March 2014 - Invicta Holdings

Transcription

IntegratedAnnualReport
Invicta Holdings Limited | Integrated Annual Report 2014
Contents
1
Financial highlights
2
Group at a glance
4
Board of directors
6
Joint report of the Chairman and CEO
8
Group structure
9
Humulani Investments Board
10
Operational structure
11
Map of BMG distribution network
12
Map of CEG distribution network
13
Mag of BSG distribution network
14
Review of operations
32
Corporate governance report
52
Integrated report
56
Share information
58
Corporate information
59
Shareholders’ diary
61
Approval of the annual financial statements
61
Certification by the Group Company Secretary
62
Report of the independent auditors
63
Report of the directors
66
Audit Committee report
70
Statements of comprehensive income
71
Statements of financial position
72
Statements of changes in equity
73
Statements of cash flows
74
Notes to the annual financial statements
119
Notice of annual general meeting of shareholders
Form of proxy (Attached)
Profile
Invicta Holdings Limited (“Invicta” or “the Group”) is an investment
holding and management company, controlling and managing
assets of R13 449 million (2013: R12 205 million). Its operations
comprise:
Bearing Man Group (BMG)
Southern Africa’s leading distributor of bearings, seals, power
transmission components, drives, belting, fasteners,
filtration and hydraulics.
Capital Equipment Group (CEG)
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
machinery, implements and related spares.
agricultural
Doosan SA
Doosan SA supplies predominantly heavy earthmoving
machinery for construction and mining applications.
Criterion
Importer and distributor of leading materials handling
equipment and related spares.
Equipment Spare Parts Africa (ESP)
After-market replacement parts, ground engaging tools and
undercarriage parts for earthmoving equipment.
Kian Ann Engineering (Kian Ann)
A large distributor of heavy earthmoving machinery parts and
diesel engine components.
High Power Equipment Africa (HPE)
Distributors of Hyundai Construction Equipment.
Building Supply Group (BSG)
Tiletoria
A leading importer and distributor of tiles and related
sanitary ware in the Western Cape, Gauteng and
KwaZulu-Natal. The Tiletoria group has expanded its
operations to encompass laminated and vinyl flooring in
Gauteng.
MacNeil
Wholesale supplier of sanitary ware, brass ware, taps, plumbing
fixtures, plastic piping and related products to the building
material sector of South Africa and neighbouring countries.
Brands 4 Africa
Export trading in Zimbabwe, Botswana, Namibia, DRC, Zambia,
Mozambique and Malawi, over the past 24 years, servicing the
hardware and construction, automotive, agricultural, mining,
lodge and tourism industries in these countries.
Financial highlights
for the year ended 31 March 2014
Revenue
2014
R’000
2013
R’000
2012
R’000
2011
R’000
2010
R’000
2009
R’000
2008
R’000
2007
R’000
2006
R’000
2005
R’000
2004
R’000
2003
R’000
10 464 511
7 557 899
5 599 464
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
1 042 950
883 759
601 081
505 493
453 293
497 356
360 379
281 229
197 843
231 957
229 451
230 123
709 911
743 532
478 775
426 222
365 389
362 812
300 856
217 724
125 165
108 507
99 631
96 502
3 077 073
2 690 077
1 895 231
1 611 265
1 442 966
1 206 055
1 025 591
886 161
716 296
365 075
312 339
343 665
287
268
254
183
151
138
138
104
68
77
66
45
788
955
647
504
453
437
356
292
170
190
164
133
788
948
604
480
441
437
354
288
169
190
160
130
788
737
647
–
–
–
–
–
–
–
–
–
11 530
10 200
6 500
4 350
2 879
2 000
2 550
2 750
1 850
1 550
935
550
Operating profit
before finance costs,
interest and
dividends received
Profit for the year
Equity attributable to
the equity holders
Dividends per
share (cents)
Earnings per
share (cents)
Diluted earnings per
share (cents)
Normalised earnings
per share (cents)
Share price at the
year-end (cents)
EPS/DPS
(cents)
Share price
(cents)
1 200
1 150
1 100
1 050
1 000
950
900
850
800
750
700
650
600
550
500
450
400
350
300
250
200
150
100
50
12 000
11 500
11 000
10 500
10 000
9 500
9 000
8 500
8 000
7 500
7 000
6 500
6 000
5 500
5 000
4 500
4 000
3 500
3 000
2 500
2 000
1 500
1 000
500
0
0
2003
2004
2005
2006
Earnings per share (cents)
2007
2008
2009
Dividends per share (cents)
2010
2011
2012
2013
2014
Share price at year-end (cents)
1
2
Group at a glance
BEARING MAN GROUP (BMG)
Group at a glance
continued
BUILDING SUPPLY
GROUP (BSG)
CAPITAL EQUIPMENT GROUP (CEG)
CONSTRUCTION
AND MINING
AGRICULTURAL
NORTHMEC
Distributor of
leading agricultural
machinery,
implements and
related spare parts.
NEW
HOLLAND SA
Importers and
wholesaler of New
Holland agricultural
equipment and
specialised Braud
grape harvesters and
CSE
DOOSAN SA
Distributor of
construction and
earthmoving
machinery, turf
grooming
machinery, golf
cars, utility
vehicles and related
spare parts.
Distributor of
excavators, wheel
loaders, articulated
dump trucks and
hydraulic hammers.
MACNEIL
TILETORIA
A reputable
manufacturer,
wholesaler and
distributor of building
supplies from
bathroom fittings,
sanitary ware,
brassware, plastic
piping and related
products into South
Africa and
neighbouring
countries.
A leading importer
and distributor of
wall and floor tiles,
laminated flooring
and sanitary ware in
the Western Cape,
KwaZulu-Natal and
Gauteng.
Bathroomware
HPE
LANDBOUPART
Plumbing
Large distributor of
heavy earthmoving
equipment parts and
diesel spares.
Replacement spare
parts for agricultural
equipment.
Flooring
EQUIPMENT AND SPARE PARTS
ESP
KIAN ANN
CRITERION
Timber
Export
After-market
replacement parts,
ground engaging tools
and undercarriage parts
for earthmoving
equipment.
Large distributor of
heavy earthmoving
equipment parts and
diesel spares.
Importer and
distributor of leading
materials handling
equipment and
3
4
Board of directors
9
4
7
3
2
1
8
11
5
6
10
1. Dr CH Wiese, 2. A Goldstone, 3. C Barnard, 4. DI Samuels, 5. LR Sherrell 6. AM Sinclair,
7. CE Walters, 8. Adv JD Wiese, 9. RA Wally, 10. R Naidoo, 11. GM Chemaly, 12. AK Masuku, 13. JS Mthimunye
1
Dr CH Wiese (72)
Non-executive chairman
BA, LLB, DCom(h.c.)
Non-executive Chairman of Invicta from October 1997 to April 2000 and a
non-executive director since April 2000, re-appointed non-executive
Chairman in January 2006 to date. Also Chairman of Tradehold Limited,
Shoprite Holdings Limited and Pepkor Holdings Limited.
2
We are proud of the
Group and
valuable contribution
of each staff
member.
(53)
Chief executive officer and executive deputy chairman
BSc (Mech Eng), BCom (Hons), CA(SA)
Worked as a management consultant at KPMG prior to joining Invicta
in January 1990 as financial manager. Appointed financial director of
Invicta in August 1991 and chief executive officer in April 2000. In
addition to his responsibilities as Invicta Group CEO, assumed the
position of executive deputy chairman effective 11 November 2013.
achievements of our
acknowledge the
A Goldstone
3
C Barnard (50)
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 1998 joined the Invicta Group as financial manager,
appointed director of CSE Equipment Company (Pty) Ltd in 1999 and
company secretary of Invicta in 2002. Appointed executive director of
Invicta on 7 June 2007. Resigned as company secretary of Invicta on
31 December 2013. Remains as financial director of Invicta.
Board of directors
continued
4
DI Samuels (74)
Independent non-executive director
CA(SA)
5
Appointed as alternate director to Mr RE Sherrell
on 27 May 2009 and has been nominated as
director of Invicta 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 Sherrell represented South Africa as a rugby
player in 1994.
Joined Trade and Industry Acceptance Corporation Limited in 1971 and
was appointed director from 1980 to 1984. From 1989 to 2000 was
managing director of Stenham (Pty) Ltd. In 1996 was appointed nonexecutive director of Invicta. Appointed non-executive director of
Bearing Man Limited in 2001 and chairman in 2002.
6
AM Sinclair
(59)
Executive director
Joined JI Case in 1982 and was appointed branch manager in 1986.
Joined CSE in 1989 and was appointed a divisional managing director in
1993. In 1998 appointed managing director of CSE and in September
2006 appointed as an alternate director of Invicta Holdings Limited.
Appointed executive director of Invicta on 7 June 2007.
8
7
CE Walters
(46)
Executive director and Deputy chief executive
officer
BSC (Mech Eng), BCom, MDP (Harvard)
Joined Anglo American Corporation in 1986 as
corporate graduate engineering trainee where he
held numerous positions in both the Anglo group
and De Beers. Appointed marketing and sales
manager – Pulp for Mondi SA in 1996 and
appointed managing director of Mondi Sales
International in 2002. Appointed managing
director of Bearing Man Group in September 2006.
Appointed alternate director to DI Samuels on the
Invicta board on 7 June 2007 and appointed as
executive director on 31 July 2009. In addition to
his responsibilities as Bearing Man Group CEO, he
has assumed the position of deputy chief executive
officer of the Invicta Group effective 11 November
2013.
Adv JD Wiese (33)
Non-executive director
BA (Value and Policy Studies), LLB, MIEM (Bocconi, Italy)
Adv JD Wiese appointed as non-executive director of Invicta effective
29 July 2010. Adv JD Wiese obtained his BA degree after which he
worked at Lourensford Wine Estate, assisting in initiating events
partnerships. Subsequently obtained his Master’s Degree in International
Economics and Management and completed this degree as a participant
in the MBA programme. 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 Court on 8 May 2009.
9
LR Sherrell (48)
Non-executive director
RA Wally
(70)
Appointed as an independent non-executive director of Invicta on 30 July 2013. Mr Wally has held various senior executive positions
with IBM in Africa, Europe, Middle East and South East Asia and Lenovo in Africa and has over 38 years of experience in the information
technology sector and is currently chairman of the board and member of the audit committee of Mango Airlines (SOC) Limited.
10
R Naidoo
(51)
BA, LLB, Certificate Mergers & Acquisitions, LLM (Corporate Law)
Admitted to practice as Attorney, Notary Public and Conveyancer (1988).
Has 15 years’ experience as a director of companies, having served as a
non-executive director on the boards of a number of private and public
companies. In a private capacity, Mrs Naidoo has been involved in
various business ventures and commercial property developments and
also has a particular interest and expertise in corporate governance, and
is a published author in the field. Appointed as an independent nonexecutive director of Invicta effective 20 February 2014.
12
11
GM Chemaly (41)
Company Secretary and Group Legal Advisor
B.Iuris, LLB
Admitted to practice as Attorney, Notary Public
and Conveyancer (1998) and has more than 8 years
of experience as a company secretary and legal
advisor in the JSE-listed environment.
AK Masuku (43)
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 of South Africa’s top 200 corporates, parastatals and BEE players. Appointed managing director
of aloeCap (Pty) Ltd in May 2007. Appointed non-executive director of Invicta on 7 June 2007 and appointed alternate director to
JS Mthimunye on 31 July 2009. Resigned as an alternate director of Invicta on 12 September 2013.
13
JS Mthimunye (49)
Non-executive independent director
CA(SA)
Appointed financial accountant Department of Finance in 1993. A founding partner of Gobodo Inc and established the corporate
advisory service in 1997. Appointed financial manager at Nampak Tissue in 1995. Appointed managing director of aloeCap (Pty) Ltd and
appointed executive chairman in May 2007. Appointed alternate director to AK Masuku on the Invicta board on 7 June 2007 and
appointed as non-executive director on 31 July 2009. Resigned as director of Invicta on 12 September 2013.
Ages as at year-end
5
6
Joint report of Chairman and CEO
Revenue grew by 38%
Normalised earnings per share grew by 7%to 788 cents per share
Final dividend 184,65 cents per share
The only JSE Company ever to achieve TOP
100
status
– 19 years in a row
FINANCIAL OVERVIEW
The Invicta Group has again delivered
good
results
under
challenging
circumstances. Labour unrest in South
Africa, a marked deterioration in the
Rand and subdued trading conditions in
South East Asia have characterised the
year under review.
Tough trading conditions in the industrial
consumables market in South Africa
(served by BMG) prevailed during the
year. Labour unrest was particularly
debilitating in the mining industry and in
the early part of the financial year, the
automotive industry. Labour unrest in the
platinum mining sector has continued
into the new financial year, which has
contributed to a contraction in GDP in
South Africa in the first quarter of the
2014 calendar year.
Dr CH Wiese
A Goldstone
Non-Executive Chairman
Chief Executive Officer
The Invicta Group has again
delivered good results under
challenging circumstances.
The capital equipment markets (served by
CEG) experienced mixed conditions –
demand for earthmoving machinery
continued to grow throughout the year,
while demand for agricultural machinery
declined year-on-year. Trading conditions
in markets in South East Asia, in which
Kian Ann operates, continued to be
subdued. BSG grew much faster than the
industry it serves, due mainly to
acquisitions.
Acquisitions made by the Group during
the prior financial year bolstered
performance and provided a solid
platform for future growth.
Group revenue grew R2,907 billion (38%)
to R10,465 billion, of which R610 million
(6%) was from acquisitions made this year
and R9,854 billion (94%) was organic.
Operating profit, which includes a non-
Joint report of the Chairman and CEO
continued
recurring profit on sale of fixed assets of R14
million, increased by R159 million (18%) to
R1,043 billion.
Operating profit increased to R484 million, a very good result. CEG
continued to outperform its benchmarks and to be a major
contributor to the Invicta stable.
A number of once-off, non-trading
transactions occurred during the year under
review and during the prior year, which
obscure the trading figures. For this reason,
the normalised earnings have been
presented. The normalised EPS increased by
7% from 737 cents to 788 cents per share,
while the normalised HEPS increased by 15%
from 667 cents to 765 cents per share.
Working capital management was good,
resulting in cash generated from operations
of R715 million.
BUILDING SUPPLIES GROUP (BSG)
BSG, comprising Tiletoria and MacNeil (which was acquired on
1 October 2012), was bolstered by two acquisitions during the year.
Revenue increased by R759 million (121%) to R1,383 billion, R1,083
billion (78%) of the growth being organic and R300 million (22%)
from acquisitions made during the year under review. Although not a
major contributor to the profits of the Invicta Group, BSG is settling
down well. It has significant potential and is expected to make a
greater contribution to the Group in future.
Management resolved at the beginning of
the year under review to restrict acquisition
activity and to bed down the acquisitions of
the prior year. The only significant acquisition
during this financial year was that of HPE,
the distributor of Hyundai earthmoving
machinery in South Africa.
BEARING MAN GROUP (BMG)
BMG performed extremely well, given the
challenging market conditions. Market
demand for BMG’s products and services was
negatively impacted by depressed conditions
in mining and manufacturing in South Africa.
BMG, however services a diversified range of
industries and customers. This put it in good
stead to achieve a modest growth in volumes
sold and to grow its revenue by 15% to
R3,956 billion. Excluding acquisitions made
during the course of the prior period,
revenue increased by 10%. No acquisitions
were made during the year under review.
Excellent management of costs and gross
margins resulted in BMG’s operating profit
increasing by 21% to R473 million. Working
capital management was good.
CAPITAL EQUIPMENT GROUP (CEG)
CEG grew significantly during the year, aided
by the acquisitions of Kian Ann in Singapore,
which was included for 2 months of the prior
year and HPE, which was included from
1 April 2013.
Earthmoving machinery sales in the country
grew throughout the year, whilst agricultural
machinery sales, measured by tractor unit
sales, declined by 6,3% during the year under
review. ESP, the quality replacement parts
business made a good contribution to CEG.
PROSPECTS
Trading conditions remain challenging. At the time of drafting this
report, labour unrest in the platinum mines appears to be close to
resolution, but there are threats of strikes in other industries served by
the Group. GDP in South Africa in the first quarter of the 2014
calendar year shrunk by 0,6%. Numerous public holidays in April and
May 2014 compounded the situation, which has resulted in a slow
start to the new financial year.
The maize price, a big driver of sales of agricultural machinery, has
dropped significantly, giving rise to the expectation of a decline in
agricultural machinery demand in South Africa in the coming financial
year. Demand for earthmoving machinery is primarily dependent on
mining, construction activity and infrastructural spend, none of which
are flourishing at the moment. Group management are experienced
in managing fluctuating markets and have shown resilience in the
past in dealing with these challenging conditions, which management
believe will inevitably change for the better and business is expected
to improve accordingly.
The global markets serviced by the Group (mainly South East Asia) are
erratic with growth likely to be muted in the coming financial year.
Notwithstanding the above, the Group will continue to do what is has
done well in the past – manage its operations soundly while seeking
out acquisitions and opportunities for growth. Current conditions are
expected to give rise to acquisition opportunities domestically and
internationally. Invicta will also use the opportunity to look inwardly
to streamline its businesses, improve supply chain management and
efficiencies.
The Group will focus on diversifying its businesses geographically and
has strategically decided to become a more global business in sectors
in which it has operated historically. Business in Africa is being pursued
vigorously.
APPRECIATION
We are proud of the achievements of our Group and acknowledge the
valuable contribution of each staff member. Thanks to everyone and
we look forward to many more years of steady growth in the Invicta
Group.
Trading conditions in the regions of South
East Asia serviced by Kian Ann continued to
be challenging.
CEG’s revenue increased by 46% to R5,122
billion. Only a small percentage of this
growth was organic, with the bulk emanating
from the acquisition of HPE and Kian Ann.
Dr CH Wiese
Chairman
12 June 2014
A Goldstone
7
8
Group structure
100%
67%
Invicta Asian
Holdings
75%
(Pte) Ltd
Invicta
Bearing Man
33%
Offshore
1955 (Pty) Ltd
100%
Holdings
Kian Ann Group
Humulani Empowerment Trust
100%
75%
Theramanzi
Investments
(Pty) Ltd
20%
Humulani
Investments
(Pty) Ltd
Humulani Employee
Investment Trust
5%
100%
100%
60%
Operational
Marketing
Goldquest
Humulani
Marketing
(Pty) Ltd
International
Building
Hydraulics SA
Supply Group
(Pty) Ltd
Man-Dirk
Divisions
Group
Disa
60%
Tiletoria
Group
Equipment
High Power
Equipment
(Pty) Ltd
(Doosan SA)
Africa
MacNeil
89%
Criterion
Group
Equipment
(Pty) Ltd
Brands 4 Africa
Equipment
Spare Parts
(Africa)
(Pty) Ltd
Invicta
Properties
(Pty) Ltd
Distribution &
Logistics
Humulani Investments Board
A Goldstone
C Barnard
RA Wally
R Naidoo
DEL Zondo
The Group will focus on diversifying its
businesses geographically.
9
10
Operational structure
Bearing Man Group
Capital Equipment Group
Building Supply Group
BMG
CEG
BSG
Charles Walters
Anthony Sinclair
Neil Malherbe
BMG
CEG
BSG
BMG DIVISIONAL DIRECTORS
CEG DIVISIONAL DIRECTORS
BSG
Abe Bekker
Geoff Balshaw
Kevin Diab
Chief Operating Officer : Supply Chain
Financial Director
Group Financial Director
Wayne Taylor
Ben Grobler
Chief Financial Officer
National Parts Director and
MACNEIL
Managing Director:
Paul McKinlay
Landboupart
Distribution
Johan van der Merwe
Managing Director: Northmec
Gavin Pelser
Director: Fluid Power and Subsidiaries
Dave Russell
Director: Engineered Products and
Technical
Ian King
Kevin Sussex
Financial Director
Peter Askew
Managing Director:
Shane Waters
New Holland SA
Procurement Director
Rod Watson
Managing Director: Doosan SA
Director: Sales and Africa
Mark Russell
Managing Director
Chief Operating Officer: Sales and
Alex Ackron
Craig Lorden
Group Director
TILETORIA
Managing Director: HPE
Keith van Wyk
Brenton Kemp
Director: Consumables
Managing Director:
CSE and Criterion Equipment
Rayen Govender
Director: HR
Andrew Grobler
Managing Director: ESP
MAN-DIRK
Barry Walters
Steve Kite
National Service Manager
Patrick Thonissen
Managing Director
Allan Duckworth
Financial Director
Mohammud Mohuideen
Operations Director
Sven Swart
Group Director
Managing Director
KIAN ANN
WEGEZI
Law Peng Kwee
BRANDS 4 AFRICA
Bennie Groenewald
Managing Director
Anthony Wannell
Managing Director
Kevin Law Cher Chuan
Managing Director
AUTOBAX
Group General Manager
Loy Soo Chew
Freddie Hall
Managing Director
Company General Manager
Map of BMG distribution network
11
12
Map of CEG distribution network
GAUTENG
CSE branches
Doosan SA branches
Northmec branches
Doosan SA dealers
Northmec dealers
Cartcom branches
New Holland SA branches
Criterion branches
New Holland SA dealers
Criterion agents
ESP branches
Map of BSG distribution network
MacNeil wholesale distribution centres
Tiletoria branches
MacNeil manufacturing operation
Tiletoria dealers
Upfront Agencies Distribution Centre
Brands4Africa Distribution Centre
13
14
CEG
BSG
BMG
Bearing Man Group
CE Walters
WR Taylor
Chief executive officer
Chief financial officer
Another successful year of supplier
acquisition, branch network extention,
product line expansion and customer
service forums has meant BMG was able
to produce another record year of
sales and profitability.
15
continued
BMG
Against many headwinds, BMG has continued on a rigorous path of strategic differentiation through
both organic and acquisitive growth. The company has augmented its core activities through strategic
additions to the business which have been carefully chosen to deliver more comprehensive support to
Southern African industry and mining. As a result, BMG has entrenched itself as the leading supplier of
critical production equipment, components and maintenance services. This has enabled the company
to weather the tough ongoing economic conditions and deliver another successful year.
As an integral part of our customers’ operations and productivity, BMG looks to the future and
continues to invest in skills development, logistic improvements and technological advances to set the
company apart in a highly competitive environment
FINANCIAL REVIEW
Market demand for BMG’s products and
services was again impacted by strikes,
predominantly in the platinum sector. Despite
this, there was a modest improvement in
volumes sold. Supplier price increases
together with Rand depreciation resulted in
significant increases in the landed cost of our
products.
was reduced while still maintaining excellent stock availability.
Debtors increased with the increase in turnover. Focused attention
was placed on the debtor’s book during the year to ensure cash flow
remained good and credit risk reduced. Net operational assets
increased to R1,5 billion (2013: R1,3 billion) and return on capital
employed improved to 32,4% (2013: 30,5%).
Turnover increased by 15% to R4 billion
(2013: R3,4 billion). Excluding acquisitions
made during the course of the prior period,
turnover increased by 10%. No acquisitions
were made in the current period. Operating
profit of R490 million (2013: R390 million)
was achieved, a growth of 26% on the
previous period. Organic growth in operating
profit was 17%. The operating margin
improved to 12,49% (2013: 11,4%).
The cross-selling opportunities envisaged following last year’s
acquisition of tools and equipment distributor, Man-Dirk, have
resulted in selected BMG branches being upgraded to include a retail
tool section. By capitalising on BMG’s extensive branch network, the
reach of this sector is being considerably enhanced.
Inventory was well managed despite the
significant impact of Rand weakness on the
landed cost of product. Inventory weeks cover
STRATEGIC DEVELOPMENTS
Strategic expansion into Africa beyond the SADC countries has been
accelerated with priority attached to countries offering the greatest
opportunity for BMG products and services. Suitable local partners
have been identified, supported and trained by BMG personnel. Most
recently, a joint venture has been set up in Tanzania and a fourth
Mozambican branch opened in Nacala. In addition, growth initiatives
are being extended to existing African distributors as well as South
African based exporters.
16
annual report
Report2013
2014
Invicta Holdings Limited | Integrated Annual
continued
BMG and subsidiary, Man-Dirk, have partnered to
embark on a localisation initiative aimed at identifying
and developing local host community entrepreneurs
with the objective of contributing to the National
Development Plan’s call for Black Industrialists. With
guidance from the Department of Mineral Resources
Empowerment Transactions Directorate, a new
distribution chain has been established within the
platinum belt under the new brand, African
Maintenance Equipment (AME). The AME distribution
chain currently comprises three branches in the North
West Province with further branches planned in other
regions during the 2015 financial year.
A re-development project has commenced at the BMG
Park site in Johannesburg. The project will realise
operational and logistics efficiencies and involves the
relocation of certain business units, the centralisation
of inventory and an investment in computerised
warehouse management tools. The project is expected
to be completed by December 2015.
CONSUMABLE PRODUCT DIVISION –
BEARINGS, SEALS, POWER TRANSMISSION,
FASTENERS AND GASKETS
The Bearings division characteristically returned a
pleasing performance in spite of unrelenting
headwinds. Astute attention to stock management
and product availability resulted in the basis for
continued customer service enhancement. This was
further accentuated by an improved responsiveness to
urgent demand for non-standard product. The
automotive section of this business achieved a strong
set of results and secured improved arrangements
with key suppliers. Suspension components were
added to the extensive wheel bearing kit programme
to add depth and focus to the selling effort. The
market for rolling element bearings continues to be
threatened by unchecked
entering the country.
counterfeit
product
Similarly, performance targets were surpassed by the
Power Transmission grouping of Drive Belts, Chain and
Ironware. The anchor brands of Fenner, Gates and Esco
all achieved record sales and products which were
introduced in recent history established themselves
with solid performances. Investments were made in
new machinery to mechanise the assembly of
attachment chain and cam clutches which further
improves the quality, efficiency and consistency of
these operations. The turmoil in the mining sector had
a depressive impact on certain product lines, but
an increased focus on other sectors had a
counterbalancing effect.
Intensified competition, mining labour issues and grey
import practices by rivals combined to restrict
performance from the Seals division. Nonetheless,
year-on-year sales growth was achieved. Custom
manufactured seals produced locally and on-demand
by our dedicated Seal Maker machines contributed
significantly to this division’s results. A further
investment in seal manufacturing machines will be
commissioned in the new year to meet the strong
demand.
The Fasteners division was unable to sustain the
exceptional growth level achieved in the prior year,
but still managed to achieve a credible sales
performance, augmented by some pleasing project
business successes. Imported product lines were forced
to navigate and react to changing import tariffs and,
of course, the depreciating Rand. The division reacted
dynamically to these challenges and secured new
supply lines in order to maintain trading margins and
customer service levels.
The supply of Tools and Equipment through the BMG
network achieved exponential growth and
underscored the power of BMG’s branch distribution
footprint. The restyling of selected branches to
incorporate a Tools and Equipment self-service retail
section was initiated during the year and all indicators
point to a continuing growth trend.
The newly formed Gasket business unit is now settling
in to the BMG group. The potential for this business
has been reflected in the purchase of CNC machinery
which will be sited in Johannesburg to expand the
offering geographically.
HoldingsLimited
Limited | | Integrated
IntegratedAnnual
annual Report
report 2014
2013
Invicta
InvictaHoldings
continued
ENGINEERED PRODUCTS DIVISION –
DRIVES, BELTING, ELECTRONICS AND
TECHNICAL RESOURCES
In total, the Engineered Products divisions produced a
satisfying result in both sales and profitability, but did
so under economic conditions which most heavily
impact this side of BMG’s endeavours. Project business
opportunities have a significant influence on the
fortunes of the Engineered product offerings which, in
turn, depend heavily on the economic appetite for
fixed capital investment.
The Gear division’s performance was flat with ongoing
tight expense cost management. The division started
the year with uncertainty over a major supplier, but
has since overcome this through the conclusion of a
distribution agreement with Rexnord/Falk – a major
U.S. manufacturer of a class-leading range of products.
In a market of fierce competition, the Electric Motor
division put in a sterling performance with growth in
sales, volumes and profits. A firm commitment to
quality coupled with careful market segmentation and
focus underpinned this pleasing result. The extensive
BMG branch network provided a successful asset in
maintaining our market share. In addition, the work
done to develop and introduce new products in the
prior year came on stream to supplement sales.
The year under review saw the successful splitting of
the Conveyor Belting businesses into Light and Heavy
materials handling in order to promote the
intensification of the differing focus points of these
two business units. The strategy returned very positive
results with exceptional growth in both sales and
trading margins. The Light Belting division, which
concentrates on bottling, printing packaging and food
processing, refined its supplier arrangements and
added new product opportunities in the process. The
Heavy Belting business unit is dedicated to the
transport of bulk mining and processing materials.
Despite the upheavals in mining, the division
successfully segmented and focussed on markets
which presented the greatest potential for success.
The innovative “Super Screw” belt fastening system
continued to gain popularity due to its ability to
reduce maintenance time and improve plant
operational availability. Production cost efficiencies
started to be realised during the year with further
scope remaining to be tapped into in the coming year
and promising further profitability gains.
17
BMG
18
annual report
Report2013
2014
continued
The Electronics division, which supplies variable speed
drives and motor soft starting equipment, successfully
supplemented the prior year’s large project income
with business from more diversified sources. The
change in product mix had a positive impact on
profitability. This division is orientated around
solution-based selling and is staffed by some of the
best technical skills in the industry. The awareness of
BMG as a highly competent supplier of electronic drive
equipment is growing and promises further success.
company prides itself. Expansion of these services is
TECHNICAL RESOURCES
signed with motion control specialists, Parker
As BMG continues its advancement into more complex
pneumatics and hydraulic filtration products and is
products and integrated technical solutions, the
expected to contribute strongly to performance in the
provision of high-level technical support has become
new financial year.
planned for the forthcoming period.
FLUID POWER DIVISION – HYDRAULICS,
PNEUMATICS, FILTRATION AND
LUBRICATION
BMG Hydraulics endured tough market conditions.
However, sales through the BMG branch network
added positively to the overall result. In the second
half of the year a strategic partnership agreement was
Hannifin. This partnership extends BMG’s range of
obligatory. In addition to engineering process
solutions, this division provides the base skills on which
staff and customer training is built. But its primary role
is to ensure customer satisfaction beyond the
boundaries of product supply. Recognising that
customers ultimately require productive efficiencies
through equipment reliability and uptime, the
Technical
Resources
division
provides
on-site
installation, maintenance, breakdown and monitoring
services as well as design engineering and failure
SUBSIDIARIES – MAN-DIRK, OMSA, WEGEZI
AND OST
In its first full year of trading as a subsidiary of BMG,
Man-Dirk delivered a very positive contribution to the
BMG group’s performance. Despite considerable
exposure to the strike hit mining industry, Man-Dirk
achieved its growth objectives in both sales and
profitability.
OMSA concluded its second year of trading as a
subsidiary on a very positive note. Management
interventions and restructuring had a profound effect
which included stratification of product lines to gain
benefit from the BMG distribution network. Notably a
valves sub-unit was created, backed by investment in
strategic stock, focussed marketing and technical skills.
The lubrication systems and instrumentation elements
of OMSA similarly grew positively.
Wegezi was affected by the prevailing economic
environment. Despite this, investment in new
products, using new technologies, has opened up new
possibilities for the year ahead. This business is well
placed to benefit strongly from a normalisation of
maintenance and upgrade activities in its customer
base.
analysis services. This talent pool also develops and
maintains the technical standards against which the
BMG group procures many of its product lines and
thereby upholds the quality standards on which the
With a positive year-on-year sales growth, the outlook
for this business is extremely positive as proactive
export activities are expected to deliver exciting results
in the new financial year.
HoldingsLimited
IntegratedAnnual
annual Report
report 2014
2013
Invicta
InvictaHoldings
continued
OUTLOOK
Trading conditions are expected to remain testing for
a fifth consecutive year. In order to continue to focus
on extracting operating efficiencies whilst maintaining
growth momentum, a structural reorganisation has
been introduced to further perfect the effectiveness of
BMG’s core strengths of distribution, logistics and
technical expertise.
Despite business friendly post-election rhetoric, we do
not anticipate that the South African customer base
will enjoy much respite in the short-term from the
unrelenting pressures of rising input costs and erratic
labour productivity. Accordingly, BMG is streamlining
its operation and focuses on offering even greater
levels of product availability, technical advice and
on-site maintenance support.
19
BMG
20
annual report
Report2013
2014
continued
BMG
BSG
CEG
The continuous focus over
the years by the CEG
management has resulted
Capital Equipment Group
in a strong, stable platform
to weather fluctuating
market conditions. This has
resulted in 7 years of
exceptional results with the
2014 financial year being
no exception.
AM Sinclair
GE Balshaw
HoldingsLimited
IntegratedAnnual
annual Report
report 2014
2013
Invicta
InvictaHoldings
continued
FINANCIAL REVIEW
Revenue 46,2%
Operating profit
42,5%
The Capital Equipment Group (CEG) has delivered an improved set of results despite very difficult
trading conditions resulting in a satisfactory performance for the year under review.
All the divisions started the trading year with good prospects despite certain sectors not showing
encouraging signs of growth.
The group’s continuous good performance has resulted in acceptable profit contributions to the
Invicta Group over this period.
The Capital Equipment Group comprises:
Northmec: CaseIH Agricultural Equipment and other related implement brands;
New Holland SA: New Holland Agricultural Equipment and other related implement brands;
CSE: Case Construction Equipment, Club Car golf cars and Jacobsen/Ransomes Turf Equipment;
Doosan SA: Doosan Construction Equipment and Hammers;
HPE: Hyundai Construction Equipment and Crushers;
Criterion Equipment: TCM/Unicarrier Forklifts;
Cartcom: Golf car rental;
Landboupart: Replacement spare parts for agricultural equipment;
ESP: Distributor of high quality aftermarket replacement parts, ground engaging tools and
undercarriage for earthmoving equipment, parts for Caterpillar, Komatsu and other earthmoving
equipment, repair of undercarriage for earthmoving machinery;
Kian Ann: One of the world’s largest independent distributors of heavy machinery parts and diesel
engine components. Their products are used for excavators, bulldozers, wheel loaders, motor graders,
trucks, trailers, power generation sets and marine engines.
HPE: Distribution of Hyundai construction equipment.
21
CEG
22
annual report
Report2013
2014
continued
Revenue of CEG increased by 46,2% to R5,122 billion.
Only a small percentage of the growth was as a result
QUALITY MANAGEMENT, TRAINING AND
SOCIAL RESPONSIBILITY (CSR)
of organic growth with the balance resulting from the
acquisition of Kian Ann and HPE. Currencies were very
The CEG has maintained its standard of quality service,
volatile during the last six months of trading resulting
after-sales support and internal controls, by complying
in a 14,7% depreciation of the ZAR against the US$
with ISO9001 certification which is audited annually to
from the beginning of the trading year to the end,
ensure continuous compliance. The division is
which required diligent pricing management to
currently working toward ISO14001 environmental
remain competitive.
certification.
Only one acquisition, that of HPE, was made during
CEG continues to invest in the training of its staff to
the year, which has had little impact on the results, but
ensure stability and succession as well as up-skilling
is expected to make a meaningful long-term
staff in all divisions. A focussed long term training
contribution in the future.
program has been implemented, with a large
An outstanding contribution by the Spare Parts
percentage of staff being trained this year. Staff
division, good operational management and control
management skills training was introduced at various
of gross margins, as well as continuous pressure to
management levels to allow managers to better
maintain operating costs, have resulted in operating
manage their staff. The CEG is the second largest
profit increasing by 42,5% to R484 million. The
apprentice trainer in the agricultural sector.
operating profit return on sales of R484 million,
reduced from 9,7% to 9,4%, as a result of an increase
in operating expenses, still a particularly pleasing
result.
Equally pleasing was the operating profit return of
OPERATIONAL REVIEW
There has been a gradual recovery of volume demand
in the capital equipment markets throughout the year
with the construction sector improving monthly. In the
49,3% on working capital which makes CEG an
latter part of the trading year, the agricultural
important contributor to the Invicta Group.
equipment market experienced an increase in demand
The year ended with equipment inventory value levels
due to very competitive pricing and old stock at lower
well above the group targets due to management’s
prices, with the forecast for the calendar year of 2014
decision to build inventory before the currency
to be 10 to 15% down on 2013 volumes. Material re-
weakened, which resulted in a reduction in the normal
handling markets are 19% down and the turf market
stock turns. All inventory on hand is well within
continues to deteriorate, being nearly 70% down on
market-related pricing.
the prior year.
CEG
continued
Equipment volumes in the construction markets in
beginning of the trading year reaching a high of
which the CEG trades have increased in the 2013/14
R3 500 per tonne and settling at R2 650 per tonne at
trading year by 20,6%, agricultural tractors decreased
year-end. The decrease in the maize prices resulted in
by 6,3%, combine harvester volumes decreased by
muted farmer confidence during that period,
20%, mobile sprayers (a new emerging market) has
however, the increase in the fuel and fertilizer prices
decreased by 21,5% and forklift trucks decreased by
as well as the drought in the North West part of the
country has created concern for the tractor demand in
19,0%.
Case
construction
equipment
which
trades
predominately in the plant hire market, recovered
well and is beginning to make the expected
contribution to the group. Doosan has had another
exceptional year. Criterion Equipment performed well
following its restructuring after being acquired by the
2014. The agricultural companies in the group have
intensified efforts to improve the support to the
farmers on precision farming and satellite farming
which
is
fast
becoming
a
must
for
farming
management to optimise returns on inputs while
preserving resources. It relies on new technologies
such as satellite imagery and geospatial tools.
Group, five years ago. All the agricultural machinery
operations performed within expectations as did ESP.
Northmec
The markets in South East Asia are still depressed,
although Kian Ann performed above expectations
under difficult trading conditions.
CaseIH Agricultural Equipment and other related
implement brands
Northmec, predominantly a retail distributor of
AGRICULTURE DIVISION
agricultural
The demand for agricultural equipment in the year
turnover and profits. Northmec gained market share
under review declined with the total national tractor
on tractors, however, lost market share on Combine
market volumes in South Africa decreasing by 6,3%
Harvesters. Trading in the second half of the trading
(excluding exports) from 7 770 units to 7 282 units.
year was difficult with volumes up, but competitive
Combine harvester market volumes decreased by 20%
pricing. At year-end, inventory was higher than
from 423 units to 337 units and the baler market has
initially anticipated as a result of management’s
remained constant with a small growth, while demand
decision to increase stock levels in anticipation of the
for implements was good. Soft commodity prices,
weakening Rand. Northmec is steadily increasing its
especially yellow maize, was R2 325 per tonne at the
market share in the small tractor sector by selling
equipment
23
and
implements,
grew
24
continued
tractors sourced from India and Turkey, which are of
The implement side of the business has grown and is
good quality and well-priced. This sector accounts for
starting to make a meaningful contribution to the
68% of the total tractors sold in South Africa. There is
gross profit of New Holland, as well as providing
an ongoing search for more products to add to the
opportunities for greater market penetration by
product range and newly identified products, namely
having the ability to offer a wider range of products to
mobile sprayers, were starting to make a contribution
its customer base.
to turnover. The big tractor market in which CaseIH is
Landboupart
very strong is still well supported by the farmers due to
their reliability, quality and continuous upgrading of
Landboupart is a wholesaler of spare parts which
technology.
sources and sells replacement spare parts for
agricultural equipment.
This small business has achieved a pleasing sales
growth during the year with great potential to do
even better in the years to come. The expectations are
to grow the business in this sector in South Africa. The
CEG group has purchased a stake in an offshore parts
buying house which will assist with future competitive
sourcing of replacement spare parts.
Northmec has 15 company-owned stores that are well
situated in high volume markets, maintaining the
after-sales support for the increased volume of sales in
certain areas.
New Holland
New Holland Agricultural Equipment and other
related brands
New Holland is predominantly a wholesale distributor
of agricultural equipment. Management found it
difficult to increase sales during the trading year due
to intense competition in the market. The higher than
expected exchange rates in the third quarter meant
prices had to be increased and in order to maintain
sales momentum. A considerable amount of time was
spent upgrading and supporting the dealer network.
On the positive side, Spare Parts grew in value and
improved the overhead absorption rate percentage.
Machine stock at the end of the trading year was
higher than expected, but well priced.
CEG
continued
CSE
Case Construction Equipment, Club
Jacobsen/Ransomes Turf Equipment
Car
and
Whilst the construction equipment division showed a
marked improvement on the previous period, the turf
division deteriorated. The total market volume for
construction machinery which CSE supplies in South
Africa, increased by 20,6% with indications of volumes
remaining static for the 2014/2015 period. The golf car
and turf markets remained depressed.
CONSTRUCTION AND TURF DIVISION
The construction industry has shown surprising steady
growth off a low base from 2010. The lack of
government spending on infrastructure (with only a
few major contracts being awarded) has resulted in a
major move by contractors to source work outside of
the country and, as a result, it is estimated that 40%
(up from 25% last year) of the units sold in South
Africa are being taken across the South African
borders. Despite this, there has been a significant
increase in the number of units of equipment sold
during the trading year in the markets CSE, Doosan
and HPE trade in, with their collective volumes sales
increasing, gaining market share.
HPE,
the
distributor
of
Hyundai
Construction
Equipment, was acquired at the beginning of the
trading year. The contribution for this trading year is
minimal but would become more significant in the
2015 trading year.
The turf markets have deteriorated further with very
little demand for new equipment, however, the golf
courses have to continue to maintain their existing
fleets, which has resulted an increase in spare parts
demand.
25
The CSE construction equipment division trades
predominantly in the plant hire and construction
sectors of the market, and recently entered the
materials handling sector within the coal mining
industry. Revenue increased on the previous year with
a good profit performance. Demand has increased in
some sectors of the market. Bank financing has
improved, however, there appears to be an emerging
trend whereby buyers are self-financing their
purchases.
There has been a major slowdown in golf course
development around the country, with rounds of golf
played and memberships declining monthly, thus
impacting severely on golf course profitability. The
golf course market is a replacement market, with very
few new golf course developments or fleet upgrades
in progress.
26
continued
CSE’s revenue is up on the previous financial period,
with good prospects for the future. It continues to
improve profitably. There are muted signs of a
recovery in the market and CSE should continue to
make its contribution to the profitability of the CEG
group.
Cartcom, the golf car rental company, performed
within expectations and continues to generate good
cash flow.
Doosan SA
Doosan excavators and loaders, Everdigm hammers
The Doosan construction machinery (excavators and
loaders) and Everdigm breaker hammer’s company has
performed well above expectations with prospects for
the new year looking good. The company was
acquired six years ago and has performed
exceptionally well, considering the market conditions.
It has delivered an outstanding result with turnover
increasing and an improved operating profit. Good
inventory turns, generating healthy cash flow has
provided an excellent return on working capital
throughout the year.
infrastructure for coal and copper mining providing a
good base for the business by supporting and
following existing customers who have been forced to
look for work outside of the country. The influence of
Chinese and Indian equipment in the local
construction market has reappeared making a small
impact on the current established suppliers in the
market.
MATERIALS HANDLING
Criterion Equipment
TCM forklifts
Criterion Equipment is the sole distributor of TCM
forklift trucks in Southern Africa, imported from Japan
and China.
This financial period signifies the fifth trading year
since the acquisition of Criterion Equipment.
Following many challenges to restore the integrity of
the brand in the marketplace, TCM has rapidly
regained its position as one of the leading forklift
truck brands in Southern Africa. Despite a 19% drop in
forklift import volumes in 2013, turnover remained
static. Whilst equipment volumes decreased, Criterion
Equipment’s rental income and profitability increased
and now forms a substantial part of Criterion
Equipment’s income.
Income in the rental fleet business has increased
significantly and a marked improvement in
workshop /after-market performance has been noted.
A reduction in operating costs, together with good
quality mix of income has resulted in all outlets
around the country being profitable and the company
overall has achieved the required return.
An internal rental finance facility has been put in place
to finance the rental of equipment, utilising the
group’s operating cash reserves.
A pleasing performance overall, with good prospects
for continued growth.
ESP
The results reflect a full 12 months of trading.
Doosan’s target market is in the mining, construction
and re-handling sectors. The focus is still on these
markets but over the last two years there has been a
shift toward other sectors which has resulted in
growth whilst improving services to other sectors has
contributed to the profits.
The coming year looks positive, with the increase in
activity outside of South Africa in construction of rail
Despite the difficult economic conditions in the
mining and construction sector, ESP managed to
achieve a good trading profit growth of 2,8%.
Management’s efforts in controlling costs and working
capital maintained a consistent breakeven and
improved cash flow. A new branch in Kathu has been
added to the existing distribution network and is
trading well.
continued
Kian Ann
(Singapore)
Kian Ann was acquired in February 2013 and is Invicta
Holding’s biggest single investment to date.
It trades in nearly 30 countries around the world with
a very strong base in South East Asia, having offices in
Indonesia, Thailand, China and Malaysia. This area of
the world has been affected by the slowdown in the
world’s demand for hard commodities, which has had
a major impact on all companies trading in this region.
Kian Ann’s trading results were above expectations
and when comparing similar business in the region,
they performed well above the average market. The
group anticipates a significant contribution to the
results over a period of time, once the markets start to
recover with great opportunities of growth in other
emerging markets such as Southern Africa, Brazil and
Australia.
HPE
HPE, the distributors of Hyundai Construction
Equipment, was acquired in the 2013 financial year.
Restructuring of the company was necessary to ensure
group compliance. Consequently, profit contribution
for the present is relatively minimal but with the new
platform established, profitability should improve
going forward. All restructuring is complete and with
the strengthened base and the good Hyundai brand, it
is expected HPE will start to make a more meaningful
profit contribution in the future.
PROSPECTS
The performance this year is a result of hard work by
management, managing each division by applying
business basics. Focused attention on all elements of
the business and continued re-evaluating and evolving
with market changes, has enabled the group to
maintain growth momentum.
The markets in which the CEG group trades have a
tendency to be unpredictable, however, the current
trends clearly indicate there will be a slowdown on the
agricultural segment as a consequence of soft
commodity prices, increased input costs, liquidity and
slow recovery of the farmers from the drought in the
North West of the country.
Management is cautious going into the new financial
year due to the pressure on margins and the weakness
of the currency, however, is confident any market
changes can be addressed with minimum impact on
the performance of the group.
The CEG group will continue to remain focussed on
the core fundamentals of its business – generating
cash flow and profitability. The division will also
continue seeking out acquisition opportunities locally
and internationally.
Management wish to thank all staff whose hard work
and sacrifice contributed to the good performance.
27
CEG
28
annual report
Report2013
2014
continued
BMG
CEG
BSG
BSG
Building Supply Group
MacNeil’s management
team is excited at the
challenge of the coming
year with plans well under
way to springboard
growth into Africa.
NS Malherbe
K Diab
29
HoldingsLimited
IntegratedAnnual
annual Report
report 2014
2013
Invicta
InvictaHoldings
BSG
continued
GROUP STRUCTURE
Building
Supply Group
MacNeil group
Brands 4 Africa
Distribution
Export
Tiletoria group
MacNeil
Manufacturing
Distribution
MacNeil Plastics
Wholesale
Retail
Contracts
The BSG Group of Companies
MacNeil: Comprises of Distribution Centres in Cape Town, Johannesburg, Durban, East
London, Port Elizabeth and George.
Brands 4 Africa: Core business: Exports into Africa, currently trading in Zimbabwe,
Botswana, Mozambique, Namibia, Zambia, DRC and Malawi.
MacNeil Plastics: Manufacturer of PVC, HDPE, LDPE, Polypropylene Pipes and Fittings for
the building, plumbing, industrial, electrical, agricultural, civil and mining sectors.
Tiletoria: Diversified Flooring Business: Wholesaling, retailing and contracts through
three major facilities in Johannesburg, Durban and Cape Town.
30
continued
A significant acquisition was made with effect from
1 April 2013 in the form of Brands 4 Africa (Pty) Ltd
(B4A) a Johannesburg-based export business. B4A
comprises of the following associated companies:
•
One Owl Enterprises (Pty) Ltd
•
Lodge Stock & Barrel (Pty) Ltd
•
Dung Beetle Logistics (Pty) Ltd
B4A’s core business is export – trading in Zimbabwe,
Botswana, Namibia, DRC, Zambia, Mozambique and
Malawi over the past 24 years. Core industries that
B4A services are as follows:
•
Building Supplies
•
Hardware and Construction
•
Automotive
•
Agricultural
•
Mining
•
Lodge and Tourism
B4A has been a customer of the MacNeil group for the
last three years and the acquisition of 60% of B4A
presents a significant opportunity for the MacNeil
group to grow their exports into Sub-Saharan Africa as
well as to supply B4A with key product lines.
MACNEIL GROUP OVERVIEW
MacNeil focuses on wholesaling a wide range of
branded building supplies from well-established local
and international suppliers as well as from its own
plastic pipe and fitting manufacturing operation.
MacNeil Distribution services a wide customer base of
building material retailers, both corporate and
independent, via six national distribution centres.
MacNeil Plastics manufactures a wide variety of plastic
pipes and fittings and services the Building Sector via
the six national distribution centres as well as the civil,
agricultural and mining sectors through the relevant
merchants and retailers in these sectors. A recent
investment of over R100 million has enabled MacNeil
Plastics to establish a new manufacturing facility in the
Western Cape. This new facility produces well over
10 000 tonnes of finished goods annually. Volumes
have grown 30% year-on-year and similar growth is
forecast for the year ahead. The order book remains
robust with the increased demand in government
spending on water reticulation infrastructure and
low-cost housing developments.
continued
MacNeil’s management team is excited at the
challenge of the coming year with plans well under
way to springboard growth into Africa on the back of
the B4A acquisition while remaining focused on its
core objectives of cash generation and profitable
growth.
TILETORIA GROUP OVERVIEW
Tiletoria is a specialist flooring solution business
established in 1995 and has become a market leader in
the industry supplying ceramic tiles, laminate and vinyl
flooring. It operates from three major outlets in
Johannesburg, Cape Town and Durban. Tiletoria’s
route to market is evenly divided between wholesale,
retail and contracts/specifications.
This is the first full trading year for the MacNeil group
since acquisition and in general it has been a tough
year due to:
•
the sharp weakening of the Rand versus the US$
commencing from May/June last year impacting all
imported products and polymer based raw
materials used in the manufacturing operation;
•
the effects of the prolonged strikes across various
industries which has heavily impacted the rural
building material retailers; and
•
the challenge associated with relocating three
existing manufacturing operations into one new
facility with predominantly new employees while
adding more than 50% additional capacity.
Despite these challenges, turnover, including the B4A
acquisition, increased by 76% to R879 million (2013:
R499 million). Expenses (including acquisitions) grew
by 50% during the period and operating profit of R34
million (2013: R21 million) was achieved, a growth of
62% on the previous period. MacNeil’s key focus is to
build a distribution platform throughout Southern
Africa which has contributed to the low operating
margin.
Inventory in existing businesses was closely managed,
however, supplier price increases, Rand depreciation
and new category expansion (laminated flooring)
resulted in an overall increase in inventory.
2014 was a challenging year. Strong revenue growth
came from both new operations in Durban and
Johannesburg and increased product ranges.
The outlook for 2015 remains positive. Revenue
growth is forecast to track prior year with increased
focus on premium products to drive margin growth.
31
BSG
32
INTRODUCTION
The Board of directors of Invicta and senior
management across the Group are committed to the
highest standards of corporate governance and take
pride in their high moral and ethical business standards,
accompanied by sound and transparent business
practices. This includes the promotion, enhancement,
development and protection of the business interests,
reputation and goodwill of the Group.
The Board is responsible for corporate citizenship and
accountability for the stewardship of Group assets,
which have ensured sustainable returns. The Board
continues to provide stakeholders with the assurance
that the Group’s business is managed responsibly.
As corporate governance is constantly evolving, Invicta
corporate governance standards. The Board is
committed to and applies the principles contained in
King III, which have been adopted on an “apply or
explain” approach as more fully detailed below, and in
doing so, continuously strives to achieve corporate
governance best practice.
The Board, assisted by the Audit Committee, and the
Social and Ethics Committee, is responsible for overall
corporate governance and monitors compliance with
all applicable laws, rules, codes, standards and the JSE
Listings Requirements, and ensures ongoing
improvement in the Group’s adherence to the principles
set out in King III. The company secretary is responsible
for assisting the Board in monitoring compliance and
the day-to-day management of corporate governance.
continually focuses on seeking ways to improve on its
KING III GAP ANALYSIS
As required by the JSE Listings Requirements, the following table discloses the status of the Group’s compliance
with King III and reasons for non-compliance, if applicable:
King III index
Comply
Ethical leadership and corporate citizenship
Effective leadership based on an effective ethical foundation
Yes
Responsible corporate citizen
Yes
Effective management of ethics
Yes
Assurance statement on ethics in the integrated report
Yes
Board and directors
The Board is the focal point for and custodian of corporate governance
Yes
Strategy, risk, performance and sustainability are inseparable
Yes
Directors act in the best interest of the Company
Yes
The Chairman of the board is an independent non-executive director
(1)
A framework for the delegation of authority has been established
Yes
The board comprises a balance of power, with a majority of non-executive directors
who are independent
(2)
Directors are appointed through a formal process
Yes
Formal induction and ongoing training of directors is conducted
Yes
The board is assisted by a competent, suitably qualified and experienced company secretary
Yes
Annual performance evaluations of the board, its committees and individual members
are undertaken
Yes
continued
King III index
Comply
BOARD AND DIRECTORS continued
Appointment of well-structured committees
Yes
An agreed governance framework between the Group and its subsidiary boards is in place
Yes
Directors and executives are fairly and responsibly remunerated
Yes (3)
Remuneration of directors and three most highly paid employees is disclosed
(4)
The Company’s remuneration policy is approved by the shareholders
Yes
Audit Committee
Effective and independent
Yes
Suitably skilled and experienced independent non-executive directors
Yes
Chaired by an independent non-executive director
Yes
Oversees integrated reporting
Yes
A combined assurance model is applied to improve efficiency in assurance activities
Yes
Satisfies itself of the expertise, resources and experience of the Company’s and the Group’s
finance function
Yes
Oversees internal audit
Yes
Integral to the risk management process
Yes
Oversees the external audit process
Yes
Reports to the board and shareholders on how it has discharged its duties
Yes
Governance of risk
The board is responsible for the governance of risk
Yes
The board determines the levels of risk tolerance
Yes
The Audit Committee and Risk Committee assist the board in carrying out its risk responsibilities
Yes
The board has delegated the process of managing of risk to management
Yes
The board ensures that risk assessments are performed on a continual basis
Yes
Frameworks and methodologies are implemented to increase the probability of anticipating
unpredictable risks
Yes
The board ensures that management implements appropriate risk responses
Yes
The board receives assurance regarding the effectiveness of the risk management process
Yes
Sufficient risk disclosure to stakeholders
Yes
Governance of information technology
The board is responsible for the governance of Information Technology (IT)
Yes
IT is aligned with the performance and sustainability objectives of the Company
Yes
Management is responsible for the implementation of an IT governance framework
Yes
The board monitors and evaluates significant IT investments and expenditure
Yes
IT is an integral part of the Company’s risk management
Yes
IT assets are managed effectively
Yes
The Audit Committee assists the board in carrying out its IT responsibilities
Yes
33
34
continued
King III index
Comply
Compliance with laws, rules, codes and standards
The board ensures that the Company complies with applicable laws and considers adherence
to non-binding rules, codes and standards
Yes
The board and each individual director and senior manager has a working understanding of
the effect of laws, rules, codes and standards applicable to the Company and its business
Yes
Compliance risk forms an integral part of the Company’s risk management process
Yes
The implementation of an effective compliance framework and process has been delegated
to management
Yes
Internal audit
The board ensures that there is an effective risk-based internal audit
Yes
Internal audit follows a risk-based approach to its plan
Yes
Internal audit provides a written assessment of the effectiveness of the Company’s system
of internal controls and risk management
Yes
The Audit Committee is responsible for overseeing internal audit
Yes
Internal audit should be strategically positioned to achieve its directives
Yes
Governing stakeholder relationships
The board appreciates that stakeholders’ perceptions affect the Company’s reputation
Yes
Management proactively deals with stakeholder relationships
Yes
There is an appropriate balance between its various stakeholder groupings
Yes
Equitable treatment of shareholders
Yes
Transparent and effective communication with stakeholders
Yes
Disputes are resolved effectively, efficiently and as expeditiously as possible
Yes
Integrated reporting and disclosure
The board ensures the integrity of the Company’s integrated report
Yes
Sustainability reporting and disclosure should be integrated with the Company’s financial reporting
Yes
Sustainability reporting and disclosure should be independently assured
(5)
continued
The Board is of the opinion that the Company has, in all
material respects and where relevant, complied with
King III during the year under review, and wishes to
highlight the following:
(1)
(2)
(3)
(4)
(5)
Dr CH Wiese, who is a non-executive director, is
also the Chairman of the Board. It is the view of
the Board that the non-independence of the
Chairman is a positive factor in ensuring the
decisions taken by the Board are guided by a
Chairman whose perspective is aligned with longterm interests of shareholders. Mr DI Samuels
maintains his role as the Company’s Lead
Independent Director. In addition, to ensure
good governance, and as recommended by King
III, the chairmanship of all of the Board
Committees is held by Mr DI Samuels.
The majority of the Board members are nonexecutive directors with three being independent.
The majority of the non-executive directors being
shareholders, from a Company point of view, this
is considered beneficial to all stakeholders as it
aligns their interest with that of other
shareholders and stakeholders.
The Board believes that the directors individually
add significant value to the Company outside of
the formal Board and Committee meetings, and
interact with management as they deem
appropriate. The directors have a record of high
attendance at Board and Committee meetings.
The King III Report requires that the salaries of
the three most highly paid employees, who are
not executive directors, should be disclosed. Due
to their specialised skills, the highly competitive
South African equipment environment in which
Invicta operates and the employees’ value to the
Company, the Board does not wish to disclose this
information for each of the individuals but has
disclosed the total salaries of the employees
concerned on page 117.
The King III Report requires that the Company’s
sustainability report be audited by an
independent external professional. The entire
integrated report is reviewed by the Audit
Committee and recommended to the Board for
approval. The Board has not found it necessary to
obtain independent assurance as it is comfortable
with the accuracy of the sustainability reporting.
Environmental issues are not material in the
Group or its operations, accordingly no empirical
data is considered necessary to be provided at
this stage.
BOARD OF DIRECTORS
Structure and role of the Board
The Board has a unitary structure and comprises of four
executive directors, three non-executive directors, and
three independent non-executive directors. The profiles
of the members of the Board are set out on pages 4 and
5 of this Integrated Annual Report.
Chairman and Chief Executive Officer
The roles of the non-executive Chairman and the Chief
Executive Officer are separated in accordance with the
Board’s policy of division of responsibilities. This ensures
a balance of authority and precludes any one director
from exercising unfettered powers of decision-making.
The CEO’s and managing directors of the operating
subsidiaries and divisions report to the Group CEO of
Invicta, who in turn reports to the Board.
Executive directors
Executive directors are appointed by the Board to
oversee the day-to-day running of the Company.
Executive directors are held accountable through
regular reporting to the Board, and their performance
is measured against predetermined criteria.
Non-executive directors
Non-executive directors provide the Board with advice
and experience that is independent of management
and the executive. The presence of independent nonexecutive directors on the Board, and the critical role
they play as Board representatives on key committees,
ensures that the Company’s interests are served by
impartial views that are separate from those of
management and shareholders.
Independence assessment
Annually, the Board considers where appropriate each
director’s independence and is of the view that the
following aspects are important in assessing a nonexecutive director’s independence – whether:
•
the director had been employed in an executive
capacity in the Group in the previous three years;
•
the director had served on the Board for longer
than nine years – in this instance, the Board
considers whether that director’s independence,
judgement and contribution to the Board’s
deliberations could be compromised, or may
appear to be compromised, by this length of
service;
•
the director is a representative of a major
shareholder; or
•
the proportion of that director’s shareholding in
the Company or director’s fees represented a
material part of their wealth or income.
35
36
continued
Board Charter
A Board Charter, which is reviewed annually, has been adopted to guide the Board in governance issues and sets
a framework within which the Board functions. The Board Charter sets out the Board’s duties and obligations,
which include inter alia to:
•
act as the focal point for, and custodian of, corporate governance by arranging its relationship with
management, shareholders and other stakeholders of the Company along sound corporate governance
principles;
•
appreciate that strategy, risk, performance and sustainability are inseparable and to give effect to this by:
–
contributing to and approving the strategy;
–
satisfying itself that the strategy and business plans do not give rise to risks that have not been
thoroughly assessed by management;
–
identifying key performance and risk areas;
–
ensuring that the strategy will result in sustainable outcomes; and
–
considering sustainability as a business opportunity that guides strategy formulation;
•
provide effective leadership on an ethical foundation;
•
ensure that the Company is and is seen to be a responsible corporate citizen by having regard not only to
the financial aspects of the business of the Group but also to the impact that business operations have on
the environment and the society within which it operates;
•
ensure that the Company’s ethics are managed effectively;
•
ensure that the Company has an effective and independent Audit Committee;
•
be responsible for the governance of risk;
•
be responsible for information technology (IT) governance;
•
ensure that the Company complies with applicable laws and considers adherence to non-binding rules and
standards;
•
ensure that there is an effective risk-based internal audit;
•
appreciate that stakeholders’ perceptions affect the Company’s reputation;
•
ensure the integrity of the Company’s Integrated Annual Report;
•
act in the best interests of the Company at all times by ensuring that individual directors:
–
exercise their fiduciary duties with the necessary care, skill and diligence;
–
adhere to legal standards of conduct;
–
practice objective judgement with regard to the affairs of the Company independently from
management, but with sufficient information to enable a proper and objective assessment;
–
are permitted to take independent advice in connection with their duties following an agreed
procedure;
–
immediately disclose real or perceived conflicts to the Board and deal with them accordingly; and
–
deal in securities only in accordance with the policy adopted by the Board;
•
elect a Chairman of the Board that is a non-executive director; and
•
appoint and evaluate the performance of the Chief Executive Officer.
Director appointment and retirement policies
The Board selects and appoints directors, including the Chief Executive Officer and executive directors. Prior to
appointment, potential Board appointees are subject to a fit and proper test as required by the JSE Listings
Requirements.
New appointments to the Board are made through a formal process and the Remuneration Committee acts as the
Nomination Committee and assists with the process of identifying suitable candidates to be proposed to the Board
continued
and to shareholders. Board appointments are made with a view to ensuring an appropriate blend of skills and
experience is maintained. All Board appointments are ratified by Invicta shareholders at the following annual
general meeting.
The non-executive directors are subject to retirement by rotation and re-election in accordance with the Company’s
Memorandum of Incorporation. At each annual general meeting, at least one-third of the non-executive directors
retire from office based on longest service. If eligible, available and recommended for re-election by the
Remuneration (Nomination) Committee, their names are submitted for re-election at the annual general meeting.
This year Mr LR Sherrell and Adv JD Wiese retire in terms of the Memorandum of Incorporation, and being
eligible and available, are recommended for re-election by the Remuneration (Nomination) Committee. The
aforementioned directors have considerable commercial experience and an excellent understanding of the Group’s
business.
Professional advice and access to information
The Board Charter requires that non-executive directors have unfettered access to management of the Company
at any time, and all directors are entitled at the Company’s expense, to seek independent professional advice on
any matters pertaining to the Group, where they deem this to be necessary, and are obliged to seek such advice
in matters where they lack sufficient expertise to make an informed decision. When seeking independent advice,
the directors must inform the company secretary and if it is relevant to Invicta or the Group, the company secretary
will disclose the information to the Chief Executive Officer and the Board.
The Company and all its subsidiaries and divisions 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.
Board evaluations
As required by King III, Board effectiveness reviews are conducted on an annual basis with further reviews being
conducted at appropriate intervals as and when required. Areas of improvement are noted and addressed on an
ongoing basis.
Remuneration and directors’ fees
Details on the remuneration of executive and non-executive directors are provided on pages 110 and 111 of the
Integrated Annual Report.
Board meetings
The Board meets at least four times a year with additional meetings held when necessary. The attendance at Board
meetings held during this period is set out below:
CH Wiese (Chairman)•
C Barnard^
A Goldstone^
JS Mthimunye•#
R Naidoo•#
DI Samuels•#
LR Sherrell•
AM Sinclair^
RA Wally•#
CE Walters^
JD Wiese•
4 Apr
2013
11 Jun
2013
11 Sep
2013
14 Oct
2013
(Strategy)
7 Nov
2013
20 Feb
2014
√
√
√
√
√
√
√
√
Apology
n/a
Apology
√
√
√
√
n/a
√
√
√
n/a
n/a
√
√
√
√
√
√
√
√
√
√
Resigned
Resigned
Resigned
n/a
√
n/a
x
n/a
√
√
√
√
√
√
√
√
√
√
√
• Non-executive
x
√
√
√
√
√
√
√
√
√
√
√
√
√
# Independent
√
√
^Executive
(JS Mthimunye resigned on 12 September 2013, RA Wally appointed 30 July 2013, R Naidoo appointed 20 February 2014)
37
38
continued
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.
Each Committee has a charter to guide the members in
performing their duties and the members of the
Committees have access to management, Group
records and external professional advice if and when
required. The Chairperson of each Committee, in line
with the recommendations of King III, attends the
annual general meeting.
Audit Committee
See Audit Committee Report page 66.
Risk Committee
Changes to the Board
During the 2014 financial year, Mr JS Mthimunye
resigned as an independent non-executive director,
and Mr AK Masuku resigned as an alternate
independent non-executive director of Invicta, both
resignations were effective 12 September 2013.
Mr RA Wally was appointed as an independent nonexecutive director of Invicta effective 30 July 2013, and
Mrs R Naidoo was appointed as an independent nonexecutive director effective 20 February 2014.
BOARD SUB-COMMITTEES
To enable the Board to properly discharge its duties
and responsibilities, the Board is assisted by an
Audit Committee, Risk Committee, Remuneration
Committee and a Social and Ethics Committee. Nonexecutive directors play a critical role as Board
representatives on the various Board Committees and
ensure that the Company’s interests are served by
impartial, objective and independent views that are
separate from those of management. Additionally,
the Board continuously strives to comply with the
requirements of King III insofar as the composition of
its sub-committees are concerned.
See pages 58 and 67.
Remuneration Committee
See Remuneration Report page 48.
Social and Ethics Committee
The Social and Ethics Committee was established and
constituted as a statutory committee of Invicta and the
Group on 30 April 2012, in respect of its statutory
duties in terms of section 72(4)(a) of the Companies
Act (2008), and a Committee of the Board in respect of
all other duties assigned to it by the Board.
The Committee has adopted a charter/terms of
reference which is reviewed annually, setting out its
duties and obligations.
The purpose of this Committee is to recognise the
responsibility for the Company’s actions and the
encouragement of a positive impact through its
activities on the environment, consumers, employees,
communities, stakeholders and all other members of
the public. The ultimate objective of managing
organisational integrity is to build an ethical corporate
culture.
continued
The Committee’s members are appointed by the Board
and it consists of not less than three members, at least
one of whom must be an independent non-executive
director. Members could comprise non-directors such
as senior management or persons with the relevant
experience. The Board appoints the Chairman from
the members of the Committee and determines the
period for which he/she shall hold office. In the
absence of the Chairman of the Committee, the
remaining members present shall elect one of their
numbers present to chair the meeting. The Board shall,
from time to time, review and revise the composition
of the Committee, taking into account the need for an
adequate combination of skills and knowledge.
Board members may attend Committee meetings by
invitation. Suitably qualified persons may be co-opted
onto the Committee when necessary to render such
specialist services as may be necessary to assist the
Committee in its deliberations on any particular
matter, but shall have no voting rights.
•
to monitor labour and employment, including the
Company’s standing in terms of the International
Labour Organisation Protocol on decent work and
working conditions and the Company’s
employment relationship and its contribution
towards the educational development of its
employees;
•
to review any statements on ethical standards or
requirements for the Company and the procedures
or review system implemented to promote and
enforce compliance;
•
to review significant cases of employee conflicts of
interest, misconduct or fraud, or any other
unethical activity by employees or the Company;
•
where requested, make recommendations on any
material potential conflict of interest or
questionable situations;
•
ensure that the code of conduct and ethics-related
policies are drafted and implemented;
•
reporting on and disclosing the Company’s ethics
performance;
•
to draw matters within its mandate to the
attention of the Board as the occasion requires;
and
•
to report, through one of its members, to the
shareholders at the Company’s annual general
meeting on the matters within its mandate.
The Committee has the following functions:
•
to provide guidance for the building and
sustaining of an ethical corporate culture in the
Company;
•
to monitor the Company’s activities, having regard
to any relevant legislation, other legal
requirements or prevailing codes of best practice,
with regard to Board Charter matters relating to
social and economic development, including the
Company’s standing in terms of goals and
purposes of the 10 principles set out in the United
Nations Global Compact Principles, the OECD
(Organisation for Economic Cooperation and
Development)
recommendations
regarding
corruption, the Employment Equity Act, the
Broad-Based Black Economic Empowerment Act
and the Company’s legal compliance framework as
applicable from time to time;
•
•
•
to promote good corporate citizenship, including
the Company’s promotion of equality, prevention
of unfair discrimination and reduction of
corruption, contribution to development of the
communities in which its activities are
predominantly conducted or within which its
products or services are predominantly marketed
and record of sponsorship, donations and
charitable giving;
to care for the environment, health and public
safety, including the impact of the Company’s
activities and of its products or services;
to promote consumer relationships, including the
Company’s advertising, public relations and
compliance with consumer protection laws;
The Committee is chaired by DI Samuels, and the
appointed members are Adv JD Wiese, A Goldstone
and C Barnard.
COMPANY SECRETARY
All directors have unrestricted access to the advice and
services of the company secretary and to Company
records, information, documents and premises. The
company secretary minutes all Board and subcommittee meetings and maintains the registers
39
40
continued
required by statute. The company secretary, assists the Board in fulfilling its functions and is empowered by the
Board to perform his/her duties. The company secretary, directly or indirectly:
•
assists the Chairman and CEO with induction of new directors;
•
assists the Board with director orientation, development and education;
•
ensures that the Group complies with all legislation applicable/relevant to the Group;
•
monitors the legal and regulatory environment and communicates new legislation and any changes to existing
legislation relevant to the Board and divisions; and
•
to provide the Board with a central source of guidance and assistance
C Barnard (Financial Director) resigned as company secretary on 31 December 2013, he remained in his current role
as Financial Director. GM Chemaly was appointed as company secretary effective 1 January 2014.
During the year under review, and in compliance with paragraph 3.84(i) and (j) of the JSE Listings Requirements,
the Board evaluated Mr C Barnard and Ms GM Chemaly, the company secretary/ies for the period under review,
and is satisfied that both Mr Barnard and Ms Chemaly are competent, suitably qualified and experienced.
Furthermore, since Ms GM Chemaly (appointed 1 January 2014) is not a director, nor is she related to or connected
to any of the directors, thereby negating a potential conflict of interest, it was agreed that she maintains an arm’s
length relationship with the Board. The Board undertakes a general evaluation of the company secretary
performance on an annual basis in order to identify possible steps for improvement, which are communicated to
him/her by the Chairman.
SUBSIDIARIES
Invicta’s major subsidiaries are listed on pages 97 and 98 of this Integrated Annual Report.
The Group acquired an additional 15% share in Wegezi Power Holdings (Pty) Ltd and Wegezi Transformers and an
additional 21% share in Screen Doctor (Pty) Ltd. The Group acquired 100% of the share capital of High Power
Equipment (Pty) Ltd, effective 14 May 2013, 60% of the share capital of Brands 4 Africa Distribution group, which
consists of Logistics (Pty) Ltd, One Owl Enterprises (Pty) Ltd and Lodge Stock and Barrel (Pty) Ltd effective
1 April 2013 and 100% of the share capital of Floormark (Pty) Ltd effective 29 April 2013.
SPONSOR
In compliance with the JSE Listings Requirements, Deloitte & Touche Sponsor Advisory Services (Pty) Ltd acts as
sponsor to Invicta.
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. Operational and financial responsibilities are delegated to CEOs, CFOs and executives of the principal
operating divisions.
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. 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 breakdown 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.
continued
INFORMATION TECHNOLOGY
An Information Technology (“IT”) Oversight
Committee was established by the Company for the
Group on 20 February 2014. The Committee has
adopted a charter/terms of reference which is
reviewed annually, setting out its duties and
obligations. The IT Oversight Committee reports via
the Audit Committee to the Board. The purpose of the
Committee is to:
•
Appraise major information technology (“IT”)related projects and technology architecture
decisions;
•
Ensure that the Company’s IT programs effectively
support the Group’s business objectives and
strategies;
•
Monitor the overall performance of the Company’s
senior IT management team; and
•
Advise the Audit Committee and Board on
strategic or material IT-related matters.
The Chief Financial Officer/Financial Director of the
Company acts as the Chief Information Officer (“CIO”)
to interact on strategic IT matters at the Board and
other Board Committee meetings.
The Committee is authorised by the Board to
investigate any activity within its Charter, and is
authorised to seek any information it requires from
any employee and all employees are directed to cooperate with any request made by the Committee.
STAKEHOLDER COMMUNICATION
Members of the Board meet on an ad hoc basis with
institutional and other investors, investment analysts
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 press
announcements and releases in South Africa and/or
printed matter sent to such shareholders, and/or
announcements on SENS, of all relevant corporate
matters and financial reporting as required in terms of
prevailing legislation. In addition, such announcements
are communicated via a broad range of channels in
both the electronic and print media. The Group has
also embarked on a more formal approach 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 website
http://www.invictaholdings.co.za containing financial
and other information, including interim and annual
results. The site has links to the websites of each major
operating subsidiary company.
The Group will continue to look at ways of allowing
electronic shareholder participation with its transfer
secretaries in the upcoming year as provided for in the
new Companies Act (2008).
EMPLOYMENT EQUITY
Invicta and the Group are 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 (1998) by
adhering to the 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 the promotion of the
constitutional right of equality for all in the
workplace, elimination of unfair discrimination where
it may exist, redressing the effects of past
discrimination of employment practices, achieving
equitable representation in occupational categories
and levels, where possible, promoting the acquisition
of skills by employees that will reflect qualifications
and standards that is part of a national qualification
framework and developing a culture in the Company
of high quality lifelong learning. The Human
Resources department implements processes to
address recruitment as well as the development of inhouse talent through coaching, mentoring and
succession planning. Included in this drive is a bursary
programme directed at young black students who
could potentially be groomed for future senior
positions should they join the Group after graduation.
The Group remains fully committed to providing equal
opportunities to its 4 853 employees (2013: 4 498).
41
42
continued
SUSTAINABILITY REPORT
INTRODUCTION
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.
As aforementioned, the role of the Social and Ethics Committee is to assist the Group with its responsibility towards
sustainability with respect to practices that are consistent with good corporate citizenship. The Companies Act
(2008), includes specific responsibilities including – the Company’s standing in terms of the United Nations Global
Compact Principles, the OECD recommendations concerning corruption, the contribution to development within
our communities, labour, employment, the environment, health and public safety. The Committee has the
objective of reviewing the Group’s Socially Responsible Investment Index, broad-based economic empowerment,
and sustainability reporting performance.
Performance in each of these areas is measured with reference to the DTI’s Broad-Based Black Economic
Empowerment (B-BBEE) scorecard and the Global Reporting Initiatives III guidelines.
Invicta has appointed Simanye to act as its consultants in terms of B-BBEE as well as The BEE Shop to re-certify the
BEE status of its various operations. The Group maintained its BEE status at a Level Four contributor in terms of
the Broad-Based Rating Scorecard for the period under review.
THE SUSTAINABILITY OBJECTIVES OF THE GROUP ARE:
•
Acting 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 safe 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 further strategic consolidation and expansion of certain
locations planned for the short- to medium-term; and
•
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 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.
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 not only for the
employee, but also for the employer in increased productivity, knowledge, loyalty and contribution to the Group.
Ongoing training and skills development also forms the basis of transformation. It is also imperative for any
company aiming to develop a competitive edge. In order to create this passion within the Group’s staff, Invicta
continually assists its employees to reach their full potential through ongoing training and development.
continued
After the successful external re-branding by BMG, and essentially transforming BMG employees into BMG brand
ambassadors with a renewed heart and mind, the focus was placed on upskilling these brand ambassadors to
become part of their customer’s process. In doing so BMG is now a fully accredited Merseta training provider,
running fitter learnerships to ensure their technical and sales staff have the necessary technical foundation to
deliver on their customers’ needs. BMG also has workplace approval to run millwright apprenticeships and aim at
upskilling all sales staff over the next two years with adding “conduct sales and support services” to their
accreditation list.
BMG has invested in a mobile training initiative, taking the training to their staff nationwide by means of a
training van concept. The training van is fully fitted with the necessary products and material to deliver hands-on
training where it is needed.
CEG has also invested a great deal of resources and funding over the last two years in uplifting skills of their whole
goods and parts employees. CEG continues its focus on the grooming of qualified apprentices in various trades.
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 of being practical and flexible. Staff can log in when practical whilst learning can be applied immediately
and shared with colleagues. In addition, e-learning also enhances much needed computer skills. All theoretical
training is followed by practical training sessions delivered through the Group’s various technical and other
divisional resources available.
Education and career development
As part of the Group’s holistic approach to employee development, it also offers educational assistance to
employees who wish to further their own qualifications on a part-time basis by completing work-related courses.
Student bursaries
The Group currently has one university bursary holder participating in the Invicta bursary scheme as well as eleven
scholars in total from various institutions such as Jeppe Boys, SACS, Kearsney College, Cornwall Hill and King
Edward VII school.
The Group is committed to partnering projects that are focused on developing its technical skills base as a
requirement for its business, as well as for the country and the economy as a whole.
43
44
continued
CORPORATE SOCIAL INVESTMENT (CSI)
As a responsible South African citizen, the Group has focused on aligning its CSI spend with its core business
objectives, thus allowing for true partnerships with its beneficiaries, the government and NGOs, in order to bring
about long-term, sustainable change and development for the benefit of all. The Group carefully selects initiatives
that will have the maximum impact on basic needs of South Africans and where an immediate need arises, it
additionally undertakes ad hoc projects to address specific issues.
Some examples of initiatives undertaken by the Group are as follows:
•
LIV Village – Cottonlands, Verulam (KZN)
LIV Village takes care of 4 households
on a monthly basis. The LIV journey
began in 2001 into Amaoti, the largest
informal settlement in KwaZulu-Natal,
to feed starving children. In 2004
NPO’s Indlela, and later Lungisanai
Indlela, were born. By 2009, 600
children were born on the Back-2School project, life skills training was
introduced in the schools, over 30
crèches were supported with teacher
training and daily food. In September
2009, LIV (Lungisisa Indelela Village)
was birthed to provide holistic
residential care for most vulnerable
and parentless children. In 2013, this
became “HOME” for 600 children
living in 3 bedroom homes with
trained mothers, and a school from
crèche to matric.
LIV’s mission statement:
LIV exists to raise the next generation of leaders in our nation.
That is LIV Village’s mission, their purpose and their passion.
They place vulnerable, parentless children into a family
environment where they receive unconditional love, spiritual
discipleship, care and nurturing. All the children’s physical
needs are met. Children are tomorrow’s future, so the manner
in which they are raised will influence who they become.
Rescue a child, Restore a life, Raise a
leader, and Release a star
continued
•
NAMPO Agricultural School – Bothaville, Free State
The Nampo Combined Agricultural School funds 2 teachers
monthly salaries and sponsoring Early Education
Development to an Assistant teacher.
The Nampo Combined Agricultural School, another
Humulani Empowerment Trust Sponsorship, started in
January 1991 as a school for the children of farm workers of
the Bothaville North region. Presently tuition incorporates
Grades RR to 12, approximately 770 learners of which 200
learners reside on farms. The school is classified as a “No
School Fees” establishment for learners of a disadvantaged
community.
•
COP Trust
The COP Trust is a non-profit organisation that provides an
opportunity for schools, businesses and ordinary South
Africans to make a lasting and meaningful difference to the
lives of their fellow citizens. During 2013, the COP Trust
undertook a wide range of development projects, which
were all aimed at uplifting our society and empowering
historically disadvantaged individuals and communities. The
Group selected a house of safety (foster home), a crèche, a
pre-school, as well as a primary and high school to support,
with the help of the COP Trust.
Support is also provided for various safe houses and
orphanages, with the main focus being abused and
abandoned women and children, homes for pregnant young
girls, as well as various other crèches that are not supported
by the COP Trust. These include The Ark in Khayelitsha, St
Francis, The New Life Centre, Solomon’s Haven and The
Homestead.
The Group also supports the SA Medical and Educational
Foundation. Their mission is to create an environment where
quality healthcare and education can be available to
everyone. They do this by supplying various medical services
with the vital equipment that is needed to enhance the
treatment that is offered to state patients. The SA Medical
and Education Foundation supports mainly hospitals and
clinics that rely solely on a state budget.
A donation was also made towards The Sunflower Fund, to
assist with obtaining donors on the registry from non-white
ethnic race groups, as well as providing a home for a 4-year
old leukaemia patient and her family.
BMG has a long-standing relationship with the Protec
organisation who is the main beneficiary of their CSI budget.
Protec’s aim is to increase the country’s technologically skilled
human resource base through the provision of holistic Learner
Excellence Programme (learner-based education) to underresourced schools in South Africa. This programme is aimed at
45
46
continued
Grade 10 learners who participate until they reach
Grade 12 and are supported through their tertiary
education studies and beyond by their Protec mentors.
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, significantly
more than the provincial averages.
Protec has a long and consistent track record of
assisting learners to improve their results in
Mathematics, Science and English and continue on to
successful careers in the fields of Engineering and
Technology – key focus areas for our business. The
expert staff and experienced leadership at Protec have
shown great passion in implementing every project.
BMG has been a long-term supporter of their branches
in Tongaat and Inanda/Kwa Mashu in KwaZulu-Natal
and have extended the Group’s commitment to Protec
by partnering with them in the establishment and
development of other branches in the key trading areas
of Steelpoort, Carletonville and Kuruman. Several of
these students have made it into the BMG trainee
programme which is a clear indication of the success of
this CSI programme, in that it goes full circle with the
ability to feed into BMG’s business or that of its
customers.
Education and career development
As well as the extensive staff training which is dealt
with elsewhere in this Integrated Annual Report, the
Group views education as a primary area of focus for
the future growth 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 is
necessary, of which academic support is but one
element.
QUALITY MANAGEMENT AND
OCCUPATIONAL 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 and ESP will endeavour to
implement the system in that operation as well.
The Autobax division
certification with Lloyds.
maintained
its
ISO
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
November 2015. 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.
COMPLIANCE , TRANSPARENCY AND
ACCOUNTABILITY
Compliance
The responsibility to facilitate compliance throughout
the Company and the Group has been delegated by the
Board to the Audit Committee, and in this regard the
Audit Committee must:
•
ensure that the Company and the Group comply
with applicable laws and consider adherence to
relevant non-binding rules, codes and standards;
•
ensure that the Company and the Group establish
and maintain a compliance framework and process
that is appropriate taking into account the laws,
rules, codes and standards that are applicable in
light of the compliance risk profile of the Company;
•
and implement a legal compliance policy;
•
and implement a compliance manual;
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.
has
continued
•
identify, assess, advise on, monitor and report on
the regulatory compliance risk of the Company and
the Group, which will form part of the overall risk
management framework of the Company;
•
ensure that compliance monitoring and reporting
be undertaken in a manner that is appropriate for
the Company’s circumstances; and
•
ensure that a compliance culture is encouraged
through leadership, establishing the appropriate
structures, education and training, communication
and measurement of key performance indicators
relevant to compliance.
Annual General Meeting
The shareholders are encouraged to attend the annual
general meeting, chaired by the Board Chairman. The
notice for any general meeting of shareholders includes
an explanation of the reason for, and the effects of, any
Corporate ethics
The Group is committed to achieving high standards of
ethical behaviour. The Ethics Hotline is independently
run by Deloitte Tip-Offs Anonymous. Deloitte Tip-Offs
Anonymous has been certified by the External WhistleBlowing Hotline Services Provider Standard E01.1.1.
This Hotline can be used by all stakeholders to report
any suspected unethical behaviour. Calls are
investigated by the Internal Audit Division.
The Board adopted a formal code of ethics during 2004
and as aforementioned, a Social and Ethics Committee
was established on 30 April 2012.
The key pillars of the code include adherence to
legal framework of the country and ensuring that
Group is not brought into disrepute, against
overriding background of transparency in
transactions.
the
the
the
all
proposed special resolutions. The company secretary
Gift policy
attends every general meeting of shareholders to assist
The Group discourages the acceptance of gifts. All gifts,
free services and any other transactions with the
Group’s suppliers, customers or any third party which
take place by virtue of their position in or their
relationship with the Group should be disclosed to and
approved by their immediate superior. An electronic
register is maintained and recorded by the respective
divisional and Invicta Audit Committee at each
meeting. A similar policy applies to the giving of gifts to
customers and also applies to the receipt / provision of
entertainment. Cash payments, irrespective of the
amount involved, may not be accepted. Any offers of
travel and accommodation to any employee,
irrespective of value, should be approved by the
respective divisional head/manager and should similarly
comply with the requirements for acceptance of gifts.
All employee expense claims are subject to both
Internal and External Audit.
with the recording of shareholders’ attendance and to
tally the votes. The Chairman confirms with the
meeting that votes will be counted by way of poll, i.e.
all votes are counted, rather than by way of a show of
hands, if required.
Share dealing and conflicts of interest
Directors and designated employees across the Group
with access to financial results and/or price-sensitive
information are prohibited from dealing in Invicta
shares during closed or prohibited periods, and
clearance and approval procedures and processes are in
place throughout the Group.
Directors, senior management and all staff across the
Group are required to separate their personal
transactions from the Company’s transactions, and are
prohibited from accepting or soliciting gifts or benefits
of any kind by virtue of their position on the Board or
in the Company. Annually, and thereafter at each Board
meeting, directors are required to disclose to the
Chairman any potential conflict of interest and any
other directorships held by them. Directors who disclose
a potential conflict of interest recuse themselves from
discussion of the matter which may give rise to the
conflict of interest.
Arnold Goldstone
Invicta Holdings Limited
47
48
continued
REMUNERATION REPORT
During the year under review, the Remuneration Committee was chaired by Dr CH Wiese (non-executive Chairman
of the Board) from 1 April 2013, however, was replaced by Mr DI Samuels (non-executive director) as Chairman of
the Committee on 6 August 2013. Dr CH Wiese remained as member of the Committee. All members of the
Committee are non-executive directors.
A Goldstone (Chief Executive Officer) attends Committee meetings ex officio. The Chief Executive Officer attends
the Committee meetings by invitation and assists the Committee in its deliberations, save when issues relating to
his own compensation are discussed. No director is involved in the decision-making of their own remuneration.
The Remuneration Committee meets at least annually and the attendance at meetings held was as follows:
11 Jun
2013
DI Samuels (Chairman)
CH Wiese
A Goldstone
√
√
√
12 Jun
2013
√
√
√
11 Sep
2013
√
√
√
(Dr CH Wiese resigned as Chairman of the Committee on 6 August 2013, DI Samuels was appointed as Chairman
of the Committee on 6 August 2013)
Role of the Remuneration Committee and terms of reference
The Remuneration Committee has adopted a charter/terms of reference which is reviewed annually, setting out its
duties and obligations. The Committee is responsible for ensuring that the directors and executive management
are appropriately remunerated. The Committee is also responsible for the formulation of proposals of the fees
paid to the non-executive directors for the Board’s consideration and shareholder approval.
The Remuneration Committee is a Committee of the Board 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 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.
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.
continued
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.
Details of the executive directors’ remuneration are detailed on pages 110 and 111.
Long-term incentive
Invicta 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. 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.
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 bonus
right) 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 the
49
50
continued
achievement of the performance conditions set for the executive), and the bonus right becomes exercisable after
a further two-year period, after which the executive has a further two-year period in which to take up the bonus
right 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 with Invicta shares.
The remaining bonus rights will only be settled with Invicta shares.
The bonus right expense has been calculated using a Black Scholes valuation model and is expensed over a threeyear period from the grant date and is recorded in the Share Appreciation Reserve.
2014
Weighted
average
incentive
rights cost
(Black
Scholes)
Rand
Number
of
incentives
Outstanding at the beginning of the year
Awarded during the year
Exercised during the year
2 569 336
427 739
(1 507 998)
Outstanding at the end of the year
2013
26,85
1 489 077
Weighted
average
incentive
rights cost
(Black
Scholes)
Rand
Number
of
incentives
8 657 000
146 340
(6 144 004)
10,13
2 569 336
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Tranche 5
Tranche 6
Tranche 7
Tranche 8
Number of grants 3 514 000
250 000
3 814 000
4 104 000
75 000
4 360 000
1 000 000
900 000
146 340
–
–
–
–
–
–
–
–
2 Mar 10
1 Mar 11
11 Jun 12
13 Mar 14
Cancelled
–
1 Sep 06 26 Mar 07 14 Mar 08
30 Sep 08 13 Mar 09
(55 000)
Tranche 9 Tranche 10
427 739
Grant date
13 Mar 06
Grant price
R17,20
R20,00
R27,97
R24,84
R26,87
R18,48
R24,37
R42,55
R66,14
R120,93
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
5 years
%
%
%
%
%
%
%
%
%
%
Expected volatility
2,1
2,0
2,1
2,2
2,2
2,1
2,1
2,2
2,1
1,6
Dividend yield
(daily)
5,6
5,3
6,4
3,5
3,8
4,2
4,9
5,3
4,5
3,2
Risk-free rate
7,2
8,17
8,17
9,4
8,7
6,43
8,68
7,39
5,35
7,7
Executive directors’ interests in the LBSIR scheme are set out in note 37 on page 111 of the 2014 Integrated Annual
Report.
In line with the principles stated above, the Remuneration Committee has authorised the implementation of a
bonus 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.
A long-term loan scheme for executives on the Board of 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. The loans
were granted in the 2012 financial year and are payable over seven years, bear interest at 6% per annum and are
secured by Invicta shares at a ratio of 1.5:1.
continued
External appointments
Approval
Executive directors are not permitted to hold external
directorships or offices without the approval of the
Board. If such approval is granted, directors may retain
the fees payable from such appointments.
This Remuneration Report has been approved by the
Directors’ fees
Signed on behalf of the Remuneration Committee
Board of Invicta.
Directors’ payments for services as directors and other
emoluments are set out in note 37 on pages 110 and
111 of the 2014 Integrated Annual Report. Members
will be requested to consider a special resolution
approving these emoluments at the annual general
meeting.
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.
Details of the non-executive directors’ fees are
detailed on page 110.
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.
The non-executive directors have a contract of
employment with the Company which can be
terminated on 30 days’ notice by either the Company
or the non-executive director.
DI Samuels
Chairman of the Remuneration Committee
51
52
Integrated report
The Board of Directors acknowledges its responsibility
King III Code.
The Group, besides having a Remuneration Committee
and an Audit Committee at Group level, has
maintained these same management and governance
disciplines at the 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
committees, are provided in more detail in the
Corporate Governance Report (page 32), the
Remuneration Report (page 48) and Audit Committee
Report (page 66).
REPORT SCOPE AND BOUNDARY
OPERATIONAL CONTEXT
The Integrated Report (the Report) covers in its scope
The Group can be seen as an efficient proxy for the
South African economy, with a clear delayed
correlation between commodity and resources
performance and the Group’s outperformance
thereof.
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
both the legal entities and physically located branches
making up the distribution, sales and administrative
infrastructure of the Group.
The Report covers the financial year ended on
31 March 2014, but due to the contiguous nature of
business and reporting, the Report implicitly takes
cognisance of 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 complementary, 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 the Managing Directors and
the CEOs of the main operational pillars having direct
reporting and executive responsibility on the Board.
ORGANISATIONAL OVERVIEW, BUSINESS
MODEL 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 14 to 31
of the 2014 Integrated 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 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 all material exchange rate exposures
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 ongoing
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 worldclass 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 increase.
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 utmost test of superior performance by the
Group.
Integrated report
continued
Stakeholders’ material issues
The following table sets out the stakeholders identified, together with the material issues and communication to
stakeholders:
Stakeholders
Private shareholders and
institutional investors
Relationship
Shareholders
Material issues
Communication forum
• Share price, dividend policy, • Integrated and interim
return on investment,
reports
profitability
• Results presentations
• Management competence
• Website
• Growth strategy
• Annual general meeting
• Acquisitions
• Press interviews
• Management remuneration
Bankers
End-users of products
Financiers
Customers
• Statements of financial
position, comprehensive
income and cash flows
• Integrated and interim
reports
• BEE credentials
• Personal contact
• Brand
• Product marketing
• Product quality
• Product technical
specifications
• Technical support
• Annual credit reviews
• Pricing
• Service information
bulletins
• Reputation
• BEE scorecard
• Service turnaround
• Operational websites
• Technical training forums
Management of business
Management
• Brands, association with
quality products
• Integrated report
• Synergies within Group
• Management and resource
support from centre for
growth
• Internal news/information
communication and
divisional broadcasts and
e-mails
• Leadership succession
planning, careers,
knowledge management
systems
• Management conferences
• Remuneration
Principals
Suppliers
• Market shares
• Regular meetings
• Sales forecasts
• Stockholding and ordering
processes
• Operational websites
• Distribution strengths
• Customer base
• Interactive electronic
ordering and
communication
• Credit-worthiness
Employees at operational
level
Staff
• Career development
• Leadership succession
planning
• Remuneration
• Wellness communication
and interventions
• Skills retention and
development
• BEE
• Retirement fund reports
• Internal news/information
communication and
divisional broadcasts and
e-mails
53
54
Integrated report
continued
STRATEGIC DIRECTION
The Group continues to look for acquisitions which fit the distribution and sales model that it has 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 than
20% per annum cumulatively for more than nine years.
2014
Rm
2013
Rm
2012
Rm
2011
Rm
2010
Rm
2009
Rm
2008
Rm
2007
Rm
2006
Rm
10 465
7 558
5 599
4 534
3 969
4 524
3 335
2 663
1 908
1 043
884
601
505
453
497
360
281
198
(192)
(65)
(50)
(54)
(24)
(22)
(25)
(19)
851
(141)
819
(76)
551
(72)
451
(25)
429
(64)
475
(112)
363
(63)
256
(38)
179
(54)
Profit after taxation
Non-controlling interest
Preference shareholders
710
(64)
(66)
743
(28)
(22)
479
(23)
–
426
(72)
–
365
(44)
–
363
(50)
–
300
(37)
–
218
(2)
–
125
–
–
Attributable earnings
Items not included in
headline earnings
580
693
456
354
321
313
263
216
125
(17)
(51)
Headline earnings
563
642
448
348
312
311
255
192
126
73 592
788
765
788
287
72 588
955
885
737
268
70 405
647
637
647
254
70 211
504
496
–
183
70 779
453
441
–
151
71 536
437
434
–
138
74 007
356
345
–
138
74 007
292
260
–
104
73 861
170
170
1 171
624
168
1 010
593
181
391
358
58
354
305
58
313
245
10
229
242
11
155
219
11
118
199
12
123
191
13
2 323
4 080
2 564
2 129
1 692
1 528
1 350
–
5
(3)
218
3 479
1 844
(2 298)
(90)
(37)
(6)
136
2 913
1 620
(2 049)
(11)
(29)
(11)
101
2 085
869
(1 802)
(25)
(2)
(13)
64
1 382
698
(1 205)
1
(7)
–
55
1 299
671
(1 020)
(13)
(3)
–
44
1 646
688
(1 295)
35
–
–
23
1 074
728
(1 267)
(26)
–
–
18
875
372
(829)
(13)
–
–
20
634
287
(450)
2
–
7 399
8
8 438
6
4 586
2
3 766
2
3 249
2
3 128
–
2 267
–
752
–
825
–
1 097
(2)
586
1 195
(3)
409
1 195
(3)
215
1 195
(4)
(131)
1 195
–
210
1 195
2
195
1 195
–
(79)
STATEMENTS OF
COMPREHENSIVE INCOME
Revenue
Operating profit
Net finance costs less dividends
received and income from associate
Profit before taxation
Taxation
Weighted average number of
ordinary shares (‘000)
Headline earnings per share (cents)
Normalised earnings per share (cents)
Dividend per share (cents)
STATEMENTS OF FINANCIAL POSITION
Property, plant and equipment
Goodwill
Other intangible assets
Financial instruments, finance lease and
long-term receivables including
current portion
Guaranteed purchase liabilities including
current portion
Defered taxation
Inventories
Trade and other receivables
Trade and other payables and provisions
Taxation
Shareholders for dividends
Net operating assets
Investment in associate
Financial investments including
current portion
Net financial liabilities
Net cash
Employment of capital
Equity
Long-term payables including
current portion
Total capital employed
2 884
–
140
786
(8)
488
(8)
(6)
(9)
(2)
3
(8)
(24)
1
–
68
10 431
9 710
6 269
5 369
4 658
4 188
3 672
2 144
1 941
482
3 077
405
2 690
59
1 895
244
1855
170
1613
130
1336
92
1118
45
931
2
718
6 872
6 615
4 315
3 514
3 045
2 852
2 554
1 213
1 223
10 431
9 710
6 269
5 369
4 658
4 188
3 672
2 144
1 941
Integrated report
continued
2014
2013
2012
2011
2010
2009
2008
2007
2006
R’000
R’000
R’000
R’000
R’000
R’000
R’000
R’000
R’000
998
680
601
487
543
388
280
221
(266)
(191)
96
103
(455)
(96)
85
(123)
STATEMENTS OF CASH FLOWS
Cash generated from trading
(Increase)/ decrease in working capital
Cash generated from operations
1 159
(444)
715
732
489
697
590
88
292
365
98
Finance costs
(828)
(652)
(598)
(545)
(433)
(383)
(209)
(163)
(40)
Dividends paid
(281)
(198)
(156)
(115)
(96)
(113)
(94)
(55)
(46)
Taxation paid
(143)
(161)
(62)
(48)
(25)
(194)
(58)
(25)
(59)
634
531
547
490
408
360
212
137
21
97
252
220
408
444
(242)
143
259
(26)
Interest and dividends received
Net cash from operating activities
Investment in property, plant and
(249)
(150)
(105)
(62)
(47)
(48)
(17)
5
Investment in operations
(416)
(2 537)
(655)
(627)
(228)
(346)
(1450)
16
(1559)
Net cash from investing activities
(665)
(2 687)
(760)
(689)
(275)
(394)
(1467)
21
(1554)
238
1 755
718
475
177
295
1337
(9)
1204
9
–
–
–
–
–
–
(10)
–
–
–
–
–
–
–
equipment
5
Increase in long-term borrowings
including guaranteed repurchase
liabilities
Share appreciation rights (settled) issued
(40)
(227)
Shares cancelled
–
–
Shares issued
–
809
–
–
1
4
271
–
198
2 337
717
475
177
295
1338
(5)
177
194
346
(341)
Net cash from financing activities
1475
Net increase (decrease) in cash and cash
equivalents
(370)
(98)
14
275
(105)
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.
55
56
Share information
as at 31 March 2014
ORDINARY SHAREHOLDER SPREAD
Number of
shareholding
%
1 – 1 000 shares
1 001 – 10 000 shares
10 001 – 100 000 shares
100 001 – 1 000 000 shares
5 300
1 687
223
66
72,73
23,15
3,06
0,91
1 000 001 shares and over
11
7 287
DISTRIBUTION OF SHAREHOLDERS
Banks
Close corporations
Endowment funds
Individuals
Insurance companies
Investment companies
Medical aid scheme
Mutual funds
Trusts
Other corporations
Own holdings
Private companies
Public companies
Retirement funds
Number
of shares
386
059
084
026
2,74
6,63
9,17
24,53
0,15
43 012 838
56,93
100,00
75 551 393
100,00
2 842 885
32
0,44
100
36
5 801
11
9
1
81
914
62
2
191
4
1,37
0,50
79,61
0,15
0,12
0,01
1,11
12,54
0,85
0,03
2,62
0,06
43
2
5
6
18
073
009
925
531
%
3,76
789
406
097
519
672
500
030
905
606
920
550
060
0,35
0,56
23,33
1,02
1,11
0,05
10,87
18,74
0,20
1,92
32,68
0,07
0,59
4 033 454
5,34
7 287
100,00
75 551 393
100,00
7 249
38
99,48
0,52
28 953 256
46 598 137
38,32
61,68
36
2
0,49
0,03
45 145 217
1 452 920
59,76
1,92
7 287
100,0
75 551 393
100,0
16 953 000
10 027 000
5 053 400
22,44
13,27
6,69
32 033 400
42,40
2014
2013
17
8
14
1
24
267
423
623
772
834
36
213
155
153
452
686
55
PUBLIC AND NON-PUBLIC SHAREHOLDERS
Public shareholders
Non-public shareholders
Directors and associates of the Company holdings
Treasury stock
Beneficial shareholders holding 5% or more
Titan Shareholders
Dorsland Diamante (Pty) Ltd
The Sherrell Family Trust
JSE LIMITED STATISTICS
Ordinary shares
Traded
High (cents)
Low (cents)
Market price at year-end (cents)
11 005
12
9
11
328
900
268
530
12 380
10
5
10
509
551
950
200
Share information
as at 31 March 2014
continued
PREFERENCE SHAREHOLDER SPREAD
Number of
shareholding
%
Number
of shares
%
1 – 1 000 shares
10 001 – 100 000 shares
100 001 – 1 000 000 shares
643
470
55
54,40
39,76
4,65
314 403
1 414 750
1 574 572
4,19
18,86
21,00
1 000 001 shares and over
14
1,19
4 196 275
55,95
1 182
100,00
7 500 000
100,00
15
27
1,27
2,28
50 080
156 355
0,67
2,09
765
6
2
30
275
14
43
1
64,72
0,51
0,17
2,54
23,27
1,18
3,64
0,08
4
DISTRIBUTION OF SHAREHOLDERS
Close corporations
Endowment funds
Individuals
Insurance companies
Medical aid scheme
Mutual funds
Nominees and trusts
Other corporations
Private companies
Public companies
527
040
265
334
248
626
397
000
17,91
12,01
0,32
25,19
15,38
0,50
25,30
0,01
0,34
46 128
0,62
1 182
100,00
7 500 000
100,00
1 175
7
99,41
0,59
6 015 000
1 485 000
80,20
19,80
7
0,59
1 485 000
19,80
1 182
100,00
7 500 000
100,00
Beneficial shareholders holding 5% or more
Liberty Group
Titan Shareholders
Nedbank Group
898 827
800 000
736 081
11,98
10,67
9,81
Cadiz
570 672
7,61
3 005 580
40,07
2014
2013
1 118 313
10 700
9 825
7 500 000
10 000
10 000
10 400
10 250
Retirement funds
1 343
901
24
1 889
1 153
37
1 897
1
PUBLIC AND NON-PUBLIC SHAREHOLDERS
Public shareholders
Non-public shareholders
Directors and associates of the Company
JSE LIMITED STATISTICS
Preference shares
Traded
High (cents)
Low (cents)
Market price at year-end (cents)
57
58
Corporate information
Company registration number
Bankers
1966/002182/06
Standard Bank of South Africa Limited
Nature of business
Absa Bank Limited
Investment holding and management company
First National Bank (A division of FirstRand
Company secretary
Bank Limited)
GM Chemaly
Nedbank Limited
PO Box 851, Isando, 1600
Citibank
Business address
HSBC
3rd Floor, Pepkor House, 36 Stellenberg Road
DBS Bank Limited
Parow Industria, 7493
OCBC Bank
Postal address
Maybank
PO Box 6077, Parow East, 7501
Bank of China
Auditors
Standard Chartered Bank
Deloitte & Touche
Attorneys
Registered Auditors
Bernadt, Vukic, Potash and Getz
Deloitte & Touche Place, The Woodlands
10th Floor, BP Centre, Thibault Square,
Woodlands Drive, Woodmead, Sandton, 2196
Cape Town, 8001
Private Bag X6, Gallo Manor, 2052
PO Box 252, Cape Town, 8000
Share transfer secretaries
Computershare Investor Services (Pty) Ltd
Ground Floor, 70 Marshall Street, Johannesburg, 2001
Website
www.invictaholdings.co.za
PO Box 61051, Marshalltown, 2107
Audit Committee
Sponsors
DI Samuels – Chairman
Deloitte & Touche Sponsor Services (Pty) Ltd
LR Sherrell
Deloitte & Touche Place, The Woodlands
RA Wally
Woodlands Drive, Woodmead, Sandton, 2196
JD Wiese (alternate to LR Sherrell and RA Wally)
Private Bag X6, Gallo Manor, 2052
Risk Committee
A Goldstone
CE Walters
AS Sinclair
C Barnard
NS Malherbe
Remuneration Committee
Dr CH Wiese
A Goldstone (ex officio)
Social and Ethics Committee
Adv JD Wiese
A Goldstone
C Barnard
Shareholders’ diary
Financial year-end
Declaration of preference share cash dividend
31 March 2014
5 June 2014
Declaration of final ordinary share cash dividend
12 June 2014
Publication of financial results for the year
17 June 2014
Preference share cash dividend
• Last day to trade “CUM” dividend
20 June 2014
• Trading “EX” dividend commences
23 June 2014
• Record date
27 June 2014
• Payment date
30 June 2014
Ordinary share cash dividend
• Last day to trade “CUM” dividend
4 July 2014
• Trading “EX” dividend commences
7 July 2014
• Record date
11 July 2014
• Payment date
14 July 2014
Integrated Annual Report posted to shareholders
30 June 2014
Annual general meeting
19 August 2014
Publication of interim results
November 2014
59
60
Contents to the
annual financial statements
61
Approval of the annual financial statements
61
Certification by the Group Company Secretary
62
Report of the independent auditors
63
66
Audit Committee Report
70
71
72
73
74
Approval of the
TO THE SHAREHOLDERS OF INVICTA HOLDINGS LIMITED
The directors of the Company are responsible for the preparation of the annual financial statements and related
financial information that fairly presents the state of affairs and the results of the Company and Group.
The annual financial statements set out in this report have been prepared under the supervision of C Barnard
CA(SA), Executive Director – Financial and Commercial, in accordance with statements of International Financial
Reporting Standards and in the manner required by the South African Companies Act (2008). These are based on
appropriate accounting policies, consistently applied, which are supported by reasonable and prudent judgements
and estimates.
The external auditors are responsible for carrying out an independent examination of the financial statements in
accordance with International Standards on Auditing and in compliance with the South African Companies Act
(2008) and reporting their findings thereon. The auditors’ report is set out on page 62.
To enable the Board to meet its responsibilities, systems and internal control, and accounting and information
systems, have been implemented. These are aimed at providing reasonable assurance that risk of error, fraud or
loss is reduced. The Group’s internal audit function, which has unrestricted access to the Group’s Audit Committee
and the divisional audit committees, evaluate and, if necessary, recommend improvements to the systems of
internal control and accounting practices, based on audit plans that take cognisance of the relative degrees of risk
of each function or aspect of the business.
The Audit Committee, together with the internal auditors, plays an oversight role in matters relating to financial
and internal control, accounting policies, reporting and disclosures.
To the best of its knowledge and belief, based on the above and after making enquiries, the Board of Directors
confirms that it has every reason to believe that the Company and the Group have adequate resources in place to
continue in operational existence for the foreseeable future. For this reason, it continues to adopt the going
concern basis in preparing the annual financial statements.
The annual financial statements for the year ended 31 March 2014, which appear on pages 63 to 118, were
approved by the Board on 12 June 2014 for publication on 17 June 2014 and are signed on its behalf by:
Dr CH Wiese
Chairman
A Goldstone
Cape Town
12 June 2014
Certification by
the Group Company Secretary
In accordance with the provisions of section 88(2) of the Companies Act (Act 71 of 2008), I certify that, to the best
of my knowledge and belief, the Company has filed for the financial year ended 31 March 2014 all such returns
and notices as are required of a public company in terms of the said Act, and that all such returns and notices
appear to be true, correct and up to date.
GM Chemaly
Group Company Secretary
Cape Town
12 June 2014
61
62
Report of the
independent auditors
TO THE SHAREHOLDERS OF INVICTA HOLDINGS LIMITED
Opinion
We have audited the consolidated and separate
financial statements of Invicta Holdings Limited set
out on pages 70 to 118, which comprise the
statements of financial position as at 31 March 2014,
and the statements of comprehensive income,
statements of changes in equity and statements of
cash flows for the year then ended, and the notes,
comprising a summary of significant accounting
policies and other explanatory information.
In our opinion, the consolidated and separate financial
statements present fairly, in all material respects, the
consolidated and separate financial position of Invicta
Holdings Limited as at 31 March 2014, and its
consolidated and separate financial performance and
consolidated and separate cash flows for the year then
ended in accordance with International Financial
Reporting Standards, and the requirements of the
Companies Act of South Africa.
Directors’ Responsibility for the Consolidated and
Separate Financial Statements
Other reports required by the Companies Act
The Company’s directors are responsible for the
preparation and fair presentation of these
consolidated and separate financial statements in
accordance with International Financial Reporting
Standards and the requirements of the Companies Act
of South Africa, and for such internal control as the
directors determine is necessary to enable the
preparation of consolidated and separate financial
statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these
consolidated and separate 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 about whether the
consolidated and separate 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.
As part of our audit of the consolidated and separate
financial statements for the year ended 31 March
2014, we have read the Report of the Directors, the
Audit Committee’s Report and the Company
Secretary’s Certificate for the purpose of identifying
whether there are material inconsistencies between
these reports and the audited consolidated and
separate financial statements. These reports are the
responsibility of the respective preparers. Based on
reading these reports we have not identified material
inconsistencies between these reports and the audited
consolidated and separate financial statements.
However, we have not audited these reports and
accordingly do not express an opinion on these
reports.
Deloitte & Touche
Registered Auditors
Per SBF Carter
Partner
12 June 2014
Buildings 1 and 2, Deloitte Place, The Woodlands,
Woodlands Drive, Woodmead, Sandton
National executive: LL Bam (Chief Executive),
AE Swiegers (Chief Operating Officer), GM Pinnock
(Audit), DL Kennedy (Risk Advisory), NB Kader (Tax),
TP Pillay (Consulting) K Black (Clients & Industries),
JK Mazzocco (Talent & Transformation), MJ Jarvis
(Finance), M Jordan (Strategy), S Gwala (Managed
Services), TJ Brown (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 in terms of the
Chartered Accountancy Profession Sector Code
Member of Deloitte Touche Tohmatsu Limited
Report of the
directors
Coloured and African) who do not participate in
INVICTA HOLDINGS LIMITED
any other share incentive scheme of the Group.
The directors have pleasure in presenting their annual
report, which forms part of the annual financial
•
In terms of SIC 12, the ordinary issued share
statements and the 2014 Integrated Annual Report of
capital of Humulani Investments (Pty) Ltd owned
the Group and of the Company for the year ended
by the HEIT and Theramanzi Investments (Pty)
31 March 2014.
Ltd (wholly-owned by the HET), has been
consolidated.
In the context of the financial statements, the term
“Group” refers to the Company, its subsidiaries and
associates.
Southern Africa’s leading distributor of bearings, seals,
power transmission components, drives, belting,
Nature of business
The
BMG
Company
is
an
investment
holding
and
management company. The various operations of the
Group are summarised below with an expanded
fasteners, filtration and hydraulics.
CEG
Northmec
explanation of the various businesses detailed in the
Distributor of a full range of leading agricultural
review of operations.
Humulani Investments (Humulani)
CSE
Operational holding company of all the South African
Wholesale and retail distributor of light earthmoving
Invicta Group operations.
machinery, turf-grooming machinery, golf cars, utility
Humulani has 25% of its ordinary shares under the
vehicles and related spares.
control of BEE parties.
New Holland
•
20% of Humulani’s ordinary shares are held
by
Theramanzi
Investments
(Pty)
Ltd,
a
Wholesale distributor of leading brand agricultural
wholly-owned subsidiary of The Humulani
Empowerment Trust (HET). It is intended that
Doosan SA
the disbursements made by the HET will be in
the areas of education initially in projects that
are considered to create sustainable community
improvements. The HET is structured in the form
of what is considered to be a broad-based trust,
with an enhanced empowerment status, its
Doosan SA supplies predominantly heavy earthmoving
machinery for construction and mining applications.
Criterion
Importer and distributor of leading materials handling
equipment and related spares.
beneficiaries include not only Invicta employees,
•
Invicta employees’ immediate families, but also
ESP
persons living or working in the communities
After-market replacement parts, ground engaging
bordering or associated with the Group’s
tools and undercarriage parts for earthmoving
business operations and other broad-based
equipment.
initiatives as determined by the trustees.
Kian Ann
5% of Humulani’s ordinary shares are held by
the Humulani Employee Investment Trust (HEIT).
A large distributor of heavy earthmoving equipment
parts and diesel spares.
The beneficiaries of the HEIT are all non-white
HPE
employees of the Group (i.e. Black, Indian,
Distributors of Hyundai Construction Equipment.
63
64
continued
BSG
Share capital and share premium
Tiletoria
A leading importer and distributor of tiles and related
sanitary ware in the Western Cape, Gauteng and
KwaZulu-Natal. The Tiletoria group has expanded its
operations to encompass laminated flooring in
Gauteng.
The authorised share capital of the Company
remained unchanged at 134 000 000 ordinary shares
of 5 cents each.
MacNeil
Wholesale supplier of sanitary ware, brass ware, taps,
plumbing fixtures, plastic piping and related products
to the building material sector of South Africa and
neighbouring countries.
to R79 417 057.
Brands 4 Africa
Core Business: Exports into Africa, currently trading in
Zimbabwe, Botswana, Mozambique, Namibia, Zambia,
DRC and Malawi.
MacNeil Plastics
Manufacturer of PVC, HDPE, LDPE, Polypropylene
Pipes and Fittings for the Building, Plumbing,
Industrial, Electrical, Agricultural, Civil and Mining
Sectors.
During the year, the Company issued 689 088 of its
issued ordinary shares. This resulted in an increase in
the share capital and share premium, which amounted
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 2014.
At the annual general meeting, shareholders will be
requested to reappoint Deloitte & Touche as auditors
Compliance with accounting standards
of Invicta Holdings Limited and to confirm that
The Group’s and the Company’s annual financial
statements comply with International Financial
Reporting Standards, the South African Companies Act
(2008) and the JSE Listings Requirements.
T Marriday will be the designated audit partner for
Profit for the year
Sponsor
Deloitte & Touche Sponsor Services (Pty) Ltd acts as
Group results
Revenue
the 2015 financial year.
sponsor to the Company in terms of the JSE Listings
2014
R'000
2013
R'000
10 464 511
7 557 899
709 911
743 532
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
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.
Requirements.
Transfer secretaries
Computershare Investor Services (Pty) Ltd 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, included in the Integrated
Annual Report, contains details of both schemes.
Subsidiaries and associate
Details of the Company’s interests in its material
subsidiaries and associates are set out in the attached
annual financial statements in notes 16 and 17 on
pages 96 to 99 of the 2014 Integrated Annual Report.
continued
Dividends
Unissued share capital
Details of the ordinary dividends paid are reflected in
note 24 on page 102 of the 2014 Integrated Annual
Report.
The unissued ordinary shares are the subject of a
The Company’s current dividend policy is to consider
an interim dividend at a 3,5 times dividend cover ratio
on normalised earnings per share, with a final
dividend being considered to bring the annual
dividend cover ratio on normalised earnings per share
to no less than 2,75 times.
general authority granted to the directors in terms of
the Companies Act (2008) and the JSE Listings
Requirements in 2013. As this general authority
remains valid only until the next annual general
meeting, which is to be held on 19 August 2014,
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 2015
annual general meeting.
Directors
Repurchase of shares
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 page 58 of the 2014 Integrated
Annual Report.
Directors’ contracts
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
No material contracts have been entered into between
regarding the repurchase of its own shares.
the Company or the Group and the directors during
the year under review.
Directors’ fees
Directors’ payments for services as directors and other
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.
emoluments for the past year are set out in note 37 on
The Company’s Memorandum of Incorporation, allows
pages 110 and 111 of the 2014 Integrated Annual
the Company to purchase its own shares if
Report. Members will be requested to consider a
shareholders have, by way of special resolution, given
special resolution approving the remuneration of each
the Company a general authority to effect such
non-executive director for the 2015 financial year and
purchase or a specific authority to effect a specific
an ordinary resolution to endorse the remuneration
policy and its implementation at the annual general
meeting.
Members will further be requested to approve the fees
purchase
of
its
own
shares,
subject
to
the
requirements of the South African Companies Act
(2008) and the JSE Listings Requirements.
Notice of annual general meeting
for services as directors for the forthcoming year as
Notice to shareholders detailing all necessary
required by the Companies Act (2008).
resolutions relating to the Company affairs is set out
on pages 119 to 125 of the 2014 Integrated Annual
Directors‘ interest in shares in the Company
Report.
The total direct and indirect interest declared by the
Signed on behalf of the Board of Directors
directors in the issued share capital of the Company at
31 March 2014 was 60% (2013: 64%).
The total direct and indirect interest declared by the
directors in the preference share capital of the
Company at 31 March 2014 was 20% (2013: 20%).
The details of the directors’ shareholding are reflected
in note 41 on page 116 of the 2014 Integrated Annual
Report.
Dr CH Wiese
Chairman
Cape Town
12 June 2014
A Goldstone
65
66
Background
The Audit Committee is guided by a charter that is
informed by the Companies Act and is approved by
the Board as and when it is amended. The revised
charter includes the specific requirements as set out in
the Companies Act (2008), pertaining to audit
committees.
Purpose
The purpose of the Audit Committee is:
•
To assist the Board in its evaluation of the overall
adequacy and efficiency of the internal control
systems, accounting practices, information systems
and auditing processes applied in the
management of the business in compliance with
all applicable legal requirements, corporate
governance and accounting standards.
•
To provide a forum for communication between
the Board, management, and the internal and
external auditors.
•
To review and confirm the independence
objectively and effectiveness of the internal and
external auditors, and to review and approve the
engagement of the external auditors for
non-audit work.
•
To introduce such measures as in the Committee’s
opinion 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 through the
establishment of a Risk Committee.
•
To monitor 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.
The Audit Committee has further established audit
committees at all major divisions which meet on a
quarterly basis and which report back to the Audit
Committee through the Group CEO and CFO.
Membership
The Committee members were appointed at the
annual general meeting of the Company on 16 August
2013. The Committee comprises solely of nonexecutive directors, with all three full members being
independent non-executive directors. The members
are:
LR Sherrell
JS Mthimunye (Resigned 12 September 2013)
RA Wally (Appointed as Committee member by the
Board on 12 September 2013)
JD Wiese (alternate to LR Sherrell and RA Wally)
The Audit Committee members are considered to be
independent of executive management.
Shareholders will be requested to approve the
re-appointment of the members of the Audit
Committee at the annual general meeting scheduled
for 19 August 2014.
Attendance at meetings by audit committee members during the year was as follows::
DI Samuels* (Chairman)
JS Mthimunye (Member)
LR Sherrell (Member)
JD Wiese (Alternate member)
RA Wally (Member)
C Barnard (FD)
A Goldstone (CEO)
CEW Walters (CEO – BMG) *
S Carter (Deloitte) *
AS Sinclair (CEO – CEG) *
D Conroy (Chief Audit Executive) *
T Marriday (Deloitte) *
GM Chemaly (Company Secretary)
* By invitation
10 Jun
10 Sep
7 Nov
20 Feb
8 Apr
2013
√
2013
2013
2014
2014
√
Resigned
√
√
√
n/a
√
√
n/a
√
√
n/a
√
Resigned
√
√
Resigned
√
√
√
√
√
√
√
√
n/a
√
√
√
√
√
√
√
√
n/a
√
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
√
√
√
√
√
√
√
√
√
√
n/a
√
√
n/a
√
√
√
√
√
continued
In addition to members, the Chairman of this Committee may request personal or written representation from
Group and Company directors as well as internal and external audit.
External audit
In terms of section 90 of the Companies Act (2008), 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 2014 audit. This appointment was approved by shareholders at the annual general meeting
on 16 August 2013. The Committee has satisfied itself through enquiry that the auditor of Invicta is independent
as defined by the Companies Act (2008), 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 2014 financial year. The budgeted fee was considered
appropriate for the work that could reasonably have been foreseen at that time. The final fee will be agreed on
completion of the audit. Audit fees are disclosed in note 4 on page 85 of the 2014 Integrated Annual Report. There
is a formal procedure that governs the process whereby the auditor is considered for non-audit services, and each
engagement letter for such work is reviewed and approved by the Committee. Meetings are held with the auditor
where management is not present and no matters of concern were raised.
The Committee has again nominated, for approval at the annual general meeting, Deloitte & Touche as the
external auditor and T Marriday as the designated auditor for the 2015 financial year. The Committee confirms
that the auditor and designated auditor are accredited by the JSE.
Risk Committee Report
Background
Responsibility for managing the Group risk lies ultimately with the Board. However, the boards of subsidiary
companies, executive committees and management at operational level assist the Board in discharging its
responsibilities in this regard by identifying, monitoring and managing risk on an ongoing basis.
Risk management specifically includes the consideration of:
•
the risk profile and management of strategic and operational risk within the Group;
•
the risk profile and risk management of major projects and acquisitions;
•
the adequacy of self-insurance and external insurance programs; and
•
the risk profile and management of information technology.
Risk management
The Board through the Risk Committee, which is a sub-committee of the Audit Committee, has identified a number
of key risk areas which it believes require monitoring and detailing to stakeholders, these are summarised
below –
Strategic risk review
The Group has internally held further strategic risk evaluations at both Group and divisional levels. The results of
this exercise have allowed management and the Board to reprioritise risks and consequentially the actions taken
to mitigate these. The Committee monitors the progress of the implementation of the above processes, with
written submissions and presentations being done by management at least annually.
67
68
continued
The Risk Committee continues to monitor and evaluate the risk reports provided by the various operational risk
committees and to report on these plus any Group risks and Group strategies formulated to the Audit Committee
and the Board.
Exchange rate fluctuations
Most of the Group’s businesses involve the importation of product and, accordingly, changes in exchange rates can
and do significantly affect the performance of operations. To date the Board has adopted the policy of hedging
all its material foreign exchange exposures, increased volatility in the Rand value has further confirmed that this
approach adopted is the correct one in the current environment.
Product supply
Based on the highly competitive markets in which the Group operates, specific focus is given to sourcing
competitively priced quality products around the world. 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 product ranges and to source new lines. The Group has established permanent buying as
well as quality assessment operations in sourcing regions which are material to the Group’s purchases.
Distribution network and infrastructure
The distribution of the Group’s products is critical to its sales performance and takes place through a wide and
entrenched network of its own outlets as well as third party distributors. The support, communication and business
model used to govern these relationships, enjoys primary focus at the operating entities’ executive committee
meetings, and may involve direct liaison with the relevant parties by the non-executive directors of the Board
where appropriate. The efficiency and viability of these different distribution arrangements are continuously
monitored and are restructured as appropriate.
Trade and funding facilities
The availability of both trade and funding facilities are strategic to the ongoing performance and success of the
Group. The Board monitors and controls these on an ongoing basis. and will continue to raise capital as needed
based on funding requirements.
Skills and leadership
The Group, through ongoing initiatives and training programs, endeavors to attract, retain and empower a work
force that strives for continuous improvement and excellence in servicing our customer base. The Group has a
strong focus on leadership and ensuring that we have the right leadership and skills present in all our businesses.
Geographical expansion
With the challenges in the mining and manufacturing sectors within South-Africa, the Group will continue
considering both international and African investments as part of its expansion strategy in order to continually
grow and diversify exposure to markets and expand its customer base.
continued
Annual financial statements
In view of the Audit Committee having fulfilled its mandate, it recommended the financial statements for approval
to the Board. The Board subsequently approved the financial statements, which will be open for discussion at the
forthcoming annual general meeting.
Group financial director
As required by the JSE Listings Requirements, the Committee confirms that the Group and Company’s finance
director, Mr C Barnard, has the necessary expertise and experience to carry out his duties.
DI Samuels
Chairman of the Audit Committee
12 June 2014
69
70
Group
Company
2014
R’000
2013
R’000
Revenue
10 464 511
7 557 899
Cost of sales
(7 564 853) (5 399 090)
Notes
Gross profit
2 899 658
Selling, administration and distribution costs
Operating profit (loss) before finance costs, interest
and dividends received
Finance costs
Dividends received from subsidiaries
Dividends received from financial investments
Negative goodwill
Share of profits of associates
Interest received
4
5
2013
R’000
–
–
–
–
–
–
(4 446)
3 540
(4 446)
–
176 925
29 557
–
–
3 540
–
5 625
34 964
–
–
17
1 042 950
(827 966)
–
310 475
–
2 150
883 759
(651 760)
–
316 902
52 066
3 018
6
323 081
214 771
4 092
4 399
850 690
818 756
206 128
48 528
7
(140 779)
Taxation
2 158 809
(1 856 708) (1 275 050)
2014
R’000
Profit for the year
(75 224)
(1 451)
(1 028)
709 911
743 532
204 677
47 500
74 615
26 810
–
–
Total comprehensive income for the year
784 526
770 342
204 677
47 500
Profit attributable to:
Owners of the Company
580 107
64 016
693 152
28 468
138 889
–
25 588
–
65 788
21 912
65 788
21 912
709 911
743 532
204 677
47 500
629 158
89 580
719 962
28 468
138 889
–
25 588
–
65 788
21 912
65 788
21 912
784 526
770 342
204 677
47 500
Other comprehensive income
Items that will be reclassified subsequently to profit and loss:
Exchange differences on translating foreign operations
Total comprehensive income attributable to:
Owners of the Company
Dividends per share (cents)
24
287
268
8
788
955
Diluted earnings per share (cents)
8
788
948
8
788
737
as at 31 March 2014
Group
ASSETS
Non-current assets
Investment in subsidiaries
Investment in associates
Financial investments
Goodwill
Other intangible assets
Financial assets
Finance lease receivables
Long-term receivables
Deferred taxation
Current assets
Loans to subsidiaries
Held for sale assets
Inventories
Current portion of finance lease receivables
Current portion of financial investments
Current portion of long-term receivables
Taxation prepaid
Bank balances and cash
Notes
2014
R’000
2013
R’000
2014
R’000
2013
R’000
9
16
17
10
11
12
13
14
15
7.1
1 170 577
–
8 239
2 023 984
623 623
168 009
155 405
9 826
2 158 876
245 098
1 010 636
–
6 337
2 012 016
593 164
180 651
156 922
12 433
1 947 658
161 139
–
530 553
–
209 323
–
–
–
–
–
–
–
503 639
–
257 229
–
–
–
–
–
–
6 563 637
6 080 956
739 876
760 868
–
957
052
567
007
959
633
831
849
1 691 845
–
–
2 057
–
99 722
–
–
765
1 641 624
–
–
1 162
–113 046
–
243
610
6 123 855
1 794 389
1 756 685
13 448 672 12 204 811
2 534 265
2 517 553
18
9.4
19
20
14
10
15
35
3 478
1 844
43
860
110
21
526
–
–
732
072
809
434
072
547
369
6 885 035
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital
Share premium
Treasury shares
Preference shares
Share appreciation reserve
Revaluation reserve
Equity reserve
Foreign currency translation reserve
Retained earnings
Company
3 777
410 897
(80 098)
750 000
18 620
5 025
(380 376)
73 526
2 275 702
3 743
331 515
(80 098)
750 000
21 324
5 025
(380 376)
24 475
2 014 469
3 777
410 897
–
750 000
–
–
–
–
1 327 210
3 743
331 515
–
750 000
–
–
–
–
1 399 136
Equity attributable to the equity holders
3 077 073
481 947
2 690 077
405 135
2 491 884
–
2 484 394
–
SHAREHOLDERS’ EQUITY
3 559 020
3 095 212
2 491 884
2 484 394
5 938 738
458
154 695
26 727
5 487
1
165
25
888
654
030
256
688
–
–
–
688
–
–
–
6 120 618
5 679 828
688
688
2 070 940
226 855
112 042
36 802
–
933 312
2 210
386 873
1 921
127
30
28
268
353
199
733
–
1 127 001
4 086
191 131
14 181
24
27 488
–
–
–
–
10 201
22 270
–
–
–
–
3 769 034
3 429 771
41 693
32 471
9 889 652
9 109 599
42 381
33 159
13 448 672 12 204 811
2 534 265
2 517 553
Non-current liabilities
Long-term borrowings
Guaranteed repurchase liabilities
Financial liabilities
Deferred taxation
Current liabilities
Trade and other payables
Provisions
Taxation liabilities
Share appreciation rights liability
Current portion of long-term borrowings
Current portion of guaranteed repurchase liabilities
Bank overdrafts
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
21
22
23
25
9
2 913
1 619
15
865
2
18
678
27
26
28
7.1
30
31
29
27
26
35
71
72
Share
capital
R’000
Share
premium
R’000
Treasury
shares
R’000
Preference
share
capital
R’000
Share
appreReciation valuation
reserve
reserve
R’000
R’000
Equity
reserve
R’000
Foreign
currency
translation
reserve
R’000
Retained
earnings
R’000
Attributable to
equity
shareholders
R’000
Noncontrolling
interest
R’000
Total
R’000
Group
Balance at
31 March 2012
3 706
Total comprehensive
income
–
–
Preference dividends paid
37
Ordinary shares issued
–
Preference shares issued
Treasury shares utilised to
settle share appreciation
rights
–
Ordinary dividends paid
–
Share appreciation
–
rights issued
Share appreciation rights
exercised
–
Put option on
non-controlling interest
–
arising on acquisition of
controlling interests
–
–
Treasury shares purchased
Balance at
31 March 2013
Total comprehensive
income
Share appreciation
rights issued
Share appreciation
rights exercised
arising on acquisition
and purchases of noncontrolling interest
Balance at
31 March 2014
272 320
(93 931)
–
33 695
5 025
–
(2 335) 1 676 751 1 895 231
–
–
59 195
–
–
–
–
–
–
–
–
750 000
–
–
–
–
–
–
–
–
–
–
–
–
26 810
–
–
–
–
–
51 958
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4 990
–
–
–
–
–
–
(17 361)
–
–
–
–
–
–
–
–
–
–
–
(38 125)
–
–
–
–
–
–
3 743
331 515
(80 098)
750 000
21 324
5 025
–
–
34
–
–
–
–
79 382
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5 926
–
–
–
–
(8 630)
–
–
–
–
3 777
410 897
-80 098
3 706
37
–
272 320
59 195
–
–
–
–
(380 376)
–
–
(380 376)
–
–
–
715 064
(21 912)
–
–
741 874
(21 912)
59 232
750 000
–
51 958
(193 263) (193 263)
–
4 990
(150 043) (167 404)
–
(12 128)
–
59 321 1 954 552
28 468
–
–
–
770 342
(21 912)
59 232
750 000
–
51 958
(9 730) (202 993)
–
4 990
–
(167 404)
(380 376)
–
(380 376)
(12 128)
(38 125)
327 076
–
314 948
(38 125)
24 475 2 014 469 2 690 077
405 135 3 095 212
–
–
–
–
–
49 051
–
–
–
–
89 580
784 526
–
(65 788)
–
79 416
321
321
(14 859) (223 648)
–
–
–
–
–
–
–
–
–
–
750 000
18 620
5 025
–
–
–
–
–
750 000
–
–
–
–
–
–
–
–
–
–
–
–
1 571 043 1 847 069
–
59 232
–
750 000
– 1 847 069
–
59 232
–
750 000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
47 500
47 500
(197 495) (197 495)
(21 912) (21 912)
–
–
–
3 743
34
331 515
79 382
–
–
750 000
–
–
–
–
–
–
–
–
–
1 399 136 2 484 394
–
79 416
– 2 484 394
–
79 416
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
204 677
204 677
(65 788) (65 788)
(210 815) (210 815)
–
–
–
3 777
410 897
–
750 000
–
–
–
– 1 327 210 2 491 884
(380 376)
645 895
694 946
(65 788) (65 788)
–
79 416
–
–
(208 789) (208 789)
–
5 926
(111 755) (120 385)
1 670
1 670
73 526 2 275 702 3 077 073
–
–
1 770
5 926
(120 385)
3 440
481 947 3 559 020
Company
Balance at
31 March 2012
Total comprehensive
income for the year
Balance at
31 March 2013
Total comprehensive
income for the year
Balance at
31 March 2014
47 500
(197 495)
(21 912)
204 677
(65 788)
(210 815)
– 2 491 884
Company
Group
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from (utilised by) operations
Finance costs
Dividends paid to Group shareholders
Dividends paid to non-controlling interest
Taxation paid
Interest and dividends received
32
33
34
Net cash inflow (outflow) from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of property, plant and
equipment and other intangible assets
Expansion to property, plant and equipment
Replacement of property, plant and equipment
Additions to intangible assets
Acquisition of subsidiaries
Acquisition of associate
Acquisition of non-controlling interest
Dividend received from associate
Net increase in long-term receivables and
finance lease receivables
Net (increase) decrease in financial investments
Net (increase) decrease in current portion of
financial investments and long-term and
finance lease receivables
Increase in loans to subsidiaries
43
Net cash outflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term borrowings
Decrease in guaranteed repurchase liabilities
Decrease in share appreciation rights liability
Employee tax paid on share appreciation
rights exercised
Settlement of share appreciation rights and
employees tax on share appreciation rights exercised
(Decrease) increase in current portion of long-term
borrowings and guaranteed repurchase liabilities
2013
R’000
(1 361)
–
(271 385)
–
(1 184)
210 574
13 227
–
(197 989)
–
(1 955)
44 988
96 473
252 421
(63 356)
(141 729)
–
–
–
–
(1 375)
–
–
–
42 480
(237 712)
(10 860)
(10 089)
(95 762)
(1 694)
(1 670)
1 947
20 552
(126 072)
(24 088)
(2 116)
(1 494 214)
(2 068)
–
425
–
–
–
–
(26 914)
–
–
–
(208 611)
(11 968)
(1 331 947)
1 029 826
–
47 906
–
103 373
(130 716)
–
(757 994)
–
13 324
(50 221)
(66 974)
(702 660)
(664 655)
(2 687 696)
(15 905)
(667 636)
435 483
(1 196)
–
901 083
(3 357)
(78 289)
(197 221)
198 088
35
2014
R’000
732 079
(651 760)
(188 704)
(9 730)
(161 137)
531 673
–
–
321
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate movement on
cash balance
2013
R’000
715 160
(827 966)
(266 508)
(14 859)
(142 910)
633 556
(39 299)
Net cash inflow from financing activities
Cash and cash equivalents at the end of the year
2014
R’000
(370 094)
487 718
–
–
–
–
–
–
–
–
–
79 416
–
–
59 232
750 000
856 897
–
–
2 336 985
79 416
809 232
–
(148 581)
59 232
750 000
(98 290)
586 008
155
610
(133)
743
21 872
–
–
–
139 496
487 718
765
610
73
74
Notes to the
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 IFRS Interpretations Committee (IFRIC) of the
IASB that are relevant to its operations and effective for the Group’s reporting period. The adoption of IFRS
7 Financial Instruments: Disclosures (amendments) and related amendments to IAS 1 Presentation of
Financial Statements, IFRS 11 Joint Arrangements, IFRS 13 Fair Value Measurements, IAS 16 Property, Plant
and Equipment, IAS19 Employee Benefits, IAS 27 Separate Financial Statements, IAS 27 Separate Financial
Statements, IAS 28 Investments in Associates and Joint Ventures, IAS 32 Financial Instruments: Presentation
and IAS 34 Inter Financial Reporting 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 2 – Share Based Payment
Annual periods beginning on or after 1 July 2014
•
IFRS3 – Business Combinations
•
IFRS 8 – Operating Segments
•
IFRS 9 – Financial Instruments –
Classification and Measurement
Annual periods beginning on or after 1 January 2018
•
IFRS 10 – Consolidated Financial
statements
•
IFRS 12 – Disclosure of Interest in
Other Entities
•
IFRS 13 – Fair value measurement
•
IAS 16 – Property, Plant and Equipment
•
IAS 19 – Employee Benefits
•
IAS 24 – Related Party Disclosure
•
IAS 27– Separate Financial Statements
•
IAS 32– Financial Instruments: Presentation
•
IAS 36– Impairment of Assets
•
IAS 38– Intangible Assets
•
IAS 39– Financial Instruments:
Recognition and Measurement
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 the requirements of the Companies Act of South Africa. The financial statements have been prepared
on the historical cost basis, except for the fair valuing 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
continued
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 noncontrolling 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 purchase price 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, after identifiable intangible assets are recognised, 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. If the Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities recognised exceeds the cost of the business
combination, the excess amount (i.e. gain on bargain purchase) is recognised in profit or loss
immediately.
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 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 is immediately
recognised as an expense and not reversed in future years.
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.
75
76
continued
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
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 risks and rewards have passed to the
customer.
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.
2.6
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.
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.
2.7
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
continued
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 statement 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.
2.8
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.
2.9
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.
2.10 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.
77
78
continued
2.11 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 statement 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 statement of financial position 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.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off tax
assets 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 net basis.
2.12 Property, plant and equipment
Land is stated at cost whilst other fixed assets are stated at cost, less accumulated depreciation and any
accumulated 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 depreciation
and 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 as
owned 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 their
residual values, at the following per annum rates, which are considered to approximate the
estimated useful lives of the assets concerned.
Buildings
Plant and equipment
Leasehold improvements
Motor vehicles
Furniture and fittings
Office equipment
Computer equipment
Golf cars
Forklifts
1 – 10%
10 – 20%
Over the period of the lease
20 – 25%
20%
10 – 33,3%
20 – 33,3%
20%
25%
continued
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognised 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.
2.13 Other intangible assets
Other intangible assets consist of computer software which is amortised on the straight-line basis over
a period of three years. Re-acquired agency rights, which are calculated with reference to the agency’s
forecast trading results to the end of the contracted lease term are amortised over the remaining
contractual term of the agency agreement. Intangible assets relating to distribution agreements,
trademarks, brands and customer relationships arising on the acquisition of subsidiaries are amortised
over a period of five to seven years.
2.14 Impairment of tangible and intangible assets excluding goodwill
At each statement of financial position date, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount
of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to
which 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 using
a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced
to its recoverable amount.
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.
2.15 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.
2.16 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.
79
80
continued
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
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.
continued
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.
Non-controlling interest put option
The minority put option is 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.
2.17 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.
81
82
continued
2.18 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 nonmarket-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.
The Group modified its accounting for share-based payments originally treated as equity-settled due
to the extent of share-based payments settled in cash from 1 April 2011 until 31 March 2013.
Share-based payments to be settled after 31 March 2013 have been treated as equity-settled.
2.19 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 arising as a result of business combinations are valued using
specific valuation methodologies pertaining to the underlying nature of the intangible and 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.
Warranty 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.
continued
3.
BUSINESS SEGMENTS
3.1
Segment revenues and operating profit
The following is an analysis of the Group's revenue and results from operations by reportable segments:
Segment revenue
Engineering consumables
Capital equipment
Building supplies
Group, financing and other operations
Segment operating profit
2014
R’000
2013
R’000
2014
R’000
2013
R’000
3 954 572
5 122 299
1 383 421
3 424 847
3 502 965
625 141
472 773
483 641
66 969
390 047
339 338
38 610
4 219
4 946
19 567
115 764
10 464 511
7 557 899
1 042 950
883 759
The accounting policies of the reportable segments are the same as the Group’s accounting policies.
Revenue and operating profit are the measures reported to the chief operating decision maker for the
purposes of assessment of segment performance.
3.2
Segment assets and liabilities
2014
R’000
2013
R’000
Capital equipment
Building supplies
2 284 378
3 789 321
693 971
2 189 286
3 215 154
502 070
6 681 002
6 298 301
13 448 672
12 204 811
Capital equipment
Building supplies
729 493
2 137 727
455 152
867 637
1 874 215
325 923
6 567 280
6 041 824
Total liabilities
9 889 652
9 109 599
Segment assets
Total assets
Segment liabilities
For the purposes of monitoring segment performance and allocating resources between segments:
• all assets are allocated to reportable segments other than investments in associates and tax assets.
• all liabilities are allocated to reportable segments other than current and deferred tax liabilities.
83
84
continued
3.
BUSINESS SEGMENTS
3.3
continued
Other segment information
Depreciation and
amortisation
Additions to property,
plant and equipment
and intangible assets
2014
2013
2014
2013
R’000
R’000
R’000
R’000
45 467
36 907
42 954
33 961
Capital equipment
72 617
34 513
181 271
54 491
Building supplies
12 805
4 971
24 736
22 221
4 213
10 423
9 700
41 603
135 102
86 814
258 661
152 276
Total
Geographical segments
The Group has not reported segment information by geographical location as the operations occur
substantially within Southern Africa. The Singapore operations have been included in the Capital
equipment segment and accounts for 47% of the total assets and 34% of the total liabilities in the
Capital equipment segment.
Customers
The Group has not reported segment information by customer as no customer contributes in excess of
2% of the Group’s total revenue.
continued
Company
Group
4.
2014
R’000
2013
R’000
2014
R’000
2013
R’000
16 372
4 075
–
–
4 032
6 754
–
–
–
20 589
–
7 632
–
158 172
–
–
–
2 227
52 066
51 087
–
–
–
–
OPERATING PROFIT (LOSS) BEFORE
FINANCE COSTS, INTEREST AND
DIVIDENDS RECEIVED
Operating profit (loss) 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
Realised and unrealised net profits on money
market investments
Gain on modification of terms of
financial investment
Gain on partial derecognition of
Negative goodwill recognised on acquisition
of subsidiary
Credit default swap derivative gain
Expenses
Auditors’ remuneration – audit fees
– Current year
– Other services
Depreciation*
–
–
–
–
–
–
–
Buildings
Plant and equipment
Motor vehicles
Office equipment
Computer equipment
Amortisation of intangible assets
Put option and interest rate swap derivatives
Impairment of property, plant and equipment
Goodwill impairment
Loss on disposal of property, plant and equipment
Employment costs
Operating lease expenses
–
–
–
–
Premises
Equipment
Motor vehicles
Other
Pension and provident fund contributions
Share options expense
7 500
5 176
–
–
6 323
1 177
4 861
315
–
–
–
–
67 628
47 331
9
12
4
18
8
2
11
832
829
348
552
269
396
402
6 121
8 678
2 487
12 452
8 127
1 250
8 216
–
–
–
–
–
–
–
–
–
–
–
–
–
–
39 984
2 227
66
–
74
1 046 367
14 480
46 370
18
2 791
524
875 073
–
–
–
–
–
–
–
–
–
–
–
–
115 427
109 287
–
–
94 335
1 236
19 280
576
89 176
880
19 007
224
–
–
–
–
–
–
–
–
57 810
27 129
38 342
46 382
–
–
–
–
–
* This excludes depreciation charge relating to the forklift, golf car and equipment rental fleets disclosed in cost of sales
of R27 490 294 (2013: R25 001 859).
85
86
continued
Company
Group
5.
6.
7.
2014
R’000
2013
R’000
2014
R’000
2013
R’000
Bank overdrafts and loans
Foreign exchange premiums
Finance leases
39 554
49 193
2 168
330
736 721
41 514
15 787
2 261
730
591 468
–
–
–
–
–
–
–
–
–
–
Total
827 966
651 760
–
–
Finance leases
Foreign exchange gains
Long-term receivables
12
4
3
303
35
1
7
169
974
918
324
555
2
–
–
4 090
1
–
–
4 398
Total
323 081
214 771
4 092
4 399
Current tax
– current year
– prior year
189 807
(431)
119 612
(9 315)
1 458
(7)
1 728
(700)
Deferred tax
– current year
– prior year
(82 115)
252
(42 465)
(2 025)
FINANCE COSTS
INTEREST RECEIVED
010
412
433
226
TAXATION
South African normal taxation
Share transfer tax
Foreign tax
Total
Reconciliation of tax rate
Statutory tax rate
Permanent differences and exempt income
Foreign tax
Effective tax rate
–
–
–
–
233
–
–
–
33 033
9 417
–
–
140 779
75 224
1 451
1 028
%
%
%
%
28,0
(12,0)
28,0
(18,8)
28,0
(27,3)
28,0
(25,9)
1,0
–
–
–
17,0
9,2
0,7
2,1
Estimated tax losses in the Group amount to R534 145 491 (2013: R284 921 901). A deferred tax asset of
R149 354 665 (2013: R78 839 136) has been raised with respect to certain of these tax losses due to the
uncertainty in estimating the remaining tax losses.
continued
Company
Group
2014
R’000
7.
TAXATION
7.1
2014
R’000
2013
R’000
continued
Deferred tax
Net balance at the beginning of the year
Arising on acquisition of subsidiaries
Charge from the statement of
135 883
625
101 413
(10 020)
81 863
44 490
Net balance at the end of the year
218 371
135 883
Comprising:
Capital allowances
Tax losses
Provisions
(32 142)
149 355
93 369
(25 780)
78 839
85 429
–
–
–
–
–
–
(2 605)
–
–
comprehensive income
Other temporary differences
8.
2013
R’000
7 789
(784)
–
–
(784)
(784)
–
–
(784)
Total
218 371
135 883
–
–
Disclosed as:
Deferred taxation asset
245 098
161 139
–
–
Deferred taxation liability
(26 727)
(25 256)
–
–
Total
218 371
135 883
–
–
788
788
788
955
948
737
–
–
–
–
–
–
580 107
693 152
–
–
73 592
72 588
–
–
EARNINGS PER SHARE
Basic earnings per share (cents)
Diluted earnings per share (cents)
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
Weighted average number of ordinary
shares for the purposes of basic earnings
per share
87
88
continued
Company
Group
8.
EARNINGS PER SHARE
8.2
2014
R’000
2013
R’000
2014
R’000
2013
R’000
580 107
693 152
–
–
73 592
73 125
–
–
–
–
–
72 588
1 072
–
–
–
–
–
–
–
–
Preference
dividends
R’000
Attributable
to equity
holders
R’000
continued
Diluted earnings per share
The earnings used in the calculation of
diluted earnings per share are as follows:
Profit for the year attributable to owners
of the Company
Weighted average number of ordinary
shares used in the calculation of
diluted earnings per share
The following potential ordinary shares are
anti-dilutive and is therefore excluded
from the weighted average number of
ordinary shares for the purposes of diluted
earnings per share:
Put option granted to directors in terms of
the loan scheme
(61)
Reconciliation of weighted average number
of ordinary shares
Basic number of ordinary shares
Share appreciation rights
Put option granted to directors in terms
of the loan scheme
73 592
413
Diluted number of ordinary shares
73 531
(474)
(535)
73 125
Group
Gross
R’000
8.3
Taxation
R’000
Noncontrolling
interests
R’000
Normalised earnings per share
This calculation is based on the
weighted average number of
73 591 668 (2013: 72 588 478)
ordinary shares in issue during
the year. It is derived, after
taxation and non-controlling
interest, as follows:
2013
Earnings attributable to ordinary
shareholders
Adjusted for:
Gain on partial derecognition of
Normalised earnings for purposes
of normalised earnings per share
Normalised earnings for the year
Weighted average number of
ordinary shares for the purposes
of basic earnings per share
818 756
(158 172)
660 584
534 980
72 588
(75 224)
–
(75 224)
(28 468)
–
(28 468)
(21 912)
–
(21 912)
693 152
(158 172)
534 980
continued
Group
Gross
R’000
8.
EARNINGS PER SHARE
8.4
Taxation
R’000
Noncontrolling
interests
R’000
Preference
dividends
R’000
Attributable
to equity
holders
R’000
continued
Headline earnings per share
This calculation is based on the
weighted average number of
73 591 668 (2013: 72 588 478)
ordinary shares in issue during
the year. It is derived, after
taxation and non-controlling
interest, as follows:
2014
shareholders
Adjusted for:
Net profit on disposal of
property, plant and equipment
Impairment of property, plant
and equipment
Profit on disposal of investments
850 690
(16 298)
66
(4 032)
(140 779)
(64 016)
2 077
(65 788)
96
–
(18)
–
–
750
–
–
580 107
(14 125)
48
(3 282)
Headline earnings for purposes of
headline earnings per share
2013
shareholders
Adjusted for:
Net profit on disposal of property,
plant and equipment
Impairment of property, plant
and equipment
Impairment of goodwill
830 426
(137 970)
(63 920)
(65 788)
562 748
818 756
(75 224)
(28 468)
(21 912)
693 152
(3 551)
994
18
2 791
(5)
–
Negative goodwill
(52 066)
–
Headline earnings for purposes of
headline earnings per share
765 948
(74 235)
758
–
(1 799)
(11)
–
–
–
2
2 791
–
(52 066)
–
(27 721)
(21 912)
642 080
Group
2014
R’000
2013
R’000
562 748
642 080
Headline earnings per share (cents)
765
885
Diluted headline earnings per share (cents)
765
878
Headline earnings for purpose of diluted headline earnings per share
89
90
continued
Group
9.
2014
R’000
2013
R’000
859 288
743 609
920 814
61 526
795 303
51 694
84 228
78 069
142 785
58 557
123 731
45 662
10 479
11 616
23 848
13 369
20 637
9 021
PROPERTY, PLANT AND EQUIPMENT
Land and buildings
– Gross carrying amount
– Accumulated depreciation and impairment
Plant and equipment
Motor vehicles
Office equipment
Computer equipment
Rental assets – Golf cars
58 928
49 898
127 465
68 537
99 883
49 985
5 123
9 667
32 772
27 649
29 047
19 380
31 339
22 128
79 206
47 867
67 599
45 471
17 671
16 614
83 429
65 758
70 970
54 356
16 132
13 800
40 710
24 578
33 972
20 172
43 042
41 968
130 547
87 505
117 578
75 610
44 347
23 267
68 241
23 894
35 972
12 705
Net carrying value
1 170 577
1 010 636
Total gross carrying amount
Total accumulated depreciation and impairment
1 649 817
479 240
1 394 692
384 056
Rental assets – Forklifts
Rental assets – Machinery
9.1
Details of land and buildings
A register containing details of land and buildings is available for inspection during business hours at
the registered office of the Company by members or their duly authorised agents.
9.2
Encumbrances
The Group has encumbered land and buildings, motor vehicles and golf cars having a carrying value
of R245 million (2013: R273 million) to secure mortgage bonds and finance lease liabilities as detailed
in note 27.
continued
Group
2014
R’000
9.
9.3
2013
R’000
continued
Reconciliation of movement in carrying value
Land and buildings
Balance at the beginning of the year
Additions
Acquisitions of subsidiaries
Depreciation for the year
Disposals
Foreign currency translation
743 609
113 312
–
(9 832)
(77)
12 276
207 665
48 656
490 066
(6 121)
(1 418)
4 761
Balance at the end of the year
859 288
743 609
Plant and equipment
Additions
Impairment raised
Disposals
78 069
18 813
1 215
(66)
(12 829)
(1 104)
130
32 169
22 460
32 487
(18)
(8 678)
(392)
41
84 228
78 069
Additions
Disposals
11 616
2 775
291
(4 348)
–
145
7
2
3
(2
10 479
11 616
Motor vehicles
Additions
Disposals
49
23
7
(18
(3
898
903
015
552)
769)
433
30
20
16
(12
(4
287
879
907
487)
(57)
87
209
055
333
452)
302)
55
58 928
49 898
Additions
Disposals
9 667
3 087
633
(8 269)
(56)
61
6 170
8 286
3 349
(8 127)
(30)
19
5 123
9 667
91
92
continued
Group
9.
2014
R’000
2013
R’000
Office equipment
Additions
Disposals
22 128
11 718
21
(2 396)
(177)
45
19 933
2 640
2 374
(2 637)
(204)
22
31 339
22 128
9.3
continued
Reconciliation of movement in carrying value continued
Computer equipment
Additions
Disposals
16 614
12 050
185
(11 402)
(96)
320
12
7
5
(8
164
452
255
216)
(96)
55
17 671
16 614
Rental assets – Golf cars
Additions
Disposals
13 800
7 209
(4 406)
(471)
13 066
5 353
(3 764)
(855)
16 132
13 800
Rental assets – Forklifts
Additions
Disposals
Rental assets – Machinery
Additions
Disposals
41
20
(11
(7
968
040
895)
071)
42
20
(12
(8
43 042
23
35
(11
(3
41 968
267
665
189)
396)
19 534
12 027
(7 315)
(979)
44 347
Total
Additions
Net impairment raised
Depreciation for the year*
Disposals
1 010 636
248 572
9 360
(66)
(95 118)
(16 217)
13 410
1 170 577
821
352
537)
668)
23 267
391 018
150 160
553 771
(18)
(72 334)
(17 001)
5 040
1 010 636
* Depreciation relating to the forklift hire fleet, golf cars fleet and equipment is included in cost of sales.
continued
Group
9.
2014
R’000
2013
R’000
Investment properties
–
–
4 667
5 290
Total
–
9 957
9.4
continued
Assets classified as held for sale
As at 31 March 2013, certain property, plant and equipment and investment properties of the Group
were presented as assets held for sale following the intention of the Group’s management to sell the
property, plant and equipment and investment properties. These assets were carried in the financial
statements at their net book value.
Group
Company
2014
R’000
2013
R’000
2014
R’000
2013
R’000
480 737
494 560
–
–
283 163
291 305
283 163
291 305
1 459 283
1 317 915
–
–
10. FINANCIAL INVESTMENTS
Unlisted securities
Business Venture Investments No 1048 (Pty) Ltd
– 50 000 redeemable non-cumulative preference
shares
The preference shares are redeemable from
8 August 2011 until 8 February 2016 in
semi-annual instalments. The preference shares
are pledged as security to the debenture
holders under a credit default swap (refer note 27).
– 50 000 redeemable non-cumulative preference
shares
The preference shares are redeemable from
8 August 2011 until 8 February 2016 in
semi-annual instalments. The preference shares
are pledged as security to the debenture holders
under a credit default swap (refer note 27).
Gryphon Financial Engineering (Pty) Ltd
preference shares
The preference shares are redeemable on
15 August 2018. Government bonds have been
pledged as security via a put option with Gryphon
Support Services (Pty) Ltd (refer note 28).
93
94
continued
Company
Group
10. FINANCIAL INVESTMENTS
2014
R’000
2013
R’000
2014
R’000
2013
R’000
69 825
213 045
25 882
78 970
591 410
559 989
–
–
–
1 161
–
–
continued
Unlisted securities continued
– Promissory Notes
The promissory notes are redeemable from
8 August 2012 until 7 August 2014 in
semi-annual instalments. Interest is received
at a rate of 6,96% per annum compounded
semi-annually. These promissory notes are
secured by a credit default swap.
FirstRand Bank listed bonds – FRB11
These bonds earn interest at Jibar plus 2,9%
payable quarterly and are tradable on the
Johannesburg Stock Exchange.
Other
Total
Current portion of financial investments
2 884 418
(860 434)
2 877 975
(865 959)
309 045
(99 722)
370 275
(113 046)
Long-term portion of financial investments
2 023 984
2 012 016
209 323
257 229
Directors’ valuation
2 023 984
2 012 016
209 323
257 229
Group
2014
R’000
2013
R’000
At the beginning of the year
593 164
358 408
Gross value
Accumulated impairment
601 172
(8 008)
363 625
(5 217)
30 459
–
237 547
(2 791)
At the end of the year
623 623
593 164
Gross value
Accumulated impairment
631 631
(8 008)
601 172
(8 008)
11. GOODWILL
Goodwill arising on acquisition of subsidiaries
Goodwill impaired during the year
The directors assess the carrying value of goodwill with reference to the future cash flows of the cashgenerating unit. The goodwill has been assessed for impairment and no further impairment is required.
continued
Group
2014
R’000
2013
R’000
Computer software
– Gross carrying value
– Accumulated amortisation
– Foreign currency translation
36 083
(22 166)
(45)
31 697
(16 497)
149
Re-acquired agency rights
76 317
(21 377)
55 987
(4 278)
Distribution agreements
19 964
(11 853)
11 547
(260)
14 198
(7 684)
9 519
(667)
12. OTHER INTANGIBLE ASSETS
Trademarks, house brands and non-compete intangibles
Contractual and non-contractual customer relationships
115 112
(30 540)
(7 236)
Total
261 674
(93 620)
209 440
(28 938)
– Foreign currency translation
Net carrying value
(45)
100 690
149
168 009
180 651
180 651
17 455
10 089
(8)
(39 984)
58 198
134 668
2 116
–
(14 480)
Reconciliation of movement in carrying value
Additions
Disposals
Amortisation for the year
(194)
149
168 009
180 651
154 695
710
156 922
–
155 405
156 922
13. FINANCIAL ASSETS
Credit default swap derivative – Serec Capital (Pty) Ltd (note 27)
Interest rate swap derivative
The fair values of the credit default swap derivative and the interest rate swap were determined by
discounting the contractual stream of payments using the zero swap curve at the valuation date.
95
96
continued
Group
2014
R’000
2013
R’000
Due within one year
Due in the second to fifth years inclusive
46 584
10 782
17 220
13 166
Unearned interest on finance leases
57 366
(3 731)
30 386
(2 946)
Net investment in finance leases
53 635
27 440
Net investment in finance leases can be analysed as follows:
Due within one year
43 809
9 826
15 007
12 433
Net investment in finance leases
53 635
27 440
930 411
683 938
1 218 215
1 130 580
10 000
10 944
108 787
96 665
1 535
28 164
14. FINANCE LEASE RECEIVABLES
The Group entered into finance lease agreements for 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 contract is prime-linked.
15. LONG-TERM RECEIVABLES
Serec Capital (Pty) Ltd
This amount relates to fees and interest receivable on the credit default
swap relating to the Serec loan, which has a fixed date of repayment of
15 August 2018.
Pixiu Optimal Investments (Pty) Ltd – ordinary shares
The financial investment does not have a redemption date nor a
determinable redemption amount. The returns on the investment are
variable and are contractually required to be reinvested. The investment
is secured by a put option against Gryphon Support Services (Pty) Ltd
which is in turn secured by South African Government Bonds of an
equivalent value in terms of a Credit Support Annexure to the ISDA
Master Agreement.
Directors’ loans to acquire Invicta Holdings Limited shares
The loans earn interest of 6% to 6,5% per annum and is repayable over
seven years. Invicta Holdings Limited shares have been provided as security
at a ratio of 150% of the initial loans provided.
The directors have a put option equal to 75% of the initial loan value which
can be exercised during the seven-year loan period. All regulatory approvals
have been obtained for this transaction.
Term loan by foreign group company
The convertible term loan to Usco is unsecured, bears interest at 6% per
annum and is repayable by December 2014.
Other loans
Total
Current portion of long-term receivables
2 268 948
(110 072)
1 950 291
(2 633)
Long-term portion of long-term receivables
2 158 876
1 947 658
Company
2014
R’000
2013
R’000
Details of the Company’s subsidiaries at 31 March are as follows:
Shares at cost
530 553
503 639
Total
530 553
503 639
16. INVESTMENT IN SUBSIDIARIES
continued
continued
Group
Proportion of
ownership interest
and voting power
held
2014
%
2013
%
South Africa
South Africa
Mauritius
South Africa
100
100
1
100
100
100
67
100
Investment holding company
Trading company
Trading company
Trading company
Trading company
Trading company
Trading company
Trading company
Trading company
Thailand
Thailand
South Africa
South Africa
Botswana
Maputo
Mozambique
Namibia
Swaziland
Zambia
48
60
29
60
100
66
100
100
100
83
0
0
29
60
100
66
100
100
100
100
Trading company
Trading company
Trading company
South
South
South
South
Africa
Africa
Africa
Africa
30
100
100
100
0
100
100
100
Trading company
Property holding company
Trading company
Trading company
Trading company
South
South
South
South
South
Africa
Africa
Africa
Africa
Africa
100
100
100
36
100
100
100
100
0
100
Trading company
South Africa
100
100
Trading company
South Africa
67
67
Trading company
South Africa
100
100
Trading company
Trading company
Trading company
South Africa
South Africa
South Africa
100
100
100
0
100
100
Trading company
South Africa
Singapore
Mauritius
South Africa
100
75
99
100
100
75
33
100
Trading company
Trading company
Trading company
Singapore
Singapore
Singapore
60
75
75
60
75
75
Name of subsidiary
Principal activity
Direct holdings
Bearing Man 1955 Ltd
Humulani Investments (Pty) Ltd*
Invicta Offshore Holdings**
October Winds 48 (Pty) Ltd
Investment
Investment
Investment
Investment
Indirect holdings
A. T. Group Holdings Co. Ltd
A.T. Truck & Bus Parts Co. Ltd
Alpha Bearings (Pty) Ltd
Aptopart (Pty) Ltd
Bearing Man (Botswana) (Pty) Ltd
Bearing Man (Maputo) (Pty) Ltd
Bearing Man (Mozambique) LDA
Bearing Man (Namibia) (Pty) Ltd
Bearing Man (Swaziland) (Pty) Ltd
Bearing Man (Zambia) (Pty) Ltd
Brands 4 Africa Distribution and
Logistics (Pty) Ltd
Criterion Equipment (Pty) Ltd
Disa Equipment (Pty) Ltd
Edmik Engineering (Pty) Ltd
Equipment Spare Parts (Africa)
(Pty) Ltd
Erf 29 Samcor Park (Pty) Ltd
Farmmac (Pty) Ltd
Floormark (Pty) Ltd
Gem Tool Company (Pty) Ltd
General Electrical Mechanical
Tool & Engineering (Pty) Ltd
GK-IT Environmental Services
(Pty) Ltd
Goldquest International Hydraulics
SA (Pty) Ltd
High Power Equipment Africa
(Pty) Ltd
Hi-Quip Hydraulics (Pty) Ltd
Humulani Marketing (Pty) Ltd
Humulani Marketing
Mozambique Lda
Invicta Asian Holdings (Pte) Ltd
Invicta Offshore Holdings**
Invicta Properties (Pty) Ltd
Kian Ann Chue Hwa (Industries)
(Pte) Ltd
Kian Ann Districentre (Pte) Ltd
Kian Ann Engineering (Pte) Ltd
holding
holding
holding
holding
Place of
operation
company
company
company
company
97
98
continued
continued
Group
Proportion of
ownership interest
and voting power
held
Name of subsidiary
Principal activity
Place of
operation
2014
%
2013
%
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
company
company
company
company
company
company
company
company
company
company
company
Singapore
Singapore
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
75
75
30
53
53
53
27
53
51
53
53
75
75
0
53
53
53
27
53
51
53
53
Trading company
South Africa
67
67
Trading company
Trading company
Trading company
South Africa
South Africa
South Africa
67
100
74
67
100
74
Trading
Trading
Trading
Trading
Trading
company
company
company
company
company
South Africa
Mozambique
Mozambique
South Africa
South Africa
100
80
80
30
100
100
80
80
0
100
Trading company
Trading company
Trading company
Trading company
Trading company
Trading company
Trading company
Trading company
Trading company
South Africa
Singapore
Indonesia
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
100
60
74
100
50
71
60
29
60
36
100
60
74
100
50
50
60
29
60
36
Trading company
Trading company
South Africa
Singapore
100
38
100
38
Trading company
Trading company
Trading company
Trading company
Trading company
South Africa
South Africa
South Africa
South Africa
South Africa
60
100
13
100
100
60
100
13
85
85
Indirect holdings continued
Kian Ann Engineering Trading
(Shanghai) Co. Ltd
Kian Ann Investment (Pte) Ltd
Lodge Stock and Barrel (Pty) Ltd
MacNeil (Pty) Ltd
MacNeil Bloemfontein (Pty) Ltd
MacNeil Durban (Pty) Ltd
MacNeil Eastern Cape (Pty) Ltd
MacNeil George (Pty) Ltd
MacNeil JHB (Pty) Ltd
MacNeil Plastics (Pty) Ltd
MacNeil Profiles (Pty) Ltd
Makona Hardware & Industrial
(Mpumalanga) (Pty) Ltd
Makona Hardware & Industrial
(Pty) Ltd
Man-Dirk (Pty) Ltd
Man-Dirk East (Pty) Ltd
Metric and Imperial Tool Systems
(Pty) Ltd
MRO Produtos Industriais Lda
Nova Vida Limitada
One Owl Enterprises (Pty) Ltd
Operational Marketing (Pty) Ltd
Oscillating Systems Technology
Africa (Pty) Ltd
Pt. Allegiance Primaparts Indonesia
Pt. Haneagle Heavyparts Indonesia
Rumiset (Pty) Ltd
Salestalk 452 (Pty) Ltd
Screen Doctor (Pty) Ltd
SET agency
Smart Taps (Pty) Ltd
Spring Lights 149 (Pty) Ltd
Tiletoria Cape (Pty) Ltd
Tool and Electric Distributors
(Pty) Ltd
Transmec Engineering (Pte) Ltd
Trendy Property Investments
(Pty) Ltd
Turnkey Hydraulics KZN (Pty) Ltd
Upfront Agencies (Pty) Ltd
Wegezi Power Holdings (Pty) Ltd
Wegezi Transformers (Pty) Ltd
*
The 5% and 20% of the ordinary issued share capital of Humulani Investments (Pty) Ltd owned by the Humulani
Employee Investment Trust and Theramanzi Investments (Pty) Ltd (owned by the Humulani Empowerment Trust)
respectively, have been consolidated in terms of SIC12. Refer the Directors’ Report on page 63 of the 2014 Annual
Report for further details.
** The 99% of the ordinary issued share capital of Invicta Offshore Holdings is owned by Bearing Man 1955 Limited.
continued
continued
The Group acquired an additional 15% share in Wegezi Power Holdings (Pty) Ltd and Wegezi Transformers
(Pty) Ltd and an additional 21% share in Screen Doctor (Pty) Ltd. The Group acquired 100% of the share
capital of High Power Equipment Africa (Pty) Ltd, effective 14 May 2013, 60% of the share capital of Brands
4 Africa Distribution group, which consists of Logistics (Pty) Ltd, One Owl Enterprises (Pty) Ltd and Lodge
Stock and Barrel (Pty) Ltd effective 1 April 2013 and 100% of the share capital of Floormark (Pty) Ltd effective
29 April 2013.
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:
Group
Profits
Losses
2014
R’000
2013
R’000
498 644
57 428
680 618
13 052
17. INVESTMENT IN ASSOCIATES
Proportion of
ownership interest
and voting
power held
Name of associates
Principal activity
Place of
incorporation
and operation
Compact Computers Solutions (Pty) Ltd
Commercial Car Components
Logistics Ltd
D&D Lifting and Crane Services (Pty) Ltd
Trading company
Trading company
Trading company
2014
%
2013
%
South Africa
40
40
England
South Africa
25
48
25
48
Group
2014
R’000
2013
R’000
28 555
(19 941)
9 409
(7 689)
8 614
1 720
72 246
6 233
111 203
10 206
2 150
3 018
2 080
312
3 762
7 700
(4 872)
(743)
2 080
312
2 068
5 550
(2 925)
(748)
8 239
6 337
Summarised financial information in respect of the Group’s associates
is set out below.
Total assets
Total liabilities
Net assets
Revenue for the year
Profit for the year
Group’s share of profits of associates
Reconciliation of carrying amount:
Original investment in associate
Acquisition of associate (part of acquisition of subsidiary)
Acquisition of associate
Equity accounted earnings, net of taxation (cumulative since acquisition)
Dividends received (cumulative since acquisition)
Carrying value at the end of the year
99
100
continued
Group
Company
2014
R’000
2013
R’000
2014
R’000
2013
R’000
Bearing Man 1955 Limited
Humulani Investments (Pty) Ltd
–
–
–
–
605 891
227 259
625 892
225 846
Humulani Marketing (Pty) Ltd
–
–
858 695
789 886
–
–
1 691 845
1 641 624
Merchandise
Work-in-progress
3 434 447
44 285
2 877 921
35 131
–
–
–
–
Total
3 478 732
2 913 052
–
–
28 550
12 863
–
–
7 537 363
5 399 090
–
–
Trade receivables
Provision for doubtful debts
Prepayments
Other receivables
1 835
(105
33
80
1 565
(100
22
132
–
–
151
1 906
–
–
148
1 014
Total
1 844 072
1 619 567
2 057
1 162
100 194
5 094
39 000
55 595
–
–
–
–
(1 216)
6 815
–
–
–
–
18. LOANS TO SUBSIDIARIES
The loans are unsecured, bear no interest and no
fixed terms of repayment have been negotiated.
19. INVENTORIES
The cost of inventories recognised as an expense
in respect of write-downs of inventory to net
realisable value
Inventory recognised in the statement of
20. TRADE AND OTHER RECEIVABLES
820
425)
041
636
006
194)
386
369
The directors consider that the
carrying value of trade and other
receivables approximates fair
value at year-end.
Movement in provision for doubtful debts
Opening balance
Amounts written off during the year, net
of recoveries
Net provision raised during the year
1 890
(1 753)
Closing balance
105 425
100 194
–
–
An ageing analysis of these past due trade
receivables that have not been impaired,
is as follows:
60 days
90 days
More than 120 days
159 315
49 225
125 178
78 339
29 436
76 743
–
–
–
–
–
–
Total
333 718
184 518
–
–
continued
Group
Company
2014
R’000
2013
R’000
2014
R’000
2013
R’000
3 732
2 645
99 048
15 092
4 025
81 077
–
–
–
–
–
–
105 425
100 194
–
–
6 700
6 700
6 700
6 700
3 743
3 706
3 743
3 706
34
37
34
37
3 777
3 743
3 777
3 743
20. TRADE AND OTHER RECEIVABLES continued
Trade receivables past due and impaired
60 days
90 days
More than 120 days
Total
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. A significant
portion of the balance relates to Kian Ann (Pte)
Ltd (“Kian Ann”), whose policy is to provide in full
for trade receivables older than 12 months. In
addition all past due trade receivables are assessed
on a case-by-case basis, as 70% of their trade
receivables have been their customers for five
years and longer.
21. ORDINARY SHARE CAPITAL
Authorised
134 000 000 (2013: 134 000 000) ordinary shares
of 5 cents each
Issued
74 862 305 (2013: 74 112 523) ordinary shares of
5 cents each at the beginning of the year
689 088 (2013: 749 782) ordinary shares of 5 cents
each issued during the year
75 551 393 (2013: 74 862 305) ordinary shares of
5 cents each at the end of the year
Number of shares
Unissued shares
The unissued ordinary shares are under the control
of the directors in terms of a resolution of
members passed at the last annual general
meeting. This authority remains in force until the
next annual general meeting.
Number of shares
2014
‘000
2013
‘000
2014
‘000
2013
‘000
58 449
59 138
59 902
60 591
At the Company annual general meeting held on 16 August 2013, a special resolution was passed giving the
directors general authority to repurchase shares not exceeding 20% of the issued share capital on the open
market. This authority remains in force until the next annual general meeting.
101
102
continued
Group
Company
2014
R’000
2013
R’000
2014
R’000
2013
R’000
The ordinary share premium is made up as follows:
Ordinary shares issued during the year
331 515
79 382
272 320
59 195
331 515
79 382
272 320
59 195
410 897
331 515
410 897
331 515
22. SHARE PREMIUM
23. TREASURY SHARES
1 452 920 (2013: 1 452 920) ordinary shares
of 5 cents each
Share premium on 1 452 920 (2013: 1 452 920)
ordinary shares
Shares not derecognised as a result of the put
option on the directors’ loans
(73)
(73)
–
–
(44 420)
(44 420)
–
–
(35 605)
(35 605)
–
–
(80 098)
(80 098)
–
–
134 025
131 179
134 025
131 179
76 790
66 316
76 790
66 316
(4 083)
(4 232)
–
–
24. ORDINARY DIVIDENDS*
Final
179 cents paid on 8 July 2013 (2012: 177 cents)
to shareholders registered in the books of the
Company on 5 July 2013
Interim
102 cents paid on 9 December 2013 (2012: 89 cents)
to shareholders registered in the books of the
Company on 6 December 2013
Dividends received on treasury shares
Dividends declared by The Humulani Employee
Investment Trust
Total
2 057
–
–
–
208 789
193 263
210 815
197 495
1 000 000
1 000 000
1 000 000
1 000 000
750 000
750 000
750 000
750 000
* In accordance with IAS10 the final dividend of 184,65
cents per share (2013: 179 cents per share) proposed by
the directors has not been reflected in the financial
statements as it had not been declared at the year-end.
25. PREFERENCE SHARES
Authorised
10 000 000 cumulative, non-participating
preference shares of no par value
Issued
7 500 000 cumulative, non-participating preference
shares of R100 each
The Group has no contractual obligation to redeem the preference shares and dividends are only payable
if declared by the Group and so these have been treated as equity.
The unissued preference shares are under the control of the directors in terms of the resolution of members
passed at the annual general meeting held on 16 August 2013. This authority remains in force for 12 months
from this date.
continued
Group
Company
2014
R’000
2013
R’000
2014
R’000
2013
R’000
5 740
331
(3 403)
10 475
730
(5 465)
–
–
–
–
–
–
Present value at the end of the year
2 668
5 740
–
–
Guaranteed repurchase liability can be analysed
as follows:
Due within one year
2 210
458
4 086
1 654
–
–
–
–
2 668
5 740
–
–
28 597
26 691
–
–
Mortgage bonds
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.
128 567
146 023
–
–
Balance carried forward
157 164
172 714
–
–
26. GUARANTEED REPURCHASE LIABILITIES
Present value at the beginning of the year
Interest accrued during the year
Liabilities settled during the year
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 residual value liability approximates fair value.
27. LONG–TERM BORROWINGS
27.1 Secured borrowings
Finance lease agreements
The lease agreements are repayable between
36 and 60 months and bear interest at fixed
rates between 10,5% and 11,5% 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.
103
104
continued
Group
Company
2014
R’000
2013
R’000
2014
R’000
2013
R’000
Balance brought forward
157 164
172 714
–
–
Debentures
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.
834 438
990 135
–
–
Serec Capital (Pty) Ltd loan
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 detailed in note 13.
2 538 323
2 291 852
–
–
82 524
68 386
–
–
Preference shares issued to Standard Bank
The preference shares mature in 2018 and
have a dividend coupon rate of Jibar plus
2%, and the dividends are payable
semi-annually.
740 835
584 505
–
–
Domestic Medium–term Note Program
These notes mature between 2014 and 2017
and bear interest at three month Jibar
plus 2,2% to 2,5% per annum payable
quarterly. These notes are secured by
cross-sureties provided by Group companies.
375 000
375 000
–
–
4 728 284
4 482 592
continued
27.1 Secured borrowings continued
Industrial Development Corporation loans
The loans bear interest at a rate between the
prime rate less 3% and 6% per annum until
31 March 2015 and thereafter the interest
rate reduces to a rate between 0,4% and
0,7% below the prime rate. The loans are
redeemable in 48 to 120 monthly instalments.
These loans are secured by sureties provided
by Group companies.
–
continued
Group
Company
2014
R’000
2013
R’000
4 728 284
4 482 592
200 762
100 338
–
–
397 913
483 327
–
–
Short-term loan from Standard Bank
The loan was repaid on 1 August 2013.
–
146 000
–
–
Loan from UOB Singapore
The loan matured in March 2014.
–
5 214
–
–
11 942
54 738
–
–
60
47 868
–
–
100 558
57 202
–
–
5 439 519
5 377 279
2014
R’000
2013
R’000
continued
27.1 Secured borrowings continued
Short-term loan from Southchester RF
(Pty) Ltd
The loan bears interest at Jibar plus 0,75%
and is repayable on 11 September 2014.
The loan is secured by an investment in
FirstRand Bank bonds (FRB11) (refer note 10).
Loans from DBS Bank and OCBC Bank
The loan bears interest at an aggregate of
the variable swap offer rate and the
applicable margin rate which varies between
2,5% and 4% per annum. The loan is
repayable in 20 quarterly instalments. The
quarterly instalments commenced in
September 2013 and will mature in June 2018.
–
27.2 Unsecured borrowings
Other borrowings
The amounts payable are unsecured, interest
free and no fixed repayment terms have
been set. The loans are long-term in nature.
Other borrowings
The amounts payable are unsecured, bear
interest at a range of 2,2% to 2,9% per
annum. The loans are repayable in 10 to 16
equal quarterly to semi-annual instalments
by March 2016.
Wesbank loan
The recourse discounting facility bears interest
at prime overdraft rate minus 1% and these
loans are repayable over a period varying
from 12 to 48 months.
–
105
106
continued
Company
Group
2014
R’000
2013
R’000
5 439 519
5 377 279
377 080
380 565
–
–
930 411
683 938
–
–
2 000
9 720
–
–
Trust receipts and bills payables
Trust receipts and bills payable are unsecured,
bear interest at a range of 1,2% to 2,2% per
annum and have an average maturity of
three months from the end of the reporting
period.
87 040
64 418
–
–
Contractual earn-out liabilities
The amounts payable are interest-free and
have been determined on the basis of the
underlying contractual arrangements.
36 000
98 969
–
–
–
–
688
688
Total borrowings
Less: Current portion of long–term
borrowings disclosed in current liabilities
6 872 050
6 614 889
688
688
–
–
Total long-term borrowings
5 938 738
5 487 888
688
688
Borrowings are repayable as follows:
On demand or within one year
In second to fifth year inclusive
After five years
933 312
5 900 290
38 448
1 127 001
3 096 003
2 391 885
–
–
688
–
–
688
Total
6 872 050
6 614 889
688
688
2014
R’000
2013
R’000
continued
27.1 Unsecured borrowings continued
Financial liability arising on minority
put option
Financial liability arising as a result of a
contractual put option on the non-controlling
interest in Invicta Asian Holdings (Pte) Ltd.
Gryphon Financial Engineering (Pty) Ltd
This amount relates to fees and interest
payable on the put option relating to the
Gryphon preference shares, which has a fixed
date of repayment of 15 August 2018.
NSM Holdings (Pty) Ltd
The loan bears interest at prime overdraft
rate plus 2%, is unsecured and no fixed
repayment term has been set.
Invicta Share Trust loan
The loan is unsecured, interest–free and
there are no fixed terms of repayment. The
loan is long–term in nature.
(933 312)
(1 127 001)
–
There is no limit on the Group’s borrowings and guarantees in terms of the Company’s Memorandum
of Incorporation
continued
Company
Group
2014
R’000
2013
R’000
2014
R’000
2013
R’000
154 695
–
156 922
8 108
–
–
–
–
154 695
165 030
–
–
28. FINANCIAL LIABILITIES
Put option derivative on the Gryphon Financial
Engineering (Pty) Ltd preference shares
(refer note 10)
Interest rate swap derivative
The fair values of the put options and the
interest rate swap derivative were determined
by discounting the contractual stream of payments
using the zero swap curve at the valuation date.
29. SHARE APPRECIATION RIGHTS LIABILITY
Opening balance
Share appreciation rights exercised
Share appreciation rights charged to statement of
–
–
78 289
(119 681)
–
–
–
–
–
41 392
–
–
Closing balance
–
–
–
–
Trade payables
Other payables
Deferred income
1 758 448
310 239
2 253
1 559 597
357 947
3 724
–
14 181
–
–
10 201
–
Total
2 070 940
1 921 268
14 181
10 201
Employee benefit provisions
Warranties and service provisions
189 572
37 283
106 968
20 385
–
–
–
–
Total
226 855
127 353
–
–
Movements in provisions
Employee benefit provisions
Charged to income
Acquisition of subsidiaries (included in trade and
other payables)
106 968
82 604
60 114
34 759
–
–
–
–
–
12 095
–
–
189 572
106 968
–
–
Warranties and service provisions
Credited to income
20 385
16 898
54 526
(34 141)
–
–
–
–
37 283
20 385
–
–
30. TRADE AND OTHER PAYABLES
31. PROVISIONS
The provision has been recognised for expected warranty claims on certain products sold during the last
three financial years.
107
108
continued
Company
Group
2014
R’000
2013
R’000
2014
R’000
2013
R’000
850 690
818 756
206 128
48 528
72 334
14 480
18
6 155
–
–
–
–
–
–
–
–
32. RECONCILIATION OF PROFIT BEFORE
TAXATION TO CASH GENERATED FROM
OPERATIONS
Adjusted for:
Depreciation
Amortisation of intangible assets
Impairment of property, plant and equipment
Interest rate swap and put option (gain) loss
Net profit on disposal of property, plant
and equipment
Finance costs
Dividend received
Share of profits of associate
Interest received
Non-cash effects of foreign currency translation
Share appreciation rights issued
Negative goodwill
Goodwill impairment
Cash generated from (utilised by) before
movements in working capital
Working capital changes:
(Increase) decrease in inventories
(Increase) decrease in trade and other receivables
Increase (decrease) in trade and other payables
and provisions
Cash generated from (utilised by) operations
95 118
39 984
66
(8 818)
(16 298)
827 966
(310 475)
(2 150)
(323 081)
–
5 926
–
–
(3 551)
651 760
(316 902)
(3 018)
(214 771)
22 363
–
(52 066)
2 791
–
–
(206 482)
1 158 928
(443 768)
998 349
(266 270)
(4 446)
3 085
3 540
9 687
(457 096)
(145 500)
55 869
(212 663)
–
(895)
–
5 675
158 828
(109 476)
3 980
4 012
715 160
732 079
(1 361)
13 227
(4 092)
–
–
–
–
–
–
(40 589)
–
(4 399)
–
–
–
In the 2012 annual financial statements, the statements of cash flows included profit on treasury shares
utilised to settle share appreciation rights. This profit was excluded from the 2013 annual financial
statements in the statements of cash flows restated 2012 financial information as it was incorrectly disclosed.
Further to the modification of the share appreciation rights, the Board based their decision on modifying
the accounting treatment for the SARs settled in cash on the participants’ option to exercise the SARs. The
date of the modification of the treatment best represents the start of the period in which the SARs were
settled in cash.
continued
Company
Group
2014
R’000
2013
R’000
2014
R’000
2013
R’000
33. DIVIDENDS PAID TO
GROUP SHAREHOLDERS
Amounts unpaid at the beginning of the year
Dividends paid
Preference dividends accrued/paid
Amounts unpaid at the end of the year
28
208
65
(36
733
789
788
802)
2
193
21
(28
262
263
912
733)
Total
266 508
188 704
Amounts unpaid (prepaid) at the beginning
of the year
Acquisition of subsidiary
Charged to the statement of comprehensive income
Amounts (unpaid) prepaid at the end of the year
11 368
(605)
222 642
(90 495)
24
28
119
(11
Total
142 910
161 137
526 369
(386 873)
139 496
22
210
65
(27
270
815
788
488)
852
197 495
21 912
(22 270)
271 385
197 989
34. TAXATION PAID
634
157
714
368)
(243)
–
1 451
(24)
684
–
1 028
243
1 184
1 955
678 849
(191 131)
765
–
610
–
487 718
765
610
35. CASH AND CASH EQUIVALENTS
Bank and cash balances
Bank overdrafts
Total
Group
Bank
R’000
Trading
R’000
Banking and trading facilities
Gross facility balances
Facilities utilised
831 865
386 873
3 844 947
1 221 817
Facilities available
444 992
2 623 130
These facilities are callable on notice being given by the facility provider.
These facilities are secured by cross–sureties provided by Group companies.
The directors are of the view that there are adequate facilities in place to operate for the next twelve
months.
36. CONTINGENT LIABILITIES
The Group had no significant contingent liabilities in the current year.
109
110
continued
37. DIRECTORS’ EMOLUMENTS
2014
Executive directors
C Barnard
A Goldstone
AM Sinclair
CE Walters
Non–executive directors
CH Wiese
JS Mthimunye
DI Samuels
JD Wiese
LR Sherrell
RA Wally
R Naidoo
Total
2013
Executive directors
C Barnard
A Goldstone
AM Sinclair
CE Walters
Non–executive directors
CH Wiese
JS Mthimunye
DI Samuels
JD Wiese
LS Sherrell
Total
Directors’
fees
R’000
Audit
and
Remuneration
committee
fees
R’000
–
–
–
–
–
–
–
–
1
2
2
2
985
168
518
855
263
287
202
289
–
–
9 526
1 041
10 894
21 461
804
58
116
174
145
130
29
24
52
191
–
104
52
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
828
110
307
174
249
182
29
1 456
423
–
–
–
1 879
1 456
423
9 526
1 041
10 894
23 340
–
–
–
–
–
–
–
–
1
2
2
2
989
170
520
853
261
286
200
279
2 600
2 200
2 600
600
4 850
4 656
5 320
3 732
–
–
9 532
1 026
8 000
18 558
634
54
108
108
108
22
93
177
48
102
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
656
147
285
156
210
1 012
442
–
–
–
1 454
1 012
442
9 532
1 026
8 000
20 012
Salary
and
benefits
R’000
Retirement
benefits
R’000
Performance
related
remuneration
R’000
Total
before
sharebased
payments
R’000
2
2
2
2
700
900
800
494
4 948
5 355
5 520
5 638
continued
37. DIRECTORS’ EMOLUMENTS
continued
Share appreciation rights exercised by the directors in 2014:
Outstanding
rights
beginning
of year
2014
A Goldstone
396 340
100 000
150 000
146 340
–
C Barnard
1 800 000
500
1 000
150
150
C Barnard
000
000
000
000
–
AM Sinclair
000
000
000
000
000
000
000
000
108 007
100 000
404 347
–
–
–
108 007
50 000
50 000
–
–
50 000
100 000
146 340
108 007
100 559
85 000
228 892
100 559
41 667
43 333
–
41 666
86 667
100 559
114 890
286 666
244 890
114 890
200 000
43 333
43 333
–
–
43 333
86 667
114 890
136 666
234 283
104 283
50 000
43 333
43 333
–
–
43 333
86 667
104 283
–
146 340
1 550 000
396 340
24,84
18,48
24,37
42,55
66,14
–
–
–
–
146 340
500 000
1 000 000
50 000
–
–
–
–
100 000
150 000
146 340
–
341 667
313 333
–
–
–
300 000
41 667
–
100 000
83 333
130 000
–
743 334
416 666
24,84
18,48
24,37
42,55
–
–
–
–
500 000
200 000
43 334
–
–
200 000
86 666
130 000
–
753 334
266 666
24,84
18,48
24,37
42,55
–
–
–
–
360 000
350 000
43 334
–
–
50 000
86 666
130 000
18,48
24,37
42,55
1 020 000
360
400
130
130
Taken up
during
the year
104 283
1 160 000
500
400
130
130
Granted
during
the year
18,48
24,37
42,55
120,93
655 000
400 000
125 000
130 000
CE Walters
18,48
24,37
42,55
120,93
266 666
50 000
86 666
130 000
–
2013
A Goldstone
24,37
42,55
120,93
416 666
200 000
86 666
130 000
–
AM Sinclair
24,37
42,55
66,14
120,93
213 333
83 333
130 000
–
CE Walters
Strike
price
Outstanding
rights end
of year
Date
granted
Average
weighted
prices on
rights
taken up
02-Mar-10
01-Mar-11
11-Jun-12
13 Mar-14
120,61
120,61
02-Mar-10
01-Mar-11
13 Mar-14
120,61
120,61
13-Mar-09
02-Mar-10
01-Mar-11
13 Mar-14
103,88
120,61
120,61
13-Mar-09
13-Mar-09
01-Mar-11
13 Mar-14
114,87
120,61
120,61
14-Mar-08
13-Mar-09
2-Mar-10
1-Mar-11
11-Jun-12
77,20
96,28
94,34
–
–
13-Mar-09
2-Mar-10
1-Mar-11
96,28
94,34
–
14-Mar-08
13-Mar-09
2-Mar-10
1-Mar-11
69,26
103,88
93,94
–
14-Mar-08
13-Mar-09
13-Mar-10
1-Mar-11
74,55
93,85
93,94
–
The share appreciation rights exercised by the directors in 2014 amounted to R65 million (2013: R35 million).
111
112
continued
38. RETIREMENT BENEFITS
The Group contributes to a defined contribution pension plan and a defined contribution provident plan
which are governed by the Pension Fund 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.
Group
2014
R’000
Company
2013
R’000
2014
R’000
2013
R’000
39. COMMITMENTS
Commitments in respect of unexpired
rental agreements for premises:
– Payable within twelve months
72 547
68 153
–
–
– Payable thereafter
261 360
219 805
–
–
Total
333 907
287 958
–
–
Commitments in respect of unexpired rental
agreements for motor vehicles:
17 066
16 116
–
–
22 885
23 459
–
–
Total
39 951
39 575
–
–
Commitments in respect of unexpired rental
agreements for office equipment:
1 624
231
–
–
6 723
190
–
–
Total
8 347
421
–
–
51 936
81 770
–
–
Commitments in respect of contracted
capital expenditure
Expenditure will be financed from existing cash facilities.
40. FINANCIAL RISK MANAGEMENT
The Group is considered to be exposed to interest rate, credit, liquidity and foreign currency risk.
Interest rate management
The interest rate profile of total borrowings is as follows:
Description
Bank overdrafts
Fixed rate borrowings
Fixed rate borrowings
Variable rate borrowings
Variable rate borrowings
Currency
Redemption
period
Interest
rate % p.a.
2014
R’000
ZAR
ZAR
SGD
ZAR
SGD
N/A
2006 to 2019
2015
2009 to 2024
2013 to 2018
8,25 to 10,50
10,50 to 12,50
2,10
6,00 to 11,00
1,20 to 4,00
386 373
4 331 769
–
1 630 245
485 013
2013
R’000
191
3 992
5
1 487
595
131
616
214
173
613
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
R42 million (2013: R42 million) on the statement of comprehensive income.
continued
continued
Credit risk management
Potential areas of credit risk consist of trade accounts receivable and short-term cash investments. Trade
accounts receivable consist of a widespread customer base. Group companies monitor the financial position
of their customers on an on-going basis. Where considered appropriate, use is made of credit guarantee
insurance. 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 risk exposure
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 major banks.
Liquidity risk management
The 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 the capital value of its financial liabilities
(excluding the credit default swap, put option and interest rate swap derivatives):
Less than
1 year
R’000
2 to 5
years
R’000
More than
5 years
R’000
Total
R’000
2014
Mortgage bonds
Serec Capital loan
Debentures
Preference shares
Domestic medium-term note program
Loans
Gryphon Financial Engineering
Put option
Finance lease liabilities
17 879
–
207 089
–
225 000
470 978
–
–
12 365
2 210
2 070 940
88
2 538
627
740
150
431
930
377
16
161
323
349
835
000
899
411
080
232
458
–
22 527
–
–
–
–
15 922
–
–
–
–
–
128
2 538
834
740
375
918
930
377
28
2
2 070
Total
3 006 461
5 900 748
38 449
8 945 658
2013
Mortgage bonds
Serec Capital loan
Debentures
Preference shares
Domestic medium-term note program
Loans
Gryphon Financial Engineering
Put option
Finance lease liabilities
46 698
–
152 973
–
–
907 986
–
–
19 344
4 086
1 921 268
111 232
–
837 162
584 505
375 000
116 254
683 938
380 565
7 347
1 654
–
Total
3 052 355
3 097 657
567
323
438
835
000
799
411
080
597
668
940
(11 907)
2 291 852
–
–
–
54 738
–
–
–
–
–
146 023
2 291 852
990 135
584 505
375 000
1 078 978
683 938
380 565
26 691
5 740
1 921 268
2 334 683
8 484 695
113
114
continued
continued
Foreign currency risk management
The majority of the Group’s monetary assets and liabilities are denominated in South African Rand. The Kian
Ann monetary assets and liabilities are denominated in Singapore Dollar together with the assets and
liabilities of the BMG foreign entities which are denominated in various foreign currencies.
Foreign currency monetary assets and liabilities
Total assets
Total liabilities
ZAR
R'000
9 098 324
(8 778 259)
320 065
SGD
R'000
3 282 778
(972 248)
2 310 530
OTHER
R'000
TOTAL
R'000
1 067 570 13 448 672
(139 145) (9 889 652)
928 425
3 559 020
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 the 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
currency
’000
Average
exchange
rate
Rand
’000
65 474
27 244
621 418
10,8774
15,3093
9,3779
712 188
417 087
66 264
British Pound
305
18,2984
5 581
2013
US Dollar
Euro
Yen
British Pound
41 916
32 705
485 876
219
8,9497
11,7070
9,8673
14,0502
2014
US Dollar
Euro
Yen
These forward exchange contracts mature within twelve months after year-end.
375
382
49
3
134
877
241
077
continued
continued
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.
Financial instruments
Financial instruments as disclosed in the statement of financial position include trade receivables and
payables, other receivables and payables, long-term debtors, overdrafts and short-term borrowings, longterm borrowings and shareholders for dividend.
Group
Categories of financial instruments
Financial assets
Investments at amortised cost
Financial investments
Financial assets at fair value
Financial asset
Loans and receivables at amortised cost
Finance lease receivables
Long-term loans
Total
Financial liabilities at fair value
2014
R’000
2013
R’000
2 884 418
2 877 975
155 405
156 922
53 635
2 268 948
1 811 031
27 440
1 950 291
1 597 181
526 369
678 849
7 699 806
7 288 658
154 695
165 030
Financial liabilities at amortised cost
Borrowings
Guaranteed repurchase liabilities
Bank overdrafts
6 872
2
2 068
36
386
Total
9 521 775
050
668
687
802
873
6 614
5
1 917
28
191
889
740
544
733
131
8 923 067
Fair value disclosure
The following is an analysis of the financial instruments that are measured subsequent to initial recognition
at fair value. They are grouped into levels 1 to 3 based on the extent to which the fair value is observable.
The levels are classified as follows:
Level 1 – fair value is based on quoted prices in active markets for identical financial assets or liabilities
Level 2 – fair value is determined using directly observable inputs other than Level 1 inputs
Level 3 – fair value is determined on inputs not based on observable market data
115
116
continued
continued
31 March
2014
Valuation
techniques
and key
inputs
Level 1
Level 2
Level 3
Financial asset
155 405
1 844 072
1
2
–
–
155 405
–
–
1 844 072
154 695
2 070 940
1
3
–
–
154 695
–
–
2 070 940
301 860
4
–
301 860
–
31 March
2013
Valuation
techniques
and key
inputs
Level 1
Level 2
Level 3
Financial asset
156 922
1
–
156 922
–
165 030
1
–
165 030
–
615 434
4
–
615 434
–
Foreign trade payables
1. Discounted contractual stream of payments using the zero swap curve at the valuation date.
2. Face value less specific related provision.
3. Expected settlement value.
4. Determined by the spot rate at year-end.
There has been no transfers between the levels during the financial year.
41. DIRECTORS’ INTEREST IN THE SHARES OF THE COMPANY
Number of shares held
2014
2013
Direct
interest
Indirect
interest
Direct
interest
Indirect
interest
Ordinary shares
C Barnard
A Goldstone
DI Samuels
LR Sherrell
AM Sinclair
CE Walters
CH Wiese
386 776
262 281
500 460
–
406 910
951 768
–
240 632
3 982 032
3 084 155
8 068 038
–
258 165
27 000 000
315 632
262 281
500 460
–
344 163
813 500
–
240 632
4 238 678
3 500 000
9 286 353
–
258 165
27 000 000
Preference shares
C Barnard
A Goldstone
LR Sherrell
AM Sinclair
JD Wiese
CH Wiese
–
200 000
–
10 000
–
–
10 000
105 000
160 000
–
200 000
800 000
–
200 000
–
10 000
–
–
10 000
105 000
160 000
–
200 000
800 000
continued
42. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related parties, are limited to dividends
received from subsidiaries of R177 million (2013: R59 million).
Remuneration of key management personnel
The remuneration of key management personnel of the Group, is set out below:
Group
Long- and short-term employee benefits
Retirement benefits
Total
2014
R’000
2013
R’000
37 254
34 237
2 442
1 716
39 696
35 953
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 27 respectively). During the prior year, Bravura provided financial
services to the counterparty in the transaction giving rise to the investments and derivative instruments
(refer note 10 and 13) and borrowings (refer note 27 and 28).
43. ACQUISITION OF SUBSIDIARIES
The significant acquisitions undertaken in the current year related to High Power Equipment Africa (Pty) Ltd,
Brands 4 Africa (Pty) Ltd and Floormark (Pty) Ltd. These subsidiaries are all operational within the same
segments as the current Group, thus the Board identified these businesses based on their ability to assist the
Group with its expansion and growth. The goodwill is based on the provisional fair values of the assets and
liabilities, including identifiable intangible assets at acquisition date. Refer to note 16 for effective dates and
holdings. Effective control was obtained through the purchase of the majority equity of these subsidiaries.
Non-controlling interest is measured as a percentage of the equity of the subsidiary.
Subsidiary
High Power Equipment Africa (Pty) Ltd
Industry
Import and distribution of Hyundai Construction Equipment
and Crushers.
Brands 4 Africa (Pty) Ltd
Exporting for the building supplies, hardware and construction,
automotive, agricultural and mining industries.
Floormark (Pty) Ltd
Supplier of vinyl and laminated flooring.
117
118
continued
43. ACQUISITION OF SUBSIDIARIES
continued
Detailed below is a summary of the financial impacts of the acquisitions:
Group
2014
R’000
2013
R’000
Fair value of net assets acquired:
Assets held for resale
Intangible assets
Long-term receivable
Financial assets
Investment in associates
Taxation prepaid
Other assets
Bank and cash
Inventories
Deferred taxation
Current portion of long-term borrowings
Taxation liabilities
Net tangible asset value
Non-controlling interest acquired in existing subsidiaries
9 360
–
17 455
–
–
–
734
–
15 990
72 110
60 784
625
(15 367)
(83 155)
(1 656)
(129)
(3 440)
553
9
134
134
1
771
957
668
625
161
312
–
367
142 264
884 259
537 720
(10 020)
(128 204)
(361 296)
(111 141)
(28 157)
(327 076)
73 311
7 982
1 433 210
17 787
81 293
(15 990)
1 450 997
(142 264)
Net fair value of net assets acquired
65 303
1 308 733
Cash outflow on acquisitions
Fair value of net assets acquired
95 762
65 303
1 494 214
1 308 733
Total goodwill
Positive goodwill
Negative goodwill
30 459
30 459
–
185 481
237 547
(52 066)
3 568
50 213
591 578
1 025 635
3 568
114 744
591 578
2 140 747
Fair value of net assets acquired
Bank and cash
Profit after taxation since acquisition date included in the consolidated
results for the year
Revenue since acquisition date included in the consolidated results
for the year
Profit after taxation should the business combinations have been
included for the entire year
Revenue should the business combinations have been included
for the entire year
44. EVENTS AFTER THE REPORTING PERIOD
There were no events to report on after the reporting period to the date of this report.
Notice of
annual general meeting
Invicta Holdings Limited
(Registration number 1966/002182/06)
(Incorporated in the Republic of South Africa)
Share code: IVT Ordinary Share • ISIN: ZAE000029773
IVTP Preference Share • ISIN: ZAE000173399
(“Invicta” or “the Company” or “the Group”)
Special Resolution 1
NOTICE OF ANNUAL GENERAL MEETING
OF SHAREHOLDERS FOR THE YEAR ENDED
31 MARCH 2014
Company, upon such terms and conditions and in such
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 Tuesday, 19 August
2014 at 10:30.
Memorandum of Incorporation of the Company, the
The record date on which shareholders 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
Friday, 8 August 2014 and last date of trade is Friday,
1 August 2014.
Company or any subsidiary of the Company may only
“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 (2008) (“Act”), to acquire from
time to time any of the issued ordinary shares of the
amounts as the directors of the Company may from
time to time determine, but subject to the
provisions
of
the
Act
and
the
JSE
Listings
Requirements, when applicable (each as presently
constituted and amended from time to time).”
It is recorded that, as at the date of this report, the JSE
Listings Requirements provide, inter alia, that the
make a general repurchase of the ordinary shares of
the Company subject to the following:
•
the repurchase of securities will be effected
through the order book operated by the JSE
trading system and done without any prior
Record date for determining which shareholders are
entitled to receive the annual general meeting notice
is Friday, 20 June 2014.
understanding or arrangement between the
Company and the counterparty;
•
All meeting participants will be required to provide
identification. Compatible forms of identification
include valid identity documents, driver’s licences and
passports.
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.
–
–
thereto
being
given
by
the
Memorandum of Incorporation of the Company;
•
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
Note:
–
authorisation
premium at which such ordinary shares may be
For the special resolutions numbers 1 to 4 to be
adopted, the support of at least 75% of the total
number of votes exercised by shareholders,
present in person or by proxy, is required.
acquired will be 10% (ten percent) of the
For the ordinary resolutions numbers 1 to 5 and
numbers 7 and 8 to be adopted, the support of
more than 50% of the total number of votes
exercised by shareholders, present in person or by
proxy, is required.
immediately preceding the date of the repurchase
For ordinary resolution number 6 to be adopted,
the support of at least 75% of the total number of
votes exercised by shareholders, present in person
or by proxy, is required.
weighted average of the market price at which
such ordinary shares are traded on the JSE, as
determined over the 5 (five) trading days
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;
119
120
continued
•
a resolution by the Board of Directors that has
authorised the repurchase, that the Company and
3% of the initial number of the relevant class of
The directors, whose names are given on pages 4 and
5 of the Integrated 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.
securities, and for each 3% (three percent) in
Material changes
its subsidiary/ies have passed the solvency and
liquidity test and that, since the test was
performed, there have been no material changes
to the financial position of the Group;
•
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
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.
Additional disclosure in terms of the JSE Listings
Requirements section 11.26 and 11.27
The JSE Listings Requirements require the following
disclosure, some of which are elsewhere in the
Integrated Annual Report of which this notice forms
part as set out below:
–
Directors and management – pages 4 and 5;
–
Major beneficial shareholders – pages 56 and 57;
–
Directors’ interests in ordinary shares – page 116;
and
–
Directors’ responsibility statement
Share capital of the Company – page 101.
Other than the facts and developments reported on in
the Integrated 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.
Statement of Board's intention
The Board, at the date of this Integrated 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.
which this notice forms part, are not aware of any
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.
legal
Statement of directors
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 Integrated Annual Report of
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.
The Company's directors undertake that after
considering the effect of such maximum repurchase,
for a period of 12 (twelve) months following the date
of this notice of the annual general meeting:
a. the Company and the Group will be in a position
to repay their debts in the ordinary course of
business;
continued
b. the assets of the Company and the Group, being
fairly valued in accordance with International
Financial Reporting Standards, will be in excess of
the liabilities of the Company and the Group;
c.
"RESOLVED THAT in terms of section 44(3)(a)(ii) of the
Companies Act (2008) (“Act”), the provision from time
to time of financial assistance (whether by way of
the share capital and reserves of the Company and
loan, guarantee, the provision of security or
the Group will be adequate for ordinary business
otherwise) by the Company to any person, for the
purposes;
purposes of, or in connection with, the subscription of
d. the working capital will be adequate to continue
the ordinary business purposes of the Company
any option, or any securities, issued or to be issued by
the Company or a related or inter-related company of
the Company, or for the purchase of any securities of
and the Group; and
the Company or a related or inter-related company of
e. before entering the market to proceed with the
the Company, be and is hereby approved.”
repurchase, the Company's sponsor will confirm to
the JSE in writing the adequacy of the Company’s
Such approval shall be in place for a period of two
and the Group's working capital for the purposes
years from the date of adoption of this special
of undertaking a repurchase of shares.
resolution number 3 and be subject further to section
44(3)(b) of the Act which states that the Board may
not authorise such financial assistance unless the
“RESOLVED THAT, the remuneration of each non-
Board is satisfied that (i) immediately after providing
executive director of the Company be approved, each
such financial assistance, the Company would satisfy
by way of a separate vote, as a special resolution in
the solvency and liquidity test contemplated in section
terms of section 66 of the Act, for the 2015 financial
4 of the Act, and (ii) the terms under which the
year as follows:
financial assistance is proposed to be given are fair
2.1
Invicta Board
2.2
Companies Act (2008) (“Act”), the provision from time
to time of financial assistance by the Company to any
R30 740 per meeting
Members of the
BMG Board
“RESOLVED THAT in terms of section 45(3)(a)(ii) of the
R66 780 per annum
Members of the
Invicta Board
2.4
R667 800 per annum
Chairman of the
Audit Committee
2.3
and reasonable to the Company.
Chairman of the
R14 840 per meeting
related or inter-related company of the Company, be
and is hereby approved.”
Such approval shall be in place for a period of two
years from the date of adoption of this special
2.5
Members of the
Humulani Board
2.6
resolution number 4 and be subject further to section
R14 840 per meeting
Members of the
Audit Committee
45(3)(b) of the Act, which states that the Board may
not authorise such financial assistance unless the
R27 560 per meeting
Board is satisfied that (i) immediately after providing
such financial assistance, the Company would satisfy
2.7
Members of the
the solvency and liquidity test contemplated in section
Remuneration
Committee
4 of the Act, and (ii) the terms under which the
R25 440 per annum
financial assistance is proposed to be given are fair
and reasonable to the Company.
121
122
continued
Ordinary Resolution 1
To receive and consider the directors report, annual
financial statements of the Company and the Group
annual financial statements, as well as the Audit
Company and the JSE Listings Requirements, where
applicable
(each
as
presently
constituted
and
amended from time to time), such authority to remain
in force until the next annual general meeting.”
Committee Report for the year ended 31 March 2014.
Ordinary Resolution 2.1 to 2.2
“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 ordinary shares in the capital of the
Company, or to allot, issue and grant options to
subscribe for, all or any of the authorised but unissued
ordinary shares in the capital of the Company, for cash,
as and when they in their discretion deem fit, subject
to the providers of the Companies Act (2008) (“Act”),
the Memorandum of Incorporation of the Company,
the JSE Listings Requirements where applicable (each
as presently constituted and amended from time to
time).”
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:
2.1
LR Sherrell
2.2
Adv JD Wiese
Abbreviated biographical details of the above
directors are set out on page 5 of this Integrated
Annual Report.
Ordinary Resolution 3.1 and 3.2
To ratify, each by way of a separate vote, the
appointment of the following directors, as
independent non-executive directors of the Company:
3.1
RA Wally – Effective 30 July 2013
It is recorded that, as at the date of this report, the JSE
Listings Requirements provide, inter alia, that the
Company may only undertake a general issue for cash
subject to the following:
3.2
R Naidoo – Effective 20 February 2014
•
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;
Abbreviated biographical details of the above directors
are set out on page 5 of this Integrated Annual
Report.
“RESOLVED THAT shareholders endorse, through a
non-binding advisory vote as 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
48 to 51 of this Integrated Annual Report.”
“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
continued
•
this authority shall 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
after 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
6 for it to be approved.
“RESOLVED THAT the reappointment of Deloitte &
Touche, Registered Auditors, as independent auditors
of the Company and to appoint T Marriday as the
designated audit partner for the 2015 financial year
be confirmed.”
Ordinary Resolution 8.1 to 8.4
“RESOLVED THAT, the following non-executive
directors be re-elected, each by way of a separate
vote, as members of the Audit Committee of the
Company for the period from 1 April 2014 until the
conclusion of the next annual general meeting of the
Company in August 2015:
8.1
8.2
LR Sherrell (subject to the passing of ordinary
resolution 2.1)
8.3
RA Wally
8.4
JD Wiese (alternate to LR Sherrell and
RA Wally) (subject to the passing of ordinary
resolution 2.2)”
Abbreviated biographical details of the above
directors are set out on page 5 of this Integrated
Annual Report.
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 Participant,
previously named Central Securities Depository
Participant 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 Participant or broker, as the
case may be, and furnish them with your instructions.
If your Participant 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 Participant or broker timeously
in terms of the agreement between yourself and your
Participant 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 Participant 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 Participant 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 Participant or broker, other than “own
name” registered dematerialised shareholders, who
wish to attend the annual general meeting, must
request their Participant or broker to issue them with
123
124
continued
a letter of representation, or they must provide the
Participant or broker with their voting instructions in
terms of the relevant custody agreement/mandate
entered into between them and the Participant or
broker.
Shareholder rights
In terms of the Companies Act (2008) (“Act”),
shareholders have the right to be represented by
proxy as stated herein.
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 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:
•
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;
•
the appointment is revocable unless the proxy
appointment expressly states otherwise; and
•
•
participate in, and speak and vote at, a
shareholders meeting on behalf of the
shareholder; or
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:
•
must be in writing, dated and signed by the
shareholder; and
•
remains valid for the duration of the annual
general meeting or any postponement
thereof, for which it was signed; or
•
if the appointment is revocable, a shareholder
may revoke the proxy appointment by
cancelling it in writing, or making a later
inconsistent appointment of a proxy; and
•
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 the date stated in the revocation
instrument, if any; or 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
•
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).
appointment remains in effect, any notice that is
required by the Companies Act (2008), or the
Company’s Memorandum of Incorporation to be
delivered by the Company to the shareholder must
be delivered by the Company to:
3. Except to the extent that the Memorandum of
Incorporation of the Company provides otherwise:
•
the shareholder; or
•
•
the proxy or proxies, if the shareholder has
a shareholder of the Company may appoint
directed the Company to do so, in writing; and
two or more persons concurrently as proxies,
and may appoint more than one proxy to
exercise voting rights attached to different
•
paid any reasonable fee charged by the
Company for doing so.
securities held by the shareholder;
•
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
7. A proxy is entitled to exercise, or abstain from
exercising, any voting right of the shareholder
without direction, except to the extent that the
Memorandum of Incorporation, or the instrument
appointing the proxy, provides otherwise.
continued
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:
•
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;
•
the invitation, or form of instrument supplied
by the Company for the purpose of appointing
a proxy, must:
–
bear a reasonably prominent summary of
the rights established by this section;
–
contain adequate blank space,
–
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;
•
the Company must not require that the proxy
appointment be made irrevocable; and
•
the proxy appointment remains valid only until
the end of the meeting at which it was
intended to be used, or any postponement
thereof.
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
GM Chemaly
Group Company Secretary
Johannesburg
12 June 2014
125
126
Form of proxy
INVICTA HOLDINGS LIMITED
Registration number 1966/002182/06 • Incorporated in the Republic of South Africa
Share code: IVT Ordinary Share • ISIN: ZAE000029773
Share code: IVTP Preference Share • ISIN: ZAE000173399 • (“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 Tuesday, 19 August 2014 at 10:30 (“the annual general meeting”).
Dematerialised shareholders holding shares other than with “own name” registration, must inform their Participant or broker of
their intention to attend the annual general meeting and request their Participant or broker to issue them with the necessary
letter of representation to attend the annual general meeting in person and vote or provide their Participant 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
of proxy.
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 held
on Tuesday, 19 August 2014 at 10:30 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/our
name(s) (see note 2).
Number of votes (one per share)
For
Special resolution 1
General authority to repurchase shares
Remuneration of non-executive directors
2.1 Chairman of the Invicta Board – R667 800 per annum
2.2 Chairman of the Audit Committee – R66 780 per annum
2.3 Members of the Invicta Board – R30 740 per meeting
2.4 Members of the BMG Board – R14 840 per meeting
2.5 Members of the Humulani Board – R14 840 per meeting
2.6 Members of the Audit Committee – R27 560 per meeting
2.7 Members of the Remuneration Committee – R25 440 per annum
Approval of financial assistance to any person for the purposes of, or in
connection with, the subscription of any option, or any securities, issued
or to be issued by the Company or a related or inter-related company of
the Company
Approval of financial assistance to any company which is related or
inter-related to the Company
Ordinary resolution 1
To receive and consider the directors report, annual financial statements
of the Company and the Group annual financial statements, as well as
the Audit Committee Report for the year ended 31 March 2014
Ordinary resolution 2.1
To re-elect as director LR Sherrell
To re-elect as director Adv JD Wiese
To ratify the appointment as independent non-executive
director of Mr RA Wally
To ratify the appointment as independent non-executive
director of Mrs R Naidoo
Against
Abstain
Form of proxy
continued
Number of votes (one per share)
For
Against
Abstain
Approval of the Company’s remuneration policy and its implementation
To place the authorised but unissued shares under the control of
the directors
To authorise the directors to issue shares for cash
To confirm the reappointment of Deloitte & Touche as independent
auditors of the Company and the Group and T Marriday as the designated
audit partner for the 2015 financial year
To re-elect as Audit Committee member Mr DI Samuels (Chairman)
To re-elect as Audit Committee member Mr LR Sherrell
To re-elect as Audit Committee member Mr RA Wally
To re-elect as alternate Audit Committee member Adv JD Wiese
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
2014
Signature
Assisted by (where applicable)
Number of shares
Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder of the Company) to attend, speak and
vote in place of that shareholder at the annual general meeting.
Please read the notes below.
Notes to the proxy form
1.
A shareholder may insert the name or names of two alternative proxies of the shareholder’s choice in the space provided,
with or 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 that
shareholder in the space provided. Failure to comply with the above will be deemed to authorise the proxy to vote or abstain
from 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
same way.
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 be
attached to this form unless previously recorded by the transfer secretaries or waived by the Chairman of the annual general
meeting.
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 such
shareholder 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 other
than 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.
9.
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
of shareholders appear in the company's register of shareholders) who tenders a vote (whether in person or by proxy)
will be accepted to the exclusion of the vote(s) of the other joint shareholder(s).
Forms of proxy must be lodged with or posted to the Company’s transfer secretaries’ offices in Johannesburg (Computershare
Investor Services (Pty) Ltd, Ground Floor, 70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107) to be
received by no later than 10:30 on Friday, 15 August 2014.
www.invictaholdings.co.za

March 2014 - Invicta Holdings

Transcription

Similar documents

January 2014 Newsletter - Fresno Police Department Credit Union

View Report - Financial Center Credit Union

Corporate Presentation

Projects - Parcar Engineers

Annual Report 2014 - Trade Me Group Ltd

The Board of Directors of Qatar Fuel (WOQOD) is pleased to invite

Important Websites - Greater Gateway Association of Realtors

Golf Thank You

Annual Report 2015