| Fri 7 Nov 2008, 17:15 | | IVT - Invicta Holdings Limited - Unaudited Group Results for the six months |
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IVT
IVT
IVT - Invicta Holdings Limited - Unaudited Group Results for the six months
ended 30 September 2008
INVICTA HOLDINGS LIMITED
(Registration number 1966/002182/06)
(Incorporated in the Republic of South Africa)
(Share code: IVT)
(ISIN code: ZAE000029773)
Unaudited Group Results for the six months ended 30 September 2008
Revenue up 39%
Profit for the period up 30%
Earnings per share up 30%
Dividend up 13%
Condensed income statement
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 March
2008 2007 % 2008
R`000 R`000 change R`000
Revenue 2 228 987 1 598 960 39 3 335 496
Operating income 212 222 141 447 50 360 379
Interest and preference 179 900 70 006 212 270
dividend received
Finance costs 181 967 79 982 209 147
Profit before taxation 210 155 131 471 60 363 502
Taxation 57 324 13 842 62 646
Profit for the period 152 831 117 629 30 300 856
Minority interest 20 946 12 664 37 491
Attributable to ordinary 131 885 104 965 26 263 365
shareholders
Earnings per share 184 141 30 356
(cents)
Diluted earnings per 183 139 32 354
share (cents)
Determination of headline
earnings
Attributable earnings 131 885 104 965 263 365
Adjustments - after
taxation and minority
interest where applicable
- Negative goodwill on
business combination - (88) (70)
- Profit on issue of - - (3 246)
shares by subsidiaries
- Impairment loss on
property, plant and
equipment 3 200 - -
- Profit on disposal of
branch - - (599)
- Profit on disposal of (3 201) (410) (4 294)
property plant and
equipment
Headline earnings 131 884 104 467 255 156
Shares in issue
Weighted average (000s) 71 536 74 341 74 007
At the end of the period
(000s) 70 801 74 341 74 007
Number of shares used for
diluted earnings per
share (000s) 71 989 75 604 74 325
Headline earnings per 184 141 30 345
share (cents)
Diluted headline earnings
per share (cents) 183 139 32 343
Dividends per share*
(cents) 138
Interim 53 47 13 47
Final - - 91
*In accordance with IAS10 the interim dividend of 53 cents per share
proposed by the directors has not been reflected in the interim results.
Condensed balance sheet
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 March
2008 2007 2008
R`000 R`000 R`000
ASSETS
Non-current assets 3 385 789 1 591 563 3 183 780
Property, plant and equipment 197 251 138 789 154 996
Deferred taxation 56 375 30 914 34 794
Investments 1 195 100 1 195 303 1 195 303
Goodwill and other intangible
assets 252 908 225 070 230 414
Loan receivable and financial
assets 1 684 155 1 487 1 568 273
Current assets 2 351 512 1 477 611 2 032 453
Inventories 1 360 111 822 785 1 073 812
Trade and other receivables 910 749 500 299 733 466
Bank balances and cash 80 652 154 527 225 175
Total assets 5 737 301 3 069 174 5 216 233
EQUITY AND LIABILITIES
Capital and reserves 1 163 603 1 014 405 1 117 738
Attributable to ordinary
shareholders 1 053 640 940 494 1 025 591
Minority interest 109 963 73 911 92 147
Non-current liabilities 2 913 274 1 208 238 2 776 809
Long-term borrowings 2 901 106 1 199 894 2 764 662
Deferred taxation 12 168 8 344 12 147
Current liabilities 1 660 424 846 531 1 321 686
Short-term borrowings 6 793 12 121 7 325
Trade, other payables and 1 622 670 815 371 1 267 748
provisions
Tax liabilities 16 147 13 912 31 309
Bank overdrafts and banker`s 14 814 5 127 15 304
acceptances
Total equity and liabilities 5 737 301 3 069 174 5 216 233
Condensed cash flow statement
Cash flows from operating
activities
Cash generated from operations 163 422 86 366 292 574
Finance costs (181 967) (79 982) (209 147)
Dividend paid (69 290) (55 600) (93 972)
Taxation paid (86 694) (22 222) (58 317)
Interest and preference
dividend received 179 900 70 006 212 270
Net cash inflow (outflow) from
operating activities 5 371 (1 432) 143 408
Cash flows from investing
activities
Net cash effects of asset
acquisitions (48 252) (7 260) (39 985)
Net cash effects of other
investing activities (80 355) (32 241) (1 378 118)
Net cash effects of treasury
share investments (44 854) - (49 393)
Cash flows from financing
activities
Net cash effects of shares
issued in terms of Bearing Man
debenture scheme - - 1 488
Net cash effects of borrowings
raised (repaid) 24 057 (5 068) 1 337 070
Net (decrease) increase in cash
and cash equivalents (144 033) (46 001) 14 470
Cash and cash equivalents at
the beginning of the year 209 871 195 401 195 401
Cash and cash equivalents at
the end of the year 65 838 149 400 209 871
Other information
Debt: Equity ratio (%)
(excluding long-term funding
debt secured by investments and
loans) 2% 2% 1%
Depreciation and amortisation
(R`000) 12 449 11 531 22 918
Net asset value per share
(cents) 1 488.2 1 265.1 1 410.7
Tangible net asset value per
share (cents) 1 131.0 962.4 1 093.7
Capital expenditure R`000 54 946 11 463 39 985
Contingent liabilities R`000 1 505 4 724 1 724
Capital commitments R`000 32 390 774 623
Business Acquisitions Disa Goldquest Total
Equipment & others R`000
(Pty) Ltd
Acquired effective 1 April 2008 1 August 2008
Property plant and equipment 1 546 13 559 15 105
Deferred taxation 6 814 (1 209) 5 605
Long-term liabilities - (2 916) (2 916)
Trade and other receivables 11 709 17 291 29 000
Cash and cash equivalents 5 960 7 154 13 114
Inventory 137 565 41 009 178 574
Trade and other payables (145 609) (15 859) (161 468)
Taxation (4 606) (1 433) (6 039)
Fair value of assets acquired 13 379 57 596 70 975
Goodwill on acquisition 11 793 10 701 22 494
Cost of acquisition 25 172 68 297 93 469
Cash and cash equivalents 5 960 7 154 13 114
acquired
Net cash effect of acquisition 19 212 61 143 80 355
of subsidiaries
Profit after tax since 3 794 3 084 7 094
acquisition date included in
the consolidated condensed
results for the period
Profit after tax should the 3 794 7 901 13 694
above business combinations
have been included for the
entire period
Condensed statement of changes in equity
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 30 Sept 31 March
2008 2007 2008
R`000 R`000 R`000
SHARE CAPITAL
Balance at beginning of year 3 635 3 717 3 717
Shares issued in terms of - - 7
Bearing Man debenture scheme
Treasury shares (95) - (89)
Closing balance 3 540 3 717 3 635
SHARE PREMIUM
Balance at beginning of year 233 411 281 234 281 234
Shares issued in terms of - - 1 481
Bearing Man debenture scheme
Treasury shares (44 759) - (49 304)
Closing balance 188 652 281 234 233 411
RETAINED EARNINGS
Balance at beginning of year 763 697 588 011 588 011
Earnings attributable to 131 885 104 965 263 365
ordinary shareholders
Dividends paid (66 160) (52 782) (87 679)
Closing balance 829 422 640 194 763 697
OTHER RESERVES
Balance at beginning of year 24 848 13 199 13 199
Arising from the issue of share 6 420 2 290 9 672
appreciation rights
Arising on translation of 758 (140) 1 977
foreign operations
Closing balance 32 026 15 349 24 848
Attributable to ordinary 1 053 640 940 494 1 025 591
shareholders
MINORITY INTEREST
Balance at beginning of year 92 147 44 685 44 685
Earnings attributable to 20 946 12 664 37 491
outside shareholders
Net investment in subsidiaries - 19 379 16 375
Dividend paid (3 130) (2 817) (6 404)
Closing balance 109 963 73 911 92 147
Segment information
Capital Non
Engineering equipment segment
consumables and spares allocations Total
R`000 R`000 R`000 R`000
Unaudited six months
ended 30 September
2007
Revenue - 2008 1 004 633 1 149 713 74 641 2 228 987
Revenue - 2007 761 717 801 290 35 953 1 598 960
Profit from
operations before
finance costs
interest and
preference dividend
received - 2008 144 245 59 700 8 277 212 222
Profit from
operations before
finance costs
interest and
preference dividend
received - 2007 98 035 46 478 (3 066) 141 447
Total assets - 2008 1 040 081 1 095 908 3 601 312 5 737 301
Total assets - 2007 723 669 732 236 1 613 269 3 069 174
Total liabilities - 389 044 926 537 3 258 117 4 573 698
2008
Total liabilities - 184 537 627 245 1 242 987 2 054 769
2007
Notes to the financial information
Basis of preparation
The consolidated financial statements have been prepared in accordance with
IAS34 Interim Financial Reporting, International Financial Reporting
Standards, the JSE Limited`s Listings Requirements and in the manner
required by the Companies Act of South Africa. The principal accounting
policies as set out in the Group`s 2008 annual report have been consistently
applied throughout the six months period under review.
Comments
Group Activities
The Invicta Group continues to be a major regional player in the importation
and distribution of:
Bearings, belts, seals, power transmission products, geared motors,
fasteners and hydraulics ("BMG")
Agricultural machinery and equipment ("Northmec") and New Holland SA ("New
Holland")
Construction and earthmoving equipment, turf grooming equipment and golf
utility cars ("CSE and Doosan SA")
Automotive and motorcycle parts ("Autobax")
Floor tiles, wall tiles and sanitary ware ("Tiletoria")
Financial Overview
The Group has again delivered excellent results. The period under review was
characterised by a weaker Rand and strong demand for most group products,
driven largely by high demand from the mineral and agricultural resource
sectors. Turmoil in the global financial markets was beginning to surface by
the end of the interim period, but it had no marked effect on the Group
performance during the period. Turnover increased by a healthy 39% to R2.229
billion (2007: R1.599 billion). Organic growth in turnover was 27%, while
turnover growth due to acquisitions was 12%. Indications are that the
Group`s annual turnover should comfortably exceed R4 billion for the full
year, which will be a new milestone. Improved margins and tight cost
controls resulted in operating profits increasing by 50% to R212 million
(2007: R141 million). The Group tax rate increased to 27%, resulting in
Profit for the period of R153 million (2007: R118 million), up 30%. The
Group also made key strategic acquisitions in the hydraulics and
construction machinery industries, as well as repurchasing its own shares
for R45 million.
BMG (Bearing Man Group)
BMG continued its excellent growth record. Revenue grew by R243 million
(32%) to R1.005 billion (2007: 762 million). Organic growth was 29% and 3%
was due to acquisitions. Good margin management and cost control resulted in
operating profit improving by 47% to R144 million (2007: R98 million), which
translates into an operating profit margin of 14.3%, up from the 12.9%
achieved in last year`s interim period. All divisions performed well except
for the automotive division which suffered from reduced demand in line with
the decline in the automotive industry as a whole. BMG continues to be the
major contributor to group profits and is bearing the fruits of initiatives
undertaken last year to improve sustainable profit growth. On 1 August 2008
BMG acquired 100% of Goldquest Hydraulics for cash in a transaction valued
at between R60 million and R65 million (dependant on profit warranties and
other performance criteria), R60 million of which was paid by 30 September
2008, with the balance being payable within the next 12 months. This
strategic acquisition will enable BMG to grow into the hydraulics market in
a meaningful way.
During the period under review, Bearing Man embarked on a rebranding
exercise, which saw it consolidate its numerous trading divisional brands
into one brand, BMG. This will eliminate duplication of expenditure and
strengthen the market awareness of a consolidated brand which reflects the
heritage and product range of the
Bearing Man Group. The bulk of the costs associated with the re-branding
were expensed during the period under review.
Capital Equipment
Invicta`s capital equipment divisions performed exceptionally well, with
turnover growing by R348 million to R1.150 billion (2007: R801 million), 43%
up on last year - 27% was due to organic growth and 16% was due to
acquisitions. Most of the organic growth arose from the agricultural sector
which was driven largely by high grain prices. Growth in operating profit of
28% was less than the growth in turnover, due to the Group`s earthmoving
(and turf equipment) divisions, CSE and Doosan SA, contributing R300 million
to turnover, but without a reciprocal contribution to operating profit. CSE
continued to struggle with competitive pricing in the earthmoving industry
and suffered in its turf equipment division with a steep decline in demand
for machinery from golf courses. An improved performance is expected in the
second half of the financial year. Doosan SA incurred large once-off costs
in order to reduce overheads and improve profitability, which steps have
been successful and should see Doosan SA making a meaningful contribution to
the Group`s profits in future.
Tiletoria
As anticipated, the tile industry in South Africa has declined in line with
the slow-down in the housing sector due to increased interest rates and the
slow-down in GDP growth. Nevertheless, Tiletoria, which was acquired
effective 1 June 2007, improved its turnover and operating profit compared
to the corresponding period in 2007, which is most pleasing under the
circumstances. Its contribution to the Group is not yet material, but should
grow substantially in the next 5 years.
General
In the second half of the last financial year, the Group entered a number of
transactions aimed at reducing the Group`s overall cost of funding. This has
been the major reason for the interest and preference dividend received
increasing by R110 million, and finance costs increasing by R102 million
when compared to the same period last year.
Prospects
The recent global meltdown of financial markets has made it very difficult
to predict future demand for group products. Internationally, mineral and
agricultural commodity prices have reduced, which is likely to put pressure
on the customers of BMG and the Group`s Agricultural Machinery Divisions.
Any decline in volumes is, however, likely to be partly off-set by price
increases arising from a weaker Rand. Volumes in the construction equipment
industry also appear to have peaked due to prevailing economic condition,
which is likely to result in little growth in the Group`s construction
equipment divisions. Off-setting this, however, Doosan SA is expected to
contribute more materially in the second half of the financial year
following its restructuring since its acquisition. In view of the prevailing
uncertainty in markets, management has adopted a cautious approach and will
focus on working capital management and building cash resources in order to
take advantage of acquisitions and other growth opportunities. In light
thereof, the dividend cover for the interim period has been increased
slightly to 3.5 times from the historic 3 times cover. The Board proposes
that this conservative dividend cover be extended to the yearend and that
the annual dividend cover be increased to 3 times from the historic 2.5
times cover.
Trading in October has been good, but the effects of the global financial
turmoil and the substantial weakening of the Rand makes for uncertain times.
However, given the Group`s strengths of good management, solid businesses
and low gearing, the Board is confident of a satisfactory performance for
the remainder of the year. The Group expects the high interest rate and weak
Rand environment to result in good acquisition opportunities arising.
Invicta, with its good cash resources and strong balance sheet, will be well
positioned to take advantage of such opportunities.
Dr DH Wiese A Goldstone
Chairman Managing Director
Dividend
The Board has declared an interim dividend of 53 cents per share.
The following dates are applicable:
Last date of trade cum dividend Friday, 28 November 2008
First date of trading ex dividend Monday, 1 December 2008
Record date Friday, 5 December 2008
Payment date Monday, 8 December 2008
Share certificates may not be dematerialised or rematerialised between
Monday, 1 December 2008 and Friday, 5 December 2008, both days inclusive.
C Barnard Johannesburg
Secretary 7 November 2008
REGISTERED OFFICEInvicta Holdings Limited
3rd Floor, Pepkor House
36 Stellenberg Road
Parow Industria 7493
PO Box 6077
Parow East 7501
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited
Ground Floor
70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
DIRECTORS
Dr CH Wiese*, C Barnard, A Goldstone, AK Masuku*, J Mthimunye#, DI Samuels*,
RE Sherrell*, AM Sinclair, CE Walters#,
* Non-executive # Alternate
SPONSOR
Deloitte & Touche Sponsor Services (Pty) Ltd
www.invictaholdings.co.za
Date: 07/11/2008 17:15:02 Produced by the JSE SENS Department.
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