integrated annual report - jse · wholesale and retail distributor of light earthmoving machinery,...

Integratedannual report

1 Financial highlights

2 Group at a glance

4 Board of directors

6 Joint report of the Chairman and CEO

8 Corporate structure

9 Humulani Investments Board

10 Operational structure

11 Map of BMG distribution network

12 Map of CEG distribution network

13 Map of BSG distribution network

14 Review of operations

26 Corporate governance report

41 Integrated report

45 Corporate information

46 Share information

48 Value added statement

49 Shareholders’ diary

51 Approval of the annual financial statements

51 Certification by the Group secretary

52 Report of the independent auditors

53 Report of the directors

56 Audit committee report

58 Statements of comprehensive income

59 Statements of financial position

60 Statements of changes in equity

61 Statements of cash flows

62 Notes to the annual financial statements

108 Notice of annual general meeting of

shareholders

Form of proxy (Attached)

>> Contents

>> Profile

Invicta Holdings Limited (Invicta) is an investment holding and management company, controlling and managingassets of R12 205 million (2012: R8 381 million). Its operations comprise:

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

>> Capital Equipment Group (CEG)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 predominantely heavy earthmoving machinery for construction and mining applications.

CriterionImporter and distributor of leading materials handling equipment and related spares.

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

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

>> 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 its operations to encompass laminated flooring in Gauteng.

MacNeilWholesale 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.

Invicta Holdings Limited | Integrated annual report 2013

for the year ended 31 March 2013

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

50100150200250300350400450500550600650700750800850900950

1 0001 050

0500

1 0001 5002 0002 5003 0003 5004 0004 5005 0005 5006 0006 5007 0007 5008 0008 5009 0009 500

10 00010 500

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

Share price

(cents)

EPS/DPS

(cents)

>> Financial highlights

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Revenue 7 557 899 5 599 464 4 533 801 3 968 872 4 523 535 3 335 496 2 663 398 1 907 754 1 937 593 2 069 163 1 907 317 1 352 311

Operating profit

before finance costs,

interest and

dividends received 883 759 601 081 505 493 453 293 497 356 360 379 281 229 197 843 231 957 229 451 230 123 122 405

Profit for the year 743 532 478 775 426 222 365 389 362 812 300 856 217 724 125 165 108 507 99 631 96 502 45 991

Equity attributable to

the equity holders 2 690 077 1 895 231 1 611 265 1 442 966 1 206 055 1 025 591 886 161 716 296 365 075 312 339 343 665 268 783

Dividends per

share (cents) 268 254 183 151 138 138 104 68 77 66 45 24

Earnings per

share (cents) 955 647 504 453 437 356 292 170 190 164 133 60

Diluted earnings per

share (cents) 948 604 480 441 437 354 288 169 190 160 130 58

Normalised earnings

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

Share price at the

year-end (cents) 10 200 6 500 4 350 2 879 2 000 2 550 2 750 1 850 1 550 935 550 310

1Invicta Holdings Limited | Integrated annual report 2013


BEARING MAN GROUP (BMG) PROFILE

BMG BEARINGS BMG SEALSBMG POWER

TRANSMISSION BMG DRIVES BMG BELTING AUTOBAX

BMG FASTENERS BMG FILTRATION BMG HYDRAULICSBMG TECHNICAL

RESOURCES BMG SUBSIDIARIES

>> Group at a glance

Wholesale supplier ofsanitary ware, brass

ware, taps, plumbingfixtures, plastic pipingand related products

to the building material sector of South Africa

and neighbouring countries.

>> Group at a glancecontinued


CAPITAL EQUIPMENT GROUP (CEG) BUILDING SUPPLY GROUP(BSG)

A leading importerand distributor of

wall and floor tiles,laminated flooring

and sanitary ware inthe Western Cape,KwaZulu-Natal and

Gauteng.

NORTHMEC CSE DOOSAN SANEW

HOLLAND SAMACNEIL TILETORIA

Importer and distributor of leading

materials handlingequipment and

related spare parts.

CRITERION

Distributor of leading agricultural

machinery,implements and

related spare parts.

Distributor of construction and

earthmoving machinery, turf

grooming machinery, golf

cars, utility vehicles and related

spare parts.

Distributor of excavators, wheel

loaders, articulateddump trucks and

hydraulic hammers.

Importers and wholesaler of New

Holland 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 earthmoving

equipment parts anddiesel spares.

Board of

directors

1. Dr CH Wiese, 2. A Goldstone, 3. C Barnard, 4. AK Masuku, 5. JS Mthimunye, 6. DI Samuels, 7. LR Sherrell 8. AM Sinclair, 9. CE Walters, 10. Adv JD Wiese


The Group has again

delivered very good results

despite markets which

experienced mixed fortunes.

8 9 2

1

4 7

5 10 36

>> Board of directorscontinued


Dr CH Wiese (71)Non-executive chairmanBA, LLB, DCom(h.c.)

Non-executive chairman of Invicta Holdings Limited from October 1997 to April 2000 and a non-executive directorsince April 2000, re-appointed non-executive chairman in January 2006. Chairman of Tradehold Limited, ShopriteHoldings Limited, and Pepkor Holdings Limited.

A Goldstone (52)Chief executive officerBSc (Mech Eng), BCom (Hons), CA(SA)

Worked as a management consultant at KPMGprior to joining the Invicta Group in January 1990as financial manager. Appointed financial director in August 1991. Appointed chief executive officer of Invicta Holdings Limited inApril 2000.

C Barnard (49)Financial directorCA(SA), MBA, ACIS

Joined Sappi as management accountant in1993, joined Group Five in their commercial development subsidiary in 1996 and was appointed commercial manager in 1997. In 1998joined the Invicta Group as financial manager,appointed director of CSE Equipment Company(Pty) Ltd in 1999 and company secretary of Invicta Holdings Limited in 2002. Appointed executive director of Invicta Holdings Limited on7 June 2007.

AK Masuku (43)Alternate non-executive independent director toJS 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 SouthAfrica’s top 200 corporates, parastatals and BEEplayers. Appointed managing director of aloeCap (Pty) Ltd in May 2007. Appointed non-executive director of Invicta Holdings Limited on7 June 2007 and appointed alternate director to J Mthimunye on 31 July 2009.

JS Mthimunye (48)Non-executive independent directorCA(SA)

Appointed financial accountant Department ofFinance in 1993. A founding partner of GobodoInc and established the corporate advisory servicein 1997. Appointed financial manager at NampakTissue in 1995. Appointed managing director ofaloeCap (Pty) Ltd and appointed executive chairman in May 2007. Appointed alternate director to AK Masuku on the Invicta HoldingsLimited board on 7 June 2007 and appointed asnon-executive director on 31 July 2009.

DI Samuels (73)Independent non-executive directorCA(SA)

Joined Trade and Industry Acceptance Corporation Limited in 1971 and was appointed director from 1980 to 1984.From 1989 to 2000 was managing director of Stenham (Pty) Limited. In 1996 was appointed non-executive director ofInvicta Holdings Limited. Appointed non-executive director of Bearing Man Limited in 2001 and chairman in 2002.

LR Sherrell (47)Non-executive director

Appointed as alternate director to Mr RE Sherrell on 27 May 2009 and has been nominated as director of InvictaHoldings Limited with effect from 29 July 2010, upon the retirement of Mr RE Sherrell. Mr LR Sherrell studied commerce at UCT and has been involved in the hospitality and motor trade industries with interests in franchise dealerships. Mr LR Sherrell represented South Africa as a rugby player in 1994.

AM Sinclair (58)Executive director

Joined JI Case in 1982 and was appointed branchmanager in 1986. Joined CSE in 1989 and wasappointed a divisional managing director in 1993.In 1998 appointed managing director of CSE andin September 2006 appointed as an alternatedirector of Invicta Holdings Limited. Appointedexecutive director of Invicta Holdings Limited on7 June 2007.

CE Walters (45)Executive directorBSC (Mech Eng), BCom, MDP (Harvard)

Joined Anglo American Corporation in 1986 ascorporate graduate engineering trainee wherehe held numerous positions in both the Anglogroup and De Beers. Appointed marketing andsales manager – Pulp for Mondi SA in 1996 andappointed managing director of Mondi SalesInternational in 2002. Appointed managing director of Bearing Man (Pty) Ltd in September2006. Appointed alternate director to DI Samuelson the Invicta Holdings Limited board on 7 June2007 and appointed as executive director on 31 July 2009.

Adv JD Wiese (32)Non-executive directorBA(Value and Policy Studies), LLB, MIEM (Bocconi, Italy)

Adv JD Wiese has been appointed as director of Invicta Holdings Limited with effect from 29 July 2010. Adv JD Wiese obtained his BA degree after which he worked at Lourensford Wine Estate, helping to initiate events partnerships. Adv JD Wiese subsequently obtained his Master’s Degree in International Economics andManagement and completed this degree as a participant in the MBA program. After returning to Lourensford for abrief period, Adv JD Wiese graduated as a Bachelor of Law student in 2008. In 2009 Adv JD Wiese completed his pupilage at the Cape Bar and was admitted as an Advocate of the High Court on 8 May 2009.

Ages as at year-end

1

2 3

6

7

8

10

5

9

4

Joint report of the

Chairman and CEO


>> Revenue grew by 35%

>> HEPS grew by 39% to 885 cents per share

>> Final dividend 179 cents per share

>> The only JSE Company ever to achieve

TOP 100 status – 18 years in a row

Dr CH WieseNon-Executive Chairman

MARKET OVERVIEW

The Group has again delivered very

good results despite markets which

experienced mixed fortunes.

Group revenue grew by 35% to R7 558

million, of which R1 026 million (18%)

was from acquisitions. Operating profit,

which included a once-off gain of R158

million, was 47% higher at R884 million.

Excluding this once-off gain, operating

profit was R726 million, an increase of

21%, which is reflective of the strong

trading performance in market conditions

which put pressure on gross margins and

inflationary pressure on costs. R46 million

of operating profit came from

acquisitions.

Profit (after tax) for the year increased by

55% to R744 million. A once-off gain

resulted in headline earnings growing by

43% to R642 million. Normalised earnings

per share grew by 14% from 647 cents per

share to 737 cents per share. Working

capital management was excellent,

resulting in cash generated from

operations of R732 million, up 50% from

R489 million.

The Group announced the acquisition of

Kian Ann Engineering Limited (Kian Ann)

on 15 October 2012. Kian Ann is a large

distributor of heavy earthmoving

equipment parts and diesel engine spares

which was listed on the Singapore Stock

Exchange, with an annual turnover of

more than R1,1 billion. The acquisition

was included in the Invicta results from

1 February 2013. The purchase price of

Kian Ann was SGD192,6 million of which

the founding management contributed

SGD31,16 million for a 25% stake and the

balance was entirely funded with debt.

A GoldstoneChief Executive Officer

Invicta is a robust business with proven

management. The Group has a strong

balance sheet, which will ensure that it is

able to weather economic storms.


>> Joint report of the Chairman and CEOcontinued

The acquisition of Kian Ann takes the Group

to the global stage of distribution of heavy

earthmoving equipment parts and diesel

engine spares as the company distributes to

over 50 countries worldwide. Since June 2012

the markets serviced by Kian Ann have

experienced challenging trading conditions,

which are expected to continue for the

short-term. Kian Ann is only expected to start

making a meaningful contribution to Group

profits over time as the debt for its

acquisition is repaid.

The Group continued to take advantage of

domestic growth opportunities and made a

number of strategic acquisitions totalling

R223 million. The most significant of these

was the acquisition by BMG of Man-Dirk, a

leading industrial distributor of tools and

equipment to the mining and industrial

sector.

In order to strengthen its balance sheet the

Group issued perpetual preference shares for

R750 million on 28 November 2012.

BMG

BMG experienced tough trading from the

second quarter onwards. Strikes in the mining

and freight transport industries had a

negative knock-on effect on the

manufacturing sector. Notwithstanding, it is

most pleasing to report that BMG grew

revenue by 25% to R3 425 million, of which

8% came from organic growth and 17% from

acquisitions.

BMG made two significant acquisitions in the

period. OMSA, a leading player in lubrication

and filtration systems with a strong field

service presence was acquired with effect

from 1 April 2012. Man-Dirk, a leading

industrial distributor of tools and equipment

to the mining and industrial sector was

acquired with effect from 1 August 2012.

Both these acquisitions strengthen BMG's

product breadth and service depth.

BMG continues to reposition its offering from

one of product supply to one of technical

value-added solutions and services for

customers. It continues to be a leading player

in the industries in which it operates and a

significant core profit generator of the

Group.

CEG

CEG has had another excellent trading year resulting in a strong

performance for the year under review. Revenue grew by 37% to

R3 503 million and operating profit grew by 38% to R339 million.

Acquisitions contributed for 7% of both revenue and operating

profit growth.

Key ratios in CEG were all healthy and cash generation was good.

CEG continues to outperform its benchmarks and to be a major

contributor to the Invicta stable.

BSG

On 1 October 2012 the Invicta Group acquired an effective 53,4% of

the issued shares of MacNeil (Pty) Ltd. MacNeil is a leading wholesale

supplier of sanitary ware, brassware, taps, plumbing fixtures, plastic

piping and related products to the building materials sector of South

Africa and neighbouring countries. It operates through seven

branches in South Africa. The combined annual revenue of Invicta

building materials segment after this acquisition is expected to exceed

R1 billion per annum. Invicta plans to grow further in this

sector.

PROSPECTS

Invicta is a robust business with proven management. Invicta has a

strong balance sheet, which will ensure that it is able to weather

economic storms and to fund significant growth opportunities as they

arise. Invicta has embarked on a path of growing its Rand hedge

business with the acquisition of Kian Ann and by developing its

business in Africa.

Given the aforegoing, management’s focus will be on containing

costs, growing the Group’s after-sales and spares business in South

Africa, growing in the building materials industry, growing into Africa

and developing Kian Ann’s global business.

Trading conditions are expected to be challenging in the coming year,

but the Board remains confident of the continued success of the

Group.

Dr CH Wiese A Goldstone

Chairman Chief Executive Officer

11 June 2013

Humulani Empowerment Trust

100% 60%100%

20%

100%

5%

75%

100%

Bearing Man

1955 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

(Pty) Ltd

Invicta Asian

Holdings

(Pte) Ltd

Operational

Marketing (Pty)

Ltd

Man-Dirk

(Pty) Ltd

Tiletoria Cape

(Pty) Ltd

MacNeil

(Pty) Ltd

Disa

Equipment

(Pty) Ltd

(Doosan SA)

Equipment

Spart Parts

(Africa)

(Pty) Ltd

Invicta

Properties

(Pty) Ltd

Humulani Employee Investment Trust


>> Corporate structure

33%

Criterion

Equipment

(Pty) Ltd

60%

89%


Humulani InvestmentsBoard

JS Mthimunye >>

C Barnard >>

<< DEL Zondo

<< AK Masuku

<< A Goldstone

Trading conditions are expected to be challenging in the

coming year, but the Board remains confident of the continued

success of the Group.

Abe BekkerChief Operating Officer

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:

Criterion Equipment

Ben GroblerNational Parts Director and

Managing Director:

Landbou Parts

Andrew GroblerManaging Director: ESP

Geoff BalshawFinancial Director

Patrick ThonissenManaging Director

Johan van der MerweManaging Director: Northmec

Wayne TaylorChief Financial Officer

Paul McKinlayDirector: Bearings, Seals and

Power Transmission

Gavin PelserDirector: Hydraulics, OMSA,

Wegezi and OST

Dave RussellDirector: Drives, Belting and

Technical Resources

Ian KingGroup Sales and

Marketing Director

CEG DIVISIONAL DIRECTORS

KIAN ANN

TILETORIA

Kevin DiabFinancial Director

Shane WatersNational Sales Director

Mark RussellManaging Director

MACNEIL

BMG DIVISIONAL DIRECTORS

Alex AckronManaging Director: CSE

Allan DuckworthFinancial Director

Mohammud MohuideenOperations Director

Charles WaltersBMG

Anthony SinclairCEG

Neil MalherbeBSG

Building Supply GroupBearing Man Group Capital Equipment Group


>> Operational structure

BMG Engineering Hubs


BMG branches

BMG Hydraulics

OMSA

Man-Dirk

GAUTENG

>> 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


>> Map of CEG distribution network

MacNeil manufacturing operation Tiletoria dealers

Tiletoria branchesMacNeil wholesale distribution centres


>> Map of BSG distribution network

Review of

operations


>> BMG – Bearing Man Group

Bearing Man Group weathers a tough economic climate.

>> CE WaltersChief executive officer

W Taylor >>Chief financial officer


>> Review of operationscontinued

FINANCIAL REVIEW

Market demand for BMG’s products and

services was impacted by strikes in the mining

sector during the second half of calendar year

2012. Despite this, there was a modest

improvement in volumes sold. Supplier price

increases, together with Rand depreciation,

resulted in significant increases in the landed

cost of BMG products. Not all of these

increases were able to be passed on to

customers, leading to pressure on gross

margins.

Two significant acquisitions were made

during the year, adding to turnover growth.

Including acquisitions, turnover increased by

25% to R3,4 billion (2012: R2,7 billion).

Organic growth in turnover was 8%. Expenses

(including acquisitions) grew by 23% during

the period, with organic growth in expenses

being restricted to 7%. Including acquisitions,

operating profit of R390 million (2012: R371

million) was achieved, a growth of 5% on the

previous period. The operating margin

reduced to 11,4% (2012: 13,5%).

Inventory in existing businesses was closely

managed and remained unchanged from the

prior year despite supplier price increases and

Rand depreciation. Including acquisitions,

inventory increased 11%. Debtors increased at a slightly faster pace

than sales reflecting the tough economic conditions. Despite this, the

debtors book remains well managed. Net operational assets increased

to R1,3 billion (2012: R1,2 billion) and operating return on capital

employed dropped slightly to 30% (2012: 31%).

STRATEGIC DEVELOPMENTS

The acquisition of 100% of Operational Marketing (Pty) Ltd and

OMSA Valves and Instrumentation (Pty) Ltd (OMSA) came into effect

from 1 April 2012. OMSA adds a leading position in lubrication

equipment, systems and field service to BMG. In addition it brings

significant potential for BMG to expand in filtration, valves and

instrumentation.

BMG also acquired 100% of the Man-Dirk Group, a leading distributor

of tools and equipment to the mining and industrial sectors. This

transaction took effect on 1 August 2012 and presents significant

cross-selling opportunities and synergies for BMG and Man-Dirk.

Man-Dirk adds a further fifteen branches in South Africa, and three in

BMG experienced a tougher year than normal. The year started off reasonably well, but from August

2012 conditions deteriorated when the mining and freight transport sectors were hurt by strikes, which

had a negative knock-on effect on the manufacturing sector. Demand in the steel sector also declined.

There was, however, modest growth in other sectors. The agricultural sector and African operations

remain strong growth areas for BMG.

BMG focuses on offering solutions for a large variety of engineering applications. Significant

service capability was added to the BMG offering in the year to add value to the wide range of

products supplied by the division.

BMG continues to invest in skills development, both with customers and with staff. In this way, BMG

delivers on its promise to customers to offer quality components, technical expertise and superior

service.


Mozambique to the extensive BMG branch network.

Plans are in place to grow Man-Dirk through product

extensions and the sale of tools through the BMG

distribution network.

BMG’s accreditation as a Level 3 Value Add Supplier

displayed its commitment to government’s Broad

Based Black Economic Empowerment (BBBEE) codes.

As part of its transformation strategy, all BMG

subsidiaries will be audited to achieve organisation-

wide BBBEE compliance.

BMG will continue its growth strategy into Africa as

part of the overall plan to expand its distribution

footprint. Excellent progress has been made in

establishing representation in a number of strategic

countries and the results will increase BMG’s

established presence as a value add supplier in Africa.

Five new branches were added to BMG’s sales network

in the year, two branches locally in Ceres and

Lichtenburg, a further two in Mozambique in

Beira and Tete, and a dedicated projects branch to

co-ordinate cross-division collaboration and

integration of the Group’s offering to project houses

in South Africa and Africa.

CONSUMABLE PRODUCTS DIVISION –BEARINGS, SEALS, POWER TRANSMISSIONPRODUCTS & FASTENERS

BMG’s Bearings division had an acceptable year with

all product lines performing well. Usage from local

steel producers declined as a result of poor global

demand for their products and the unplanned closing

of production facilities. The Bearings division remains

the largest contributor to both sales and operating

profit in BMG. Rand weakness created margin

pressure, mitigated by modest price increases to

customers.

BMG’s Power Transmission division, made up of Drive

belts, Ironware and Chain delivered consistent results

even though margins were under pressure. Ironware

and Drive belts showed fair sales growth. The Chain

business managed to grow volume sales, but found

trading conditions tough in some sectors. Growth in

the more specialised product lines of Kabelschlepp,

Hutchinson and Gates was pleasing. The team will

continue building on the successes in the agricultural

sector.

Sales growth in the BMG Seals division was modest.

Contributing factors to the sales growth were the

addition of rotary couplings and Loctite, which

boosted annual adhesive sales. Specialised product

development in the power generation sector will bear

fruit in the coming year.

BMG’s Fasteners division had an exceptional year with

good growth in revenue over the prior period.

Margins were under pressure as a result of a change in

product mix and the effects of provisional dumping

duties which affected sales and volumes of these

products. The weaker Rand also had a negative impact

on margins. The new Tools and Equipment division is

off to a good start with the opening of two branches

in Pinetown and Kimberley.

Inventory levels in the Consumable Products Division

were well managed during the year under review.

Supplier price increases were kept to a minimum

during the year, and increases are expected to follow

in the new year.

ENGINEERED PRODUCTS DIVISION –DRIVES, BELTING, ELECTRONICS ANDTECHNICAL RESOURCES

The Engineered Products businesses weathered the

depressed trading conditions satisfactorily. After a

promising first half of the year, the second half was

negatively impacted by labour issues and extended

plant stoppages at customers in key markets.

Modest sales growth was achieved in a very

competitive market. Management continues to apply

tight cost and stock controls, which resulted in a good

year-on-year performance from this operation.

International merger activity in the geared motor

sector resulted in ongoing market uncertainty. The

division satisfactorily maintained its market position

and improved its profitability through good cost

management.

BMG’s Electric Motor division achieved revenue

growth and a modest volume increase. Plans have

been implemented to improve profitability in the new

financial year. A new “Synergy” motor as well as

improvements to BMG’s existing motors have been

launched which are aimed at strengthening the

market position of this division.

BMG’s Belting division produced growth in revenue,

margin and profitability. This pleasing result is

attributable to steadfast focus on targeted market

prospects and effective sales and cost strategies.

Although no new product lines were introduced,

opportunities which were identified in the prior year



produced results in the current period. The Belting

Division has been streamlined into light and heavy

materials handling for the new financial year to

further refine market segment focus.

Continued growth in all performance metrics in the

Electronics division was achieved. The expansion into

new areas is a target for the coming year.

The strategy to provide supporting on-site services has

resulted in notable success in the differentiation of

BMG as a process solutions provider to the customer

base. Major maintenance projects, involving a broad

range of group products were carried out in the

mining, manufacturing and food sectors both locally

and in African countries.

The outlook for the Engineered Products businesses

remains positive with management balancing business

expansion opportunities with conservative cost

management.

FLUID POWER DIVISION – HYDRAULICS,PNEUMATICS, FILTRATION

BMG’s Hydraulics division continued to build on the

successes of the prior year. This was due not only to

growth in sales of hydraulics products through BMG’s

distribution network, but also to continuous focus on

streamlining workshop processes and working capital

management.

During the period, a strategic decision was taken to

acquire 100% of the shares in Electro and Hydraulics

Projects, a dedicated distributor of BMG Hydraulics

based in Klerksdorp. The remaining minority

shareholdings in Edmik Engineering (Pty) Ltd, Hi-Quip

Hydraulics (Pty) Ltd and Turnkey Hydraulics (KZN) (Pty)

Ltd were taken up, and these companies have been

converted to wholly-owned branches within BMG

Hydraulics.

Hydraulics is seen as a key growth area for BMG.

BMG will look to build on this year’s strong

performance.

SUBSIDIARIES

Wegezi Power Holdings (Wegezi) experienced a

positive trading period with increased demand for

their range of products, resulting in a good set of

results. The Pump and Remanufacturing divisions

delivered consistent results.

Strong supplier and customer relationships and continuous staff development of technical personnelremain key focus areas for Wegezi.

Oscillating Systems Technology (OST) had a difficulttrading period as a consequence of weak project activity, resulting in falling volume sales. Originalequipment manufacturers (OEM’s) remain a key customer target market for OST and additional focuswill be placed on the African export market, aftermarket sales and repairs of used equipment.

OUTLOOK

The coming year looks set to be another challengingone. BMG’s management team remain focussed ontwo core objectives: Growth and Efficiency.

With downsizing and threats of strike action in its customer base, increasing electricity and labour inputcosts, BMG is concerned that many of its customershave become uncompetitive. BMG will continue towork with its customers to support them and findways to assist them in reaching their targets for production efficiency and plant reliability and availability.

BMG will continue to provide Quality Components,Technical Expertise and Superior Service to its customers and strive to be Part of Their Process.




>> CEG – Capital Equipment Group

>> A SinclairChief executive officer

G Balshaw >>Chief financial officer

The Capital Equipment Group has had another good trading

year resulting in a solid performance for the year under review.



FINANCIAL RESULTS

All the divisions generally enjoyed better

market conditions than in the prior year.

Gross margins were under pressure, but good

management of expenses resulted in

significant growth in operating profit and

a very pleasing operating profit margin

of 10%.

CEG’s revenue increased by 37% to R3,503

billion, with 7% of the growth coming from

acquisitions. Currencies were volatile,

resulting in a 21% depreciation of the

ZAR against the US$ from the beginning of

the trading year to the end, which required

diligent pricing management to remain

competitively priced.

Operating profit increased by a healthy 38%

to R339 million. The operating return on

capital was good, as was cash generation. At

year-end, levels of inventory and inventory

values were healthy.

CEG’s continued good performance has resulted in the CEG being asignificant contributor to Invicta’s profit and cash flow during theyear.

QUALITY MANAGEMENT AND SOCIAL RESPONSIBILITY(CSR)

CEG has maintained its standard of quality service, after sales supportand internal controls, by complying with ISO9001 certification which isaudited annually to ensure continuous compliance. The division is currently working toward ISO14001 environmental certification.

In order to ensure stability and succession as well as up-skilling staff inthe divisions, a focussed long term training program has been put inplace which has resulted in over 350 staff members being trained thisyear alone. CEG is the second biggest apprentice trainer in the agricultural sector and has a university bursary scheme for tertiaryeducation.

CEG contributes, through the Community Outreach Program Trust(COP Trust), to a feeding scheme which reaches more than 200 children under the age of 8 years old every day. It has also invested inbuilding class rooms, training Grade R teachers and providing bursaries for deserving children at high school and University.

The focus is on education from the grass roots through to tertiary levels.

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

Criterion Equipment: TCM Forklifts

Cartcom: Golf car rental

Landboupart: Replacement spare parts for agricultural equipment

ESP: High quality aftermarket replacement parts for earthmoving equipment and repair of

undercarriages for earthmoving machinery.

Kian Ann: One of the world's largest independent distributors of heavy machinery parts, diesel

engine components and the like for heavy earthmoving machinery and trucks. The products are used

for excavators, bulldozers, wheel loaders, motor graders, trucks, trailers, power generation sets and

marine engines.



OPERATIONAL REVIEW

There has been a gradual recovery of volumes in the

capital equipment markets, especially in the

construction machinery sector. However the latter part

of the trading year saw a decline in the demand for

agricultural equipment. Market expectation is for

volumes in this sector for calendar 2013 to be 5% to

10% below calendar 2012. Material re-handling

markets were consistent but the turf equipment was

significantly down compared to the prior year.

All divisions performed well. 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 has

performed well following its restructuring after being

acquired by the Group, three years ago. All the

agricultural machinery operations performed

exceptionally as did ESP.

AGRICULTURAL MACHINERY DIVISION

Demand for tractors declined during the course of the

year, with the total national tractor market volumes in

South Africa decreasing by 3% (excluding exports)

from 7 984 units to 7 770 units in the year under

review. Combine harvester market volumes increased

by 58% from 267 units to 423 units and the baler

market has remained constant with a small growth.

Demand for implements was good.

Soft commodity prices, especially yellow maize, was

R2 235 per ton at the beginning of the trading year

reaching a high of R2 780 per ton and settling at

R2 325 per ton at year-end. The decrease in the maize

prices resulted in reduced farmer confidence during

that period and the increase in the fuel and fertilizer

prices as well as the possibility of a drought has

created some further concern for the second half of

calendar 2013.

The agricultural companies in the group have

intensified efforts to improve the support to the

farmers on precision farming (or satellite farming),

which is fast becoming a must for farming

management to optimize returns on inputs while

preserving resources. It relies on new technologies

such as satellite imagery and geospatial tools.

Precision farming has also aided farmers’ ability to

locate their precise position in a field using satellite

positioning systems like the GPS or other GNSS.

NorthmecCaseIH Agricultural Equipment and other related

implement brands

Northmec, predominantly a retail distributor of

agricultural equipment and implements, performed

above expectations with substantial growth in

revenue and profits. The division enjoyed good market

shares in all sectors in which it trades and retained its

market share leadership in Combine Harvesters. At

year-end, inventory was at an acceptable level and was

well priced.


New Holland has recently acquired a number of

implement franchises which has helped to offer a

broader range of product to customers.

An additional two spare parts outlets were opened

during the year.

LandboupartLandboupart is a wholesaler of spare parts which

sources and sells replacement spare parts for

agricultural equipment. Landboupart is a relatively

small component of CEG, but grew substantially

during the year under review. Management plans to

grow the business materially. The Group has

purchased a share in an offshore parts buying house

which will help with future competitive sourcing.

CONSTRUCTION AND TURF DIVISION

The construction machinery industry has shown

surprising growth off the low base which has prevailed

since the 2010 financial year and early indications are

that that this level of activity in the industry will

continue.

The turf grooming equipment markets are flat with

very little demand for new equipment but golf

courses in SA have to continue to maintain their

existing fleets which has resulted an increase in spare

parts demand.


Northmec is steadily increasing its market share in the

small tractor sector, which accounts for 68% of the

total tractors sold in South Africa. Northmec is

particularly strong in the big tractor market with its

flagship Case-IH brand, which is well supported by

farmers due to the brand’s reliability, quality and

continuous upgrading of technology.

An additional two branches were opened during the

year, increasing the number of branches to fifteen,

maintaining the after sales support for the increased

volume of sales in certain areas.

During the second half of the year Northmec

established a separate division (G North) through

which all implements will be sold to ensure greater

focus on this range of products.

New Holland SANew Holland Agricultural Equipment and other

related brands

New Holland is predominantly a wholesale distributor

of agricultural equipment and has, during the year,

concentrated on strengthening its distribution

network and business related support structures to

boost market penetration. New Holland also enjoyed

significant growth in revenue and profits. Its market

share in tractors declined slightly due to delays in

incoming inventory, but it is expected that this will be

made up in the new year.


MATERIALS HANDLING

CriterionTCM forklifts

Criterion is the distributor of TCM forklift trucksimported from Japan.

This is the third full trading year since acquisition andafter many challenges to restore the company andbrand confidence in the market in South Africa, theTCM brand is rapidly regaining its position as one ofthe leading forklift brands in the South African market. Revenue and profits increased satisfactorily,despite the strong Yen making it very difficult to compete against non-Yen sourced product.

Further restructuring was necessary during the year but thebusiness is now in a very healthystate and is well positioned toimprove performance. Incomefrom the rental fleet hasincreased. All outlets aroundthe country are profitableand the company hasachieved the requiredreturn set by theGroup.

An internal rental financefacility has been put in place to finance sales of equipment. During the year, the strength of the Yenwas a major concern as it affected the competitivenessof the product. However, with the weakening of theYen towards year-end, product has become more competitive which has improved prospects for thecoming year.

CSECase Construction Equipment, Club Car and

Jacobsen/Ransomes Turf Equipment

The CSE construction equipment division showed a

marked improvement on the last year, while the turf

grooming equipment markets fared worse than last

year. Total market volumes of construction machinery

in which CSE operates in South Africa, increased by

11% with signs of continued recovery going forward.

The CSE construction equipment division trades predominantly in the plant hire and construction sectors of the market, but it has now moved into othersectors. Revenue and profits were well up on last year.

Despite the slowdown in golf course development,there is still a need for the replacement of golf carfleets and turf equipment. The golf course market is areplacement market with very few, if any, new golfcourse developments in progress or fleet upgrades.

Doosan SADoosan excavators and loaders, Everdigm hammers

Doosan SA performed well above expectations duringthe year under review and market trends going forward look positive.

The company was acquired five years ago and has performed exceptionally well since then consideringthe prevailing market conditions. Good inventoryturns and working capital management have generated healthy cash flow and have provided anexcellent return on working capital throughout the year.

Doosan’s target market has traditionally been the mining and construction sectors. The focus is still onthese markets but over the last two years there hasbeen a shift toward other sectors. Doosan hasincreased its market share in both excavator and loader sales in the market in SA.



PROSPECTS

The performance this year has been as a direct result

of a good sales performance, focused attention on all

elements of the businesses and being able to adapt to

the ever-evolving market conditions with a clear

strategic vision.

The markets in which the CEG trades have a tendency

to be unpredictable but there are certain trends which

indicate there is likely to be a slow down on the

agricultural machinery side as a consequence of soft

commodity prices and increased input costs.

Contrasting this is the expectation of improved

conditions in the earthmoving machinery markets.

Management is cautious going into the new financial

year because of the pressure on margins and the

weakness and volatility of the Rand, but is confident

of meeting the challenges.

The CEG will continue to remain focussed on the core

fundamentals of its business, namely profitable

growth and cash generation. CEG will also continue

seeking out acquisition opportunities.

Management would like to thank all staff whose hard

work and sacrifice contributed to these excellent

results.

ESPThis is the first full year of ESP being included in CEG’s

results, as it was acquired in February 2012.

Despite the lack of growth in the mining and

construction sectors, ESP managed to achieve excellent

results. Management’s efforts in controlling costs and

working capital maintained a consistent cash flow.

A new branch in Port Elizabeth has been added to the

existing distribution network and is trading well.

Kian Ann (Singapore)

Kian Ann was acquired in February this year and is

Invicta’s biggest single investment to date.

It trades actively in over 30 countries globally, with a

very strong base in South East Asia. It has offices in

Singapore, Indonesia, China and Malaysia. This region

has been affected by the slow down in the world’s

demand for hard commodities which has had a major

impact on all companies trading in this region. This is

likely to continue for the short term.

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.





>> BSG – Building Supply Group

The consolidated group revenue of the Building Supply Group

is expected to exceed R1 billion per annum.

>> N MalherbeChief executive officer

K Diab >>Chief financial officer




MacNeilEstablished in 1996, MacNeil has developed into a reputable wholesaler, distributor and

manufacturer of building supplies. It has an extensive base of well-established local and

international suppliers for its broad range of taps, bathroom accessories, brassware,

copper tubing, piping, baths, timber boards, doors and frames, and laminated flooring.

MacNeil operates out of 6 distribution centres nationally and supplies a broad client base

which includes corporate, independent and franchised retailers in South Africa and

neighbouring countries.

MacNeil manufactures a wide variety of plastic pipes and fittings for the housing,

industrial, commercial, civil, electrical and irrigation sectors. The manufacturing operation

has shown considerable growth over the past three years and a new manufacturing

facility was commissioned during the year in the Western Cape. Products include pressure

and sewer pipe, waste pipe and fittings, HDPE, LDPE pipes and fittings and Polypropylene

pipes and fittings.

Invicta acquired an effective 53,4% interest in MacNeil on 1 October 2012. Management owns the remaining interest.

In the 5 months that MacNeil has been in the Invicta Group, its performance has been within expectations. The

acquisition is in the process of being bedded down and should reach full potential in the medium-term. MacNeil’s revenue

exceeds R600m per annum.

TiletoriaTiletoria is a specialist tile, flooring and sanitary ware company. Established in 1995, it operates from 3 major outlets in

Johannesburg, Cape Town and Durban. Tiletoria’s route to market is evenly divided between wholesale, retail and

contracts/specifications. It has been part of the Invicta group for the past 5 years.

The 2013 year was a vast improvement on 2012. Revenue was up well above inflation, as was operating profit. Strong

revenue growth came from the new branches in Durban and Johannesburg and the outlook remains very positive. The

hard work of the past 3 years is paying off and Tiletoria looks set to build on it growing base.

BUILDING SUPPLY GROUP OUTLOOK

The consolidated group revenue of the Building Supply Group is expected to exceed R1 billion per annum. The group will

focus on domestic and African markets. The next year will be one of consolidation of the base and the Group intends

adding bolt-on acquisitions.

MacNeil

Building Supply Group

Distribution Manufacturing

Tiletoria

Wholesale ContractsRetail

GROUP STRUCTURE


Corporategovernancereport

INTRODUCTION

The Group’s policy is to conduct its business with honesty and integrity and with the highest standard of personaland corporate ethics. This includes the promotion, enhancement, development and protection of the businessinterests, reputation and goodwill of the Group.

The Board remains responsible for corporate citizenship and accountability for the stewardship of Group assets,which have ensured sustainable returns. The Board continues to provide stakeholders with the assurance that theGroup’s business is managed responsibly.

Invicta endorses the Code of Corporate Practices and Conduct, as well as the King Code of Governance for SouthAfrica 2009 (King III) and its Code of Governance Principles, which were published in September 2009 (effectivefrom 1 March 2010) and replacing King II. The South African Companies Act (Act 71 of 2008) (Companies Act) alsocontains governance requirements. King III has been adopted on an “apply or explain” approach.

The Audit Committee continuously reviews and amends its corporate governance practices with a view to complying with the requirements of the Companies Act and the King III recommendations. Invicta will continue toadopt, as appropriate, existing and new principles, which advance good practical corporate governance and addvalue to the Group’s business activities.

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 Yes


>> 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 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 and Risk Committee assists the board in carrying out its risk responsibilities Yes

The board has delegated the process of risk management 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 and Risk 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 Group has, in allmaterial respects and where relevant, complied withKing III during the year under review, and wishes tohighlight the following:

(1) The King III Report states that the chairman ofthe Board should be an independent non-executive director. Dr CH Wiese, who is a non-executive director, is the Chairman of the Board,but he is not independent. It is the view of theBoard that the non-independence of theChairman is a positive factor in ensuring the decisions taken by the Board are guided by aChairman whose perspective is aligned with long-term interests of shareholders. Mr DI Samuels maintains his role as the Group’sLead Independent Director. In addition, to ensuregood governance, and as recommended by King III, the chairmanship of two of the threeBoard Committees is held by Mr DI Samuels.

(2) The Board does not have a majority of independent non-executives directors as requiredby King III. The majority of the non-executivedirectors are also shareholders, which, from aGroup point of view, is beneficial to all stakeholders, as it aligns its interest with that ofother shareholders and stakeholders.

(3) The Board believes that the directors individuallyadd significant value to the Group outside of theformal Board and Committee meetings, andinteract with management as they think appropriate. The directors have a record of highattendance at Board and Committee meetings.

(4) The King III Report requires that the salaries ofthe three most highly paid employees, who arenot executive directors, should be disclosed. Dueto their specialised skills, the highly competitiveSouth African engineering and capital equipmentenvironment and the employees’ value to theCompany, the Board does not wish to disclose thisinformation for each of the individuals but hasinstead disclosed the total salaries of the employees concerned on page 105.

The Chairman of the Remuneration Committee isalso Chairman of the Board.

(5) The King III Report requires that the Company’ssustainability report be audited by an independent external professional. The entireintegrated report is reviewed by the Audit andRisk Committee and recommended to the Board.The Board has not found it necessary to obtainindependent assurance for sustainability reporting as it is comfortable with the accuracy ofthe sustainability reporting. Environmental issuesare not material in the Group or its operations, sono empirical data is considered necessary to beprovided at this stage.

BOARD OF DIRECTORS

Composition

The names and brief résumés of the directors appear onpages 4 and 5 of this 2013 Integrated Annual Report.

The Board currently comprises four executive directors,three non-executive directors, two independent non-executive directors and one alternate independentnon-executive director. The intention is to appoint a further independent non-executive director during the2014 financial year.

Board effectiveness reviews were conducted during theyear and further reviews will be conducted at appropriate intervals going forward.

The Board is satisfied that no one individual director orblock of directors has undue power of decision-makingand there is a clear division of responsibilities at boardlevel to ensure an appropriate balance of power and authority.

Annually, the Board considers each director’s independence. The Committee feels that the followingaspects are important in assessing a non-executivedirector’s independence:

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

• the directors had served on the Board for longerthan nine years. In this case, the Committee considers whether that director’s independence,judgement and contribution to the Board’s deliberation could be compromised, or mayappear to be compromised, by this length of service;

• the director is a representative of a major shareholder; and

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

The Company Secretary, Mr C Barnard, who is also theFinancial Director, assists the Board in fulfilling its functions and is empowered by the Board to performhis duties. The Company Secretary, directly or indirectly:

• assists the Chairman and CEO with induction ofnew 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 environmentand communicates new legislation and anychanges to existing legislation relevant to theBoard and divisions; and

• provides the Board with a central source of guidance and assistance.



Chairman and CEO

The roles of Chairman and Group CEO are separate. The Managing Directors and CEOs of the operating

subsidiaries and divisions report to the Group CEO of Invicta, who in turn reports to the Board.

Professional advice and access to information

All directors have access to the Company Secretary and management and are entitled to obtain independent professional advice at the Company’s expense, if required. The Board has unrestricted access to the Group’s information, records, documents and resources to enable them to properly discharge their responsibilities.

The Company and all its subsidiaries are compliant with the provisions of the Promotion of Access to InformationAct. The manual in terms of this legislation is available from the registered office of the Company and on theCompany’s website.

Board

The Board meets regularly on a scheduled basis and at such other times as circumstances may require. The table ofmeetings and attendance is as follows:

5 Jun 21 Sep 9 Nov 15 Feb2012 2012 2012 2013

C Barnard^ √ √ √ √A Goldstone^ √ √ √ √AK Masuku*•# x x x xJS Mthimunye•# √ √ x xDI Samuels•# √ √ √ √LR Sherrell• √ √ √ √AM Sinclair^ √ √ √ √CE Walters^ √ √ √ √CH Wiese (Chairman)• √ √ √ √JD Wiese• √ √ √ √

* Alternate • Non-executive # Independent ^Executive

Board papers are issued to all directors prior to each meeting and contain relevant detail to inform members ofthe financial and trading position of the Company and each of its operating subsidiaries, as well as covering material issues pertaining to the Group.

Non-executive directors also maintain regular contact with executive directors to ensure that they are kept abreastof material matters that may require their input and guidance.

Board appointments

A third of the directors retire by rotation annually based on longest service. If eligible, available and recommended for re-election by the Remuneration Committee, their names are submitted for re-election at theannual general meeting. This year Dr CH Wiese, Mr DI Samuels, Mr JD Wiese and Mr JS Mthimunye retire in termsthereof. Messrs Samuels, Wiese, Mthimunye and Dr Wiese, being eligible and available, are recommended for re-election by the Remuneration Committee. The directors have considerable business experience and an excellentunderstanding of the Group’s business.

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.

INTERNAL CONTROL

The directors have responsibility for the Group’s systems of internal controls. These are designed to provide reasonable assurance of effective and efficient operations, internal financial control and compliance with laws 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 toprovide reasonable, but not absolute, assuranceagainst the risk of material errors, fraud or lossesoccurring. Furthermore, because of changing internaland external factors, the effectiveness of an internalcontrol 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, theGroup internal audit department, management andemployees as an integrated approach. The Boardreports that:

• to the best of its knowledge and belief, nomaterial malfunction of the Group’s internalcontrol system occurred during the period underreview;

• it is satisfied with the effectiveness of theGroup’s internal controls and risk management;

• it has no reason to believe that the Group’s codeof ethics has been transgressed in any materialrespect; and

• to the best of its knowledge and belief, nomaterial breaches have occurred during theperiod under review, of compliance with anylaws and regulations applicable to the Group.

INFORMATION TECHNOLOGY

Compliance with legislative requirements contributestowards the protection of corporate information, butin itself only addresses a small part of the total number of threats posed to the business arising fromits dependencies on information technology and theinternet. Security policies and procedures for employees and the use of technologies such as enter-prise and personal firewalls, antivirus systems, intrusion monitoring and detection are applied, aswell as frequent application of software security“patches” issued by vendors as and when vulnerabilities are discovered. Ensuring proper systemsecurity, data integrity and business continuity are theresponsibility of the Board, but are given effect by theAudit and Risk Committee.

STAKEHOLDER COMMUNICATION

Members of the Board meet on an ad hoc basis withinstitutional and other investors, investment analystsand members of the financial media. Discussions atsuch meetings are restricted to matters that are in thepublic domain.

Shareholders are informed, by means of pressannouncements and releases in South Africa and/or

printed matter sent to such shareholders, and/orannouncements on SENS, of all relevant corporatematters and financial reporting as required in terms of prevailing legislation. In addition, such announcements are communicated via a broad rangeof channels in both the electronic and print media.The Group has also embarked on a more formalapproach to providing feedback in respect of the year-end results with interviews scheduled for bothradio and television after the relevant media and SENSannouncements have been made.

The Company maintains a corporate websitehttp://www.invictaholdings.co.za containing financialand other information, including interim and annualresults. The site has links to the websites of each majoroperating subsidiary company.

The Group will continue to look at ways of allowingelectronic shareholder participation with its transfersecretaries in the upcoming year as provided for in thenew Companies Act.

EMPLOYMENT EQUITY

Invicta is committed to providing a working culturethat is inclusive to all. It is Group policy to acknowledge and support South Africa’s employmentequity drive in ensuring that equal opportunities are directed at our staff, regardless of race, colour, sexualorientation, sex, religion, creed or national origin. TheGroup remains compliant with all aspects of theEmployment Equity Act (Act 55 of 1998) by adheringto the requirements of the timeous submission of anonline report and plan, consultation with employeesand communication of the report and progress is monitored on an ongoing basis. Areas of strategicfocus include the promotion of constitutional right ofequality for all in the workplace, elimination of unfairdiscrimination where it may exist, redressing of theeffects of past discrimination of employment practices,achieving equitable representation in occupationalcategories and levels, where possible, promoting theacquisition of skills by employees that will reflect qualifications and standards that is part of a nationalqualification framework and developing a culture inthe Company of high quality lifelong learning. HRimplements processes to address recruitment as well asthe development of in-house talent through coaching,mentoring and succession planning. Included in thisdrive is a bursary programme directed at young blackstudents who could potentially be groomed for futuresenior positions should they join the Group after graduation. The Group remains fully committed toproviding equal opportunities to its 4 498 employees(2012: 3 911 employees).



SUSTAINABILITY REPORT The Board is committed to creating long-term value

for all its stakeholders by providing sustainable

businesses in an integrated approach to the

communities in which it operates.

The 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 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 and

employment and the environment and 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 JSE’s Socially Responsible Investment

Index criteria, 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.

The sustainability objectives of the Group are:

• Acting in the best interests of Group shareholders and Group principals, by representing them in a manner which bringscredit to their products and brands.

• Ensuring that customers receive an integratedand environmentally sound solution that meetstheir specific needs.

• Providing employees with a working environment and encouraging a culture whichallows them to achieve as much as possible andto have a fulfilled working career.

• Delivering sustainable returns to shareholderswhich are not at the expense of the Group’s ethical standards.

• The Group continues to measure its expenditureon non-renewable resources and to eliminateany unnecessary or inefficient processes. The primary areas of consumption in the Group continue to be transport, fuel and electricity.The Group continually looks at optimising itswarehouse locations and inventory holdings in a bid to minimise transport cost and fuel consumption, with further strategic consolidation and expansion of certain locationsplanned for the short- to medium-term.

• As customers continue to search for more efficient and productive products, the Group,through its various operations, continues todevelop these with its various principals aroundthe world and to offer solutions to the market.



Student bursaries

The Group currently has two university bursary holders

participating in the Invicta bursary scheme as well as

twelve scholars in total from various institutions such

as Jeppe, 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.

BMG has a long-standing relationship with the Protec

organisation. Protec’s aim is to increase the country’s

technologically skilled human resource base through

the provision of educator-based training and a Learner

Excellence Programme (learner-based education) to

under-resourced schools in South Africa. This holistic

programme is aimed at Grade 10 learners who

participate until they reach Grade 12 and they are

supported through their tertiary education studies

and beyond by their Protec mentors. Research results

clearly indicate that the Protec branches are having a

positive impact on the academic performance of

beneficiaries from historically disadvantaged

communities. At least 50% of learners from Protec

passed with University passes, significantly more than

the provincial averages.

Protec has a long and consistent track record of

helping learners improve their results and go on to

successful careers. 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

The Board wishes to take this opportunity to thank all

the stakeholders in the Group for their ongoing

commitment and loyalty to the development of a

sustainable business and relationships.

Suitability of the Financial Director

As required by the JSE, the Audit Committee andBoard have considered the skills, qualifications andperformance of the Financial Director, Craig Barnard,and are unanimously satisfied with his continuing suitability for the position. His résumé is detailed onpage 5.

TRAINING EDUCATION AND DEVELOPMENTOF STAFF

In-house training and development:

The Group’s philosophy on training the right employee, at the right time provides returns not onlyfor the employee, but also for the employer inincreased productivity, knowledge, loyalty and contribution to the Group. Ongoing training and skillsdevelopment also forms the basis of transformation. Itis also imperative for any company aiming to developa competitive edge. In order to create this passionwithin the Group’s staff, Invicta needs to help its people reach their full potential through ongoingtraining and development. After the successful external re-branding by BMG, it has embarked on aBrand Ambassador training initiative that essentiallytransforms BMG employees to BMG BrandAmbassadors with a renewed heart and mind. CEG hasalso invested a great deal of money and time over thelast two years in uplifting thashe skills of their wholegoods and parts employees. CEG continues its focus onthe grooming of qualified apprentices in varioustrades. The Group provides a broad range of initiatives, including technical, management and salestraining, as well as softer skills programmes, with technical courses being delivered via e-learning. E-learning provides the major benefits of being practical and flexible. Staff can log in when practicalwhilst learning can be applied immediately and sharedwith colleagues. In addition, e-learning also enhancesmuch has needed computer skills. All theoretical training is has finished off with practical training sessions delivered by the Group’s various technical andother divisional resources available.

Education and career development

As part of the Group’s holistic approach to employee

development, it also offers educational assistance to

employees who are keen to further their own

qualifications on a part-time basis by completing

work-related courses.



partnering them in the establishment and development of other

branches in the key trading areas of Steelpoort, Carletonville and

Kuruman more recently. Several of these students have made it onto

our BMG trainee programme which is really taking our CSI work full

circle.

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 also undertakes more

ad hoc projects to address specific issues.

Some examples of initiatives the Group undertook are as follows:

• The COP Trust is a non-profit organisation that provides an

opportunity for schools, businesses and ordinary South Africans

to make a lasting and meaningful difference to the lives of their

fellow citizens. The COP Trust has undertaken a wide range of

development projects, which are all aimed at uplifting our

society and empowering historically disadvantaged individuals

and communities. The Group has selected a house of safety

(foster home), a crèche, a pre-school, as well as a primary and

high school to support with the help of the COP Trust.

• Support is also provided for various safe houses and orphanages,

with the main focus being abused and abandoned women and

children, homes for pregnant young girls, as well as various

other crèches that are not supported by the COP Trust. These

include The Ark in Khayelitsha, St Francis, The New Life Centre,

Solomon’s Haven and The Homestead.

• The Group also supports the SA

Medical and Educational

Foundation. Their mission is to

create an environment where

quality health care and

education can be available to

everyone. They do this by

supplying various medical

services with the vital

equipment that is needed to

enhance the treatment that is

offered to state patients. The

SA Medical and Education

Foundation supports mainly

hospitals and clinics that rely

solely on a state budget.

• A donation was also made

towards The Sunflower Fund,

to assist with getting donors

on the registry from non-white

ethnic race groups, as well as

providing a home for a 4-year

old leukaemia patient and her

family.

Education and career development

As well as the extensive staff training

which is dealt with elsewhere in this

report, the Group sees 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.



Sport development

Within the Group, sponsorship as well as dedicated time is allocated to form a local soccer championship league

consisting of players from the community as well as from the Company. By investing time and energy into this

initiative, the Group strongly believes that people prefer to rather invest their energy in community-related events

where they can create a sense of belonging rather than spending time on the streets.

General

All the Group operations, no matter how small, have contributed to supporting the destitute and underprivileged

in the communities in which they exist and function.

QUALITY MANAGEMENT AND OCCUPATIONAL HEALTH AND SAFETY

The consistent supply of both quality products and service to customers is key to the Group’s successes. To this end,

the Group continues to focus on the ISO quality system to assist in achieving this.

CEG has maintained their ISO certification with TUV Rheinland in all its divisions, including the Criterion Equipment

Division and with 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 AND ACCOUNTABILITY

Annual General Meeting

The shareholders are encouraged to attend the annual general meeting, chaired by the Board Committee

Chairperson.

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.

Restriction on trading in securities

A formal policy, implemented some years ago, prohibits directors, officers and employees with access to financial

information from dealing in the Company’s securities, from the end of an interim reporting period until after the

interim results have been published and similarly from the end of the financial year until after the audited

annual results have been published. Directors and employees are reminded of this policy prior to the

commencement of any closed period.

In addition, no dealing in the Company’s securities is permitted by any director, officer or employee whilst in

possession of information which could affect the price of the Company’s securities and which is not in the public

domain. Directors of the Company and of its subsidiaries are required to obtain clearance from Invicta’s chairman

(and in the case of the chairman, or in the absence of the chairman, from the chairman of the Audit Committee),

or his nominee, prior to dealing in the Company’s securities, and to timeously disclose to the Company full details

of any transaction for notification to and publication by the JSE.



Where relevant, participants in the long-term

equity-settled bonus share incentive scheme may not

exercise these rights during a closed period.

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 a Social and Ethics Committee was established

during the previous financial year and consisting of:

• DI Samuels (Non-executive independent director)

• A Goldstone (Executive director)

• C Barnard (Executive director)

Having regard for its responsibilities, the committee has

commenced monitoring of the various projects

undertaken by the operating divisions with respect to

Corporate Social Investments spend and has requested

the divisional executives to provided annual programs

for consideration by this committee.

Further review and monitoring of the Group’s

legislative and legal responsibilities take place on an

ongoing basis in conjunction with the company

secretary and the Group’s respective legal and other

advisors, with special attention paid to labour matters

and the well-being of staff in general.

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.

Arnold Goldstone

Chief Executive Officer

Invicta Holdings Limited



REMUNERATION REPORTMembers of the Remuneration Committee during 2013

• CH Wiese (Chairman)• DI Samuels • A Goldstone – Attendance ex Officio

All members of the Committee are non-executive directors.

Role of the Remuneration Committee and terms of reference

The Remuneration Committee is a committee of the Board of Directors and is responsible for:

• making recommendations to the Board on the general policy on executive remuneration, benefits, conditions of service and staff retention;

• determining the specific remuneration packages of executive directors and senior management of the 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 Board has approved the mandate and terms of reference of the Committee, which is in compliance with theKing III obligations.

The Committee met twice during the 2013 financial year. The Chief Executive Officer attends the Committee meetings by invitation and assists the Committee in its deliberations, except when issues relating to his own compensation are discussed. No director is involved in deciding their own remuneration.

The Company’s auditors, Deloitte & Touche, have not provided advice to the Committee. However, in their capacity as Group auditors, they perform normal audit procedures on the remuneration of directors.

The Remuneration Committee meets at least annually and the attendance at meetings held was as follows:

25 May 11 June 24 Aug 22 Oct 3 Mar 26 May 28 Mar 4 June 5 June 11 June2009 2010 2010 2010 2011 2011 2012 2012 2012 2012

CH Wiese √ √ √ √ √ √ √ √ √ √DI Samuels √ √ √ √ √ √ √ √ √ √A Goldstone √ √ √ √ √ √ √ √ √ √JD Wiese √ √ √ √ √ √ √ √ √ √(by invitation)

Remuneration policy and executive remuneration

Principles of executive remuneration

The Group’s remuneration policy aims to attract and retain high-calibre executives and to motivate them to develop and implement the Group’s business strategy in order to optimise long-term shareholder value creation.The policy conforms with King III and is based on the following principles:

• Total rewards are set at levels that are competitive within the relevant market.

• Incentive-based rewards are earned through the achievement of demanding performance conditions consistent with shareholder interests over the short-, medium- and long-term.

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

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

In line with the principles stated above, the Remuneration Committee has authorised the implementation of abonus bank scheme at senior and middle management level which entails management earning a performance-based bonus which is effectively paid out over the subsequent three years.



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 98 and 99.

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.



During the 2012 and 2013 financial years, some of the bonus rights were settled in cash and disclosed accordinglyin note 37 on page 99 in the 2013 Integrated Annual Report. The remaining bonus rights will only be settled withInvicta shares.

The bonus right expense has been calculated using a Black Scholes valuation model and is expensed over a three-year period from the grant date and is recorded in the Share Appreciation Reserve.

2013 2012

Weighted Weightedaverage average

incentive incentiverights cost rights cost

Number (Black Number (Black of Scholes) of Scholes)

incentives Rand incentives Rand

Outstanding at the beginning of the year 8 657 000 11 104 500Awarded during the year 146 340 10,13 900 000 10,13Exercised during the year (6 144 004) (3 332 500)Cancelled – (105 000)

Outstanding at the end of the year 2 569 336 8 567 000

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

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

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

Grant price R17,20 R20,00 R27,97 R24,84 R26,87 R18,48 R24,37 R42,55 R66,14

3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years

% % % % % % % % %

Expected volatility (daily) 2,1 2,0 2,1 2,2 2,2 2,1 2,1 2,2 2,1

Dividend yield 5,6 5,3 6,4 3,5 3,8 4,2 4,9 5,3 4,5

Risk-free rate 7,2 8,17 8,17 9,4 8,7 6,43 8,68 7,39 5,35

Executive directors’ interests in the LBSIR scheme are set out in note 37 on page 99 of the 2013 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 Directors 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 is payable over seven years, bears interest at

6% per annum and is secured by Invicta shares at a ratio of 1.5:1.

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 98 and 99

of the 2013 Integrated Annual Report. Members will be

requested to consider an ordinary 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 meet-

ing 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 98.

Directors’ and executive management’s service

contracts

None of the directors are bound by service contracts. All

executive directors, who are also directors of subsidiary

companies, have an engagement letter which provides

for a notice period of between one and three months

to be given by either party.

The Group Chief Executive Officer has no service

contract.

None of the non-executive directors have a contract of

employment with the Group.

A third of the directors retire by rotation annually

based on longest service. If eligible, available and

recommended for re-election by the Remuneration

Committee, their names are submitted for re-election

at the annual general meeting. The appointment of

new directors during the year is required to be

confirmed at the next annual general meeting and such

new directors are required to retire at such annual

general meeting, but may offer themselves for

re-election.

Approval

This remuneration report has been approved by the

Board of Directors of Invicta.

Signed on behalf of the Remuneration Committee

Dr CH Wiese

Chairman of the Remuneration Committee



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 2013, but due to the contiguous nature of

business and reporting, the Report implicitly takes into

cognisance the end of the previous and the first

quarter of the subsequent financial year.

The Group has always been run on an operationally

decentralised basis due to the 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 11 to 13

of the 2013 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 Committee

and an Audit and Risk Committee at the Group level,

has maintained these same management and

governance disciplines at the main operational pillars

to ensure policies and direction are effectively

cascaded down, at the same time allowing for

effective reporting up. Details of Group management

and governance committees, are provided in more

detail in the Corporate Governance Report (page 26),

the Remuneration Report (page 37) and Audit

Committee Report (page 56).

OPERATIONAL CONTEXT

The Group can be seen as an efficient proxy for theSouth African economy, with a clear delayed correlation between commodity and resources performance and the Group’s outperformance thereof.

The Group imports almost all of the products it supplies and thus the effects of exchange rate fluctuations 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 improved communication processes within the operations.

The Group has made a conscious effort to address itscommunity and social responsibility spending bydeveloping a more clearly focused programme of initiatives, which it supports. With the Group holdingkey agency and distribution agreements for world-class brands with international principals, ongoing relationship building with these suppliers isseen as a key element of the current and future successof the Group, as the network and range of suppliersincreases.

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

Integrated report


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 shareholdersand institutional 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 financial position, 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 technical specifications

• Service information bulletins

• 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 succession planning, careers, knowledge managementsystems

• Remuneration

• Integrated report

• Management conferences


• Internal news/informationcommunication and divisional broadcasts and e-mails

Principals Suppliers • Market shares

• Sales forecasts

• Stockholding and orderingprocesses

• Distribution strengths

• Customer base

• Credit-worthiness

• Regular meetings


• Operational websites

• Interactive electronic ordering and communication

Employees at operational

level

Staff • Career development

• Leadership succession planning

• Remuneration

• Skills retention and development

• BEE



• Retirement fund reports

• Wellness communicationand interventions

• Internal news/informationcommunication and divisional broadcasts and e-mails


>> Integrated reportcontinued

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 seven years.

2013 2012 2011 2010 2009 2008 2007 2006Rm Rm Rm Rm Rm Rm Rm Rm

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

Operating profit 884 601 505 453 497 360 281 198Net finance costs less dividends

received and income from associate (65) (50) (54) (24) (22) 3 (25) (19)

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

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

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

Headline earnings 642 448 348 312 311 255 192 126

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

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

STATEMENTS OF FINANCIAL POSITIONProperty, plant and equipment 1 010 391 354 313 229 155 118 123Goodwill 593 358 305 245 242 219 199 191Other intangible assets 181 58 58 10 11 11 12 13Financial instruments, finance lease and

long-term receivables including current portion 4 080 2 564 2 129 1 692 1 528 1 350 – 5

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

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

Net operating assets 8 438 4 586 3 766 3 249 3 128 2 267 752 825Investment in associate 6 2 2 2 – – – –Financial investments including

current portion 786 1 097 1 195 1 195 1 195 1 195 1 195 1 195Net financial liabilities (8) (2) (3) (3) (4) – 2 –Net cash 488 586 409 215 (131) 210 195 (79)

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

Non-controlling interest 405 59 244 170 130 92 45 2Equity 2 690 1 895 1855 1613 1336 1118 931 718Long-term payables including

current portion 6 615 4 315 3 514 3 045 2 852 2 554 1 213 1 223

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



2013 2012 2011 2010 2009 2008 2007 2006

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

STATEMENTS OF CASH FLOWS

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

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

Cash generated from operations 732 489 697 590 88 292 365 98

Finance costs (652) (598) (545) (433) (383) (209) (163) (40)

Dividends paid (198) (156) (115) (96) (113) (94) (55) (46)

Taxation paid (161) (62) (48) (25) (194) (58) (25) (59)

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

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

Investment in property, plant and

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

Investment in operations (2 537) (655) (627) (228) (346) (1450) 16 (1559)

Net cash from investing activities (2 687) (760) (689) (275) (394) (1467) 21 (1554)

Increase in long-term borrowings including

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

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

Shares cancelled – (10) – – – – – –

Shares issued 809 – – 1 4 271 – –

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

Net increase (decrease) in cash and cash

equivalents (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.




>> Corporate information

Company registration number

1966/002182/06

Nature of business

Investment holding and management company

Secretary

C Barnard

PO Box 851, Isando, 1600

Business address

3rd Floor, Pepkor House, 36 Stellenberg Road

Parow Industria, 7493

Postal address

PO Box 6077, Parow East, 7501

Auditors

Deloitte & Touche

Registered Auditors

Deloitte & Touche Place, The Woodlands

Woodlands Drive, Woodmead, Sandton, 2196

Private Bag X6, Gallo Manor, 2052

Share transfer secretaries

Computershare Investor Services (Pty) 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

JS Mthimunye

LR Sherrell

JD Wiese (alternate to LR Sherrell and JS Mthimunye)

Risk Committee

DI Samuels – Chairman

JS Mthimunye

LR Sherrell

JD Wiese (alternate to LR Sherrell and JS Mthimunye)

Remuneration Committee

Dr CH Wiese – Chairman

DI Samuels

A Goldstone (ex officio)

ORDINARY SHAREHOLDER SPREAD

Number of Number

shareholding % of shares %

1 – 1 000 shares 3 576 69,14 1 329 092 1,77

1 001 – 10 000 shares 1 318 25,48 4 175 671 5,58

10 001 – 100 000 shares 205 3,97 6 004 825 8,02

100 001 – 1 000 000 shares 62 1,20 18 128 606 24,22

1 000 001 shares and over 11 0,21 45 224 111 60,41

5 172 100,00 74 862 305 100,00

DISTRIBUTION OF SHAREHOLDERS

Banks 20 0,39 2 839 750 3,79

Close corporations 86 1,66 222 847 0,30

Endowment funds 28 0,54 407 076 0,54

Individuals 4 056 78,42 13 547 727 18,10

Insurance companies 14 0,27 769 746 1,03

Investment companies 16 0,31 623 661 0,83

Medical aid scheme 3 0,06 27 090 0,04

Mutual funds 70 1,35 7 208 400 9,63

Nominees and trusts 670 12,95 29 163 698 38,96

Other corporations 48 0,93 384 180 0,51

Own holdings 2 0,04 1 452 920 1,94

Private companies 127 2,46 14 311 518 19,12

Public companies 3 0,06 51 889 0,07

Retirement funds 29 0,56 3 851 803 5,14

5 172 100,00 74 862 305 100,00

PUBLIC AND NON-PUBLIC SHAREHOLDERS

Public shareholders 5 135 98,87 26 649 521 35,60

Non-public shareholders 37 0,72 48 212 784 64,40

Directors and associates of the Company 35 0,68 46 759 864 62,46

Treasury stock 2 0,04 1 452 920 1,94

5 172 100,00 74 862 305 100,00

Beneficial shareholders holding 5% or more

Titan Shareholders 16 953 000 22,65

Dorsland Diamante (Pty) Ltd 10 027 000 13,39

The Sherrell Family Trust 6 253 400 8,35

33 233 400 44,39

JSE LIMITED STATISTICS

2013 2012

Ordinary shares

Traded 12 380 509 12 360 776

High (cents) 10 551 6 700

Low (cents) 5 950 3 905

Market price at year-end (cents) 10 200 6 500

as at 31 March 2013

>> Share information


PREFERENCE SHAREHOLDER SPREAD

Number of Number

shareholding % of shares %

1 – 1 000 shares 532 52,94 249 790 3,33

1 001 – 10 000 shares 405 40,30 1 220 477 16,27

10 001 – 100 000 shares 52 5,17 1 547 285 20,63

100 001 – 1 000 000 shares 16 1,59 4 482 448 59,77

1 005 100,00 7 500 000 100,00

DISTRIBUTION OF SHAREHOLDERS

Close corporations 10 0,99 23 917 0,32

Endowment funds 30 2,98 131 054 1,75

Individuals 666 66,27 1 269 093 16,92

Insurance companies 6 0,60 774 756 10,33

Investment companies 2 0,20 290 154 3,87

Medical aid scheme 2 0,20 28 000 0,37

Mutual funds 28 2,79 1 842 552 24,57

Nominees and trusts 207 20,60 859 827 11,46

Other corporations 10 1,00 44 362 0,59

Private companies 38 3,78 2 025 372 27,01

Public companies 1 0,09 1 000 0,01

1 005 100,00 7 500 000 100,00

PUBLIC AND NON-PUBLIC SHAREHOLDERS

Public shareholders 998 99,30 6 200 000 82,67

Non-public shareholders 7 0,70 1 300 000 17,33

Directors and associates of the Company 7 0,70 1 300 000 17,33

1 005 100,00 7 500 000 100,00

Beneficial shareholders holding 5% or more

Liberty Group 1 000 000 13,33

Titan Shareholders 800 000 10,67

Nedbank Group 721 912 9,63

Cadiz 611 620 8,15

2 133 532 28,45

JSE LIMITED STATISTICS

2013 2012

Preference shares

Traded 7 500 000 –

High (cents) 10 000 –

Low (cents) 10 000 –

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

>> Share informationcontinued

as at 31 March 2013


2013 2012

Employees Providers of capital Government Retained for reinvestment

33%

30%

3%

34%

38%

26%

4%

32%

Group

2013 2012R’000 % R’000 %

Income from goods and services 7 557 899 5 599 464

Less: Cost of goods and services (5 492 374) (4 170 830)

Value added from trading operations 2 065 525 1 428 634

Add: Dividends received on investments 316 902 327 871

Add: Interest received from investments 214 771 219 076

Total value added 2 597 198 100,0 1 975 581 100,0

Utilised as follows:

Employees

Salaries and benefits 875 073 33,7 642 514 32,5

Providers of capital 866 935 33,4 744 038 37,7

Interest on borrowings 651 760 598 354

Dividends to shareholders 215 175 145 684

Government – company tax 75 224 2,9 71 921 3,6

Current 110 297 79 000

Foreign 9 417 10 156

Deferred (44 490) (18 279)

Secondary tax on companies – 1 044

1 817 232 70,0 1 458 473 73,8

Retained for reinvestment

Depreciation and amortisation 86 814 3,3 61 365 3,1

Income retained in the business 693 152 26,7 455 743 23,1

779 966 30,0 517 108 26,2

Total utilisation of value added 2 597 198 100,0 1 975 581 100,0


>> Value added statement


Financial year-end 31 March 2013

Declaration of final dividend 11 June 2013

Publication of financial results for the year 11 June 2013

Last day to trade “CUM” dividend 28 June 2013

Trading “EX” dividend commences 1 July 2013

Record date 5 July 2013

Dividends payable 8 July 2013

Integrated Annual Report posted to shareholders 17 July 2013

Annual general meeting 16 August 2013

Publication of interim results November 2013

>> Shareholders’ diary


51 Approval of the annual financial statements

51 Certification by the Group secretary

52 Report of the independent auditors

53 Report of the directors

56 Audit Committee report

58 Statements of comprehensive income

59 Statements of financial position

60 Statements of changes in equity

61 Statements of cash flows

62 Notes to the annual financial statements

Contents to the

annual financial statements


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. These are based on appropriate 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 Companies Act (Act 71 of 2008)and reporting their findings thereon. The auditors' report is set out on page 52.

To enable the Board to meet its responsibilities, systems and internal control and accounting and information systems have been implemented. These are aimed at providing reasonable assurance that risk of error, fraud or lossis reduced. The Group's internal audit function, which has unrestricted access to the Group's Audit and RiskManagement Committee, evaluates and, if necessary, recommends improvements to the systems of internal control and accounting practices, based on audit plans that take cognisance of the relative degrees of risk of eachfunction or aspect of the business.

The Audit and Risk Management Committee, together with the internal auditors, plays an oversight role in matters relating to financial and internal control, accounting policies, reporting and disclosures.

To the best of its knowledge and belief, based on the above and after making enquiries, the Board of 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 going concern basis in preparing the annual financial statements.

The annual financial statements for the year ended 31 March 2013, which appear on pages 53 to 107, wereapproved by the Board on 11 June 2013 for publication on 11 June 2013 and are signed on its behalf by:

Dr CH Wiese A GoldstoneChairman Chief executive officer

Cape Town

11 June 2013

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 2013 all such returnsand notices as are required of a public company in terms of the said Act, and that all such returns notices appearto be true, correct and up to date.

C Barnard Secretary

Cape Town

11 June 2013

>> Approval of

the annual financial statements

>> Certification by

the Group secretary

Invicta Holdings Limited | Integrated annual report 2013 51

TO THE SHAREHOLDERS OF INVICTA HOLDINGS LIMITED

Report on the annual financial statements

We have audited the Group annual financial statements and annual financial statements of InvictaHoldings Limited set out on pages 58 to 107, which comprise the consolidated and separate statements of financial position as at 31 March 2013, and the consolidated and separate statements of comprehensive income, the consolidated and separatestatements of changes in equity and the consolidatedand separate statements of cash flows for the yearthen ended, and a summary of significant accountingpolicies and other explanatory information.

Directors’ Responsibility for the Financial Statements

The Company’s directors are responsible for the preparation and fair presentation of these financialstatements in accordance with International FinancialReporting Standards and the requirements of theCompanies Act of South Africa, and for such internalcontrol as the directors determine is necessary toenable the preparation of financial statements thatare free from material misstatement, whether due tofraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on thesefinancial statements based on our audit. We conducted our audit in accordance with InternationalStandards on Auditing. Those standards require thatwe comply with ethical requirements and plan andperform the audit to obtain reasonable assuranceabout whether the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtainaudit evidence about the amounts and disclosures inthe financial statements. The procedures selecteddepend on the auditor’s judgment, 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 the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimatesmade by management, as well as evaluating the overall 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, these financial statements present fairly, in all material respects, the consolidated andseparate financial position of Invicta Holdings Limitedas at 31 March 2013, and its consolidated and separatefinancial performance and consolidated and separatecash flows for the year then ended in accordance withInternational Financial Reporting Standards andrequirements of the Companies Act of South Africa.

Other reports required by the Companies Act

As part of our audit of the financial statements for theyear ended 31 March 2013, we have read theDirectors’ Report, the Audit Committee’s Report andthe Company Secretary’s Certificate for the purpose ofidentifying whether there are material inconsistenciesbetween these reports and the audited financial statements.

These reports are the responsibility of the respectivepreparers. Based on reading these reports we have notidentified material inconsistencies between thesereports and the audited financial statements.However, we have not audited these reports andaccordingly do not express an opinion on thesereports.

Deloitte & ToucheRegistered AuditorsPer SBF CarterPartner

11 June 2013

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), CR Beukman(Finance), M Jordan (Strategy), S Gwala (Special Projects), 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 the

independent auditors


INVICTA HOLDINGS LIMITED

The directors have pleasure in presenting their annual

report, which forms part of the annual financial

statements and the 2013 Integrated Annual Report of

the Group and of the Company for the year ended

31 March 2013.

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) Limited, 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) Limited

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 predominantely 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.

>> Report of the directors


BSG

TiletoriaA leading importer and distributor of tiles and relatedsanitary ware in the Western Cape, Gauteng andKwaZulu-Natal. The Tiletoria Group has expanded itsoperations to encompass laminated flooring inGauteng.

MacNeilWholesale supplier of sanitary ware, brass ware, taps,plumbing fixtures, plastic piping and related productsto the building material sector of South Africa andneighbouring countries.

Compliance with accounting standards

The Group’s and the Company’s annual financial

statements comply with International Financial

Reporting Standards, the South African Companies Act

and the JSE Limited’s (JSE) Listings Requirements.

Group results

2013 2012R'000 R'000

Revenue 7 557 899 5 599 464Profit for the year 743 532 478 775

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 749 782 of its

issued ordinary shares. This resulted in a increase in

the share capital and share premium, which amounted

to R59 231 626.

The Company issued 7 500 000 preference shares,

which amounted to R750 000 000.

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 ofthe Company and its subsidiaries for 2013.

At the annual general meeting, shareholders will be

requested to reappoint Deloitte & Touche as auditors

of Invicta Holdings Limited and to confirm that

SBF Carter will be the designated audit partner for the

2014 financial year.

Sponsor

Deloitte & Touche Sponsor Services (Pty) Limited acts

as sponsor to the Company in terms of the Listings

Requirements of the JSE Limited.

Transfer secretaries

Computershare Investor Services (Pty) Limited serves as

the registrar and transfer secretaries of the Company.

Invicta Holdings long-term bonus and share incentive

scheme and bonus bank scheme

In order to attract and retain key staff the Group has

implemented a long-term bonus and share incentive

scheme as well as a bonus bank scheme. The

Remuneration Report, 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 85 to 87 of the 2013 Integrated Annual Report.

Dividends

Details of the ordinary dividends paid are reflected in

note 24 on page 90 of the 2013 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.


>> Report of the directorscontinued


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 45 of the 2013 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 98 and 99 of the 2013 Integrated Annual

Report. Members will be requested to consider a

special resolution approving the remuneration of each

non-executive director for the 2014 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.

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 2013 was 64% (2012:61%).

The total direct and indirect interest declared by the

directors in the preference share capital of the

Company at 31 March 2013 was 17% (2012:0%).

The details of the directors’ shareholding are reflected

in note 41 on page 104 of the 2013 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 and the JSE Listings Requirements.

As this general authority remains valid only until the

next annual general meeting, which is to be held on

16 August 2013, 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 2014 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 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 108 to 116 of the 2013 Integrated Annual

Report.

Signed on behalf of the Board of Directors

Dr CH Wiese A Goldstone

Chairman Chief Executive Officer

Cape Town

11 June 2013


>> 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, pertaining to audit committees.

Purpose

The purpose of the Audit Committee is:

• To assist the Board in its evaluation of the overalladequacy and efficiency of the internal control systems, accounting practices, information systemsand auditing processes applied in the management of the business in compliance withall applicable legal requirements, corporate governance and accounting standards.

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

• To review and confirm the independence objectively 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 risk management of the Group through the establishment of a Risk Committee.

• To monitor the 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 operations which meet on aquarterly basis and which report back to the AuditCommittee through the Group CEO and CFO.

Membership

The Committee was appointed at the annual generalmeeting on 14 August 2012. The Committee comprisessolely of non-executive directors. The members are:

DI Samuels (Chairman)JS MthimunyeLR SherrellJD Wiese (alternate to LR Sherrell and JS Mthimunye)

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 16 August 2013.

Attendance at meetings during the year was as follows:

18 Mar 8 Nov 20 Sep 15 Aug 4 Jun2013 2012 2012 2012 2012

C Barnard• √ √ √ x √SBF Carter# x x x x √A Goldstone• √ √ √ √ √G Herman^ √ √ √ √ xJS Mthimunye* √ x √ √ xDI Samuels* √ √ √ √ √LR Sherrell* √ √ √ √ √AM Sinclair• x √ √ x √C Walters• x √ x x √JD Wiese* x √ √ √ x

* Members • Group Directors # External Audit

^ Internal Audit

In addition to members, the chairman may requestpersonal or written representation from Group andCompany directors as well as internal and externalaudit.

External audit

In terms of section 90 of the Companies Act, theCommittee nominated Deloitte & Touche as the independent auditor and SBF Carter as the designatedpartner, who is a registered independent auditor, forappointment for the 2013 audit. This appointmentwas approved by shareholders at the annual generalmeeting on 14 August 2012. The Committee has satisfied itself through enquiry that the auditor ofInvicta is independent as defined by the CompaniesAct, as amended or replaced, and as per the standardsstipulated by the auditing profession.

Requisite assurance was sought and provided by theauditor that internal governance processes within theaudit 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 planfor the 2013 financial year. The budgeted fee is considered appropriate for the work that could reasonably have been foreseen at that time. The finalfee will be agreed on completion of the audit. Auditfees are disclosed in note 4 on page 73 of the 2013Integrated Annual Report.

There is a formal procedure that governs the processwhereby the auditor is considered for non-audit services, and each engagement letter for such work isreviewed and approved by the Committee. Meetingsare held with the auditor where management is notpresent and no matters of concern were raised.

The Committee has again nominated, for approval atthe annual general meeting, Deloitte & Touche as theexternal auditor and SBF Carter as the designatedauditor for the 2014 financial year. The Committeeconfirms that the auditor and designated auditor areaccredited by the JSE.


>> Audit committee report


Risk Committee Report

Background

Responsibility for managing the Group risk lies ultimately with the Board. However, the boards ofsubsidiary companies, executive committees and management at operational level assist the Board indischarging its responsibilities in this regard by identifying, monitoring and managing risk on anongoing basis.

Risk management specifically includes the considerationof:

• the risk profile and management of strategic andoperational risk within the Group;

• the risk profile and risk management of majorprojects and acquisitions;

• the adequacy of self-insurance and external insurance programs; and

• the risk profile and management of informationtechnology.

Risk management

The Board through the Risk Committee, which is a sub-committee of the Audit Committee, has identifieda number of key risk areas which it believes requiremonitoring and detailing to stakeholders, these aresummarised below –

Strategic risk review

The Group has internally held further strategic riskevaluations at both Group and divisional levels. Theresults of this exercise have allowed management andthe Board to reprioritise risks and consequentially theactions taken to mitigate these. The Committee monitors the progress of the implementation of theabove processes, with written submissions and presentations being done by management at leastannually.

The Risk Committee continues to monitor and evaluate the risk reports provided by the various operational risk committees and to report on theseplus any Group risks and Group strategies formulatedto the Audit Committee and the Board.

Exchange rate fluctuations

Most of the Group’s businesses involve the importation of product and, accordingly, changes inexchange rates can and do significantly affect the performance of operations. To date the Board has adopted the policy of hedging all its material foreignexchange exposures, increased volatility in the Randvalue 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 theGroup operates, specific focus is given to sourcingcompetitively priced quality products around theworld. Directors and senior management have specificprogrammes on an annual basis, including the visitingof selected international trade fairs and supplier functions, to benchmark existing product ranges andto source new lines. The Group has established permanent buying as well as quality assessment operations in sourcing regions which are material tothe Group’s purchases.

Distribution network and infrastructure

The distribution of the Group’s products is critical to itssales performance and takes place through a wide andentrenched network of its own outlets as well as thirdparty distributors. The support, communication andbusiness model used to govern these relationships,enjoys primary focus at the operating entities’ executive committee meetings, and may involve direct liaison with the relevant parties by the non-executivedirectors of the Board where appropriate. The efficiency and viability of these different distributionarrangements are continuously monitored and arerestructured as appropriate.

Trade and funding facilities

The availability of both trade and funding facilities arestrategic to the ongoing performance and success ofthe Group. The Board monitors and controls these onan ongoing basis. The Group has undertaken a number of transactions to raise capital during the yearand will continue to do so based on funding requirements.

Annual financial statements

In view of the Audit Committee having fulfilled itsmandate, it recommended the financial statements forapproval to the Board. The Board subsequentlyapproved the financial statements, which will be openfor discussion at the forthcoming annual generalmeeting.

Group financial director

As required by the JSE Listings Requirements, the committee confirms that the Group and Company’sfinance director, Mr C Barnard, has the necessaryexpertise and experience to carry out his duties.

DI SamuelsChairman of the Audit Committee

11 June 2013


>> Audit committee reportcontinued


Group Company

2012 2013 Restated 2013 2012

Notes R’000 R’000 R’000 R’000

Revenue 7 557 899 5 599 464 – –

Cost of sales (5 399 090) (3 933 434) – –

Gross profit 2 158 809 1 666 030 – –

Selling, administration and distribution costs (1 275 050) (1 064 949) 3 540 (3 515)

Operating profit (loss) before finance costs, interest

and dividends received 4 883 759 601 081 3 540 (3 515)

Finance costs 5 (651 760) (598 354) – –

Dividends received from subsidiaries – – 5 625 760 431

Dividends received from financial investments 316 902 327 871 34 964 46 848

Negative goodwill 52 066 – – –

Share of profits of associates 17 3 018 1 022 – –

Interest received 6 214 771 219 076 4 399 253

Profit before taxation 818 756 550 696 48 528 804 017

Taxation 7 (75 224) (71 921) (1 028) (593)

Profit for the year 743 532 478 775 47 500 803 424

Other comprehensive income

Exchange differences on translating foreign operations 26 810 4 763 – –

Total comprehensive income for the year 770 342 483 538 47 500 803 424

Profit attributable to:

Owners of the company 693 152 455 743 25 588 803 424

Non-controlling interest 28 468 23 032 – –

Preference shareholders 21 912 – 21 912 –

743 532 478 775 47 500 803 424

Total comprehensive income attributable to:

Owners of the company 741 874 460 082 47 500 803 424

Non–controlling interest 28 468 23 456 – –

770 342 483 538 47 500 803 424

Dividends per share (cents) 24 268 254

Basic earnings per share (cents) 8 955 647

Diluted earnings per share (cents) 8 948 604

Normalised earnings per share (cents) 8 737 647


>> Statements of comprehensive income


Group Company

20122013 Restated 2011 2013 2012

Notes R’000 R’000 R’000 R’000 R’000

ASSETSNon-current assetsProperty, plant and equipment 9 1 010 636 391 018 353 953 – –Investment in subsidiaries 16 – – – 503 639 502 264 Investment in associates 17 6 337 2 112 2 190 – –Financial investments 10 2 012 016 3 040 681 2 963 484 257 229 360 602 Goodwill 11 593 164 358 408 304 746 – –Other intangible assets 12 180 651 58 198 57 707 – –Financial asset 13 156 922 208 257 249 230 – –Finance lease receivables 14 12 433 2 633 433 – –Long-term receivables 15 1 947 658 490 886 260 992 – –Deferred taxation 7.1 161 139 106 180 69 940 – –

6 080 956 4 658 373 4 262 675 760 868 862 866

Current assetsLoans to subsidiaries 18 – – – 1 641 624 938 964 Held for sale assets 9.4 9 957 – – – –Inventories 19 2 913 052 2 084 662 1 381 615 – –Trade and other receivables 20 1 619 567 869 184 698 526 1 162 6 837 Current portion of finance lease receivables 14 15 007 1 315 299 – –Current portion of financial investments 10 865 959 124 290 97 998 113 046 46 072 Current portion of long-term receivables 15 2 633 – 1 201 – –Taxation prepaid 18 831 1 694 14 150 243 – Bank balances and cash 35 678 849 641 091 432 403 610 743

6 123 855 3 722 236 2 626 192 1 756 685 992 616

TOTAL ASSETS 12 204 811 8 380 609 6 888 867 2 517 553 1 855 482

EQUITY AND LIABILITIESCapital and reservesOrdinary share capital 21 3 743 3 706 3 724 3 743 3 706 Share premium 22 331 515 272 320 282 715 331 515 272 320 Treasury shares 23 (80 098) (93 931) (119 809) – –Preference shares 25 750 000 – – 750 000 – Share appreciation reserve 21 324 33 695 54 979 – –Revaluation reserve 5 025 5 025 5 025 – –Equity reserve (380 376) – – – –Foreign currency translation reserve 24 475 (2 335) (6 674) – –Retained earnings 2 014 469 1 676 751 1 391 305 1 399 136 1 571 043

Equity attributable to the equity holders 2 690 077 1 895 231 1 611 265 2 484 394 1 847 069 Non-controlling interest 405 135 59 321 243 584 – –

SHAREHOLDERS’ EQUITY 3 095 212 1 954 552 1 854 849 2 484 394 1 847 069

Non-current liabilitiesLong-term borrowings 27 5 487 888 4 078 225 3 391 948 688 688 Guaranteed repurchase liabilities 26 1 654 5 011 9 347 – –Financial liabilities 28 165 030 210 577 251 819 – –Deferred taxation 7.1 25 256 4 767 6 248 – –

5 679 828 4 298 580 3 659 362 688 688

Current liabilitiesTrade and other payables 30 1 921 268 1 687 826 1 111 487 10 201 6 189 Provisions 31 127 353 114 640 93 237 – –Taxation liabilities 30 199 26 328 13 052 – 684 Shareholders for dividends 28 733 2 262 7 062 22 270 852 Share appreciation rights liability 29 – 78 289 – – –Current portion of long-term borrowings 27 1 127 001 157 585 122 290 – –Current portion of guaranteed repurchase

liabilities 26 4 086 5 464 3 781 – –Bank overdrafts 35 191 131 55 083 23 747 – –

3 429 771 2 127 477 1 374 656 32 471 7 725

TOTAL LIABILITIES 9 109 599 6 426 057 5 034 018 33 159 8 413

TOTAL EQUITY AND LIABILITIES 12 204 811 8 380 609 6 888 867 2 517 553 1 855 482

as at 31 March 2013

>> Statements of financial position


Foreign Attribu-Share currency table to Non-

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

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

GroupBalance at 1 April 2011

as originally reported 3 724 282 715 (119 809) – 54 979 5 025 – (6 674) 1 391 305 1 611 265 243 584 1 854 849 Restatement of the

opening balance due to modification of the treatment of share appreciation rights – – – – (27 096) – – – (52 033) (79 129) – (79 129)

Restated balance 3 724 282 715 (119 809) – 27 883 5 025 – (6 674) 1 339 272 1 532 136 243 584 1 775 720Cancellation of

issued shares (18) (10 395) – – – – – – – (10 413) – (10 413) Restated profit for

the year – – – – – – – – 455 743 455 743 23 032 478 775 Exchange differences on

translating foreign operations – – – – – – – 4 339 – 4 339 424 4 763

Acquisition of non-controlling interest – – – – – – – – 21 347 21 347 (202 570) (181 223)

Treasury shares disposed in terms of directors' loan scheme – – 17 497 – 4 535 – – – 9 303 31 335 – 31 335

Treasury shares utilised to settle share appreciation rights – – 16 366 – – – – – 15 670 32 036 – 32 036

Dividends paid – – – – – – – – (145 684) (145 684) (5 149) (150 833) Share appreciation

rights issued – – – – 9 121 – – – – 9 121 – 9 121 Share appreciation

rights exercised – – – – (7 844) – – – (18 900) (26 744) – (26 744) Treasury share purchased – – (7 985) – – – – – – (7 985 ) – (7 985)

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

Profit for the year – – – – – – – – 715 064 715 064 28 468 743 532 Preference dividends paid – – – – – – – – (21 912) (21 912) – (21 912) Exchange differences on

translating foreign operations – – – – – – – 26 810 – 26 810 – 26 810

Ordinary shares issued 37 59 195 – – – – – – – 59 232 – 59 232 Preference shares issued – – – 750 000 – – – – – 750 000 – 750 000Treasury 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 interest

arising 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

Company

Balance at 1 April 2011 3 724 282 715 – – – 4 814 – – 918 814 1 210 067 – 1 210 067 Cancellation of

issued shares (18) (10 395) – – – – – – – (10 413) – (10 413) Mark to market on

treasury shares – – – – – (4 814) – – – (4 814) – (4 814) Total comprehensive

income for the year – – – – – – – – 803 424 803 424 – 803 424 Dividends paid – – – – – – – – (151 195) (151 195) – (151 195)

Balance at 31 March 2012 3 706 272 320 – – – – – – 1 571 043 1 847 069 – 1 847 069Ordinary shares issued 37 59 195 – – – – – – – 59 232 – 59 232 Preference shares issued – – – 750 000 – – – – – 750 000 – 750 000Profit for the year – – – – – – – – 47 500 47 500 – 47 500 Ordinary dividends paid – – – – – – – – (197 495) (197 495) – (197 495) Preference 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


>> Statements of changes in equity


Group Company

20122013 Restated 2013 2012

Notes R’000 R’000 R’000 R’000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 32 732 079 489 281 13 227 483

Finance costs (651 760) (598 354) – –

Dividends paid to group shareholders 33 (188 704) (150 484) (197 989) (151 080)

Dividends paid to non-controlling interest (9 730) (5 149) – –

Taxation paid 34 (161 137) (62 466) (1 955) (599)

Interest and dividends received 531 673 546 946 44 988 807 532

Net cash inflow (outflow) from operating activities 252 421 219 774 (141 729) 656 336

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds on sale of property, plant and equipment 20 552 14 122 – –

Expansion to property, plant and equipment (126 072) (58 848) – –

Replacement of property, plant and equipment (24 088) (46 600) – –

Additions to intangible assets (2 116) (3 828) – –

Acquisition of subsidiaries 43 (1 494 214) (152 808) (1 375) –

Acquisition of associates (2 068) – – –

Acquisition of non-controlling interest – (177 525) – –

Dividend received from associate 425 1 100 – –

Increase in long-term receivables (1 331 947) (232 094) – –

Net decrease (increase) in financial investments 1 029 826 (77 197) 103 373 62 081

Increase in current portion of financial investments,

long-term and finance lease receivables (757 994) (26 107) (66 974) (9 746)

Increase in loans to subsidiaries – – (702 660) (701 214)

Net cash outflow from investing activities (2 687 696) (759 785) (667 636) (648 879)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in long-term borrowings 901 083 686 277 – –

Decrease in guaranteed repurchase liabilities (3 357) (4 336) – –

Decrease in loan from subsidiary – – – (420)

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

Settlement of share appreciation rights (148 581) (69 432) – –

Cancellation of issued shares – (10 413) – (16 011)

Ordinary shares issued 59 232 – 59 232 –

Preference shares issued 750 000 – 750 000 –

Increase in current portion of long-term borrowings

and guaranteed repurchase liabilities 856 897 36 978 – –

Net cash inflow (outflow) from financing activities 2 336 985 717 363 809 232 (16 431)

Net (decrease) increase in cash and cash equivalents (98 290) 177 352 (133) (8 974)

Cash and cash equivalents at the beginning of the year 586 008 408 656 743 9 717

Cash and cash equivalents at the end of the year 35 487 718 586 008 610 743


>> 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 International Financial ReportingInterpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for the Group’sreporting period. The adoption of IFRS 3 Business Combinations (amendments), IFRS 7 Financial Instruments:Disclosures (amendments) and related amendments to IAS 1 Presentation of Financial Statements, IAS 24Related Party Disclosures, IAS 27 Consolidated and Separate Financial Statements and IAS 34 Inter FinancialReporting has not resulted in any significant changes to the Group and Company’s accounting policies andthe effects on the amounts reported for the current or prior years have been disclosed.

At the date of authorisation of these financial statements, the following Standards applicable to the Groupand Company were in issue but not yet effective:

Standards: Effective date:

• IFRS 7 – Financial Instruments –Disclosures Annual periods beginning on or after 1 January 2013

• IFRS 9 – Financial Instruments – Classification and Measurement Annual periods beginning on or after 1 January 2013

• IFRS 10 – Consolidated Financial Statements Annual periods beginning on or after 1 January 2013

• IFRS 12 – Disclosure of Interest in Annual periods beginning on or after 1 January 2013Other Entities

• IFRS 13 – Fair value measurement Annual periods beginning on or after 1 January 2013

• IAS 1 – Presentation of Financial Statements Annual periods beginning on or after 1 January 2013

• IAS 16 – Property, Plant and Equipment Annual periods beginning on or after 1 January 2013

• IAS 19 – Employee Benefits Annual periods beginning on or after 1 January 2013

• IAS 27 – Separate Financial Statements Annual periods beginning on or after 1 January 2013

• IAS 28 – Investments in Associated and Annual periods beginning on or after 1 January 2013Joint Ventures

• IAS 32 – Financial Instruments: Presentation Annual periods beginning on or after 1 January 2013

• IAS 34 – Interim Financial Reporting Annual periods beginning on or after 1 January 2013

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 accounting policies adopted are set out below.

2.1 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has thepower to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statements of comprehensive income from the effective date of acquisition or up to theeffective date of disposal, as appropriate.


>> Notes to the

annual financial statements


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

accounting policies into line with those used by the Group.

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

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

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

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

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

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

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

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

2.2 Business combinations

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

is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities

incurred or assumed, and equity instruments issued by the Group in exchange for control of the

acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable

assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are

recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups)

that are classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and

Discontinued Operations, which are recognised and measured at fair value less costs to sell. Goodwill

arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the

cost of the business combination over the Group’s interest in the net fair value of the identifiable

assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the

net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost

of the business combination, the excess is recognised immediately in profit or loss.

The interest of non-controlling shareholders in the acquiree is initially measured at the non-

controlling shareholders’ proportion of the net fair value of the assets, liabilities and contingent

liabilities recognised.

2.3 Goodwill

Goodwill arising on the acquisition of a subsidiary or a jointly controlled entity represents the excess

of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets,

liabilities and contingent liabilities of the subsidiary or jointly controlled entity recognised at the date

of acquisition.

Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any

accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each

of the Group’s cash-generating units expected to benefit from the synergies of the combination.

Cash-generating units to which goodwill has been allocated are tested for impairment annually, or

more frequently when there is an indication that the unit may be impaired. If the recoverable amount

of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is

allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the

other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. An

impairment loss recognised for goodwill is not reversed in a subsequent period.

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 title has passed.

Interest income is accrued on the time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash 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 the relevant 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 the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statements of financial position as a financelease obligation. Lease payments are apportioned between finance charges and a reduction of thelease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.Finance charges are charged to profit or loss.

Rentals payable under operating leases are charged to profit or loss on the straight-line basis over 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.




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 pro-

ceeds (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.

Minority 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.




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 operating profit by reportable segments:

Segment revenue Segment operating profit

2012 2012

2013 Restated 2013 Restated

R’000 R’000 R’000 R’000

Engineering consumables 3 424 847 2 742 046 390 047 371 458

Capital equipment 3 502 865 2 548 888 339 338 246 783

Building supplies 625 141 306 771 38 610 14 127

Group, financing and other operations 4 946 1 759 115 764 (31 287)

7 557 899 5 599 464 883 759 601 081

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.

The comparative information has been restated to include the Building supplies segment due to the

segment now becoming material in the current financial year as a result of acquisitions.

3.2 Segment assets and liabilities

2012

2013 Restated

R’000 R’000

Segment assets

Engineering consumables 2 189 286 1 723 928

Capital equipment 3 215 154 1 556 429

Building supplies 502 070 191 505

Group, financing and other operations 6 298 301 4 908 747

Total assets 12 204 811 8 380 609

Segment liabilities

Engineering consumables 867 637 510 138

Capital equipment 1 874 215 1 295 827

Building supplies 325 923 97 602

Group, financing and other operations 6 041 824 4 522 490

Total liabilities 9 109 599 6 426 057

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.




3. BUSINESS SEGMENTS continued

3.3 Other segment information

Additions to property,

Depreciation and plant and equipment

amortisation and intangible assets

2012 2012

2013 Restated 2013 Restated

R’000 R’000 R’000 R’000

Engineering consumables 36 907 25 545 33 961 42 056

Capital equipment 34 513 31 778 54 491 42 162

Building supplies 4 971 29 22 221 1 217

Group, financing and other operations 10 423 4 013 41 603 23 841

Total 86 814 61 365 152 276 109 276

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 41% of the total liabilities in that

segment.

Customers

The Group has not reported segment information by customer as no customer contributes in excess of

10% of the Group's total revenue.




Group Company

20122013 Restated 2013 2012

R’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 4 075 2 744 – – Realised and unrealised net profits on money

market investments 6 754 5 914 – – 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 – – – Release of deferred profit on issue of

shares by subsidiary – 11 610 – – Credit default swap derivative gain 51 087 92 689 – – Interest rate swap derivative gain 946 – – –

ExpensesAuditors’ remuneration – audit fees 5 176 4 442 – –

– Current year 4 861 3 789 – –– Prior year – 150 – –– Other services 315 503 – –

Depreciation* 47 331 33 058 – –

– Buildings 6 121 4 230 – – – Plant and equipment 8 678 5 637 – –– Leasehold improvements 2 487 2 295 – –– Motor vehicles 12 452 7 218 – – – Furniture and fittings 8 127 2 319 – –– Office equipment 1 250 5 995 – – – Computer equipment 8 216 5 364 – –

Amortisation of intangible assets 14 480 6 292 – – Put option and interest rate swap derivatives 46 370 87 740 – – Impairment of property, plant and equipment 18 13 554 – –Goodwill impairment 2 791 1 137 – –Loss on disposal of property, plant and equipment 524 119 – – Employment costs 875 073 642 514 – –

Operating lease expenses 109 287 71 565 – –

– Premises 89 176 51 401 – –– Equipment 880 911 – –– Motor vehicles 19 007 19 253 – –– Other 224 – – –

Pension and provident fund contributions 38 342 26 888 – – Share options expense 46 382 44 938 – –

* This excludes depreciation charge relating to the forklift, golf car and equipment rental fleets disclosed in cost of sales

of R25 002 559 (2012: R22 015 605).




Group Company

20122013 Restated 2013 2012

R’000 R’000 R’000 R’000

5. FINANCE COSTS

Bank overdrafts and loans 41 514 16 513 – –

Foreign exchange premiums 15 787 6 891 – –

Finance leases 2 261 2 429 – –

Guaranteed repurchase liabilities 730 1 127 – –

Long-term borrowings 591 468 571 394 – –

Total 651 760 598 354 – –

6. INTEREST RECEIVED

Bank balances and cash 35 974 23 831 1 –

Finance leases 1 918 57 – –

Foreign exchange gains 7 324 6 789 – –

Long-term receivables 169 555 188 399 4 398 253

Total 214 771 219 076 4 399 253

7. TAXATION

South African normal taxation

Current taxation

– current year 119 612 73 045 1 728 593

– prior year (9 315) 5 955 (700) –

Deferred taxation

– current year (42 465) (18 418) – –

– prior year (2 025) 139 – –

Secondary taxation on companies – 1 044 – –

Foreign taxation 9 417 10 156 –

Total 75 224 71 921 1 028 593

Reconciliation of taxation rate % % % %

Statutory taxation rate 28,0 28,0 28,0 28,0

Permanent differences and exempt income (18,8) (17,2) (25,9) (27,9)

Secondary taxation on companies – 0,2 – –

Recognition of deferred taxation on taxation

losses not previously recognised – (0,7) – –

Utilisation of taxation losses – (0,3) – –

Prior year under provision – 1,0 – –

Foreign taxation – 1,2 – –

Capital gains taxation – 0,9 – –

Effective taxation rate 9,2 13,1 2,1 0,1

Estimated tax losses in the Group amount to R284 921 901 (2012: R36 402 587). A deferred tax asset of

R78 839 136 (2012: R5 937 766) has been raised with respect of certain of these tax losses due to the

uncertainty in estimating the remaining tax losses.




Group Company

2012

2013 Restated 2013 2012

R’000 R’000 R’000 R’000

7. TAXATION continued

7.1 Deferred taxation

Net balance at the beginning of the year 101 413 63 692 – (784)

Restatement due to modification of share

appreciation rights (refer note 44) – 20 235 – –

Arising on acquisition of subsidiaries (10 020) (793) – –

Arising on fair valuation of treasury shares – – – 784

Charge from the statement of

comprehensive income 44 490 18 279 – –

Net balance at the end of the year 135 883 101 413 – –

Comprising:

Capital allowances (25 780) (6 448) – –

Tax losses 78 839 2 173 – –

Provisions 85 429 68 639 – –

Other temporary differences (2 605) 37 049 – –

Total 135 883 101 413 – –

Disclosed as:

Deferred taxation asset 161 139 106 180 – –

Deferred taxation liability (25 256) (4 767) – –

Total 135 883 101 413 – –

8. EARNINGS PER SHARE

Basic earnings per share (cents) 955 647 – –

Diluted earnings per share (cents) 948 604 – –

Normalised earnings per share (cents) 737 647 – –

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 693 152 455 743 – –

Weighted average number of ordinary

shares for the purposes of basic earnings

per share 72 588 70 405 – –




Group Company

20122013 Restated 2013 2012

R’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 693 152 455 743 – –

Weighted average number of ordinary shares used in the calculation of diluted earnings per share 73 125 75 416 – –

Reconciliation of weighted average numberof ordinary shares

Basic number of ordinary shares 72 588 70 405 – –Share appreciation rights 1 072 3 918 –Put granted to directors in terms of the

loan scheme (535) 1 093 – –

Diluted number of ordinary shares 73 125 75 416 – –

Group

AttributablePreference to equity

Gross Taxation Minorities 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 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 152Adjusted 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

Group

20122013 Restated

Cents Cents

Normalised earnings for the year 534 980 693 152Weighted average number of ordinary shares for the purposes

of basic earnings per share 72 588 70 405




Group

AttributablePreference to equity

Gross Taxation Minorities 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

72 588 478 (2012: 70 405 211)

ordinary shares in issue during

the year. It is derived, after

taxation and non-controlling

interest, as follows:

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

2012 – RestatedEarnings attributable to ordinary

shareholders 550 696 (71 921) (23 032) – 455 743Adjusted for:Release of deferred profit on issue

of shares by subsidiary (11 610) 1 872 – – (9 738)Profit on disposal of investments (5 914) 828 – – (5 086)Net profit on disposal of property,

plant and equipment (2 625) 735 – – (1 890)Impairment of goodwill 1 137 – – – 1 137Impairment of property, plant

and equipment 13 554 (3 780) (1 800) – 7 974

Headline earnings for purposes of headline earnings per share 545 238 (72 266) (24 832) – 448 140

Group

20122013 Restated

R’000 R’000

Headline earnings for purpose of diluted headline earnings per share 642 080 448 140

Headline earnings per share (cents) 885 637

Diluted headline earnings per share (cents) 878 594




Group

2013 2012R’000 R’000

9. PROPERTY, PLANT AND EQUIPMENT

Land and buildings 743 609 207 665

– Gross carrying amount 795 303 253 238– Accumulated depreciation and impairment 51 694 45 573

Plant and equipment 78 069 32 169


Leasehold improvements 11 616 7 287


Motor vehicles 49 898 30 209


Furniture and fittings 9 667 6 170


Office equipment 22 128 19 933


Computer equipment 16 614 12 164


Rental assets – Golf cars 13 800 13 066


Rental assets – Forklifts 41 968 42 821


Rental assets – Equipment 23 267 19 534


Net carrying value 1 010 636 391 018

Total gross carrying amount 1 394 692 702 722Total accumulated depreciation and impairment 384 056 311 704

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 R273 million (2012: R199 million) to secure mortage bonds and finance lease liabilities as detailedin note 27.




Group

2013 2012R’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 207 665 201 412Additions 48 656 23 983Acquisitions of subsidiaries 490 066 –Impairment raised – (13 500)Depreciation for the year (6 121) (4 230) Disposals (1 418) –Foreign currency translation 4 761 –

Balance at the end of the year 743 609 207 665

Plant and equipmentBalance at the beginning of the year 32 169 19 831Additions 22 460 13 252Acquisitions of subsidiaries 32 487 5 056Impairment raised (18) –Depreciation for the year (8 678) (5 637)Adjustment – 279Disposals (392) (612)Foreign currency translation 41 –


Leasehold improvementsBalance at the beginning of the year 7 287 5 263Additions 2 879 4 319Acquisitions of subsidiaries 3 907 –Depreciation for the year (2 487) (2 295)Disposals (57) –Foreign currency translation 87 –


Motor vehiclesBalance at the beginning of the year 30 209 19 666Additions 20 055 17 161Acquisitions of subsidiaries 16 333 2 526Impairment raised – (54)Depreciation for the year (12 452) (7 218)Disposals (4 302) (1 872)Foreign currency translation 55 –


Furniture and fittingsBalance at the beginning of the year 6 170 7 837Additions 8 286 694Acquisitions of subsidiaries 3 349 –Reclassification to office equipment – (302)Depreciation for the year (8 127) (2 319)Adjustment – 260Disposals (30) –Foreign currency translation 19 –





Group

2013 2012R’000 R’000


9.3 Reconciliation of movement in carrying value continued

Office equipmentBalance at the beginning of the year 19 933 19 271Additions 2 640 6 754Acquisitions of subsidiaries 2 374 57Reclassification from furniture and fittings – 302Depreciation for the year (2 637) (5 995)Adjustment – (223)Disposals (204) (233)Foreign currency translation 22 –


Computer equipmentBalance at the beginning of the year 12 164 8 630Additions 7 452 8 739Acquisitions of subsidiaries 5 255 378Depreciation for the year (8 216) (5 364)Disposals (96) (219)Foreign currency translation 55 –


Rental assets – Golf carsBalance at the beginning of the year 13 066 13 005Additions 5 353 4 967Depreciation for the year (3 764) (4 100)Disposals (855) (806)


Rental assets – ForkliftsBalance at the beginning of the year 42 821 48 411Additions 20 352 12 520Depreciation for the year (12 537) (13 763)Adjustment – 3 055Disposals (8 668) (7 402)


Rental assets – MachineryBalance at the beginning of the year 19 534 10 627Additions 12 027 13 059Depreciation for the year (7 315) (4 152)Disposals (979) –


TotalBalance at the beginning of the year 391 018 353 953Additions 150 160 105 448Acquisitions of subsidiaries 553 771 8 017Net impairment raised (18) (13 554)Depreciation for the year* (72 334) (55 073)Other – 3 371Disposals (17 001) (11 144)Foreign currency translation 5 040 –

Balance at the end of the year 1 010 636 391 018

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




Group

2013 2012R’000 R’000


9.4 Assets classified as held for sale

Property, plant and equipment 4 667 –Investment 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 area carried in the financial statements at their net book value.

Group Company

2013 2012 2013 2012R’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 494 560 690 428 – –

The preference shares are redeemable from 8 August 2011 until 8 February 2016 in semi-annual instalments. The present value of future dividendobligations was declared and paid on 8 August 2012and were invested in promissory notes. The preference shares are pledged to Standard Bankas security for its obligations under a credit default swap (refer note 27).

Business Venture Investments No 1057 (Pty) Ltd – 50 000 redeemable non-cumulative preference shares 291 305 406 674 291 305 406 674

The preference shares are redeemable from 8 August 2011 until 8 February 2016 in semi-annual instalments. The present value of future dividend obligations was declared and paid on 8 August 2012 and were invested in promissory notes. The preference shares are pledged to Standard Bank as security for its obligations under a credit default swap (refer note 27).

Gryphon Financial Engineering (Pty) Ltd preference shares 1 317 915 2 067 869 – –

The preference shares are redeemable on 15 August 2018.

The preference shares are redeemable on 15 August 2018. The present value of future dividend obligationswas declared and paid on 28 March 2013 and were invested in ordinary shares (refer note 15). A put optionhas been granted to a Group company as security for the investment for which Gryphon Support Services(Pty) Ltd ceded Government bonds as collateral to secure their performance obligations under the put optiongranted (refer note 28).




Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

10. FINANCIAL INVESTMENTS continued

Unlisted securities continued

Business Venture Investments No. 1062 (Pty) Ltd 213 045 – 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 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 2 877 975 3 164 971 370 275 406 674Current portion of financial investments (865 959) (124 290) (113 046) (46 072)

Long-term portion of financial investments 2 012 016 3 040 681 257 229 360 602

Directors’ valuation 2 012 016 3 040 681 257 229 360 602

Group

2013 2012R’000 R’000

11. GOODWILL

Goodwill arising on acquisition of subsidiaries

At the beginning of the year 358 408 304 746

Gross value 363 625 308 826Accumulated impairment (5 217) (4 080)

Acquisition of subsidiaries 237 547 54 799Goodwill impaired during the year (2 791) (1 137)

At the end of the year 593 164 358 408

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

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

2013 2012R’000 R’000

12. OTHER INTANGIBLE ASSETS

Computer software

– Gross carrying value 31 697 22 493

– Accumulated amortisation (16 497) (12 414)

– Foreign currency translation 149 –

Re-acquired agency rights



Distribution agreements

– Gross carrying value 11 547 –

– Accumulated amortisation (260) –

Trademarks, house brands and non-compete intangibles


– Accumulated amortisation (667) –

Contractual and non-contractual customer relationships


– Accumulated amortisation (7 236) –

Total



– Foreign currency translation 149 –

Net carrying value 180 651 58 198

Reconciliation of movement in carrying value

Balance at the beginning of the year 58 198 57 707

Acquisition of subsidiaries 134 668 3 305

Additions 2 116 3 828

Disposals – (350)

Amortisation for the year (14 480) (6 292)

Foreign currency translation 149 –


13. FINANCIAL ASSET

Credit default swap derivative – Serec Capital (Pty) Ltd (note 27.1) 156 922 208 257

The fair value of the credit default swap derivative was determined by discounting the contractual stream

of payments using the zero swap curve at the valuation date.




Group

2013 2012

R’000 R’000

14. FINANCE LEASE RECEIVABLES

Due within one year 17 220 1 684Due in the second to fifth years inclusive 13 166 2 541

30 386 4 225Unearned interest on finance leases (2 946) (277)

Net investment in finance leases 27 440 3 948

Net investment in finance leases can be analysed as follows:Due within one year 15 007 1 315Due in the second to fifth years inclusive 12 433 2 633

Net investment in finance leases 27 440 3 948

The Group entered into finance lease agreements for certain of its equipment and forklifts. The average term of finance leases entered into is 5 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 683 938 461 207

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 1 130 580 –

The financial investment does not have a redemption date nor a determinable redemption amount. The returns on the investment are variable and need 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 10 944 26 651

The loans earn interest of 6% per annum. 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 to a foreign group company supplier 96 665 –

The term loan bears interest at 6% per annum and is repayable by December 2014. The supplier has given notice that the loan may be repaid by 31 October 2013 and should this not occur the loan is convertible at the discretion of the group company into equity of the foreign supplier, the value of which exceeded the loan at the year-end.

Other loans 28 164 3 028

Total 1 950 291 490 886Current portion of long-term receivables (2 633) –

Long-term portion of long-term receivables 1 947 658 490 886




Group

2013 2012R’000 R’000

16. INVESTMENT IN SUBSIDIARIES

Details of the Company’s subsidiaries at 31 March are as follows:

Shares at cost 503 639 502 264

Total 503 639 502 264

Group

Proportion ofownership interestand voting power

held

Place of 2013 2012Name of subsidiary Principal activity operation % %

Direct holdingsBearing Man 1955 Ltd Investment holding company South Africa 100 100October Winds Trading 48 (Pty) Ltd Investment holding company South Africa 100 100Humulani Investments (Pty) Ltd* Investment holding company South Africa 100 100Invicta Offshore Holdings** Investment holding company Mauritius 67 0

Indirect holdingsBearing Man (Botswana) (Pty) Ltd Trading company Botswana 100 100Bearing Man (Namibia) (Pty) Ltd Trading company Namibia 100 100Bearing Man (Swaziland) (Pty) Ltd Trading company Swaziland 100 100Bearing Man (Mozambique) Lda Trading company Mozambique 100 100Bearing Man (Zambia) (Pty) Ltd Trading company Zambia 100 100Bearing Man (Maputo) (Pty) Ltd Trading company Maputo 66 53Equipment Spare Parts (Africa)

(Pty) Ltd Trading company South Africa 100 100Invicta Properties (Pty) Ltd Property holding company South Africa 100 100Salestalk 452 (Pty) Ltd Property holding company South Africa 50 50Oscillating Systems Technology

Africa (Pty) Ltd Trading company South Africa 100 100Erf 29 Samcor Park (Pty) Ltd Property holding company South Africa 100 100Screen Doctor (Pty) Ltd Trading company South Africa 50 50Disa Equipment (Pty) Ltd Trading company South Africa 100 100Criterion Equipment (Pty) Ltd Trading company South Africa 100 100Goldquest International

Hydraulics SA (Pty) Ltd Trading company South Africa 100 100Humulani Marketing (Pty) Ltd Trading company South Africa 100 100Farmmac SA (Pty) Ltd Trading company South Africa 100 100Tiletoria Cape (Pty) Ltd Trading company South Africa 36 40Spring Lights 149 (Pty) Ltd Trading company South Africa 60 60Wegezi Power Holdings (Pty) Ltd Trading company South Africa 85 85Wegezi Transformers (Pty) Ltd Trading company South Africa 85 48Trendy Property Investments

(Pty) Ltd Trading company South Africa 60 51SET Agency (Pty) Ltd Trading company South Africa 60 51Alpha Bearings (Pty) Ltd Trading company South Africa 29 25Turnkey Hydraulics (KZN) (Pty) Ltd Trading company South Africa 100 70Rumiset (Pty) Ltd Trading company South Africa 100 0




16. INVESTMENT IN SUBSIDIARIES continued

Group

Proportion ofownership interestand voting power

held

Place of 2013 2012Name of subsidiary Principal activity operation % %

Indirect holdings continued

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

(Mozambique) Lda Trading company South Africa 100 100Edmik Engineering (Pty) Ltd Trading company South Africa 100 70Smart Taps (Pty) Ltd Trading company South Africa 29 48Man-Dirk (Pty) Ltd Trading company South Africa 100 0MRO Produtos Industriais Lda Trading company Mozambique 80 0Nova Vida Limitada Trading company Mozambique 80 0Makona Hardware & Industrial

(Pty) Ltd Trading company South Africa 67 0Makona Hardware & Industrial

(Mpumalanga) (Pty) Ltd Trading company South Africa 67 0GK-IT Environmental Services

(Pty) Ltd Trading company South Africa 67 0Tool and Electric Distributors

(Pty) Ltd Trading company South Africa 100 0General Electrical Mechanical

Tool & Engineering Manufacturers (Pty) Ltd Trading company South Africa 100 0

Metric and Imperial Tool Systems(Pty) Ltd Trading company South Africa 100 0

Gem Tool Company (Pty) Ltd Trading company South Africa 100 0Man-Dirk East (Pty) Ltd Trading company South Africa 74 0Operational Marketing (Pty) Ltd Trading company South Africa 100 0Invicta Offshore Holdings** Investment holding company Mauritius 33 0Invicta Asian Holdings (Pte) Ltd Investment holding company Singapore 75 0Kian Ann Engineering (Pte) Ltd Trading company Singapore 75 0Kian Ann Engineering Trading

(Shanghai) Co. Ltd Trading company Singapore 75 0Kian Ann Districentre (Pte) Ltd Trading company Singapore 75 0PT. Haneagle Heavyparts Indonesia Trading company Indonesia 74 0Kian Ann Investment (Pte) Ltd Trading company Singapore 75 0Transmec Engineering (Pte) Ltd Trading company Singapore 38 0Kian Chue Hwa (Industries)

(Pte) Ltd Trading company Singapore 60 0PT. Allegiance Primaparts Indonesia Trading company Singapore 60 0Aptopart (Pty) Ltd Investment holding company South Africa 60 0MacNeil (Pty) Ltd Trading company South Africa 53 0MacNeil George (Pty) Ltd Trading company South Africa 53 0MacNeil Plastics (Pty) Ltd Trading company South Africa 53 0MacNeil Profiles (Pty) Ltd Trading company South Africa 53 0MacNeil Bloemfontein (Pty) Ltd Trading company South Africa 53 0MacNeil Durban (Pty) Ltd Trading company South Africa 53 0MacNeil JHB (Pty) Ltd Trading company South Africa 51 0MacNeil Eastern Cape (Pty) Ltd Trading company South Africa 27 0Upfront Agencies (Pty) Ltd Trading company South Africa 13 0

* 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 53 of the 2013 AnnualReport for further details.

** The 33% of the ordinary issued share capital of Invicta Offshore Holdings is owned by Bearing Man 1955 Limited.




16. INVESTMENT IN SUBSIDIARIES continued

The Group acquired 74,5% of the share capital of Kian Ann Engineering (Pte) Ltd, effective 1 February 2013,100% of the share capital of Man-Dirk (Pty) Ltd effective 1 August 2012, 100% of the share capital ofOperational Marketing (Pty) Ltd effective 1 April 2012, and 53% of the share capital of MacNeil (Pty) Ltdeffective 1 October 2012. Further details pertaining to these acquisitions are noted in Acquisition of subsidiaries note 43.

The Company’s attributable interest in the aggregate profits and losses (after taxation and non-controllinginterest) of its subsidiaries is as follows:

Group

20122013 Restated

R’000 R’000

Profits 680 618 438 621Losses 13 052 28 655

17. INVESTMENT IN ASSOCIATES

Proportion ofownership interest

and votingpower held

Place ofincorporation 2013 2012

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 0D&D Lifting and Crane Services (Pty) Ltd Trading company South Africa 48 0

Group

2013 2012R’000 R’000

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

Total assets 9 409 2 152Total liabilities (7 689) (1 437)

Net assets 1 720 715

Revenue for the year 111 203 25 943Profit for the year 10 206 2 555

Group’s share of profits of associates 3 018 1 022

Reconciliation of carrying amount:Original investment in associate 2 080 2 080Acquisition of associate (part of acquisition of subsidiary) 312 –Acquisition of associate 2 068 –Equity accounted earnings, net of taxation (cumulative since acquisition) 5 550 2 532 Dividends received (cumulative since acquisition) (2 925) (2 500) Foreign currency translation (748) –

Carrying value at the end of the year 6 337 2 112




Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

18. LOANS TO SUBSIDIARIES

Bearing Man 1955 Limited – – 625 892 625 891Humulani Investments (Pty) Limited – – 225 846 303 584

Humulani Marketing (Pty) Limited – – 789 886 9 489

– – 1 641 624 938 964

The loans are unsecured, bear no interest and no

fixed terms of repayment have been negotiated.

19. INVENTORIES

Merchandise 2 877 921 2 063 274 – –Work-in-progress 35 131 21 388 – –

Total 2 913 052 2 084 662 – –

The cost of inventories recognised as an expensein respect of write-downs of inventory to netrealisable value 12 863 19 932 – –

Cost of inventory recognised in the statement ofcomprehensive income 5 399 090 3 933 434 – –

20. TRADE AND OTHER RECEIVABLES

Trade receivables 1 565 006 800 443 – –Provision for doubtful debts (100 194) (39 000) – –Prepayments 22 386 14 323 148 –Other receivables 132 369 93 418 1 014 6 837

Total 1 619 567 869 184 1 162 6 837

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 39 000 37 495 – –Acquisition of subsidiaries 55 595 764 – –Amounts written off during the year, net

of recoveries (1 216) (1 011) – –Net provision raised during the year 6 815 1 752 – –

Closing balance 100 194 39 000 – –




Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

20. TRADE AND OTHER RECEIVABLES continued

Trade receivables past due and not impairedAll 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 as well as those who have not paid for two consecutive months on the basis that 70% of their trade receivables have been their customers for 5 years and longer.60 days 78 339 26 675 – –90 days 29 436 10 851 – –More than 120 days 76 743 12 698 – –

Total 184 518 50 224 – –

Trade receivables past due and impaired

60 days 15 092 2 303 – –90 days 4 025 1 235 – –More than 120 days 81 077 35 462 – –

Total 100 194 39 000 – –

21. ORDINARY SHARE CAPITAL

Authorised134 000 000 (2012: 134 000 000) ordinary shares

of 5 cents each 6 700 6 700 6 700 6 700

Issued74 112 523 (2012: 74 480 655) ordinary shares of 5 cents each at the beginning of the year 3 706 3 724 3 706 3 724368 032 ordinary shares of 5 cents each cancelled

during the prior year – (18) – (18)749 785 ordinary shares of 5 cents each issued

during the year 37 – 37 –

74 862 305 (2012: 74 112 523) ordinary shares of5 cents each at the end of the year 3 743 3 706 3 743 3 706

Number of shares Number of shares

2013 2012 2013 2012‘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. 59 138 59 888 60 591 59 888

At the Company’s annual general meeting held on 14 August 2012, a special resolution was passed givingthe directors general authority to repurchase shares not exceeding 20% of the issued share capital on theopen market. This authority remains in force until the next annual general meeting.




Group Company

2013 2012 2013 2012R’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 272 320 282 715 272 320 282 715Ordinary shares cancelled during the year – (10 395) – (10 395)Ordinary shares issued during the year 59 195 – 59 195 –

Balance at the end of the year 331 515 272 320 331 515 272 320

23. TREASURY SHARES

1 452 920 (2012: 1 989 484) ordinary shares of 5 cents each (73) (99) – –

Share premium on 1 452 920 (2012: 1 989 484)ordinary shares (44 420) (58 227) – –

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) (93 931) – –

24. ORDINARY DIVIDENDS*

Final177 cents paid on 9 July 2012 (2012: 126 cents)

to shareholders registered in the books of theCompany on 6 July 2012 131 179 93 845 131 179 93 845

Interim89 cents paid on 10 December 2012 (2012: 77 cents)

to shareholders registered in the books of theCompany on 7 December 2012 66 316 57 350 66 316 57 350

Dividends received on treasury shares (4 232) (5 511) – –

Total 193 263 145 684 197 495 151 195

* In accordance with IAS 10 the final dividend of

179 cents per share (2012: 177 cents) proposed by the

directors has not been reflected in the financial statements

as it had not been declared at the year-end.

25. PREFERENCE SHARES

Authorised

10 000 000 cumulative, non-participating preference shares of no par value 1 000 000 – 1 000 000 –

Issued

750 000 cumulative, non-participating preference shares of no par value 750 000 – 750 000 –

The Group has no contractual obligation to redeem the preference shares and dividends are only payableif declared by the Group.

The unissued preference shares are under the control of the directors in terms of the resolution of memberspassed at the extraordinary general meeting held on 12 November 2012. This authority remains in force for18 months from this date.




Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

26. GUARANTEED REPURCHASE LIABILITIES

Present value at the beginning of the year 10 475 13 128 – – Interest accrued during the year 730 1 127 – – Liabilities settled during the year (5 465) (3 780) – –

Present value at the end of the year 5 740 10 475 – –

Guaranteed repurchase liability can be analysed as follows:

Due within one year 4 086 5 464 – – Due within the second to fifth years inclusive 1 654 5 011 – –

5 740 10 475 – –

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 26 691 48 070 – –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 203 225 132 063 – –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 229 916 180 133 – –




Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

27. LONG–TERM BORROWINGS continued

27.1 Secured borrowings continued

Balance brought forward 229 916 180 133 – –

Debentures 990 135 1 097 101 – –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 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 2 291 852 2 069 115 – –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 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 Depfin Investments (Pty) Ltd – 178 000 – –

The preference shares were settled in the current year.

Preference shares issued to Standard Bank 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 375 000 225 000 – –The note mature between 2014 to 2017 and bears 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 4 539 794 3 749 349 – –




Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000


27.1 Secured borrowings continued

Balance brought forward 4 539 794 3 749 349 – –

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

The loan bears interest at Jibar plus 0,75% and is repayable on 3 June 2013. The loan is secured by an investment in FirstRand Bank bonds (FRB11) (refer note 10).

Short-term loan from DBS Bank and OCBC Bank 483 327 – – –

The loan bears interest at an aggregate of the variable swap offer rate and the applicable margin rate which varies between 2,75% and 3% per annum. The loan is repayable on 6 August 2013. This loan is secured by cross-sureties provided by Group companies.

Short-term loan from Standard Bank 146 000 – – –The loan bears interest at Jibar plus 2% and is repayable on 1 August 2013. The loan is secured by a Swap entered into with HSBC.

Loan from UOB Singapore 5 214 – – –The amounts payable are secured, bears interest at 2,1% per annum. The loan is repayable in 36 monthly instalments. The monthly instalments commenced in April 2012 and will mature in March 2015. As at year-end the covenant on the loan had been breached and remedied subsequent to year-end. Consequently the loan has been reclassified as a current liability.

27.2 Unsecured borrowings

Other borrowings 54 738 25 254 – –The amounts payable are unsecured, interest free and no fixed repayment terms have been set. The loans are long-term in nature.

Other borrowings 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 quarter to semi-annual instalments by March 2016.

Balance carried forward 5 377 279 3 774 603 – –




Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000


27.1 Unsecured borrowings continued

Balance brought forward 5 377 279 3 774 603 – –

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

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

Gryphon Financial Engineering (Pty) Ltd 683 938 461 207 – –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 9 720 – – –The loan bears interest at prime overdraft plus 2% is unsecured and no fixed repayment term have been set.

Trust receipts and bills payables 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 3 months from the end of the reporting period.

Contractual earn-out liabilities 98 969 – – –The amounts payable are interest-free and have been determined on the basis of the underlying contractual arrangements. No fixed repayment terms have been set.

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 6 614 889 4 235 810 688 688Current portion of long–term borrowings (1 127 001) (157 585) – –

Long–term portion of long-term borrowings 5 487 888 4 078 225 688 688

Borrowings are repayable as follows:Due within one year 1 127 001 157 585 – –Due within second to fifth years inclusive 3 096 003 2 009 110 – –After five years 2 391 885 2 069 115 688 –

Total 6 614 889 4 235 810 688 –

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




Group Company

20122013 Restated 2013 2012

R’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) 156 922 208 257 – –

Interest rate swap derivative 8 108 2 320 – –

165 030 210 577 – –

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 – – –Restated due to modification to share appreciation

rights (refer note 44) – 99 364 – –Share appreciation rights exercised (119 681) (56 892) – –Share appreciation rights charged to statement of

comprehensive income 41 392 35 817 – –

Closing balance – 78 289 – –

30. TRADE AND OTHER PAYABLES

Trade payables 1 559 597 1 330 484 – –Other payables 357 946 346 482 10 201 6 189Deferred income 3 725 10 860 – –

Total 1 921 268 1 687 826 10 201 6 189

31. PROVISIONS

Employee benefit provisions 106 968 60 114 – –Warranties and service provisions 20 385 54 526 – –

Total 127 353 114 640 – –

Movements in provisionsEmployee benefit provisionsBalance at the beginning of the year 60 114 68 014 – –Charged (credited) to income 34 759 (7 900) – –Acquisition of subsidiaries (included in Trade and

other payables) 12 095 – – –

Balance at the end of the year 106 968 60 114 – –

Warranties and service provisionsBalance at the beginning of the year 54 526 25 223 – –(Credited) charged to income (34 141) 29 303 – –

Balance at the end of the year 20 385 54 526 – –

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

three financial years.




Group Company

2012

2013 Restated 2013 2012

R’000 R’000 R’000 R’000

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

Profit before taxation 818 756 550 696 48 528 804 017Adjusted for:Depreciation 72 334 55 073 – –Amortisation of intangible assets 14 480 6 292 – –Impairment of property, plant and equipment 18 13 554 – –Interest rate swap and put option gain 6 155 4 266 – –Net profit on disposal of property, plant

and equipment (3 551) (2 625) – –Finance costs 651 760 598 354 – –Dividends received (316 902) (327 871) (40 589) (807 279)Share of profits of associate (3 018) (1 022) – –Interest received (214 771) (219 076) (4 399) (253)Adjustment to property, plant and equipment – (3 371) – –Movement in foreign currency translation reserve 22 363 4 763 – –Negative goodwill (52 066) – – –Goodwill impaired 2 791 1 137 – –

Cash generated (utilised) before movements in working capital 998 349 680 170 3 540 (3 515)

Working capital changes: (266 270) (190 889) 9 687 3 998

Decrease (increase) in inventories 55 869 (602 947) – –(Increase) decrease in trade and other receivables (212 663) (138 773) 5 675 456(Decrease) increase in trade and other payables

and provisions (109 476) 550 831 4 012 3 542

Cash generated from operations 732 079 489 281 13 227 483

33. DIVIDENDS PAID TO GROUP SHAREHOLDERS

Amounts unpaid at the beginning of the year 2 262 7 062 852 737Final dividend paid 9 July 2012 (2012: 11 July 2011) 131 179 93 845 131 179 93 845Interim dividend paid 10 December 2012

(2012: 5 December 2011) 66 316 57 350 66 316 57 350Preference dividends accrued 21 912 – 21 912 –Dividends received on treasury shares (4 232) (5 511) – –

Amounts unpaid at the end of the year (28 733) (2 262) (22 270) (852)

Total 188 704 150 484 197 989 151 080




Group Company

2013 2012 2013 2012

R’000 R’000 R’000 R’000

34. TAXATION PAID

Amounts unpaid (prepaid) at the beginning

of the year 24 634 (1 098) 684 690

Acquisition of subsidiary 28 157 1 295 – –

Charged to the statement of comprehensive income 119 714 86 903 1 028 593Amounts (unpaid) prepaid at the end of the year (11 368) (24 634) 243 (684)

Total 161 137 62 466 1 955 599

35. CASH AND CASH EQUIVALENTS

Bank and cash balances 678 849 641 091 610 743Bank overdrafts (191 131) (55 083) – –

Total 487 718 586 008 610 743

Group

Bank TradingR’000 R’000

Banking and trading facilitiesGross facility balances 234 966 2 936 425Facilities utilised 88 099 1 107 452

Facilities available 146 867 1 828 973

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 has no contingent liabilities in the current year. In the prior year the Group had guaranteed certain finance facilities granted to customers of ABSA Bank amounting to R240 135.




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

2013

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

– – 9 532 1 026 8 000 18 558

Non–executive directorsCH Wiese 634 22 – – – 656JS Mthimunye 54 93 – – – 147DI 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

2012

Executive directorsC Barnard – – 1 538 245 2 200 3 983A Goldstone* – – 2 000 274 200 2 474AM Sinclair – – 2 332 186 2 350 4 868CE Walters – – 2 650 249 1 850 4 749

– – 8 520 954 6 600 16 074

Non–executive directorsCH Wiese 756 22 – – – 778JS Mthimunye 147 72 – – – 219DI Samuels 351 276 – – – 627JD Wiese 162 – – – – 162LR Sherrell 108 24 – – – 132

1 524 394 – – – 1 918

Total 1 524 394 8 520 954 6 600 17 992

* A Goldstone elected to receive LBSIRs in lieu of a greater bonus for 2012. 146 340 LBSIRs were granted on 11 June 2012

at a weighted average cost of R66,14.




37. DIRECTORS’ EMOLUMENTS continued

Share appreciation rights exercised by the directors in 2013:

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

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

500 000 24,84 – 500 000 – 14-Mar-08 77,20 1 000 000 18,48 – 1 000 000 – 13-Mar-09 96,28

150 000 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 –

2012 A Goldstone 2 150 000 150 000 500 000 1 800 000

1 000 000 24,84 – 500 000 500 000 14 Mar 08 53,161 000 000 18,48 – – 1 000 000 13 Mar 09 –

150 000 24,37 – – 150 000 2 Mar 10 –– 42,55 150 000 – 150 000 1 Mar 11 –

C Barnard 975 000 130 000 450 000 655 000

150 000 27,96 – 150 000 – 26 Mar 07 42,68300 000 24,84 – 300 000 – 14 Mar 08 42,68400 000 18,48 – – 400 000 13 Mar 09 –125 000 24,37 – – 125 000 2 Mar 10 –

– 42,55 130 000 – 130 000 1 Mar 11 –

CE Walters 1 380 000 130 000 350 000 1 160 000

50 000 20,00 – 50 000 – 1 Sep 06 47,80300 000 27,96 – 300 000 – 26 Mar 07 50,48500 000 24,84 – – 500 000 14 Mar 08 –400 000 18,48 – – 400 000 13 Mar 09 –130 000 24,37 – – 130 000 2 Mar 10 –

– 42,55 130 000 – 130 000 1 Mar 11 –

AM Sinclair 1 110 000 130 000 220 000 1 020 000

220 000 27,96 – 220 000 – 26 Mar 07 53,16360 000 24,84 – – 360 000 14 Mar 08 –400 000 18,48 – – 400 000 13 Mar 09 –130 000 24,37 – – 130 000 13 Mar 09 –

– 42,55 130 000 – 130 000 1 Mar 11 –

The share appreciation rights exercised by the directors in 2012 amounted to R35 million.




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 and equivalent funds outside South Africa. 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

2013 2012 2013 2012R’000 R’000 R’000 R’000

39. COMMITMENTS

Commitments in respect of unexpired

rental agreements for premises:

– Payable within twelve months 68 153 71 440 – –

– Payable thereafter 219 805 77 304 – –

Total 287 958 148 744 – –

Commitments in respect of unexpired rental

agreements for motor vehicles:

– Payable within twelve months 16 116 15 500 – –

– Payable thereafter 23 459 24 223 – –

Total 39 575 39 723 – –

Commitments in respect of unexpired rental

agreements for office equipment:

– Payable within twelve months 231 706 – –

– Payable thereafter 190 980 – –

Total 421 1 686 – –

Commitments in respect of contracted

capital expenditure 81 770 6 014 – –

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 2013 2012Description Currency period rate % p.a. R’000 R’000

Bank overdrafts ZAR N/A 8,25 – 10,50 191 131 55 083Fixed rate borrowings ZAR 2006 – 2018 11,00 – 13,80 3 992 616 3 675 493Fixed rate borrowings SGD 2015 2,10 5 214 –Variable rate borrowings ZAR 2009 – 2020 8,50 – 14,10 1 487 173 535 063Variable rate borrowings SGD 2013 – 2016 1,20 – 3,00 595 613 –

The Group is exposed to interest rate risk on its variable rate borrowings. The exposure to interest rate riskis 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 approximatelyR42 million (2012: R11 million) on the statement of comprehensive income.

Credit risk managementPotential areas of credit risk consist of trade accounts receivable and short-term cash investments. Tradeaccounts receivable consist of a widespread customer base. Group companies monitor the financial positionof their customers on an 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 specific bad debts and at the year end management did not consider there to be any material credit riskexposure that was not already covered by credit guarantee or a bad debt provision (refer to note 20 for further detail in this regard). It is group policy to deposit short-term cash investments with only the majorbanks.

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 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

2013Mortgage bonds 46 698 111 232 45 295 203 225 Serec Capital loan – – 2 291 852 2 291 852 Debentures 152 973 837 162 – 990 135Preference shares – 584 505 – 584 505 Domestic medium term note program – 375 000 – 375 000 Loans 718 923 84 342 – 803 265 Financial liability arising on minority put option – 380 565 – 380 565 Finance lease liabilities and unsecured borrowings 208 407 777 935 – 986 342Guaranteed repurchase liability 4 086 1 654 – 5 740Trade and other payables 1 921 268 – – 1 921 268

Total 3 052 355 3 152 395 2 337 147 8 541 897

2012 – RestatedMortgage bonds 17 604 38 507 75 952 132 063Serec Capital loan – – 2 069 115 2 069 115Debentures 124 290 972 811 – 1 097 101Preference shares – 178 000 – 178 000Domestic medium–term note program – 225 000 – 225 000 Finance lease liabilities and unsecured borrowings 15 691 518 840 – 534 531Share appreciation rights liability 78 289 – – 78 289Guaranteed repurchase liabilities 5 464 5 011 – 10 475Trade and other payables 1 687 826 – – 1 687 826

Total 1 929 164 1 938 169 2 145 067 6 012 400




40. FINANCIAL RISK MANAGEMENT continued

Foreign currency risk managementThe majority of the Group's monetary assets and liabilities are denominated in South African Rand. The KianAnn 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 TOTALForeign currency monetary assets and liabilities R'000 R'000 R'000 R'000

Total assets 10 135 921 1 844 658 224 232 12 204 811 Total liabilities (7 884 380) (787 581) (437 638) (9 109 599)

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 placedon suppliers and which are due for payment in the coming year. It is the Group's policy not to speculate inforeign exchange contracts.

At year-end, open forward exchange contracts are marked-to-market and the profits and losses arising onthe contracts are recognised in the statement of comprehensive income. The estimated net fair values havebeen 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 Averagecurrency exchange Rand

’000 rate ’000

2013US Dollar 41 916 8,9497 375 136 Euro 32 705 11,7070 382 877 Yen 485 876 9,8673 49 241 British Pound 219 14,0502 3 077

2012US Dollar 32 595 8,7399 284 877Euro 61 300 7,8189 479 298Yen 652 178 10,5597 61 761British Pound 284 12,3979 3 521

These forward exchange contracts mature within twelve months.

Hedging of net investments in Kian AnnBearing Man 1955 Limited had a firm commitment to invest SGD81,8 million in Invicta Offshore Holdings(Pte) Ltd on 1 February 2013 as a result of the Scheme of arrangement approved by Kian Ann shareholders.

Humulani Marketing (Pty) Ltd entered into FEC transactions totalling SGD60 million to hedge the movement in the foreign currency risk.

The hedging relationship effectiveness is measured using the movement in the foreign currency for the FECtransactions compared to the movement in the foreign currency up to date of payment, which was 1 February 2013

1 February2013

Fair valueR'000

FEC transactions 436 302 Net investment in Kian Ann 440 250

Management considers the hedge as being effective.





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

2012

2013 Restated

R’000 R’000

Categories of financial instruments

Financial assets

Investments at amortised cost

Financial investments 2 877 975 3 164 971

Financial assets at fair value

Financial asset 156 922 208 257

Loans and receivables at amortised cost

Finance lease receivables 27 440 3 948

Long-term loans 1 950 291 490 886

Trade and other receivables 1 597 181 854 861

Bank balances and cash 678 849 641 091

Total 7 288 658 5 364 014

Financial liabilities

Financial liabilities at fair value

Financial liabilities 165 030 210 577

Financial liabilities at amortised cost

Borrowings 6 614 889 4 235 810

Guaranteed repurchase liabilities 5 740 10 475

Trade and other payables 1 917 543 1 676 966

Bank overdrafts 191 131 55 083

Total 8 894 333 6 188 911





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

31 March

2013 Level 1 Level 2 Level 3

Financial assets at fair value

Financial asset 156 922 – 156 922 –

Financial liabilities at fair value

Financial liabilities 165 030 – 165 030 –

Trade and other payables 615 434 – 615 434 –

31 March

2012 Level 1 Level 2 Level 3

Financial assets at fair valueFinancial asset 208 257 – 208 257 –

Financial liabilities at fair valueFinancial liabilities 210 577 – 210 577 –Trade and other payables 753 862 – 753 862 –

41. DIRECTORS’ INTEREST IN THE SHARES OF THE COMPANY

Number of shares held

2013 2012

Direct Indirect Direct Indirectinterest interest interest interest

Ordinary sharesC Barnard 315 632 240 632 306 361 231 361 A Goldstone 262 281 4 238 678 138 966 4 212 678 DI Samuels 500 460 3 500 000 500 460 3 500 000 LR Sherrell – 9 286 353 – 9 427 788 AM Sinclair 344 163 – 339 163 – CE Walters 813 500 258 165 997 011 – CH Wiese – 27 000 000 – 25 480 590

Preference sharesC Barnard – 10 000 – – A Goldstone 200 000 105 000 – – LR Sherrell – 160 000 – – AM Sinclair 10 000 – – – JS Mthimunye – 15 000 – – CH Wiese – 800 000 – – JD Wiese – 200 000 – –




42. RELATED PARTY TRANSACTIONS

Transactions between the Company and its subsidiaries, which are related parties, are limited to dividends

received from subsidiaries of R59 million (2012: R766 million).

Remuneration of key management personnel

The remuneration of key management personnel of the Group, is set out below:

Group

2013 2012

R’000 R’000

Long- and short-term employee benefits 34 237 31 703

Retirement benefits 1 716 1 395

Total 35 953 33 098

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 current and prior year , Bravura

provided financial services to the counterparty in the transaction giving rise to the investments and

derivative instruments (refer note 10 and13) and borrowings (refer note 27 and 28).

43. ACQUISITION OF SUBSIDIARIES

The significant acquisitions undertaken in the current year related to Man-Dirk (Pty) Ltd, Operational

Marketing (Pty) Ltd, Kian Ann Engineering (Pte) Ltd and MacNeil (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 and negative goodwill are

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. The transaction costs for these acquisitions amounted to an

aggregated number of R50 million.

Subsidiary Industry

Man-Dirk (Pty) Ltd Industrial distributor of tools and equipment to the mining and

industrial sector

Operational Marketing (Pty) Ltd Lubrication and filtration systems with a strong field service

presence

MacNeil (Pty) Ltd 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

Kian Ann Engineering (Pte) Ltd A large distributor of heavy earthmoving machinery parts and diesel

engine components




43. ACQUISITION OF SUBSIDIARIES continued

Group

2013 2012

R’000 R’000

Fair value of net assets acquired:

Property, plant and equipment 553 771 8 017

Assets held for resale 9 957 –

Intangible assets 134 668 3 305

Long-term receivable 134 625 –

Financial assets 1 161 –

Investment in associates 312 –

Other assets 367 –

Bank and cash 142 264 (11 077)

Inventories 884 259 100 100

Trade and other receivables 537 720 31 885

Deferred taxation (10 020) (793)

Long-term borrowings (128 204) –

Trade and other payables (361 296) (46 909)

Current portion of long-term borrowings (111 141) –

Taxation liabilities (28 157) (1 295)

Non-controlling interest (327 076) (47)

Net tangible asset value 1 433 210 83 186

Non-controlling interest acquired in existing subsidiaries 17 787 3 746

Fair value of net assets acquired 1 450 997 86 932

Bank and cash (142 264) 11 077

Net fair value of net assets acquired 1 308 733 98 009

Cash outflow on acquisitions 1 494 214 152 808

Fair value of net assets acquired 1 308 733 98 009

Total goodwill 185 481 54 799

Positive goodwill 237 547 54 799

Negative goodwill (52 066) –

Profit after taxation since acquisition date included in the consolidated

results for the year 50 213 6 102

Revenue since acquisition date included in the consolidated results

for the year 1 025 635 69 994

Profit after taxation should the business combinations have been

included for the entire year 114 744 24 717

Revenue should the business combinations have been included

for the entire year 2 140 747 267 506

44. MODIFICATION OF THE TREATMENT OF SHARE APPRECIATION RIGHTS

During the 2012 financial year and 2013 financial year certain share appreciation rights (SAR’s) were settled in cash at the discretion of the board. IFRS 2 paragraph 41 states that the entity has a present obligation to settle in cash if the choice of settlement in equity instruments has no commercial substance, orthe entity has a past practice or a stated policy of settling in cash, or generally settles in cash whenever thecounterparty asks for cash settlement. The board made the decision to modify the accounting treatment forthe SAR’s settled in cash based on the past practice of settling in cash, which results in a present obligationfor the relevant SAR’s.




44. MODIFICATION OF THE TREATMENT OF SHARE APPRECIATION RIGHTS continued

Restate- Effect of Total Opening ment restate- effects of Closing

balance as of ment restate- balance as Restatedoriginally opening during ment originally balancestated at balance at 2012 to 2012 stated at as at

1 April 1 April financial financial 31 March 31 March2011 2011 year year 2012 2012

R’000 R’000 R’000 R’000 R’000 R’000

Statement of financial position

AssetsDeferred taxation 69 940 20 235 948 21 183 84 997 106 180

EquityShare appreciation rights

reserve 54 979 (27 096) 9 461 (17 635) 51 330 33 695 Retained earnings 1 391 305 (52 033) 12 562 (39 471) 1 716 222 1 676 751

LiabilitiesShare appreciation rights

liability – 99 365 (21 076) 78 289 – 78 289

Statement of comprehensive incomeShare appreciation

rights expense (33 504) (33 504) Taxation (2 349) (2 349)

EARNINGS PER SHAREBasic earnings per

share (cents) 50,92 Diluted earnings per

share (cents) 47,54 Weighted average

number of ordinary shares for the purposes of basic earnings per share 70 405

Weighted average number of ordinary shares used in the calculation of diluted earnings per share 75 416

45. RESTATEMENT OF OTHER COMPREHENSIVE INCOMEIn the 2012 annual financial statements, the following disclosures were made, which do not meet the definition of other comprehensive income, as per IAS 1. Subsequently, these have been excluded from othercomprehensive income.

Group

2012R'000

Profit on treasury shares utilised to settle share appreciation rights 15 670 Profit on disposal of treasury shares to directors 9 303 Gain on change in control in subsidiaries 21 347

46 320

46. EVENTS AFTER THE REPORTING PERIOD

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




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 2013

Notice is hereby given that the annual general

meeting of shareholders of Invicta Holdings Limited

will be held in the boardroom, Invicta Holdings

Limited, 3rd Floor, Pepkor House, 36 Stellenberg Road,

Parow Industria, Cape Town on Friday, 16 August 2013

at 10:00.

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

Thursday, 8 August 2013 and last date of trade is

Thursday, 1 August 2013.

Record date for determining which shareholders are

entitled to receive the annual general meeting notice

is Friday, 5 July 2013.

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:

i. For the special resolutions numbers 1 to 4 to be

adopted, the support of 75% of the total number

of votes exercised by shareholders, present in

person or by proxy, is required.

ii. For the ordinary resolutions numbers 1 to 4 and

numbers 6 and 7 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.

iii. For ordinary resolution number 5 to be adopted,

the support of 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 71 of 2008, as amended (“Act”), to

acquire from time to time any of the issued ordinary

shares of the Company, upon such terms and

conditions and in such amounts as the directors of the

Company may from time to time determine, but

subject to the Memorandum of Incorporation of the

Company, the provisions of the Act and the Listings

Requirements of the JSE Limited (“JSE”), when

applicable (each as presently constituted and

amended from time to time).”

It is recorded that, as at the date of this report, the

Listings Requirements of the JSE 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;

>> Notice of

annual general meeting


• 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.

Other disclosure in terms of the JSE Listings

Requirements sections 11.26 and 11.27, required for

special resolution 1.

Additional disclosure in terms of the JSE Listings

Requirements section 11.26

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 46 and 47;

– Directors’ interests in ordinary shares – page 104; and

– Share capital of the Company – page 89.

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 in formation 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;

>> Notice of annual general meetingcontinued


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 2014 financial

year as follows:

2.1 Chairman of the

Invicta Board R630 000 per annum

2.2 Chairman of the

Audit Committee R63 000 per annum

2.3 Members of the

Invicta Board R29 000 per meeting

2.4 Members of the

BMG Board R14 000 per meeting

2.5 Members of the

Humulani Board R14 000 per meeting

2.6 Members of the

Audit Committee R26 000 per meeting

2.7 Members of

Remuneration

Committee R24 000 per annum


"RESOLVED THAT in terms of section 44(3)(a)(ii) of the

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

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 here-

by 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 and the Group annual financial

statements, as well as the Audit Committee report for

the year ended 31 March 2013.

Ordinary Resolution 2.1 to 2.4

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

2.1 CH Wiese

2.2 DI Samuels

2.3 JD Wiese

2.4 JS Mthimunye

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


“RESOLVED THAT shareholders endorse, through a

non-binding advisory vote required by King III to

ascertain the shareholder’s view on the Company’s

remuneration policy and its implementation. The

Company’s remuneration report is set out on pages 37

to 40 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 Act, the Memorandum

of Incorporation of the Company, the Listings

Requirements of the JSE, where applicable (each as

presently constituted and ended from time to time).”

It is recorded that, as at the date of this report, the

Listings Requirements of the JSE 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;



• 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

5 for it to be approved.


“RESOLVED THAT the reappointment of Deloitte &

Touche, Registered Auditors, as independent auditors

of the Company and to appoint SBF Carter as the

designated audit partner for the following year be

confirmed.”

Ordinary Resolution 7.1 to 7.4

“RESOLVED THAT, subject to the passing of ordinary

resolution 2.2 to 2.4, the following independent

non-executive directors be elected, each by way of a

separate vote, as members of the Audit Committee of

the Company for the period from 1 April 2013 until

the conclusion of the next annual general meeting of

the Company in July 2014:

7.1 DI Samuels (Chairman)

7.2 JS Mthimunye

7.3 LR Sherrell

7.4 JD Wiese (alternate to LR Sherrell and

JS Mthimunye)”

Abbreviated biographical details of the above

directors are set out on pages 4 and 5 of this

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 Act, shareholders have the right to be

represented by proxy as stated herein.

1. At any time, a shareholder of the Company may

appoint any individual, including an individual

who is not a shareholder of the Company, as a

proxy to:

a. participate in, and speak and vote at, a

shareholders meeting on behalf of the

shareholder; or

b. give or withhold written consent on behalf of

the shareholder to a decision contemplated in

section 60;

provided that the shareholder may appoint more than

one proxy to exercise voting rights attached to

different shares held by the shareholder.

2. A proxy appointment:

a. must be in writing, dated and signed by the

shareholder; and

b. remains valid for:

i. one year after the date on which it was

signed; or

ii. any longer or shorter period expressly set

out in the appointment, unless it is

revoked in a manner contemplated in

subsection (4)(c), or expires earlier as

contemplated in subsection (8)(d).

3. Except to the extent that the Memorandum of

Incorporation of the Company provides otherwise:

a. a shareholder of the Company may appoint

two or more persons concurrently as proxies,

and may appoint more than one proxy to

exercise voting rights attached to different

securities held by the shareholder;

b. a proxy may delegate the proxy’s authority to

act on behalf of the shareholder to another

person, subject to any restriction set out in the

instrument appointing the proxy; and

c. a copy of the instrument appointing a proxy

must be delivered to the Company, or to any

other person on behalf of the Company,

before the proxy exercises any rights of the

shareholder at a shareholders meeting.

4. Irrespective of the form of instrument used to

appoint a proxy:

a. the appointment is suspended at any time and

to the extent that the shareholder chooses to

act directly and in person in the exercise of any

rights as a shareholder;

b. the appointment is revocable unless the proxy

appointment expressly states otherwise; and

c. if the appointment is revocable, a shareholder

may revoke the proxy appointment by:

i. cancelling it in writing, or making a later

inconsistent appointment of a proxy; and

ii. delivering a copy of the revocation

instrument to the proxy, and to the

Company.

5. The revocation of a proxy appointment constitutes

a complete and final cancellation of the proxy’s

authority to act on behalf of the shareholder as of

the later of:

a. the date stated in the revocation instrument, if

any; or

b. the date on which the revocation instrument

was delivered as required in subsection

(4)(c)(ii).

6. If the instrument appointing a proxy or proxies has

been delivered to the Company, as long as that

appointment remains in effect, any notice that is

required by this Act or the Company’s

Memorandum of Incorporation to be delivered by

the Company to the shareholder must be delivered

by the Company to

a. the shareholder; or

b. the proxy or proxies, if the shareholder has

i. directed the company to do so, in writing;

and

ii. paid any reasonable fee charged by the

company for doing so.



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

exercising, any voting right of the shareholder

without direction, except to the extent that the

Memorandum of Incorporation, or the instrument

appointing the proxy, provides otherwise.

8. If the company issues an invitation to shareholders

to appoint one or more persons named by the

Company as a proxy, or supplies a form of

instrument for appointing a proxy:

a. the invitation must be sent to every

shareholder which is entitled to notice of the

meeting at which the proxy is intended to be

exercised;

b. the invitation, or form of instrument supplied

by the company for the purpose of appointing

a proxy, must:

i. bear a reasonably prominent summary of

the rights established by this section;

ii. contain adequate blank space,

iii. provide adequate space for the

shareholder to indicate whether the

appointed proxy is to vote in favour of or

against any resolution or resolutions to be

put at the meeting, or is to abstain from

voting;

c. the Company must not require that the proxy

appointment be made irrevocable; and

d. the proxy appointment remains valid only until

the end of the meeting at which it was

intended to be used, subject to subsection (5).

9. Subsection (8)(b) and (d) do not apply if the

Company merely supplies a generally available

standard form of proxy appointment on request

by a shareholder.

By order of the Board

C Barnard

Company Secretary

Johannesburg

17 July 2013



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 Friday, 16 August 2013 at 10:00 (“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 annual general meeting as my/our proxy to act for me/us at the annual general meeting which will be held on Friday, 16 August 2013 at 10:00 in the boardroom of Invicta Holdings Limited at 3rd Floor, Pepkor House, 36 Stellenberg Road, ParowIndustria, Cape Town for the purposes of considering and, if deemed fit, passing with or without modification, the resolutionsto be proposed thereat and at each adjournment or postponement thereof, and to vote for and/or against the resolutionsand/or abstain from voting in respect of the shares in the issued share capital of the Company registered in my/our name(s) (seenote 2).

Number of votes (one per share)

For Against Abstain

Special resolution 1General authority to repurchase shares

Special resolution 2Remuneration of non-executive directors

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 and the Group annual financial statements, as well as the Audit Committee report for the year ended 31 March 2013

Ordinary resolution 2.1To re-elect as director Dr CH Wiese

Ordinary resolution 2.2To re-elect as director Mr DI Samuels

Ordinary resolution 2.3To re-elect as director Adv JD Wiese

Ordinary resolution 2.4To re-elect as director Mr JS Mthimunye

Ordinary resolution 3Approval of the remuneration policy and its implementation

Ordinary resolution 4To place the authorised but unissued shares under the control of the directors

Ordinary resolution 5To authorise the directors to issue shares for cash

>> Form of proxy


Number of votes (one per share)

For Against Abstain

Ordinary resolution 6To confirm the reappointment of Deloitte & Touche as independent auditors of the Company and SBF Carter as the designated audit partner for the following year

Ordinary resolution 7.1To elect as Audit Committee member Mr DI Samuels (Chairman)

Ordinary resolution 7.2To elect as Audit Committee member Mr JS Mthimunye

Ordinary resolution 7.3To elect as Audit Committee member Mr LR Sherrell

Ordinary resolution 7.4To elect as alternate Audit Committee member Adv JD Wiese

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 2013

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) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107) tobe received by 10:00 on Wednesday, 14 August 2013.

>> Notes to the proxy form


>> Form of proxycontinued

GRAPHICULTURE 2191


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