c.)
Non-executive chairman of Invicta Holdings Limited from October 1997 to April 2000 and anon-executive director since April 2000, re-appointed non-executive chairman in January 2006.Chairman of Tradehold Limited, Shoprite Holdings Limited, and Pepkor Holdings Limited. Non-executive director of KWV Holdings Limited.
A Goldstone (50)Chief executive officer
BSc (Mech Eng), BCom (Hons), CA(SA)
Worked as a management consultant at KPMG prior to joining the Invicta Group in January1990 as financial manager. Appointed financial director in August 1991. Appointed chief executive officer of Invicta Holdings Limited in April 2000.
C Barnard (47)Financial director
CA(SA), MBA, ACIS
Joined Sappi as management accountant in 1993, joined Group Five in their commercial development subsidiary in 1996 and was appointed commercial manager in 1997. In 1998joined the Invicta Group as financial manager, appointed director of CSE Equipment Company(Pty) Limited in 1999 and company secretary of Invicta Holdings Limited in 2002. Appointed executive director of Invicta Holdings Limited on 7 June 2007.
AK Masuku (41)Alternate non-executive independent director to JS Mthimunye
MCom, MDP (University of New York)
Mr Masuku has ten years’ experience with both local and international banks (SCMB, JP Morgan and Real Africa Durolink) structuring and concluding transactions with some ofSouth Africa’s top 200 corporates, parastatals and BEE players. Appointed managing directorof aloeCap (Pty) Limited in May 2007. Appointed non-executive director of Invicta HoldingsLimited on 7 June 2007 and appointed alternate director to J Mthimunye on 31 July 2009.
JS Mthimunye (46)Non-executive independent director
CA(SA)
Appointed financial accountant Department of Finance in 1993. A founding partner of GobodoInc and established the corporate advisory service in 1997. Appointed financial manager atNampak Tissue in 1995. Previously appointed managing director of aloeCap (Pty) Limited and appointed executive chairman in May 2007. Appointed alternate director to AK Masuku on theInvicta Holdings Limited board on 7 June 2007 and appointed as non-executive director on 31 July 2009.
5Invicta Holdings Limited • Annual report 2011
BOARD OF DIRECTORSCONTINUED
DI Samuels (71)Independent non-executive director
CA(SA)
Joined Trade and Industry Acceptance Corporation Limited in 1971 and was appointed directorfrom 1980 to 1984. From 1989 to 2000 was managing director of Stenham (Pty) Limited. In 1996was appointed non-executive director of Invicta Holdings Limited. Appointed non-executivedirector of Bearing Man Limited in 2001 and chairman in 2002.
LR Sherrell (45)Non-executive director
Appointed as alternate director to Mr RE Sherrell on 27 May 2009 and has been nominated asdirector of Invicta Holdings Limited with effect from 29 July 2010, upon the retirement of Mr RE Sherrell. Mr LR Sherrell studied commerce at UCT and has been involved in the hospitality and motor trade industries with interests in franchise dealerships. Mr LR Sherrellrepresented South Africa as a rugby player in 1994.
AM Sinclair (56)Executive director
Joined JI Case in 1982 and was appointed branch manager in 1986. Joined CSE in 1989 and wasappointed a divisional managing director in 1993. In 1998 appointed managing director of CSEand in September 2006 appointed as an alternate director of Invicta Holdings Limited.Appointed executive director of Invicta Holdings Limited on 7 June 2007.
Adv JD Wiese (30)Non-executive director
BA(Value and Policy Studies), LLB, MIEM (Bocconi, Italy)
Adv JD Wiese has been appointed as director of Invicta Holdings Limited with effect from 29 July 2010. Adv JD Wiese obtained his BA degree after which he worked at Lourensford WineEstate, helping to initiate events partnerships. Adv JD Wiese subsequently obtained hisMaster’s Degree in International Economics and Management and completed this degree as a participant in the MBA program. After returning to Lourensford for a brief period, Adv JD Wiese graduated as a Bachelor of Law student in 2008. In 2009 Adv JD Wiese completed his pupilage at the Cape Bar and was admitted as an Advocate of the High Courton 8 May 2009.
CE Walters (43)Executive director
BSC (Mech Eng), BCom, MDP (Harvard)
Joined Anglo American Corporation in 1986 as Corporate Graduate Engineering trainee wherehe held numerous positions in both the Anglo group and De Beers. Appointed marketing andsales manager – Pulp for Mondi SA in 1996 and appointed managing director of Mondi SalesInternational in 2002. Appointed managing director of Bearing Man (Pty) Limited in September2006. Appointed alternate director to DI Samuels on the Invicta Holdings Limited board on 7 June 2007 and appointed as executive director on 31 July 2009.
Ages as at year-end
Invicta Holdings Limited • Annual report 20116
HEADLINE EARNINGS PER SHARE
grew by
12,5%to 496 cents per share
REVENUE
grew by
14,2%
FINAL DIVIDEND
increased by
23,5%
• Invicta has deliveredgood results
• Increased demand forproducts
JOINT REPORT OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Dr CH WieseNon-executive chairman
A GoldstoneChief executive officer
The only JSE Company ever to achieve TOP 100 STATUS – 16 years in a row
7Invicta Holdings Limited • Annual report 2011
GROUP OVERVIEW
The Group has once again delivered good results.
Global markets have started to recover from the
recent financial crisis, leading to increased demand for
products supplied by the Group. The strong Rand
continues, however, to put pressure on margins.
Group revenue grew by 14,2% to R4,534 billion, of
which R227 million (5,0%) was from acquisitions. As a
result of continued margin and inflationary pressures,
operating income increased by only 11,5% to R505
million, still an acceptable performance.
Profit for the year increased by 16,6% to R426 million,
resulting in headline earnings per share increasing by
12,5% to 496 cents per share. Good working capital
management resulted in cash generated from
operations reaching a record R627 million, an increase
of 6,2% over the prior year.
The Group continued to take advantage of growth
opportunities and made a number of strategic
acquisitions totalling R135 million. The most
significant of these were the acquisitions by BMG of
some of its strategic agency outlets, 70% of Wegezi
Power Holdings (Pty) Limited and a number of smaller
hydraulics businesses. Wegezi manufactures and
prepares transformers, electric switch gears, panels
and pumps.
BMG (Bearing Man Group)
BMG continues to be the core profit contributor to the
Invicta Group, contributing 63,2% of the operating
income for the year. The industrial consumables
trading environment continued to prove challenging,
with areas of improvement in some sectors offset by
weakness in others. Under the circumstances, BMG has
produced a most satisfactory set of results.
Volumes have generally increased, but the strong
Rand resulted in a decline in gross margins. Revenue
increased by 18,3% from R2,018 billion to R2,387
billion; 7,6% (R154 million) from organic growth and
10,7% (R215 million) from acquisitions. Reduced gross
margins and higher operating costs resulted in
operating income increasing by only 9,2%. During the
year, a strategic decision was taken to increase
selected inventory categories which has resulted in
BMG being well stocked at year-end and, as a result,
the earthquake in Japan has had a relatively minor
impact on BMG’s operations.
CEG (Capital Equipment Group)
The CEG continued to face challenging conditions.
There has been a gradual recovery of volumes in the
construction equipment sector, albeit from a very low
base. However, the steps taken by CEG in its
construction equipment division following the global
financial crisis have resulted in a material
improvement in its contribution to CEG’s operating
profit. Volumes in the agricultural machinery sector
have improved marginally over last year, ensuring
consistent performance in this division. The materials
handling division (Criterion Equipment) also made a
good contribution to profits.
Total revenue of the Capital Equipment Group
increased by 7,3% to R1,877 billion.
A minor acquisition was made during the year, but did
not have any impact on the results.
A greater contribution from spares and service
revenue combined with good cost control resulted in
operating profit increasing by 27,6% to R158 million.
The segment’s annualised operating profit return on
capital employed continued to be at excellent levels,
an overall pleasing result.
OTHER OPERATIONS
Tiletoria expanded its distribution network by moving
to new premises in Durban and opening a branch in
Johannesburg. The Group has continued to invest in
the infrastructure of Tiletoria and, whilst not
contributing in any significant way to earnings at
present, Tiletoria should grow substantially in the next
few years.
PROSPECTS
Trading conditions in the sectors in which the Group
operates appear to be improving gradually. The
current strength of the Rand continues to be a source
of concern as it is likely to maintain pressure on
margins and reduce the income of key customers who
operate in export orientated sectors. The Group will
continue to focus on improving operational
efficiencies and to make acquisitions to grow steadily.
BMG has grown its base by making strategic
acquisitions and will continue to do so as and when
opportunities arise.
JOINT REPORT OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CONTINUED
REVIEW OF OPERATIONSCONTINUED
Invicta Holdings Limited • Annual report 20118
In the CEG, agricultural equipment conditions are
better than anticipated. Grain prices have recovered
from last year’s lows and should support a steady
demand for agricultural equipment. Conditions in the
construction equipment market are gradually
improving, albeit off a low base.
The recent earthquake in Japan has affected some of
the Group’s suppliers, but not materially. The resultant
effect on the Group has been minimal. About 21% of
the Invicta Group’s revenue is from Japanese products.
The Group’s supplier factories are, in the main, based
in the southern part of Japan, which is well away from
the north-eastern area which was affected by the
disaster. Some have been affected by disruption in
supply to them from component manufacturers, but
disruption to supply to the Invicta Group has so far
been minimal. The Invicta Group is well stocked and
does not anticipate any material disruption due to the
consequences of the earthquake in Japan.
In keeping with its intention of growing the Group,
the Board has decided to strike a balance between
retaining cash for growth and paying dividends. In the
result, the annual dividend cover has henceforth been
fixed at 2,75 times earnings per share, resulting in a
final dividend of 126 cents per share, an increase of
23,5%.
The Board remains confident of the continued success
of the Group.
EVENTS AFTER REPORTING PERIOD
Theramanzi Investments (Pty) Limited (“Trust
Subsidiary”) (a 100% held subsidiary of a new
broad-based trust, Humulani Empowerment Trust,
with its beneficiaries including Invicta employees, their
immediate families, communities and other
broad-based initiatives as determined by trustees)
(“Trust”) and aloeCap (Pty) Limited, have entered into
an agreement effective 1 June 2011, in terms of which
the Trust Subsidiary acquired aloeCap’s 20% equity
stake in Humulani. By the time this report reaches
shareholders, details of the transaction will have
been announced. We refer shareholders to this
announcement.
CONCLUSION
The Group has continued its growth track record and
is set to continue along this path. Invicta was again
awarded Top 100 status on the JSE, the only JSE-listed
company to have achieved this for 16 years in a row.
This is a fantastic team effort and we thank all our
loyal staff members for their contribution. We are
immensely proud of our achievements and look
forward to more of the same in the future.
Dr CH Wiese A Goldstone
Chairman Chief Executive Officer
31 May 2011
JOINT REPORT OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CONTINUED
9Invicta Holdings Limited • Annual report 2011
100% 60%100%
Humulani
Employee
Investment
Trust
aloeCap
(Pty) Limited
5%
20%
75%100%
INVESTMENTS
HUMULANI
INVESTMENTS
(PTY) LIMITED
Divisions
CORPORATE STRUCTURE
Humulani
Marketing
(Pty) Limited
Goldquest
International
Hydraulics SA
(Pty) Limited
Tiletoria
(Pty) Limited
Disa
Equipment
(Pty) Limited
(Doosan SA)
Criterion
Equipment
(Pty) Limited
Invicta
Properties
(Pty) Limited
Invicta Holdings Limited • Annual report 201110
DEL ZondoJS Mthimunye
The Group will continue to focus on
improving operationalefficiencies and to make
acquisitions to grow steadily.
HUMULANI INVESTMENTS BOARD
C BarnardA Goldstone AK Masuku
11Invicta Holdings Limited • Annual report 2011
HUMULANI INVESTMENTS STRUCTURE
HUMULANI INVESTMENTS
CHARLES WALTERSBMG
Abe BekkerChief Operating Officer
Rod WatsonManaging Director: CSE
Paul ViljoenSales Director: Northmec
Peter AskewManaging Director: New Holland SA
Alex AckronCartcom and Turf
Steve KiteNational Service
Brenton KempManaging Director: Criterion Equipment
Ben GroblerNational Parts Director
Geoff BalshawFinancial Director
Johan van der MerweManaging Director:Northmec
Wayne TaylorChief Financial Officer
Paul McKinlayDirector: Bearings, Seals and Power Transmission
Gavin PelserDirector: Drives, Belting and OST
Dave RussellGroup Technical Director
Ian KingGroup Sales and Marketing Director
ANTHONY SINCLAIRCEG
CEG DIVISIONAL DIRECTORSBMG DIVISIONAL DIRECTORS
André StruwigManaging Director: Doosan SA
NATIONAL MANAGERS
Humulani Marketing Tiletoria
Allan DuckworthFinancial Director
Mohammud MohuideenOperations Director
PATRICK THONISSENTiletoria
Invicta Holdings Limited • Annual report 201112
MAP OF BMG DISTRIBUTION NETWORK
Autobax/Motosport branches
BMG
BMG Automotive
BMG Belting
Invicta Bearings
BMG Engineering Hubs
BMG Springset
BMG Fasteners
BMG Sealco
BMG Trade
BMG Hydraulics
Alpha Bearings
GAUTENG
Invicta Holdings Limited • Annual report 201112
13Invicta Holdings Limited • Annual report 2011
MAP OF CEG DISTRIBUTION NETWORK
13Invicta Holdings Limited • Annual report 2011
GAUTENG
CSE branches
Northmec branches
Northmec dealers
New Holland SA branches
New Holland SA dealers
Doosan SA branches
Doosan SA dealers
Cartcom branches
Criterion branches
Invicta Holdings Limited • Annual report 201114
BMG – Bearing Man Group
BEARING MAN GROUP MAINTAINS ITS LEAD
BMG has worked hard to maintain its position as Africa’s largest specialist distributor ofbearings, seals, power transmission components, electric and geared motors, belting, fasteners, filtration and hydraulics.
BMG’s success can be attributed to a carefully structured expansion programme, where newproducts are launched to satisfy exact market demand. Strategies to maintain the company’s leading position include setting benchmarks for the company locally, to meetstringent international standards.
As part of BMG’s programme to develop and fulfil strategic objectives, BMG has openedspecialist engineering hubs throughout the country. These engineering hubs have beenformed by the consolidation of BMG Drives and BMG Belting’s business to support the company’s recently launched World Class Production Efficiency initiative.
REVIEW OF OPERATIONS
BM
G
W TaylorChief financial officer
CE WaltersChief executive officer
BMG has opened specialist engineering
hubs throughout the country
15Invicta Holdings Limited • Annual report 2011
REVIEW OF OPERATIONSCONTINUED
BM
G
FINANCIAL REVIEW
The economic environment continued to prove challenging during the year with areas of improvement in some sectors offset by weakness inothers. Despite these tough trading conditions BMGhas produced a satisfactory set of results.
Turnover from existing businesses increased by 7,6%to R2,172 billion (2010: R2,018 billion). Acquisitionsadded a further R215 million to turnover. Turnover,including acquisitions, increased by 18,3%. Gross margins remained under pressure due to the continued strength of the Rand. Operating profit fromexisting businesses was marginally lower, at R286,3million (2010: R292,7 million) at an operating marginof 13,2% (2010: 14,5%). Operating profit, includingacquisitions, increased by 9,2% to R319,7 million, at anoperating margin of 13,4%.
In key geographic areas, BMG has acquired the
majority interest of the agency back from the owner
manager for a number of reasons, inter alia, key
account management and succession planning.
In April 2010 Wegezi Power Holdings (Pty) Limited was
acquired on a profit target basis, with targets to be
met over the three-year period to 31 March 2013. This
acquisition has enabled BMG to expand its product
offering to include electric motor rewinding and
transformers.
A number of smaller acquisitions were made during
the year to improve the geographic footprint of BMG’s
hydraulics business. The more significant of these were
Turnkey Hydraulics in KwaZulu-Natal and Hi-Quip
Hydraulics in Mpumalanga.
In July 2010, a strategic decision was taken to increase
stock orders due to pending supplier price increases
arising from escalating commodity prices. BMG is well
prepared for extended supplier lead times.
The short-term implication has been a significant
increase in inventory, but management is confident
this decision will benefit BMG in the ensuing year due
to product availability at lower costs. Inventory in
existing businesses increased by 32% to R790 million
and inventory in acquired businesses amounted to R22
million at year-end. The cost of acquisitions, combined
with increases in inventory, resulted in cash balances
reducing by R86 million to R91 million at year-end.
ACQUISITIONS
During the year BMG spent R128 million on acquiring
businesses and buying back certain of the company’s
strategic agency outlets. Many of BMG’s retail
branches are owner managed on an agency basis.
CONSUMABLE PRODUCTS DIVISION –BEARINGS, SEALS, POWER TRANSMISSIONPRODUCTS AND FASTENERS
The Consumables Division performed satisfactorily
overall, with positive sales and volume growth
compared to the previous year.
Gross margin on bearing sales remained under
pressure, mainly due to the competitive situation
resulting from the strong Yen. Sales and volume
growth were positive, although the magnitude of the
growth tapered off in the last quarter.
Power transmission products recovered well with sales,
volume and gross margin improvement in most
product lines.
A highlight of the year included the formalisation of a
distribution agreement with the Gates Corporation of
the USA. Gates is a global leader in the supply of
premium quality drive belts and hoses.
BM
GInvicta Holdings Limited • Annual report 201116
Performance from BMG’s seals products was ahead of
expectations, with sales, volume and gross margin
results showing pleasing growth. The addition of a
new seal manufacturing facility towards the end of
the financial year will improve the company’s ability to
provide customers with a broader range of products.
BMG pioneered the introduction of professional
specialised seal manufacturing machines more than
twenty years ago. This investment, which strengthens
BMG’s leading position in the local seals market,
enables the company to increase the size range of
non-standard seals to over 500 mm.
The Fasteners Division saw positive growth during the
year; however, the dynamics in this sector resulted in
continued pressure on margins. A supply agreement
was finalised with Gedore, which extends BMG’s range
to include a full portfolio of quality tool products.
ENGINEERED PRODUCTS DIVISION –DRIVES, BELTING, OST AND WEGEZI
The Drives Division experienced a slow recovery in
sales in the first six months, as major projects remained
on hold in key mining sectors, including diamonds,
platinum and chrome.
In the second half of the year the Drives Division was
awarded several strategic project orders, including
replacement gearboxes for the Richards Bay coal
terminal and two large Dorstener units for Illovo
Sugar.
Daily replacement sales increased during the year and
the availability of strategic stocks resulted in increased
market share for BMG Drives. The division remains
focussed on becoming the leader in the southern
African market in this highly competitive sector.
The electric motor market in southern Africa remained
depressed in the first six months and competitive
throughout the year. Nevertheless, BMG’s Electric
Motors Division performed satisfactorily relative to the
previous year.
Highlights for the division were the launch of new IE2
high efficiency motors and the award of an Eskom
contract for the supply of high voltage and low
voltage motors.
The Belting Division experienced a slow recovery from
the recession and faced the challenges of responding
to skills shortages and raw material price increases.
The belting technical platform was enhanced by the
employment of four product technical specialists who
concentrate on training, technical expertise and
superior service.
Oscillating System Technology (OST) experienced
another tough year. Focus was placed on reducing
costs and the profitability of the business was
improved. The niche product offering of this business
has seen it weather the storm well and it is well set to
benefit from the anticipated improvement in its
markets.
The acquisition in April 2010 of Wegezi Power
Holdings has made a meaningful contribution to BMG.
Wegezi consists of five divisions – transformers,
electric motor repair and sales, remanufacturing and
site work, pump repair and sales.
The Wegezi transaction is in line with BMG’s strategy
to expand its business through select value-adding
acquisitions. BMG continues to differentiate its
business through specialist services that include
technical advice on energy savings and production
efficiency, condition monitoring and maintenance
advice, on-site maintenance support, repair services
for bearings, gearboxes, electric motors, hydraulic
systems and pumps, as well as customer training.
BMG has also extended its interests in the electronics
sector, with the recent acquisition of Velo Control,
distributors of Danfoss drives and instrumentation.
With this key addition under BMG Drives, BMG is set
to become a leader in variable speed drives in
southern Africa.
TECHNICAL RESOURCES DIVISION
BMG’s growing influence as a source of competitive
advantage and profit maximisation for South African
industry is spearheaded by its Technical Resources
Division.
During the year, the technical team has added world
leading reliability systems, advanced instrumentation
and recording devices and energy efficiency
programmes to boost the effectiveness of its World
Class Production Efficiency initiative.
Aligned with this is a continuing expansion into field
services to deliver these benefits on the ground, at the
customer’s plant and machinery, where skills shortages
are negatively affecting the profitability of the South
African economy.
REVIEW OF OPERATIONSCONTINUED
17Invicta Holdings Limited • Annual report 2011
REVIEW OF OPERATIONSCONTINUED
BM
G
The company has invested significantly in the control
of product quality, both locally and abroad. The recent
establishment of a high power, low energy test facility
has enabled BMG in South Africa to make a
meaningful contribution to the research and
development work of one of the company’s largest
global suppliers, at the same time delivering total
reliability confidence to local customers.
Future plans are geared at increasing BMG’s ability to
partner its customers by expanding further into field
services, technical training, reliability based
maintenance and integrated technical process
solutions involving the entire BMG product range.
OUTLOOK
Although trading conditions have improved
somewhat from the recession in the past two years,
trading conditions are likely to remain fairly
challenging. The local currency is expected to remain
relatively strong while ongoing upward cost pressure
is expected from product suppliers due to availability
challenges and commodity price increases. Increases in
local labour and distribution costs are also expected.
While BMG will have to pass product price increases on
to its customers, management remains very focused
on ensuring all input costs are effectively managed
and that customer value is created by providing
assistance with the correct selection of product and
the introduction of services to assist with the
management of maintenance programmes and costs.
BMG is well positioned to continue to provide quality
components, technical expertise and superior service
to diverse industries, thereby ensuring it continues on
its exciting growth path.
Invicta Holdings Limited • Annual report 201118
G BalshawFinancial director
A SinclairChief executive officer
CEG – Capital Equipment Group
The CEG has producedexcellent results, with most
markets in which it operatesshowing signs of recovery
from the global recession.
CEG is one of South Africa’s leading importers and distributors of capital equipment in a
range of different markets including agriculture, construction and materials handling.
REVIEW OF OPERATIONSCONTINUED
CEG
19Invicta Holdings Limited • Annual report 2011
REVIEW OF OPERATIONSCONTINUED
CEG
FINANCIAL REVIEW
The CEG has faced challenging conditions during the
year. The year started off with the country
struggling out of the recession with muted demand
for new equipment and a strong Rand, which put
pressure on margins. The CEG implemented various
strategies during the recession and was better
prepared than most to perform well as the markets
started recovering. It rose to the occasion and
delivered improved profits and cash flow.
By the end of the financial year, each market
segment serviced by the CEG had shown an
improvement over last year, with the only exception
being the plant hire sector of the construction
equipment market.
The CEG’s structures have been built over the years to
enable it to weather cyclical market corrections.
Therefore, in years where all divisions of CEG
simultaneously perform, the profits and cash flow
contributions are rewarding.
The Capital Equipment Group comprises:
NORTHMEC: CaseIH Agricultural Equipment
and other related implement brands
NEW HOLLAND SA: New Holland
Agricultural Equipment and other related brands
CSE: Case Construction Equipment, Club Car and
Jacobsen/Ransomes Turf Equipment
DOOSAN SA: Doosan Construction Equipment
and Hammers
CRITERION EQUIPMENT: TCM Forklifts
CARTCOM: Golf car rental
LANDBOU PART: Replacement spare parts for
agricultural equipment
Revenue of the CEG increased by 7,3% to R1,877
billion. This small increase in turnover was expected,
owing to the very strong South African Rand having
the effect of lowering retail prices. Only one
acquisition was made during the year, which has not
yet had any impact on the results, but is expected to
do so in the future.
Good operational management and control of gross
margins, as well as continuous pressure to maintain
operating costs, have resulted in operating profit
increasing by 27,6% to R158 million. The operating
profit return on sales of 8,4% is particularly pleasing.
Equally pleasing was the operating profit return on
working capital which makes CEG an important
contributor to the Invicta Group.
The year ended with equipment stock levels in line
with the value on hand at the 2008 year-end. All stock
on hand is well within market-related pricing. Notably,
high valued inventory that resulted from currency
fluctuations at the beginning of the current year is out
Invicta Holdings Limited • Annual report 201120
of the system. Lead times from manufacturers during
the year of trading were within normal standards and
additional demand was well accommodated by the
factories.
QUALITY MANAGEMENT AND SOCIALRESPONSIBILITY
The CEG has maintained its standard of quality service,
after sales support and internal controls, by complying
with ISO9001 certification which is audited annually to
ensure continuous compliance. The division is
currently working toward ISO14001 environmental
certification.
To ensure stability and succession as well as up skilling
staff in the divisions, e-learning has been introduced,
which enables staff in remote locations to be trained
and educated electronically. The CEG also trains
artisans and has a university bursary scheme for
tertiary education.
The CEG contributes to a weekly feeding scheme
which reaches more than 200 children under the age
of eight years old. It has also invested in a
continuous chess education scheme “Moves for Life”
for school children, of which President Zuma, is the
Patron.
OPERATIONAL REVIEW
There has been a gradual recovery of volume demand
in the capital equipment markets throughout the year
with the construction sector still lagging behind
the agricultural and material re-handling markets.
Equipment volumes in the construction markets in
which the CEG trades have increased on 2009 calendar
year by 17,7%, agricultural tractors increased by 5,5%,
combine harvester volumes decreased by 8,0% and
forklift trucks increased by 58%.
All divisions performed well, with Doosan having an
exceptional year. Criterion performed well following
its restructuring after being acquired by the Group
in the prior year. All the agricultural machinery
operations performed well. Only the Case construction
equipment division, which trades predominately in
the plant hire market, struggled although it
continuous to be profitable.
NORTHMEC
CaseIH Agricultural Equipment and other related
implement brands
Northmec, predominantly a retail distributor of
agricultural equipment and implements, performed
above expectation. The total national market tractor
volumes in South Africa increased by 5,5% (excluding
exports) from 5 146 units to 5 432 units. Combine
harvesters decreased by 8,0% from 252 units to 210
units. The baler market has remained constant with a
2,3% increase from 388 units to 397 units, while
demand for implements was good.
Soft commodity prices were low at the beginning of
the year, but have increased steadily throughout the
year. This increase in prices has resulted in improved
farmer confidence despite a surplus of grain stock in
South Africa.
Northmec gained market share in all sectors in which
it trades. At year-end inventory was at an acceptable
level and was well priced.
Northmec is steadily increasing its importation of
tractors from India, owing to better pricing and
quality which is superior to Chinese product at this
stage. There is a continuous search for more products
to add to the range.
In a positive start to the 2012 year, Northmec has
secured a R90 million tractor order, the biggest ever
from a private farmer in South Africa.
NEW HOLLAND
New Holland Agricultural Equipment and other
related brands
New Holland is predominantly a wholesale distributor
of agricultural equipment but during the year it
ventured into opening retail stores in areas where
existing dealers were under-performing. This has
resulted in increased revenue and profits, although
operating costs have increased commensurately.
New Holland once again performed exceptionally
well. Its market share in tractors was maintained at
prior year levels despite difficulties in obtaining
popular models due to excessive world demand.
CEG
REVIEW OF OPERATIONSCONTINUED
21Invicta Holdings Limited • Annual report 2011
REVIEW OF OPERATIONSCONTINUED
Turnover remained flat but profit increased and an
excellent return on capital employed was achieved.
Overheads were fully covered by profits made on parts
and service without the necessity of having to sell any
equipment.
New Holland has recently acquired two significant
implement franchises which should make a
meaningful contribution to the division in future.
LANDBOU PART
Landbou Part is a wholesale division which sources
and sells replacement spare parts for agricultural
equipment. It was acquired during the financial period
under review.
At this early stage the division does not make a
meaningful contribution to the CEG’s profit, but it has
enormous potential to do so within the next three
years.
CSE
Case Construction Equipment, Club Car and
Jacobsen/Ransomes Turf Equipment
The construction equipment division showed a marked
improvement on the last year, while the turf
markets were on par with last year. Total market
volumes of construction machinery in which CSE
operates in South Africa, increased by 17,7% from
2 653 units to 3 123 units, with signs of continued
recovery going forward. The golf car and turf markets
remained stable.
The CSE construction equipment division trades
predominantly in the plant hire and construction
sectors of the markets. Revenue increased over last
year, but demand was muted owing to the lack of
government spending on infrastructure and there
were no major contracts to fill the gap left after the
FIFA World Cup. Lack of bank financing was also a
major obstacle for financing of sales of equipment.
Mining sectors, especially coal and platinum, have
recovered, which is good for the front end loader
materials re-handling sectors.
Despite the slowdown in golf course development,
there is still a need for upgrading of golf car fleets and
turf equipment. The golf course market is a
replacement market with very few, if any, new golf
course developments in progress.
CSE’s revenue increased over last year, and it continues
to trade profitably. There are positive signs of a
gradual recovery in the market and CSE should
continue to make its contribution to the overheads of
the Group.
Cartcom, the golf car rental company, performed well
and generated good cash flow.
DOOSAN SA
Doosan excavators and loaders, Everdigm hammers
This company distributes Doosan construction
machinery (excavators and loaders) and Everdigm
breaker hammers, all products being sourced from
South Korea. The company was acquired three years
ago and has performed exceptionally well considering
the market conditions. It has delivered an outstanding
result with turnover and operating profit increasing,
generating healthy cash flow throughout the year and
providing an excellent return on working capital.
CEG
REVIEW OF OPERATIONSCONTINUED
Invicta Holdings Limited • Annual report 201122C
EG
Doosan’s target market is mining and construction,
although it services other sectors as well. Doosan has
increased market share in both excavators and
loaders in a market which grew by 17,7% on average.
The coming year looks positive, with the increase in
activity in coal and platinum mining providing a good
base for the business. The influence of Chinese
equipment in the local construction market has almost
disappeared because of poor support for the product.
On a sad note, Doosan SA mourns the passing of its
Managing Director, Andre Struwig, who passed away
unexpectedly in May 2011. Andre was a key driver of
the success of Doosan and he will be sorely missed. The
Group’s condolences go to his family and friends.
CRITERION
TCM forklifts
Criterion is the distributor of TCM forklift trucks
imported from Japan.
This is the second full trading year since acquisition by
the Group and after many challenges to restore the
company and brand confidence in the market place,
the TCM brand is rapidly regaining its position as one
of the leading forklift brands in the South African
market. Each year since acquisition the profits have
grown significantly with both revenue and operating
profit increasing, compared with last year.
A significant amount of funds have been invested to
upgrade the national service vehicle fleet and an
internal rental finance facility has been put in place to
finance sales of equipment by the Group.
a threat of rolling power blackouts in Japan, but
suppliers are prepared for this and it should not have
any material impact on supplies to Criterion.
The CEG will once again remain focussed on the core
fundamentals of its business of cash flow and
profitability. The division will also continue seeking
out acquisition opportunities.
Management would like to thank all staff who helped
to make these excellent results possible.
The company has made a good contribution to the
CEG and has good potential to make an even more
meaningful contribution to the division’s profits in
future.
PROSPECTS
The results are an indication that the markets are
gradually starting to recover, but management is
cautious going into the new financial year.
Management expects factory lead times to increase as
global demand for product grows and has taken
appropriate steps to counteract this. The tsunami in
Japan had a minimal impact on TCM and the company
is back to full production in Japan. There is, however,
Tile
tori
a
23Invicta Holdings Limited • Annual report 2011
REVIEW OF OPERATIONSCONTINUED
Tiletoria has expandedmaterially in a very tough
market. Consolidation ofactivities in the coming year
should result in it achievingmeaningful profits.
P ThonissenManaging director
A DuckworthFinancial director
Tiletoria
REVIEW OF OPERATIONSCONTINUED
Invicta Holdings Limited • Annual report 201124
REVIEW OF OPERATIONSCONTINUED
Tile
tori
a
Tiletoria specialises in ceramic and porcelain wall and
floor tiles. During the year it added to that basket by
broadening the range to include some granite and
marble. It also extended its range of taps, sanitary
ware, bathroom accessories, basin cabinets, etc.
Tiletoria opened in Johannesburg (DecoPark, North
Riding) in June 2010. The branch is gearing up to
become a major player in the Gauteng region. Initial
trading has been good and this branch shows
enormous potential.
In July 2010 Tiletoria relocated its branch in Durban to
larger premises. The resultant disruption to business
was greater than anticipated and turnover in the new
branch has been lower than expected. Steps have been
taken to improve the branch and management
expects an improved year there with all the new
facilities which are in place. Two factory shops have
also been opened – one in Cape Town and one in
Durban – to sell lower priced and discounted stock.
Trading conditions in the building materials sector
during the year have been tough. The construction
sector in South Africa is struggling to shake off the
effects of the recession. Notwithstanding this, Tiletoria
increased its turnover by 46% to over R250 million, but
profitability fell as once-off costs of the two new
branches in Johannesburg and Durban were expensed.
As a result, Tiletoria did not make a meaningful
contribution to the Invicta Group operating profit
during the year under review.
Trading conditions in the coming year are expected to
be as tough as in the past year. It will be a year of
consolidation for Tiletoria and management will focus
on ensuring that all branches are profitable and that
the business is cash positive.
25Invicta Holdings Limited • Annual report 2011
Invicta endorses the Code of Corporate Practices and
Conduct, as well as the King Code of Governance for
South Africa 2009 (King III) and its Code of Governance
Principles that were launched on 1 September 2009
and came into effect and replaced King II on 1 March
2010. The new Companies Act, also contains
governance requirements. King III has adopted an
“apply or explain” approach. The Audit Committee
continuously reviews and amends its corporate
governance practices with a view to complying with
the requirements of the new Companies Act and the
King III recommendations. Invicta will continue to
adopt, as appropriate, existing and new principles,
which advance good practical corporate governance
and add value to the Group’s business activities.
The Board is of the opinion that the Group has, in all
material respects and where relevant, complied with
the King Code during the year under review.
INTRODUCTION
The Group’s policy is to conduct its business with
honesty and integrity and with the highest standard
of personal and corporate ethics. This includes
the promotion, enhancement, development and
protection of the business interests, reputation and
goodwill of the Group.
CODE OF ETHICS
The Board adopted a formal code of ethics during
2004, which seeks to ensure that a relationship of trust
and shared values is built up with both employees and
external stakeholders. The key pillars of the code
include adherence to the legal framework of the
country and ensuring that the Group is not brought
into disrepute, against the overriding background of
transparency in all transactions.
BOARD OF DIRECTORS
Composition
The names and brief résumés of the directors appear
on pages 4 and 5 of this 2011 Annual Report.
The Board currently comprises of nine directors and
one alternate director. Five directors qualify as non-
executive directors, of whom two also qualify as
independent directors in terms of the King III Code.
The Company’s Articles of Association provide for the
retirement of not less than one third of the directors
based on longest service. This year Dr CH Wiese,
Mr JS Mthimunye, Mr DI Samuels and Mr CE Walters
retire in terms thereof. Messrs Wiese, Mthimunye,
Samuels and Walters, being eligible, offer themselves
for re-election.
The directors have considerable business experience
and an excellent understanding of the Group’s
business.
Board effectiveness reviews were conducted during
the year under review, and further reviews will be
conducted at appropriate intervals.
Humulani Investments (Pty) Limited, the operational
holding company of the Invicta Group has further
appointed Diatile Lily Zondo as an independent
non-executive director with effect from 31 March
2011. Mrs Zondo previously held an executive position
at the Auditor General of South Africa and currently
holds an executive position at MTN South Africa.
Chairman and CEO
The roles of chairman and CEO are separate. The
managing directors and CEOs of the operating
subsidiaries and divisions report to the Group CEO of
Invicta, who in turn reports to the Board.
The Board is satisfied that no one individual
director or block of directors has undue power over
decision-making.
Professional advice
All directors have access to the company secretary and
management and are entitled to obtain independent
professional advice at the Company’s expense if
required.
CORPORATE GOVERNANCE
Invicta Holdings Limited • Annual report 201126
CORPORATE GOVERNANCECONTINUED
Board papers are issued to all directors prior to each
meeting and contain relevant detail to inform
members of the financial and trading position of the
company and each of its operating subsidiaries, as well
as covering material issues pertaining to the Group.
Non-executive directors also maintain regular
contact with executive directors to ensure that they
are kept abreast of material matters that may require
their input and guidance.
INTERNAL CONTROL
The directors have responsibility for the Group’s
systems of internal controls. These are designed to
provide reasonable assurance of effective and efficient
operations, internal financial control and compliance
with laws and regulations.
The Group’s system of internal controls is designed to
provide reasonable, but not absolute, assurance
against the risk of material errors, fraud or losses
occurring.
Meetings
The Board meets regularly on a scheduled basis and at such other times as circumstances may require. The table ofmeetings and attendance is as follows:
25 May 22 July 6 Sep 5 Nov 11 Feb2010 2010 2010 2010 2011
C Barnard^ √ √ √ √ √A Goldstone^ √ √ √ √ √AK Masuku*•# x x x x xJS Mthimunye•# √ √ √ √ √DI Samuels•# √ √ √ √ √LR Sherrell• √ √ x x √AM Sinclair^ √ √ √ √ √CE Walters^ √ x √ √ √CH Wiese (Chairman)• √ √ √ √ √JD Wiese• x √ √ √ x
* Alternate • Non-executive # Independent ^Executive
Furthermore, because of changing
internal and external factors, the
effectiveness of an internal control
system may vary over time and must be
continually reviewed and adapted.
The system of internal controls is
monitored throughout the Group by the
audit committee, the Group internal audit
department, management and employees as an
integrated approach. The Board reports that:
• to the best of its knowledge and belief, no
material malfunction of the Group’s internal
control system occurred during the period under
review;
• it is satisfied with the effectiveness of the Group’s
internal controls and risk management;
• it has no reason to believe that the Group’s code of
ethics has been transgressed in any material
respect; and
• to the best of its knowledge and belief, no
material breaches have occurred during the period
under review, of compliance with any laws and
regulations applicable to the Group.
27Invicta Holdings Limited • Annual report 2011
INFORMATION SECURITY
Compliance with legislative requirements contributes
towards the protection of corporate information, but
in itself only addresses a small part of the total
number of threats posed to the business arising from
its dependencies on information technology and the
internet. Security policies and procedures for
employees and the use of technologies such as
enterprise and personal firewalls, antivirus systems,
intrusion monitoring and detection are applied, as
well as frequent application of software security
“patches” issued by vendors as and when
vulnerabilities are discovered. An overhaul and
upgrade of the systems applicable to the Capital
Equipment Group is planned for the new year.
RESTRICTION ON TRADING IN SECURITIES
A formal policy, implemented some years ago,
prohibits directors, officers and employees with access
to financial information from dealing in the
Company’s securities, from the end of an interim
reporting period until after the interim results have
been published and similarly from the end of the
financial year until after the audited annual results
have been published. Directors and employees are
reminded of this policy prior to the commencement of
any restricted period.
In addition, no dealing in the Company’s securities is
permitted by any director, officer or employee whilst
in possession of information which could affect the
price of the Company’s securities and which is not in
the public domain.
Directors of the Company and of its subsidiaries are
required to obtain clearance from Invicta’s chairman
(and in the case of the chairman, or in the absence of
the chairman, from the chairman of the Audit
Committee), or his nominee, prior to dealing in the
Company’s securities, and to timeously disclose to the
Company full details of any transaction for
notification to and publication by the JSE.
All participants in the long-term equity-settled bonus
share incentive scheme may not exercise these rights
during a closed period.
STAKEHOLDER COMMUNICATION
Members of the Board meet on an ad hoc basis with
institutional investors, investment analysts, individuals
and members of the financial media. Discussions at
such meetings are restricted to matters that are in the
public domain.
Shareholders are informed, by means of pressannouncements and releases in South Africa and/orprinted matter sent to such shareholders, and/orannouncements on SENS, of all relevant corporatematters and financial reporting as required in terms of prevailing legislation. In addition, such announcements are communicated via a broad rangeof channels in both the electronic and print media.The Group has also embarked on a more formalapproach to providing feedback in respect of the year-end results with interviews scheduled for both radio and television after the relevant media and SENS announcements have been made. The company maintains a corporate websitehttp://www.invictaholdings.co.za containing financialand other information, including interim and annualresults. The site has links to the websites of each majoroperating subsidiary company.
The Group will look at ways of allowing electronicshareholder participation with its transfer secretariesin the upcoming year as provided for in the newCompanies Act.
EMPLOYMENT EQUITY
Invicta Holdings is committed to providing a working
culture that is inclusive to all. It is Group policy to
acknowledge and support South Africa’s Employment
Equity drive in ensuring that equal opportunities are
directed at our staff, regardless of race, colour, sexual
orientation, sex, religion, creed or national origin. The
Group remains compliant with all aspects of the
Employment Equity Act by adhering to the basic
requirements of the timeous submission of an online
report and plan, consultation with employees and
communication of the report and progress is
monitored on an ongoing basis. Areas of strategic
focus include recruitment as well as the development
of in-house talent through coaching, mentoring and
succession planning. Included in this drive is a bursary
programme directed a young black students who
could potentially be groomed for future senior
positions once they join us after graduation, where
potential Employment Equity Barriers are identified.
HR implements processes to eliminate these barriers,
where possible. The Group remains fully committed to
providing equal opportunities to its 3 279 employees
(2010: 2 240 employees).
CORPORATE GOVERNANCECONTINUED
Invicta Holdings Limited • Annual report 201128
CORPORATE GOVERNANCECONTINUED
TRAINING EDUCATION AND DEVELOPMENT OF STAFF
In-house training and development:
The Group’s philosophy on training the right
employee, at the right time provides returns for the
employer in increased productivity, knowledge,
loyalty, and contribution to the Group. Ongoing
training and skills development also forms the basis of
transformation; therefore it is an imperative for any
company aiming to develop a competitive edge. In
order to create this passion within the Group’s staff,
Invicta needs to help its people reach their full
potential through ongoing training and development.
After the successful external re-branding by BMG, it
has embarked on a Brand Ambassador training
initiative that essentially transforms BMG employees
to BMG Brand Ambassadors with a renewed heart and
mind. The Group provides a broad range of initiatives,
including technical, management and sales training, as
well as softer skills programmes, with technical
courses being delivered via e-learning. E-learning
provides the major benefit being convenience and
flexibility. Staff can log in when convenient whilst
learning can be applied immediately and shared with
colleagues. Training via e-learning also enhances the
much needed computer skills. All theoretical training
is finished off with practical training sessions delivered
by the Group’s technical resource division.
Education and career development
As part of the Group’s holistic approach to employee
development, it also offers educational assistance to
employees who are keen to further their own
qualifications on a part-time basis by completing work
related courses.
Student bursaries
The Group also currently has eight bursars
participating in a bursary scheme as well as one
engineering graduate who is completing her practical
year within the Group.
The Group is committed to partnering projects that
are focused on developing the technical skills base of
the country as a requirement for its business, as well as
the economy as a whole.
Over the past three years BMG has funded CASME –
Centre for the Advancement for Science and Maths
Education. This project is training 50 educators from
25 rural, under-resourced schools in and around
Umgungundlovu in KwaZulu-Natal, and providing
learning and teaching resources through a Teachers’
Resource Centre based at the FET College. The project
includes ongoing school-based support for teachers, as
well as a learner support programme, which addresses
further education opportunities, with a focus on
technical and engineering programmes offered by the
FET College.
BMG also has a long-standing relationship with the
PROTEC branches in Tongaat and Inanda/ Kwa Mashu
in KwaZulu-Natal. Protec’s aim is to increase the
country’s technologically skilled human resource base
through the provision of educator-based training and
a Learner Excellence Programme (learner-based
education) to under-resourced schools in South Africa.
This holistic programme is aimed at Grade 10 learners
who participate until they reach Grade 12 and they are
supported through their tertiary education studies
and beyond. Research results clearly indicate that the
Protec branches are having a positive impact on
the academic performance of beneficiaries from
historically disadvantaged communities. At least 50%
of learners from Protec passed with University passes
between 2002 and 2010, significantly more than the
provincial averages.
Protec has a long and consistent track record of
helping learners improve their results and go on to
successful technological careers. They have expert staff
and experienced leadership who show great passion in
implementing every project. BMG will be extending
the Group’s commitment to Protec by partnering them
in the development of two new branches in key
trading areas of Steelpoort and Carletonville in the
year ahead.
BLACK ECONOMIC EMPOWERMENT (“BEE”)
Invicta has requested Bravura Consultancy to act as its
consultants in terms of Broad-Based Black Economic
Empowerment (“B-BBEE”) as well as the BEESCORE to
re-certify the BEE status of its various operations. The
Group envisages improving its BEE status from its
current Level Five contributor to a Level Four
contributor in terms of the Broad-Based Rating
Scorecard.
29Invicta Holdings Limited • Annual report 2011
CORPORATE GOVERNANCECONTINUED
CORPORATE SOCIAL INVESTMENT (“CSI”)
As a responsible South African citizen, the Group hasmade commendable contributions towards enhancingbasic services at community level. The Group carefullyselects initiatives that will have the maximum impacton basic needs of South African’s and, where an immediate need arises, it also undertakes more ad hocprojects to address specific issues.
Some examples of initiatives the Group undertook areas follows:
• Supporting a feeding scheme where the Group’sfinancial as well as time contributions enabled the foundation to distribute food parcels to needyschool children and their families.
• Funding for the education of scholars in the critical areas of mathematics and science duringSaturday schooling initiatives.
• The Group supports a foundation that providesthe poor, who have sound micro-enterprise ideas,with capital and guidance to help them get themselves out of poverty.
• Scholarships to underprivileged and financially disadvantaged children.
• The Group is also supporting various homes, suchas a centre for abused and neglected children, ahome for young pregnant girls as well as a crèchein Khayelitsha.
• The Group also provide significant funding to an institution who supports people in providing a loving and stable home for orphans and vulnerable children, whether on a temporary basis,a foster parent or by adopting.
Education and career development
As well as the extensive staff training which is dealtwith elsewhere in this report, the Group sees education as a primary area of focus for the futuregrowth of the country.
Funding is provided to centres providing education to educators, which are based in 25 rural under-resourced schools.
A further major funding project is in respect of a non-profit technological career development programme,focusing on quality of mathematics and science. The Group acknowledges that a holistic approach isnecessary, of which academic support is but one element.
Sport development
Within the Group, sponsorship as well as dedicated
time is allocated to form a local soccer championship
league consisting of players from the community as
well as from the Company. By investing time and
energy into this initiative, the Group strongly believes
that people prefer to rather invest their energy in
community-related events where they can create a
sense of belonging rather than spending time on the
streets.
General
All the Group operations, no matter how small, have
contributed to supporting the destitute and
underprivileged in the communities in which they exist
and function.
QUALITY MANAGEMENT ANDOCCUPATIONAL HEALTH AND SAFETY
The consistent supply of both quality products and
service to customers is key to the Group’s successes. To
this end, the Group continues to focus on the ISO
quality system to assist in achieving this.
CEG has maintained their ISO certification with TUV
Rheinland in all its divisions, including the Criterion
Equipment Division.
The Autobax Division has maintained its ISO
certification with Lloyds.
BMG’s Quality Management Systems (QMS) certified in
2003, is now well established, with their current ISO
9001:2008 standard only due for re-certification in
December 2012. BMG’s commitment to a safe and
healthy working environment for customers and
employees is demonstrated by the implementation of
the OHSAS 18001:2007 standard.
The Group continues to progress the development and
implementation of the OHSAS 18001 Occupational
Health and Safety Management System in its major
operations, with CEG aiming to achieve certification of
this standard in the 2011 calendar year.
ACCESS TO INFORMATION
The Company and all its subsidiaries are compliant
with the provisions of the Promotion of Access to
Information Act. The manual in terms of this
legislation is available from the registered office of the
Company and on the Company’s website.
Invicta Holdings Limited • Annual report 201130
CORPORATE GOVERNANCECONTINUED
SUSTAINABILITY REPORT
The Board is committed to creating long-term value
for all its stakeholders by providing sustainable
businesses in an integrated approach to the
communities in which it operates.
The sustainability objectives of the Group are:
• Act in the best interests of Group shareholders and
Group principals, by representing them in a
manner which brings credit to their products and
brands.
• Ensuring that customers receive an integrated and
environmentally sound solution that meets their
specific needs.
• Providing employees with a working environment
and encouraging a culture which allows them to
achieve as much as possible and to have a fulfilled
working career.
• Delivering sustainable returns to shareholders
which are not at the expense of the Group’s
ethical standards.
• The Group continues to measure its expenditure
on non-renewable resources and to eliminate any
unnecessary or inefficient processes. The primary
areas of consumption in the Group continue to be
transport, fuel and electricity. The Group
continually looks at optimising its warehouse
locations and inventory holdings in a bid to
minimise transport cost and fuel consumption,
with consolidation of certain locations planned for
the new year.
• As customers continue to search for more efficient
and productive products, the Group, through its
various operations, continues to develop these
with its various principals around the world and to
offer solutions to the market.
The Board wishes to take this opportunity to thank all
the stakeholders in the Group for their ongoing
commitment and loyalty to the development of a
sustainable business and relationships.
Arnold GoldstoneChief Executive Officer Invicta Holdings Limited
REMUNERATION REPORT
Role of the Remuneration Committee and terms of
reference
The Remuneration Committee is a committee of the
Board of Directors and is responsible for:
• making recommendations to the Board on the
general policy on executive remuneration,
benefits, conditions of service and staff retention;
• determining the specific remuneration packages
of executive directors and senior management of
the Group including, but not limited to, basic
salary, performance-based short- and long-term
incentives, pensions and other benefits; and
• the design and operation of the Group’s share
incentive schemes.
The full terms of reference of the Committee have
been agreed by the Board.
Members of the Remuneration Committee during 2011
• CH Wiese (Chairman)
• DI Samuels
• A Goldstone – Attendance ex Officio
All members of the Committee are non-executive
directors.
The Committee met five times during 2011. The chief
executive officer attends the Committee meetings by
invitation and assists the Committee in its
deliberations, except when issues relating to his own
compensation are discussed. No director is involved in
deciding his or her own remuneration. In 2010 the
Committee was advised by the Group’s finance and
human resources divisions on the implementation of
the executive incentive schemes.
The Company’s auditors, Deloitte & Touche, have not
provided advice to the Committee. However, in their
capacity as Group auditors, they perform normal audit
procedures on the remuneration of directors.
The Remuneration Committee meets at least annually
and the attendance at meetings held was as follows:
25 May 11 Jun 24 Aug 22 Oct 3 Mar
2009 2010 2010 2010 2011
CH Wiese √ √ √ √ √DI Samuels √ √ √ √ √A Goldstone √ √ √ √ √
31Invicta Holdings Limited • Annual report 2011
CORPORATE GOVERNANCECONTINUED
Remuneration policy and executive remuneration
Principles of executive remuneration
The Group’s remuneration policy aims to attract and
retain high-calibre executives and to motivate them to
develop and implement the Group’s business strategy
in order to optimise long-term shareholder value
creation. The policy conforms with King III and is based
on the following principles:
• Total rewards are set at levels that are competitive
within the relevant market.
• Incentive-based rewards are earned through
the achievement of demanding performance
conditions consistent with shareholder interests
over the short-, medium- and long-term.
• Incentive plans, performance measures and targets
are structured to operate effectively throughout
the business cycle.
• The design of long-term incentives is prudent and
does not expose shareholders to unreasonable
financial risk.
Elements of executive remuneration
The four elements of executive remuneration consist
of a base salary, benefits, an annual incentive and
long-term incentives. The Committee seeks to ensure
an appropriate balance between the fixed and
performance-related elements of executive
remuneration, and between those aspects of the
package linked to short-term financial performance
and those aspects linked to longer-term shareholder
value creation. A further consideration has been the
need to retain critical skills in the Group. The
Committee considers each element of remuneration
relative to the market and takes into account the
performance of the Group and the individual
executive in determining both quantum and design.
The policy relating to each component of
remuneration is summarised below:
Base salary
The base salary of the executives is subject to annual
review. It is set to be competitive at the median level,
with reference to market practice in companies
comparable in terms of size, market sector and
business complexity. Group and Company
performance, individual performance and changes in
responsibilities are also taken into consideration when
determining annual base salaries.
Benefits
Benefits for executives include membership of a
retirement fund and a medical aid, to which
contributions are made by the executives and the
Group.
Short-term incentive
All executives are eligible to participate in a short-term
incentive with payment levels based on either
corporate or individual performance or both. Key
performance indicators are set on an individual basis
each year. The incentive plan is contractual but not
pensionable. The Committee retains the discretion to
make positive adjustments to bonuses earned at the
end of the year on an exceptional basis, taking into
account both Group performance and the overall and
specific contribution of individual executives to
meeting the Group’s objectives.
The Committee reviews measures annually, to ensure
that the targets set are appropriate, given the
economic context and the performance expectations
for the Group.
Long-term incentive
Invicta Holdings long-term bonus and share incentive
scheme
In order to attract and retain key staff, the Group
requires appropriate long-term incentive schemes.
Many of the Group’s operations require key technical
skills which are often difficult to replace. In trying to
address the critical factor, the Committee, in
consultation with industry professionals, has designed
a long-term bonus incentive scheme for key
executives. In terms of the scheme, executives will be
rewarded on their performance, with reference to the
growth in the Invicta share price over a period of three
to five years. The bonus, as determined by the
formula, will be settled with equity in Invicta by the
relevant operational entity or on terms of the existing
Invicta Holdings Limited Share Trust. The bonus
scheme will constantly be reviewed by the Committee
for its effectiveness and will be amended from time to
time, if necessary. Divisional senior executives and
management are on a cash-based bonus system, which
ensures they are rewarded for performance in those
areas over which they have direct influence. Details of
the Invicta Holdings Long-Term Bonus and Share
Incentive Scheme are detailed on page 32.
CORPORATE GOVERNANCECONTINUED
Equity-settled bonus share incentive right scheme
The Group employed a long-term bonus equity-settled share incentive right scheme (“LBSIR scheme”) for key executives in 2006. In terms of the LBSIR scheme executives are granted a bonus share incentive right (“the bonusright”) calculated with reference to a specified number of shares at a price equal to the weighted average five-day closing market price on the date of grant. The bonus right vests after a period of one year, (subject to theachievement of the performance conditions set for the executive), and the bonus right becomes exercisable aftera further two-year period, after which the executive has a further two-year period in which to take up the bonusright before it lapses.
The bonus right is determined based on the difference between the grant price and the weighted average five-day closing share price on the exercise date. The bonus, as determined by the formula, will be settled withInvicta shares.
The bonus right expense has been calculated using a Black Scholes valuation model and is expensed over a three-year period from the grant date and is recorded in the Share Appreciation Reserve.
2011 2010
Weighted Weightedaverage average
Number incentive Number incentiveof rights cost of rights cost
incentives Rand incentives Rand
Outstanding at the beginning of the year 15 610 458 11 506 458Awarded during the year 1 000 000 5,87 4 360 000 4,44Exercised during the year (5 505 958) (256 000)
Outstanding at the end of the year 11 104 500 15 610 458
Tranch 1 Tranch 2 Tranch 3 Tranch 4 Tranch 5 Tranch 6 Tranch 6
Number of grants 3 514 000 250 000 3 814 000 4 104 000 75 000 4 360 000 1 000 000Grant date 13 Mar 06 1 Sep 06 26 Mar 07 14 Mar 07 30 Sep 08 13 Mar 09 2 Mar 10Grant price R17,20 R20,00 R27,97 R24,84 R26,87 R18,48 R24,37
3 years 3 years 3 years 3 years 3 years 3 years 3 years% % % % % % %
Expected volatility (daily) 2,1 2,0 2,1 2,2 2,2 2,1 2,1Dividend yield 5,6 5,3 6,4 3,5 3,8 4,2 4,9Risk-free rate 7,2 8,17 8,17 9,4 8,7 6,43 8,68
Executive directors’ interests in the LBSIR scheme are set out in note 36 on page 80 of the 2011 Annual Report.
A long-term loan scheme for executives on the board of directors of Invicta Holdings Limited (“Invicta”)
The purpose of the loan is to incentivise Invicta executives over the long term by providing them with a mechanism to acquire a meaningful stake in Invicta, thereby aligning them with the interests of Invicta shareholders.
A subsidiary of Invicta, Humulani Marketing (Pty) Limited (“Humulani”) will make a seven-year loan to the executives to acquire shares in Invicta within 90 days of the loan being granted.
Interest on the loan will be charged at the Income Tax Official Rate for low interest loans to employees as published by SARS from time to time (currently 6,5% per annum), calculated daily and capitalised annually.
Capital shall be repayable at the end of the loan period.
Invicta Holdings Limited • Annual report 201132
CORPORATE GOVERNANCECONTINUED
Servicing of the loan will be by interest being paidannually using dividends received on the Invicta shareswhich have been acquired with the loan. If the dividends received are less than the interest payable,the shortfall shall be capitalised. The executive may, athis election, pay off all or part of the accumulated interest at any time, but shall not be obliged to do so.
The loan will be secured by a cession and pledge of theInvicta shares acquired with the loan, plus a cessionand pledge of additional Invicta shares which may be provided by the executive, plus any additional securitythat the Invicta Remuneration Committee may requirefrom time to time, such that the value of thesecurity:loan ratio will be at least 1,5:1.
The loan will be limited to a multiple of each executive’s cost to company. The multiple will varydepending on the executive’s position and responsibility, as well as the security he is able to provide for the loan. The limit will be determined bythe Remuneration Committee.
The total capital value of the loans to the Invicta executives shall not exceed R85 million and the maximum loan to any one individual shall not exceedR40 million.
Humulani will grant the executive a put of the shares(acquired with the loan) at 75% of the price paid byhim for the shares, which shall be used to offset anyloan balance at the time. The put shall only be exercisable when the loan falls due for repayment atthe end of the loan period or if his employment withthe Group is terminated due to no fault of his, egdeath or disability.
By the time this report reaches shareholders, details ofthe proposed loans will have been announced. Werefer shareholders to this announcement.
In line with the principles stated above, theRemuneration Committee has authorised the implementation of a bonus bank scheme at senior andmiddle management level which entails managementearning a performance-based bonus, which is effectively paid out over the subsequent three years.
External appointments
Executive directors are not permitted to hold externaldirectorships or offices without the approval of theBoard. If such approval is granted, directors may retainthe fees payable from such appointments.
Directors’ fees
Directors’ payments for services as directors and otheremoluments are set out in note 36 on pages 79 and 80
of the 2011 Annual Report. Members will be requested to consider an ordinary resolution approving these emoluments at the annual generalmeeting.
Non-executive directors’ fees
The annual fees payable to non-executive directors of
the Company are based on a fee for attendance per
meeting of the Board and, where applicable, per
meeting of sub-committees. An additional fee is paid
to the Chairman of both the Board and the Audit
Committee.
Non-executive directors do not participate in the
Company’s annual bonus plan, or in any of its share
incentive schemes.
Directors’ and executive management’s service
contracts
None of the directors are bound by service contracts.
All executive directors, who are also directors of
subsidiary companies, have an engagement letter
which provides for a notice period of between one
and three months to be given by either party.
The Group chief executive officer has no service
contract.
None of the non-executive directors have a contract of
employment with the Group.
In terms of the Articles of Association, not less than
one-third of the directors are required to retire by
rotation at each annual general meeting of the
Company and may offer themselves for re-election.
The appointment of new directors during the year is
required to be confirmed at the next annual general
meeting and such new directors are required to retire
at such annual general meeting, but may offer them-
selves for re-election.
Approval
This remuneration report has been approved by the
Board of Directors of Invicta.
Signed on behalf of the Remuneration Committee
Dr CH Wiese
Chairman of the Remuneration Committee
33Invicta Holdings Limited • Annual report 2011
Invicta Holdings Limited • Annual report 201134
The Board of Directors acknowledges its responsibility
to ensure the integrity of the Integrated Report.
The Board has accordingly applied its mind to the
Integrated Report and, in the opinion of the Board,
the Integrated Report addresses all material issues,
and presents fairly the integrated performance of the
organisation and its impacts. The Integrated Report
has been prepared in line with appropriate best
practices pursuant to the recommendations of the
King III Code.
REPORT SCOPE AND BOUNDARY
The Integrated Report (“the Report”) covers in its
scope both the legal entities and physically located
branches making up the distribution, sales and
administrative infrastructure of the Invicta Group.
The Report covers the financial year ended on
31 March 2011, but due to the contiguous nature of
business and reporting, the Report implicitly takes into
cognisance the end of the previous and the first
quarter of the subsequent financial year.
The Group has always been run on an operationally
decentralised basis due to the complimentary, but
often different nature of the main operational pillars
making up the Group. Based on this principle of
decentralised operations, the Group’s role is that of
providing a strategic, financial and strong directional
role for operations, with CEO’s of the main
operational pillars having direct reporting and
executive responsibility on the Board.
ORGANISATIONAL OVERVIEW, BUSINESSMODEL AND GOVERNANCE STRUCTURES
The Group has always seen its distribution sales and
support network as a key strategic asset, enabling it to
create value on a sustainable basis, while also
constituting barriers of entry to competitors on a
national basis. The extent and number of the Group
operational outlets are highlighted on pages 2 and 3
of the Annual Report.
Further to the above, the Group sees its management
and staff as a key factor in a business which is
effectively selling, supporting and advising on a wide
range of industrial consumable products.
The Group, besides having a Remuneration Committee
and a Audit and Risk Committee at the Group level,
has maintained these same management and
governance disciplines in place at main operational
pillars to ensure policies and direction are effectively
cascaded down, at the same time allowing for
effective reporting up. Details of Group management
and governance committee, are provided in more
detail in the Report of the Directors (page 39),
Corporate Governance Report (page 25), the
Remuneration Report (page 30) and Audit and Risk
Committee Report (page 42).
OPERATIONAL CONTEXT
The Group continues to act as a value-added proxy for
the South African economy, with a clear delayed
correlation between commodity and resources
performance and the Group.
The Group imports almost all of the products it
supplies and thus the effects of exchange rate
fluctuations need to be effectively managed through
operational buying departments, under the Group’s
policy of hedging through the use of Forward
Exchange Contracts.
Employment and logistic costs are the main domestic
cost elements that make up a significant element of
the overhead base of the Group.
STAKEHOLDER RELATIONSHIPS
The Group continues to view its employees as a key
stakeholder group, and endeavours to, on an
on-going basis, develop not only training, but
improved communication processes within the
operations.
The Group has made a conscious effort to address its
community and social responsibility spending by
developing a more clearly focused programme of
initiatives, which it supports. With the Group holding
key agency and distribution agreements for world
class brands with international principals, ongoing
relationship building with these suppliers is seen as a
key element of the current and future success of the
Group, as the network and range of suppliers
increases.
Customers and shareholders, through their actions,
continue to give the Board and management a
mandate to run the Group, whose ongoing support
and beneficiation is seen as the litmus test of superior
performance by the Group.
STRATEGIC DIRECTION
The Group continues to look for acquisitions which fit
the distribution and sales model that it has
INTEGRATED REPORT
35Invicta Holdings Limited • Annual report 2011
INTEGRATED REPORTCONTINUED
successfully developed over the last decade. Further consideration will also be given to opportunities that are
based outside South Africa, which not only fit with the Group’s expertise, but which also provide a natural hedge
against some of the currency exposures the Group faces.
PERFORMANCE
The Group continues to outperform its own return benchmarks and has, at a trading level, grown by more than20% per annum cumulatively for more than seven years.
Key and carefully selected acquisitions as well as excellent management are the primary drivers of the Group’s success.
The Group continues to benchmark return on working capital as a key factor.
SUMMARY FINANCIAL INFORMATION
2011 2010 2009 2008 2007 2006 2005 2004 2003
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Revenue 4 533 801 3 968 872 4 523 535 3 335 496 2 663 398 1 907 754 1 937 593 2 069 163 1 907 317
Operating profit
before finance costs,
interest and dividends
received 505 493 453 293 497 356 360 379 281 229 197 843 231 957 229 451 230 123
Profit for the year 426 222 365 389 362 812 300 856 217 724 125 165 108 507 99 631 96 502
Ordinary shareholders’
interest 1 611 265 1 442 966 1 206 055 1 025 591 886 161 716 296 365 075 312 339 343 665
Dividends per share (cents) 183 151 138 138 104 68 77 66 45
Earnings per share (cents) 504 453 437 356 292 170 190 164 133
Diluted earnings per
share (cents) 480 441 437 354 288 169 190 160 130
Share price at the
year-end (cents) 4 350 2 879 2 000 2 550 2 750 1 850 1 550 935 550
REMUNERATION POLICY
Principles of executive remuneration
The Group’s remuneration policy aims to attract and retain high-calibre executives and to motivate them to develop and implement the Group’s business strategy in order to optimise long-term shareholder value creation.The policy conforms with King III and is based on the following principles:
• Total rewards are set at levels that are competitive within the relevant market.
• Incentive-based rewards are earned through the achievement of demanding performance conditions consistent with shareholder interests over the short-, medium- and long-term.
• Incentive plans, performance measures and targets are structured to operate effectively throughout the business cycle.
• The design of long-term incentives is prudent and does not expose shareholders to unreasonable financial risk.
In line with the principles stated above, the Remuneration Committee has authorised the implementation of abonus bank scheme at senior and middle management level which entails management earning a performancebased bonus which is effectively paid out over the subsequent three years.
Shareholders will further be asked to vote on a resolution in terms of which Invicta’s long-term bonus and shareincentive scheme of 2006 is made an approved scheme under Schedule 14 of the JSE Listing Requirements.
Finally a long-term scheme for executives on the board of directors of Invicta Holdings Ltd (“Invicta”) has beendeveloped. The purpose of the loan is to incentivise Invicta executives over the long term by providing them witha mechanism to acquire a meaningful stake in Invicta, thereby aligning them with the interests of Invicta shareholders. Shareholders are referred to the separate announcement in this regard.
Invicta Holdings Limited • Annual report 201136
VALUE ADDED STATEMENTfor the year ended 31 March 2011
2011 2010
Employees Providers of capital Government Retained for reinvestment
31%
38%
5%
26%
34%
40%
2%
24%
GROUP
2011 2010R’000 % R’000 %
Income from goods and services 4 533 801 3 968 872
Less: Cost of goods and services (3 404 499) (3 001 527)
Value added from trading operations 1 129 302 967 345
Add: Dividends received on investments 312 727 210 056
Add: Interest received from investments 177 405 198 442
Total value added 1 619 434 100,00 1 375 843 100,0
Utilised as follows:
Employees
Salaries and benefits 550 503 34,0 430 712 31,3
Providers of capital 657 015 40,6 527 724 38,3
Interest on borrowings 545 242 432 886
Dividends for shareholders 111 773 94 858
Government – company tax 25 032 1,5 64 155 4,7
Current 23 220 19 480
Foreign 8 683 53 460
Deferred (7 817) (9 593)
Secondary tax on companies 946 808
1 232 550 76,1 1 022 591 74,3
Retained for reinvestment
Depreciation and amortisation 32 729 2,0 32 356 2,4
Income retained in the business 354 155 21,9 320 896 23,3
386 884 23,9 353 252 25,7
Total utilisation of value added 1 619 434 100,0 1 375 843 100,0
37Invicta Holdings Limited • Annual report 2011
APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS
TO THE MEMBERS OF INVICTA HOLDINGS LIMITED
It is the directors’ responsibility to prepare annual financial statements that fairly present the state of affairs of the
Company and the Group at the end of the financial year and the profit or loss for the year. The external auditors
are responsible for independently reviewing and reporting on these annual financial statements.
The annual financial statements set out in this report have been prepared by management in accordance with
International Financial Reporting Standards and in the manner required by the Companies Act of South Africa.
They are based on appropriate accounting policies which have been consistently applied and which are supported
by reasonable and prudent judgements and estimates.
Dr CH Wiese A Goldstone
Chairman Chief executive officer
31 May 2011
CERTIFICATION BY THE COMPANY SECRETARY
I certify in accordance with Section 268G(d) of the Companies Act, that the Company has lodged with the
Companies Intellectual Property and Registration Office all such returns as are required by a public company in
terms of the Act and that all such returns are true, correct and up to date.
C Barnard
Secretary
Cape Town
31 May 2011
Invicta Holdings Limited • Annual report 201138
REPORT OF THE INDEPENDENT AUDITORS
TO THE MEMBERS OF INVICTA HOLDINGS LIMITED
Report on the annual financial statements
We have audited the group annual financial
statements and annual financial statements of Invicta
Holdings Limited, which comprise the Audit Committee
report on pages 42 and 43, the consolidated and
company statements of financial position as at
31 March 2011, and the consolidated and company
statements of comprehensive income, changes in
equity and cash flows for the year then ended, and a
summary of significant accounting policies and other
explanatory notes, and the directors’ report, as set out
on pages 39 to 41.
Directors’ Responsibility for the Financial Statements
The directors are responsible for the preparation and
fair presentation of these financial statements in
accordance with International Financial Reporting
Standards and in the manner required by the
Companies Act of South Africa, and for such internal
control as the directors determine is necessary to
enable the preparation of financial statements that
are free from material misstatement, whether due to
fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these
financial statements based on our audit. We
conducted our audit in accordance with International
Standards on Auditing. Those standards require that
we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance
whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures in
the financial statements. The procedures selected
depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation
and fair presentation of the financial statements in
order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates
made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the financial statements present fairly,
in all material respects, the consolidated and company
financial position of Invicta Holdings Limited as at
31 March 2011, and its consolidated and company
financial performance and consolidated and company
cash flows for the year then ended in accordance with
International Financial Reporting Standards and in the
manner required by the Companies Act of South
Africa.
Deloitte & Touche
Registered Auditors
Per SBF Carter
Partner
31 May 2011
Buildings 1 and 2, Deloitte Place, The Woodlands,
Woodlands Drive, Woodmead, Sandton
National executive: GG Gelink (Chief Executive),
AE Swiegers (Chief Operating Officer), GM Pinnock
(Audit), DL Kennedy (Risk Advisory), NB Kader (Tax &
Legal Services), L Geeringh (Consulting), L Bam
(Corporate Finance), JK Mazzocco (Human Resources),
CR Beukman (Finance), TJ Brown (Clients), NT Mtoba
(Chairman of the Board) and MJ Comber (Deputy
Chairman of the Board)
A full list of partners and directors is available on
request.
B-BBEE rating: Level 2 contributor/AAA (certified by
Empowerdex)
39Invicta Holdings Limited • Annual report 2011
REPORT OF THE DIRECTORSfor the year ended 31 March 2011
INVICTA HOLDINGS LIMITED
The directors have pleasure in presenting their annual
report, which forms part of the annual financial
statements and the 2011 Annual Report of the Group
and of the Company for the year ended 31 March
2011.
In the context of the financial statements, the term
“Group” refers to the Company, its subsidiaries,
associates and joint ventures.
Nature of business
The Company is an investment holding and
management company. The various operations of the
Group are summarised below with an expanded
explanation of the various businesses detailed in the
review of operations.
Humulani Investments (Humulani)
Operational holding company of all the Invicta Group
operations.
Humulani has 25% of its ordinary shares under the
control of BEE parties.
20% of Humulani’s ordinary shares are held by
aloeCap Private Equity Investments 1 (Pty) Limited, a
wholly-owned subsidiary of aloeCap (Pty) Limited.
aloeCap is a 100% black-owned and managed
company.
5% of Humulani’s ordinary shares are held by
the Humulani Employee Investment Trust. The
beneficiaries of the trust are the black employees of
the Group.
In terms of SIC 12, the 5% of the ordinary issued share
capital of Humulani Investments (Pty) Limited owned
by the Humulani Employee Investment Trust (“the
trust”) has been consolidated. Deconsolidation
thereof and the recognition of the profit attributable
to the issue of the shares to the trust will commence
once the residual risks attributable to the loan finance
provided by Invicta to the trust to acquire the shares
dissipate through repayment or the investment value
increases.
BMG (Bearing Man Group)
Southern Africa's leading distributor of bearings, seals,
power transmission components, drives, belting,
fasteners, filtration and hydraulics.
CEG (Capital Equipment Group)
Northmec
Distributor of a full range of leading agricultural
machinery, implements and related spares.
CSE
Wholesale and retail distributor of light earthmoving
machinery, turf-grooming machinery, golf cars, utility
vehicles and related spares.
New Holland
Wholesale distributor of leading brand agricultural
machinery, implements and related spares.
Doosan SA
Doosan SA supplies predominately heavy earthmoving
machinery for construction and mining applications.
Criterion
Importer and distributor of leading materials handling
equipment and related spares.
Tiletoria
A leading importer and distributor of tiles and related
sanitary ware in the Western Cape, Gauteng and
KwaZulu- Natal.
Compliance with accounting standards
The Group’s and the Company’s annual financial
statements comply with International Financial
Reporting Standards, the South African Companies Act
and the JSE Limited’s Listings Requirements (“JSE”).
Group results
2011 2010
R'000 R'000
Revenue 4 533 801 3 968 872
Profit for the year 426 222 365 389
Management philosophy
Invicta adopts a hands-on approach to managing its
subsidiaries. Each subsidiary is self contained and has
its own managing director and a complete
complement of financial and administration
infrastructure. The Invicta Group chief executive
officer is, however, actively involved in the executive
committees of all operations, with executive directors
of the Group actively controlling and participating on
Invicta Holdings Limited • Annual report 201140
REPORT OF THE DIRECTORS continued
for the year ended 31 March 2011
the boards of subsidiaries. Cash flow is always a major
focus of the Group. The Board aims to add value by
providing expertise and guidance to subsidiary
management teams, where feasible, and by pooling
best practices within the Group.
Share capital and share premium
The authorised share capital of the Company
remained unchanged at 134 000 000 ordinary shares
of 5 cents each.
During the year, the Company’s issued ordinary share
capital and share premium remained unchanged.
Dematerialising of shares (Strate)
Shareholders are again requested to note that, as a
result of clearing and settlement of trades through the
Strate system, the Company’s share certificates are
no longer good for delivery for trading.
Dematerialisation of the Company’s share certificates
is now a prerequisite when dealing in its shares.
Auditors
Deloitte & Touche continued in office as auditors of
the Company and its subsidiaries for 2011.
At the annual general meeting, shareholders will be
requested to reappoint Deloitte & Touche as auditors
of Invicta Holdings Limited and to confirm that SBF
Carter will be the designated auditor partner for the
2012 financial year.
Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited acts
as sponsor to the Company in terms of the
requirement of the JSE Limited.
Transfer secretaries
Computershare Investor Services (Pty) Limited serves as
the registrar and transfer secretaries of the Company.
Invicta Holdings long-term bonus and share incentive
scheme and Bonus Bank Scheme
In order to attract and retain key staff the Group has
implemented a long-term bonus and share incentive
scheme as well as a Bonus Bank Scheme. The
Remuneration Report contains details of the scheme.
Subsidiaries and associate
Details of the Company’s interests in its material
subsidiaries and associate are set out in the attached
annual financial statements in notes 16 and 17 on
pages 68 to 71 of the 2011 Annual Report.
Dividends
Details of the ordinary dividends paid are reflected in
note 24 on page 73 of the 2011 Annual Report.
The Company’s current dividend policy is to consider
an interim dividend at a 3,5 times dividend cover ratio,
with a final dividend being considered to bring the
annual dividend cover ratio to no less than 2,75 times.
Historically the dividend cover ratio has been 3,5 times
at interim stage and 3,0 times annual dividend cover
ratio at the final dividend stage.
Directors
Details of the directors and company secretary during
the year and at the date of this report are reflected on
pages 4 and 5 and on the inside back cover of the 2011
Annual Report.
Directors’ contracts
No material contracts have been entered into between
the Company and the Group and the directors during
the year under review.
Directors’ fees
Directors’ payments for services as directors and other
emoluments for the past year are set out in note 36 on
pages 79 and 80 of the 2011 Annual Report. Members
will be requested to consider an ordinary resolution
approving these emoluments at the annual general
meeting.
Members will further be requested to approve the fees
for services as director for the forthcoming year as
required by the Companies Act.
Directors‘ interest in shares in the Company
The total direct and indirect interest declared by the
directors in the issued share capital of the Company at
31 March 2011 was 59% (2010: 60%).
The details of the directors’ shareholding are reflected
in note 40 on page 85 of the 2011 Annual Report.
Unissued share capital
The unissued ordinary shares are the subject of a
general authority granted to the directors in terms of
the Companies Act and the JSE Listings Requirements.
As this general authority remains valid only until the
next annual general meeting, which is to be held
on 29 July 2011, members will be requested at the
meeting to consider an ordinary resolution placing the
said ordinary shares under the control of the
directors until the 2012 annual general meeting.
41Invicta Holdings Limited • Annual report 2011
REPORT OF THE DIRECTORS continued
for the year ended 31 March 2011
Repurchase of shares
It makes sound business sense for a Company to
acquire its own shares under certain circumstances.
Thus, the directors consider it appropriate to secure a
general authority for the Company to repurchase
shares on the open market of the JSE in order to
provide the Company with maximum flexibility
regarding the repurchase of its own shares.
The Group has over the years repurchased shares
which are held at subsidiary level. The treasury shares
are eliminated on consolidation and are thus treated
as cancelled from a financial reporting perspective.
The directors consider it appropriate to secure a
general authority for the Company to repurchase its
shares held by its subsidiary.
The Company’s Articles of Association allow the
Company to purchase its own shares if shareholders
have, by way of special resolution, given the Company
a general authority to affect such purchase or a
specific authority to affect a specific purchase of its
own shares, subject to the requirements of the
Companies Act and the JSE Listings Requirements.
Shareholders will be required to consider special
resolutions at the annual general meeting giving the
directors general authority to permit the Company or
a subsidiary of the Company to acquire the Company’s
shares and to permit the Company to acquire its shares
held by subsidiary companies.
Notice of annual general meeting
Notice to shareholders detailing all necessary
resolutions relating to the Company affairs is set out
on pages 89 to 96 of the 2011 Annual Report.
Signed on behalf of the Audit Committee
Dr CH Wiese A Goldstone
Chairman Chief Executive Officer
Cape Town
31 May 2011
Invicta Holdings Limited • Annual report 201142
AUDIT COMMITTEE REPORTfor the year ended 31 March 2011
Background
The Audit Committee is guided by a charter that isinformed by the Companies Act and is approved bythe Board as and when it is amended. The revisedcharter includes the specific requirements as set out inthe Companies Act, pertaining to audit committees.
Purpose
The purpose of the Committee is:
• To assist the Board in its evaluation of the adequacy and efficiency of the internal control systems, accounting practices, information systemsand auditing processes applied in the day-to-daymanagement of the business in compliance withall applicable legal requirements, corporate governance and accounting standards.
• To provide a forum for communication betweenthe Board, management, and the internal andexternal auditors.
• To review and confirm the independence of theinternal and external auditors, and to review andapprove the engagement of the external auditorsfor non-audit work.
• To introduce such measures as in the Committee’sopinion may serve to enhance the reliability,integrity and objectivity of financial information,statements and affairs of the Group.
• To provide support to the Board on the risk management of the Group.
• To review the management of financial risk. Prior
to the establishment of a separate Risk Committee,
the Audit Committee will perform the function of
the Risk Committee, whereby identified risks will
be monitored and discussed at the Audit
Committee meetings.
• To monitor the compliance of the Group with legal
requirements and the Group’s code of ethics.
• To ensure a high standard of Corporate
Governance is adhered to at all times within the
Group.
• To review and monitor the internal audit function.
Membership
The Committee was appointed at the annual general
meeting on 29 July 2010. The Committee comprises
solely of non-executive directors. The members are:
DI Samuels (Chairman)
JS Mthimunye
LR Sherrell
JD Wiese (alternate to LR Sherrell and JS Mthimunye)
The Audit Committee members are considered to be
independent of executive management.
Shareholders will be requested to approve the
appointment of the members of the Audit Committee
at the annual general meeting scheduled for 29 July
2011.
Attendance at meetings during the year was as
follows:
24 May 21 July 4 Nov 10 Feb
2010 2010 2010 2011
C Barnard• √ √ √ √SBF Carter# √ √ x √A Goldstone• √ √ √ √JS Mthimunye* √ x √ xDI Samuels* √ √ √ √LR Sherrell* x x x √AM Sinclair• √ √ x xB Smith# √ x x xJD Wiese+ x x √ √* Members • Group Directors # External Audit
^ Internal Audit + Alternate
In addition to members, the chairman may request
personal or written representation from Group and
Company directors as well as internal and external
audit.
External audit
In terms of section 269A of the Companies Act, the
Committee nominated Deloitte & Touche as the
independent auditor and SBF Carter as the designated
partner, who is a registered independent auditor, for
appointment for the 2011 audit. This appointment
was approved by shareholders at the annual general
meeting on 29 July 2010. The Committee has satisfied
itself through enquiry that the auditor of Invicta is
independent as defined by the Companies Act, as
amended or replaced, and as per the standards
stipulated by the auditing profession.
Requisite assurance was sought and provided by the
auditor that internal governance processes within
the audit firm support and demonstrate their
independence.
The Committee, in consultation with executive
management, agreed to the engagement letter, terms,
nature and scope of the audit function and audit plan
for the 2011 financial year. The budgeted fee is
considered appropriate for the work that could
reasonably have been foreseen at that time. The final
adjusted fee will be agreed on completion of the
audit. Audit fees are disclosed in note 4 on page 59 of
the 2011 Annual Report.
43Invicta Holdings Limited • Annual report 2011
AUDIT COMMITTEE REPORT continued
for the year ended 31 March 2011
There is a formal procedure that governs the processwhereby the auditor is considered for non-audit services, and each engagement letter for such work isreviewed and approved by the Committee. Meetingsare held with the auditor where management is notpresent and no matters of concern were raised.
The Committee has again nominated, for approval atthe annual general meeting, Deloitte & Touche as theexternal auditor and SBF Carter as the designatedauditor for the 2012 financial year. The Committeeconfirms that the auditor and designated auditor areaccredited by the JSE.
Risk Committee
Responsibility for managing the Group risk lies ultimately with the Board. However, the boards ofsubsidiary companies, executive committees and management at operational level assist the Board indischarging its responsibilities in this regard by identifying, monitoring and managing risk on anongoing basis.
Risk management specifically includes the consideration of:
• the risk profile and management of operationalrisk within the Group;
• the risk profile and risk management of majorprojects and acquisitions; and
• the adequacy of self-insurance and external insurance programs.
Risk management
The Board through the Risk Committee, which is asub-committee of the Audit Committee, has identifieda number of key risk areas which it believes requiremonitoring and detailing to stakeholders, these aresummarised below –
Strategic risk review
The Group has, with the guidance of external consultants, performed a strategic risk review in theprevious years at both Group and divisional level. Theresults of this exercise have allowed management andthe Board to focus on risk mitigation strategies andprocesses. The Committee monitors the progress ofthe implementation of the above processes, with written submissions and presentations being done bymanagement at least annually.
Exchange rate fluctuations
Most of the Group’s businesses involve the importation of product and, accordingly, changes inexchange rates can and do significantly affect the
performance of operations. To date the Board hasadopted the policy of hedging all its material foreignexchange exposures.
Product supply
Based on the highly competitive markets in which theGroup operates, specific focus is given to sourcingcompetitively priced quality products around theworld. Directors and senior management have specific programmes on an annual basis, including the visiting of selected international trade fairs and supplier functions, to benchmark existing productranges and to source new lines.
Distribution network and infrastructure
The distribution of the Group’s products is critical to itssales performance and takes place through a wide andentrenched network of its own outlets as well as thirdparty distributors. The support, communication andbusiness model used to govern these relationships,enjoys primary focus at the operating entities’ executive committee meetings, and involves direct liaison with the relevant parties by the non-executivedirectors of the Board.
Trade and funding facilities
The availability of both trade and funding facilities arestrategic to the ongoing performance and success ofthe Group. The Board monitors and controls these onan ongoing basis. This has become a greater focussince the global liquidity crunch and its resultantimpact on the world banking system and consequently on the Group’s customers and suppliers.
Annual financial statements
In view of the Audit Committee having fulfilled itsmandate, it recommended the financial statements forapproval to the Board. The Board subsequentlyapproved the financial statements, which will be openfor discussion at the forthcoming annual generalmeeting.
Group financial director
As required by the JSE Listings Requirements, the committee confirms that the Group and Company’sfinance director, Mr C Barnard, has the necessaryexpertise and experience to carry out his duties.
DI SamuelsChairman of the Audit Committee
31 May 2011
Invicta Holdings Limited • Annual report 201144
STATEMENTS OF COMPREHENSIVE INCOMEfor the year ended 31 March 2011
GROUP COMPANY
2011 2010 2011 2010Notes R’000 R’000 R’000 R’000
Revenue 4 533 801 3 968 872 – –
Cost of sales (3 169 438) (2 886 154) – –
Gross profit 1 364 363 1 082 718 – –
Selling, administration and distribution costs (858 870) (629 425) 5 958
Operating profit before finance costs, interest
and dividends received 4 505 493 453 293 5 958
Finance costs 5 (545 242) (432 886) (13) (2)
Dividends received from subsidiaries – – 132 170 96 990
Dividends received from investments 312 727 210 056 48 548 49 044
Share of profits of associate 17 871 639 – –
Interest received 6 177 405 198 442 175 23
Profit before taxation 451 254 429 544 180 885 147 013
Taxation 7 (25 032) (64 155) (668) (368)
Profit for the year 426 222 365 389 180 217 146 645
Other comprehensive income
Exchange differences on translating
foreign operations (833) (7 649) – –
Total comprehensive income for the year 425 389 357 740 180 217 146 645
Profit attributable to:
Owners of the Company 354 155 320 896 180 217 146 645
Non-controlling interest 72 067 44 493 – –
426 222 365 389 180 217 146 645
Total comprehensive income attributable to:
Owners of the Company 353 630 315 196 180 217 146 645
Non-controlling interest 71 759 42 544 – –
425 389 357 740 180 217 146 645
Dividends per share (cents) 24 183 151
Earnings per share (cents) 8 504 453
Diluted earnings per share (cents) 8 480 441
45Invicta Holdings Limited • Annual report 2011
STATEMENTS OF FINANCIAL POSITIONas at 31 March 2011
GROUP COMPANY
2011 2010 2011 2010Notes R’000 R’000 R’000 R’000
ASSETSNon-current assetsProperty, plant and equipment 9 353 953 312 860 – –Investment in subsidiaries 16 – – 502 264 502 264Investment in associate 17 2 190 2 119 – –Financial investments 10 2 963 484 2 880 087 422 683 443 000Goodwill 11 304 746 245 403 – –Other intangible assets 12 57 707 9 923 – –Financial asset 13 249 230 179 549 – –Finance lease receivable 14 433 – – –Long-term receivables 15 260 992 6 721 – –Deferred taxation 7.1 69 940 69 852 – –
4 262 675 3 706 514 924 947 945 264
Current assetsLoans to subsidiaries 18 – – 237 750 401 136Inventories 19 1 381 615 1 298 795 – –Trade and other receivables 20 698 526 670 979 7 293 7 146Current portion of finance lease receivable 14 299 – – –Current portion of financial investments 10 97 998 – 36 326 –Current portion of long-term receivable 15 1 201 – – –Taxation prepaid 14 150 273 – –Bank balances and cash 34 432 403 260 553 9 717 12 681
2 626 192 2 230 600 291 086 420 963
TOTAL ASSETS 6 888 867 5 937 114 1 216 033 1 366 227
EQUITY AND LIABILITIESCapital and reservesOrdinary share capital 21 3 724 3 724 3 724 3 724Share premium 22 282 715 282 715 282 715 282 715Treasury shares 23 (119 809) (96 570) – –Share appreciation reserve 54 979 55 339 – –Available for sale reserve – – 4 814 –Revaluation reserve 5 025 5 025 – –Foreign currency translation reserve (6 674) (6 149) – –Retained earnings 1 391 305 1 198 882 918 814 857 021
Equity attributable to the equity holders 1 611 265 1 442 966 1 210 067 1 143 460Non-controlling interest 243 584 170 297 – –
SHAREHOLDERS’ EQUITY 1 854 849 1 613 263 1 210 067 1 143 460
Non-current liabilitiesLong-term borrowings 26 3 391 948 3 026 890 688 688Guaranteed repurchase liability 25 9 347 – – –Financial liabilities 27 251 819 182 168 – –Deferred taxation 7.1 6 248 14 289 784 –
3 659 362 3 223 347 1 472 688
Current liabilitiesTrade and other payables 28 1 111 487 947 777 2 647 2 431Provisions 29 93 237 72 571 – –Tax liabilities 13 052 13 287 690 665Loan from subsidiary 30 – – 420 218 344Shareholders for dividends 7 062 2 967 737 639Current portion of long-term borrowings 26 122 290 18 056 – –Current portion of guaranteed repurchase liability 25 3 781 – – –Bank overdrafts and bankers’ acceptances 34 23 747 45 846 – –
1 374 656 1 100 504 4 494 222 079
TOTAL LIABILITIES 5 034 018 4 323 851 5 966 222 767
TOTAL EQUITY AND LIABILITIES 6 888 867 5 937 114 1 216 033 1 366 227
Invicta Holdings Limited • Annual report 201146
STATEMENTS OF CHANGES IN EQUITYfor the year ended 31 March 2011
Foreign Attribu-Share Available currency table to Non-
appre- for Re- trans- equity control-Share Share Treasury ciation sale valuation lation Retained share- ling
capital premium shares reserve reserve reserve reserve earnings holders interest TotalR’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
GROUP
Balance at
1 April 2009 3 724 282 715 (94 247) 33 294 – 8 194 (449) 972 824 1 206 055 130 196 1 336 251
Total comprehensive
income for the year – – – – – – (5 700) 320 896 315 196 42 544 357 740
Dividends paid – – – – – – – (94 838) (94 838) (3 953) (98 791)
Share appreciation
rights issued – – – 22 045 – – – – 22 045 – 22 045
Non-controlling
interest arising on
acquisition of
subsidiary – – – – – – – – – 1 510 1 510
Revaluation reserve
written off on
liquidation of
Group company – – – – – (3 169) – – (3 169) – (3 169)
Treasury shares
acquired – – (2 323) – – – – – (2 323) – (2 323)
Balance at
31 March 2010 3 724 282 715 (96 570) 55 339 – 5 025 (6 149) 1 198 882 1 442 966 170 297 1 613 263
Total comprehensive
income for the year – – – – – – (525) 354 155 353 630 71 759 425 389
Dividends paid – – – – – – – (111 773) (111 773) (6 907) (118 680)
Share appreciation
rights issued – – – 19 226 – – – – 19 226 – 19 226
Share appreciation
rights exercised – – – (19 586) – – – (50 920) (70 506) – (70 506)
Acquisition of
additional non-
controlling interest – – – – – – – 961 961 (2 608) (1 647)
Non-controlling interest
arising on acquisition
of subsidiary – – – – – – – – – 11 043 11 043
Treasury shares
acquired – – (23 239) – – – – – (23 239) – (23 239)
Balance at
31 March 2011 3 724 282 715 (119 809) 54 979 – 5 025 (6 674) 1 391 305 1 611 265 243 584 1 854 849
COMPANY
Balance at
1 April 2009 3 724 282 715 – – – – – 810 180 1 096 619 – 1 096 619
Total comprehensive
income for the year – – – – – – – 146 645 146 645 – 146 645
Dividends paid – – – – – – – (99 804) (99 804) – (99 804)
Balance at
31 March 2010 3 724 282 715 – – – – – 857 021 1 143 460 – 1 143 460
Mark to market on
treasury shares – – – – 4 814 – – – 4 814 – 4 814
Total comprehensive
income for the year – – – – – – – 180 217 180 217 – 180 217
Dividends paid – – – – – – – (118 424) (118 424) – (118 424)
Balance at
31 March 2011 3 724 282 715 – – 4 814 – – 918 814 1 210 067 – 1 210 067
47Invicta Holdings Limited • Annual report 2011
STATEMENTS OF CASH FLOWSfor the year ended 31 March 2011
GROUP COMPANY
2011 2010 2011 2010Notes R’000 R’000 R’000 R’000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 31 626 547 590 226 74 811
Finance costs (545 242) (432 886) (13) (2)
Dividends paid to Group shareholders 32 (107 679) (92 436) (118 327) (99 730)
Dividends paid to non-controlling interest (6 907) (3 953) – –
Taxation (paid) refunded 33 (48 377) (25 329) (643) 263
Interest and dividends received 490 132 408 498 180 893 146 057
Net cash inflow from operating activities 408 474 444 120 61 984 47 399
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of property, plant and equipment 21 303 9 872 – –
Expansion to property, plant and equipment and
intangible assets (61 919) (46 914) – –
Replacement of property, plant and equipment (52 455) (37 416) – –
Additions to intangible assets (1 967) – – –
Acquisition of subsidiaries 42 (134 646) (32 964) – –
Acquisition of associate – (1 480) – –
Dividends received from associate 800 – – –
Investment in treasury shares (23 239) (2 323) (10 410) –
Disposal of investment in partnership – 1 527 875 – –
(Increase) decrease in long-term receivable (254 553) (6 721) 36 326 –
Increase in financial investments (83 397) (1 684 987) – –
Increase in current portion of financial investments
and long-term and finance lease receivables (99 498) – (36 326) –
Decrease (increase) in loans to subsidiaries – – 163 386 (146 655)
Net cash (outflow) inflow from investing activities (689 571) (275 058) 152 976 (146 655)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term borrowings 358 184 164 594 – –
Increase in guaranteed repurchase liability 9 347 – – –
(Decrease) increase in loan from subsidiary – – (217 924) 100 803
Increase in current portion of long-term borrowings
and guaranteed repurchase liabilities 107 515 12 510 – –
Net cash inflow (outflow) from financing activities 475 046 177 104 (217 924) 100 803
Net increase (decrease) in cash and cash equivalents 193 949 346 166 (2 964) 1 547
Cash and cash equivalents at the beginning of the year 214 707 (131 459) 12 681 11 134
Cash and cash equivalents at the end of the year 34 408 656 214 707 9 717 12 681
Invicta Holdings Limited • Annual report 201148
NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2011
1. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
During the year, the Group adopted all of the new and revised Standards and Interpretations issued by the
International Accounting Standards Board (the IASB) and the International Financial Reporting
Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for the Group’s
reporting period. The adoption of IFRS 2 Share-based Payments (amendments), IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations (amendments), IFRS 8 Operating Segments (amendments), and
related amendments to IAS 1 Presentation of Financial Statements, IAS 7 Statement of Cash Flows, IAS 17
Leases, IAS 28 Investments in Associates, IAS31 Interest in Joint Ventures, IAS 32 Financial Instruments:
Presentation, IAS 36 Impairment of Assets, IAS 38 Intangible Assets, IAS 39 Financial Instruments: Recognition
and Measurement has not resulted in any significant changes to the Group and Company’s accounting
policies and the effects on the amounts reported for the current or prior years have been disclosed.
At the date of authorisation of these financial statements, the following Standards applicable to the Group
and Company were in issue but not yet effective:
Standards: Effective date:
• IFRS 3 – Business Combinations
(Amendments) Annual periods beginning on or after 1 July 2010
• IFRS 7 – Financial Instruments: Disclosures
(Amendments) Annual periods beginning on or after 1 July 2010
• IFRS 9 – Financial Instruments –
Classification and Measurement Annual periods beginning on or after 1 January 2013
• IAS 1 – Presentation of Financial
Statements (Amendments) Annual periods beginning on or after 1 January 2011
• IAS 12 – Income Taxes – Limited scope
amendment Annual periods beginning on or after 1 January 2012
• IAS 24 – Related Party Disclosures (Revised) Annual periods beginning on or after 1 January 2011
• IAS 27 – Consolidated and Separate
Financial Statements (Amendments) Annual periods beginning on or after 1 July 2010
• IAS 34 – Interim Financial Reporting
(Amendments) Annual periods beginning on or after 1 January 2011
The directors anticipate that the adoption of these Standards in future periods will have no material impact
on the financial statements of the Group and Company.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with International Financial Reporting Standards
and in the manner required by the Companies Act of South Africa. The financial statements have been
prepared on the historical cost basis, except for the revaluation of financial instruments. The principal
accounting policies adopted are set out below.
2.1 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and
entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the
49Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
power to govern the financial and operating policies of an entity so as to obtain benefits from its
activities. The results of subsidiaries acquired or disposed of during the year are included in the
consolidated statements of comprehensive income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with those used by the Group.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation. The
non-controlling interests in the net assets of consolidated subsidiaries are identified separately from
the Group’s equity therein. The non-controlling interests consist of the amount of those interests at
the date of the original business combination and the non-controlling shareholders’ share of changes
in equity since the date of the combination. Losses applicable to the non-controlling shareholder in
excess of the non-controlling interests’ share in the subsidiary’s equity are allocated against the
interests of the Group except to the extent that the non-controlling shareholder has a binding
obligation and is able to make an additional investment to cover the losses.
2.2 Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition
is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity instruments issued by the Group in exchange for control of the
acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable
assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are
recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups)
that are classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and
Discontinued Operations, which are recognised and measured at fair value less costs to sell. Goodwill
arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the
cost of the business combination over the Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s
interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities
exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.
The interest of non-controlling shareholders in the acquiree is initially measured at the non-
controlling shareholders’ proportion of the net fair value of the assets, liabilities and contingent
liabilities recognised.
2.3 Goodwill
Goodwill arising on the acquisition of a subsidiary or a jointly controlled entity represents the excess
of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities of the subsidiary or jointly controlled entity recognised at the date
of acquisition.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any
accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each
of the Group’s cash-generating units expected to benefit from the synergies of the combination.
Cash-generating units to which goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication that the unit may be impaired. If the recoverable amount
of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the
other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. An
impairment loss recognised for goodwill is not reversed in a subsequent period.
Invicta Holdings Limited • Annual report 201150
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
2.4 Investments in associates
The results of associates are incorporated in the consolidated financial statements using the equity
method of accounting. Under the equity method, investments in associates are carried in the
consolidated statement of financial position at cost as adjusted for post-acquisition changes in the
Group’s share of the net assets of the associate, less any impairment in the value of individual
investments. Losses of an associate in excess of the Group’s interest in that associate (which includes
any long-term interests that, in substance, form part of the Group’s net investment in the associate)
are recognised only to the extent that the Group has incurred legal or constructive obligations or
made payments on behalf of the associate.
2.5 Non-current assets held for sale
Non-current assets and disposal groups are classified as held-for-sale if their carrying amount will be
recovered through a sale transaction rather than through continuing use. This condition is regarded
as met only when the sale is highly probable and the asset (or disposal group) is available for
immediate sale in its present condition. Management must be committed to the sale, which should be
expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets (and disposal groups) classified as held-for-sale are measured at the lower of the
assets’ previous carrying amount and fair value less costs of disposal.
2.6 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents
amounts receivable for goods and services provided in the normal course of business, net of discounts
and sales-related taxes. Sales of goods are recognised when goods are delivered and title has passed.
Interest income is accrued on the time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that asset’s net carrying amount.
Dividend income from investments is recognised when the shareholders’ rights to receive payment
have been established.
2.7 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessor
When assets are leased out under finance leases, the present value of the lease payments is recognised
as a receivable. Finance income is recognised over the term of the lease using the net investment
method, which reflects a constant periodic rate of return.
Rental income from operating leases is recognised on the straight-line basis over the term of the
relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added
to the carrying amount of the leased asset and recognised on the straight-line basis over the lease
term. Payments received in advance is recognised as deferred income and recognised in revenue over
the term of the agreement.
51Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
The Group as lessee
Assets held under finance leases are recognised as assets of the Group at their fair value at the
inception of the lease or, if lower, at the present value of the minimum lease payments. The
corresponding liability to the lessor is included in the statements of financial position as a finance lease
obligation. Lease payments are apportioned between finance charges and a reduction of the lease
obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are charged to profit or loss.
Rentals payable under operating leases are charged to profit or loss on the straight-line basis over the
term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating
lease are also spread on the straight-line basis over the lease term.
2.8 Foreign currencies
The individual financial statements of each Group entity are presented in the currency of the primary
economic environment in which the entity operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial position of each entity are expressed in
currency units, which are the functional currency of the Company, and the presentation currency for
the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than
the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing
on the dates of the transactions. At each statements of financial position date, monetary items
denominated in foreign currencies are retranslated at the rates prevailing on the statements of
financial position date. Non-monetary items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing on the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of
monetary items, are included in profit or loss for the period. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are included in profit or loss for the period
except for differences arising on the retranslation of non-monetary items in respect of which gains and
losses are recognised directly in equity. For such non-monetary items, any exchange component of that
gain or loss is also recognised directly in equity.
In order to hedge its exposure to certain foreign exchange risks, the Group enters into forward
contracts and options. For the purpose of presenting consolidated financial statements, the assets and
liabilities of the Group’s foreign operations are expressed in currency units using exchange rates
prevailing on the statements of financial position date. Income and expense items are translated at
the average exchange rates for the period, unless exchange rates fluctuated significantly during that
period, in which case the exchange rates at the dates of the transactions are used. Exchange
differences arising, if any, are classified as equity and transferred to the Group’s translation reserve.
Such translation differences are recognised in profit or loss in the period in which the foreign
operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as
assets and liabilities of the foreign operation and translated at the closing rate.
Invicta Holdings Limited • Annual report 201152
2.9 Borrowing costs
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
Borrowing costs directly attributable to the acquisition or construction of assets that necessarily take
a substantial period of time to get ready for their intended use are added to the cost of those assets,
until such time as the assets are substantially ready for their intended use.
2.10 Government grants
Government grants towards staff re-training costs are recognised in profit or loss over the periods
necessary to match them with the related costs and are deducted in reporting the related expense.
2.11 Retirement benefit costs
Defined contribution pension and provident funds
Current contributions to the defined contribution pension and defined contribution provident funds
registered in terms of the Pension Fund Act, 1956 are based on current service and current salaries and
are charged against income for the year. Payments to defined contribution retirement benefit plans
are charged as an expense as they are incurred.
Other post-retirement obligations
The Group provides a post-retirement medical aid subsidy to some of its retirees. The entitlement to
these benefits is conditional on the employee having pensionable service from a particular date and
continuous medical aid membership of a qualifying scheme from the same date. The expected costs of
these benefits are accrued over the period of employment.
2.12 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as
reported in the statements of comprehensive income because it excludes items of income or expense
that are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted at the statements of financial position date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and
are accounted for using the balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which deductible temporary differences
can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from
the initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control
the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each
statements of financial position date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred
tax is calculated at the tax rates that are expected to apply in the period when the liability is settled
or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to
items charged or credited directly to equity, in which case the deferred tax is also dealt with in
equity.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
53Invicta Holdings Limited • Annual report 2011
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off taxassets against tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends, and is able to, settle its tax assets and liabilities on a netbasis.
2.13 Property, plant and equipment
Land is stated at cost whilst other fixed assets are stated at cost, less accumulated depreciation and anyaccumulated impairment losses.
Buildings are stated at cost less accumulated depreciation and any accumulated impairment losses,with the exception of certain buildings which are stated at deemed cost less accumulated depreciationand accumulated impairment losses. Deemed cost was determined in terms of an election made as permitted by IFRS 1.
Assets held under finance leases are depreciated over their expected useful lives on the same basis asowned assets or, where shorter, the term of the relevant lease.
Depreciation is calculated on the straight-line basis, so as to write the cost of the assets down to theirresidual values, at the following per annum rates, which are considered to approximate the estimated useful lives of the assets concerned.
Buildings 1 – 10%Plant and equipment 10 – 20%Leasehold improvements Over the period of the leaseMotor vehicles 20 – 25%Furniture and fittings 20%Office equipment 10 – 33,3%Computer equipment 20 – 33,3%Golf cars 20%Forklifts 25%
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment isdetermined as the difference between the sales proceeds and the carrying amount of the asset and isrecognised in profit or loss.
Golf cars, forklifts and equipment rental fleets are accounted for as part of property, plant and equipment and are depreciated over their relevant contractual rental terms.
2.14 Other intangible assets
Other intangible assets consist of computer software which is amortised on the straight-line basis overa period of three to ten years. Re-acquired agency rights, which are determined with reference to theagency’s forecast trading results to the end of the contracted lease term. The rights are amortised overthe remaining contractual term of the agency agreement.
2.15 Impairment of tangible and intangible assets excluding goodwill
At each statements of financial position date, the Group reviews the carrying amounts of its tangibleand intangible assets to determine whether there is any indication that those assets have suffered animpairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order to determinethe extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amountof an individual asset, the Group estimates the recoverable amount of the cash-generating unit towhich the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value usinga pre-tax discount rate that reflects current market assessments of the time value of money and therisks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimatedto be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reducedto its recoverable amount.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
Invicta Holdings Limited • Annual report 201154
An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an
impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as a revaluation increase.
2.16 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and,
where applicable, direct labour costs and those overheads that have been incurred in bringing the
inventories to their present location and condition. Cost is calculated using the first-in first-out
method.
Net realisable value represents the estimated selling price less all estimated costs of completion and
costs to be incurred in marketing, selling and distribution.
2.17 Financial instruments
Financial assets and financial liabilities are recognised on the Group’s statements of financial position
when the Group becomes a party to the contractual provisions of the instrument.
Trade receivables
Trade receivables are measured at initial recognition at fair value, and are subsequently measured at
amortised cost using the effective interest rate method as reduced by appropriate allowances for
estimated irrecoverable amounts. These allowances are recognised in profit or loss when there is
objective evidence that the asset is impaired. The allowance recognised is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows discounted
at the effective interest rate computed at initial recognition.
Investments
Investments are recognised and derecognised on a trade date basis where the purchase or sale of an
investment is under a contract whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at fair value, plus directly
attributable transaction costs.
At subsequent reporting dates, debt securities that the Group has the expressed intention and ability
to hold to maturity (held-to-maturity debt securities) are measured at amortised cost using the
effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts.
An impairment loss is recognised in profit or loss when there is objective evidence that the asset is
impaired, and is measured as the difference between the investment’s carrying amount and the
present value of estimated future cash flows discounted at the effective interest rate computed at
initial recognition.
Impairment losses are reversed in subsequent periods when an increase in the investment’s
recoverable amount can be related objectively to an event occurring after the impairment was
recognised, subject to the restriction that the carrying amount of the investment at the date the
impairment is reversed, shall not exceed what the amortised cost would have been had the
impairment not been recognised.
Investments other than held-to-maturity debt securities are classified as either investments held for
trading or as available-for-sale, and are measured at subsequent reporting dates at fair value. Where
securities are held for trading purposes, gains and losses arising from changes in fair value are
included in profit or loss for the period. For available-for-sale investments, gains and losses arising
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
55Invicta Holdings Limited • Annual report 2011
from changes in fair value are recognised directly in equity, until the security is disposed of or is
determined to be impaired, at which time the cumulative gain or loss previously recognised in equity
is included in the profit or loss for the period. Impairment losses recognised in profit or loss for
equity investments classified as available-for-sale are not subsequently reversed through profit or loss.
Impairment losses recognised in profit or loss for debt instruments classified as available-for-sale are
subsequently reversed if an increase in the fair value of the instrument can be objectively related to
an event occurring after the recognition of the impairment loss.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly
liquid investments that are readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the
substance of the contractual arrangements entered into and the definitions of a financial liability and
an equity instrument. An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific
financial liabilities and equity instruments are set out below.
Bank borrowings
Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method. Any difference between the
proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over
the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs.
Trade payables
Trade and other payables are initially measured at fair value, and are subsequently measured at
amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue
costs.
Guaranteed repurchase liability
Guaranteed repurchase liabilities are initially and subsequently measured at present value using the
effective interest rate method.
Derivative financial instruments and hedge accounting
The Group’s activities expose it primarily to the financial risks of changes in foreign exchange rates and
interest rates. The Group uses derivative financial instruments (primarily foreign currency forward
contracts and interest rate swaps) to hedge its risks associated with foreign currency fluctuations
relating to certain firm commitments, forecast transactions and interest rate fluctuations relating to
bank loans. The use of financial derivatives is governed by the Group’s policies approved by the board
of directors, which provide written principles on the use of financial derivatives consistent with the
Group’s risk management strategy.
The Group does not use derivative financial instruments for speculative purposes.
Derivative financial instruments are initially measured at fair value on the contract date, and are
remeasured to fair value at subsequent reporting dates.
Derivatives embedded in other financial instruments or other non-financial host contracts are treated
as separate derivatives when their risks and characteristics are not closely related to those of the host
contract and the host contract is not carried at fair value with unrealised gains or losses reported in
profit or loss.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
Invicta Holdings Limited • Annual report 201156
2.18 Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it
is probable that the Group will be required to settle that obligation. Provisions are measured at the
directors’ best estimate of the expenditure required to settle the obligation at the statements of
financial position date, and are discounted to present value where the effect is material.
The warranty provision represents warranty income that has been deferred and which is recognised
on a systematic basis over the warranty term. It is expected that the majority of warranty claims will
be incurred within two years after the reporting period.
2.19 Share-based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled
share-based payments are measured at fair value (excluding the effect of non market-based vesting
conditions) at the date of the grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on the straight-line basis over the vesting period, based on the
Group’s estimate of the shares that will eventually vest and is adjusted for the effect of non-
market-based vesting conditions. Fair value is measured using the Black-Scholes pricing model. The
expected life used in the model is adjusted, based on management’s best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.
2.20 Key judgements made by management
Preparing financial statements in conformity with IFRS requires judgements and assumptions that
affect reported amounts and related disclosures. Actual results could differ from these estimates.
Certain accounting policies have been identified as involving particularly complex or subjective
judgements or assessments as follows:
Asset lives and residual values
Property, plant and equipment is depreciated over its useful life taking into account residual values,
where appropriate. The actual lives of the assets and residual values are assessed annually and may
vary depending on a number of factors. In reassessing asset lives, factors such as technological
innovation, product life cycles and maintenance programmes are taken into account. Residual value
assessments consider issues such as future market conditions, the remaining life of the asset and
projected disposal values.
Intangible assets other than goodwill
Intangible assets other than goodwill are amortised over their useful lives. The actual lives of the
intangible assets are assessed annually and may vary depending on a number of factors. In reassessing
intangible asset lives, factors such as technological innovation are taken into account.
Provisions
Management bases their estimation for warranty provision on the number of products under
warranty at year-end, the age of these products and the remaining period under warranty. Actual
warranty costs may vary depending on a number of factors.
Valuation of derivatives
Derivatives valuations are determined by discounting the contractual stream of payments/receipts
using appropriate discount rates at the valuation date.
Valuation of investments
Investments are carried at cost or fair value. The directors determine the fair value on an annual basis
by assessing the future cash flows associated with the investment.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
57Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
3. BUSINESS SEGMENTS
3.1 Segment revenues and results
The following is an analysis of the Group’s revenue and results from operations by reportable segments:
Segment revenue Segment profit
2011 2010 2011 2010
R’000 R’000 R’000 R’000
Engineering consumables 2 387 363 2 018 304 319 665 292 673
Capital equipment 1 876 542 1 749 538 157 525 123 441
Group, financing and other operations 269 896 201 030 28 303 37 179
4 533 801 3 968 872 505 493 453 293
Share of profits of associate 871 639
Finance costs (545 242) (432 886)
Interest and dividends received 490 132 408 498
Profit before taxation 451 254 429 544
Taxation (25 032) (64 155)
Profit for the year 426 222 365 389
The accounting policies of the reportable segments are the same as the Group’s accounting policies.
Segment profit represents the profit earned by each segment without allocation of profits of
associate, finance costs and income tax expense. This is the measure reported to the chief operating
decision maker for the purposes of assessment of segment performance.
3.2 Segment assets and liabilities
2011 2010
R’000 R’000
Segment assets
Engineering consumables 1 450 792 1 233 928
Capital equipment 1 081 667 884 232
Group, financing and other operations 4 356 408 3 818 954
Total assets 6 888 867 5 937 114
Invicta Holdings Limited • Annual report 201158
3. BUSINESS SEGMENTS CONTINUED
3.2 Segment assets and liabilities continued
2011 2010
R’000 R’000
Segment liabilities
Engineering consumables 414 378 300 217
Capital equipment 778 091 631 884
Group, financing and other operations 3 841 549 3 391 750
Total liabilities 5 034 018 4 323 851
For the purposes of monitoring segment performance and allocating resources between segments:
• all assets are allocated to reportable segments other than investments in associate and tax assets;
• all liabilities are allocated to reportable segments other than current and deferred tax liabilities.
3.3 Other segment information
Additions to property,
Depreciation and plant and equipment
amortisation and intangible assets
2011 2010 2011 2010
R’000 R’000 R’000 R’000
Engineering consumables 19 425 16 006 70 670 10 523
Capital equipment 56 513 22 993 89 552 25 815
Group, financing and other operations 5 351 4 464 4166 47 992
Total 81 289 43 463 164 388 84 330
Geographical segments
The Group has not reported segment information by geographical location as the operations occur
substantially within southern Africa.
Customers
The Group has not reported segment information by customer as no customer contributes in excess of
10% of the Group’s total revenue.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
59Invicta Holdings Limited • Annual report 2011
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
4. OPERATING PROFIT BEFORE FINANCE COSTS, INTEREST AND DIVIDENDS RECEIVED
Operating profit before finance costs, interest
and dividends received is arrived at after taking
into account the following items:
Income
Profit on disposal of property, plant and equipment 2 361 3 762 – –
Release of deferred profit on issue of shares
by subsidiary 3 870 3 870 – –
Negative goodwill recognised on acquisition
of subsidiary – 7 952 – –
Credit default swap derivative 69 681 (52 963) – –
Interest rate swap derivative 30 1 303 –
Goodwill impairment reversed – 3 442 – –
Net impairment of property, plant and equipment 4 271 (190) – –
Expenses
Auditors’ remuneration – audit fees 3 257 3 557 – –
– Current year 3 114 3 123 – –
– Prior year 49 150 – –
– Other services 94 284 – –
Depreciation* 30 499 30 215 – –
– Buildings 4 230 3 420 – –
– Plant and equipment 4 849 3 404 – –
– Leasehold improvements 1 887 1 449 – –
– Motor vehicles 6 316 4 144 – –
– Furniture and fittings 2 457 2 058 – –
– Office equipment 4 922 4 064 – –
– Computer equipment 5 838 6 630 – –
– Golf cars – 5 039 – –
– Forklifts – 7 –
Amortisation of intangible assets 2 230 2 141 – –
Put option/credit default swap derivative 69 681 (52 963) – –
Loss on disposal of property, plant and equipment 2 244 30 – –
Employment costs 550 503 430 712 – –
Operating lease expenses 65 149 14 390 – 92
– Premises 47 482 13 271 – 92
– Equipment 494 407 – –
– Motor vehicles 17 148 – – –
– Other 25 712 – –
Pension and provident fund contributions 19 267 20 491 – –
Share options expense 19 227 22 045 – –
* This excludes depreciation charge disclosed in cost of sales of R48 559 749 (2010: R11 106 792).
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
Invicta Holdings Limited • Annual report 201160
GROUP COMPANY
2011 2010 2011 2010
R’000 R’000 R’000 R’000
5. FINANCE COSTS
Bank overdrafts and loans 19 630 22 631 1 2
Foreign exchange premiums 1 794 9 496 – –
Finance leases 1 216 827 – –
Guaranteed repurchase liability 4 537 – – –
Debentures, promissory notes and other
long-term borrowings 518 065 399 932 12 –
Total 545 242 432 886 13 2
6. INTEREST RECEIVED
Bank balances and cash 12 955 2 419 6 23
Finance leases 72 – – –
Partnership income – 123 035 – –
Foreign exchange gains 2 268 5 240 – –
Long-term receivables 162 110 67 748 169 –
Total 177 405 198 442 175 23
7. TAXATION
South African normal taxation
Current tax
– current year 23 245 18 044 575 433
– prior year (25) 1 436 93 (65)
Deferred tax
– current year (5 683) (4 466) – –
– prior year (2 134) (5 127) – –
Secondary tax on companies 946 808 – –
Foreign tax 8 683 53 460 – –
Total 25 032 64 155 668 368
Reconciliation of tax rate % % % %
Statutory tax rate 28,0 28,0 28,0 28,0
Permanent differences and exempt income (23,7) (25,3) (27,7) (27,7)
Secondary tax on companies 0,2 0,2 – –
Utilisation of tax losses (0,5) (0,7) – –
Prior year under provision (0,4) 0,3 0,1 –
Foreign tax 1,9 12,4 – –
Effective tax rate 5,5 14,9 0,4 0,3
Estimated tax losses in the Group amount to R68 559 128 (2010: R59 403 245). A deferred tax asset of
R8 507 183 (2010: R2 970 595) was raised with respect to certain of these tax losses due to the uncertainty in
estimating the remaining tax losses.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
61Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP COMPANY
2011 2010 2011 2010
R’000 R’000 R’000 R’000
7. TAXATION CONTINUED
7.1 Deferred taxNet balance at the beginning of the year 55 563 43 901 – –Arising on acquisition of subsidiaries 312 2 069 – –Statement of comprehensive income charge 7 817 9 593 – –
Net balance at the end of the year 63 692 55 563 – –
Comprising:Capital allowances (8 264) (10 422) – –Tax losses 8 507 2 971 – –Provisions 52 210 45 272 – –Other temporary differences 11 239 18 252 – –Prepayments – (510) – –
Total 63 692 55 563 – –
Disclosed as:Deferred taxation asset 69 940 69 852 – –Deferred taxation liability (6 248) (14 289) (784) –
Total 63 692 55 563 (784) –
8. EARNINGS PER SHARE
Basic earnings per share (cents) 504 453 – –Diluted earnings per share (cents) 480 441 – –
8.1 Basic earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:
Profit for the year attributable to owners of the Company 354 155 320 896 – –
Weighted average number of ordinary shares for the purposes of basic earnings per share 70 211 70 779 – –
8.2 Diluted earnings per share
The earnings used in the calculation of diluted earnings per share are as follows:
Earnings used in the calculation of diluted earnings per share 354 155 320 896 – –
Weighted average number of ordinary shares used in the calculation of diluted earnings per share 73 720 72 767 – –
Invicta Holdings Limited • Annual report 201162
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP
Non- Attributablecontrolling to equity
Gross Taxation interest holdersR’000 R’000 R’000 R’000
8. EARNINGS PER SHARE CONTINUED
8.3 Headline earnings per share
This calculation is based on the weighted
average number of 70 211 362
(2010: 70 779 151) ordinary shares in issue
during the year. It is derived, after taxation
and non-controlling interest, as follows:
2011
Earnings attributable to ordinary shareholders 451 254 (25 032) (72 067) 354 155
Adjusted for:
Release of deferred profit on issue of
shares by subsidiary (3 870) 624 – (3 246)
Net profit on disposal of property, plant
and equipment (117) 33 17 (67)
Net impairment of property, plant and
equipment (4 271) 1 196 615 (2 460)
Headline earnings for purposes of headline
earnings per share 442 996 (23 179) (71 435) 348 382
2010
Earnings attributable to ordinary shareholders 429 544 (64 155) (44 493) 320 896
Adjusted for:
Release of deferred profit on issue of
shares by subsidiary (3 870) 624 – (3 246)
Net profit on disposal of property, plant
and equipment (3 732) 1 045 537 (2 150)
Negative goodwill on business combinations (7 952) – 1 590 (6 362)
Impairment of property, plant and equipment 190 (53) (27) 110
Impairment of goodwill 3 442 – (688) 2 754
Headline earnings for purposes of headline
earnings per share 417 622 (62 539) (43 081) 312 002
GROUP
2011 2010R’000 R’000
Headline earnings for purposes of diluted headline
earnings per share 348 382 312 002
Headline earnings per share (cents) 496 441
Diluted headline earnings per share (cents) 473 429
63Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP
2011 2010R’000 R’000
9. PROPERTY, PLANT AND EQUIPMENT
Land and buildings 201 412 196 784
– Gross carrying amount 229 255 225 213– Accumulated depreciation and impairment 27 843 28 429
Plant and equipment 19 831 14 991
– Gross carrying amount 48 285 37 123– Accumulated depreciation and impairment 28 454 22 132
Leasehold improvements 5 263 4 448
– Gross carrying amount 9 502 6 809– Accumulated depreciation 4 239 2 361
Motor vehicles 19 666 10 430
– Gross carrying amount 47 925 31 341– Accumulated depreciation and impairment 28 259 20 911
Furniture and fittings 7 837 8 347
– Gross carrying amount 17 245 15 556– Accumulated depreciation 9 408 7 209
Office equipment 19 271 16 392
– Gross carrying amount 57 422 49 402 – Accumulated depreciation and impairment 38 151 33 010
Computer equipment 8 630 9 229
– Gross carrying amount 53 141 48 876– Accumulated depreciation and impairment 44 511 39 647
Rental assets – Golf cars 13 005 11 586
– Gross carrying amount 27 678 26 010– Accumulated depreciation 14 673 14 424
Rental assets – Forklifts 48 411 40 653
– Gross carrying amount 119 723 93 728– Accumulated depreciation and impairment 71 312 53 075
Rental assets – Equipment 10 627 –
– Gross carrying amount 11 864 –– Accumulated depreciation and impairment 1 237 –
Net carrying value 353 953 312 860
Total gross carrying amount 622 040 534 058Total accumulated depreciation and impairment 268 087 221 198
9.1 Details of land and buildingsA register containing details of land and buildings is available for inspection during business hours atthe registered office of the Company by members or their duly authorised agents.
9.2 EncumbrancesThe Group has encumbered land and buildings, motor vehicles and golf cars having a carrying valueof R202 million (2010: R155 million) to secure banking financing facilities as detailed in note 26.
Invicta Holdings Limited • Annual report 201164
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP
2011 2010R’000 R’000
9. PROPERTY, PLANT AND EQUIPMENT CONTINUED
9.3 Reconciliation of movement in carrying value
Land and buildings
Balance at the beginning of the year 196 784 151 040
Additions 1 597 47 227
Acquisitions of subsidiaries 10 210 –
Impairment reversed 5 771 4 000
Depreciation for the year (4 230) (3 420)
Disposals (8 720) (2 063)
Balance at the end of the year 201 412 196 784
Plant and equipment
Balance at the beginning of the year 14 991 13 307
Additions 7 047 4 207
Acquisitions of subsidiaries 3 108 983
Impairment (181) (97)
Depreciation for the year (4 849) (3 404)
Disposals (285) (5)
Balance at the end of the year 19 831 14 991
Leasehold improvements
Balance at the beginning of the year 4 448 3 275
Additions 2 497 2 622
Acquisitions of subsidiaries 205 –
Depreciation for the year (1 887) (1 449)
Balance at the end of the year 5 263 4 448
Motor vehicles
Balance at the beginning of the year 10 430 10 657
Additions 9 189 4 183
Acquisitions of subsidiaries 7 925 4
Impairment – (12)
Depreciation for the year (6 316) (4 144)
Disposals (1 562) (258)
Balance at the end of the year 19 666 10 430
Furniture and fittings
Balance at the beginning of the year 8 347 9 112
Additions 1 627 1 203
Acquisitions of subsidiaries 362 110
Depreciation for the year (2 457) (2 058)
Disposals (42) (20)
Balance at the end of the year 7 837 8 347
65Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP
2011 2010R’000 R’000
9. PROPERTY, PLANT AND EQUIPMENT CONTINUED
9.3 Reconciliation of movement in carrying value continued
Office equipmentBalance at the beginning of the year 16 392 16 567Additions 7 441 4 037Acquisitions of subsidiaries 514 51Impairment – (189)Depreciation for the year (4 922) (4 064)Disposals (154) (10)
Balance at the end of the year 19 271 16 392
Computer equipmentBalance at the beginning of the year 9 229 11 953Additions 4 766 3 508Acquisitions of subsidiaries 369 614Impairment reversed (raised) 181 (158)Depreciation for the year (5 838) (6 630)Disposals (77) (58)
Balance at the end of the year 8 630 9 229
Rental assets – Golf carsBalance at the beginning of the year 11 586 13 086Additions 6 873 4 798 Depreciation for the year (4 559) (5 039)Disposals (895) (1 259)
Balance at the end of the year 13 005 11 586
Rental assets – ForkliftsBalance at the beginning of the year 40 653 –Additions 61 473 11 639Acquisitions of subsidiaries – 46 329Impairment (1 500) (3 734)Depreciation for the year (42 764) (11 114)Disposals (9 451) (2 467)
Balance at the end of the year 48 411 40 653
Rental assets – EquipmentBalance at the beginning of the year – –Additions 11 864 –Depreciation for the year (1 237) –
Balance at the end of the year 10 627 –
TotalBalance at the beginning of the year 312 860 228 997Additions 114 374 83 424Acquisitions of subsidiaries 22 693 48 091Net impairment reversed (raised) 4 271 (190)Depreciation for the year* (79 059) (41 322)Disposals (21 186) (6 140)
Balance at the end of the year 353 953 312 860
* Depreciation relating to the forklifts, equipment and golf car hire fleets is included in cost of sales.
Invicta Holdings Limited • Annual report 201166
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
10. FINANCIAL INVESTMENTS
Unlisted securities
Business Venture Investments No 1048 (Pty)
Limited – 50 000 redeemable non-cumulative
preference shares 752 100 752 100 – –
The shares are redeemable from 8 August 2011
to 8 February 2016 in semi-annual instalments.
Dividends are received at a rate of 10,9% per
annum compounded semi-annually. The
preference shares are pledged as security
to the debenture holders under a credit default
swap (refer note 26).
Business Venture Investments No 1057 (Pty)
Limited – 50 000 redeemable non-cumulative
preference shares 443 000 443 000 443 000 443 000
The shares are redeemable from 8 August 2011
to 8 February 2016 in semi-annual instalments.
Dividends are received at a rate of 10,9% per
annum compounded semi-annually. The
preference shares are pledged as security to
the debenture holders under a credit default
swap (refer note 26).
Gryphon Financial Engineering (Pty) Limited
preference shares – fully paid Class “A” par
value redeemable preference shares of R1,00 1 866 382 1 684 987 – –
Dividends are received at a rate of 10,35% per
annum compounded quarterly. Government bonds
have been pledged as security via a put option
with Gryphon Support Services (Pty) Limited
(refer note 27).
Treasury shares – – 16 009 –
Total 3 061 482 2 880 087 459 009 443 000
Current portion of financial investments
disclosed in current assets (97 998) – (36 326) –
Long-term portion of financial investments 2 963 484 2 880 087 422 683 443 000
Directors’ valuation 2 963 484 2 880 087 422 683 443 000
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
67Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP
2011 2010R’000 R’000
11. GOODWILL
Goodwill arising on acquisition of subsidiaries
Balance at the beginning of the year 245 403 242 491
Acquisition of subsidiaries 58 788 6 354
Acquisition of non-controlling interest in
subsidiaries 555 –
Goodwill impaired during the year – (3 442)
Balance at the end of the year 304 746 245 403
The carrying amount of the goodwill has been allocated as follows:
Bearing Man Group 271 422 213 615
Goldquest International
Hydraulics SA (Pty) Limited 1 683 1 683
Disa Equipment (Pty) Limited 11 793 11 793
Tiletoria Cape Group 13 847 13 292
Humulani Marketing (Pty) Limited 6 001 5 020
Total 304 746 245 403
The directors assess the carrying value of goodwill with reference to the
future cash flows of the cash-generating unit.
12. OTHER INTANGIBLE ASSETS
Computer software
– Gross carrying value 20 496 18 529
– Accumulated amortisation (10 836) (8 606)
Re-acquired agency rights 48 047 –
Net carrying value 57 707 9 923
Reconciliation of movement in carrying value
Balance at the beginning of the year 9 923 11 158
Acquisition of subsidiaries 48 047 –
Additions 1 967 906
Amortisation for the year (2 230) (2 141)
Balance at the end of the year 57 707 9 923
13. FINANCIAL ASSET
Credit default swap derivative 249 230 179 549
The fair value of the credit default swap derivative was determined by discounting the contractual stream
of receipts on the long-term receivable using the zero swap curve at the valuation date.
Invicta Holdings Limited • Annual report 201168
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP
2011 2010R’000 R’000
14. FINANCE LEASE RECEIVABLE
Later than one year and not later than five years 356 –
Due in the second and fifth years inclusive 473 –
829 –
Unearned interest on finance lease (97) –
Net investment in finance lease 732 –
Net investment in finance leases can be analysed as follows:
Not later than one year 299 –
Later than one year and not later than five years 433 –
Net investment in finance lease 732 –
The Group entered into finance lease agreements over certain of its equipment
and forklifts. The average term of finance leases entered into is five years.
The interest rate inherent in the leases is fixed at the contract date for the
entire lease term. The average effective interest rate is prime-linked.
15. LONG-TERM RECEIVABLE
Serec Capital (Pty) Limited 259 604 –
The long-term receivable earns interest ranging from 8% to 12% and no
fixed repayment terms have been set. The loans are long-term in nature.
Other 2 589 6 721
262 193 6 721
Current portion of long-term receivables disclosed in current assets (1 201) –
Total 260 992 6 721
16. INVESTMENT IN SUBSIDIARIES
Details of the Company’s subsidiaries at 31 March 2011 are as follows:
Shares at cost 502 264 502 264
Total 502 264 502 264
69Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
16. INVESTMENT IN SUBSIDIARIES CONTINUEDGROUP
Proportion ofownership interest
and votingpower held
Place of 2011 2010
Name of subsidiary Principal activity operation % %
Direct holdings
Bearing Man 1955 Limited Investment holding company South Africa 100 100
Humulani Investments
(Pty) Limited* Investment holding company South Africa 80 80
Indirect holdings
Bearing Man (Botswana)
(Pty) Limited Trading company Botswana 80 80
Bearing Man (Namibia)
(Pty) Limited Trading company Namibia 80 80
Bearing Man (Swaziland)
(Pty) Limited Trading company Swaziland 80 80
Bearing Man (Mozambique) Lda Trading company Mozambique 80 80
Bearing Man (Zambia)
(Pty) Limited Trading company Zambia 80 80
Invicta Properties (Pty) Limited Property holding company South Africa 80 80
Oscillating Systems Technology
Africa (Pty) Limited Trading company South Africa 80 80
Disa Equipment (Pty) Limited Trading company South Africa 80 80
Criterion Equipment (Pty) Limited Trading company South Africa 80 80
Goldquest International
Hydraulics SA (Pty) Limited Trading company South Africa 80 80
Humulani Marketing (Pty) Limited Trading company South Africa 80 80
Farmmac (Pty) Limited Trading company South Africa 80 80
Tiletoria Cape (Pty) Limited Trading company South Africa 48 48
Spring Lights 149 (Pty) Limited Trading company South Africa 48 48
Wegezi Power Holdings
(Pty) Limited Trading company South Africa 56 –
Trendy Property Investments
(Pty) Limited Trading company South Africa 41 –
SET agency Trading company South Africa 41 –
Alpha Bearings (Pty) Limited Trading company South Africa 21 –
Turnkey Hydraulics KZN
(Pty) Limited Trading company South Africa 56 –
Hi-Quip Hydraulics (Pty) Limited Trading company South Africa 80 –
Humulani Marketing
Mozambique Lda Trading company Mozambique 80 –
Edmik Engineering (Pty) Limited Trading company South Africa 56 –
Smart Taps (Pty) Limited Trading company South Africa 38 –
* The 5% of the ordinary issued share capital of Humulani Investments (Pty) Limited owned by the Humulani Investments
Share Incentive Trust has been consolidated in terms of SIC12. Refer the Report of the directors on pages 39 to 41 of the
2011 Annual Report for further details.
Invicta Holdings Limited • Annual report 201170
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP
2011 2010R’000 R’000
16. INVESTMENT IN SUBSIDIARIES CONTINUED
The Group acquired 70% of the share capital of Wegezi Power Holdings
(Pty) Limited, effective 1 April 2010.
The Group acquired 70% of the share capital of Turnkey Hydraulics KZN
(Pty) Limited, effective 1 April 2010.
The Group acquired 100% of the share capital of Hi-Quip Hydraulics (Pty)
Limited, effective 1 September 2010.
The Group acquired 70% of the share capital of Edmik Engineering (Pty)
Limited, effective 1 November 2010.
The Group acquired 80% of the share capital of Smart Taps (Pty) Limited,
effective 1 June 2010.
The Group acquired 51% of the share capital of Trendy Property Investments
(Pty) Limited, effective 1 April 2010.
The Group, through Trendy Property Investments (Pty) Limited, acquired
100% of the share capital of the SET Agency, effective 1 April 2010.
The Group, through SET Agency, acquired 51% of the share capital of Alpha
Bearings (Pty) Limited, effective 1 October 2010.
A register containing details of the other direct and indirect subsidiaries is
available for inspection during business hours at the registered office of the
Company by members or their duly authorised agents.
The Company’s attributable interest in the aggregate profits and losses
(after taxation and non-controlling interest) of its subsidiaries is as follows:
Profits 289 068 272 077
Losses 4 261 41
17. INVESTMENT IN ASSOCIATE
Proportion of
ownership interest
and voting
power held
Place of
Principal incorporation 2011 2010
Name of associate activity and operation % %
Compact Computers Solutions
(Pty) Ltd Trading company South Africa 40 40
71Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP
2011 2010R’000 R’000
17. INVESTMENT IN ASSOCIATE CONTINUED
Summarised financial information in respect of the Group’s associate
is set out below.
Total assets 3 569 2 018
Total liabilities (2 892) (1 406)
Net assets 677 612
Revenue for the year 20 450 17 890Profit for the year 2 177 1 599
Group’s share of profits of associate 871 639
Reconciliation of carrying amount:Acquisition of associate 2 080 2 080Equity accounted earnings, net of taxation 1 510 639Dividends received (1 400) (600)
Carrying value at the end of the year 2 190 2 119
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
18. LOANS TO SUBSIDIARIES
Bearing Man 1955 Limited – – 228 228 223 872
Humulani Investments (Pty) Limited – – 9 522 177 264
– – 237 750 401 136
The loans are unsecured, bear no interest and no
fixed terms of repayment have been negotiated.
19. INVENTORIES
Merchandise 1 554 083 1 441 226 – –Work-in-progress 20 841 38 932 – –Obsolescence provision (193 309) (181 363) – –
Total 1 381 615 1 298 795 – –
Inventory carried at net realisable value 193 891 261 403 – –
Inventory write-down expensed 2 828 3 062 – –
Inventory recognised in the statement ofcomprehensive income 3 169 438 2 886 154 – –
Invicta Holdings Limited • Annual report 201172
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
20. TRADE AND OTHER RECEIVABLES
Trade receivables 685 354 598 856 – –
Provision for doubtful debts (37 495) (39 925) – –
Prepayments 6 758 3 367 – 121
Other receivables 43 909 108 681 7 293 7 025
Total 698 526 670 979 7 293 7 146
The directors consider that the
carrying value of trade and other
receivables approximates fair
value at year-end.
Movement in provision for
doubtful debts
Balance at the beginning of the year 39 925 35 827 – –
Acquisition of subsidiaries 358 11 583 – –
Amounts written off during the year, net
of recoveries (3 556) (1 487) – –
Net provision raised (released) during the year 768 (5 998) – –
Balance at the end of the year 37 495 39 925 – –
Trade receivables past due and not impaired
All past due receivable balances have been
assessed for recoverability and it is believed
that their credit quality remains intact. The
ageing of these past due trade receivables
that have not been impaired, is as follows:
60 days 12 731 4 754 – –
90 days 8 687 2 343 – –
More than 120 days 11 866 – – –
Total 33 284 7 097 – –
Trade receivables past due and impaired
60 days 5 408 1 280 – –
90 days 4 958 12 349 – –
More than 120 days 27 129 26 296 – –
Total 37 495 39 925 – –
21. ORDINARY SHARE CAPITAL
Authorised
134 000 000 (2010: 134 000 000)
ordinary shares of 5 cents each 6 700 6 700 6 700 6 700
Issued
74 480 555 (2010: 74 480 555)
ordinary shares of 5 cents each 3 724 3 724 3 724 3 724
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
73Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
Number of shares Number of shares
2011 2010 2011 2010
‘000 ‘000 ‘000 ‘000
21. ORDINARY SHARE CAPITAL CONTINUED
Unissued shares The unissued ordinary shares are under the control
of the directors in terms of a resolution of the shareholders passed at the last annual general meeting. This authority remains in force until the next annual general meeting. 64 045 63 288 64 045 63 288
At the Company’s annual general meeting held on 29 July 2010, a special resolution was passed giving the directors general authority to repurchase its own shares not exceeding 20% of the issued share capital on the open market. This authority remains in force until the next annual general meeting.
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
22. SHARE PREMIUM
The ordinary share premium is made up as follows:
Balance at the end of the year 282 715 282 715 282 715 282 715
23. TREASURY SHARES
4 525 913 (2010: 3 768 261) ordinary shares of 5 cents each (226) (188) – –
Share premium (119 583) (96 382) – –
Balance at the end of the year (119 809) (96 570) – –
24. ORDINARY DIVIDENDS*
Final102 cents paid on 12 July 2010 (2010: 85 cents)
to shareholders registered in the books of theCompany on 9 July 2010 75 971 63 308 75 971 63 308
Interim57 cents paid on 6 December 2010 (2010: 49 cents)
to shareholders registered in the books of theCompany on 3 December 2010 42 454 36 496 42 454 36 496
Dividends received on treasury shares (6 651) (4 966) – –
Total 111 774 94 838 118 425 99 804
* In accordance with IAS10 the final dividend of 126 cents per share (2010: 102 cents) proposed by the directors has not been
reflected in the financial statements as it had not been declared at the year-end.
Invicta Holdings Limited • Annual report 201174
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
25. GUARANTEED REPURCHASE LIABILITY
Present value at the beginning of the year – – – – Acquisition of subsidiary 16 902 – – – Liability raised during the year 1 060 – – – Interest accrued during the year 1 615 – – – Liabilities settled during the year (6 449) – – –
Present value at the end of the year 13 128 – – –
Guaranteed repurchase liability can be analysed as follows:
Not later than one year 3 781 – – – Later than one year and not later than five years 9 347 – – –
13 128 – – –
The Group has entered into repurchase undertakings with financial institutions over certain forklifts sold to customers. The company will repurchase these forklifts from the financial institution at a predetermined value at the end of the customers' rental term with the respective financial institution.
The directors consider that the carrying value of the guaranteed repurchase liability approximates fair value.
26. LONG-TERM BORROWINGS
26.1 Secured borrowingsFinance lease agreements 32 090 27 368 – –The lease agreements are repayable between 36 and 60 months and bear interest at fixed rates between 11% and 13,8% per annum. The leases are repaid in equal monthly instalments. No arrangements have been entered into for contingent rental payments. The borrowings are secured by certain motor vehicles and golf cars as detailed in note 9.2.
Mortgage bonds 143 879 125 620 – –The mortgage bonds are repayable over 120 months. The mortgage bonds attract interest at JIBAR plus 2,05% per annum. The capital on the JIBAR linked bonds are repayable from the third year onwards. The JIBAR linked variable rates bonds have been swapped for fixed rate loans for a period of two years. These bonds are secured by certain land and buildings as referred to in note 9.2.
Balance carried forward 175 969 152 988 – –
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
75Invicta Holdings Limited • Annual report 2011
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
26. LONG-TERM BORROWINGS CONTINUED
26.1 Secured borrowings continued
Balance brought forward 175 969 152 988 – –
Debentures 1 195 100 1 195 100 – –The debentures bear interest at 12,5% per annum and are redeemable in semi-annual instalments from 8 August 2011 to 8 February 2016. The rights of the debenture holders to the repayment of interest and capital are subordinated in favour of the claims of the creditors of certain of the Group’s companies. The debentures are secured by certain preference share investments by means of a credit default swap transaction entered into with Standard Bank of South Africa Limited as detailed in note 10.
Serec Capital (Pty) Limited loan 1 867 506 1 686 001 – –The loan bears interest at a compounded quarterly fixed rate of 11,73% per annum. The fixed date of repayment is 15 August 2018. The Group may however elect to repay the loan at an earlier date without premium or penalty. The loan is secured by a credit default swap as referred to in note 13.
26.2 Unsecured borrowings
Other borrowings 16 059 10 857 – –The amounts payable are unsecured, interest-free and no fixed repayment terms have been negotiated. The loans are long-term in nature.
Gryphon Financial Engineering (Pty) Limited 259 604 – – –The amounts payable are unsecured, interest ranges from 8% to 12% and no fixed repayment terms have been set. The loans are long-term in nature.
Invicta Share Trust loan – – 688 688The loan is unsecured, interest-free and no fixed repayment terms have been negotiated. The loan is long-term in nature.
Total borrowings 3 514 238 3 044 946 688 688Less: Current portion of long-term
borrowings disclosed in current liabilities (122 290) (18 056) – –
Total long-term borrowings 3 391 948 3 026 890 688 688
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
Invicta Holdings Limited • Annual report 201176
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
26. LONG-TERM BORROWINGS CONTINUED
Borrowings are repayable as follows:On demand or within one year 122 290 18 056 – –In second to fifth year inclusive 510 847 145 789 – –After five years 2 881 101 2 881 101 688 688
Total 3 514 238 3 044 946 688 688
There is no limit on the Group’s borrowings and guarantees in terms of the Company’s Articles of Association.
27. FINANCIAL LIABILITIES
Put option/credit default swap derivative 249 230 179 549 – – Interest rate swap derivative 2 589 2 619 – –
251 819 182 168 – –
The fair values of the put option/credit default swap derivative and the interest rate swap derivative were determined by discounting the contractual stream of payments using the zero swap curve at the valuation date.
28. TRADE AND OTHER PAYABLES
Trade payables 833 602 561 786 – –Other payables 247 036 373 007 2 647 2 431Deferred income 30 849 12 984 – –
Total 1 111 487 947 777 2 647 2 431
29. PROVISIONS
Employee benefit provisions 68 014 42 885 – – Warranties and service provisions 25 223 29 686 – –
Total 93 237 72 571 – –
Movements in provisionsEmployee benefit provisionsBalance at the beginning of the year 42 885 86 439 – –Charged (credited) to income 24 532 (46 024) – –Acquisition of subsidiaries 597 2 470 – –
Balance at the end of the year 68 014 42 885 – –
Warranties and service provisionsBalance at the beginning of the year 29 686 16 971 – –(Credited) charged to income (4 463) 10 884 – –Acquisition of subsidiaries – 1 831 – –
Balance at the end of the year 25 223 29 686 – –
The provision has been recognised for expected warranty claims on certain products sold during the last
three financial years.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
77Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
30. LOAN FROM SUBSIDIARY
Humulani Marketing (Pty) Limited – – 420 218 344
Total – – 420 218 344
The loan is unsecured, bears no interest and no fixed terms of repayment have been negotiated.
31. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS
Profit before taxation 451 254 429 544 180 885 147 013Adjusted for:Depreciation 79 059 30 215 – – Amortisation of intangible assets 2 230 2 141 – –Impairment of property, plant and equipment (4 271) 190 – –Interest rate swap gain (30) (1 303) – –Net profit on disposal of property, plant
and equipment (117) (3 732) – –Finance costs 545 242 432 886 13 2Dividends received (312 727) (210 056) (180 718) (146 034)Share of profits of associate (871) (639) – –Interest received (177 405) (198 442) (175) (23)Negative goodwill on acquisition of subsidiaries – (7 952) – –Goodwill impairment – 3 442 – –Currency translation of foreign operations (833) (7 649) – –Revaluation reserve reversed on liquidation of
Group company – (3 169) – –Share appreciation rights exercised (70 506) – – –Share appreciation rights charge 19 226 22 045 – –
Cash generated before movements in working capital 530 251 487 521 5 958
Working capital changes: 96 296 102 705 69 (147)
(Increase) decrease in inventories (67 256) 391 825 – –Decrease (increase) in trade and other receivables 23 529 60 925 (147) (138)Increase (decrease) in trade and other payables
and provisions 140 023 (350 045) 216 (9)
Cash generated from operations 626 547 590 226 74 811
32. DIVIDENDS PAID TO GROUP SHAREHOLDERS
Amounts unpaid at the beginning of the year 2 967 565 639 565Final dividend paid 2 July 2010 (2010: 13 July 2009) 75 971 63 308 75 971 63 308Interim dividend paid 6 December 2010
(2010: 7 December 2009) 42 454 36 496 42 454 36 496Dividends received on treasury shares (6 651) (4 966) – –
Amounts unpaid at the end of the year (7 062) (2 967) (737) (639)
Total 107 679 92 436 118 327 99 730
Invicta Holdings Limited • Annual report 201178
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
33. TAXATION PAID (REFUNDED)
Amounts unpaid (prepaid) at the
beginning of the year 13 014 (35 405) 665 34
Acquisition of subsidiary 1 416 – – –
Charged to the statement of
comprehensive income 32 849 73 748 668 368
Amounts prepaid (unpaid) at the end of the year 1 098 (13 014) (690) (665)
Total 48 377 25 329 643 (263)
34. CASH AND CASH EQUIVALENTS
Bank and cash balances 432 403 260 553 9 717 12 681
Bank overdrafts and bankers’ acceptances (23 747) (45 846) – –
Total 408 656 214 707 9 717 12 681
GROUP
Bank Trading
R’000 R’000
Banking and trading facilities
Gross facility balances 289 964 2 117 367
Facilities utilised (14 125) (963 873)
Facilities available 275 839 1 153 494
These facilities are callable on notice being given by the facility provider.
The directors are of the view that there are adequate facilities in place to operate for the next twelve
months.
35. CONTINGENT LIABILITIES
The Group has guaranteed certain finance facilities granted to customers of ABSA Bank. At the year-end, the
finance facilities guaranteed were R252 443 (2010: R313 233).
79Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
36. DIRECTORS’ EMOLUMENTS
Share
Share appre-
appre- ciation
ciation rights
Audit rights exercised –
and exercised – amount
Remu- amount recog-
neration Salary Retire- included nised in Total
Directors’ Committee and ment in retained emolu-
fees fees benefits benefits reserve earnings Bonus ments
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
2011
Executive directors
C Barnard – – 1 471 222 1 843 4 196 1 400 9 132
A Goldstone – – 2 044 255 9 660 7 345 2 000 21 304
AM Sinclair – – 2 239 160 1 818 3 737 1 500 9 454
CE Walters – – 2 523 227 948 2 613 1 500 7 811
– – 8 277 864 14 269 17 891 6 400 47 701
Non-executive directors
CH Wiese 665 22 – – – – – 687
JS Mthimunye 125 88 – – – – – 213
DI Samuels 348 286 – – – – – 634
JD Wiese 69 – – – – – – 69
LR Sherrell 69 22 – – – – – 91
AK Masuku 10 – – – – – – 10
1 286 418 – – – – – 1 704
Total 1 286 418 8 277 864 14 269 17 891 6 400 49 405
Audit and
Remuneration Salary Retire- Total
Directors’ Committee and ment emolu-
fees fees benefits benefits Bonus ments
R’000 R’000 R’000 R’000 R’000 R’000
2010
Executive directors
C Barnard – – 1 099 170 1 200 2 469
A Goldstone – – 1 400 201 5 000 6 601
AM Sinclair – – 1 656 103 470 2 229
CE Walters – – 1 871 166 498 2 535
– – 6 026 640 7 168 13 834
Non-executive directors
CH Wiese 635 22 – – – 657
J Mthimunye 84 80 – – – 164
DI Samuels 332 262 – – – 594
LR Sherrell 63 – – – – 63
1 114 364 – – – 1 478
Total 1 114 364 6 026 640 7 168 15 312
Invicta Holdings Limited • Annual report 201180
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
36. DIRECTORS’ EMOLUMENTS CONTINUED
With effect from 31 March 2010, a portion of the cumulative total of the bonuses paid to the directors have
been deducted from the benefit accrued to the directors under the long-term bonus share incentive right
scheme. The cumulative portion of the bonuses that was deducted in the previous year from the benefits
accrued, are reflected below:
Cumulativetotal of
bonus paidto date
R
C Barnard 480 000A Goldstone 14 984 900AM Sinclair 1 200 000CE Walters 1 297 200
Weightedaverage
Number of Number of cost ofTotal number grants grants grants
of grants exercised awarded awardedShare appreciation awarded in the in the in the Grantrights awarded to date current year current year current year date
2011A Goldstone 2 150 000 2 000 000 150 000 5,87 2 March 2010AM Sinclair 1 110 000 419 375 130 000 5,87 2 March 2010C Barnard 975 000 404 000 125 000 5,87 2 March 2010CE Walters 1 380 000 200 000 130 000 5,87 2 March 2010
2010A Goldstone 4 000 000 – 1 000 000 4,44 13 March 2009AM Sinclair 1 399 375 – 300 000 4,44 13 March 2009C Barnard 1 254 000 – 400 000 4,44 13 March 2009CE Walters 1 450 000 – 300 000 4,44 13 March 2009
81Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
GROUP COMPANY
2011 2010 2011 2010R’000 R’000 R’000 R’000
37. RETIREMENT BENEFITS
The Group contributes to a defined contribution
pension plan and a defined contribution provident
plan which are governed by the Pension Funds Act,
1956. No actuarial valuation of the plans is required.
All staff are members of a fund and the costs of
providing retirement benefits are charged to the
statement of comprehensive income as they are
incurred. Refer to note 4 for contributions made
to retirement funds during the year.
38. COMMITMENTS
Commitments in respect of unexpired
rental agreements for premises:
– Payable within twelve months 50 300 30 861 – 54
– Payable thereafter 54 989 43 618 – –
Total 105 289 74 479 – 54
Commitments in respect of unexpired rental
agreements for motor vehicles:
– Payable within twelve months 11 847 12 624 – –
– Payable thereafter 18 809 14 904 – –
Total 30 656 27 528 – –
Commitments in respect of unexpired rental
agreements for office equipment:
– Payable within twelve months 76 231 – –
– Payable thereafter 145 113 – –
Total 221 344 – –
Commitments in respect of contracted
capital expenditure 7 121 988 – –
Expenditure will be financed from existing cash facilities.
Invicta Holdings Limited • Annual report 201182
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
39. FINANCIAL RISK MANAGEMENT
The Group is considered to be exposed to interest rate, credit, liquidity and foreign currency risk.
Interest rate managementThe interest rate profile of total borrowings is as follows:
Redemption Interest 2011 2010Description Currency period rate % p.a. R’000 R’000
Bank overdrafts ZAR N/A 8,25 – 10,50 23 747 45 846Fixed rate borrowings ZAR 2006 – 2018 11,00 – 13,80 3 242 308 2 893 217Variable rate borrowings ZAR 2009 – 2020 8,50 – 14,10 149 640 133 673
The Group is exposed to interest rate risk on its variable rate borrowings. The exposure to interest rate risk is managed using derivatives, where it is considered appropriate, and through a closely monitored cash management system. The impact of a change in the interest rate of 2% will have an effect of approximately R3 million (2010: R3 million) on the statement of comprehensive income.
Credit risk managementPotential areas of credit risk consist of trade accounts receivable and short-term cash investments. Tradeaccounts receivable consist of a widespread customer base. Group companies monitor the financial positionof their customers on an ongoing basis. Where considered appropriate, use is made of credit guaranteeinsurance. The granting of credit is controlled by application and account limits. Provision is made for specific bad debts and at the year-end management did not consider there to be any material credit riskexposure that was not already covered by credit guarantee or a bad debt provision (refer to note 20 for further detail in this regard). It is Group policy to deposit short-term cash investments with only the majorbanks and financial institutions.
Liquidity risk managementThe Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained.
The following table details the Group’s contractual maturities on its financial liabilities (excluding the credit default swap, put option and interest rate swap derivatives):
Less than 2 to 5 More than
1 year years 5 years Total
R’000 R’000 R’000 R’000
2011
Mortgage bonds 10 298 65 103 68 478 143 879
Serec Capital loan – – 1 867 506 1 867 506
Debentures 97 998 1 097 102 – 1 195 100
Finance lease liabilities and unsecured borrowings 13 994 18 096 – 32 090
Guaranteed repurchase liability 3 781 9 347 – 13 128
Trade and other payables 1 111 487 – – 1 111 487
1 237 558 1 189 648 1 935 984 4 363 190
2010
Mortgage bonds 2 804 65 815 57 001 125 620
Serec Capital loan – – 1 686 001 1 686 001
Debentures – 566 477 628 623 1 195 100
Finance lease liabilities and unsecured borrowings 15 252 8 736 3 380 27 368
Trade and other payables 947 777 – – 947 777
965 833 641 028 2 375 005 3 981 866
83Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
39. FINANCIAL RISK MANAGEMENT CONTINUED
Foreign currency risk management
All the Group’s monetary assets and liabilities are denominated in South African Rand, with the exception
of those assets and liabilities of BMG foreign entities which are fairly insignificant from a Group perspective.
The Group utilises currency derivatives to eliminate or reduce the exposure to its foreign currency
denominated assets and liabilities, and to hedge future transactions. The Group has entered into certain
forward exchange contracts in various currencies which will be utilised for settlement of orders placed on
suppliers and which are due for payment in the coming year. It is the Group’s policy not to speculate in
foreign exchange contracts.
At year-end, open forward exchange contracts are marked-to-market and the profits and losses arising on
the contracts are recognised in the statement of comprehensive income. The estimated net fair values have
been determined at the year-end, using available market information and appropriate valuation
methodologies.
As at year-end, no uncovered foreign exchange denominated transactions were in existence.
The forward exchange contracts in place at the year-end to cover current and future inventory purchases,
are as follows:
Foreign Average
currency exchange Rand
’000 rate ’000
2011
US Dollar 63 637 6,8600 436 550
Euro 224 389 0,9697 217 590
Yen 1 091 990 12,0662 90 500
Australian Dollar 19 6,9474 132
Singapore Dollar 13 5,4615 71
British Pound 289 10,9446 3 163
Swiss Franc 125 7,4240 928
Swedish Krona 452 1,0619 480
2010
US Dollar 40 490 7,6181 308 457
Euro 20 188 10,8838 219 722
Yen 786 602 11,6117 67 742
Australian Dollar 19 5,6842 108
Singapore Dollar 327 1,0734 351
British Pound 112 11,8036 1 322
Swiss Franc 17 7,5882 129
The forward exchange contracts mature within twelve months.
Capital risk management
Capital is managed to ensure that operations are able to continue as a going concern, whilst maximising
return to stakeholders through an appropriate debt and equity structure. The capital structure of the Group
consists of debt, which includes borrowings, cash and cash equivalents, preference shares, debentures, a
credit default swap and equity. Capital risk was reviewed in detail by the Board in the corporate restructure
process and assessment of new acquisitions.
Invicta Holdings Limited • Annual report 201184
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
39. FINANCIAL RISK MANAGEMENT CONTINUED
Financial instrumentsFinancial instruments as disclosed in the statement of financial position include trade receivables andpayables, other receivables and payables, long-term debtors, overdrafts and short-term borrowings, long-term borrowings and shareholders for dividend.
GROUP
2011 2010R’000 R’000
Categories of financial instrumentsFinancial assetsInvestments at cost or fair valueFinancial investments 3 061 482 2 880 087
Financial assets at fair valueFinancial asset 249 230 179 549
Loans and receivables at amortised costFinance lease receivable 732 –Long-term loans 262 193 6 721Trade and other receivables 691 768 667 612Bank balances and cash 432 403 260 553
4 697 808 3 994 522
Financial liabilitiesFinancial liabilities at fair valueFinancial liabilities 251 819 182 168
Financial liabilities at amortised costBorrowings 3 514 238 3 044 946Guaranteed repurchase liability 13 128 –Trade and other payables 1 080 638 947 777Bank overdrafts and bankers’ acceptances 23 747 45 846
4 883 570 4 220 737
Fair value disclosureThe following is an analysis of the financial instruments that are measured subsequent to initial recognitionat 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 liabilitiesLevel 2 – fair value is determined using directly observable inputs other than Level 1 inputsLevel 3 – fair value is determined on inputs not based on observable market data
31 March
2011 Level 1 Level 2 Level 3
Financial assets at fair value
Financial asset 249 230 – 249 230 –
Financial liabilities at fair value
Financial liabilities 251 819 – 251 819 –
Trade and other payables 544 019 – 544 019 –
85Invicta Holdings Limited • Annual report 2011
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
39. FINANCIAL RISK MANAGEMENT CONTINUED
31 March
2010 Level 1 Level 2 Level 3
Financial assets at fair value
Financial asset 179 549 – 179 549 –
Financial liabilities at fair value
Financial liabilities 182 168 – 182 168 –
Trade and other payables 382 378 – 382 378 –
40. DIRECTORS’ INTERESTS IN THE SHARES OF THE COMPANY
Number of shares held
2011 2010
Direct Indirect Direct Indirect
interest interest interest interest
C Barnard 147 439 72 438 100 000 25 000
A Goldstone 138 966 3 619 401 588 966 3 749 008
DI Samuels 800 460 4 000 000 800 460 4 000 000
LR Sherrell – 9 427 788 – –
RE Sherrell – – 3 760 018 6 253 400
AM Sinclair 137 000 – 137 000 –
CE Walters 297 500 – 300 000 –
CH Wiese – 25 480 590 – 25 113 992
41. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related parties, are limited to dividends
received from subsidiaries of R132 million (2010: R97 million).
Remuneration of key management personnel
The remuneration of the directors of the subsidiaries, who are the key management personnel of the Group,
is set out below:
GROUP
2011 2010R’000 R’000
Short-term employee benefits 53 798 33 521
Retirement benefits 1 290 1 279
55 088 34 800
Services provided by Bravura Equity Services (“Bravura”)
Bravura is a related entity to one of the directors and major shareholders in the Group. Bravura has
provided financial services to the Group with regard to its BEE transaction in 2006, giving rise to certain
investments and borrowings (refer notes 10 and 26 respectively). During the current and prior year, Bravura
provided financial services to the counterparty in the transaction giving rise to the investments and
derivative instruments (refer notes 10 and 13) and borrowings (refer notes 26 and 27).
Invicta Holdings Limited • Annual report 201186
NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued
for the year ended 31 March 2011
42. ACQUISITION OF SUBSIDIARIES
The significant acquisitions included the following:
• 70% of the share capital of Wegezi Power Holdings (Pty) Limited, effective 1 April 2010.• 51% of the share capital of Trendy Property Investments (Pty) Limited, effective 1 April 2010.• 70% of the share capital of Turnkey Hydraulics KZN (Pty) Limited, effective 1 April 2010.• 100% of the share capital of Hi-Quip Hydraulics (Pty) Limited, effective 1 September 2010.• 70% of the share capital of Edmik Engineering (Pty) Limited, effective 1 November 2010.• 80% of the share capital of Smart Taps (Pty) Limited, effective 1 June 2010.
GROUP
2011 2010R’000 R’000
Fair value of net assets acquired:
Property, plant and equipment 22 693 48 091Re-acquired rights 48 047 –Bank and cash (4 512) –Other assets 72 814 77 398Deferred taxation 312 2 069Long-term borrowings (6 874) (15 658)Other liabilities (52 293) (75 828)Non-controlling interest (11 043) (1 510)
Net asset value 69 144 34 562Non-controlling interest acquired in existing subsidiary 1 647 –
Fair value of net assets acquired 70 791 34 562Bank and cash 4 512 –
Net fair value of net assets acquired 75 303 34 562
Cash outflow on acquisitions 134 646 32 964Fair value of net assets acquired (75 303) (34 562)
Net goodwill 59 343 (1 598)
Positive goodwill 59 343 6 354Negative goodwill – (7 952)
Profit after tax since acquisition date included in the consolidated results for the year 26 706 10 350
Revenue since acquisition date included in the consolidated results for the year 297 420 202 506
Profit (loss) after tax should the business combinations have been included for the entire year 21 602 (33 270)
Revenue should the business combinations have been included for the entire year 328 876 189 865
43. EVENTS AFTER THE REPORTING PERIODTheramanzi Investments (Pty) Limited (“Trust Subsidiary”) (a 100% held subsidiary of the Humulani
Empowerment Trust (“Trust”), and aloeCap (Pty) Limited (“aloeCap”) entered into an agreement effective
1 June 2011, in terms of which the Trust Subsidiary, acquired aloeCap's 20% equity stake in Humulani
Investments (Pty) Limited.
87Invicta Holdings Limited • Annual report 2011
SHARE INFORMATIONas at 31 March 2011
SHAREHOLDER SPREAD
Number of Number
shareholding % of shares %
1 – 1 000 shares 1 113 55,65 393 232 0,53
1 001 – 10 000 shares 640 32,00 2 320 087 3,11
10 001 – 100 000 shares 175 8,75 5 332 600 7,16
100 001 – 1 000 000 shares 59 2,95 17 316 481 23,25
1 000 001 shares and over 13 0,65 49 118 155 65,95
2 000 100,00 74 480 555 100,00
DISTRIBUTION OF SHAREHOLDERS
Banks 12 0,60 1 911 592 2,57
Close corporations 38 1,90 138 530 0,19
Endowment funds 8 0,40 411 591 0,55
Individuals 1 531 76,55 13 005 566 17,46
Insurance companies 9 0,45 864 359 1,16
Investment companies 11 0,55 3 907 321 5,24
Medical aid schemes 4 0,20 37 216 0,05
Mutual funds 69 3,45 9 958 389 13,37
Nominees and trusts 194 9,70 23 934 078 32,13
Other corporations 9 0,45 96 850 0,13
Own holdings 3 0,15 4 460 140 5,99
Private companies 48 2,40 12 517 764 16,81
Public companies 4 0,20 1 086 390 1,46
Retirement funds 60 3,00 2 150 769 2,89
2 000 100,00 74 480 555 100,00
PUBLIC AND NON-PUBLIC SHAREHOLDERS
Public shareholders 1 974 98,70 26 126 018 35,08
Non-public shareholders 26 1,30 48 354 537 64,92
Directors and associates of the Company holdings 23 1,15 43 894 397 58,93
Treasury stock 3 0,15 4 460 140 5,99
2 000 100,00 74 480 555 100,00
Beneficial shareholders holding 5% or more
Titan Shareholders 15 433 590 20,72
Dorsland Diamante (Pty) Limited 10 027 000 13,46
The Sherrell Family Trust 6 253 400 8,40
31 713 990 42,58
JSE LIMITED STATISTICS
2011 2010
Ordinary shares
Traded 12 798 911 10 127 369
High (cents) 4 525 2 900
Low (cents) 2 200 2 000
Market price at year-end (cents) 4 350 2 879
Invicta Holdings Limited • Annual report 201188
Financial year-end 31 March 2011
Declaration of final dividend 31 May 2011
Publication of financial results for the year 1 June 2011
Last day to trade “CUM” dividend 1 July 2011
Trading “EX” dividend commences 4 July 2011
Record date 8 July 2011
Dividends payable 11 July 2011
Annual report posted to shareholders 30 June 2011
Annual general meeting 29 July 2011
Publication of interim results November 2011
SHAREHOLDERS’ DIARY
89Invicta Holdings Limited • Annual report 2011
CORPORATE INFORMATION
Company registration number
1966/002182/06
Nature of business
Investment holding and management company
Secretary
C Barnard
PO Box 851, Isando, 1600
Business address
3rd Floor, Pepkor House, 36 Stellenberg Road
Parow Industria, 7493
Postal address
PO Box 6077, Parow East, 7501
Auditors
Deloitte & Touche
Registered Auditors
Deloitte & Touche Place, The Woodlands
Woodlands Drive, Woodmead, Sandton, 2196
Private Bag X6, Gallo Manor, 2052
Share transfer secretaries
Computershare Investor Services (Pty) Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Johannesburg, 2107
Sponsors
Deloitte & Touche Sponsor Services (Pty) Limited
Deloitte & Touche Place, The Woodlands
Woodlands Drive, Woodmead, Sandton, 2196
Private Bag X6, Gallo Manor, 2052
Bankers
Standard Bank of South Africa Limited
Absa Bank Limited
First National Bank (A division of FirstRand
Bank Limited)
Nedbank Limited
Citibank
HSBC Africa
Attorneys
Bernadt, Vukic, Potash and Getz
10th Floor, BP Centre, Thibault Square,
Cape Town, 8001
PO Box 252, Cape Town, 8000
Website
www.invictaholdings.co.za
Audit Committee
DI Samuels – Chairman
JS Mthimunye
LR Sherrell
JD Wiese (alternate to LR Sherrell and JS Mthimunye)
Risk Committee
DI Samuels – Chairman
JS Mthimunye
LR Sherrell
JD Wiese (alternate to LR Sherrell and JS Mthimunye)
Remuneration Committee
Dr CH Wiese – Chairman
DI Samuels
A Goldstone (ex officio)
Invicta Holdings Limited • Annual report 201190
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
Invicta Holdings Limited
(Registration number 1966/002182/06)
(Incorporated in the Republic of South Africa)
Share code: IVT • ISIN: ZAE000029773
(“Invicta” or “the Company” or “the Group”)
NOTICE OF ANNUAL GENERAL MEETINGOF SHAREHOLDERS FOR THE YEAR ENDED 31 MARCH 2011
Notice is hereby given that the annual general
meeting of shareholders of Invicta Holdings Limited
will be held in the boardroom, Invicta Holdings
Limited, 3rd Floor, Pepkor House, 36 Stellenberg Road,
Parow Industria, Cape Town on Friday, 29 July 2011 at
12:00 for the following purposes:
The record date on which members must be recorded
as such in the register maintained by the transfer
secretaries of the Company for the purposes of being
entitled to attend and vote at the meeting is 20 July
2011.
All meeting participants will be required to provide
identification reasonably satisfactory to the chairman
of the meeting.
The purpose of the meeting is to transact the business
set out below and to consider and, if deemed fit, to
pass, with or without modification, the resolutions set
out below:
Special Resolution 1
To consider and if deemed fit, to pass with or without
amendment, the following resolution as a special
resolution:
“RESOLVED THAT, the Company and/or any subsidiary
of the Company be and is hereby authorised by way of
a general approval as contemplated in section 48 of
the Companies Act 71 of 2008, as amended (“Act”), to
acquire from time to time any of the issued ordinary
shares of the Company, upon such terms and
conditions and in such amounts as the directors of the
Company may from time to time determine, but
subject to the Memorandum of Incorporation of the
Company, the provisions of the Act and the Listings
Requirements of the JSE Limited (“JSE”), when
applicable, and provided that:
• the repurchase of securities will be effected
through the order book operated by the JSE
trading system and done without any prior
understanding or arrangement between the
Company and the counterparty;
• this general authority shall only be valid until the
Company’s next annual general meeting, provided
that it shall not extend beyond 15 (fifteen) months
from the date of passing of this special resolution;
• in determining the price at which the Company’s
ordinary shares are acquired by the Company in
terms of this general authority, the maximum
premium at which such ordinary shares may be
acquired will be 10% (ten percent) of the
weighted average of the market price at which
such ordinary shares are traded on the JSE, as
determined over the 5 (five) trading days
immediately preceding the date of the repurchase
of such ordinary shares by the Company;
• the acquisitions of ordinary shares in the
aggregate in any one financial year do not exceed
20% (twenty percent) of the Company’s issued
ordinary share capital from the date of the grant
of this general authority;
• the Company and the Group are in a position to
repay their debt in the ordinary course of business
for the following year;
• the consolidated assets of the Company, being
fairly valued in accordance with International
Financial Reporting Standards, are in excess of the
consolidated liabilities of the Company for the
following year;
• the ordinary capital and reserves of the Company
and the Group are adequate for the next 12
(twelve) months;
• the available working capital is adequate to
continue the operations of the Company and the
Group in the following year;
• upon entering the market to proceed with the
repurchase, the Company’s sponsor has complied
with its responsibilities contained in section 2.12
and schedule 25 of the JSE Listings Requirements;
• after such repurchase the Company will still
comply with paragraphs 3.37 to 3.41 of the JSE
Listings Requirements concerning shareholder
spread requirements;
• the Company or its subsidiaries will not repurchase
securities during a prohibited period as defined in
paragraph 3.67 of the JSE Listings Requirements;
• when the Company has cumulatively repurchased
3% of the initial number of the relevant class of
securities, and for each 3% (three percent) in
91Invicta Holdings Limited • Annual report 2011
aggregate of the initial number of that class
acquired thereafter, an announcement will be
made; and
• the Company only appoints one agent to effect
any repurchase(s) on its behalf.”
Other disclosure in terms of the JSE Listings
Requirements sections 11.26 and 11.23, required for
special resolutions 1 and 2.
Additional disclosure in terms of the JSE Listing
Requirements section 11.26
The JSE Listings Requirements require the following
disclosure, some of which are elsewhere in the annual
report of which this notice forms part as set out below:
– Directors and management – pages 4 and 5 ;
– Major beneficial shareholders – page 87;
– Directors’ interests in ordinary shares – page 85; and
– Share capital of the Company – pages 72 and 73.
Litigation statement
In terms of section 11.26 of the JSE Listings
Requirements, the directors, whose names are given
on pages 4 and 5 of the annual report of which this
notice forms part, are not aware of any legal or
arbitration proceedings, including proceedings that
are pending or threatened, that may have or have had
in the recent past, being at least the previous 12
(twelve) months, a material effect on the Group’s
financial position.
Directors’ responsibility statement
The directors, whose names are given on pages 4 and
5 of the annual report, collectively and individually
accept full responsibility for the accuracy of the
information pertaining to this special resolution and
certify that to the best of their knowledge and belief
there are no facts that have been omitted which
would make any statement false or misleading, and
that all reasonable enquiries to ascertain such facts
have been made and that these special resolutions
contain all information required by law and the JSE
Listings Requirements.
Material changes
Other than the facts and developments reported on in
the annual report, there have been no material
changes in the affairs or financial position of the
Company and its subsidiaries since the date of
signature of the audit report and the date of this
notice.
Reason and effect
The reason for and the effect of the special resolution
is to grant to the Company a general approval in terms
of the Companies Act for the acquisition by the
Company of its own shares, which general approval
shall be valid until the earlier of the next annual
general meeting of the Company or the variation or
revocation of such general authority by special
resolution by a subsequent general meeting of the
Company, provided that the general authority shall
not extend beyond 15 (fifteen) months from the date
of this special resolution.
Statement of board's intention
The Board, at the date of this annual report, has no
definite intention of repurchasing shares in Invicta on
the open market of the JSE. It is, however, proposed,
and the Board believes it to be in the best interest of
Invicta, that shareholders pass a special resolution
granting the Company a general authority to acquire
its own shares and permit subsidiary companies of
Invicta to acquire shares in the Company.
Pursuant to a general repurchase other than shares
repurchased by one or more of the subsidiary
companies to be held as treasury stock, application will
be made to the JSE for the cancellation and delisting
of the shares in question. The cancellation of the
shares will be effected by way of a reduction of the
ordinary share capital and a reduction of the ordinary
share premium.
Statement of directors
As at the date of this report, the Company's directors
undertake that they will not implement any such
repurchase (as contemplated in special resolution
number 1) unless for a period of 12 (twelve) months
following the date of the general repurchase:
a. the Company and the Group are in a position to
repay their debts in the ordinary course of
business;
b. the assets of the Company and the Group, being
fairly valued in accordance with International
Financial Reporting Standards, are in excess of the
liabilities of the Company and the Group;
c. the share capital and reserves of the Company and
the Group are adequate for ordinary business
purposes;
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERScontinued
Invicta Holdings Limited • Annual report 201192
d. the available working capital is adequate to
continue the ordinary business purposes of the
Company and the Group; and
e. upon entering the market to proceed with the
repurchase, the Company's sponsor has confirmed
the adequacy of the Company's and the Group's
working capital for the purposes of understanding
a repurchase of shares in writing to the JSE.
Special Resolution 2
To consider and if deemed fit, to pass with or without
amendment, the following resolution as a special
resolution:
“RESOLVED THAT, the Company be and is hereby
authorised by way of a specific approval as
contemplated in section 48 of the Act, to acquire from
time to time any or all of the issued ordinary shares of
the Company, held by Humulani Marketing (Pty)
Limited, upon such terms and conditions and in such
amounts as the directors of the Company may from
time to time determine, but subject to the
Memorandum of Incorporation of the Company and
the provisions of the Act, when applicable and
provided that:
• this specific authority shall only be valid until the
Company’s next annual general meeting, provided
that it shall not extend beyond 15 (fifteen) months
from the date of passing of this special resolution;
• the repurchase price not be lower than the cost to
the subsidiary of acquiring the shares and will not
be more than 20% (twenty percent) higher than
the weighted average price (R26,47) at which the
shares were acquired;
• the maximum number of shares that are to be
repurchased not to exceed 4 525 913;
• the Company and the Group are in a position to
repay their debt in the ordinary course of business
for the following year;
• the consolidated assets of the Company, being
fairly valued in accordance with International
Financial Reporting Standards, are in excess of the
consolidated liabilities of the Company for the
following year;
• the ordinary capital and reserves of the Company
and the Group are adequate for the next twelve
months; and
• the available working capital is adequate to
continue the operations of the Company and the
Group in the following year.
The shares which the Company wishes to obtain
specific authority to repurchase are treasury shares
held at subsidiary level, which are currently eliminated
on consolidation and are thus treated as cancelled
from a financial reporting perspective to shareholders
and any internal repurchase will therefore have no
financial effect.
Once shares have been repurchased in terms of this
authority, these shares will be cancelled.
Reason and effect
In terms of the Company’s specific authority to
repurchase shares granted at all the annual general
meetings held for each year ended since 31 March
2000 onwards, Invicta, through its wholly-owned
subsidiary Humulani Marketing (Pty) Limited has over
the years purchased 4 525 913 shares in the Company
which were held as “treasury shares”.
Source of funding for the repurchase will be from
within the Group.
The effect of the special resolution and the reason
therefore is to grant directors of the Company a
specific authority in terms of the Act, as amended, for
the acquisition by Invicta of 4 525 913 Invicta shares
held by the Company’s wholly-owned subsidiary,
Humulani Marketing (Pty) Limited.
Statement of directors
As at the date of this report, the Company's directors
undertake that they will not implement any such
repurchase (as contemplated in special resolution
number 2) unless for a period of 12 (twelve) months
following the date of any such repurchase:
a. the Company and the Group are in a position to
repay their debts in the ordinary course of
business;
b. the assets of the Company and the Group, being
fairly valued in accordance with International
Financial Reporting Standards, are in excess of the
liabilities of the Company and the Group;
c. the share capital and reserves of the Company and
the Group are adequate for ordinary business
purposes;
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERScontinued
93Invicta Holdings Limited • Annual report 2011
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERScontinued
d. the available working capital is adequate to
continue the ordinary business purposes of the
Company and the Group;
e. upon entering the market to proceed with the
repurchase, the Company’s sponsor has confirmed
the adequacy of the Company’s and the Group’s
working capital for the purposes of understanding
a repurchase of shares in writing to the JSE; and
f. the Company and the Group has complied with
the applicable provisions of the Act and the JSE
Listings Requirements.
For the purpose of the JSE Listings Requirements in
respect of Special Resolution 2, the directors’ business
address and percentage shareholding of net shares in
issue are as follows:
3rd floor, Pepkor House, 36 Stellenberg Road, Parow
Industria, 7493
C Barnard 0,31%
A Goldstone 5,37%
DI Samuels 6,86%
LR Sherrell 13,48%
AM Sinclair 0,20%
CE Walters 0,43%
CH Wiese 36,42%
Special Resolution 3
To consider and if deemed fit, to pass with or without
amendment, the following resolution as a special
resolution:
"RESOLVED THAT the remuneration of each non-
executive director of the Company be approved, each
by way of a separate vote, as a special resolution in
terms of section 66 of the Act, for the 2012 financial
year as follows:
3.1 Chairman of the
Invicta Board R550 000 per annum
3.2 Chairman of the
BMG Board R200 000 per annum
3.3 Chairman of the
Audit Committee R55 000 per annum
3.4 Members of the
Invicta Board R23 000 per meeting
3.5 Members of the
BMG Board R11 000 per meeting
3.6 Members of the
Humulani Board R10 000 per meeting
3.7 Members of the
Audit Committee R22 000 per meeting
3.8 Members of
Remuneration Committee R22 000 per annum
Reason and effect
The reason for and effect of special resolution
numbers 3.1 to 3.8 is to grant the Company the
authority to pay fees to its non-executive directors for
their services as directors, in line with the
recommendations of the King Code of Governance for
South Africa 2009 (“King III”) and the Act.
Special Resolution 4
“RESOLVED THAT the directors, in terms of and subject
to the provisions of section 45 of the Act, be
authorised to cause the Company to provide financial
assistance to any company or corporation which is
related or inter-related to the Company.”
Reason and effect
The reason for and effect of special resolution number
4 is to grant the directors of the Company the
authority to cause the Company to provide financial
assistance to any company or corporation which is a
consolidated entity of the Company. It does not
authorise the provision of financial assistance to a
director or prescribed officer of the Company.
Special Resolution 5
“RESOLVED THAT the directors’ remuneration for the
year, which are set out in note 36 on pages 79 and 80
of the 2011 Annual Report be approved.”
Reason and effect
The reason for and effect of special resolution 5 is to
approve the remuneration to be paid to the
directors of the Company for their services as directors
as required by section 66(9) of the Companies Act.
Ordinary Resolution 1
To receive and consider the annual financial
statements and the Group annual financial statements
for the year ended 31 March 2011.
Ordinary Resolution 2.1 to 2.4
To re-elect, each by way of a separate vote, the
following directors who retire by rotation at the
Annual General Meeting, but being eligible, offer
themselves for re-election:
Invicta Holdings Limited • Annual report 201194
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERScontinued
2.1 Dr CH Wiese
2.2 JS Mthimunye
2.3 DI Samuels
2.4 CE Walters
Abbreviated biographical details of the above
directors are set out on pages 4 and 5 of this annual
report.
Ordinary Resolution 3
“RESOLVED THAT shareholders endorse, through a
non-binding advisory vote required by King III to
ascertain the shareholder’s view on the Company’s
remuneration policy and its implementation. The
Company’s remuneration report is set out on pages 30
to 33 of this annual report.”
Ordinary Resolution 4
“RESOLVED THAT the authorised but unissued shares
in the capital of the Company be and are hereby
placed under the control and authority of the directors
of the Company and that the directors of the
Company be and are hereby authorised and
empowered to allot, issue and otherwise dispose of
such shares to such person or persons on such terms
and conditions and at such times as the directors of
the Company may from time to time and in their
discretion deem fit, subject to the provisions of the
Act, the Memorandum of Incorporation of the
Company and the JSE Listings Requirements, when
applicable, such authority to remain in force until the
next annual general meeting.”
Ordinary Resolution 5
“RESOLVED THAT the directors of the Company be and
they are hereby authorised by way of a general
authority, to issue all or any of the authorised but
unissued shares in the capital of the Company, for
cash, as and when they in their discretion deem fit,
subject to the Act, the Memorandum of Incorporation
of the Company, the Listings Requirements of the JSE,
when applicable, and the following limitations,
namely that:
• the equity securities which are the subject of the
issue for cash must be of a class already in issue, or
where this is not the case, must be limited to such
securities or rights that are convertible into a class
already in issue;
• any such issue will only be made to “public
shareholders” as defined in the JSE Listings
Requirements and not related parties, unless the
JSE otherwise agrees;
• the number of shares issued for cash shall not in
the aggregate in any one financial year exceed
15% (fifteen percent) of the Company’s issued
share capital of ordinary shares. The number of
ordinary shares which may be issued shall be based
on the number of ordinary shares in issue, added
to those that may be issued in future (arising from
the conversion of options/convertibles) at the date
of such application, less any ordinary shares issued,
or to be issued in future arising from options/
convertible ordinary shares issued during the
current financial year, plus any ordinary shares to
be issued pursuant to a rights issue which has been
announced, is irrevocable and fully underwritten,
or an acquisition which has had final terms
announced;
• this authority be valid until the Company’s next
annual general meeting, provided that it shall not
extend beyond 15 (fifteen) months from the date
that this authority is given;
• a paid press announcement giving full details,
including the impact on the net asset value and
earnings per share, will be published at the time of
any issue representing, on a cumulative basis
within 1 (one) financial year, 5% (five percent) or
more of the number of shares in issue prior to the
issue; and
• in determining the price at which an issue of
shares may be made in terms of this authority, the
maximum discount permitted will be 10% (ten
percent) of the weighted average traded price on
the JSE of those shares over the 30 (thirty) business
days prior to the date that the price of the issue is
determined or agreed by the directors of the
Company.”
In terms of the JSE Listings Requirements, 75%
(seventy-five percent) of the votes cast by shareholders
present or represented by proxy at the annual general
meeting must be cast in favour of ordinary resolution
5 for it to be approved.
Ordinary Resolution 6
“RESOLVED THAT the reappointment of Deloitte &
Touche, Registered Auditors, as independent auditors
of the Company and to appoint SBF Carter as the
designated audit partner for the following year be
confirmed.”
95Invicta Holdings Limited • Annual report 2011
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERScontinued
Ordinary Resolution 7.1 to 7.4
“RESOLVED THAT, subject to the passing of ordinary
resolutions 2.2 and 2.3, the following independent
non-executive directors be elected, each by way of a
separate vote, as members of the Audit Committee of
the Company for the period from 1 April 2011 until
the conclusion of the next annual general meeting of
the Company in July 2012:
7.1 DI Samuels (Chairman)
7.2 JS Mthimunye
7.3 LR Sherrell
7.4 JD Wiese (alternate to LR Sherrell and JS
Mthimunye)
Abbreviated biographical details of the above
directors are set out on pages 4 and 5 of this annual
report.”
Ordinary Resolution 8
“RESOLVED THAT, as an ordinary resolution in terms of
the Listing Requirements of the JSE, the Invicta
Holdings Limited Long-Term Bonus and Share
Incentive Right Scheme 2006, as amended, and as
approved by the JSE, in order to ensure compliance
with schedule 14 of the Listing Requirements of the
JSE, be adopted by the Company.”
In terms of the JSE Listings Requirements, 75%
(seventy-five percent) of the votes cast by shareholders
present or represented by proxy at the annual general
meeting (excluding all votes attaching to all equity
securities owned or controlled by persons who are
participants in the Scheme and may be impacted by
the changes) must be cast in favour of ordinary
resolution 8 for it to be approved.
The Invicta Holdings Limited Long-Term Bonus and
Share Incentive Right Scheme 2006 will be available
for inspection by the shareholders during normal
business hours at the Company’s registered office and
the office of the Company’s transfer secretaries
commencing on 1 July 2011.
Reason
The reason for ordinary resolution 8 Invicta Holdings
Limited Long-Term Bonus and Share Incentive Right
Scheme 2006 is to ensure compliance with Schedule 14
of the JSE Listings Requirements.
Voting instructions
In terms of the Act, any member entitled to attend
and vote at the above meeting may appoint one or
more persons as proxy, to attend and speak and vote
in his stead. A proxy need not be a member of the
Company. Forms of proxy must be deposited at the
office of the transfer secretaries not later than 48
hours before the time fixed for the meeting (excluding
Saturdays, Sundays and public holidays).
If your Invicta shares have been dematerialised and
are held in a nominee account, then your Central
Securities Depository Participant (“CSDP”) or broker, as
the case may be, should contact you to ascertain how
you wish to cast your vote at the annual general
meeting and thereafter cast your vote in accordance
with your instructions.
If you have not been contacted it would be advisable
for you to contact your CSDP or broker, as the case
may be, and furnish them with your instructions. If
your CSDP or broker, as the case may be, does not
obtain instructions from you, they will be obliged to
act in terms of your mandate furnished to them, or if
the mandate is silent in this regard to abstain from
voting.
Dematerialised shareholders whose shares are held in
a nominee account must not complete the attached
form of proxy.
Unless you advise your CSDP or broker timeously in
terms of the agreement between yourself and your
CSDP or broker by the cut-off time advised by them
that you wish to attend the annual general meeting or
send a proxy to represent you at the annual general
meeting, your CSDP or broker will assume you do not
wish to attend the annual general meeting or send a
proxy. If you wish to attend the annual general
meeting, your CSDP or broker will issue the necessary
letter of representation to you to attend the annual
general meeting.
Shareholders who have dematerialised their shares
through a CSDP or broker, other than “own name”
registered dematerialised shareholders, who wish to
attend the annual general meeting, must request their
CSDP or broker to issue them with a letter of
Invicta Holdings Limited • Annual report 201196
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERScontinued
representation, or they must provide the CSDP or
broker with their voting instructions in terms of the
relevant custody agreement/mandate entered into
between them and the CSDP or broker.
Shareholder rights
In terms of the Act, any member entitled to attend
In terms of section 58 of the Companies Act, No. 71 of
2008 (as amended), shareholders have rights to be rep-
resented by proxy as herewith stated.
1. At any time, a shareholder of the Company may
appoint any individual, including an individual
who is not a shareholder of the Company, as a
proxy to:
a. participate in, and speak and vote at, a
shareholders meeting on behalf of the
shareholder; or
b. give or withhold written consent on behalf of
the shareholder to a decision contemplated in
section 60;
provided that the shareholder may appoint more
than one proxy to exercise voting rights attached
to different shares held by the shareholder.
2. A proxy appointment:
a. must be in writing, dated and signed by the
shareholder; and
b. remains valid for:
i. one year after the date on which it was
signed; or
ii. any longer or shorter period expressly set
out in the appointment, unless it is
revoked in a manner contemplated in
subsection (4)(c), or expires earlier as
contemplated in subsection (8)(d).218.164
3. Except to the extent that the Memorandum of
Incorporation of the Company provides otherwise:
a. a shareholder of the Company may appoint
two or more persons concurrently as proxies,
and may appoint more than one proxy to
exercise voting rights attached to different
securities held by the shareholder;
b. a proxy may delegate the proxy’s authority to
act on behalf of the shareholder to another
person, subject to any restriction set out in the
instrument appointing the proxy; and
c. a copy of the instrument appointing a proxy
must be delivered to the Company, or to any
other person on behalf of the Company,
before the proxy exercises any rights of the
shareholder at a shareholders meeting.
4. Irrespective of the form of instrument used to
appoint a proxy:
a. the appointment is suspended at any time and
to the extent that the shareholder chooses to
act directly and in person in the exercise of any
rights as a shareholder;
b. the appointment is revocable unless the proxy
appointment expressly states otherwise; and
c. if the appointment is revocable, a shareholder
may revoke the proxy appointment by:
i. cancelling it in writing, or making a later
inconsistent appointment of a proxy; and
ii. delivering a copy of the revocation
instrument to the proxy, and to the
company.
5. The revocation of a proxy appointment constitutes
a complete and final cancellation of the proxy’s
authority to act on behalf of the shareholder as of
the later of:
a. the date stated in the revocation instrument, if
any; or
b. the date on which the revocation instrument
was delivered as required in subsection
(4)(c)(ii).
6. If the instrument appointing a proxy or proxies has
been delivered to the Company, as long as that
appointment remains in effect, any notice that
is required by this Act or the Company’s
Memorandum of Incorporation to be delivered by
the Company to the shareholder must be delivered
by the Company to
a. the shareholder; or
b. the proxy or proxies, if the shareholder has
i. directed the company to do so, in writing;
and
ii. paid any reasonable fee charged by the
company for doing so.
7. A proxy is entitled to exercise, or abstain from
exercising, any voting right of the shareholder
97Invicta Holdings Limited • Annual report 2011
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERScontinued
without direction, except to the extent that the
Memorandum of Incorporation, or the instrument
appointing the proxy, provides otherwise.
8. If the company issues an invitation to shareholders
to appoint one or more persons named by the
Company as a proxy, or supplies a form of
instrument for appointing a proxy:
a. the invitation must be sent to every
shareholder which is entitled to notice of the
meeting at which the proxy is intended to be
exercised;
b. the invitation, or form of instrument supplied
by the company for the purpose of appointing
a proxy, must:
i. bear a reasonably prominent summary of
the rights established by this section;
ii. contain adequate blank space, immediately
preceding the name or names of any
person or persons named in it, to enable a
shareholder to write in the name and, if so
desired, an alternative name of a proxy
chosen by the shareholder; and
iii. provide adequate space for the shareholder
to indicate whether the appointed proxy is
to vote in favour of or against any
resolution or resolutions to be put at the
meeting, or is to abstain from voting;
c. the Company must not require that the proxy
appointment be made irrevocable; and
d. the proxy appointment remains valid only until
the end of the meeting at which it was
intended to be used, subject to subsection (5).
9. Subsection (8)(b) and (d) do not apply if the
Company merely supplies a generally available
standard form of proxy appointment on request
by a shareholder.
By order of the board
C Barnard
Company secretary
Johannesburg
31 May 2011
Invicta Holdings Limited • Annual report 201198
Invicta Holdings Limited • Annual report 2011
INVICTA HOLDINGS LIMITEDRegistration number 1966/002182/06 • Incorporated in the Republic of South Africa
Share code: IVT • ISIN: ZAE000029773 • (“Invicta” or “the Company”)
For use of shareholders who are:
1. Registered as such and who have not dematerialised their Invicta ordinary shares; or
2. Hold dematerialised Invicta ordinary shares in their own name
at the Invicta annual general meeting to be held in the boardroom, Invicta Holdings Limited, 3rd Floor, Pepkor House, 36 Stellenberg Road, Parow Industria, Cape Town on Friday, 29 July 2011 commencing at 12:00 (“the annual general meeting”).
Dematerialised shareholders holding shares other than with “own name” registration, must inform their CSDP or broker of theirintention to attend the annual general meeting and request their CSDP or broker to issue them with the necessary letter of representation to attend the annual general meeting in person and vote or provide their CSDP or broker with their voting instructions should they not wish to attend the annual general meeting in person. These shareholders must not use this form ofproxy.
I/We (please print name in full)
of (address)
being a shareholder(s) of Invicta and holding ordinary shares hereby appoint (name in block letters)
1. or failing him
2. or failing him
3. The chairman of the annual general meeting as my/our proxy to act for me/us at the annual general meeting which will be heldon Friday, 29 July 2011 at 12:00 in the boardroom of Invicta Holdings Limited at 3rd Floor, Pepkor House, 36 Stellenberg Road,Parow Industria, Cape Town for the purposes of considering and, if deemed fit, passing with or without modification, the resolutions to be proposed thereat and at each adjournment or postponement thereof, and to vote for and/or against the resolutions and/or abstain from voting in respect of the shares in the issued share capital of the Company registered in my/ourname(s) (see note 2).
Number of votes (one per share)
For Against Abstain
Special resolution 1General authority to repurchase shares
Special resolution 2Specific authority to acquire shares of the Company held byHumulani Marketing (Pty) Limited, a subsidiary company
Special resolution 3Approval of the non-executive directors’ remuneration for the 2012 financial year
Special resolution 4Approval of financial assistance to any company or corporation which is related or inter-related to the Company
Special resolution 5Approval of directors’ remuneration for the 2011 financial year
Ordinary resolution 1Adoption of the annual financial statements
Ordinary resolution 2.1To re-elect as director Dr CH Wiese
Ordinary resolution 2.2To re-elect as director Mr JS Mthimunye
Ordinary resolution 2.3To elect as director Mr DI Samuels
Ordinary resolution 2.4To elect as director Mr CE Walters
Ordinary resolution 3Approval of the remuneration policy and its implementation
Ordinary resolution 4To place the authorised but unissued shares under the control of the directors
Ordinary resolution 5To authorise the directors to issue shares for cash
Ordinary resolution 6To confirm the reappointment of Deloitte & Touche as independent auditors of the Company and SBF Carter as the designated audit partner for the following year
FORM OF PROXY
Invicta Holdings Limited • Annual report 2011
FORM OF PROXYcontinued
NOTES TO THE PROXY FORM
Number of votes (one per share)
For Against Abstain
Ordinary resolution 7.1To elect as audit committee member Mr DI Samuels
Ordinary resolution 7.2To elect as audit committee member Mr JS Mthimunye
Ordinary resolution 7.3To elect as audit committee member Mr LR Sherrell
Ordinary resolution 7.4To elect as alternate audit committee member Adv JD Wiese
Ordinary resolution 8Adoption of the Invicta Holdings Limited Long-Term Bonus and Share Incentive Right Scheme 2006
Please indicate with an “X” in the appropriate spaces above how you wish your votes to be cast.Unless otherwise instructed, my/our proxy may vote as he/she thinks fit.
Signed at on 2011
Signature
Assisted by (where applicable)
Number of sharesEach shareholder is entitled to appoint one or more proxies (who need not be a shareholder of the Company) to attend, speak andvote in place of that shareholder at the annual general meeting.Please read the notes below.
1. A shareholder may insert the name or names of two alternative proxies of the shareholder’s choice in the space provided, withor without deleting “the chairman of the annual general meeting” but any such deletion must be initialled by the shareholder.
2. A shareholder’s instruction to the proxy must be indicated by the insertion of the relevant number of votes exercisable by thatshareholder in the space provided. Failure to comply with the above will be deemed to authorise the proxy to vote or abstainfrom voting at the annual general meeting as he deems fit in respect of all the shareholder’s votes exercisable thereat. A shareholder or his proxy is not obliged to use all the votes exercisable by the shareholder or his proxy, or cast them in the sameway.
3. Any alteration or correction made to this form must be initialled by the signatory/ies.
4. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must beattached to this form unless previously recorded by the transfer secretaries or waived by the chairman of the annual generalmeeting.
5. The completion and lodging of this form will not preclude the relevant shareholder from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms thereof, should suchshareholder wish to do so.
6. The chairman of the annual general meeting may reject or accept any form of proxy which is completed and/or received otherthan in accordance with these instructions, provided that he is satisfied as to the manner in which a shareholder wishes to vote.
7. A minor must be assisted by his/her parent/guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the Company.
8. Where there are joint holders of any shares:
• any one holder may sign this form of proxy;
• the vote(s) of the senior shareholders (for that purpose seniority will be determined by the order in which the names ofshareholders appear in the company's register of shareholders) who tenders a vote (whether in person or by proxy) willbe accepted to the exclusion of the vote(s) of the other joint shareholder(s).
9. Forms of proxy must be lodged with or posted to the Company’s transfer secretaries’ offices in Johannesburg (ComputershareInvestor Services (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001; PO Box 61051, Johannesburg, 2107) tobe received by 12:00 on Wednesday, 27 July 2011.
Invicta Holdings Limited • Annual report 2011
GRAPHICULTURE 2018
www.invictaholdings.co.za