Integrated Annual Report - Invicta Holdings reports/MARCH_2014.pdf · Contents Invicta Holdings...

IntegratedAnnualReport

Contents

Invicta Holdings Limited | Integrated Annual Report 2014

Profile1 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)

Invicta Holdings Limited (“Invicta” or “the Group”) is an investmentholding and management company, controlling and managingassets of R13 449 million (2013: R12 205 million). Its operationscomprise:

Bearing Man Group (BMG)Southern Africa’s leading distributor of bearings, seals, powertransmission components, drives, belting, fasteners, filtration and hydraulics.

Capital Equipment Group (CEG)NorthmecDistributor of a full range of leading agricultural machinery,implements and related spares.

CSEWholesale and retail distributor of light earthmoving machinery, turf-grooming machinery, golf cars, utility vehicles and related spares.

New HollandWholesale distributor of leading brand agricultural machinery, implements and related spares.

Doosan SADoosan SA supplies predominantly heavy earthmovingmachinery for construction and mining applications.

CriterionImporter and distributor of leading materials handlingequipment and related spares.

Equipment Spare Parts Africa (ESP)After-market replacement parts, ground engaging tools andundercarriage parts for earthmoving equipment.

Kian Ann Engineering (Kian Ann)A large distributor of heavy earthmoving machinery parts anddiesel engine components.

High Power Equipment Africa (HPE)Distributors of Hyundai Construction Equipment.

Building Supply Group (BSG)TiletoriaA leading importer and distributor of tiles and related sanitary ware in the Western Cape, Gauteng and KwaZulu-Natal. The Tiletoria group has expanded itsoperations to encompass laminated and vinyl flooring inGauteng.

MacNeilWholesale supplier of sanitary ware, brass ware, taps, plumbingfixtures, plastic piping and related products to the buildingmaterial sector of South Africa and neighbouring countries.

Brands 4 AfricaExport trading in Zimbabwe, Botswana, Namibia, DRC, Zambia,Mozambique and Malawi, over the past 24 years, servicing thehardware and construction, automotive, agricultural, mining,lodge and tourism industries in these countries.

for the year ended 31 March 2014

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

50100150200250300350400450500550600650700750800850900950

1 0001 0501 1001 1501 200

05001 0001 5002 0002 5003 0003 5004 0004 5005 0005 5006 0006 5007 0007 5008 0008 5009 0009 50010 00010 50011 00011 50012 000

Earnings per share (cents) Dividends per share (cents) Share price at year-end (cents)

Share price

(cents)

EPS/DPS

(cents)

1

2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Revenue 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

Operating profit

before finance costs,

interest and

dividends received 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

Profit for the year 709 911 743 532 478 775 426 222 365 389 362 812 300 856 217 724 125 165 108 507 99 631 96 502

Equity attributable to

the equity holders 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

Dividends per

share (cents) 287 268 254 183 151 138 138 104 68 77 66 45

Earnings per

share (cents) 788 955 647 504 453 437 356 292 170 190 164 133

Diluted earnings per

share (cents) 788 948 604 480 441 437 354 288 169 190 160 130

Normalised earnings

per share (cents) 788 737 647 – – – – – – – – –

Share price at the

year-end (cents) 11 530 10 200 6 500 4 350 2 879 2 000 2 550 2 750 1 850 1 550 935 550

Financial highlights


2

BEARING MAN GROUP (BMG)

Group at a glance


CRITERION

A reputablemanufacturer,wholesaler and

distributor of buildingsupplies from

bathroom fittings,sanitary ware,

brassware, plasticpiping and relatedproducts into South

Africa andneighbouringcountries.

Group at a glance continued

3

CAPITAL EQUIPMENT GROUP (CEG)BUILDING SUPPLYGROUP (BSG)

A leading importerand distributor of wall and floor tiles,laminated flooringand sanitary ware inthe Western Cape,KwaZulu-Natal and

Gauteng.

NORTHMEC CSE DOOSAN SANEW

HOLLAND SAMACNEIL TILETORIA

Importer and distributor of leadingmaterials handlingequipment and

related spare parts.

Distributor of leading agricultural

machinery,implements and

related spare parts.

Distributor of construction and earthmoving

machinery, turf grooming

machinery, golf cars, utility

vehicles and relatedspare parts.

Distributor of excavators, wheel loaders, articulateddump trucks and

hydraulic hammers.

Importers and wholesaler of NewHolland agriculturalequipment and specialised Braud

grape harvesters andrelated spare parts.

LANDBOUPART

ESP

Replacement spare parts for agricultural

equipment.

After-market replacement parts,

ground engaging toolsand undercarriage parts

for earthmoving equipment.

KIAN ANN

Large distributor ofheavy earthmovingequipment parts and

diesel spares.


AGRICULTURALCONSTRUCTION AND MINING

Bathroomware

Plumbing

Flooring

Timber

Export

HPE

Large distributor ofheavy earthmovingequipment parts and

diesel spares.

EQUIPMENT AND SPARE PARTS

Board of directors


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

12379 8 11 5 6 104

1 Dr CH Wiese (72)Non-executive chairmanBA, LLB, DCom(h.c.)

Non-executive Chairman of Invicta from October 1997 to April 2000 and anon-executive director since April 2000, re-appointed non-executiveChairman in January 2006 to date. Also Chairman of Tradehold Limited,Shoprite Holdings Limited and Pepkor Holdings Limited.

2 A Goldstone (53)Chief executive officer and executive deputy chairmanBSc (Mech Eng), BCom (Hons), CA(SA)

Worked as a management consultant at KPMG prior to joining Invictain January 1990 as financial manager. Appointed financial director ofInvicta in August 1991 and chief executive officer in April 2000. Inaddition to his responsibilities as Invicta Group CEO, assumed theposition of executive deputy chairman effective 11 November 2013.

3 C Barnard (50)Financial directorCA(SA), MBA, ACIS

Joined Sappi as management accountant in 1993, joined Group Five in theircommercial development subsidiary in 1996 and was appointed commercialmanager in 1997. In 1998 joined the Invicta Group as financial manager,appointed director of CSE Equipment Company (Pty) Ltd in 1999 andcompany secretary of Invicta in 2002. Appointed executive director ofInvicta on 7 June 2007. Resigned as company secretary of Invicta on 31 December 2013. Remains as financial director of Invicta.

We are proud of the

achievements of our

Group and

acknowledge the

valuable contribution

of each staff

member.

Board of directorscontinued

5Invicta Holdings Limited | Integrated Annual Report 2014

DI Samuels (74)Independent non-executive directorCA(SA)

Joined Trade and Industry Acceptance Corporation Limited in 1971 andwas appointed director from 1980 to 1984. From 1989 to 2000 wasmanaging director of Stenham (Pty) Ltd. In 1996 was appointed non-executive director of Invicta. Appointed non-executive director ofBearing Man Limited in 2001 and chairman in 2002.

CE Walters (46)Executive director and Deputy chief executiveofficer BSC (Mech Eng), BCom, MDP (Harvard)

Joined Anglo American Corporation in 1986 ascorporate graduate engineering trainee where heheld numerous positions in both the Anglo groupand De Beers. Appointed marketing and salesmanager – Pulp for Mondi SA in 1996 andappointed managing director of Mondi SalesInternational in 2002. Appointed managingdirector of Bearing Man Group in September 2006.Appointed alternate director to DI Samuels on theInvicta board on 7 June 2007 and appointed asexecutive director on 31 July 2009. In addition tohis responsibilities as Bearing Man Group CEO, hehas assumed the position of deputy chief executiveofficer of the Invicta Group effective 11 November2013.

Ages as at year-end

4

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 in1993. In 1998 appointed managing director of CSE and in September2006 appointed as an alternate director of Invicta Holdings Limited.Appointed executive director of Invicta on 7 June 2007.

6

Adv JD Wiese (33)Non-executive directorBA (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 heworked at Lourensford Wine Estate, assisting in initiating eventspartnerships. Subsequently obtained his Master’s Degree in InternationalEconomics and Management and completed this degree as a participantin the MBA programme. After returning to Lourensford for a briefperiod, Adv JD Wiese graduated as a Bachelor of Law student in 2008. In2009 Adv JD Wiese completed his pupilage at the Cape Bar and wasadmitted as an Advocate of the High Court on 8 May 2009.

8

RA Wally (70)Independent non-executive director

Appointed as an independent non-executive director of Invicta on 30 July 2013. Mr Wally has held various senior executive positionswith IBM in Africa, Europe, Middle East and South East Asia and Lenovo in Africa and has over 38 years of experience in the informationtechnology sector and is currently chairman of the board and member of the audit committee of Mango Airlines (SOC) Limited.

9

R Naidoo (51)Independent non-executive directorBA, 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 anon-executive director on the boards of a number of private and publiccompanies. In a private capacity, Mrs Naidoo has been involved invarious business ventures and commercial property developments andalso has a particular interest and expertise in corporate governance, andis a published author in the field. Appointed as an independent non-executive director of Invicta effective 20 February 2014.

10 GM Chemaly (41)Company Secretary and Group Legal AdvisorB.Iuris, LLB

Admitted to practice as Attorney, Notary Publicand Conveyancer (1998) and has more than 8 yearsof experience as a company secretary and legaladvisor in the JSE-listed environment.

11

7

12 AK Masuku (43)Alternate non-executive independent director to JS MthimunyeMCom, MDP (University of New York)

Mr Masuku has ten years’ experience with both local and international banks (SCMB, JP Morgan and Real Africa Durolink) structuringand concluding transactions with some of South Africa’s top 200 corporates, parastatals and BEE players. Appointed managing directorof 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 directorCA(SA)

Appointed financial accountant Department of Finance in 1993. A founding partner of Gobodo Inc and established the corporateadvisory service in 1997. Appointed financial manager at Nampak Tissue in 1995. Appointed managing director of aloeCap (Pty) Ltd andappointed executive chairman in May 2007. Appointed alternate director to AK Masuku on the Invicta board on 7 June 2007 andappointed as non-executive director on 31 July 2009. Resigned as director of Invicta on 12 September 2013.

LR Sherrell (48)Non-executive director

Appointed as alternate director to Mr RE Sherrellon 27 May 2009 and has been nominated asdirector of Invicta with effect from 29 July 2010,upon the retirement of Mr RE Sherrell. Mr LR Sherrell studied commerce at UCT and hasbeen involved in the hospitality and motor tradeindustries with interests in franchise dealerships.Mr LR Sherrell represented South Africa as a rugbyplayer in 1994.

5

Joint report of Chairman and CEO

6

FINANCIAL OVERVIEWThe Invicta Group has again deliveredgood results under challengingcircumstances. Labour unrest in SouthAfrica, a marked deterioration in theRand and subdued trading conditions inSouth East Asia have characterised theyear under review.

Tough trading conditions in the industrialconsumables market in South Africa(served by BMG) prevailed during theyear. Labour unrest was particularlydebilitating in the mining industry and inthe early part of the financial year, theautomotive industry. Labour unrest in theplatinum mining sector has continuedinto the new financial year, which hascontributed to a contraction in GDP inSouth Africa in the first quarter of the2014 calendar year.

The capital equipment markets (served byCEG) experienced mixed conditions –demand for earthmoving machinerycontinued to grow throughout the year,while demand for agricultural machinerydeclined year-on-year. Trading conditionsin markets in South East Asia, in whichKian Ann operates, continued to besubdued. BSG grew much faster than theindustry it serves, due mainly toacquisitions.

Acquisitions made by the Group duringthe prior financial year bolsteredperformance and provided a solidplatform for future growth.

Group revenue grew R2,907 billion (38%)to R10,465 billion, of which R610 million(6%) was from acquisitions made this yearand R9,854 billion (94%) was organic.Operating profit, which includes a non-

The Invicta Group has again

delivered good results under

challenging circumstances.

Revenue grew by38%

Normalised earnings per share grew by7%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

Dr CH WieseNon-Executive Chairman

A GoldstoneChief Executive Officer


7

Joint report of the Chairman and CEOcontinued

recurring profit on sale of fixed assets of R14million, increased by R159 million (18%) toR1,043 billion.

A number of once-off, non-tradingtransactions occurred during the year underreview and during the prior year, whichobscure the trading figures. For this reason,the normalised earnings have beenpresented. The normalised EPS increased by7% 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 operationsof R715 million.

Management resolved at the beginning ofthe year under review to restrict acquisitionactivity and to bed down the acquisitions ofthe prior year. The only significant acquisitionduring this financial year was that of HPE, the distributor of Hyundai earthmovingmachinery in South Africa.

BEARING MAN GROUP (BMG)BMG performed extremely well, given thechallenging market conditions. Marketdemand for BMG’s products and services wasnegatively impacted by depressed conditionsin mining and manufacturing in South Africa.BMG, however services a diversified range ofindustries and customers. This put it in goodstead to achieve a modest growth in volumessold and to grow its revenue by 15% toR3,956 billion. Excluding acquisitions madeduring the course of the prior period,revenue increased by 10%. No acquisitionswere made during the year under review.Excellent management of costs and grossmargins resulted in BMG’s operating profitincreasing by 21% to R473 million. Workingcapital management was good.

CAPITAL EQUIPMENT GROUP (CEG)CEG grew significantly during the year, aidedby the acquisitions of Kian Ann in Singapore,which was included for 2 months of the prioryear and HPE, which was included from 1 April 2013.

Earthmoving machinery sales in the countrygrew throughout the year, whilst agriculturalmachinery sales, measured by tractor unitsales, declined by 6,3% during the year underreview. ESP, the quality replacement partsbusiness made a good contribution to CEG.

Trading conditions in the regions of SouthEast Asia serviced by Kian Ann continued tobe challenging.

CEG’s revenue increased by 46% to R5,122billion. Only a small percentage of thisgrowth was organic, with the bulk emanatingfrom the acquisition of HPE and Kian Ann.

Operating profit increased to R484 million, a very good result. CEGcontinued to outperform its benchmarks and to be a majorcontributor to the Invicta stable.

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, R1,083billion (78%) of the growth being organic and R300 million (22%)from acquisitions made during the year under review. Although not amajor contributor to the profits of the Invicta Group, BSG is settlingdown well. It has significant potential and is expected to make agreater contribution to the Group in future.

PROSPECTSTrading conditions remain challenging. At the time of drafting thisreport, labour unrest in the platinum mines appears to be close toresolution, but there are threats of strikes in other industries served bythe Group. GDP in South Africa in the first quarter of the 2014calendar year shrunk by 0,6%. Numerous public holidays in April andMay 2014 compounded the situation, which has resulted in a slowstart to the new financial year.

The maize price, a big driver of sales of agricultural machinery, hasdropped significantly, giving rise to the expectation of a decline inagricultural machinery demand in South Africa in the coming financialyear. Demand for earthmoving machinery is primarily dependent onmining, construction activity and infrastructural spend, none of whichare flourishing at the moment. Group management are experiencedin managing fluctuating markets and have shown resilience in thepast in dealing with these challenging conditions, which managementbelieve will inevitably change for the better and business is expectedto improve accordingly.

The global markets serviced by the Group (mainly South East Asia) areerratic with growth likely to be muted in the coming financial year.

Notwithstanding the above, the Group will continue to do what is hasdone well in the past – manage its operations soundly while seekingout acquisitions and opportunities for growth. Current conditions areexpected to give rise to acquisition opportunities domestically andinternationally. Invicta will also use the opportunity to look inwardlyto streamline its businesses, improve supply chain management andefficiencies.

The Group will focus on diversifying its businesses geographically andhas strategically decided to become a more global business in sectorsin which it has operated historically. Business in Africa is being pursuedvigorously.

APPRECIATIONWe are proud of the achievements of our Group and acknowledge thevaluable contribution of each staff member. Thanks to everyone andwe look forward to many more years of steady growth in the InvictaGroup.

Dr CH Wiese A GoldstoneChairman Chief Executive Officer

12 June 2014


Humulani Empowerment Trust

100% 60%100%

20%

100%

5%

75%

100%

Bearing Man

1955 (Pty) Ltd

67%

75%75%

100%

Invicta

Offshore

Holdings

HumulaniInvestments (Pty) Ltd

TheramanziInvestments (Pty) Ltd

Divisions

Humulani

Marketing

(Pty) Ltd

Goldquest

International

Hydraulics SA

(Pty) Ltd

Building

Supply Group

Invicta Asian

Holdings

(Pte) Ltd

Brands 4 Africa

Distribution &

Logistics

Operational

Marketing

Man-Dirk

Group

High Power

Equipment

Africa

Tiletoria

Group

MacNeil

Group

Disa

Equipment

(Pty) Ltd

(Doosan SA)

Equipment

Spare Parts

(Africa)

(Pty) Ltd

Invicta

Properties

(Pty) Ltd

Humulani Employee Investment Trust

8

33%

Criterion

Equipment

(Pty) Ltd

60%

89%

Group structure

Kian Ann Group


9

R Naidoo

C Barnard

DEL Zondo

RA Wally

A Goldstone

The Group will focus on diversifying its

businesses geographically.

Humulani Investments Board


CEG BSG

Abe BekkerChief Operating Officer : Supply Chain

Rod WatsonManaging Director: Doosan SA

Peter AskewManaging Director:

New Holland SA

Steve KiteNational Service Manager

Law Peng KweeManaging Director

Kevin Law Cher ChuanGroup General Manager

Loy Soo ChewCompany General Manager

Brenton KempManaging Director:

CSE and Criterion Equipment

Ben GroblerNational Parts Director and

Managing Director:

Landboupart

Andrew GroblerManaging Director: ESP

Geoff BalshawFinancial Director

Kevin DiabGroup Financial Director

Johan van der MerweManaging Director: Northmec

Wayne TaylorChief Financial Officer

Paul McKinlayChief Operating Officer: Sales and

Distribution

Gavin PelserDirector: Fluid Power and Subsidiaries

Dave RussellDirector: Engineered Products and

Technical

Ian KingDirector: Sales and Africa

Keith van WykDirector: Consumables

Rayen GovenderDirector: HR

CEG DIVISIONAL DIRECTORS

KIAN ANN

BSG

Kevin SussexFinancial Director

Shane WatersProcurement Director

Craig LordenGroup Director

Mark RussellManaging Director

MACNEIL

Patrick ThonissenManaging Director

Allan DuckworthFinancial Director

Mohammud MohuideenOperations Director

Sven SwartGroup Director

TILETORIA

Anthony WannellManaging Director

BRANDS 4 AFRICA

BMG DIVISIONAL DIRECTORS

Alex AckronManaging Director: HPE

Charles WaltersBMG

Anthony SinclairCEG

Neil MalherbeBSG

Building Supply GroupBearing Man Group Capital Equipment Group

10

Operational structure

BMG

MAN-DIRK

Barry WaltersManaging Director

WEGEZI

Bennie GroenewaldManaging Director

AUTOBAX

Freddie HallManaging Director


11

Map of BMG distribution network


GAUTENG

CSE branches

Northmec branches

Northmec dealers

New Holland SA branches

New Holland SA dealers

ESP branches

Doosan SA branches

Doosan SA dealers

Cartcom branches

Criterion branches

Criterion agents

12

Map of CEG distribution network


MacNeil manufacturing operation

Upfront Agencies Distribution Centre

Brands4Africa Distribution Centre

Tiletoria dealers

Tiletoria branchesMacNeil wholesale distribution centres

13

Map of BSG distribution network


Review of operations

14

Bearing Man Group

CE WaltersChief executive officer

WR Taylor Chief financial officer

CEG BSG

BMG

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

Review of operationscontinued

FINANCIAL REVIEW

Market demand for BMG’s products andservices was again impacted by strikes,predominantly in the platinum sector. Despitethis, there was a modest improvement involumes sold. Supplier price increasestogether with Rand depreciation resulted insignificant increases in the landed cost of ourproducts.

Turnover increased by 15% to R4 billion(2013: R3,4 billion). Excluding acquisitionsmade during the course of the prior period,turnover increased by 10%. No acquisitionswere made in the current period. Operatingprofit of R490 million (2013: R390 million)was achieved, a growth of 26% on theprevious period. Organic growth in operatingprofit was 17%. The operating marginimproved to 12,49% (2013: 11,4%).

Inventory was well managed despite thesignificant impact of Rand weakness on thelanded cost of product. Inventory weeks cover

was reduced while still maintaining excellent stock availability.Debtors increased with the increase in turnover. Focused attentionwas placed on the debtor’s book during the year to ensure cash flowremained good and credit risk reduced. Net operational assetsincreased to R1,5 billion (2013: R1,3 billion) and return on capitalemployed improved to 32,4% (2013: 30,5%).

STRATEGIC DEVELOPMENTS

The cross-selling opportunities envisaged following last year’sacquisition of tools and equipment distributor, Man-Dirk, haveresulted in selected BMG branches being upgraded to include a retailtool section. By capitalising on BMG’s extensive branch network, thereach of this sector is being considerably enhanced.

Strategic expansion into Africa beyond the SADC countries has beenaccelerated with priority attached to countries offering the greatestopportunity for BMG products and services. Suitable local partnershave been identified, supported and trained by BMG personnel. Mostrecently, a joint venture has been set up in Tanzania and a fourthMozambican branch opened in Nacala. In addition, growth initiativesare being extended to existing African distributors as well as SouthAfrican based exporters.

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



BMG and subsidiary, Man-Dirk, have partnered toembark on a localisation initiative aimed at identifyingand developing local host community entrepreneurswith the objective of contributing to the NationalDevelopment Plan’s call for Black Industrialists. Withguidance from the Department of Mineral ResourcesEmpowerment Transactions Directorate, a newdistribution chain has been established within theplatinum belt under the new brand, AfricanMaintenance Equipment (AME). The AME distributionchain currently comprises three branches in the NorthWest Province with further branches planned in otherregions during the 2015 financial year.

A re-development project has commenced at the BMGPark site in Johannesburg. The project will realiseoperational and logistics efficiencies and involves therelocation of certain business units, the centralisationof inventory and an investment in computerisedwarehouse management tools. The project is expectedto be completed by December 2015.

CONSUMABLE PRODUCT DIVISION –BEARINGS, SEALS, POWER TRANSMISSION,FASTENERS AND GASKETS

The Bearings division characteristically returned apleasing performance in spite of unrelentingheadwinds. Astute attention to stock managementand product availability resulted in the basis forcontinued customer service enhancement. This wasfurther accentuated by an improved responsiveness tourgent demand for non-standard product. Theautomotive section of this business achieved a strongset of results and secured improved arrangementswith key suppliers. Suspension components wereadded to the extensive wheel bearing kit programmeto add depth and focus to the selling effort. Themarket for rolling element bearings continues to be

threatened by unchecked counterfeit productentering the country.

Similarly, performance targets were surpassed by thePower Transmission grouping of Drive Belts, Chain andIronware. The anchor brands of Fenner, Gates and Escoall achieved record sales and products which wereintroduced in recent history established themselveswith solid performances. Investments were made innew machinery to mechanise the assembly ofattachment chain and cam clutches which furtherimproves the quality, efficiency and consistency ofthese operations. The turmoil in the mining sector hada depressive impact on certain product lines, but an increased focus on other sectors had acounterbalancing effect.

Intensified competition, mining labour issues and greyimport practices by rivals combined to restrictperformance from the Seals division. Nonetheless,year-on-year sales growth was achieved. Custommanufactured seals produced locally and on-demandby our dedicated Seal Maker machines contributedsignificantly to this division’s results. A furtherinvestment in seal manufacturing machines will becommissioned in the new year to meet the strongdemand.

The Fasteners division was unable to sustain theexceptional growth level achieved in the prior year,but still managed to achieve a credible salesperformance, augmented by some pleasing projectbusiness successes. Imported product lines were forcedto navigate and react to changing import tariffs and,of course, the depreciating Rand. The division reacteddynamically to these challenges and secured newsupply lines in order to maintain trading margins andcustomer service levels.

The supply of Tools and Equipment through the BMGnetwork achieved exponential growth andunderscored the power of BMG’s branch distributionfootprint. The restyling of selected branches toincorporate a Tools and Equipment self-service retailsection was initiated during the year and all indicatorspoint to a continuing growth trend.

The newly formed Gasket business unit is now settlingin to the BMG group. The potential for this businesshas been reflected in the purchase of CNC machinerywhich will be sited in Johannesburg to expand theoffering geographically.

Invicta Holdings Limited | Integrated annual report 20131616 Invicta Holdings Limited | Integrated Annual Report 2014


ENGINEERED PRODUCTS DIVISION –DRIVES, BELTING, ELECTRONICS ANDTECHNICAL 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.

17Invicta Holdings Limited | Integrated annual report 2013

BMG



Invicta Holdings Limited | Integrated annual report 20131818

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.

TECHNICAL RESOURCES

As BMG continues its advancement into more complex

products and integrated technical solutions, the

provision of high-level technical support has become

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

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

company prides itself. Expansion of these services is

planned for the forthcoming period.

FLUID POWER DIVISION – HYDRAULICS,PNEUMATICS, FILTRATION ANDLUBRICATION

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

signed with motion control specialists, Parker

Hannifin. This partnership extends BMG’s range of

pneumatics and hydraulic filtration products and is

expected to contribute strongly to performance in the

new financial year.

SUBSIDIARIES – MAN-DIRK, OMSA, WEGEZIAND 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.

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.




BMG

19

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.


Capital Equipment Group

AM SinclairChief executive officer

GE Balshaw Chief financial officer

BSGBMG

CEG



The continuous focus over

the years by the CEG

management has resulted

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.

20 Invicta Holdings Limited | Integrated Annual Report 2014



CEG

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

Revenue46,2%

Operating profit 42,5%

FINANCIAL REVIEW

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.



Revenue of CEG increased by 46,2% to R5,122 billion.

Only a small percentage of the growth was as a result

of organic growth with the balance resulting from the

acquisition of Kian Ann and HPE. Currencies were very

volatile during the last six months of trading resulting

in a 14,7% depreciation of the ZAR against the US$

from the beginning of the trading year to the end,

which required diligent pricing management to

remain competitive.

Only one acquisition, that of HPE, was made during

the year, which has had little impact on the results, but

is expected to make a meaningful long-term

contribution in the future.

An outstanding contribution by the Spare Parts

division, good operational management and control

of gross margins, as well as continuous pressure to

maintain operating costs, have resulted in operating

profit increasing by 42,5% to R484 million. The

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

49,3% on working capital which makes CEG an

important contributor to the Invicta Group.

The year ended with equipment inventory value levels

well above the group targets due to management’s

decision to build inventory before the currency

weakened, which resulted in a reduction in the normal

stock turns. All inventory on hand is well within

market-related pricing.

QUALITY MANAGEMENT, TRAINING ANDSOCIAL RESPONSIBILITY (CSR)

The CEG has maintained its standard of quality service,

after-sales support and internal controls, by complying

with ISO9001 certification which is audited annually to

ensure continuous compliance. The division is

currently working toward ISO14001 environmental

certification.

CEG continues to invest in the training of its staff to

ensure stability and succession as well as up-skilling

staff in all divisions. A focussed long term training

program has been implemented, with a large

percentage of staff being trained this year. Staff

management skills training was introduced at various

management levels to allow managers to better

manage their staff. The CEG is the second largest

apprentice trainer in the agricultural sector.

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

latter part of the trading year, the agricultural

equipment market experienced an increase in demand

due to very competitive pricing and old stock at lower

prices, with the forecast for the calendar year of 2014

to be 10 to 15% down on 2013 volumes. Material re-

handling markets are 19% down and the turf market

continues to deteriorate, being nearly 70% down on

the prior year.



23

Equipment volumes in the construction markets in

which the CEG trades have increased in the 2013/14

trading year by 20,6%, agricultural tractors decreased

by 6,3%, combine harvester volumes decreased by

20%, mobile sprayers (a new emerging market) has

decreased by 21,5% and forklift trucks decreased by

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

Group, five years ago. All the agricultural machinery

operations performed within expectations as did ESP.

The markets in South East Asia are still depressed,

although Kian Ann performed above expectations

under difficult trading conditions.

AGRICULTURE DIVISION

The demand for agricultural equipment in the year

under review declined with the total national tractor

market volumes in South Africa decreasing by 6,3%

(excluding exports) from 7 770 units to 7 282 units.

Combine harvester market volumes decreased by 20%

from 423 units to 337 units and the baler market has

remained constant with a small growth, while demand

for implements was good. Soft commodity prices,

especially yellow maize, was R2 325 per tonne at the

23

CEG

beginning of the trading year reaching a high of

R3 500 per tonne and settling at R2 650 per tonne at

year-end. The decrease in the maize prices resulted in

muted farmer confidence during that period,

however, the increase in the fuel and fertilizer prices

as well as the drought in the North West part of the

country has created concern for the tractor demand in

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.

NorthmecCaseIH Agricultural Equipment and other related

implement brands

Northmec, predominantly a retail distributor of

agricultural equipment and implements, grew

turnover and profits. Northmec gained market share

on tractors, however, lost market share on Combine

Harvesters. Trading in the second half of the trading

year was difficult with volumes up, but competitive

pricing. At year-end, inventory was higher than

initially anticipated as a result of management’s

decision to increase stock levels in anticipation of the

weakening Rand. Northmec is steadily increasing its

market share in the small tractor sector by selling



The implement side of the business has grown and is

starting to make a meaningful contribution to the

gross profit of New Holland, as well as providing

opportunities for greater market penetration by

having the ability to offer a wider range of products to

its customer base.

LandboupartLandboupart is a wholesaler of spare parts which

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.

tractors sourced from India and Turkey, which are of

good quality and well-priced. This sector accounts for

68% of the total tractors sold in South Africa. There is

an ongoing search for more products to add to the

product range and newly identified products, namely

mobile sprayers, were starting to make a contribution

to turnover. The big tractor market in which CaseIH is

very strong is still well supported by the farmers due to

their reliability, quality and continuous upgrading of

technology.

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.



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.

CEG

25

CSECase Construction Equipment, Club Car and

Jacobsen/Ransomes Turf Equipment

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.

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

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 SADoosan 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.

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 inactivity outside of South Africa in construction of rail

infrastructure for coal and copper mining providing agood base for the business by supporting andfollowing existing customers who have been forced tolook for work outside of the country. The influence ofChinese and Indian equipment in the localconstruction market has reappeared making a smallimpact on the current established suppliers in themarket.

MATERIALS HANDLING

Criterion EquipmentTCM forklifts

Criterion Equipment is the sole distributor of TCMforklift trucks in Southern Africa, imported from Japanand China.

This financial period signifies the fifth trading yearsince the acquisition of Criterion Equipment.Following many challenges to restore the integrity ofthe brand in the marketplace, TCM has rapidlyregained its position as one of the leading forklifttruck brands in Southern Africa. Despite a 19% drop inforklift import volumes in 2013, turnover remainedstatic. Whilst equipment volumes decreased, CriterionEquipment’s rental income and profitability increasedand now forms a substantial part of CriterionEquipment’s income.

Income in the rental fleet business has increasedsignificantly and a marked improvement in workshop /after-market performance has been noted.A reduction in operating costs, together with goodquality mix of income has resulted in all outletsaround the country being profitable and the companyoverall has achieved the required return.

An internal rental finance facility has been put in placeto finance the rental of equipment, utilising thegroup’s operating cash reserves.

A pleasing performance overall, with good prospectsfor continued growth.

ESPThe results reflect a full 12 months of trading.

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.



CEG

27

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.

HPEHPE, 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.



BSGBMG



NS MalherbeChief executive officer

K DiabChief financial officer

MacNeil’s management

team is excited at the

challenge of the coming

year with plans well under

way to springboard

growth into Africa.

Building Supply Group

CEG

BSG




BSG

29

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.

MacNeil group

Building Supply Group

Tiletoria group

Wholesale ContractsRetail

Brands 4 Africa

Distribution

Export

Manufacturing

MacNeil Plastics

MacNeil

Distribution

GROUP STRUCTURE




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.

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.



BSG

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.

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.

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.

INTRODUCTION

The Board of directors of Invicta and seniormanagement across the Group are committed to thehighest standards of corporate governance and takepride in their high moral and ethical business standards,accompanied by sound and transparent businesspractices. 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 andaccountability for the stewardship of Group assets,which have ensured sustainable returns. The Boardcontinues to provide stakeholders with the assurancethat the Group’s business is managed responsibly.

As corporate governance is constantly evolving, Invicta

continually focuses on seeking ways to improve on its

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.

KING III GAP ANALYSIS

As required by the JSE Listings Requirements, the following table discloses the status of the Group’s compliancewith 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

Corporate governance report


Corporate governance reportcontinued


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



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)




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) 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 long-

term 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.

(2) The majority of the Board members are non-

executive 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.

(3) 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.

(4) 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.

(5) 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 fourexecutive directors, three non-executive directors, andthree independent non-executive directors. The profilesof the members of the Board are set out on pages 4 and5 of this Integrated Annual Report.

Chairman and Chief Executive Officer

The roles of the non-executive Chairman and the ChiefExecutive Officer are separated in accordance with theBoard’s policy of division of responsibilities. This ensuresa balance of authority and precludes any one directorfrom exercising unfettered powers of decision-making.The CEO’s and managing directors of the operatingsubsidiaries and divisions report to the Group CEO ofInvicta, who in turn reports to the Board.

Executive directors

Executive directors are appointed by the Board tooversee the day-to-day running of the Company.Executive directors are held accountable throughregular reporting to the Board, and their performanceis measured against predetermined criteria.

Non-executive directors

Non-executive directors provide the Board with adviceand experience that is independent of managementand the executive. The presence of independent non-executive directors on the Board, and the critical rolethey play as Board representatives on key committees,ensures that the Company’s interests are served byimpartial views that are separate from those ofmanagement and shareholders.

Independence assessment

Annually, the Board considers where appropriate eachdirector’s independence and is of the view that thefollowing aspects are important in assessing a non-executive director’s independence – whether:

• the director had been employed in an executivecapacity in the Group in the previous three years;

• the director had served on the Board for longerthan nine years – in this instance, the Boardconsiders whether that director’s independence,judgement and contribution to the Board’sdeliberations could be compromised, or mayappear to be compromised, by this length ofservice;

• the director is a representative of a majorshareholder; or

• the proportion of that director’s shareholding inthe Company or director’s fees represented amaterial part of their wealth or income.


36

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 withmanagement, shareholders and other stakeholders of the Company along sound corporate governanceprinciples;

• 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 beenthoroughly 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 tothe financial aspects of the business of the Group but also to the impact that business operations have onthe 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 andstandards;

• 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 frommanagement, but with sufficient information to enable a proper and objective assessment;

– are permitted to take independent advice in connection with their duties following an agreedprocedure;

– 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 toappointment, potential Board appointees are subject to a fit and proper test as required by the JSE ListingsRequirements.

New appointments to the Board are made through a formal process and the Remuneration Committee acts as theNomination Committee and assists with the process of identifying suitable candidates to be proposed to the Board



37

and to shareholders. Board appointments are made with a view to ensuring an appropriate blend of skills andexperience is maintained. All Board appointments are ratified by Invicta shareholders at the following annualgeneral meeting.

The non-executive directors are subject to retirement by rotation and re-election in accordance with the Company’sMemorandum of Incorporation. At each annual general meeting, at least one-third of the non-executive directorsretire from office based on longest service. If eligible, available and recommended for re-election by theRemuneration (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. Theaforementioned directors have considerable commercial experience and an excellent understanding of the Group’sbusiness.

Professional advice and access to information

The Board Charter requires that non-executive directors have unfettered access to management of the Companyat any time, and all directors are entitled at the Company’s expense, to seek independent professional advice onany matters pertaining to the Group, where they deem this to be necessary, and are obliged to seek such advicein 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 secretarywill 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 toInformation Act. The manual in terms of this legislation is available from the registered office of the Company andon the Company’s website.

Board evaluations

As required by King III, Board effectiveness reviews are conducted on an annual basis with further reviews beingconducted at appropriate intervals as and when required. Areas of improvement are noted and addressed on anongoing basis.

Remuneration and directors’ fees

Details on the remuneration of executive and non-executive directors are provided on pages 110 and 111 of theIntegrated Annual Report.

Board meetings

The Board meets at least four times a year with additional meetings held when necessary. The attendance at Boardmeetings held during this period is set out below:

14 Oct4 Apr 11 Jun 11 Sep 2013 7 Nov 20 Feb2013 2013 2013 (Strategy) 2013 2014

CH Wiese (Chairman)• √ √ √ √ √ √C Barnard^ √ √ √ √ √ √A Goldstone^ √ √ √ √ √ √JS Mthimunye•# Apology √ √ Resigned Resigned Resigned

R Naidoo•# n/a n/a n/a n/a n/a √DI Samuels•# Apology √ √ x √ √LR Sherrell• √ √ √ x √ √AM Sinclair^ √ √ √ √ √ √RA Wally•# n/a n/a √ √ √ √CE Walters^ √ √ √ √ √ √JD Wiese• √ √ √ √ √ √

• Non-executive # Independent ^Executive

(JS Mthimunye resigned on 12 September 2013, RA Wally appointed 30 July 2013, R Naidoo appointed 20 February 2014)



Board papers are issued to all directors prior to eachmeeting and contain relevant detail to informmembers of the financial and trading position of theCompany and each of its operating subsidiaries, aswell as covering material issues pertaining to theGroup.

Non-executive directors also maintain regular contactwith executive directors to ensure that they are keptabreast of material matters that may require theirinput and guidance.

Changes to the Board

During the 2014 financial year, Mr JS Mthimunyeresigned as an independent non-executive director,and Mr AK Masuku resigned as an alternateindependent non-executive director of Invicta, bothresignations were effective 12 September 2013.

Mr RA Wally was appointed as an independent non-executive director of Invicta effective 30 July 2013, andMrs R Naidoo was appointed as an independent non-executive director effective 20 February 2014.

BOARD SUB-COMMITTEES

To enable the Board to properly discharge its dutiesand responsibilities, the Board is assisted by an Audit Committee, Risk Committee, RemunerationCommittee and a Social and Ethics Committee. Non-executive directors play a critical role as Boardrepresentatives on the various Board Committees andensure that the Company’s interests are served byimpartial, objective and independent views that areseparate from those of management. Additionally,the Board continuously strives to comply with therequirements of King III insofar as the composition ofits sub-committees are concerned.

Each Committee has a charter to guide the members inperforming their duties and the members of theCommittees have access to management, Grouprecords and external professional advice if and whenrequired. The Chairperson of each Committee, in linewith the recommendations of King III, attends theannual general meeting.

Audit Committee

See Audit Committee Report page 66.

Risk Committee

See pages 58 and 67.

Remuneration Committee

See Remuneration Report page 48.

Social and Ethics Committee

The Social and Ethics Committee was established andconstituted as a statutory committee of Invicta and theGroup on 30 April 2012, in respect of its statutoryduties in terms of section 72(4)(a) of the CompaniesAct (2008), and a Committee of the Board in respect ofall other duties assigned to it by the Board.

The Committee has adopted a charter/terms ofreference which is reviewed annually, setting out itsduties and obligations.

The purpose of this Committee is to recognise theresponsibility for the Company’s actions and theencouragement of a positive impact through itsactivities on the environment, consumers, employees,communities, stakeholders and all other members ofthe public. The ultimate objective of managingorganisational integrity is to build an ethical corporateculture.

38



• to monitor labour and employment, including theCompany’s standing in terms of the InternationalLabour Organisation Protocol on decent work andworking conditions and the Company’semployment relationship and its contributiontowards the educational development of itsemployees;

• to review any statements on ethical standards orrequirements for the Company and the proceduresor review system implemented to promote andenforce compliance;

• to review significant cases of employee conflicts ofinterest, misconduct or fraud, or any otherunethical activity by employees or the Company;

• where requested, make recommendations on anymaterial potential conflict of interest orquestionable situations;

• ensure that the code of conduct and ethics-relatedpolicies are drafted and implemented;

• reporting on and disclosing the Company’s ethicsperformance;

• to draw matters within its mandate to theattention of the Board as the occasion requires;and

• to report, through one of its members, to theshareholders at the Company’s annual generalmeeting on the matters within its mandate.

The Committee is chaired by DI Samuels, and theappointed members are Adv JD Wiese, A Goldstoneand C Barnard.

COMPANY SECRETARY

All directors have unrestricted access to the advice andservices of the company secretary and to Companyrecords, information, documents and premises. Thecompany secretary minutes all Board and sub-committee meetings and maintains the registers

The Committee’s members are appointed by the Boardand it consists of not less than three members, at leastone of whom must be an independent non-executivedirector. Members could comprise non-directors suchas senior management or persons with the relevantexperience. The Board appoints the Chairman fromthe members of the Committee and determines theperiod for which he/she shall hold office. In theabsence of the Chairman of the Committee, theremaining members present shall elect one of theirnumbers present to chair the meeting. The Board shall,from time to time, review and revise the compositionof the Committee, taking into account the need for anadequate combination of skills and knowledge.

Board members may attend Committee meetings byinvitation. Suitably qualified persons may be co-optedonto the Committee when necessary to render suchspecialist services as may be necessary to assist theCommittee in its deliberations on any particularmatter, but shall have no voting rights.

The Committee has the following functions:

• to provide guidance for the building andsustaining of an ethical corporate culture in theCompany;

• to monitor the Company’s activities, having regardto any relevant legislation, other legalrequirements or prevailing codes of best practice,with regard to Board Charter matters relating tosocial and economic development, including theCompany’s standing in terms of goals andpurposes of the 10 principles set out in the UnitedNations Global Compact Principles, the OECD(Organisation for Economic Cooperation andDevelopment) recommendations regardingcorruption, the Employment Equity Act, the Broad-Based Black Economic Empowerment Actand the Company’s legal compliance framework asapplicable from time to time;

• to promote good corporate citizenship, includingthe Company’s promotion of equality, preventionof unfair discrimination and reduction ofcorruption, contribution to development of thecommunities in which its activities arepredominantly conducted or within which itsproducts or services are predominantly marketedand record of sponsorship, donations andcharitable giving;

• to care for the environment, health and publicsafety, including the impact of the Company’sactivities and of its products or services;

• to promote consumer relationships, including theCompany’s advertising, public relations andcompliance with consumer protection laws;

39



required by statute. The company secretary, assists the Board in fulfilling its functions and is empowered by theBoard 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 existinglegislation 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 roleas 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 connectedto any of the directors, thereby negating a potential conflict of interest, it was agreed that she maintains an arm’slength relationship with the Board. The Board undertakes a general evaluation of the company secretaryperformance on an annual basis in order to identify possible steps for improvement, which are communicated tohim/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 anadditional 21% share in Screen Doctor (Pty) Ltd. The Group acquired 100% of the share capital of High PowerEquipment (Pty) Ltd, effective 14 May 2013, 60% of the share capital of Brands 4 Africa Distribution group, whichconsists 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 assponsor to Invicta.

INTERNAL CONTROL

The directors have responsibility for the Group’s systems of internal controls. These are designed to providereasonable assurance of effective and efficient operations, internal financial control and compliance with laws andregulations. Operational and financial responsibilities are delegated to CEOs, CFOs and executives of the principaloperating divisions.

The Group’s system of internal controls is designed to provide reasonable, but not absolute, assurance against therisk 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 internalaudit 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 occurredduring 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.

40



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 co-

operate 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 in-

house 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


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 mannerwhich brings credit to their products and brands;

• Ensuring that customers receive an integrated and environmentally sound solution that meets their specificneeds;

• Providing employees with a safe working environment and encouraging a culture which allows them toachieve 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 unnecessaryor inefficient processes. The primary areas of consumption in the Group continue to be transport, fuel andelectricity. The Group continually looks at optimising its warehouse locations and inventory holdings in a bidto minimise transport cost and fuel consumption, with further strategic consolidation and expansion of certainlocations planned for the short- to medium-term; and

• As customers continue to search for more efficient and productive products, the Group, through its variousoperations, continues to develop these with its various principals around the world to offer solutions to themarket.

The Board wishes to take this opportunity to thank all the stakeholders in the Group for their ongoingcommitment 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 theemployee, 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 anycompany aiming to develop a competitive edge. In order to create this passion within the Group’s staff, Invictacontinually assists its employees to reach their full potential through ongoing training and development.


43


After the successful external re-branding by BMG, and essentially transforming BMG employees into BMG brandambassadors with a renewed heart and mind, the focus was placed on upskilling these brand ambassadors tobecome 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 todeliver on their customers’ needs. BMG also has workplace approval to run millwright apprenticeships and aim atupskilling all sales staff over the next two years with adding “conduct sales and support services” to theiraccreditation list.

BMG has invested in a mobile training initiative, taking the training to their staff nationwide by means of atraining van concept. The training van is fully fitted with the necessary products and material to deliver hands-ontraining 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 wholegoods 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 assofter skills programmes, with technical courses being delivered via e-learning. E-learning provides the majorbenefit of being practical and flexible. Staff can log in when practical whilst learning can be applied immediatelyand shared with colleagues. In addition, e-learning also enhances much needed computer skills. All theoreticaltraining is followed by practical training sessions delivered through the Group’s various technical and otherdivisional 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.


44


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 householdson a monthly basis. The LIV journeybegan in 2001 into Amaoti, the largestinformal settlement in KwaZulu-Natal,to feed starving children. In 2004NPO’s Indlela, and later LungisanaiIndlela, were born. By 2009, 600children were born on the Back-2-School project, life skills training wasintroduced in the schools, over 30crèches were supported with teachertraining and daily food. In September2009, LIV (Lungisisa Indelela Village)was birthed to provide holisticresidential care for most vulnerableand parentless children. In 2013, thisbecame “HOME” for 600 childrenliving in 3 bedroom homes withtrained mothers, and a school fromcrèche 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 familyenvironment where they receive unconditional love, spiritualdiscipleship, care and nurturing. All the children’s physicalneeds are met. Children are tomorrow’s future, so the mannerin which they are raised will influence who they become. Rescue a child, Restore a life, Raise a

leader, and Release a star


45


• NAMPO Agricultural School – Bothaville, Free State

The Nampo Combined Agricultural School funds 2 teachersmonthly salaries and sponsoring Early EducationDevelopment to an Assistant teacher.

The Nampo Combined Agricultural School, anotherHumulani Empowerment Trust Sponsorship, started inJanuary 1991 as a school for the children of farm workers ofthe Bothaville North region. Presently tuition incorporatesGrades RR to 12, approximately 770 learners of which 200learners reside on farms. The school is classified as a “NoSchool Fees” establishment for learners of a disadvantagedcommunity.

• COP Trust

The COP Trust is a non-profit organisation that provides anopportunity for schools, businesses and ordinary SouthAfricans to make a lasting and meaningful difference to thelives of their fellow citizens. During 2013, the COP Trustundertook a wide range of development projects, whichwere all aimed at uplifting our society and empoweringhistorically disadvantaged individuals and communities. TheGroup selected a house of safety (foster home), a crèche, apre-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, toassist with obtaining donors on the registry from non-whiteethnic race groups, as well as providing a home for a 4-yearold leukaemia patient and her family.

BMG has a long-standing relationship with the Protecorganisation who is the main beneficiary of their CSI budget.Protec’s aim is to increase the country’s technologically skilledhuman resource base through the provision of holistic LearnerExcellence Programme (learner-based education) to under-resourced schools in South Africa. This programme is aimed at


46


Grade 10 learners who participate until they reachGrade 12 and are supported through their tertiaryeducation studies and beyond by their Protec mentors.Research results clearly indicate that the Protecbranches are having a positive impact on the academicperformance of beneficiaries from historicallydisadvantaged communities. At least 50% of learnersfrom Protec passed with University passes, significantlymore 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.

General

All the Group operations, no matter how small,

have contributed to supporting the destitute and

underprivileged in the communities in which they exist

and function.

QUALITY MANAGEMENT ANDOCCUPATIONAL HEALTH AND SAFETY

The consistent supply of both quality products and

service to customers is key to the Group’s successes. To

this end, the Group continues to focus on the ISO

quality system to assist in achieving this.

CEG has maintained their ISO certification with TUV

Rheinland in all its divisions, including the Criterion

Equipment Division and ESP will endeavour to

implement the system in that operation as well.

The Autobax division has maintained its ISO

certification with Lloyds.

BMG’s Quality Management Systems (QMS), certified in

2003, is now well established, with their current ISO

9001:2008 standard only due for re-certification in

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 ANDACCOUNTABILITY

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 complywith applicable laws and consider adherence torelevant non-binding rules, codes and standards;

• ensure that the Company and the Group establishand maintain a compliance framework and processthat is appropriate taking into account the laws,rules, codes and standards that are applicable inlight of the compliance risk profile of the Company;

• ensure that the Company and the Group establishand implement a legal compliance policy;

• ensure that the Company and the Group establishand implement a compliance manual;


47


• 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

proposed special resolutions. The company secretary

attends every general meeting of shareholders to assist

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.

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 Whistle-

Blowing 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 the

legal framework of the country and ensuring that the

Group is not brought into disrepute, against the

overriding background of transparency in all

transactions.

Gift policy

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.

Arnold Goldstone

Chief Executive Officer

Invicta Holdings Limited


48


REMUNERATION REPORTDuring the year under review, the Remuneration Committee was chaired by Dr CH Wiese (non-executive Chairmanof the Board) from 1 April 2013, however, was replaced by Mr DI Samuels (non-executive director) as Chairman ofthe Committee on 6 August 2013. Dr CH Wiese remained as member of the Committee. All members of theCommittee are non-executive directors.

A Goldstone (Chief Executive Officer) attends Committee meetings ex officio. The Chief Executive Officer attendsthe Committee meetings by invitation and assists the Committee in its deliberations, save when issues relating tohis 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 12 Jun 11 Sep2013 2013 2013

DI Samuels (Chairman) √ √ √CH Wiese √ √ √A Goldstone √ √ √

(Dr CH Wiese resigned as Chairman of the Committee on 6 August 2013, DI Samuels was appointed as Chairmanof 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 itsduties and obligations. The Committee is responsible for ensuring that the directors and executive managementare appropriately remunerated. The Committee is also responsible for the formulation of proposals of the feespaid 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, conditionsof service and staff retention;

• determining the specific remuneration packages of executive directors and senior management of the Groupincluding, but not limited to, basic salary, performance-based short- and long-term incentives, pensions andother 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 capacityas 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 todevelop 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 conditionsconsistent with shareholder interests over the short-, medium- and long-term;

• Incentive plans, performance measures and targets are structured to operate effectively throughout thebusiness cycle;

• The design of long-term incentives is prudent and does not expose shareholders to unreasonable financial risk.


49


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


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 three-

year period from the grant date and is recorded in the Share Appreciation Reserve.

2014 2013

Weighted Weightedaverage averageincentive incentive

rights cost rights costNumber (Black Number (Black

of Scholes) of Scholes)incentives Rand incentives Rand

Outstanding at the beginning of the year 2 569 336 8 657 000Awarded during the year 427 739 26,85 146 340 10,13Exercised during the year (1 507 998) (6 144 004)

Outstanding at the end of the year 1 489 077 2 569 336

Tranche 1 Tranche 2 Tranche 3 Tranche 4 Tranche 5 Tranche 6 Tranche 7 Tranche 8 Tranche 9 Tranche 10

Number of grants 3 514 000 250 000 3 814 000 4 104 000 75 000 4 360 000 1 000 000 900 000 146 340 427 739

Cancelled – – – – – – (55 000) – – –

Grant date 13 Mar 06 1 Sep 06 26 Mar 07 14 Mar 08 30 Sep 08 13 Mar 09 2 Mar 10 1 Mar 11 11 Jun 12 13 Mar 14

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

(daily) 2,1 2,0 2,1 2,2 2,2 2,1 2,1 2,2 2,1 1,6

Dividend yield 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 performance-

based 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.

50



External appointments

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.

Directors’ fees

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.

Approval

This Remuneration Report has been approved by the

Board of Invicta.

Signed on behalf of the Remuneration Committee

DI Samuels

Chairman of the Remuneration Committee

51



The Board of Directors acknowledges its responsibility

to ensure the integrity of the Integrated Report. The

Board has accordingly applied its mind to the

Integrated Report and, in the opinion of the Board,

the Integrated Report addresses all material issues,

and presents fairly the integrated performance of the

organisation and its impacts. The Integrated Report

has been prepared in line with appropriate best

practices pursuant to the recommendations of the

King III Code.

REPORT SCOPE AND BOUNDARY

The Integrated Report (the Report) covers in its scope

both the legal entities and physically located branches

making up the distribution, sales and administrative

infrastructure of the 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, BUSINESSMODEL AND GOVERNANCE STRUCTURES

The Group has always seen its distribution, sales and

support network as a key strategic asset, enabling it to

create value on a sustainable basis, while also

constituting barriers of entry to competitors on a

national basis. The extent and number of the Group

operational outlets are highlighted on pages 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, besides having a Remuneration Committeeand an Audit Committee at Group level, hasmaintained these same management and governancedisciplines at the main operational pillars to ensurepolicies and direction are effectively cascaded down,at the same time allowing for effective reporting up.Details of Group management and governancecommittees, are provided in more detail in theCorporate Governance Report (page 32), theRemuneration Report (page 48) and Audit CommitteeReport (page 66).

OPERATIONAL CONTEXT

The Group can be seen as an efficient proxy for theSouth African economy, with a clear delayedcorrelation between commodity and resourcesperformance and the Group’s outperformancethereof.

The Group imports almost all of the products itsupplies and thus the effects of exchange ratefluctuations need to be effectively managed throughoperational buying departments, under the Group’spolicy of hedging all material exchange rate exposuresthrough the use of Forward Exchange Contracts.

Employment and logistic costs are the main domesticcost elements that make up a significant element ofthe overhead base of the Group.

STAKEHOLDER RELATIONSHIPS

The Group continues to view its employees as a keystakeholder group, and endeavours to, on an ongoingbasis, develop not only training, but improvedcommunication processes within the operations.

The Group has made a conscious effort to address itscommunity and social responsibility spending bydeveloping a more clearly focused programme ofinitiatives, which it supports. With the Group holdingkey agency and distribution agreements for world-class brands with international principals, ongoingrelationship building with these suppliers is seen as akey element of the current and future success of theGroup, as the network and range of suppliers increase.

Shareholders, through their actions, continue to givethe Board and management a mandate to run theGroup, whose ongoing support and beneficiation isseen as the utmost test of superior performance by theGroup.

Integrated report


continued

53

Stakeholders’ material issues

The following table sets out the stakeholders identified, together with the material issues and communication to

stakeholders:

Stakeholders Relationship Material issues Communication forum

Private shareholders andinstitutional investors

Shareholders • Share price, dividend policy,return on investment,profitability

• Management competence

• Growth strategy

• Acquisitions

• Management remuneration

• Integrated and interimreports

• Results presentations

• Website

• Annual general meeting

• Press interviews

Bankers Financiers • Statements of financialposition, comprehensiveincome and cash flows

• Integrated and interimreports

• Annual credit reviews

End-users of products Customers • BEE credentials

• Brand

• Product quality

• Technical support

• Service turnaround

• Pricing

• Reputation

• Personal contact

• Product marketing

• Product technicalspecifications

• Service informationbulletins

• BEE scorecard

• Operational websites

• Technical training forums

Management of business Management • Brands, association withquality products

• Synergies within Group

• Management and resourcesupport from centre forgrowth

• Leadership successionplanning, careers,knowledge managementsystems

• Remuneration

• Integrated report

• Management conferences


• Internal news/informationcommunication anddivisional broadcasts and e-mails

Principals Suppliers • Market shares

• Sales forecasts

• Stockholding and orderingprocesses

• Distribution strengths

• Customer base

• Credit-worthiness

• Regular meetings


• Operational websites

• Interactive electronicordering andcommunication

Employees at operational

level

Staff • Career development

• Leadership successionplanning

• Remuneration

• Skills retention anddevelopment

• BEE



• Retirement fund reports

• Wellness communicationand interventions

• Internal news/informationcommunication anddivisional broadcasts and e-mails


Integrated report

STRATEGIC DIRECTION

The Group continues to look for acquisitions which fit the distribution and sales model that it has successfullydeveloped over the last decade. Further consideration will also be given to opportunities that are based outsideSouth Africa, which not only fit with the Group’s expertise, but which also provide a natural hedge against someof 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 2013 2012 2011 2010 2009 2008 2007 2006Rm Rm Rm Rm Rm Rm Rm Rm Rm

STATEMENTS OF COMPREHENSIVE INCOMERevenue 10 465 7 558 5 599 4 534 3 969 4 524 3 335 2 663 1 908

Operating profit 1 043 884 601 505 453 497 360 281 198Net finance costs less dividends received and income from associate (192) (65) (50) (54) (24) (22) 3 (25) (19)

Profit before taxation 851 819 551 451 429 475 363 256 179Taxation (141) (76) (72) (25) (64) (112) (63) (38) (54)

Profit after taxation 710 743 479 426 365 363 300 218 125Non-controlling interest (64) (28) (23) (72) (44) (50) (37) (2) –Preference shareholders (66) (22) – – – – – – –

Attributable earnings 580 693 456 354 321 313 263 216 125Items not included in headline earnings (17) (51) (8) (6) (9) (2) (8) (24) 1

Headline earnings 563 642 448 348 312 311 255 192 126

Weighted average number of ordinary shares (‘000) 73 592 72 588 70 405 70 211 70 779 71 536 74 007 74 007 73 861

Earnings per share (cents) 788 955 647 504 453 437 356 292 170Headline earnings per share (cents) 765 885 637 496 441 434 345 260 170Normalised earnings per share (cents) 788 737 647 – – – – – –Dividend per share (cents) 287 268 254 183 151 138 138 104 68

STATEMENTS OF FINANCIAL POSITIONProperty, plant and equipment 1 171 1 010 391 354 313 229 155 118 123Goodwill 624 593 358 305 245 242 219 199 191Other intangible assets 168 181 58 58 10 11 11 12 13Financial instruments, finance lease and long-term receivables including current portion 2 323 4 080 2 564 2 129 1 692 1 528 1 350 – 5

Guaranteed purchase liabilities including current portion (3) (6) (11) (13) – – – – –

Defered taxation 218 136 101 64 55 44 23 18 20Inventories 3 479 2 913 2 085 1 382 1 299 1 646 1 074 875 634Trade and other receivables 1 844 1 620 869 698 671 688 728 372 287Trade and other payables and provisions (2 298) (2 049) (1 802) (1 205) (1 020) (1 295) (1 267) (829) (450)Taxation (90) (11) (25) 1 (13) 35 (26) (13) 2Shareholders for dividends (37) (29) (2) (7) (3) – – – –

Net operating assets 7 399 8 438 4 586 3 766 3 249 3 128 2 267 752 825Investment in associate 8 6 2 2 2 – – – –Financial investments including current portion 2 884 786 1 097 1 195 1 195 1 195 1 195 1 195 1 195

Net financial liabilities – (8) (2) (3) (3) (4) – 2 –Net cash 140 488 586 409 215 (131) 210 195 (79)

Employment of capital 10 431 9 710 6 269 5 369 4 658 4 188 3 672 2 144 1 941

Non-controlling interest 482 405 59 244 170 130 92 45 2Equity 3 077 2 690 1 895 1855 1613 1336 1118 931 718Long-term payables including current portion 6 872 6 615 4 315 3 514 3 045 2 852 2 554 1 213 1 223

Total capital employed 10 431 9 710 6 269 5 369 4 658 4 188 3 672 2 144 1 941

Integrated reportcontinued


Integrated reportcontinued

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

STATEMENTS OF CASH FLOWS

Cash generated from trading 1 159 998 680 601 487 543 388 280 221

(Increase)/ decrease in working capital (444) (266) (191) 96 103 (455) (96) 85 (123)

Cash generated from operations 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)

Interest and dividends received 634 531 547 490 408 360 212 137 21

Net cash from operating activities 97 252 220 408 444 (242) 143 259 (26)

Investment in property, plant and

equipment (249) (150) (105) (62) (47) (48) (17) 5 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)

Increase in long-term borrowings

including guaranteed repurchase

liabilities 238 1 755 718 475 177 295 1337 (9) 1204

Share appreciation rights (settled) issued (40) (227) 9 – – – – – –

Shares cancelled – – (10) – – – – – –

Shares issued – 809 – – 1 4 271 – –

Net cash from financing activities 198 2 337 717 475 177 295 1338 (5) 1475

Net increase (decrease) in cash and cash

equivalents (370) (98) 177 194 346 (341) 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.


56

ORDINARY SHAREHOLDER SPREAD

Number of Number

shareholding % of shares %

1 – 1 000 shares 5 300 72,73 2 073 386 2,74

1 001 – 10 000 shares 1 687 23,15 5 009 059 6,63

10 001 – 100 000 shares 223 3,06 6 925 084 9,17

100 001 – 1 000 000 shares 66 0,91 18 531 026 24,53

1 000 001 shares and over 11 0,15 43 012 838 56,93

7 287 100,00 75 551 393 100,00

DISTRIBUTION OF SHAREHOLDERS

Banks 32 0,44 2 842 885 3,76

Close corporations 100 1,37 267 789 0,35

Endowment funds 36 0,50 423 406 0,56

Individuals 5 801 79,61 17 623 097 23,33

Insurance companies 11 0,15 772 519 1,02

Investment companies 9 0,12 834 672 1,11

Medical aid scheme 1 0,01 36 500 0,05

Mutual funds 81 1,11 8 213 030 10,87

Trusts 914 12,54 14 155 905 18,74

Other corporations 62 0,85 153 606 0,20

Own holdings 2 0,03 1 452 920 1,92

Private companies 191 2,62 24 686 550 32,68

Public companies 4 0,06 55 060 0,07

Retirement funds 43 0,59 4 033 454 5,34

7 287 100,00 75 551 393 100,00

PUBLIC AND NON-PUBLIC SHAREHOLDERS

Public shareholders 7 249 99,48 28 953 256 38,32

Non-public shareholders 38 0,52 46 598 137 61,68

Directors and associates of the Company holdings 36 0,49 45 145 217 59,76

Treasury stock 2 0,03 1 452 920 1,92

7 287 100,0 75 551 393 100,0

Beneficial shareholders holding 5% or more

Titan Shareholders 16 953 000 22,44

Dorsland Diamante (Pty) Ltd 10 027 000 13,27

The Sherrell Family Trust 5 053 400 6,69

32 033 400 42,40

JSE LIMITED STATISTICS

2014 2013

Ordinary shares

Traded 11 005 328 12 380 509

High (cents) 12 900 10 551

Low (cents) 9 268 5 950

Market price at year-end (cents) 11 530 10 200

as at 31 March 2014

Share information


57

Share information

continued

as at 31 March 2014

PREFERENCE SHAREHOLDER SPREAD

Number of Number

shareholding % of shares %

1 – 1 000 shares 643 54,40 314 403 4,19

10 001 – 100 000 shares 470 39,76 1 414 750 18,86

100 001 – 1 000 000 shares 55 4,65 1 574 572 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

DISTRIBUTION OF SHAREHOLDERS

Close corporations 15 1,27 50 080 0,67

Endowment funds 27 2,28 156 355 2,09

Individuals 765 64,72 1 343 527 17,91

Insurance companies 6 0,51 901 040 12,01

Medical aid scheme 2 0,17 24 265 0,32

Mutual funds 30 2,54 1 889 334 25,19

Nominees and trusts 275 23,27 1 153 248 15,38

Other corporations 14 1,18 37 626 0,50

Private companies 43 3,64 1 897 397 25,30

Public companies 1 0,08 1 000 0,01

Retirement funds 4 0,34 46 128 0,62

1 182 100,00 7 500 000 100,00

PUBLIC AND NON-PUBLIC SHAREHOLDERS

Public shareholders 1 175 99,41 6 015 000 80,20

Non-public shareholders 7 0,59 1 485 000 19,80

Directors and associates of the Company 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 898 827 11,98

Titan Shareholders 800 000 10,67

Nedbank Group 736 081 9,81

Cadiz 570 672 7,61

3 005 580 40,07

JSE LIMITED STATISTICS

2014 2013

Preference shares

Traded 1 118 313 7 500 000

High (cents) 10 700 10 000

Low (cents) 9 825 10 000

Market price at year-end (cents) 10 400 10 250



Company registration number

1966/002182/06

Nature of business

Investment holding and management company

Company secretary

GM Chemaly

PO Box 851, Isando, 1600

Business address

3rd Floor, Pepkor House, 36 Stellenberg Road

Parow Industria, 7493

Postal address

PO Box 6077, Parow East, 7501

Auditors

Deloitte & Touche

Registered Auditors

Deloitte & Touche Place, The Woodlands

Woodlands Drive, Woodmead, Sandton, 2196

Private Bag X6, Gallo Manor, 2052

Share transfer secretaries

Computershare Investor Services (Pty) Ltd

Ground Floor, 70 Marshall Street, Johannesburg, 2001

PO Box 61051, Marshalltown, 2107

Sponsors

Deloitte & Touche Sponsor Services (Pty) Ltd

Deloitte & Touche Place, The Woodlands

Woodlands Drive, Woodmead, Sandton, 2196

Private Bag X6, Gallo Manor, 2052

Bankers

Standard Bank of South Africa Limited

Absa Bank Limited

First National Bank (A division of FirstRand

Bank Limited)

Nedbank Limited

Citibank

HSBC

DBS Bank Limited

OCBC Bank

Maybank

Bank of China

Standard Chartered Bank

Attorneys

Bernadt, Vukic, Potash and Getz

10th Floor, BP Centre, Thibault Square,

Cape Town, 8001

PO Box 252, Cape Town, 8000

Website

www.invictaholdings.co.za

Audit Committee

DI Samuels – Chairman

LR Sherrell

RA Wally

JD Wiese (alternate to LR Sherrell and RA Wally)

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

Corporate information

Financial year-end 31 March 2014

Declaration of preference share cash dividend 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

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

60

Contents to the

annual financial statements


In accordance with the provisions of section 88(2) of the Companies Act (Act 71 of 2008), I certify that, to the bestof my knowledge and belief, the Company has filed for the financial year ended 31 March 2014 all such returnsand notices as are required of a public company in terms of the said Act, and that all such returns and noticesappear to be true, correct and up to date.

GM Chemaly Group Company Secretary

Cape Town

12 June 2014

Certification by

the Group Company Secretary

61

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 relatedfinancial 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 BarnardCA(SA), Executive Director – Financial and Commercial, in accordance with statements of International FinancialReporting Standards and in the manner required by the South African Companies Act (2008). These are based onappropriate accounting policies, consistently applied, which are supported by reasonable and prudent judgementsand estimates.

The external auditors are responsible for carrying out an independent examination of the financial statements inaccordance 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 informationsystems, have been implemented. These are aimed at providing reasonable assurance that risk of error, fraud orloss is reduced. The Group’s internal audit function, which has unrestricted access to the Group’s Audit Committeeand the divisional audit committees, evaluate and, if necessary, recommend improvements to the systems ofinternal control and accounting practices, based on audit plans that take cognisance of the relative degrees of riskof each function or aspect of the business.

The Audit Committee, together with the internal auditors, plays an oversight role in matters relating to financialand 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 Directorsconfirms that it has every reason to believe that the Company and the Group have adequate resources in place tocontinue in operational existence for the foreseeable future. For this reason, it continues to adopt the goingconcern 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, wereapproved by the Board on 12 June 2014 for publication on 17 June 2014 and are signed on its behalf by:

Dr CH Wiese A GoldstoneChairman Chief executive officer

Cape Town

12 June 2014


62

TO THE SHAREHOLDERS OF INVICTA HOLDINGS LIMITED

We have audited the consolidated and separatefinancial statements of Invicta Holdings Limited setout on pages 70 to 118, which comprise thestatements of financial position as at 31 March 2014,and the statements of comprehensive income,statements of changes in equity and statements ofcash flows for the year then ended, and the notes,comprising a summary of significant accountingpolicies and other explanatory information.

Directors’ Responsibility for the Consolidated andSeparate Financial Statements

The Company’s directors are responsible for thepreparation and fair presentation of theseconsolidated and separate financial statements inaccordance with International Financial ReportingStandards and the requirements of the Companies Actof South Africa, and for such internal control as thedirectors determine is necessary to enable thepreparation of consolidated and separate financialstatements that are free from material misstatement,whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on theseconsolidated and separate financial statements basedon our audit. We conducted our audit in accordancewith International Standards on Auditing. Thosestandards require that we comply with ethicalrequirements and plan and perform the audit toobtain reasonable assurance about whether theconsolidated and separate financial statements arefree from material misstatement.

An audit involves performing procedures to obtainaudit evidence about the amounts and disclosures inthe financial statements. The procedures selecteddepend on the auditor’s judgement, including theassessment of the risks of material misstatement of thefinancial statements, whether due to fraud or error. Inmaking those risk assessments, the auditor considersinternal control relevant to the entity’s preparationand fair presentation of the financial statements inorder to design audit procedures that are appropriatein the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of theentity’s internal control. An audit also includesevaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimatesmade by management, as well as evaluating theoverall presentation of the financial statements.

We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for ouraudit opinion.

Opinion

In our opinion, the consolidated and separate financialstatements present fairly, in all material respects, theconsolidated and separate financial position of InvictaHoldings Limited as at 31 March 2014, and itsconsolidated and separate financial performance andconsolidated and separate cash flows for the year thenended in accordance with International FinancialReporting Standards, and the requirements of theCompanies Act of South Africa.

Other reports required by the Companies Act

As part of our audit of the consolidated and separatefinancial statements for the year ended 31 March2014, we have read the Report of the Directors, theAudit Committee’s Report and the CompanySecretary’s Certificate for the purpose of identifyingwhether there are material inconsistencies betweenthese reports and the audited consolidated andseparate financial statements. These reports are theresponsibility of the respective preparers. Based onreading these reports we have not identified materialinconsistencies between these reports and the auditedconsolidated and separate financial statements.However, we have not audited these reports andaccordingly do not express an opinion on thesereports.

Deloitte & ToucheRegistered AuditorsPer SBF CarterPartner

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 (ManagedServices), TJ Brown (Chairman of the Board) and MJ Comber (Deputy Chairman of the Board)

A full list of partners and directors is available onrequest.

B-BBEE rating: Level 2 contributor in terms of theChartered Accountancy Profession Sector Code

Member of Deloitte Touche Tohmatsu Limited

Report of theindependent auditors


63

INVICTA HOLDINGS LIMITED

The directors have pleasure in presenting their annual

report, which forms part of the annual financial

statements and the 2014 Integrated Annual Report of

the Group and of the Company for the year ended

31 March 2014.

In the context of the financial statements, the term

“Group” refers to the Company, its subsidiaries and

associates.

Nature of business

The Company is an investment holding and

management company. The various operations of the

Group are summarised below with an expanded

explanation of the various businesses detailed in the

review of operations.

Humulani Investments (Humulani)

Operational holding company of all the South African

Invicta Group operations.

Humulani has 25% of its ordinary shares under the

control of BEE parties.

• 20% of Humulani’s ordinary shares are held

by Theramanzi Investments (Pty) Ltd, a

wholly-owned subsidiary of The Humulani

Empowerment Trust (HET). It is intended that

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

beneficiaries include not only Invicta employees,

Invicta employees’ immediate families, but also

persons living or working in the communities

bordering or associated with the Group’s

business operations and other broad-based

initiatives as determined by the trustees.

• 5% of Humulani’s ordinary shares are held by

the Humulani Employee Investment Trust (HEIT).

The beneficiaries of the HEIT are all non-white

employees of the Group (i.e. Black, Indian,

Coloured and African) who do not participate in

any other share incentive scheme of the Group.

• In terms of SIC 12, the ordinary issued share

capital of Humulani Investments (Pty) Ltd owned

by the HEIT and Theramanzi Investments (Pty)

Ltd (wholly-owned by the HET), has been

consolidated.

BMG

Southern Africa’s leading distributor of bearings, seals,

power transmission components, drives, belting,

fasteners, filtration and hydraulics.

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 agricultural

machinery, implements and related spares.

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.

ESP

After-market replacement parts, ground engaging

tools and undercarriage parts for earthmoving

equipment.

Kian Ann

A large distributor of heavy earthmoving equipment

parts and diesel spares.

HPE

Distributors of Hyundai Construction Equipment.

Report of thedirectorsfor the year ended 31 March 2014


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 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

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.

Compliance with accounting standards

The Group’s and the Company’s annual financial

statements comply with International Financial

Reporting Standards, the South African Companies Act

(2008) and the JSE Listings Requirements.

Group results

2014 2013

R'000 R'000

Revenue 10 464 511 7 557 899

Profit for the year 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.

Share capital and share premium

The authorised share capital of the Company

remained unchanged at 134 000 000 ordinary shares

of 5 cents each.

During the year, the Company issued 689 088 of its

issued ordinary shares. This resulted in an increase in

the share capital and share premium, which amounted

to R79 417 057.

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

of Invicta Holdings Limited and to confirm that

T Marriday will be the designated audit partner for

the 2015 financial year.

Sponsor

Deloitte & Touche Sponsor Services (Pty) Ltd acts as

sponsor to the Company in terms of the JSE Listings

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.


Report of the directorscontinued


Dividends

Details of the ordinary dividends paid are reflected in

note 24 on page 102 of the 2014 Integrated Annual

Report.

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.

Directors

Details of the directors and company secretary during

the year and at the date of this report are reflected on

pages 4 and 5 and on page 58 of the 2014 Integrated

Annual Report.

Directors’ contracts

No material contracts have been entered into between

the Company or the Group and the directors during

the year under review.

Directors’ fees

Directors’ payments for services as directors and other

emoluments for the past year are set out in note 37 on

pages 110 and 111 of the 2014 Integrated Annual

Report. Members will be requested to consider a

special resolution approving the remuneration of each

non-executive director for the 2015 financial year and

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

for services as directors for the forthcoming year as

required by the Companies Act (2008).

Directors‘ interest in shares in the Company

The total direct and indirect interest declared by the

directors in the issued share capital of the Company at

31 March 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.

Unissued share capital

The unissued ordinary shares are the subject of a

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.

Repurchase of shares

It makes sound business sense for a Company to

acquire its own shares under certain circumstances.

Thus, the directors consider it appropriate to secure a

general authority for the Company to repurchase

shares on the open market of the JSE in order to

provide the Company with maximum flexibility

regarding the repurchase of its own shares.

The Group has over the years repurchased shares

which are held at subsidiary level. The treasury shares

are eliminated on consolidation and are thus treated

as cancelled from a financial reporting perspective.

The Company’s Memorandum of Incorporation, allows

the Company to purchase its own shares if

shareholders have, by way of special resolution, given

the Company a general authority to effect such

purchase or a specific authority to effect a specific

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

Notice to shareholders detailing all necessary

resolutions relating to the Company affairs is set out

on pages 119 to 125 of the 2014 Integrated Annual

Report.

Signed on behalf of the Board of Directors

Dr CH Wiese A Goldstone

Chairman Chief Executive Officer

Cape Town

12 June 2014


Report of the directorscontinued


Background

The Audit Committee is guided by a charter that isinformed by the Companies Act and is approved bythe Board as and when it is amended. The revisedcharter includes the specific requirements as set out inthe Companies Act (2008), pertaining to auditcommittees.

Purpose

The purpose of the Audit Committee is:

• To assist the Board in its evaluation of the overalladequacy and efficiency of the internal controlsystems, accounting practices, information systemsand auditing processes applied in themanagement of the business in compliance withall applicable legal requirements, corporategovernance and accounting standards.

• To provide a forum for communication betweenthe Board, management, and the internal andexternal auditors.

• To review and confirm the independenceobjectively and effectiveness of the internal andexternal auditors, and to review and approve theengagement of the external auditors for non-audit work.

• To introduce such measures as in the Committee’sopinion may serve to enhance the reliability,integrity and objectivity of financial information,statements and affairs of the Group.

• To provide support to the Board on the riskmanagement of the Group through theestablishment of a Risk Committee.

• To monitor compliance of the Group with legalrequirements and the Group’s code of ethics.

• To ensure a high standard of CorporateGovernance is adhered to at all times within theGroup.

• To review and monitor the internal audit function.

The Audit Committee has further established auditcommittees at all major divisions which meet on aquarterly basis and which report back to the AuditCommittee through the Group CEO and CFO.

Membership

The Committee members were appointed at theannual general meeting of the Company on 16 August2013. The Committee comprises solely of non-executive directors, with all three full members beingindependent non-executive directors. The membersare:

DI Samuels (Chairman)LR SherrellJS Mthimunye (Resigned 12 September 2013)RA Wally (Appointed as Committee member by theBoard on 12 September 2013)JD Wiese (alternate to LR Sherrell and RA Wally)

The Audit Committee members are considered to beindependent of executive management.

Shareholders will be requested to approve the re-appointment of the members of the AuditCommittee at the annual general meeting scheduledfor 19 August 2014.


Audit Committee report

66

Attendance at meetings by audit committee members during the year was as follows::

10 Jun 10 Sep 7 Nov 20 Feb 8 Apr

2013 2013 2013 2014 2014

DI Samuels* (Chairman) √ √ √ √ √JS Mthimunye (Member) √ √ Resigned Resigned Resigned

LR Sherrell (Member) √ √ √ √ √JD Wiese (Alternate member) √ √ n/a n/a n/a

RA Wally (Member) n/a √ √ √ √C Barnard (FD) √ √ √ √ √A Goldstone (CEO) √ √ √ √ √CEW Walters (CEO – BMG) * √ √ √ √ √S Carter (Deloitte) * √ n/a √ √ n/a

AS Sinclair (CEO – CEG) * √ √ √ √ √D Conroy (Chief Audit Executive) * n/a n/a n/a √ √T Marriday (Deloitte) * n/a n/a n/a √ n/a

GM Chemaly (Company Secretary) n/a n/a n/a √ √* By invitation


In addition to members, the Chairman of this Committee may request personal or written representation fromGroup 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.


Audit Committee reportcontinued




68

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.




69

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


Group Company

2014 2013 2014 2013Notes R’000 R’000 R’000 R’000

Revenue 10 464 511 7 557 899 – –

Cost of sales (7 564 853) (5 399 090) – –

Gross profit 2 899 658 2 158 809 – –

Selling, administration and distribution costs (1 856 708) (1 275 050) (4 446) 3 540

Operating profit (loss) before finance costs, interest

and dividends received 4 1 042 950 883 759 (4 446) 3 540

Finance costs 5 (827 966) (651 760) – –

Dividends received from subsidiaries – – 176 925 5 625

Dividends received from financial investments 310 475 316 902 29 557 34 964

Negative goodwill – 52 066 – –

Share of profits of associates 17 2 150 3 018 – –

Interest received 6 323 081 214 771 4 092 4 399

Profit before taxation 850 690 818 756 206 128 48 528

Taxation 7 (140 779) (75 224) (1 451) (1 028)

Profit for the year 709 911 743 532 204 677 47 500

Other comprehensive income

Items that will be reclassified subsequently to profit and loss:

Exchange differences on translating foreign operations 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 580 107 693 152 138 889 25 588

Non-controlling interest 64 016 28 468 – –

Preference shareholders 65 788 21 912 65 788 21 912

709 911 743 532 204 677 47 500

Total comprehensive income attributable to:

Owners of the Company 629 158 719 962 138 889 25 588

Non-controlling interest 89 580 28 468 – –

Preference shareholders 65 788 21 912 65 788 21 912

784 526 770 342 204 677 47 500

Dividends per share (cents) 24 287 268

Earnings per share (cents) 8 788 955

Diluted earnings per share (cents) 8 788 948

Normalised earnings per share (cents) 8 788 737


Statements of comprehensive income


Group Company

2014 2013 2014 2013Notes R’000 R’000 R’000 R’000

ASSETSNon-current assetsProperty, plant and equipment 9 1 170 577 1 010 636 – –Investment in subsidiaries 16 – – 530 553 503 639 Investment in associates 17 8 239 6 337 – –Financial investments 10 2 023 984 2 012 016 209 323 257 229 Goodwill 11 623 623 593 164 – –Other intangible assets 12 168 009 180 651 – –Financial assets 13 155 405 156 922 – –Finance lease receivables 14 9 826 12 433 – –Long-term receivables 15 2 158 876 1 947 658 – –Deferred taxation 7.1 245 098 161 139 – –

6 563 637 6 080 956 739 876 760 868

Current assetsLoans to subsidiaries 18 – – 1 691 845 1 641 624 Held for sale assets 9.4 – 9 957 – –Inventories 19 3 478 732 2 913 052 – –Trade and other receivables 20 1 844 072 1 619 567 2 057 1 162 Current portion of finance lease receivables 14 43 809 15 007 – –- Current portion of financial investments 10 860 434 865 959 99 722 113 046 Current portion of long-term receivables 15 110 072 2 633 – –Taxation prepaid 21 547 18 831 – 243 Bank balances and cash 35 526 369 678 849 765 610

6 885 035 6 123 855 1 794 389 1 756 685

TOTAL ASSETS 13 448 672 12 204 811 2 534 265 2 517 553

EQUITY AND LIABILITIESCapital and reservesOrdinary share capital 21 3 777 3 743 3 777 3 743 Share premium 22 410 897 331 515 410 897 331 515 Treasury shares 23 (80 098) (80 098) – –Preference shares 25 750 000 750 000 750 000 750 000 Share appreciation reserve 18 620 21 324 – –Revaluation reserve 5 025 5 025 – –Equity reserve (380 376) (380 376) – –Foreign currency translation reserve 73 526 24 475 – –Retained earnings 2 275 702 2 014 469 1 327 210 1 399 136

Equity attributable to the equity holders 3 077 073 2 690 077 2 491 884 2 484 394 Non-controlling interest 481 947 405 135 – –

SHAREHOLDERS’ EQUITY 3 559 020 3 095 212 2 491 884 2 484 394

Non-current liabilitiesLong-term borrowings 27 5 938 738 5 487 888 688 688 Guaranteed repurchase liabilities 26 458 1 654 – –Financial liabilities 28 154 695 165 030 – –Deferred taxation 7.1 26 727 25 256 – –

6 120 618 5 679 828 688 688

Current liabilitiesTrade and other payables 30 2 070 940 1 921 268 14 181 10 201 Provisions 31 226 855 127 353 - - Taxation liabilities 112 042 30 199 24 - Shareholders for dividends 36 802 28 733 27 488 22 270 Share appreciation rights liability 29 – – – –Current portion of long-term borrowings 27 933 312 1 127 001 – –Current portion of guaranteed repurchase liabilities 26 2 210 4 086 – –Bank overdrafts 35 386 873 191 131 – –

3 769 034 3 429 771 41 693 32 471

TOTAL LIABILITIES 9 889 652 9 109 599 42 381 33 159

TOTAL EQUITY AND LIABILITIES 13 448 672 12 204 811 2 534 265 2 517 553

as at 31 March 2014

Statements of financial position


Foreign Attribu-Pre- Share currency table to Non-

ference appre- Re- trans- equity control-Share Share Treasury share ciation valuation Equity lation Retained share- ling

capital premium shares capital reserve reserve reserve reserve earnings holders interest TotalR’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Group

Balance at 31 March 2012 3 706 272 320 (93 931) – 33 695 5 025 – (2 335) 1 676 751 1 895 231 59 321 1 954 552

Total comprehensive income – – – – – – – 26 810 715 064 741 874 28 468 770 342

Preference dividends paid – – – – – – – – (21 912) (21 912) – (21 912) Ordinary shares issued 37 59 195 – – – – – – – 59 232 – 59 232 Preference shares issued – – – 750 000 – – – – – 750 000 – 750 000 Treasury shares utilised to settle share appreciation rights – – 51 958 – – – – – – 51 958 – 51 958

Ordinary dividends paid – – – – – – – – (193 263) (193 263) (9 730) (202 993) Share appreciation rights issued – – – – 4 990 – – – – 4 990 – 4 990

Share appreciation rights exercised – – – – (17 361) – – – (150 043) (167 404) – (167 404)

Put option on non-controlling interest – – – – – – (380 376) – – (380 376) – (380 376)

Non-controlling interestarising on acquisition of controlling interests – – – – – – – – (12 128) (12 128) 327 076 314 948

Treasury shares purchased – – (38 125) – – – – – – (38 125) – (38 125)

Balance at 31 March 2013 3 743 331 515 (80 098) 750 000 21 324 5 025 (380 376) 24 475 2 014 469 2 690 077 405 135 3 095 212

Total comprehensive income – – – – – – – 49 051 645 895 694 946 89 580 784 526

Preference dividends paid – – – – – – – – (65 788) (65 788) – (65 788) Ordinary shares issued 34 79 382 – – – – – – – 79 416 – 79 416 Preference shares issued – – – – – – – – – – 321 321Ordinary dividends paid – – – – – – – – (208 789) (208 789) (14 859) (223 648) Share appreciation rights issued – – – – 5 926 – – – – 5 926 – 5 926

Share appreciation rights exercised – – – – (8 630) – – – (111 755) (120 385) – (120 385)

Non-controlling interest arising on acquisition and purchases of non-controlling interest – – – – – – – – 1 670 1 670 1 770 3 440

Balance at 31 March 2014 3 777 410 897 -80 098 750 000 18 620 5 025 (380 376) 73 526 2 275 702 3 077 073 481 947 3 559 020

Company

Balance at 31 March 2012 3 706 272 320 – – – – – – 1 571 043 1 847 069 – 1 847 069

Ordinary shares issued 37 59 195 – – – – – – – 59 232 – 59 232 Preference shares issued – – – 750 000 – – – – – 750 000 – 750 000 Total comprehensiveincome for the year – – – – – – – – 47 500 47 500 – 47 500

Preference dividends paid – – – – – – – – (197 495) (197 495) – (197 495)Ordinary dividends paid – – – – – – – – (21 912) (21 912) – (21 912)

Balance at 31 March 2013 3 743 331 515 – 750 000 – – – – 1 399 136 2 484 394 – 2 484 394

Ordinary shares issued 34 79 382 – – – – – – – 79 416 – 79 416Total comprehensive income for the year – – – – – – – – 204 677 204 677 – 204 677

Preference dividends paid – – – – – – – – (65 788) (65 788) – (65 788) Ordinary dividends paid – – – – – – – – (210 815) (210 815) – (210 815)

Balance at 31 March 2014 3 777 410 897 – 750 000 – – – – 1 327 210 2 491 884 – 2 491 884


Statements of changes in equity


Group Company

2014 2013 2014 2013Notes R’000 R’000 R’000 R’000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from (utilised by) operations 32 715 160 732 079 (1 361) 13 227

Finance costs (827 966) (651 760) – –

Dividends paid to Group shareholders 33 (266 508) (188 704) (271 385) (197 989)

Dividends paid to non-controlling interest (14 859) (9 730) – –

Taxation paid 34 (142 910) (161 137) (1 184) (1 955)

Interest and dividends received 633 556 531 673 210 574 44 988

Net cash inflow (outflow) from operating activities 96 473 252 421 (63 356) (141 729)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds on sale of property, plant and

equipment and other intangible assets 42 480 20 552 – –

Expansion to property, plant and equipment (237 712) (126 072) – –

Replacement of property, plant and equipment (10 860) (24 088) – –

Additions to intangible assets (10 089) (2 116) – –

Acquisition of subsidiaries 43 (95 762) (1 494 214) (26 914) (1 375)

Acquisition of associate (1 694) (2 068) – –

Acquisition of non-controlling interest (1 670) – – –

Dividend received from associate 1 947 425 – –

Net increase in long-term receivables and

finance lease receivables (208 611) (1 331 947) – –

Net (increase) decrease in financial investments (11 968) 1 029 826 47 906 103 373

Net (increase) decrease in current portion of

financial investments and long-term and

finance lease receivables (130 716) (757 994) 13 324 (66 974)

Increase in loans to subsidiaries – – (50 221) (702 660)

Net cash outflow from investing activities (664 655) (2 687 696) (15 905) (667 636)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in long-term borrowings 435 483 901 083 – –

Decrease in guaranteed repurchase liabilities (1 196) (3 357) – –

Decrease in share appreciation rights liability – (78 289) – –

Employee tax paid on share appreciation

rights exercised (39 299) – – –

Settlement of share appreciation rights and

employees tax on share appreciation rights exercised – (148 581) – –

Ordinary shares issued – 59 232 79 416 59 232

Preference shares issued 321 750 000 – 750 000

(Decrease) increase in current portion of long-term

borrowings and guaranteed repurchase liabilities (197 221) 856 897 – –

Net cash inflow from financing activities 198 088 2 336 985 79 416 809 232

Net (decrease) increase in cash and cash equivalents (370 094) (98 290) 155 (133)

Cash and cash equivalents at the beginning of the year 487 718 586 008 610 743

Effect of foreign exchange rate movement on

cash balance 21 872 – – –

Cash and cash equivalents at the end of the year 35 139 496 487 718 765 610


Statements of cash flows


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 theInternational Accounting Standards Board (the IASB) and the IFRS Interpretations Committee (IFRIC) of theIASB that are relevant to its operations and effective for the Group’s reporting period. The adoption of IFRS7 Financial Instruments: Disclosures (amendments) and related amendments to IAS 1 Presentation ofFinancial Statements, IFRS 11 Joint Arrangements, IFRS 13 Fair Value Measurements, IAS 16 Property, Plantand Equipment, IAS19 Employee Benefits, IAS 27 Separate Financial Statements, IAS 27 Separate FinancialStatements, IAS 28 Investments in Associates and Joint Ventures, IAS 32 Financial Instruments: Presentationand IAS 34 Inter Financial Reporting has not resulted in any significant changes to the Group and Company’saccounting policies and the effects on the amounts reported for the current or prior years have beendisclosed.

At the date of authorisation of these financial statements, the following Standards applicable to the Groupand 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 Annual periods beginning on or after 1 July 2014

• IFRS 8 – Operating Segments Annual periods beginning on or after 1 July 2014

• IFRS 9 – Financial Instruments – Annual periods beginning on or after 1 January 2018Classification and Measurement

• IFRS 10 – Consolidated Financial Annual periods beginning on or after 1 January 2014statements

• IFRS 12 – Disclosure of Interest in Annual periods beginning on or after 1 January 2014Other Entities

• IFRS 13 – Fair value measurement Annual periods beginning on or after 1 July 2014

• IAS 16 – Property, Plant and Equipment Annual periods beginning on or after 1 July 2014

• IAS 19 – Employee Benefits Annual periods beginning on or after 1 July 2014

• IAS 24 – Related Party Disclosure Annual periods beginning on or after 1 July 2014

• IAS 27– Separate Financial Statements Annual periods beginning on or after 1 January 2014

• IAS 32– Financial Instruments: Presentation Annual periods beginning on or after 1 January 2014

• IAS 36– Impairment of Assets Annual periods beginning on or after 1 January 2014

• IAS 38– Intangible Assets Annual periods beginning on or after 1 July 2014

• IAS 39– Financial Instruments: Annual periods beginning on or after 1 January 2014Recognition and Measurement

The directors anticipate that the adoption of these Standards in future periods will have no material impacton the financial statements of the Group and Company.

2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with International Financial Reporting Standardsand the requirements of the Companies Act of South Africa. The financial statements have been preparedon the historical cost basis, except for the fair valuing of financial instruments. The principal accountingpolicies adopted are set out below.

2.1 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company andentities controlled by the Company (its subsidiaries). Control is achieved where the Company has the


Notes to the



power to govern the financial and operating policies of an entity so as to obtain benefits from itsactivities. The results of subsidiaries acquired or disposed of during the year are included in theconsolidated statements of comprehensive income from the effective date of acquisition or up to theeffective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their

accounting policies into line with those used by the Group.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation. The non-

controlling interests in the net assets of consolidated subsidiaries are identified separately from the

Group’s equity therein. The non-controlling interests consist of the amount of those interests at the

date of the original business combination and the non-controlling shareholders’ share of changes in

equity since the date of the combination. Losses applicable to the non-controlling shareholder in

excess of the non-controlling interests’ share in the subsidiary’s equity are allocated against the

interests of the Group except to the extent that the non-controlling shareholder has a binding

obligation and is able to make an additional investment to cover the losses.

2.2 Business combinations

The acquisition of subsidiaries is accounted for using the purchase method. The 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.


Notes to the annual financial statementscontinued


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 representsamounts receivable for goods and services provided in the normal course of business, net of discountsand sales-related taxes.

Sales of goods are recognised when goods are delivered and risks and rewards have passed to thecustomer.

Interest income is accrued on the time basis, by reference to the principal outstanding and at theeffective interest rate applicable, which is the rate that exactly discounts estimated future cash receiptsthrough 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 paymenthave been established.

2.6 Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risksand 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 recognisedas a receivable. Finance income is recognised over the term of the lease using the net investmentmethod, which reflects a constant periodic rate of return.

Rental income from operating leases is recognised on the straight-line basis over the term of therelevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are addedto the carrying amount of the leased asset and recognised on the straight-line basis over the leaseterm. Payments received in advance is recognised as deferred income and recognised in revenue overthe 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 theinception of the lease or, if lower, at the present value of the minimum lease payments. Thecorresponding liability to the lessor is included in the statements of financial position as a finance leaseobligation. Lease payments are apportioned between finance charges and a reduction of the leaseobligation so as to achieve a constant rate of interest on the remaining balance of the liability. Financecharges are charged to profit or loss.

Rentals payable under operating leases are charged to profit or loss on the straight-line basis over theterm of the relevant lease. Benefits received and receivable as an incentive to enter into an operatinglease 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 primaryeconomic environment in which the entity operates (its functional currency). For the purpose of theconsolidated financial statements, the results and financial position of each entity are expressed in




currency units, which are the functional currency of the Company, and the presentation currency forthe 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.




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 asreported in the statements of comprehensive income because it excludes items of income or expensethat are taxable or deductible in other years and it further excludes items that are never taxable ordeductible. The Group’s liability for current tax is calculated using tax rates that have been enacted orsubstantively enacted at the statement of financial position date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in thefinancial statements and the corresponding tax bases used in the computation of taxable profit, andare accounted for using the statement of financial position liability method. Deferred tax liabilities aregenerally recognised for all taxable temporary differences and deferred tax assets are recognised tothe extent that it is probable that taxable profits will be available against which deductible temporarydifferences can be utilised.

Such assets and liabilities are not recognised if the temporary difference arises from goodwill or fromthe 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 controlthe reversal of the temporary difference and it is probable that the temporary difference will notreverse 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. Deferredtax is calculated at the tax rates that are expected to apply in the period when the liability is settledor the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates toitems 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 taxassets against tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends, and is able to, settle its tax assets and liabilities on a 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 anyaccumulated impairment losses.

Buildings are stated at cost less accumulated depreciation and any accumulated impairment losses,with the exception of certain buildings which are stated at deemed cost less accumulated depreciationand accumulated impairment losses. Deemed cost was determined in terms of an election made as permitted by IFRS 1.

Assets held under finance leases are depreciated over their expected useful lives on the same basis asowned assets or, where shorter, the term of the relevant lease.

Depreciation is calculated on the straight-line basis, so as to write the cost of the assets down to theirresidual values, at the following per annum rates, which are considered to approximate the estimated useful lives of the assets concerned.

Buildings 1 – 10%Plant and equipment 10 – 20%Leasehold improvements Over the period of the leaseMotor vehicles 20 – 25%Furniture and fittings 20%Office equipment 10 – 33,3%Computer equipment 20 – 33,3%Golf cars 20%Forklifts 25%




The gain or loss arising on the disposal or retirement of an item of property, plant and equipment 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




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 aninvestment is under a contract whose terms require delivery of the investment within the timeframeestablished 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 abilityto 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 isimpaired, 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 theimpairment 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 fortrading 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 areincluded in profit or loss for the period. For available-for-sale investments, gains and losses arisingfrom 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 equityis 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 aresubsequently reversed if an increase in the fair value of the instrument can be objectively related toan 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 highlyliquid investments that are readily convertible to a known amount of cash and are subject to aninsignificant 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 andan equity instrument. An equity instrument is any contract that evidences a residual interest in theassets of the Group after deducting all of its liabilities. The accounting policies adopted for specificfinancial liabilities and equity instruments are set out below.




Bank borrowings

Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently

measured at amortised cost, using the effective interest rate method. Any difference between the

proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over

the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs.

Trade payables

Trade and other payables are initially measured at fair value, and are subsequently measured at

amortised cost, using the effective interest rate method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue

costs.

Guaranteed repurchase liability

Guaranteed repurchase liabilities are initially and subsequently measured at present value using the

effective interest rate method.

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




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 vestingconditions) at the date of the grant. The fair value determined at the grant date of the equity-settledshare-based payments is expensed on the straight-line basis over the vesting period, based on theGroup’s estimate of the shares that will eventually vest and is adjusted for the effect of non-market-based vesting conditions. Fair value is measured using the Black-Scholes pricing model. Theexpected life used in the model is adjusted, based on management’s best estimate, for the effects ofnon-transferability, exercise restrictions and behavioural considerations.

The Group modified its accounting for share-based payments originally treated as equity-settled dueto 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 thataffect 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 mayvary 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 valueassessments 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 mayvary 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/receiptsusing 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 basisby assessing the future cash flows associated with the investment.




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 Segment operating profit

2014 2013 2014 2013

R’000 R’000 R’000 R’000

Engineering consumables 3 954 572 3 424 847 472 773 390 047

Capital equipment 5 122 299 3 502 965 483 641 339 338

Building supplies 1 383 421 625 141 66 969 38 610

Group, financing and other operations 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 2013

R’000 R’000

Segment assets

Engineering consumables 2 284 378 2 189 286

Capital equipment 3 789 321 3 215 154

Building supplies 693 971 502 070

Group, financing and other operations 6 681 002 6 298 301

Total assets 13 448 672 12 204 811

Segment liabilities

Engineering consumables 729 493 867 637

Capital equipment 2 137 727 1 874 215

Building supplies 455 152 325 923

Group, financing and other operations 6 567 280 6 041 824

Total liabilities 9 889 652 9 109 599

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




3. BUSINESS SEGMENTS continued

3.3 Other segment information

Additions to property,

Depreciation and plant and equipment

amortisation and intangible assets

2014 2013 2014 2013

R’000 R’000 R’000 R’000

Engineering consumables 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

Group, financing and other operations 4 213 10 423 9 700 41 603

Total 135 102 86 814 258 661 152 276

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.




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

4. 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:

IncomeProfit on disposal of property, plant and equipment 16 372 4 075 – –Realised and unrealised net profits on money market investments 4 032 6 754 – –

Gain on modification of terms of financial investment – 20 589 – 7 632

Gain on partial derecognition of financial investment – 158 172 – –

Negative goodwill recognised on acquisition of subsidiary – 52 066 – –

Credit default swap derivative gain 2 227 51 087 – –

ExpensesAuditors’ remuneration – audit fees 7 500 5 176 – –

– Current year 6 323 4 861 – – – Other services 1 177 315 – –

Depreciation* 67 628 47 331 –

– Buildings 9 832 6 121 – –– Plant and equipment 12 829 8 678 – –– Leasehold improvements 4 348 2 487 – –– Motor vehicles 18 552 12 452 – –– Furniture and fittings 8 269 8 127 – –– Office equipment 2 396 1 250 – –– Computer equipment 11 402 8 216 – –

Amortisation of intangible assets 39 984 14 480 – –Put option and interest rate swap derivatives 2 227 46 370 – –Impairment of property, plant and equipment 66 18 – –Goodwill impairment – 2 791 – –Loss on disposal of property, plant and equipment 74 524 – –Employment costs 1 046 367 875 073 – –

Operating lease expenses 115 427 109 287 – –

– Premises 94 335 89 176 – – – Equipment 1 236 880 – – – Motor vehicles 19 280 19 007 – – – Other 576 224 – –

Pension and provident fund contributions 57 810 38 342 – – Share options expense 27 129 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




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

5. FINANCE COSTS

Bank overdrafts and loans 39 554 41 514 – –

Foreign exchange premiums 49 193 15 787 – –

Finance leases 2 168 2 261 – –

Guaranteed repurchase liability 330 730 – –

Long-term borrowings 736 721 591 468 – –

Total 827 966 651 760 – –

6. INTEREST RECEIVED

Bank balances and cash 12 010 35 974 2 1

Finance leases 4 412 1 918 – –

Foreign exchange gains 3 433 7 324 – –

Long-term receivables 303 226 169 555 4 090 4 398

Total 323 081 214 771 4 092 4 399

7. TAXATION

South African normal taxation

Current tax

– current year 189 807 119 612 1 458 1 728

– prior year (431) (9 315) (7) (700)

Deferred tax

– current year (82 115) (42 465) – –

– prior year 252 (2 025) – –

Share transfer tax 233 – – –

Foreign tax 33 033 9 417 – –

Total 140 779 75 224 1 451 1 028

Reconciliation of tax rate % % % %

Statutory tax rate 28,0 28,0 28,0 28,0

Permanent differences and exempt income (12,0) (18,8) (27,3) (25,9)

Foreign tax 1,0 – – –

Effective tax rate 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.




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

7. TAXATION continued

7.1 Deferred tax

Net balance at the beginning of the year 135 883 101 413 (784) (784)

Arising on acquisition of subsidiaries 625 (10 020) – –

Charge from the statement of

comprehensive income 81 863 44 490 – –

Net balance at the end of the year 218 371 135 883 (784) (784)

Comprising:

Capital allowances (32 142) (25 780) – –

Tax losses 149 355 78 839 – –

Provisions 93 369 85 429 – –

Other temporary differences 7 789 (2 605) – –

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 – –

8. EARNINGS PER SHARE

Basic earnings per share (cents) 788 955 – –

Diluted earnings per share (cents) 788 948 – –

Normalised earnings per share (cents) 788 737 – –

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 580 107 693 152 – –

Weighted average number of ordinary

shares for the purposes of basic earnings

per share 73 592 72 588 – –

87




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

8. EARNINGS PER SHARE continued

8.2 Diluted earnings per shareThe earnings used in the calculation of diluted earnings per share are as follows:

Profit for the year attributable to owners of the Company 580 107 693 152 – –

Weighted average number of ordinary shares used in the calculation of diluted earnings per share 73 592 73 125 – –

The following potential ordinary shares areanti-dilutive and is therefore excluded from the weighted average number of ordinary shares for the purposes of dilutedearnings per share:

Put option granted to directors in terms ofthe loan scheme (61) – – –

Reconciliation of weighted average numberof ordinary shares

Basic number of ordinary shares 73 592 72 588 – –Share appreciation rights 413 1 072 – –Put option granted to directors in terms of the loan scheme (474) (535) – –

Diluted number of ordinary shares 73 531 73 125 – –

Group

Non- Attributablecontrolling Preference to equity

Gross Taxation interests dividends holdersR’000 R’000 R’000 R’000 R’000

8.3 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:

2013Earnings attributable to ordinary shareholders 818 756 (75 224) (28 468) (21 912) 693 152

Adjusted for:Gain on partial derecognition of financial investment (158 172) – – – (158 172)

Normalised earnings for purposes of normalised earnings per share 660 584 (75 224) (28 468) (21 912) 534 980

Normalised earnings for the year 534 980

Weighted average number of

ordinary shares for the purposes

of basic earnings per share 72 588




Group

Non- Attributablecontrolling Preference to equity

Gross Taxation interests dividends holdersR’000 R’000 R’000 R’000 R’000

8. EARNINGS PER SHARE continued

8.4 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

Earnings attributable to ordinary

shareholders 850 690 (140 779) (64 016) (65 788) 580 107

Adjusted for:

Net profit on disposal of

property, plant and equipment (16 298) 2 077 96 – (14 125)

Impairment of property, plant

and equipment 66 (18) – – 48

Profit on disposal of investments (4 032) 750 – – (3 282)

Headline earnings for purposes of

headline earnings per share 830 426 (137 970) (63 920) (65 788) 562 748

2013

Earnings attributable to ordinary

shareholders 818 756 (75 224) (28 468) (21 912) 693 152

Adjusted for:

Net profit on disposal of property,

plant and equipment (3 551) 994 758 – (1 799)

Impairment of property, plant

and equipment 18 (5) (11) – 2

Impairment of goodwill 2 791 – – – 2 791

Negative goodwill (52 066) – – – (52 066)

Headline earnings for purposes of

headline earnings per share 765 948 (74 235) (27 721) (21 912) 642 080

Group

2014 2013

R’000 R’000

Headline earnings for purpose of diluted headline earnings per share 562 748 642 080

Headline earnings per share (cents) 765 885

Diluted headline earnings per share (cents) 765 878

89




Group

2014 2013R’000 R’000

9. PROPERTY, PLANT AND EQUIPMENT

Land and buildings 859 288 743 609

– Gross carrying amount 920 814 795 303– Accumulated depreciation and impairment 61 526 51 694

Plant and equipment 84 228 78 069


Leasehold improvements 10 479 11 616


Motor vehicles 58 928 49 898


Furniture and fittings 5 123 9 667


Office equipment 31 339 22 128


Computer equipment 17 671 16 614


Rental assets – Golf cars 16 132 13 800


Rental assets – Forklifts 43 042 41 968


Rental assets – Machinery 44 347 23 267


Net carrying value 1 170 577 1 010 636

Total gross carrying amount 1 649 817 1 394 692Total accumulated depreciation and impairment 479 240 384 056

9.1 Details of land and buildingsA register containing details of land and buildings is available for inspection during business hours atthe registered office of the Company by members or their duly authorised agents.

9.2 EncumbrancesThe Group has encumbered land and buildings, motor vehicles and golf cars having a carrying valueof R245 million (2013: R273 million) to secure mortgage bonds and finance lease liabilities as detailedin note 27.




Group

2014 2013R’000 R’000

9. PROPERTY, PLANT AND EQUIPMENT continued

9.3 Reconciliation of movement in carrying value

Land and buildingsBalance at the beginning of the year 743 609 207 665 Additions 113 312 48 656 Acquisitions of subsidiaries – 490 066 Depreciation for the year (9 832) (6 121) Disposals (77) (1 418) Foreign currency translation 12 276 4 761

Balance at the end of the year 859 288 743 609

Plant and equipmentBalance at the beginning of the year 78 069 32 169 Additions 18 813 22 460 Acquisitions of subsidiaries 1 215 32 487 Impairment raised (66) (18) Depreciation for the year (12 829) (8 678) Disposals (1 104) (392) Foreign currency translation 130 41


Leasehold improvementsBalance at the beginning of the year 11 616 7 287Additions 2 775 2 879Acquisitions of subsidiaries 291 3 907Depreciation for the year (4 348) (2 487)Disposals – (57)Foreign currency translation 145 87


Motor vehiclesBalance at the beginning of the year 49 898 30 209Additions 23 903 20 055Acquisitions of subsidiaries 7 015 16 333Depreciation for the year (18 552) (12 452)Disposals (3 769) (4 302)Foreign currency translation 433 55


Furniture and fittingsBalance at the beginning of the year 9 667 6 170 Additions 3 087 8 286 Acquisitions of subsidiaries 633 3 349 Depreciation for the year (8 269) (8 127) Disposals (56) (30) Foreign currency translation 61 19


91




Group

2014 2013R’000 R’000


9.3 Reconciliation of movement in carrying value continued

Office equipmentBalance at the beginning of the year 22 128 19 933 Additions 11 718 2 640 Acquisitions of subsidiaries 21 2 374 Depreciation for the year (2 396) (2 637) Disposals (177) (204) Foreign currency translation 45 22


Computer equipmentBalance at the beginning of the year 16 614 12 164Additions 12 050 7 452Acquisitions of subsidiaries 185 5 255Depreciation for the year (11 402) (8 216)Disposals (96) (96)Foreign currency translation 320 55


Rental assets – Golf carsBalance at the beginning of the year 13 800 13 066Additions 7 209 5 353Depreciation for the year (4 406) (3 764)Disposals (471) (855)


Rental assets – ForkliftsBalance at the beginning of the year 41 968 42 821Additions 20 040 20 352Depreciation for the year (11 895) (12 537)Disposals (7 071) (8 668)


Rental assets – MachineryBalance at the beginning of the year 23 267 19 534Additions 35 665 12 027Depreciation for the year (11 189) (7 315)Disposals (3 396) (979)


TotalBalance at the beginning of the year 1 010 636 391 018Additions 248 572 150 160Acquisitions of subsidiaries 9 360 553 771Net impairment raised (66) (18)Depreciation for the year* (95 118) (72 334)Disposals (16 217) (17 001)Foreign currency translation 13 410 5 040

Balance at the end of the year 1 170 577 1 010 636

* Depreciation relating to the forklift hire fleet, golf cars fleet and equipment is included in cost of sales.




Group

2014 2013R’000 R’000


9.4 Assets classified as held for sale

Property, plant and equipment – 4 667Investment properties – 5 290

Total – 9 957

As at 31 March 2013, certain property, plant and equipment and investment properties of the Groupwere presented as assets held for sale following the intention of the Group’s management to sell theproperty, plant and equipment and investment properties. These assets were carried in the financialstatements at their net book value.

Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

10. FINANCIAL INVESTMENTS

Unlisted securitiesBusiness Venture Investments No 1048 (Pty) Ltd – 50 000 redeemable non-cumulative preference shares 480 737 494 560 – –

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).

Business Venture Investments No 1057 (Pty) Ltd – 50 000 redeemable non-cumulative preference shares 283 163 291 305 283 163 291 305

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 1 459 283 1 317 915 – –

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




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

10. FINANCIAL INVESTMENTS continued

Unlisted securities continuedBusiness Venture Investments No 1062 (Pty) Ltd 69 825 213 045 25 882 78 970– 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 591 410 559 989 – –

These bonds earn interest at Jibar plus 2,9% payable quarterly and are tradable on the Johannesburg Stock Exchange.

Other – 1 161 – –

Total 2 884 418 2 877 975 309 045 370 275Current portion of financial investments (860 434) (865 959) (99 722) (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 2013R’000 R’000

11. GOODWILL

Goodwill arising on acquisition of subsidiaries

At the beginning of the year 593 164 358 408

Gross value 601 172 363 625Accumulated impairment (8 008) (5 217)

Acquisition of subsidiaries 30 459 237 547Goodwill impaired during the year – (2 791)

At the end of the year 623 623 593 164

Gross value 631 631 601 172Accumulated impairment (8 008) (8 008)

The directors assess the carrying value of goodwill with reference to the future cash flows of the cash-generating unit. The goodwill has been assessed for impairment and no further impairment is required.




Group

2014 2013R’000 R’000

12. OTHER INTANGIBLE ASSETS

Computer software

– Gross carrying value 36 083 31 697

– Accumulated amortisation (22 166) (16 497)

– Foreign currency translation (45) 149

Re-acquired agency rights



Distribution agreements


– Accumulated amortisation (11 853) (260)

Trademarks, house brands and non-compete intangibles


– Accumulated amortisation (7 684) (667)

Contractual and non-contractual customer relationships



Total



– Foreign currency translation (45) 149

Net carrying value 168 009 180 651

Reconciliation of movement in carrying value

Balance at the beginning of the year 180 651 58 198

Acquisition of subsidiaries 17 455 134 668

Additions 10 089 2 116

Disposals (8) –

Amortisation for the year (39 984) (14 480)

Foreign currency translation (194) 149


13. FINANCIAL ASSETS

Credit default swap derivative – Serec Capital (Pty) Ltd (note 27) 154 695 156 922

Interest rate swap derivative 710 –

155 405 156 922

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




Group

2014 2013R’000 R’000

14. FINANCE LEASE RECEIVABLES

Due within one year 46 584 17 220Due in the second to fifth years inclusive 10 782 13 166

57 366 30 386Unearned interest on finance leases (3 731) (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 15 007Due in the second to fifth years inclusive 9 826 12 433

Net investment in finance leases 53 635 27 440

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 930 411 683 938

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 1 218 215 1 130 580

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 10 000 10 944

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 108 787 96 665

The convertible term loan to Usco is unsecured, bears interest at 6% per annum and is repayable by December 2014.

Other loans 1 535 28 164

Total 2 268 948 1 950 291Current portion of long-term receivables (110 072) (2 633)

Long-term portion of long-term receivables 2 158 876 1 947 658

Company

2014 2013R’000 R’000

16. INVESTMENT IN SUBSIDIARIES

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

Group

Proportion ofownership interestand voting power

held

Place of 2014 2013Name of subsidiary Principal activity operation % %

Direct holdingsBearing Man 1955 Ltd Investment holding company South Africa 100 100Humulani Investments (Pty) Ltd* Investment holding company South Africa 100 100Invicta Offshore Holdings** Investment holding company Mauritius 1 67October Winds 48 (Pty) Ltd Investment holding company South Africa 100 100

Indirect holdingsA. T. Group Holdings Co. Ltd Investment holding company Thailand 48 0A.T. Truck & Bus Parts Co. Ltd Trading company Thailand 60 0Alpha Bearings (Pty) Ltd Trading company South Africa 29 29Aptopart (Pty) Ltd Investment holding company South Africa 60 60Bearing Man (Botswana) (Pty) Ltd Trading company Botswana 100 100Bearing Man (Maputo) (Pty) Ltd Trading company Maputo 66 66Bearing Man (Mozambique) LDA Trading company Mozambique 100 100Bearing Man (Namibia) (Pty) Ltd Trading company Namibia 100 100Bearing Man (Swaziland) (Pty) Ltd Trading company Swaziland 100 100Bearing Man (Zambia) (Pty) Ltd Trading company Zambia 83 100Brands 4 Africa Distribution and Logistics (Pty) Ltd Investment holding company South Africa 30 0

Criterion Equipment (Pty) Ltd Trading company South Africa 100 100Disa Equipment (Pty) Ltd Trading company South Africa 100 100Edmik Engineering (Pty) Ltd Trading company South Africa 100 100Equipment Spare Parts (Africa) (Pty) Ltd Trading company South Africa 100 100

Erf 29 Samcor Park (Pty) Ltd Property holding company South Africa 100 100Farmmac (Pty) Ltd Trading company South Africa 100 100Floormark (Pty) Ltd Trading company South Africa 36 0Gem Tool Company (Pty) Ltd Trading company South Africa 100 100General Electrical Mechanical Tool & Engineering (Pty) Ltd Trading company South Africa 100 100

GK-IT Environmental Services(Pty) Ltd Trading company South Africa 67 67

Goldquest International Hydraulics SA (Pty) Ltd Trading company South Africa 100 100

High Power Equipment Africa (Pty) Ltd Trading company South Africa 100 0

Hi-Quip Hydraulics (Pty) Ltd Trading company South Africa 100 100Humulani Marketing (Pty) Ltd Trading company South Africa 100 100Humulani Marketing Mozambique Lda Trading company South Africa 100 100

Invicta Asian Holdings (Pte) Ltd Investment holding company Singapore 75 75Invicta Offshore Holdings** Investment holding company Mauritius 99 33Invicta Properties (Pty) Ltd Property holding company South Africa 100 100Kian Ann Chue Hwa (Industries) (Pte) Ltd Trading company Singapore 60 60

Kian Ann Districentre (Pte) Ltd Trading company Singapore 75 75Kian Ann Engineering (Pte) Ltd Trading company Singapore 75 75

97





Group

Proportion ofownership interestand voting power

held

Place of 2014 2013Name of subsidiary Principal activity operation % %

Indirect holdings continued

Kian Ann Engineering Trading (Shanghai) Co. Ltd Trading company Singapore 75 75

Kian Ann Investment (Pte) Ltd Trading company Singapore 75 75Lodge Stock and Barrel (Pty) Ltd Trading company South Africa 30 0MacNeil (Pty) Ltd Trading company South Africa 53 53MacNeil Bloemfontein (Pty) Ltd Trading company South Africa 53 53MacNeil Durban (Pty) Ltd Trading company South Africa 53 53MacNeil Eastern Cape (Pty) Ltd Trading company South Africa 27 27MacNeil George (Pty) Ltd Trading company South Africa 53 53MacNeil JHB (Pty) Ltd Trading company South Africa 51 51MacNeil Plastics (Pty) Ltd Trading company South Africa 53 53MacNeil Profiles (Pty) Ltd Trading company South Africa 53 53Makona Hardware & Industrial (Mpumalanga) (Pty) Ltd Trading company South Africa 67 67

Makona Hardware & Industrial (Pty) Ltd Trading company South Africa 67 67

Man-Dirk (Pty) Ltd Trading company South Africa 100 100Man-Dirk East (Pty) Ltd Trading company South Africa 74 74Metric and Imperial Tool Systems (Pty) Ltd Trading company South Africa 100 100

MRO Produtos Industriais Lda Trading company Mozambique 80 80Nova Vida Limitada Trading company Mozambique 80 80One Owl Enterprises (Pty) Ltd Trading company South Africa 30 0Operational Marketing (Pty) Ltd Trading company South Africa 100 100Oscillating Systems Technology Africa (Pty) Ltd Trading company South Africa 100 100

Pt. Allegiance Primaparts Indonesia Trading company Singapore 60 60Pt. Haneagle Heavyparts Indonesia Trading company Indonesia 74 74Rumiset (Pty) Ltd Trading company South Africa 100 100Salestalk 452 (Pty) Ltd Property holding company South Africa 50 50Screen Doctor (Pty) Ltd Trading company South Africa 71 50SET agency Trading company South Africa 60 60Smart Taps (Pty) Ltd Trading company South Africa 29 29Spring Lights 149 (Pty) Ltd Trading company South Africa 60 60Tiletoria Cape (Pty) Ltd Trading company South Africa 36 36Tool and Electric Distributors (Pty) Ltd Trading company South Africa 100 100

Transmec Engineering (Pte) Ltd Trading company Singapore 38 38Trendy Property Investments (Pty) Ltd Trading company South Africa 60 60

Turnkey Hydraulics KZN (Pty) Ltd Trading company South Africa 100 100Upfront Agencies (Pty) Ltd Trading company South Africa 13 13Wegezi Power Holdings (Pty) Ltd Trading company South Africa 100 85Wegezi Transformers (Pty) Ltd Trading company South Africa 100 85

* The 5% and 20% of the ordinary issued share capital of Humulani Investments (Pty) Ltd owned by the HumulaniEmployee 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 AnnualReport for further details.

** The 99% of the ordinary issued share capital of Invicta Offshore Holdings is owned by Bearing Man 1955 Limited.





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 sharecapital of High Power Equipment Africa (Pty) Ltd, effective 14 May 2013, 60% of the share capital of Brands4 Africa Distribution group, which consists of Logistics (Pty) Ltd, One Owl Enterprises (Pty) Ltd and LodgeStock and Barrel (Pty) Ltd effective 1 April 2013 and 100% of the share capital of Floormark (Pty) Ltd effective29 April 2013.

A register containing details of the other direct and indirect subsidiaries is available for inspection duringbusiness 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-controllinginterest) of its subsidiaries is as follows:

Group

2014 2013R’000 R’000

Profits 498 644 680 618Losses 57 428 13 052

17. INVESTMENT IN ASSOCIATES

Proportion ofownership interest

and votingpower held

Place ofincorporation 2014 2013

Name of associates Principal activity and operation % %

Compact Computers Solutions (Pty) Ltd Trading company South Africa 40 40Commercial Car Components Logistics Ltd Trading company England 25 25

D&D Lifting and Crane Services (Pty) Ltd Trading company South Africa 48 48

Group

2014 2013R’000 R’000

Summarised financial information in respect of the Group’s associates is set out below.

Total assets 28 555 9 409Total liabilities (19 941) (7 689)

Net assets 8 614 1 720

Revenue for the year 72 246 111 203Profit for the year 6 233 10 206

Group’s share of profits of associates 2 150 3 018

Reconciliation of carrying amount:Original investment in associate 2 080 2 080Acquisition of associate (part of acquisition of subsidiary) 312 312 Acquisition of associate 3 762 2 068 Equity accounted earnings, net of taxation (cumulative since acquisition) 7 700 5 550 Dividends received (cumulative since acquisition) (4 872) (2 925) Foreign currency translation (743) (748)

Carrying value at the end of the year 8 239 6 337

99




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

18. LOANS TO SUBSIDIARIES

Bearing Man 1955 Limited – – 605 891 625 892Humulani Investments (Pty) Ltd – – 227 259 225 846

Humulani Marketing (Pty) Ltd – – 858 695 789 886

– – 1 691 845 1 641 624

The loans are unsecured, bear no interest and no

fixed terms of repayment have been negotiated.

19. INVENTORIES

Merchandise 3 434 447 2 877 921 – –Work-in-progress 44 285 35 131 – –

Total 3 478 732 2 913 052 – –

The cost of inventories recognised as an expensein respect of write-downs of inventory to netrealisable value 28 550 12 863 – –

Inventory recognised in the statement ofcomprehensive income 7 537 363 5 399 090 – –

20. TRADE AND OTHER RECEIVABLES

Trade receivables 1 835 820 1 565 006 – –Provision for doubtful debts (105 425) (100 194) – –Prepayments 33 041 22 386 151 148Other receivables 80 636 132 369 1 906 1 014

Total 1 844 072 1 619 567 2 057 1 162

The directors consider that the carrying value of trade and other receivables approximates fair value at year-end.

Movement in provision for doubtful debtsOpening balance 100 194 39 000 – –Acquisition of subsidiaries 5 094 55 595 – –Amounts written off during the year, net of recoveries 1 890 (1 216) – –

Net provision raised during the year (1 753) 6 815 – –

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 159 315 78 339 – –90 days 49 225 29 436 – –More than 120 days 125 178 76 743 – –

Total 333 718 184 518 – –




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

20. TRADE AND OTHER RECEIVABLES continued

Trade receivables past due and impaired

60 days 3 732 15 092 – –90 days 2 645 4 025 – –More than 120 days 99 048 81 077 – –

Total 105 425 100 194 – –

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

Authorised134 000 000 (2013: 134 000 000) ordinary shares of 5 cents each 6 700 6 700 6 700 6 700

Issued74 862 305 (2013: 74 112 523) ordinary shares of 5 cents each at the beginning of the year 3 743 3 706 3 743 3 706

689 088 (2013: 749 782) ordinary shares of 5 cents each issued during the year 34 37 34 37

75 551 393 (2013: 74 862 305) ordinary shares of 5 cents each at the end of the year 3 777 3 743 3 777 3 743

Number of shares Number of shares

2014 2013 2014 2013‘000 ‘000 ‘000 ‘000

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. 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 thedirectors general authority to repurchase shares not exceeding 20% of the issued share capital on the openmarket. This authority remains in force until the next annual general meeting.

101




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

22. SHARE PREMIUM

The ordinary share premium is made up as follows: Balance at the beginning of the year 331 515 272 320 331 515 272 320Ordinary shares issued during the year 79 382 59 195 79 382 59 195

Balance at the end of the year 410 897 331 515 410 897 331 515

23. TREASURY SHARES

1 452 920 (2013: 1 452 920) ordinary shares of 5 cents each (73) (73) – –

Share premium on 1 452 920 (2013: 1 452 920)ordinary shares (44 420) (44 420) – –

Shares not derecognised as a result of the putoption on the directors’ loans (35 605) (35 605) – –

Balance at the end of the year (80 098) (80 098) – –

24. ORDINARY DIVIDENDS*

Final179 cents paid on 8 July 2013 (2012: 177 cents) to shareholders registered in the books of the Company on 5 July 2013 134 025 131 179 134 025 131 179

Interim102 cents paid on 9 December 2013 (2012: 89 cents) to shareholders registered in the books of the Company on 6 December 2013 76 790 66 316 76 790 66 316

Dividends received on treasury shares (4 083) (4 232) – –Dividends declared by The Humulani Employee Investment Trust 2 057 – – –

Total 208 789 193 263 210 815 197 495

* 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

Authorised10 000 000 cumulative, non-participating preference shares of no par value 1 000 000 1 000 000 1 000 000 1 000 000

Issued7 500 000 cumulative, non-participating preference shares of R100 each 750 000 750 000 750 000 750 000

The Group has no contractual obligation to redeem the preference shares and dividends are only payableif 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 memberspassed at the annual general meeting held on 16 August 2013. This authority remains in force for 12 monthsfrom this date.




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

26. GUARANTEED REPURCHASE LIABILITIES

Present value at the beginning of the year 5 740 10 475 – – Interest accrued during the year 331 730 – – Liabilities settled during the year (3 403) (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 4 086 – – Due in the second to fifth years inclusive 458 1 654 – –

2 668 5 740 – –

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 borrowingsFinance lease agreements 28 597 26 691 – –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.

Mortgage bonds 128 567 146 023 – –The mortgage bonds are repayable over 120 months. The mortgage bonds attract interest at Jibar plus 2,05% per annum. The capital on the Jibar linked bonds are repayable from the third year onwards. The Jibar linked variable rates bonds have been swapped for fixed rate loans for a period of two years. These bonds are secured by certain land and buildings as referred to in note 9.2.

Balance carried forward 157 164 172 714 – –

103




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

27. LONG–TERM BORROWINGS continued

27.1 Secured borrowings continued

Balance brought forward 157 164 172 714 – –

Debentures 834 438 990 135 – –The debentures bear interest at 12,5% per annum and are redeemable in semi-annual instalments from 8 August 2011 to 8 February 2016. The rights of the debenture holders to the repayment of interest and capital are subordinated in favour of the claims of the creditors of certain of the Group’s companies. The debentures are secured by certain preference share investments by means of a credit default swap transaction entered into with Standard Bank of South Africa Limited as detailed in note 10.

Serec Capital (Pty) Ltd loan 2 538 323 2 291 852 – –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.

Industrial Development Corporation loans 82 524 68 386 – –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.

Preference shares issued to Standard Bank 740 835 584 505 – –The preference shares mature in 2018 and have a dividend coupon rate of Jibar plus 2%, and the dividends are payable semi-annually.

Domestic Medium–term Note Program 375 000 375 000 – –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.

Balance carried forward 4 728 284 4 482 592 –




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000


27.1 Secured borrowings continued

Balance brought forward 4 728 284 4 482 592 –

Short-term loan from Southchester RF (Pty) Ltd 200 762 100 338 – –

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 397 913 483 327 – –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.

Short-term loan from Standard Bank – 146 000 – –The loan was repaid on 1 August 2013.

Loan from UOB Singapore – 5 214 – –The loan matured in March 2014.

27.2 Unsecured borrowings

Other borrowings 11 942 54 738 – –The amounts payable are unsecured, interest free and no fixed repayment terms have been set. The loans are long-term in nature.

Other borrowings 60 47 868 – –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 100 558 57 202 – –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.

Balance carried forward 5 439 519 5 377 279 –

105




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000


27.1 Unsecured borrowings continued

Balance brought forward 5 439 519 5 377 279 –

Financial liability arising on minority put option 377 080 380 565 – –

Financial liability arising as a result of a contractual put option on the non-controllinginterest in Invicta Asian Holdings (Pte) Ltd.

Gryphon Financial Engineering (Pty) Ltd 930 411 683 938 – –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 2 000 9 720 – –The loan bears interest at prime overdraft rate plus 2%, is unsecured and no fixed repayment term has been set.

Trust receipts and bills payables 87 040 64 418 – –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.

Contractual earn-out liabilities 36 000 98 969 – –The amounts payable are interest-free and have been determined on the basis of the underlying contractual arrangements.

Invicta Share Trust loan – – 688 688The loan is unsecured, interest–free and there are no fixed terms of repayment. The loan is long–term in nature.

Total borrowings 6 872 050 6 614 889 688 688Less: Current portion of long–term borrowings disclosed in current liabilities (933 312) (1 127 001) – –

Total long-term borrowings 5 938 738 5 487 888 688 688

Borrowings are repayable as follows:On demand or within one year 933 312 1 127 001 – –In second to fifth year inclusive 5 900 290 3 096 003 – –After five years 38 448 2 391 885 688 688

Total 6 872 050 6 614 889 688 688

There is no limit on the Group’s borrowings and guarantees in terms of the Company’s Memorandumof Incorporation




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

28. FINANCIAL LIABILITIES

Put option derivative on the Gryphon Financial Engineering (Pty) Ltd preference shares (refer note 10) 154 695 156 922 – –

Interest rate swap derivative – 8 108 – –

154 695 165 030 – –

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 – 78 289 – –Share appreciation rights exercised – (119 681) – –Share appreciation rights charged to statement of comprehensive income – 41 392 – –

Closing balance – – – –

30. TRADE AND OTHER PAYABLES

Trade payables 1 758 448 1 559 597 – –Other payables 310 239 357 947 14 181 10 201Deferred income 2 253 3 724 – –

Total 2 070 940 1 921 268 14 181 10 201

31. PROVISIONS

Employee benefit provisions 189 572 106 968 – –Warranties and service provisions 37 283 20 385 – –

Total 226 855 127 353 – –

Movements in provisionsEmployee benefit provisionsBalance at the beginning of the year 106 968 60 114 – –Charged to income 82 604 34 759 – –Acquisition of subsidiaries (included in trade andother payables) – 12 095 – –

Balance at the end of the year 189 572 106 968 – –

Warranties and service provisionsBalance at the beginning of the year 20 385 54 526 – –Credited to income 16 898 (34 141) – –

Balance at the end of the year 37 283 20 385 – –

The provision has been recognised for expected warranty claims on certain products sold during the last

three financial years.

107




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

32. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

Profit before taxation 850 690 818 756 206 128 48 528 Adjusted for:

Depreciation 95 118 72 334 – –

Amortisation of intangible assets 39 984 14 480 – –

Impairment of property, plant and equipment 66 18 – –

Interest rate swap and put option (gain) loss (8 818) 6 155 – –

Net profit on disposal of property, plant

and equipment (16 298) (3 551) – –

Finance costs 827 966 651 760 – –

Dividend received (310 475) (316 902) (206 482) (40 589)

Share of profits of associate (2 150) (3 018) –

Interest received (323 081) (214 771) (4 092) (4 399)

Non-cash effects of foreign currency translation – 22 363 – –

Share appreciation rights issued 5 926 – –

Negative goodwill – (52 066) – –

Goodwill impairment – 2 791 – –

Cash generated from (utilised by) before

movements in working capital 1 158 928 998 349 (4 446) 3 540

Working capital changes: (443 768) (266 270) 3 085 9 687

(Increase) decrease in inventories (457 096) 55 869 – –

(Increase) decrease in trade and other receivables (145 500) (212 663) (895) 5 675

Increase (decrease) in trade and other payables

and provisions 158 828 (109 476) 3 980 4 012

Cash generated from (utilised by) operations 715 160 732 079 (1 361) 13 227

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.




Group Company

2014 2013 2014 2013R’000 R’000 R’000 R’000

33. DIVIDENDS PAID TO GROUP SHAREHOLDERS

Amounts unpaid at the beginning of the year 28 733 2 262 22 270 852

Dividends paid 208 789 193 263 210 815 197 495

Preference dividends accrued/paid 65 788 21 912 65 788 21 912

Amounts unpaid at the end of the year (36 802) (28 733) (27 488) (22 270)

Total 266 508 188 704 271 385 197 989

34. TAXATION PAID

Amounts unpaid (prepaid) at the beginning

of the year 11 368 24 634 (243) 684

Acquisition of subsidiary (605) 28 157 – –

Charged to the statement of comprehensive income 222 642 119 714 1 451 1 028Amounts (unpaid) prepaid at the end of the year (90 495) (11 368) (24) 243

Total 142 910 161 137 1 184 1 955

35. CASH AND CASH EQUIVALENTS

Bank and cash balances 526 369 678 849 765 610Bank overdrafts (386 873) (191 131) – –

Total 139 496 487 718 765 610

Group

Bank TradingR’000 R’000

Banking and trading facilitiesGross facility balances 831 865 3 844 947Facilities utilised 386 873 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 twelvemonths.

36. CONTINGENT LIABILITIES

The Group had no significant contingent liabilities in the current year.

109




37. DIRECTORS’ EMOLUMENTS

Audit Totaland Perfor- before

Remu- mance share-neration Salary Retire- related based

Directors’ committee and ment remune- pay-fees fees benefits benefits ration ments

R’000 R’000 R’000 R’000 R’000 R’000

2014

Executive directors C Barnard – – 1 985 263 2 700 4 948A Goldstone – – 2 168 287 2 900 5 355AM Sinclair – – 2 518 202 2 800 5 520 CE Walters – – 2 855 289 2 494 5 638

– – 9 526 1 041 10 894 21 461

Non–executive directorsCH Wiese 804 24 – – – 828 JS Mthimunye 58 52 – – – 110 DI Samuels 116 191 – – – 307 JD Wiese 174 – – – – 174 LR Sherrell 145 104 – – – 249 RA Wally 130 52 – – – 182 R Naidoo 29 – – – – 29

1 456 423 – – – 1 879

Total 1 456 423 9 526 1 041 10 894 23 340

2013

Executive directorsC Barnard – – 1 989 261 2 600 4 850 A Goldstone – – 2 170 286 2 200 4 656AM Sinclair – – 2 520 200 2 600 5 320 CE Walters – – 2 853 279 600 3 732

– – 9 532 1 026 8 000 18 558

Non–executive directorsCH Wiese 634 22 – – – 656 JS Mthimunye 54 93 – – – 147 DI Samuels 108 177 – – – 285 JD Wiese 108 48 – – – 156 LS Sherrell 108 102 – – – 210

1 012 442 – – – 1 454

Total 1 012 442 9 532 1 026 8 000 20 012




37. DIRECTORS’ EMOLUMENTS continued

Share appreciation rights exercised by the directors in 2014:

Out- Averagestanding Outstan- weighted

rights Granted Taken up ding prices onbeginning Strike during during rights end Date rights

of year price the year the year of year granted taken up

2014A Goldstone 396 340 108 007 100 000 404 347

100 000 24,37 – 50 000 50 000 02-Mar-10 120,61 150 000 42,55 – 50 000 100 000 01-Mar-11 120,61 146 340 66,14 – – 146 340 11-Jun-12

– 120,93 108 007 – 108 007 13 Mar-14

C Barnard 213 333 100 559 85 000 228 892

83 333 24,37 41 667 41 666 02-Mar-10 120,61 130 000 42,55 43 333 86 667 01-Mar-11 120,61

– 120,93 100 559 – 100 559 13 Mar-14

CE Walters 416 666 114 890 286 666 244 890

200 000 18,48 200 000 – 13-Mar-09 103,88 86 666 24,37 43 333 43 333 02-Mar-10 120,61

130 000 42,55 43 333 86 667 01-Mar-11 120,61– 120,93 114 890 – 114 890 13 Mar-14

AM Sinclair 266 666 104 283 136 666 234 283

50 000 18,48 50 000 – 13-Mar-09 114,87 86 666 24,37 43 333 43 333 13-Mar-09 120,61

130 000 42,55 43 333 86 667 01-Mar-11 120,61– 120,93 104 283 – 104 283 13 Mar-14

2013A Goldstone 1 800 000 – 146 340 1 550 000 396 340

500 000 24,84 – 500 000 – 14-Mar-08 77,20 1 000 000 18,48 – 1 000 000 – 13-Mar-09 96,28150 000 24,37 – 50 000 100 000 2-Mar-10 94,34150 000 42,55 – – 150 000 1-Mar-11 –

– 66,14 146 340 – 146 340 11-Jun-12 –

C Barnard 655 000 – 341 667 313 333

400 000 18,48 – 300 000 100 000 13-Mar-09 96,28125 000 24,37 – 41 667 83 333 2-Mar-10 94,34130 000 42,55 – – 130 000 1-Mar-11 –

CE Walters 1 160 000 – 743 334 416 666

500 000 24,84 – 500 000 – 14-Mar-08 69,26400 000 18,48 – 200 000 200 000 13-Mar-09 103,88130 000 24,37 – 43 334 86 666 2-Mar-10 93,94130 000 42,55 – – 130 000 1-Mar-11 –

AM Sinclair 1 020 000 – 753 334 266 666

360 000 24,84 – 360 000 – 14-Mar-08 74,55400 000 18,48 – 350 000 50 000 13-Mar-09 93,85130 000 24,37 – 43 334 86 666 13-Mar-10 93,94130 000 42,55 – – 130 000 1-Mar-11 –

The share appreciation rights exercised by the directors in 2014 amounted to R65 million (2013: R35 million).

111




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 Company

2014 2013 2014 2013R’000 R’000 R’000 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:

– Payable within twelve months 17 066 16 116 – –

– Payable thereafter 22 885 23 459 – –

Total 39 951 39 575 – –

Commitments in respect of unexpired rental

agreements for office equipment:

– Payable within twelve months 1 624 231 – –

– Payable thereafter 6 723 190 – –

Total 8 347 421 – –

Commitments in respect of contracted

capital expenditure 51 936 81 770 – –

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 managementThe interest rate profile of total borrowings is as follows:

Redemption Interest 2014 2013

Description Currency period rate % p.a. R’000 R’000

Bank overdrafts ZAR N/A 8,25 to 10,50 386 373 191 131

Fixed rate borrowings ZAR 2006 to 2019 10,50 to 12,50 4 331 769 3 992 616

Fixed rate borrowings SGD 2015 2,10 – 5 214

Variable rate borrowings ZAR 2009 to 2024 6,00 to 11,00 1 630 245 1 487 173

Variable rate borrowings SGD 2013 to 2018 1,20 to 4,00 485 013 595 613

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.




40. FINANCIAL RISK MANAGEMENT continued

Credit risk managementPotential areas of credit risk consist of trade accounts receivable and short-term cash investments. Tradeaccounts receivable consist of a widespread customer base. Group companies monitor the financial positionof their customers on an on-going basis. Where considered appropriate, use is made of credit guaranteeinsurance. The granting of credit is controlled by application and account limits. Provision is made for specificbad debts and at the year end management did not consider there to be any material credit risk exposurethat was not already covered by credit guarantee or a bad debt provision (refer to note 20 for further detailin this regard). It is Group policy to deposit short-term cash investments with only the major banks.

Liquidity risk managementThe Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilisedborrowing 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 2 to 5 More than1 year years 5 years TotalR’000 R’000 R’000 R’000

2014Mortgage bonds 17 879 88 161 22 527 128 567 Serec Capital loan – 2 538 323 – 2 538 323 Debentures 207 089 627 349 – 834 438 Preference shares – 740 835 – 740 835 Domestic medium-term note program 225 000 150 000 – 375 000 Loans 470 978 431 899 15 922 918 799 Gryphon Financial Engineering – 930 411 – 930 411 Put option – 377 080 – 377 080 Finance lease liabilities 12 365 16 232 – 28 597 Guaranteed repurchase liability 2 210 458 – 2 668 Trade and other payables 2 070 940 – – 2 070 940

Total 3 006 461 5 900 748 38 449 8 945 658

2013Mortgage bonds 46 698 111 232 (11 907) 146 023Serec Capital loan – – 2 291 852 2 291 852 Debentures 152 973 837 162 – 990 135 Preference shares – 584 505 – 584 505 Domestic medium-term note program – 375 000 – 375 000 Loans 907 986 116 254 54 738 1 078 978 Gryphon Financial Engineering – 683 938 – 683 938Put option – 380 565 – 380 565Finance lease liabilities 19 344 7 347 – 26 691Guaranteed repurchase liability 4 086 1 654 – 5 740 Trade and other payables 1 921 268 – – 1 921 268

Total 3 052 355 3 097 657 2 334 683 8 484 695

113





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.

ZAR SGD OTHER TOTAL

Foreign currency monetary assets and liabilities R'000 R'000 R'000 R'000

Total assets 9 098 324 3 282 778 1 067 570 13 448 672

Total liabilities (8 778 259) (972 248) (139 145) (9 889 652)

320 065 2 310 530 928 425 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 Average

currency exchange Rand

’000 rate ’000

2014

US Dollar 65 474 10,8774 712 188

Euro 27 244 15,3093 417 087

Yen 621 418 9,3779 66 264

British Pound 305 18,2984 5 581

2013

US Dollar 41 916 8,9497 375 134

Euro 32 705 11,7070 382 877

Yen 485 876 9,8673 49 241

British Pound 219 14,0502 3 077

These forward exchange contracts mature within twelve months after year-end.





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, long-

term borrowings and shareholders for dividend.

Group

2014 2013R’000 R’000

Categories of financial instruments

Financial assets

Investments at amortised cost

Financial investments 2 884 418 2 877 975

Financial assets at fair value

Financial asset 155 405 156 922

Loans and receivables at amortised cost

Finance lease receivables 53 635 27 440

Long-term loans 2 268 948 1 950 291

Trade and other receivables 1 811 031 1 597 181

Bank balances and cash 526 369 678 849

Total 7 699 806 7 288 658

Financial liabilities

Financial liabilities at fair value

Financial liabilities 154 695 165 030

Financial liabilities at amortised cost

Borrowings 6 872 050 6 614 889

Guaranteed repurchase liabilities 2 668 5 740

Trade and other payables 2 068 687 1 917 544

Shareholders for dividends 36 802 28 733

Bank overdrafts 386 873 191 131

Total 9 521 775 8 923 067

Fair value disclosure

The following is an analysis of the financial instruments that are measured subsequent to initial recognitionat fair value. They are grouped into levels 1 to 3 based on the extent to which the fair value is observable.

The levels are classified as follows:Level 1 – fair value is based on quoted prices in active markets for identical financial assets or liabilitiesLevel 2 – fair value is determined using directly observable inputs other than Level 1 inputsLevel 3 – fair value is determined on inputs not based on observable market data

115





Valuation

techniques

31 March and key

2014 inputs Level 1 Level 2 Level 3


Financial asset 155 405 1 – 155 405 –

Trade and other receivables 1 844 072 2 – – 1 844 072


Financial liabilities 154 695 1 – 154 695 –

Trade and other payables 2 070 940 3 – – 2 070 940

Foreign trade payables 301 860 4 – 301 860 –

Valuation

techniques

31 March and key

2013 inputs Level 1 Level 2 Level 3


Financial asset 156 922 1 – 156 922 –


Financial liabilities 165 030 1 – 165 030 –

Trade and other payables 615 434 4 – 615 434 –

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 Indirect Direct Indirectinterest interest interest interest

Ordinary sharesC Barnard 386 776 240 632 315 632 240 632 A Goldstone 262 281 3 982 032 262 281 4 238 678 DI Samuels 500 460 3 084 155 500 460 3 500 000 LR Sherrell – 8 068 038 – 9 286 353 AM Sinclair 406 910 – 344 163 –CE Walters 951 768 258 165 813 500 258 165 CH Wiese – 27 000 000 – 27 000 000

Preference sharesC Barnard – 10 000 – 10 000 A Goldstone 200 000 105 000 200 000 105 000 LR Sherrell – 160 000 – 160 000 AM Sinclair 10 000 – 10 000 –JD Wiese – 200 000 – 200 000 CH Wiese – 800 000 – 800 000




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

2014 2013R’000 R’000

Long- and short-term employee benefits 37 254 34 237

Retirement benefits 2 442 1 716

Total 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 Industry

High Power Equipment Africa (Pty) Ltd 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




43. ACQUISITION OF SUBSIDIARIES continued

Detailed below is a summary of the financial impacts of the acquisitions:

Group

2014 2013R’000 R’000

Fair value of net assets acquired:

Property, plant and equipment 9 360 553 771 Assets held for resale – 9 957 Intangible assets 17 455 134 668 Long-term receivable – 134 625 Financial assets – 1 161 Investment in associates – 312 Taxation prepaid 734 –Other assets – 367 Bank and cash 15 990 142 264 Inventories 72 110 884 259 Trade and other receivables 60 784 537 720 Deferred taxation 625 (10 020) Long-term borrowings (15 367) (128 204) Trade and other payables (83 155) (361 296) Current portion of long-term borrowings (1 656) (111 141) Taxation liabilities (129) (28 157) Non-controlling interest (3 440) (327 076)

Net tangible asset value 73 311 1 433 210Non-controlling interest acquired in existing subsidiaries 7 982 17 787

Fair value of net assets acquired 81 293 1 450 997Bank and cash (15 990) (142 264)

Net fair value of net assets acquired 65 303 1 308 733

Cash outflow on acquisitions 95 762 1 494 214Fair value of net assets acquired 65 303 1 308 733

Total goodwill 30 459 185 481Positive goodwill 30 459 237 547Negative goodwill – (52 066)

Profit after taxation since acquisition date included in the consolidated results for the year 3 568 50 213

Revenue since acquisition date included in the consolidated results for the year 591 578 1 025 635

Profit after taxation should the business combinations have been included for the entire year 3 568 114 744

Revenue should the business combinations have been included for the entire year 591 578 2 140 747

44. EVENTS AFTER THE REPORTING PERIOD

There were no events to report on after the reporting period to the date of this report.




119119

Notice ofannual 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”)

NOTICE OF ANNUAL GENERAL MEETINGOF SHAREHOLDERS FOR THE YEAR ENDED 31 MARCH 2014

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.

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.

Record date for determining which shareholders are

entitled to receive the annual general meeting notice

is Friday, 20 June 2014.

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.

Note:

– 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.

– 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.

– 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.

Special Resolution 1

“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

Company, upon such terms and conditions and in such

amounts as the directors of the Company may from

time to time determine, but subject to the

Memorandum of Incorporation of the Company, the

provisions of the Act and the 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

Company or any subsidiary of the Company may only

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

understanding or arrangement between the

Company and the counterparty;

• authorisation 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

premium at which such ordinary shares may be

acquired will be 10% (ten percent) of the

weighted average of the market price at which

such ordinary shares are traded on the JSE, as

determined over the 5 (five) trading days

immediately preceding the date of the repurchase

of such ordinary shares by the Company;

• the acquisitions of ordinary shares in the

aggregate in any one financial year do not exceed

20% (twenty percent) of the Company’s issued

ordinary share capital from the date of the grant

of this general authority;


• a resolution by the Board of Directors that has

authorised the repurchase, that the Company and

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

3% of the initial number of the relevant class of

securities, and for each 3% (three percent) in

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

– Share capital of the Company – page 101.

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

which this notice forms part, are not aware of any

legal or arbitration proceedings, including

proceedings that are pending or threatened, that may

have or have had in the recent past, being at least the

previous 12 (twelve) months, a material effect on the

Group’s financial position.

Directors’ responsibility statement

The directors, whose names are given on pages 4 and

5 of the 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.

Material changes

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.

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.

Statement of directors

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;

120

Notice of annual general meetingcontinued



121121

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. the share capital and reserves of the Company and

the Group will be adequate for ordinary business

purposes;

d. the working capital will be adequate to continue

the ordinary business purposes of the Company

and the Group; and

e. before entering the market to proceed with the

repurchase, the Company's sponsor will confirm to

the JSE in writing the adequacy of the Company’s

and the Group's working capital for the purposes

of undertaking a repurchase of shares.


“RESOLVED THAT, the remuneration of each non-

executive director of the Company be approved, each

by way of a separate vote, as a special resolution in

terms of section 66 of the Act, for the 2015 financial

year as follows:

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


"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

loan, guarantee, the provision of security or

otherwise) by the Company 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, or for the purchase of any securities of

the Company or a 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

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

Board is satisfied that (i) immediately after providing

such financial assistance, the Company would satisfy

the solvency and liquidity test contemplated in section

4 of the Act, and (ii) the terms under which the

financial assistance is proposed to be given are fair

and reasonable to the Company.


“RESOLVED THAT in terms of section 45(3)(a)(ii) of the

Companies Act (2008) (“Act”), the provision from time

to time of financial assistance by the Company to any

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

resolution number 4 and be subject further to section

45(3)(b) of the Act, which states that the Board may

not authorise such financial assistance unless the

Board is satisfied that (i) immediately after providing

such financial assistance, the Company would satisfy

the solvency and liquidity test contemplated in section

4 of the Act, and (ii) the terms under which the

financial assistance is proposed to be given are fair

and reasonable 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 2.2

To re-elect, each by way of a separate vote, thefollowing directors who retire by rotation at theannual general meeting, but being eligible, offerthemselves for re-election:

2.1 LR Sherrell

2.2 Adv JD Wiese

Abbreviated biographical details of the abovedirectors are set out on page 5 of this IntegratedAnnual Report.

Ordinary Resolution 3.1 and 3.2

To ratify, each by way of a separate vote, theappointment of the following directors, asindependent non-executive directors of the Company:

3.1 RA Wally – Effective 30 July 2013

3.2 R Naidoo – Effective 20 February 2014

Abbreviated biographical details of the above directorsare set out on page 5 of this Integrated AnnualReport.


“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

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.”


“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).”

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:

• 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;




123123

• 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 DI Samuels (Chairman)

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


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:

• 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

• 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).

3. Except to the extent that the Memorandum of

Incorporation of the Company provides otherwise:

• a shareholder of the Company may appoint

two or more persons concurrently as proxies,

and may appoint more than one proxy to

exercise voting rights attached to different

securities held by the shareholder;

• 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

• 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

• 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

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:

• the shareholder; or

• the proxy or proxies, if the shareholder has

directed the Company to do so, in writing; and

• paid any reasonable fee charged by the

Company for doing so.

7. A proxy is entitled to exercise, or abstain from

exercising, any voting right of the shareholder

without direction, except to the extent that the

Memorandum of Incorporation, or the instrument

appointing the proxy, provides otherwise.



125


Invicta Holdings Limited | Integrated Annual Report 2014 125

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

INVICTA HOLDINGS LIMITEDRegistration number 1966/002182/06 • Incorporated in the Republic of South Africa

Share code: IVT Ordinary Share • ISIN: ZAE000029773Share 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 oftheir 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 theirvoting instructions should they not wish to attend the annual general meeting in person. These shareholders must not use this formof 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 heldon Tuesday, 19 August 2014 at 10:30 in the boardroom of Invicta Holdings Limited at 3rd Floor, Pepkor House, 36 StellenbergRoad, Parow Industria, Cape Town for the purposes of considering and, if deemed fit, passing with or without modification, theresolutions to be proposed thereat and at each adjournment or postponement thereof, and to vote for and/or against theresolutions and/or abstain from voting in respect of the shares in the issued share capital of the Company registered in my/ourname(s) (see note 2).

Number of votes (one per share)

For Against Abstain

Special resolution 1General authority to repurchase shares

Special resolution 2Remuneration 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

Special resolution 3Approval 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

Special resolution 4Approval of financial assistance to any company which is related or inter-related to the Company

Ordinary resolution 1To 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 2.1To re-elect as director LR Sherrell

Ordinary resolution 2.2To re-elect as director Adv JD Wiese

Ordinary resolution 3.1To ratify the appointment as independent non-executive director of Mr RA Wally

Ordinary resolution 3.2To ratify the appointment as independent non-executive director of Mrs R Naidoo

Form of proxy

Number of votes (one per share)

For Against Abstain

Ordinary resolution 4Approval of the Company’s remuneration policy and its implementation

Ordinary resolution 5To place the authorised but unissued shares under the control of the directors

Ordinary resolution 6To authorise the directors to issue shares for cash

Ordinary resolution 7To 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

Ordinary resolution 8.1To re-elect as Audit Committee member Mr DI Samuels (Chairman)

Ordinary resolution 8.2To re-elect as Audit Committee member Mr LR Sherrell

Ordinary resolution 8.3To re-elect as Audit Committee member Mr RA Wally

Ordinary resolution 8.4To 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 andvote in place of that shareholder at the annual general meeting.Please read the notes below.

1. A shareholder may insert the name or names of two alternative proxies of the shareholder’s choice in the space provided, 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 thatshareholder in the space provided. Failure to comply with the above will be deemed to authorise the proxy to vote or abstainfrom voting at the annual general meeting as he deems fit in respect of all the shareholder’s votes exercisable thereat. A shareholder or his proxy is not obliged to use all the votes exercisable by the shareholder or his proxy, or cast them in thesame 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 beattached to this form unless previously recorded by the transfer secretaries or waived by the Chairman of the annual generalmeeting.

5. The completion and lodging of this form will not preclude the relevant shareholder from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms thereof, should suchshareholder wish to do so.

6. The Chairman of the annual general meeting may reject or accept any form of proxy which is completed and/or received otherthan in accordance with these instructions, provided that he is satisfied as to the manner in which a shareholder wishes to vote.

7. A minor must be assisted by his/her parent/guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the Company.

8. Where there are joint holders of any shares:

• any one holder may sign this form of proxy;

• the vote(s) of the senior shareholders (for that purpose seniority will be determined by the order in which the namesof 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).

9. Forms of proxy must be lodged with or posted to the Company’s transfer secretaries’ offices in Johannesburg (ComputershareInvestor Services (Pty) Ltd, Ground Floor, 70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107) to bereceived by no later than 10:30 on Friday, 15 August 2014.

Notes to the proxy form

Form of proxycontinued

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