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2010 Annual Report - Annual report

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									Annual report

  2010
Invicta Holdings Limited • Annual report 2010




         Contents
         Financial highlights                               1                Certification by the company secretary          35
         Group at a glance                                  2                Report of the independent auditors              36
         Board of directors                                 4                Report of the directors                         37
         Joint report of the chairman and                                    Statements of comprehensive income              40
             chief executive officer                        6                Statements of financial position                41
         Corporate structure                                9                Statements of changes in equity                 42
         Humulani Investments board                        10                Statements of cash flows                        43
         Humulani Investments structure                    11                Notes to the annual financial statements        44
         Map of BMG distribution network                   12                Share information                               80
         Map of CED distribution network                   13                Shareholders’ diary                             81
         Review of operations                              14                Notice of annual general meeting
         Corporate governance                              25                  of shareholders                               82
         Value added statement                             34                Form of proxy                              Attached
         Approval of the annual financial statements       35                Corporate information                           ibc




         Profile
         Invicta Holdings Limited is an investment holding and management company, controlling and managing assets of
         R5 937 million (2009: R6 005 million). Its operations comprise:

         •      import and distribution of a comprehensive range of bearings, seals, power transmission components,
                fasteners, drives, belting, filtration and hydraulics;

         •      import and sale of machinery and related spare parts for the agriculture, earthmoving, turf grooming and
                golf-car markets;

         •      the distribution of a niche range of spare parts to the automotive industry and niche products to the
                motorcycle industry;

         •      the distribution of excavators, wheel loaders, skid steer loaders and hydraulic hammers;

         •      import and distribution of wall and floor tiles and related sanitary ware; and

         •      import and distribution of leading materials handling equipment and related spare parts.
                                                                                                  Invicta Holdings Limited • Annual report 2010   1




Financial highlights
for the year ended 31 March 2010




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

Revenue                               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                              453 293   497 356    360 379    281 229     197 843     231 957     229 451      230 123      122 405
Profit for the year                    365 389   362 812    300 856    217 724     125 165     108 507      99 631       96 502       45 991
Ordinary shareholders’ interest       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)                151       138        138        104         68            77          66            45           24
Earnings per share (cents)                 453       437        356        292        170          190          164           133           60
Diluted earnings per share (cents)         441       437        354        288        169          190          160           130           58
Share price at the year-end (cents)      2 879     2 000      2 550      2 750       1 850       1 550          935           550          310




    EPS/DPS                                                                                                                  Share price
     (cents)                                                                                                                   (cents)



        500                                                                                                                      5 000

        450                                                                                                                      4 500

        400                                                                                                                      4 000

        350                                                                                                                      3 500

        300                                                                                                                      3 000

        250                                                                                                                      2 500

        200                                                                                                                      2 000

        150                                                                                                                      1 500

        100                                                                                                                      1 000

          50                                                                                                                        500

            0                                                                                                                        0
                 2002         2003       2004       2005        2006        2007        2008           2009           2010



                  Earnings per share (cents)       Dividends per share (cents)               Share price at year-end (cents)
2   Invicta Holdings Limited • Annual report 2010




             Group at a glance


                                                       BEARING MAN GROUP (BMG) PROFILE
                        Southern Africa’s leading distributor of bearings, seals, power transmission components, drives, belting, fasteners, filtration and hydraulics.

                                                                         BMG POWER
                 BMG BEARINGS                  BMG SEALS                TRANSMISSION                  BMG DRIVES                 BMG BELTING                  AUTOBAX




                                                                                                                                                               Importer and
                                                                                                                                                          distributor of timing
                                                                                                                                                          chains, timing belts,
                                                                                                                                                           timing components
                                                                                                                                                          and oil pumps to the
                                                                                                                                                          automotive industry
                                                                                                                                                             and similar niche
                                                                                                                                                              products to the
                                                                                                                                                          motorcycle industry.




                                                                                                   BMG TECHNICAL
                BMG FASTENERS               BMG FILTRATION            BMG HYDRAULICS                 RESOURCES
                                                                                                        Invicta Holdings Limited • Annual report 2010   3




                       CAPITAL EQUIPMENT DIVISION (CED)                                                                    TILETORIA
                                                                           NEW
   NORTHMEC                   CSE                DOOSAN SA                                       CRITERION
                                                                        HOLLAND SA




   Distributor of
leading agricultural      Distributor of          Distributor of         Importers and                                     A leading importer
     machinery,         construction and        excavators, wheel     wholesalers of New                                   and distributor of
                                                                                                  Importer and
  implements and          earthmoving           loaders, skid steer   Holland agricultural                                 wall and floor tiles
                                                                                             distributor of leading
related spare parts.     machinery, turf      loaders and hydraulic     equipment and                                          and sanitary
                                                                                              materials handling
                            grooming                hammers.           specialised Braud                                       ware in the
                                                                                                equipment and
                         machinery, golf                               grape harvesters.                                   Western Cape and
                                                                                              related spare parts.
                           cars, utility                                                                                    KwaZulu-Natal.
                       vehicles and related
                           spare parts.
4   Invicta Holdings Limited • Annual report 2010




                                                    Board of directors




                                                    CH Wiese    (68)                      A Goldstone      (49)
                                                    Non-executive chairman                Chief executive officer

                                                    BA, LLB, DCom(h.c.)                   BSc (Mech Eng), BCom (Hons),
                                                                                          CA(SA)
                                                    Non-executive       chairman     of
                                                    Invicta Holdings Limited from         Worked as a management
                                                    October 1997 to April 2000 and a      consultant at KPMG prior to
                                                    non-executive director since April    joining the Invicta Group in
                                                    2000, re-appointed non-executive      January 1990 as financial manager.
                                                    chairman in January 2006.             Appointed financial director in
                                                    Chairman of Tradehold Limited,        August 1991. Appointed chief
                                                    Shoprite Holdings Limited, Brown      executive officer of Invicta
                                                    & Jackson plc (listed on the London   Holdings Limited in April 2000.
                                                    Stock Exchange) and Pepkor.
                                                    Non-executive director of KWV.




    The Group took
    advantage of
    weak market
    conditions and
    made a number of                                AM Sinclair     (56)                  DI Samuels (70)
                                                    Executive director                    Non-executive independent
    strategic acquisitions.                                                               director
                                                    Joined JI Case in 1982 and was
                                                    appointed branch manager in           CA(SA)
                                                    1986. Joined CSE in 1989 and was
                                                    appointed a divisional managing       Joined   Trade     and     Industry
                                                    director in 1993. In 1998 appointed   Acceptance Corporation Limited in
                                                    managing director of CSE and in       1971 and was appointed director
                                                    September 2006 appointed as an        from 1980 to 1984. From 1989 to
                                                    alternate director of Invicta         2000 was managing director of
                                                    Holdings Limited. Appointed           Stenham (Pty) Limited. In 1996 was
                                                    executive director of Invicta         appointed non-executive director
                                                    Holdings Limited on 7 June 2007.      of Invicta Holdings Limited.
                                                                                          Appointed non-executive director
                                                                                          of Bearing Man Limited in 2001
                                                                                          and chairman in 2002.
                                                                              Invicta Holdings Limited • Annual report 2010   5




RE Sherrell   (77)                     CE Walters     (42)                    C Barnard     (46)
Non-executive director                 Executive director                     Financial director

Served as non-executive director       BSC (Mech Eng), BCom,                  CA(SA), MBA, ACIS
of Bearing Man Limited for 20          MDP (Harvard)
years until it was delisted in 2006.                                          Joined Sappi as management
                                       Joined       Anglo       American      accountant in 1993, joined
During that period he also served
                                       Corporation in 1986 as Corporate       Group Five in their commercial
as the chairman of Bearing Man
                                       Graduate Engineering trainee           development subsidiary in 1996
for a number of years. Most of his
                                       where he held numerous positions       and was appointed commercial
business life was spent in merchant    in both the Anglo group and De
banking and corporate finance                                                 manager in 1997. In 1998 joined
                                       Beers. Appointed marketing and         the Invicta Group as financial
with his final active years being in   sales manager – Pulp for Mondi
the Rand Merchant Bank group.                                                 manager, appointed director of
                                       SA in 1996 and appointed
Appointed as a non-executive                                                  CSE Equipment Company (Pty)
                                       managing director of Mondi Sales
director of Invicta Holdings                                                  Limited in 1999 and company
                                       International in 2002. Appointed
Limited in September 2006.                                                    secretary of Invicta Holdings
                                       managing director of Bearing Man
                                       (Pty) Limited in September 2006.       Limited in 2002. Appointed
                                       Appointed alternate director to        executive director of Invicta
                                       DI Samuels on the Invicta Holdings     Holdings Limited on 7 June 2007.
                                       Limited board on 7 June 2007 and
                                       appointed as executive director on
                                       31 July 2009.




AK Masuku (40)                         J Mthimunye (45)                       LR Sherrell (44)
Alternate non-executive                Non-executive independent              Alternate non-executive
independent director to                director                               director to RE Sherrell
J Mthimunye
                                       CA(SA)                                 Appointed as alternate director to
MCom,                                                                         Mr RE Sherrell on 27 May 2009 and
MDP (University of New York)           Appointed financial accountant         has been nominated as director
                                       Department of Finance in 1993. A       of Invicta Holdings Limited with
Mr Masuku has ten years’               founding partner of Gobodo Inc         effect from the 2010 annual
experience with both local and         and established the corporate          general meeting, upon the
international banks (SCMB, JP          advisory service in 1997. Appointed    retirement of Mr RE Sherrell.
Morgan and Real Africa Durolink)       financial manager at Nampak            Mr LR Sherrell studied commerce
structuring     and     concluding     Tissue    in    1995.     Previously   at UCT and has been involved
transactions with some of South        appointed managing director of
Africa’s top 200 corporates,                                                  in the hospitality and motor
                                       aloeCap      (Pty)   Limited    and    trade industries with interests
parastatals and BEE players.
                                       appointed executive chairman in        in franchise dealerships. Mr
Appointed managing director of
                                       May 2007. Appointed alternate          LR Sherrell represented South
aloeCap (Pty) Limited in May 2007.
                                       director to AK Masuku on the           Africa as a rugby player in 1994.
Appointed non-executive director
of Invicta Holdings Limited on         Invicta Holdings Limited board on
7 June 2007 and appointed              7 June 2007 and appointed as non-
alternate director to J Mthimunye      executive director on 31 July 2009.
on 31 July 2009.
6   Invicta Holdings Limited • Annual report 2010




                                                    Joint report of chairman and chief executive officer



                                                    INVICTA HAS AGAIN PRODUCED OUTSTANDING
                                                    RESULTS IN A VERY CHALLENGING ECONOMIC
                                                    ENVIRONMENT. ...

                                                    • Earnings per share grew by           3,7% to 453 cents per share
                                                    • Dividend increased by         9,4%
                                                    • The only JSE Company ever to achieve                 TOP 100 STATUS
                                                       15 years in a row
                 CH Wiese
          Non-executive chairman

                                                    GROUP OVERVIEW
                                                    The Group has again produced outstanding results in a very challenging
                                                    economic environment. The market was characterised by weak demand for
                                                    product, a global liquidity crisis, a strong Rand and generally tough economic
                                                    conditions.

                                                    Notwithstanding, turnover declined by only 12,3% to R3 969 million.
                                                    Acquisitions accounted for R202 million of turnover.

                                                    Good margin management and tight cost controls resulted in operating profit
                                                    declining by a modest 8,9% to R453 million. Improved financing costs and
                                                    dividends received led to profit for the year increasing by 0,7% to R365 million.
                                                    A reduction in the weighted average number of shares in issue resulted in
                                                    earnings per share increasing by 3,7% to 453 cents per share.
               A Goldstone
                                                    Particular emphasis was placed on working capital management, resulting in
           Chief executive officer
                                                    cash generated from operations of R590 million being achieved, the highest
                                                    ever.

                                                    The Group took advantage of weak market conditions and made a number of
                                                    strategic acquisitions. The more significant of these was the acquisition of
                                                    100% of Criterion Equipment (Pty) Limited and 70% of Wegezi Power Holdings
                                                    (Pty) Limited subsequent to year-end. Criterion Equipment operates in the
    The Invicta Group has                           materials handling sector with TCM forklifts being its primary product. Wegezi
    proven its resilience in                        Power Holdings manufactures and repairs transformers, electric switch gears,
                                                    panels and pumps.
    the worst recession the
                                                    BMG (Bearing Man Group)
    world has experienced                           BMG continues to be the core profit base of the Group. Trading conditions in
    in living memory. In                            the industrial consumable sector were particularly challenging. Commodity
                                                    prices were under pressure due to the global recession. Key market segments
    spite of the enormous                           of mining and manufacturing also showed substantial declines. Margins were
    challenges in the                               under pressure as the Rand strengthened. The competitive market
                                                    environment, the strengthening of the Rand and the clearing of higher priced
    market, Group revenue                           inventory received at weaker exchange rates contributed to lower margins. In
                                                    spite of these adverse conditions, BMG achieved turnover for the year of R2 018
    declined only modestly                          million, a decline of only 5,5% and operating profit declined by 10,1% to R293
    while earnings per                              million. The operating margin was a pleasing 14,5%.

                                                    The BMG brand (launched last year) has now been firmly entrenched as being
    share increased                                 representative of the market leader in the industrial consumables sector. BMG
    modestly.                                       Hydraulics was successfully established during the year with the re-branding of
                                                    Goldquest Hydraulics. BMG continued to invest in staff training and education
                                                    and in strategic acquisitions, the most important of which was Wegezi Power
                                                    Holdings, effective 1 April 2010. Wegezi Power Holdings’ core business is
                                                                                    Invicta Holdings Limited • Annual report 2010   7




Joint report of chairman and chief executive officer
continued




electric motor rewinding and it manufactures and         infrastructure projects. Although it suffered losses
repairs transformers, electric switch gear, panels and   during the year, CSE managed to cut costs and
pumps and the company offers an all round on site        restructure its operations sufficiently to ensure that it
repair or replacement partnership with the end user.     returned to profitability by year-end. In contrast to
The Wegezi group operates from a 6 000 m2 facility       this, Doosan SA managed to remain profitable during
and has a total staff compliment of 200.                 the year, and increased its market share in excavators
                                                         by 17,6% and loaders by 14,6%.
Most divisions in BMG experienced a decline in
demand for product. Management focussed on               Criterion Equipment, which was acquired on 1 June
margin preservation, cost control and reduction of       2009, has been restructured and is operating
working capital. These efforts paid off handsomely       profitably. It did not contribute meaningfully to
and BMG produced a very respectable profit               segment profits in CED during the year under review,
performance, which combined with excellent working       but helped to absorb some of the overheads in the
capital management enabled it to generate R370           construction equipment divisions. It is expected to
million in cash during the year.                         make a significant contribution to CED profits in the
                                                         coming year.
BMG continued to invest in staff training and
development, product development and expansion,          The agricultural equipment divisions experienced
with its World Class Production Efficiency program       challenging conditions, with total market sales of
gaining momentum. The division is well positioned to     tractors for the period under review declining by 33%
grow as markets return to normal.                        from 8 045 units to 5 406 units. Despite this, the
                                                         agricultural machinery divisions improved market
Capital Equipment Division (CED)
                                                         shares in key sectors and through tight margin and
CED, being the more cyclical of the Group                cost management, produced the bulk of CED’s
operations, experienced large declines in volumes in     segment profits. The major influencing factors which
the markets in which it operates. Notwithstanding,       affected the agricultural machinery markets were low
CED managed to limit its decline in revenue to R1 750    grain prices and a strong Rand. Although volumes
million, a reduction of 22,4% compared to last year.     declined in both Northmec and New Holland SA, both
Acquisitions accounted for 8,2% of turnover.             operations enjoyed good demand for spare parts,
Exceptional margin management and cost control           which helped to offset the effect of reduced unit sales.
resulted in this segment’s profit declining by only      Other Operations
12,8% to R123 million. Good control of working
capital resulted in an excellent return on working       Although not yet a significant contributor to the
capital being achieved by CED.                           group, Tiletoria managed to increase its revenue, a
                                                         very credible achievement under difficult trading
The construction equipment divisions suffered the        conditions in the building industry. Operating income
most in CED. Demand for product in this sector has       also increased. Tiletoria is in the process of
declined dramatically in the face of the recent          relocating its Durban branch to bigger premises and
recession and has been compounded by the completion      intends opening an outlet in Gauteng in the coming
of the 2010 Soccer World Cup and government              year.
8   Invicta Holdings Limited • Annual report 2010




             Joint report of chairman and chief executive officer
             continued




             The Group successfully concluded some smaller             CONCLUSION
             property acquisitions during the year and aims to
                                                                       The Invicta Group has proven its resilience in the worst
             invest further in strategic properties for Group use.
                                                                       recession the world has experienced in living memory.
                                                                       In spite of the enormous challenges in the market,
             PROSPECTS
                                                                       Group revenue declined only modestly, while earnings
             Trading conditions in the sectors in which the Group      per share increased modestly. Particularly noteworthy
             operates appear to have stabilised. The current           was the exceptional working capital management
             strength of the Rand is however a source for concern      which resulted in cash generated from operations of
             as it could lead to a reduction in the price of Group     R590 million being achieved, the highest ever. All
             products and reduce the income of key customers           Group operations contributed to this achievement.
             which operate in export orientated sectors.               The Group was again awarded Top 100 status on the
                                                                       JSE, the only JSE-listed company to have achieved this
             Volumes in BMG appear to have stabilised, but trading
                                                                       for 15 years in a row. This is a team effort and we
             is still subdued. The macro global environment
                                                                       thank all our loyal staff members for their
             indicates a return to normal trading in the medium
                                                                       contribution.
             term. This should, in turn, result in increased demand
             for BMG products and services.                            Mr RE Sherrell is retiring from the board at this year’s
                                                                       annual general meeting. He has been associated with
             In CED, agricultural machinery conditions are expected
                                                                       BMG since 1986 and served as its chairman for many
             to continue to be challenging. Low grain prices are       years when BMG was listed separately. He has served
             expected to keep the demand for agricultural              as a non-executive director of Invicta since BMG was
             machinery at current muted levels. Conditions in the      de-listed in 2006. The Board wishes to thank
             construction equipment market are still depressed and     Mr RE Sherrell for his devoted service to the Group
             management does not expect this to improve in the         and wishes him well in his retirement.
             next 12 months. The division has successfully reduced
                                                                       The Board of Directors is very appreciative of the
             its costs to ensure profitable trading and working
                                                                       immense hard work put in by all staff members during
             capital is carefully managed. The acquisition of
                                                                       this very tough past year, especially for the laudable
             Criterion Equipment has been bedded down and the
                                                                       way in which the Group was de-risked through such
             Company is now profitable. It should make a
                                                                       excellent reduction in working capital. We look
             meaningful contribution to CED in the coming year
                                                                       forward to markets settling down, which should
             and will help to spread the construction equipment        enable the Group to return to its profit growth record.
             sections overheads.

             In light of the more stable trading conditions and
             better economic expectations, the Board has declared
             a final dividend of 102 cents per share resulting in
             total dividends for the year of 151 cents per share, up
             9,4% on last year. This is a 3,0 times dividend cover     A Goldstone                        CH Wiese
             ratio, which the Board intends to maintain until          Chief Executive Officer            Chairman
             market conditions have returned to normal.                25 May 2010
                                                                  Invicta Holdings Limited • Annual report 2010   9




     Corporate structure




                                                                                Humulani
               100%             75%
                                                                               Investments
                                                            5%               Share Incentive
                                                                                   Trust
                             Humulani
            Investments     Investments
                            (Pty) Limited

                                                                                 aloeCap
                                                            20%               (Pty) Limited




                100%            100%                                                    60%



                                             Goldquest
             Humulani
                                            International                            Tiletoria
             Marketing
                                            Hydraulics SA                          (Pty) Limited
            (Pty) Limited
                                            (Pty) Limited


Divisions



                                                Disa
                                             Equipment
                                            (Pty) Limited
                                            (Doosan SA)




                                              Criterion
                                             Equipment
                                            (Pty) Limited




                                               Invicta
                                             Properties
                                            (Pty) Limited
10   Invicta Holdings Limited • Annual report 2010




                                                     Humulani Investments board




                                                     A Goldstone                  AK Masuku




     Particular emphasis
     was placed on
     working capital
     management,
     resulting in cash
     generated from
     operations of
     R590 million being                              J Mthimunye                  C Barnard

     achieved, the highest
     ever.
                                                                    Invicta Holdings Limited • Annual report 2010   11




Humulani Investments structure




                                       HUMULANI INVESTMENTS




                  Humulani Marketing                              Tiletoria




 CHARLES WALTERS                       ANTHONY SINCLAIR           PATRICK THONISSEN
 BMG                                   CED                        Tiletoria

 BMG DIVISIONAL DIRECTORS              CED DIVISIONAL DIRECTORS

 Abe Bekker                            Geoff Balshaw              Allan Duckworth
 Chief Operating Officer               Financial Director         Financial Director

                                       Johan van der Merwe        Mohammud Mohuideen
 Wayne Taylor
                                       Managing Director:         Operations Director
 Financial Director
                                       Northmec
 Paul McKinlay
                                       Paul Viljoen
 Director: Bearings, Seals and
                                       Sales Director: Northmec
 Power Transmission
                                       Peter Askew
 Gavin Pelser
                                       Managing Director:
 Director: Drives, Belting and OST
                                       New Holland SA

 Dave Russell                          Rod Watson
 Group Technical Director              Managing Director: CSE

 Ian King                              André Struwig
 Group Sales and                       Managing Director:
 Marketing Director                    Doosan SA
                                       Ben Grobler
                                       National Parts Director

                                       Brenton Kemp
                                       Managing Director:
                                       Criterion Equipment

                                       NATIONAL MANAGERS

 FREDERICK HALL                        Alex Ackron
 Autobax                               Cartcom and Turf


 DIVISIONAL DIRECTORS                  Steve Kite
                                       National Service

 Neville Whitehead
 Sales Director
12   Invicta Holdings Limited • Annual report 2010




              Map of BMG distribution network



            GAUTENG




                                                     Alpha Bearings

                                                     BMG

                                                     BMG Automotive

                                                     BMG Engineering Hubs

                                                     BMG Springset

                                                     BMG Belting

                                                     BMG Fasteners

                                                     BMG Hydraulics

                                                     BMG Sealco

                                                     BMG Trade

                                                     Invicta Bearings

                                                     Autobax/Motosport branches
                                                            Invicta Holdings Limited • Annual report 2010   13




Map of CED distribution network



                     GAUTENG




                                  CSE branches                   Doosan SA branches

                                  Northmec branches              Doosan SA dealers

                                  Northmec dealers               Cartcom branches

                                  New Holland SA branches        Criterion branches

                                  New Holland SA dealers
14   Invicta Holdings Limited • Annual report 2010




                                                     Review of operations



                                                     BMG – BEARING MAN GROUP
                                                     FINANCIAL REVIEW
                                                     BMG experienced an extremely challenging economic environment with its key
                                                     market segments of mining and manufacturing showing substantial declines.
                                                     Given these market conditions which prevailed during the year, BMG has
                                                     produced a very pleasing result.

                                                     Turnover decreased by 5,5% to R2,018 billion (2009: R2,137 billion). Gross
                                                     margins reduced as excess inventory that was received at weak exchange rates
                 CE Walters                          during the previous financial year was traded out. Margins were also
            Chief executive officer                  pressurised by the competitive market environment and the strengthening of
                                                     the Rand during the year. Good cost management resulted in an absolute
                                                     reduction in overhead expenses. Operating profit declined 10,1% to R293
                                                     million (2009: R326 million) at an operating margin of 14,5% (2009: 15,2%).

                                                     Inventory reduced significantly from the overstocked position of last year and
                                                     debtors were well managed in a difficult market. The respectable profit
                                                     performance combined with excellent working capital management saw BMG
                                                     generate R370 million in cash during the year. This enables BMG to fund its
                                                     exciting growth plans from internal resources.

                                                     Over a three year period, despite the recession, BMG’s turnover has increased
                                                     by 41,5%.

                                                     INVESTMENT IN CAPABILITIES
                   W Taylor
                                                     BMG strengthened its position as a market leader in the industrial sector
               Financial director
                                                     during the year in spite of the difficult trading conditions. Several initiatives
                                                     were undertaken during the year to entrench the BMG brand in the
                                                     marketplace.

     Having weathered                                BMG enhanced their focus on marketing of the BMG package offering to
                                                     customers through a dedicated key account management team.
     the recent storm
                                                     BMG Technical Resources was established to offer enhanced technical advice
     admirably, BMG is                               and support to branches and customers. Through this division, BMG now offers
     well set to regain its                          application consulting, draughting and design, on-site services, and the
                                                     provision of maintenance products and instrumentation.
     growth momentum.
                                                     BMG has also strengthened the quality control of its product range with the
                                                     recent appointment of a full time quality inspector resident in China.

                                                     The BMG Academy of Excellence has been established to provide training
                                                     courses to staff and customers. The online and classroom training is
                                                     augmented by lectures and practical, hands-on training delivered by the
                                                     Technical Resources team.

                                                     The hydraulics acquisition (Goldquest International Hydraulics) was rebranded
                                                     as BMG Hydraulics during the year and several steps were taken to expand the
                                                     company’s hydraulic offering to customers.

                                                     Despite these bold investments in BMG’s future capabilities, products and
                                                     services, most of management’s focus during the year was placed on working
                                                     capital management and operational efficiencies.
                                                                    Invicta Holdings Limited • Annual report 2010   15




Review of operations
continued




BMG




                                                                                                                    BMG
BEARING MAN GROUP
CONTINUES TO LEAD THE WAY

BMG continues to expand its operations to maintain its role as
Africa’s largest specialist distributor of bearings, seals, power
transmission components, electric and geared motors,
belting, fasteners, filtration and hydraulics.


The company took important steps to develop
and entrench the BMG brand as Africa’s
most competitive offering of quality
components, technical expertise and
superior service from a single
reliable source.
 16   Invicta Holdings Limited • Annual report 2010




               Review of operations
               continued




               OPERATIONAL REVIEW                                            done well. Profitability decreased as many customers
                                                                             looked at repairs as an alternative to the purchase of
               The Bearings division performed well during the year.
                                                                             new drives. There are, however, encouraging signs of
               Sales reduced modestly but margins came under
                                                                             a pick-up in demand for drive systems. BMG’s range of
               pressure due to the strengthening of the Rand. Great
                                                                             gearboxes is unsurpassed in quality and breadth and
               emphasis was placed on inventory management with
                                                                             this augurs well for the expected resumption of
               both suppliers and branches. Unfortunately, the
                                                                             demand.
               recessionary conditions saw an increase in imported
               counterfeit product during the year with customers            The electric motor market in South Africa dropped by
               being lured by inferior quality at cheaper prices. BMG        approximately 30% in the period and this had a
               continues to work with its suppliers and customers to         marked impact on the electric motors business unit.
               help reduce the threat posed to the industry by this          The shrinking of the market and the overstocked
               problem. On a positive note, BMG secured the rights           position of most local motor suppliers led to a price
               to the SNR brand during the year, a well respected            war.
               European brand. Sales to the steel industry and to
                                                                             On a positive note, sales of BMG EFF1 (energy
               export markets picked up in the second half of the
                                                                             efficient) motors are increasing on a monthly basis and
               year.
                                                                             fluid coupling sales grew year-on-year. An important
               The Seals division managed to hold sales, margins and         project for BMG Drives in the year was the supply
               profitability at the same level as the previous period.       of complete drives for the overland conveyors
BMG




               While      the     market       was    competitive,   BMG’s   supplied to Kumba Iron Ore for the Sishen South
               stockholding and service levels saw unit sales increase.      project.
               The two dedicated seals branches did exceptionally            BMG Drives’ repair facility in Durban started operation
               well and managed to offset the loss in revenue from           in the year and has completed numerous high
               the severe downturn experienced by a major capital            value projects for plants in various sectors. It is BMG’s
               equipment builder.                                            intention to grow its repair capabilities to be able to
               The Power Transmission division held up very well             service customers’ gearboxes, bearings, electric
               during the downturn. Overall sales were down.                 motors, pumps and hydraulic systems.
               The Chain business unit performed exceptionally well          The Belting division had a much improved second half
               and managed to show growth in profitability. This was         but sales still finished down on the previous period.
               offset by a fall in profitability of the division’s           The division suffered margin degradation which was
               commodity products which experienced both volume              mitigated by cost reductions and improved
               declines and margin pressure. In addition, the division       purchasing. Market share was maintained and its
               felt the impact of the significant reduction in sales of      offering broadened through forming strategic
               larger-sized engineered items as a result of the              alliances with other companies.
               substantial reduction in project-related work in the
               industry during the year.                                     The Drives and Belting divisions underwent a process
                                                                             of rationalising and consolidating their respective
               The Automotive division did very well. Sales increased        support infrastructures (hubs). The synergies and cost
               and margins were maintained which led to an                   savings of this programme will be realised in the
               increase in profitability. The division continues to look     current year.
               at ways to enhance BMG’s automotive offering.
                                                                             Oscillating Systems (OST) had a tough year. The
               The Fasteners division saw a decline in sales and             product range of this business is sold into mining and
               margins during the year on the back of falling input          manufacturing applications. The loss of project work
               steel prices and the strengthening Rand. A                    in the industry hit OST particularly hard. Nevertheless,
               cost reduction exercise helped slow the reduction in          the business survived well and managed a respectable
               profitability. BMG is now a leading player in the             profit and return for the year.
               southern African fastener market.
                                                                             The Hydraulics division held up exceptionally well
               The Drives division suffered a decline in sales during        during the downturn. Sales reduced marginally, which
               the year. The main contributors to the drop in sales          is very positive given the division’s exposure to system
               were the delay or cancellation of capital projects and        building and project work. Emphasis was placed on
               the suspension of operations at many diamond and              cost reductions and enhancing working capital
               platinum mines where historically the division had            management during the year, both of which yielded
                                                                                          Invicta Holdings Limited • Annual report 2010   17




Review of operations
continued




very positive results. The business was rebranded               It is envisaged that the company will add between 3%
during the year from Goldquest to BMG Hydraulics.               to 4% to BMG’s turnover and profitability in the new
This had a positive impact both internally with the             financial year. The acquisition presents some exciting
staff and also in the marketplace where BMG’s growth            growth opportunities for BMG.
into this new sector has been noted. The division has
taken several steps to strengthen its market presence           OUTLOOK
and enhance its branch network. The acquisition of
Fluid Power Systems in Port Elizabeth and Turnkey               Having weathered the recent storm admirably, BMG is
Hydraulics in KwaZulu-Natal will strengthen the                 well set to regain its growth momentum. Profitability
capabilities of the division and service to the market          of the existing operation will improve in the coming
considerably. In addition, extensions to the product            year. BMG continues to review several interesting
range are planned to include hose and fittings and              acquisition opportunities which would help build the
pneumatics.                                                     BMG brand offering and competitiveness further still,
                                                                as well as provide enhanced growth in profitability.
The BMG Filtration division increased sales in a
competitive market. Due to margins coming under
pressure from customers and the key supplier, profit
growth was muted. The range of products was
extended during the year to include magnetic as well
as air filtration in the range. This market presents BMG




                                                                                                                                          BMG
with interesting growth opportunities.


WORLD CLASS PRODUCTION EFFICIENCY
BMG is uniquely positioned to combine energy
efficiency with reliability engineering through its
‘World Class Production Efficiency’ programme.

The aim of the programme is to combine BMG’s
energy efficient products in a way that compounds the
energy savings available. Further payback is then
achieved for customers by coupling the range of
energy efficient products with reliability engineering
to improve plant output. By providing engineering
solutions     and    technical     services   that   optimise
productivity, BMG can make a difference to the
efficiencies of every plant.


NEW ACQUISITIONS
BMG’s strategy is to expand its business through a
combination         of   organic     growth     and    select
value-adding acquisitions.

BMG has concluded a sale of share agreement for the
purchase of 70% of the shares of Wegezi Power
Holdings (Pty) Ltd, effective 1 April 2010. The
company’s management team retains the balance of
the shares.

Wegezi, which was established as a motor rewinding
company, has diversified into the manufacture and
repair of transformers, electric switch gear and panels.
The company also offers an on-site repair service.
 18   Invicta Holdings Limited • Annual report 2010




               Review of operations
               continued




               CED – CAPITAL EQUIPMENT DIVISION




                             A Sinclair                                      G Balshaw
                       Chief executive officer                           Financial director



               With the worst behind it, CED is set to take advantage of the
               opportunities that have been created by the weak markets, with cash
CED




               flows and profitability being the main focus.


               The Capital Equipment Division comprises:                       weathered the worst global recession in living
                                                                               memory, and has emerged even stronger than before.
               NORTHMEC:            CaseIH Agricultural Equipment and          Turnover dropped by 22,4% to R1,750 billion (2009:
               other related implement brands                                  R2,255 billion). Acquisitions accounted for 8,2% of
                                                                               turnover. Maintenance of good gross margins and
               NEW HOLLAND SA:                    New Holland Agricultural
                                                                               stringent cost control resulted in operating profit
               Equipment and other related implement brands
                                                                               declining by only 12,8% to R123 million (2009: R142
               CSE:    Case Construction Equipment, Club Car and               million).
               Jacobsen Turf Equipment                                         Inventory levels have reduced significantly due to

               DOOSAN SA:            Doosan Construction Equipment             focused management control during the year. High
                                                                               value inventory, which was on hand at the beginning
               CRITERION EQUIPMENT: TCM forklifts                              of the financial year (landed at a much weaker Rand),
                                                                               is now largely out of the system and current inventory
               FINANCIAL REVIEW
                                                                               is well priced and competitive. Manufacturers
               CED has had a difficult trading year due to the                 overseas are largely still overstocked and are clearing
               impact of the world recession on the South African              excess inventory, but because of their cut-back in
               economy. Each capital equipment market segment’s                production, lead times have once again moved out for
               performance fluctuated at different levels throughout           non-inventory items.
               the year, depending on the factors influencing the
                                                                               Debtors have been well managed over this period with
               different sectors. Notwithstanding the challenging
                                                                               minimum bad debts, which is most commendable
               conditions, CED as a whole achieved very acceptable
                                                                               under the circumstances.
               levels of turnover and profitability, albeit that the
               figures were lower than last year. The division’s               Gearing in CED has been reduced substantially and
               infrastructures have been built over the years to               management is continuing its acute focus on positive
               withstand cyclical market fluctuations and CED has              cash flow.
                                                                             Invicta Holdings Limited • Annual report 2010   19




Review of operations
continued




CED




                                                                                                                             CED
CED is one of South Africa’s leading importers and distributors of capital
equipment in a range of different markets including agriculture,
construction and materials handling.
20   Invicta Holdings Limited • Annual report 2010




                                                     Review of operations
                                                     continued




                                                     CED’s operating return on capital employed was at a very satisfactory level
                                                     and this, coupled with acceptable levels of profitability, has ensured that this
                                                     division has outperformed its competitors and has made a meaningful
                                                     contribution to the Invicta Group.

                                                     QUALITY MANAGEMENT AND SUCCESSION
                                                     CED has progressively raised its standard of service, after sales support and
                                                     internal controls over the past few years. The division complies with ISO9001
                                                     and is audited annually to ensure continuous compliance. The division is
                                                     currently working toward ISO14001 environmental certification.

                                                     To ensure stability and succession in the divisional management for future
                                                     operational requirements and acquisitions, a talent pool has been established
                                                     from within staff ranks. Participants are put through a three- to five-year
                                                     management training program to prepare them for future roles.

                                                     OPERATIONAL REVIEW
                                                     In general, the capital equipment markets have been in a depressed state
                                                     during the year under review, with volumes in all sectors declining year-on-year
                                                     as follows: construction equipment (in the sectors served by CED) 50%,
                                                     agricultural tractors 32,8%, combine harvesters 33,3% and forklift trucks 52%.
                                                     These factors forced all distributors in South Africa to approach the markets
                                                     very aggressively, resulting in pressure on margins.



                                                     NORTHMEC
                                                     Northmec, predominantly a retail distributor of agricultural equipment,
                                                     experienced tough trading conditions as a direct result of national markets
                                                     falling by 32,8% on tractors from 8 045 units to 5 406 units, 33,3% on combine
                                                     harvesters from 378 units to 252 units and demand for implements reducing in
                                                     line with the market contraction. Implement sales, however, contributed
                                                     significantly to the profit of the division. The baler market was the exception,
                                                     which showed positive growth with a 9,5% increase from 388 units to 425 units.

                                                     Northmec’s turnover dropped by less than that of the overall market, which is
                                                     commendable. Northmec’s meaningful contribution to CED’s profits was
                                                     achieved by maintaining margins and controlling expenses. It has also displayed
                                                     its resilience to major market demand fluctuations. Spare parts turnover and
                                                     profitability both increased.

                                                     A major influence on this sector of the market has been the large reduction of
                                                     soft commodity prices due to good crop yields, the strong Rand and high
                                                     production over the last three years.

                                                     A highlight of the past year is that Northmec gained market share in the
                                                     second half of the year in all sectors that it traded in. This was achieved by
                                                     sourcing more competitive product and through good foreign exchange
                                                     management. Inventory was at an acceptable level and well under
                                                     control.

                                                     Tractors sourced from China by competitors appear, at this stage, to have had
                                                     little impact on the market.
                                                                                        Invicta Holdings Limited • Annual report 2010   21




Review of operations
continued




NEW HOLLAND SA                                              trades declined by 50% in volume from 5 101 units to
                                                            2 556 units and there are few signs of recovery in the
New Holland SA is predominantly a wholesale                 new year. The golf car and turf market, by contrast,
distributor of agricultural equipment in Southern           remained stable, with CSE gaining market share and
Africa and was acquired by the Invicta Group four           profitability.
years ago. New Holland SA performed exceptionally
                                                            CSE    construction     equipment        division      trades
well, despite the major drop in unit sales in all sectors
                                                            predominantly in the plant hire and construction
of the agricultural markets, as indicated under the
Northmec review. Turnover dropped but profit                sectors of the markets. Turnover has been affected by
increased and a good return on capital employed was         the drop in demand for equipment due to the
achieved.                                                   completion of major contracts related to FIFA 2010
                                                            World Cup Soccer and completion of government
Overheads are fully covered by spare parts and service
                                                            infrastructure projects, with no major contracts in the
without the necessity of having to sell any equipment,
                                                            future to fill the gap. The mining sector, especially coal
which positions the company well to take advantage
                                                            and platinum, are showing promising signs of recovery
of the improvements in the markets in the future.
                                                            which is good for the front-end loader materials
Spare parts turnover and profitability both increased.      handling sector, an important market for CSE as the
                                                            Case product is well accepted here.
New Holland SA is in the process of sourcing New
Holland tractors manufactured by New Holland in             Despite the slowdown in golf course development, the




                                                                                                                                        CED
China. This should provide a new source of well priced      need for upgrading of golf car fleets and turf
New Holland tractors for the South African market.          equipment led to customers turning to CSE for supply
                                                            because of good quality products, after sales service

CSE                                                         and stability. Cartcom, the golf car rental division, has
                                                            done well, exceeding last year’s profit and generating
CSE distributes Case construction equipment, Club Car       good cash flow.
golf cars and Jacobsen turf equipment in South Africa.
                                                            Despite the decline in turnover in CSE, it did not
The   construction    equipment     and    golf   course    negatively impact CED’s overall profitability. Improved
equipment sectors of the market performed in                sourcing, better inventory levels and good cost control
complete contrast to each other. Total construction         will result in CSE being profitable in the new
equipment market volumes in the sectors in which CSE        financial year.
 22   Invicta Holdings Limited • Annual report 2010




               Review of operations
               continued




               DOOSAN                                                            CRITERION EQUIPMENT
CED




               Doosan distributes the Doosan range of excavators,                Criterion is the distributor of TCM forklift trucks
               loaders      and     Everdigm          breaker   hammers,   all   imported from TCM in Japan.
               manufactured in South Korea. The company was
                                                                                 The company was purchased in June 2009 and was in
               acquired two years ago and has performed beyond                   a very depressed financial state, which necessitated
               expectations considering the market conditions, and               significant restructuring, resulting in a number of staff
               has been profitable throughout the year, as well as               being retrenched and branches closed around the
               being cash generative.                                            country. By October 2009 (five months after
                                                                                 acquisition) the company was trading profitably and
               Doosan’s target market is mining and construction,
                                                                                 has continued to do so.
               and through good management in these difficult
               times, Doosan has increased market share in                       The company has great potential to make a
               excavators by 17,6% and loaders by 14,6%.                         meaningful contribution to the division’s profits in the
                                                                                 future.
               The increased activity in coal and platinum mining is
               positive for Doosan.

               The Chinese equipment influence in the construction               CED FUTURE
               market has almost disappeared because of poor                     With the worst behind it, CED division is set to take
               quality, market resistance to the products and                    advantage of the opportunities that have been
               suppliers not having the resources to continue                    created by the weak markets, with cash flow and
               importing.                                                        profitability being the main focus. The division is
                                                                                 continuously looking at acquisition opportunities,
                                                                                 particularly   consumables      and     complementary
                                                                                 capital equipment-related businesses, to strengthen
                                                                                 CED’s base.

                                                                                 Management would like to thank all staff who helped
                                                                                 to make these good results possible.
                                                                      Invicta Holdings Limited • Annual report 2010     23




Review of operations
continued




Tiletoria




                                                                                                                      Tiletoria
Established in Cape Town in 1995, Tiletoria has grown to become the
single biggest distributor of wall and floor tiles, sanitary ware,
bathroomware and accessories in the Western Cape. The
company’s product range includes ceramics and porcelains,
natural stones such as travertine and slate, sanitary ware,
bathroomware, spas, spa baths and bathroom accessories.
     24     Invicta Holdings Limited • Annual report 2010




                     Review of operations
                     continued
Tiletoria




                                 P Thonissen                                  A Duckworth
                               Managing director                             Financial director



                     Despite the downturn, Tiletoria has continued to grow its infrastructure
                     to accommodate national growth.



                     Tiletoria is a specialist company which trades in floor       more aggressive buying, more aggressive advertising,
                     and wall tiles, baths and sanitary ware. Products             new product ranges, improved staff training, better
                     include ceramic and porcelain wall and floor tiles,           service and innovative ideas being applied. The
                     bathroom ware, (sanitary ware, bathroom accessories,          Tiletoria motto “We lead others follow” has been
                     bathroom cabinets, bathroom furniture, basin                  proven over and over again.
                     cabinets, spas and taps), imported natural stone such
                                                                                   Despite the downturn, Tiletoria has continued to grow
                     as sandstone and travertines, tilers’ tools and specialist
                                                                                   its infrastructure to accommodate national growth.
                     tile adhesives. The company was established in 1995
                                                                                   Durban is in the process of expanding its showroom
                     and Invicta acquired a 60% share in June 2007.
                                                                                   from 300 m2 to 1 000 m2 and is growing its
                     The building industry was very negatively affected by         warehouse from 2 500 m2 to 6 000 m2. The real growth,
                     the economic downturn in the past financial year.             however, is expected to be in Gauteng where Tiletoria
                     Despite this, Tiletoria grew its turnover. Tough              will open at least one store during the coming year.
                     trading conditions put pressure on margins, resulting         The platform has been set and management’s goal
                     in operating profit growth being limited. The                 now is to grow Tiletoria as rapidly as possible so that it
                     exceptional sales performance was achieved by                 can become a meaningful contributor to the Invicta
                     improving the newly opened KwaZulu-Natal branches,            Group.
                                                                                          Invicta Holdings Limited • Annual report 2010   25




Corporate governance



Invicta endorses the Code of Corporate Practices and Conduct, as well as the King II Report on Corporate
Governance. Ongoing enhancement of corporate governance principles is a global movement and is fully
supported by the Board and management. Invicta will continue to adopt, as appropriate, existing and new
principles, which advance good practical corporate governance and add value to the Group’s business activities.

The Board is of the opinion that the Group has, in all material respects and where relevant, complied with the Code
during the year under review.

KING III RECOMMENDATIONS
The King Code of Governance for South Africa 2009 (King III) and its Code of Governance Principles were launched
on 1 September 2009 and came into effect and replaced King II on 1 March 2010. The proposed new Companies
Act, also contains governance requirements. King III has adopted an “apply or explain” approach. The Audit
Committee is in the process of reviewing and amending its corporate governance practices with a view to
complying with the requirements of the new Companies Act and the King III recommendations.

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

CODE OF ETHICS
The Board adopted a formal code of ethics during 2004, which seeks to ensure that a relationship of trust and
shared values is built up with both employees and external stakeholders. The key pillars of the code include
adherence to the legal framework of the country and ensuring that the Group is not brought into disrepute,
against the overriding background of transparency in all transactions.

BOARD OF DIRECTORS
Composition

The names and brief resumès of the directors appear on pages 4 and 5 of this 2010 Annual Report.

The Board currently comprises of eight directors and two alternate directors. Four directors qualify as
non-executive directors, of whom two also qualify as independent directors in terms of the King II Report.

The Company’s Articles of Association provide for the retirement of not less than one third of the directors based
on longest service. This year Mr C Barnard, Mr AM Sinclair and Mr RE Sherrell retire in terms thereof. Messrs
Barnard and Sinclair, being eligible, offer themselves for re-election. Mr Sherrell, has, due to ill-health, decided not
to offer himself for re-election.

Mr LR Sherrell and Adv JD Wiese both accepted nomination to the Board and have offered themselves for
election.

The directors have considerable business experience and an excellent understanding of the Group’s
business.

Board effectiveness reviews were conducted during the year under review, and further reviews will be
conducted at appropriate intervals.

Chairman and CEO

The roles of chairman and CEO are separate. The managing directors and CEOs of the operating subsidiaries and
divisions report to the Group CEO of Invicta, who in turn reports to the Board.

The Board is satisfied that no one individual director or block of directors has undue power over
decision-making.

Professional advice

All directors have access to the company secretary and management and are entitled to obtain independent
professional advice at the Company’s expense if required.
26   Invicta Holdings Limited • Annual report 2010




              Corporate governance
              continued




              Meetings

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

                                                     12 Feb        2 Apr          27 May      20 Aug        6 Nov        12 Feb
                                                       2009         2009            2009        2009         2009          2010

              CH Wiese (Chairman)•                       x               √                √       √               √            √
              DI Samuels•#                               √               √                √       √               √            √
              RE Sherrell•                               √               x                x       x               x            x
              J Mthimunye•#                              x               √                √       √               √            x
                                                         √               √                √       √               √            √
                                                         √               √                √       √               √            √
              A Goldstone^

                                                         √               √                √       √               √            √
              AM Sinclair^

                                                         √               √                √       √               √            √
              CE Walters^

                                                         x               x                x       x               x            x
              C Barnard^
              AK Masuku*•#
              LR Sherrell*•                              x               x                x       √               √            √

              * Alternate         • Non-executive        # Independent       ^Executive

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

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

              INTERNAL CONTROL
              The directors have responsibility for the Group’s systems of internal controls. These are designed to provide
              reasonable assurance of effective and efficient operations, internal financial control and compliance with laws and
              regulations.

              The Group’s system of internal controls are designed to provide reasonable, but not absolute, assurance against
              the risk of material errors, fraud or losses occurring.

              Furthermore, because of changes in conditions, the effectiveness of an internal control system may vary over time
              and must be continually reviewed and adapted.

              The system of internal controls is monitored throughout the Group by the audit committees, the Group internal
              audit department, management and employees as an integrated approach. The Board reports that:

              •    to the best of its knowledge and belief, no material malfunction of the Group’s internal control system
                   occurred during the period under review;

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

              •    it has no reason to believe that the Group’s code of ethics has been transgressed in any material respect; and

              •    to the best of its knowledge and belief, no material breaches have occurred during the period under review,
                   of compliance with any laws and regulations applicable to the Group.

              INFORMATION SECURITY
              Compliance with legislative requirements contributes towards the protection of corporate information, but in
              itself only addresses a small part of the total number of threats posed to the business arising from its
              dependencies on information technology and the internet. Security policies and procedures for employees and the
              use of technologies such as enterprise and personal firewalls, antivirus systems, intrusion monitoring and
              detection are applied, as well as frequent application of software security “patches” issued by vendors as and
              when vulnerabilities are discovered. An overhaul and upgrade of the systems applicable to the capital equipment
              operations is planned for the new year.
                                                                                       Invicta Holdings Limited • Annual report 2010   27




Corporate governance
continued




RESTRICTION ON TRADING IN SECURITIES                        elected employment equity committees at the
                                                            respective operations are responsible for ensuring and
A formal policy, implemented some years ago,                monitoring the achievement of the employment
prohibits directors, officers and employees with access     equity goals within their business units. The Group
to financial information from dealing in the                remains fully committed to providing equal
Company’s securities, from the date of the end of an        opportunities to its 2 240 employees (2009: 2 110
interim reporting period until after the interim results    employees) and the intention is to improve the
have been published and similarly from the end of the       effectiveness of the human resource (“HR”) function
financial year until after the audited annual results       within the Group.
have been published. Directors and employees are
reminded of this policy prior to the commencement of
                                                            TRAINING EDUCATION AND
any restricted period.
                                                            DEVELOPMENT OF STAFF
In addition, no dealing in the Company’s securities is
                                                            Invicta Group Bursary Scheme
permitted by any director, officer or employee whilst
in possession of information which could affect the         The Group bursary scheme has now settled down with
price of the Company's securities and which is not in       three candidates granted bursaries in the 2010
the public domain.                                          financial year, with a further five bursaries to be
                                                            granted in the 2011 financial year. The bursaries are
Directors of the Company and of its subsidiaries are
                                                            spread across all the business disciplines.
required to obtain clearance from Invicta’s chairman
(and in the case of the chairman, or in the absence of      Staff Training Development
the chairman, from the chairman of the Audit
                                                            Staff training continues to be a primary focus within
Committee), or his nominee, prior to dealing in the
                                                            the Group with business specific (technical), business
Company's securities, and to timeously disclose to
                                                            related and general skills training taking place.
the Company full details of any transaction for
notification to and publication by the JSE.                                                             Staff training
                                                                                                          participants
All participants in the long-term equity-settled bonus
                                                                                                          per division
share incentive scheme may not exercise these rights
during a closed period.                                     CED                                                     229
                                                            BMG                                                     764
STAKEHOLDER COMMUNICATION                                   Autobax division                                          9
                                                            Tiletoria division                                       25
Members of the Board meet on an ad-hoc basis with
institutional investors, investment analysts, individuals
                                                            BLACK ECONOMIC EMPOWERMENT (“BEE”)
and members of the financial media. Discussions at
such meetings are restricted to matters that are in the     Invicta has requested BEESA as its consultants in terms
public domain.                                              of Broad Based Black Economic Empowerment
Shareholders are informed, by means of press                (“BBBEE”) as well as the BEESCORE to re-certify the
announcements and releases in South Africa and/or           BEE status of its various operations. The Group
printed matter sent to such shareholders, and/or            envisages at least maintaining its BEE status as a Level
announcements on SENS, of all relevant corporate            five contributor in terms of the Broad Based Rating
matters and financial reporting as required in terms        Scorecard.
of prevailing legislation. In addition, such
announcements are communicated via a broad range            CORPORATE SOCIAL INVESTMENT (“CSI”)
of channels in both the electronic and print media.
The company maintains a corporate website                   The Group participates in a number of CSI activities at
http://www.invictaholdings.co.za containing financial       a subsidiary level, where it is felt that the interaction
and other information, including interim and annual         with the community and environment in which the
results. The site has links to the websites of each major   Group exists is the most relevant. The primary
operating subsidiary company.
                                                            activities have been in the area of supporting
The Group will look at ways of allowing electronic          educational and career development institutions as
shareholder participation with its transfer secretaries     well as providing resources for sporting activities
once the new Companies Act takes effect.                    which are seen as a positive support and cohesive
                                                            influence in both the work and community
EMPLOYMENT EQUITY
                                                            environment.
In compliance with the Employment Equity Act, the
                                                            Education and Career Development
Group's operating entities had previously each
developed their own employment equity policies and          As well as the extensive staff training which is dealt
plans in consultation with their employees. The             with elsewhere in this report, the Group sees
28   Invicta Holdings Limited • Annual report 2010




              Corporate governance
              continued




              education as a primary area of focus for the future         Information Act. The manual in terms of this
              growth of the country.                                      legislation is available from the registered office of the
                                                                          Company and on the Company’s website.
              Funding is provided to centres providing education to
              educators, which are based in 25 rural under-
              resourced schools.
                                                                          SUSTAINABILITY REPORT
                                                                          The Board is committed to creating long-term value
              A further major funding project is in respect of a
                                                                          for all its stakeholders by providing sustainable
              non-profit technological career development
                                                                          businesses in an integrated approach to the
              program, focusing on quality of mathematics and
                                                                          communities in which it operates.
              science. The Group acknowledges that a holistic
              approach is necessary, of which academic support is         The sustainability objectives of the Group are:
              but one element.
                                                                          •   Act in the best interests of Group shareholders and
              Sport Development                                               Group principals, by representing them in a
                                                                              manner which brings credit to their products and
              Sporting sponsorship is given to the traditional big
              sports in South Africa, namely soccer and rugby. Not            brands.
              only do most operations have their own divisional           •   Ensuring that customers receive an integrated and
              soccer teams, but with the World Cup in 2010, soccer            environmentally sound solution that meets their
              sponsorship is used to support underprivileged sports           specific needs.
              clubs and to take children off the streets.
                                                                          •   Providing employees with an environment and
              General                                                         work relationship which allows them to achieve as
              All the Group operations, no matter how small, have             much as possible and to have a fulfilled working
              contributed to supporting the destitute and                     career.
              underprivileged in the communities in which they exist      •   Delivering sustainable returns to shareholders
              and function.                                                   which are not at the expense of the Group’s
                                                                              ethical standards.
              QUALITY MANAGEMENT AND
                                                                          •   The Group continues to measure its expenditure
              OCCUPATIONAL HEALTH AND SAFETY
                                                                              on consumable resources and to eliminate any
              The consistent supply of both quality products and              unnecessary or inefficient processes.
              service to customers is key to the Group’s successes. To
              this end, the Group continues to focus on the ISO           •   The primary areas of consumption in the Group
              quality system to assist in achieving this. CED has             are those of transport fuel and electricity.
              maintained their ISO certification with TUV Rheinland           The Group continually looks at optimising its
              in all its divisions, except the newly acquired Criterion       warehouse locations and inventory holdings in a
              Equipment division, which is scheduled for ISO                  bid to minimise transport cost and fuel
              certification in August 2010.                                   consumption.

              The Autobax division has maintained its ISO                 •   As customers continue to search for more efficient
              certification with Lloyds.                                      and productive products, the Group, through its
                                                                              various operations, continues to develop these
              BMG’s Quality Management Systems (QMS) certified in
                                                                              with its various principals around the world and to
              2003, is now well established, with re-certification to
                                                                              offer solutions to the market.
              the updated ISO 9001:2008 standard completed in
              December 2009. BMG’s commitment to a safe and               The Board wishes to take this opportunity to thank all
              healthy working environment for customers and               the stakeholders in the Group for their ongoing
              employees is demonstrated by the implementation of          commitment and loyalty to the development of a
              the OHSAS 18001 standard.                                   sustainable business and relationships.
              The Group continues to progress the development and
              implementation of the OHSAS 18001 Occupational
              Health and Safety Management System in its major
              operations with CED aiming to achieve certification of
              this standard in the 2011 financial year.

              ACCESS TO INFORMATION                                       Arnold Goldstone
              The Company and all its subsidiaries are compliant          Chief Executive Officer
              with the provisions of the Promotion of Access to           Invicta Holdings Limited
                                                                                       Invicta Holdings Limited • Annual report 2010   29




Corporate governance
continued




AUDIT COMMITTEE REPORT                                    directors, the Board has further requested a non-
                                                          executive director, LR Sherrell, to serve on the Audit
Background                                                Committee. The Audit Committee members are
The Audit Committee’s operation is guided by a            considered to be independent of executive
charter that is informed by the Companies Act and is      management.
approved by the Board as and when it is                   Shareholders will be requested to approve the
amended. The revised charter includes the specific        appointment of the members of the Audit Committee
requirements as set out in the proposed new               at the annual general meeting scheduled for 29 July
Companies Act, pertaining to audit committees.            2010.
Purpose                                                   Attendance at meetings during the year was as
The purpose of the Committee is:                          follows:

•   To assist the Board in its evaluation of the                              11 Feb   26 May      19 Aug        5 Nov
    adequacy and efficiency of the internal control                             2009     2009        2009         2009
    systems, accounting practices, information systems                            √           x           √            √
                                                                                  √           √           √            √
                                                          J Mthimunye*
    and auditing processes applied in the day-to-day
                                                                                  √           √           √            √
                                                          DI Samuels*
    management of the business in compliance with
                                                          C Barnard•
                                                                                  √           √           √            √
    all applicable legal requirements, corporate
                                                          A Goldstone•
                                                                                  √           √           √            √
    governance and accounting standards.
                                                          AM Sinclair•
                                                                                  √           √           x            √
                                                                                  x           √           x            x
•   To provide a forum for communication between          SBF Carter#

                                                                                  √           x           √            x
    the Board, management, and the internal and           B Smith#

                                                                                  x           x           √            x
    external auditors.                                    B Sacks^
•   To review and confirm the independence of the         A Govindsamy^
    internal and external auditors, and to review and     * Members
    approve the engagement of the external auditors       • Group Directors
    for non-audit work.                                   # External Audit
•   To introduce such measures as in the Committee’s      ^ Internal Audit
    opinion may serve to enhance the reliability,
                                                          In addition to members, the chairman may request
    integrity and objectivity of financial information,
                                                          personal or written representation from Group and
    statements and affairs of the Group.
                                                          Company directors as well as internal and external
•   To provide support to the Board on the risk           audit.
    appetite and risk management of the Group.
                                                          External audit
•   To review the management of financial risk. Prior
    to the establishment of a separate Risk Committee,    In terms of section 269A of the Companies Act, the
    the Audit Committee will perform the function of      committee had nominated Deloitte & Touche as the
    the Risk Committee, whereby identified risks will     independent auditor and SBF Carter as the designated
    be monitored and discussed at the Audit               partner, who is a registered independent auditor, for
    Committee meetings.                                   appointment for the 2010 audit. This appointment
•   To monitor the compliance of the Group with legal     was approved by shareholders at the annual general
    requirements and the Group’s code of ethics.          meeting on 31 July 2009. The Committee has satisfied
                                                          itself through enquiry that the auditor of Invicta is
•   To ensure a high standard of Corporate                independent as defined by the Companies Act, as
    Governance is adhered to at all times within the
                                                          amended or replaced, and as per the standards
    Group.
                                                          stipulated by the auditing profession.
•   To review and monitor the Internal Audit function.
                                                          Requisite assurance was sought and provided by the
Membership                                                auditor that internal governance processes within the
                                                          audit firm support and demonstrate the claim to
The Committee is currently appointed by the Board.
The Committee comprises solely of non-executive,          independence.
independent directors. The members are:                   The Committee in consultation with executive
DI Samuels (Chairman)                                     management, agreed to the engagement letter, terms,
                                                          nature and scope of the audit function and audit plan
J Mthimunye
                                                          for the 2010 financial year. The budgeted fee is
In order to meet the requirements of King III, of         considered appropriate for the work that could
having an audit committee of three non-executive          reasonably have been foreseen at that time. The final
30   Invicta Holdings Limited • Annual report 2010




              Corporate governance
              continued




              adjusted fee will be agreed on completion of the               performance of operations. To date the Board has
              audit. Audit fees are disclosed in note 4 on page 53 of        adopted the policy of hedging all its material foreign
              the 2010 Annual Report.                                        exchange exposures.

              There is a formal procedure that governs the process
                                                                             Product supply
              whereby the auditor is considered for non-audit
              services, and each engagement letter for such work is          Based on the highly competitive markets in which the
              reviewed and approved by the Committee. Meetings               Group operates, specific focus is given to sourcing
              are held with the auditor where management is not              competitively priced quality products around the
              present and no matters of concern were raised.                 world. Directors and senior management have specific
              The Committee has again nominated, for approval at             programs on an annual basis, including the visiting of
              the annual general meeting, Deloitte & Touche as the           selected international trade fairs and supplier
              external auditor and SBF Carter as the designated              functions to benchmark existing product ranges and
              auditor for the 2011 financial year. The Committee             to source new lines.
              confirms that the auditor and designated auditor are
              accredited by the JSE.                                         Distribution network and infrastructure

                                                                             The distribution of the Group’s products is critical to its
              Risk Committee
                                                                             sales performance and takes place through a wide and
              Responsibility for managing the Group risk lies                entrenched network of its own outlets as well as third
              ultimately with the Board. However, the boards of              party distributors. The support, communication and
              subsidiary companies, executive committees and                 business model used to govern these relationships,
              management at operational level assist the Board in            enjoys primary focus at the operating entities’
              discharging its responsibilities in this regard by             executive committee meetings, and involves direct
              identifying, monitoring and managing risk on an                liaison with the relevant parties by the non-executive
              ongoing basis.                                                 directors of the Board.
              Risk   management              specifically   includes   the
              consideration of:                                              Trade and funding facilities

              •    the risk profile and management of operational            The availability of both trade and funding facilities are
                   risk within the Group;                                    strategic to the ongoing performance and success of
                                                                             the Group. The Board monitors and controls these on
              •    the risk profile and risk management of major
                                                                             an ongoing basis. This has become a greater focus
                   projects and acquisitions; and
                                                                             since the global liquidity crunch and its resultant
              •    the adequacy of self-insurance and external               impact on the world banking system and
                   insurance programs.                                       consequently on the Group’s customers and suppliers.

              Risk management                                                Annual financial statements
              The Board through the Risk Committee, which is a               In view of the Audit Committee having fulfilled its
              sub-committee of the Audit Committee, has identified           mandate, it recommended the financial statements
              a number of key risk areas which it believes require           for approval to the Board. The Board subsequently
              monitoring and detailing to stakeholders, these are            approved the financial statements, which will be open
              summarised below –                                             for discussion at the forthcoming annual general
                                                                             meeting.
              Strategic risk review

              The Group has with the guidance of external                    Group financial director
              consultants performed a strategic risk review at both
                                                                             As required by the JSE Listings Requirements, the
              Group and divisional level. The results of this exercise
                                                                             committee confirms that the Company’s finance
              has allowed management and the Board to focus on
                                                                             director, Craig Barnard, has the necessary expertise
              risk mitigation strategies and processes. The
                                                                             and experience to carry out his duties.
              Committee monitors the progress of the
              implementation of the above processes, with written
              submissions and presentations being done by
              management at least annually.

              Exchange rate fluctuations

              Most of the Group’s businesses involve the
              importation of product and, accordingly, changes in            David Samuels
              exchange rates can and do significantly affect the             Chairman of the Audit Committee
                                                                                       Invicta Holdings Limited • Annual report 2010   31




Corporate governance
continued




REMUNERATION REPORT                                         Remuneration policy and executive remuneration

Role of the remuneration committee and terms of             Principles of executive remuneration
reference                                                   The Group’s remuneration policy aims to attract and
                                                            retain high-calibre executives and to motivate them to
The Remuneration Committee is a committee of the
                                                            develop and implement the Group’s business strategy
Board of directors and is responsible for:                  in order to optimise long-term shareholder value
                                                            creation. The policy conforms with King III and is based
•   making recommendations to the Board on the
                                                            on the following principles:
    general    policy    on   executive   remuneration,
    benefits, conditions of service and staff retention;    •   Total rewards are set at levels that are competitive
                                                                within the relevant market.
•   determining the specific remuneration packages
                                                            •   Incentive-based rewards are earned through the
    of executive directors and senior management of
                                                                achievement      of  demanding     performance
    the Group including, but not limited to, basic
                                                                conditions consistent with shareholder interests
    salary, performance-based short- and long-term              over the short, medium and long term.
    incentives, pensions and other benefits; and
                                                            •   Incentive plans, performance measures and targets
•   the design and operation of the Group’s share               are structured to operate effectively throughout
    incentive schemes.                                          the business cycle.

                                                            •   The design of long-term incentives is prudent and
The full terms of reference of the Committee have
                                                                does not expose shareholders to unreasonable
been agreed by the Board.
                                                                financial risk.
Members of the Remuneration Committee during 2010           Elements of executive remuneration

•   CH Wiese (Chairman)                                     The four elements of executive remuneration consist
                                                            of a base salary, benefits, an annual incentive and
•   DI Samuels
                                                            long-term incentives. The Committee seeks to ensure
•   A Goldstone Attendance ex Officio                       an appropriate balance between the fixed and
                                                            performance-related      elements     of   executive
All members of the Committee are non-executive
                                                            remuneration, and between those aspects of the
directors.                                                  package linked to short-term financial performance
                                                            and those aspects linked to longer-term shareholder
The Committee met once during 2010. The chief
                                                            value creation. A further consideration has been the
executive officer attends the Committee meetings by         need to retain critical skills in the Group. The
invitation    and   assists   the   Committee    in   its   Committee considers each element of remuneration
deliberations, except when issues relating to his own       relative to the market and takes into account the
compensation are discussed. No director is involved in      performance of the Group and the individual
deciding his or her own remuneration. In 2010 the           executive in determining both quantum and design.

Committee was advised by the Group’s finance and            The policy relating to each component                      of
human resources divisions on the implementation of          remuneration is summarised below:
the executive incentive schemes.                            Base salary

The Company’s auditors, Deloitte & Touche, have not         The base salary of the executives is subject to annual
provided advice to the Committee. However, in their         review. It is set to be competitive at the median level,
capacity as Group auditors, they perform normal audit       with reference to market practice in companies
                                                            comparable in terms of size, market sector and
procedures on the remuneration of directors.
                                                            business      complexity.    Group     and     Company
The Remuneration Committee meets at least annually          performance, individual performance and changes in
                                                            responsibilities are also taken into consideration when
and the attendance at meetings held was as follows:
                                                            determining annual base salaries.
                                                29 May
                                                   2009     Benefits

                                                      √
                                                            Benefits for executives include membership of a

                                                      √
CH Wiese
                                                            retirement fund and a medical aid, to which

                                                      √
DI Samuels
                                                            contributions are made by the executives and the
A Goldstone                                                 Group.
32   Invicta Holdings Limited • Annual report 2010




              Corporate governance
              continued




              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. Incentive potentials are set on an individual basis each year. The
              incentive plan is contractual but not pensionable. The Committee retains the discretion to make positive
              adjustments to bonuses earned at the end of the year on an exceptional basis, taking into account both Group
              performance and the overall and specific contribution of individual executives to meeting the Group’s objectives.

              The Committee reviews measures annually, to ensure that the targets set are appropriate, given the
              economic context and the performance expectations for the Group.

              Long-term incentive

              Invicta Holdings long-term bonus and share incentive scheme

              In order to attract and retain key staff the Group requires appropriate long-term incentive schemes. Many of the
              Group’s operations require key technical skills which are often difficult to replace. In trying to address the critical
              factor, the Committee, in consultation with industry professionals, has designed a long-term bonus incentive
              scheme for key executives. In terms of the scheme, executives will be rewarded on their performance, with
              reference to the growth in the Invicta share price over a period of three to five years. The bonus, as determined
              by the formula, will be settled with equity in Invicta by the relevant operational entity or on terms of the existing
              Invicta Holdings Limited Share Trust. The bonus scheme will constantly be reviewed by the Committee for its
              effectiveness and will be amended from time to time, if necessary. The intention is to move divisional senior
              executives and management on to a cash-based bonus bank over the next year, to ensure they are rewarded for
              performance in those areas over which they have direct influence. Details of the Invicta Holdings Long-Term Bonus
              and Share Incentive Scheme are below.

              Equity-settled bonus share incentive right scheme

              The Group has implemented a long-term bonus equity-settled share incentive right scheme (“LBSIR scheme”) for
              key executives. 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
              performance conditions set for the executive being met), 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. Due to the prevailing economic climate, the expiry dates for tranche 1 (grant date: 13 March 2006)
              and tranche 2 (grant date: 1 September 2006) have been extended by two years.

              The bonus right is determined based on the difference between the grant price and the weighted average
              five-day closing price on the exercise date. The bonus, as determined by the formula, will be settled with 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.


                                                                                       2010                         2009

                                                                                            Weighted                    Weighted
                                                                                              average                     average
                                                                               Number        incentive      Number       incentive
                                                                                     of    rights cost            of   rights cost
                                                                             incentives          Rand     incentives         Rand

              Outstanding at the beginning of the year                       11 506 458                    7 327 458
              Awarded during the year                                         4 360 000           4,44     4 179 000          7,13
              Exercised during the year                                        (256 000)                           –

              Outstanding at the end of the year                             15 610 458                  11 506 458
                                                                                         Invicta Holdings Limited • Annual report 2010   33




Corporate governance
continued




                                             Tranch 1    Tranch 2     Tranch 3     Tranch 4     Tranch 5       Tranch 6

Number of grants                           3 514 000      250 000 3 814 000 4 104 000            75 000 4 360 000
Grant date                                 13 Mar 06     1 Sep 06 26 Mar 07 14 Mar 07         30 Sep 08 13 Mar 09
Grant price                                   R17,20       R20,00    R27,97    R24,84            R26,87    R18,48



                                              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
Dividend yield                                    5,6          5,3         6,4          3,5            3,8           4,2
Risk-free rate                                    7,2         8,17        8,17          9,4            8,7          6,43

Executive directors’ interests in the LBSIR scheme are set out in note 34 on page 73 of the 2010 Annual Report.

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 34 on pages 72 and 73 of
the 2010 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 meeting of sub-committees. An additional fee is paid to the
Chairman of both the Board and the Audit Committee.

Non-executive directors do not participate in the Company’s annual bonus plan, or in any of its share incentive
schemes.

Directors’ and executive management’s service contracts

None of the directors are bound by service contracts. All executive directors, who are also directors of
subsidiary companies, have an engagement letter which provides for a notice period of between one and three
months to be given by either party.

The Group chief executive officer has no service contract.

None of the non-executive directors have a contract of employment with the Group.

In terms of the Articles of Association, not less than one-third of the directors are required to retire by rotation at
each annual general meeting of the Company and may offer themselves for re-election. The appointment of new
directors during the year is required to be confirmed at the next annual general meeting and such new directors
are required to retire at such annual general meeting, but may offer 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.




CH Wiese
Chairman of the remuneration committee
34   Invicta Holdings Limited • Annual report 2010




              Value added statement
              for the year ended 31 March 2010




                                                                                                    GROUP
                                                                                 2010                            2009
                                                                                R’000              %            R’000           %

              Income from goods and services                                 3 968 872                    4 523 535
              Less: Cost of goods and services                              (3 096 365)                  (3 636 259)

              Value added from trading operations                             872 507                       887 276
              Add: Dividends received on investments                          210 056                       134 270
              Add: Interest received on investments                           198 442                       225 845

              Total value added                                             1 281 005            100,0    1 247 391          100,0

              Utilised as follows:
              Employees
              Salaries and benefits                                           430 712             33,6      411 308           33,0

              Providers of capital
              Interest on borrowings                                          432 886             33,8      382 719           30,6

              Government – Company tax                                         64 155              5,0      111 940            9,0

              Current                                                          19 480                        35 123
              Foreign                                                          53 460                        91 511
              Deferred                                                         (9 593)                      (15 649)
              Secondary tax on companies                                          808                           955

                                                                              927 753             72,4      905 967           72,6

              Retained for reinvestment
              Depreciation and amortisation                                    32 356              2,5       28 612            2,3
              Income retained in the business                                 320 896             25,1      312 812           25,1

                                                                              353 252             27,6      341 424           27,4

              Total utilisation of value added                              1 281 005            100,0    1 247 391          100,0




                                        2010                                                             2009



                      28%                                                                  27%

                                                               33%                                                          33%




                    5%
                                                                                          9%




                                              34%                                                               30%



                     Employees                       Providers of capital   Government                   Retained for reinvestment
                                                                                           Invicta Holdings Limited • Annual report 2010   35




Approval of the annual financial statements



TO THE MEMBERS OF INVICTA HOLDINGS LIMITED

It is the directors’ responsibility to prepare annual financial statements that fairly present the state of affairs of the
Company and the Group at the end of the financial year and the profit or loss for the year. The external auditors
are responsible for independently reviewing and reporting on these annual financial statements.

The annual financial statements set out in this report have been prepared by management in accordance with
International Financial Reporting Standards and in the manner required by the Companies Act of South Africa.

They are based on appropriate accounting policies which have been consistently applied and which are supported
by reasonable and prudent judgements and estimates.




Dr CH Wiese                                                      A Goldstone
Chairman                                                         Chief executive officer

25 May 2010




Certification by the company secretary


I certify in accordance with Section 268G(d) of the Companies Act, that the Company has lodged with the Registrar
all such returns as are required by a public company in terms of the Act and that all such returns are true, correct
and up to date.




C Barnard
Secretary

Cape Town
25 May 2010
36   Invicta Holdings Limited • Annual report 2010




              Report of the independent auditors



              TO THE MEMBERS OF INVICTA HOLDINGS LIMITED                internal control relevant to the entity’s preparation
                                                                        and fair presentation of the financial statements in
              Report on the annual financial statements
                                                                        order to design audit procedures that are appropriate
              We have audited the Group annual financial                in the circumstances, but not for the purpose of
              statements and annual financial statements of Invicta     expressing an opinion on the effectiveness of the
              Holdings Limited, which comprise the audit committee’s    entity’s internal control. An audit also includes
              report on page 29, the consolidated and Company           evaluating the appropriateness of accounting policies
              statements of financial position as at 31 March 2010,     used and the reasonableness of accounting estimates
              and the consolidated and Company statements of            made by management, as well as evaluating the
              comprehensive income, changes in equity and cash          overall presentation of the financial statements.
              flows for the year then ended, and a summary of
                                                                        We believe that the audit evidence we have obtained
              significant accounting policies and other explanatory
                                                                        is sufficient and appropriate to provide a basis for our
              notes, and the directors’ report, as set out on pages
                                                                        audit opinion.
              37 to 79.
                                                                        Opinion
              Directors’ responsibility for the financial statements
                                                                        In our opinion, the financial statements present fairly,
              The Company’s directors are responsible for the
                                                                        in all material respects, the consolidated and Company
              preparation and fair presentation of these financial
                                                                        financial position of Invicta Holdings Limited as at
              statements in accordance with International Financial
                                                                        31 March 2010, and its consolidated and Company
              Reporting Standards and in the manner required by
                                                                        financial performance and cash flows for the year then
              the Companies Act of South Africa. This responsibility
                                                                        ended in accordance with International Financial
              includes: designing, implementing and maintaining
                                                                        Reporting Standards and in the manner required by
              internal control relevant to the preparation and fair
                                                                        the Companies Act of South Africa.
              presentation of financial statements that are free from
              material misstatement, whether due to fraud or error;
              selecting and applying appropriate accounting
              policies; and making accounting estimates that are
              reasonable in the circumstances.
                                                                        Deloitte & Touche
              Auditors’ responsibility
                                                                        Registered Auditors
              Our responsibility is to express an opinion on these      Per SBF Carter
              financial statements based on our audit. We               Partner
              conducted our audit in accordance with International
                                                                        25 May 2010
              Standards on Auditing. Those standards require that
              we comply with ethical requirements and plan and          Buildings 1 and 2, Deloitte Place, The Woodlands,
              perform the audit to obtain reasonable assurance          Woodlands Drive, Woodmead, Sandton
              whether the financial statements are free from            National executive: GG Gelink (Chief Executive),
              material misstatement.                                    AE Swiegers (Chief Operating Officer), GM Pinnock
              An audit involves performing procedures to obtain         (Audit), DL Kennedy (Tax & Legal and Risk Advisory),
              audit evidence about the amounts and disclosures in       L Geeringh (Consulting), L Bam (Corporate Finance),

              the financial statements. The procedures selected         CR Beukman (Finance), TJ Brown (Clients & Markets),
                                                                        NT Mtoba (Chairman of the Board) and CR Qually
              depend on the auditor’s judgement, including the
                                                                        (Deputy Chairman of the Board)
              assessment of the risks of material misstatement of the
              financial statements, whether due to fraud or error. In   A full list of partners and directors is available on
              making those risk assessments, the auditor considers      request.
                                                                                       Invicta Holdings Limited • Annual report 2010   37




Report of the directors
for the year ended 31 March 2010




INVICTA HOLDINGS LIMITED                                    Capital Equipment Division (CED)

The directors have pleasure in presenting their annual      Northmec
report, which forms part of the annual financial
                                                            Distributor of a full range of leading agricultural
statements and the 2010 Annual Report of the Group
and of the Company for the year ended 31 March              machinery, implements and related spare parts.
2010.
                                                            CSE
In the context of the financial statements, the term
                                                            Wholesale and retail distributor of light earthmoving
“Group” refers to the Company, its subsidiaries and
                                                            machinery, turf-grooming machinery, golf cars, utility
associates.
                                                            vehicles and related spare parts.
Nature of business
                                                            New Holland
The Company is an investment holding and
management company. The various operations of the           Wholesale distributor of leading brand agricultural
Group are summarised below with an expanded                 machinery, implements and related spare parts.
explanation of the various businesses detailed in the
review of operations.                                       Doosan SA

Humulani Investments                                        Doosan SA supplies predominately heavy earthmoving
                                                            machinery for construction and mining applications.
Operational holding company of all the Invicta Group
operations.                                                 Criterion
Humulani has 25% of its ordinary shares under the           Importer and distributor of leading materials handling
control of BEE parties.
                                                            equipment and related spare parts.
20% of Humulani’s ordinary shares are held by
                                                            Tiletoria
aloeCap Private Equity Investments 1 (Pty) Limited, a
wholly-owned subsidiary of aloeCap (Pty) Limited.           A leading importer and distributor of tiles and related
aloeCap is a 100% black-owned and managed                   sanitary ware in the Western Cape and KwaZulu-
company.
                                                            Natal.
5% of Humulani’s ordinary shares are held by the
                                                            Compliance with accounting standards
Humulani Investments Share Incentive Trust. The
beneficiaries of the trust are the black employees of       The Group’s and the Company’s annual financial
the Group.                                                  statements comply with International Financial
In terms of SIC 12, the 5% of the ordinary issued share     Reporting Standards, the South African Companies Act
capital of Humulani Investments (Pty) Limited owned         and the JSE’s Listings Requirements.
by the Humulani Investments Share Incentive Trust
(“the trust”) has been consolidated. Deconsolidation        Group results
thereof and the recognition of the profit attributable                                          2010              2009
to the issue of the shares to the trust will commence
                                                                                                R'000             R'000
once the residual risks attributable to the loan finance
provided by Invicta to the trust to acquire the shares      Revenue                      3 968 872           4 523 535
dissipate through repayment or the investment value         Profit for the year               365 389          362 812
increases.

Bearing Man Group (BMG)                                     Management philosophy

Southern Africa’s leading distributor of bearings, seals,   Invicta adopts a hands-on approach to managing its
power transmission components, drives, belting,             subsidiaries. Each subsidiary is self contained and has
fasteners, filtration and hydraulics.                       its   own   managing     director     and    a    complete

Autobax                                                     complement      of    financial     and     administration
                                                            infrastructure. The Invicta Group chief executive
Importer and distributor of timing chains, timing belts,
                                                            officer is, however, actively involved in the executive
timing components and oil pumps to the automotive
                                                            committees of both the capital equipment and
industry, and similar niche products to the motorcycle
industry.                                                   engineering consumable operations, with executive
38   Invicta Holdings Limited • Annual report 2010




              Report of the directors continued
              for the year ended 31 March 2010




              directors of the Group actively controlling and                    Subsidiaries and associate
              participating on the boards of subsidiaries. Cash flow
                                                                                 Details of the Company’s interests in its material
              is always a major focus of the Group, even more so                 subsidiaries and associate are set out in the attached
              under the current economic conditions. The Board                   annual financial statements in notes 15 and 16 on
              aims to add value by providing expertise and guidance              pages 62 and 63 of the 2010 Annual Report.
              to subsidiary management teams, where feasible, and
                                                                                 Dividends
              by pooling best practices within the Group.
                                                                                 Details of the ordinary dividends paid are reflected in
              Share capital and share premium
                                                                                 note 23 on page 66 of the 2010 Annual Report.
              The authorised share capital of the Company
                                                                                 The Company’s current dividend policy is to consider
              remained unchanged at 134 000 000 ordinary shares
                                                                                 an interim dividend at a 3,5 times dividend cover ratio,
              of 5 cents each.
                                                                                 with a final dividend being considered to bring the
              During the year, the Company’s issued ordinary share               annual dividend cover ratio to no less than 3,0 times.
              capital and share premium remained unchanged                       Historically the dividend cover ratio has been 3,0 times
              (2009: unchanged).                                                 at interim stage and 2,5 times annual dividend cover
                                                                                 ratio at the final dividend stage, but this was changed
              Dematerialising of shares (STRATE)
                                                                                 last year in light of the world recession.
              Shareholders are again requested to note that, as a
                                                                                 Events subsequent to year-end
              result of clearing and settlement of trades through the
              STRATE system, the Company’s share certificates are                The Group took advantage of weak market conditions
              no     longer      good      for       delivery   for   trading.   and made a number of strategic acquisitions, one of
              Dematerialisation of the Company’s share certificates              the most significant of which was the acquisition of a
              is now a prerequisite when dealing in its shares.                  70% share of Wegezi Power Holdings (Pty) Limited
                                                                                 effective 1 April 2010.
              Auditors
                                                                                 Directors
              Deloitte & Touche continued in office as auditors of
              the Company and its subsidiaries for 2010.                         Details of the directors and company secretary during
                                                                                 the year and at the date of this report are reflected on
              At the annual general meeting, shareholders will be
                                                                                 pages 4 and 5 and on the inside back cover of the 2010
              requested to reappoint Deloitte & Touche as auditors               Annual Report.
              of Invicta Holdings Limited and to confirm that
              SBF Carter will be the designated auditor for the 2011             Directors’ contracts

              financial year.                                                    No material contracts have been entered into between
                                                                                 the Company and the Group and the directors during
              Sponsor
                                                                                 the year under review.
              Deloitte & Touche Sponsor Services (Pty) Limited
                                                                                 Directors’ fees
              acts as sponsor to the Company in terms of the
              requirements of the JSE Limited.                                   Directors’ payments for services as directors and other
                                                                                 emoluments are set out in note 34 on pages 72 and 73
              Transfer Secretaries
                                                                                 of the 2010 Annual Report. Members will be requested
              Computershare Investor Services (Pty) Limited serves as            to consider an ordinary resolution approving these
              the registrar and transfer secretaries of the Company.             emoluments at the annual general meeting.

              Invicta Holdings long-term bonus and share incentive               Directors‘ interest in shares in the Company
              scheme                                                             The total direct and indirect interest declared by the
                                                                                 directors in the issued share capital of the Company at
              In order to attract and retain key staff the Group has
                                                                                 31 March 2010 was 60% (2009: 62%).
              implemented a long-term bonus and share incentive
              scheme. The Remuneration Report contains details of                The details of the directors’ shareholding are reflected
              the scheme.                                                        in note 38 on page 78 of the 2010 Annual Report.
                                                                                      Invicta Holdings Limited • Annual report 2010   39




Report of the directors continued
for the year ended 31 March 2010




Unissued share capital                                     Notice of annual general meeting

The unissued ordinary shares are the subject of a          Notice to shareholders detailing all necessary
general authority granted to the directors in terms of     resolutions relating to the Company’s affairs is set out
Section 221 and 222 of the Companies Act (Act 61 of        on pages 82 to 86 of the 2010 Annual Report.
1973) as amended (“the Companies Act”), and the JSE
Limited (“JSE”) Listings Requirements. As this general
authority remains valid only until the next annual
general meeting, which is to be held on 29 July 2010,
members will be requested at the meeting to consider
an ordinary resolution placing the said ordinary shares
                                                           A Goldstone                              CH Wiese
under the control of the directors until the 2011          Chief Executive Officer                  Chairman
annual general meeting.
                                                           Cape Town
Repurchase of shares                                       25 May 2010

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 shares.

The Group has over the years repurchased shares
which are held at subsidiary level. The treasury shares
are eliminated on consolidation and are thus treated
as cancelled from a financial reporting perspective.
The directors consider it appropriate to secure a
specific authority for the Company to repurchase its
shares held by its subsidiary.

The Company’s Articles of Association allow the
Company to purchase its own shares if shareholders
have, by way of special resolution, either 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
Companies Act and the JSE Listings Requirements.

Members will be required to consider special
resolutions at the annual general meeting giving the
directors general authority to permit the Company or
a subsidiary of the Company to acquire the Company’s
shares and to permit the Company to acquire its shares
held by subsidiary companies.
40   Invicta Holdings Limited • Annual report 2010




              Statements of comprehensive income
              for the year ended 31 March 2010




                                                                                GROUP                  COMPANY
                                                                             2010          2009        2010       2009
                                                                Notes       R’000         R’000       R’000      R’000

              Revenue                                                    3 968 872     4 523 535          –          –
              Cost of sales                                             (2 886 154)   (3 417 181)         –          –

              Gross profit                                              1 082 718     1 106 354          –          –
              Selling, administration and distribution costs             (629 425)     (608 998)       958        563

              Operating profit before finance costs, interest
                and dividends received                             4      453 293        497 356        958        563
              Finance costs                                        5     (432 886)      (382 719)        (2)       (30)
              Dividends received from subsidiaries                              –              –     96 990    122 404
              Dividends received from investments                         210 056        134 270     49 044     49 548
              Share of profits of associate                       16          639              –          –          –
              Interest received                                    6      198 442        225 845         23         68

              Profit before taxation                                      429 544        474 752    147 013    172 553
              Taxation                                             7      (64 155)      (111 940)      (368)      (567)

              Profit for the year                                         365 389       362 812     146 645    171 986

              Other comprehensive income
              Exchange differences on translating
               foreign operations                                           (7 649)       (3 079)         –          –

              Total comprehensive income for the year                     357 740       359 733     146 645    171 986

              Attributable to:
              Owners of the Company                                       320 896       312 812     146 645    171 986
              Minority interest                                            44 493        50 000           –          –

                                                                          365 389       362 812     146 645    171 986

              Total comprehensive income attributable to:
              Owners of the Company                                       315 196       309 733     146 645    171 986
              Minority interest                                            42 544        50 000           –          –

                                                                          357 740       359 733     146 645    171 986

              Dividends per share (cents)                         23          151           138

              Earnings per share (cents)                           8          453           437

              Diluted earnings per share (cents)                   8          441           437
                                                                                 Invicta Holdings Limited • Annual report 2010   41




Statements of financial position
as at 31 March 2010




                                                             GROUP                          COMPANY

                                                        2010            2009               2010             2009
                                            Notes      R’000           R’000              R’000            R’000

ASSETS
Non-current assets
Property, plant and equipment                  9      312 860        228 997                 –                –
Investment in subsidiaries                    15            –              –           502 264          502 264
Investment in associate                       16        2 119              –                 –                –
Financial investments                         10    2 880 087      1 195 100           443 000          443 000
Goodwill                                      11      245 403        242 491                 –                –
Other intangible assets                       12        9 923         11 158                 –                –
Financial asset                               13      179 549        232 512                 –                –
Long-term receivable                          14            –      1 527 875                 –                –
Long-term loans                                         6 721              –                 –                –
Deferred taxation                             7.1      69 852         57 177                 –                –

                                                    3 706 514      3 495 310           945 264          945 264

Current assets
Loans to subsidiaries                         17            –                –         401 136          254 481
Inventories                                   18    1 298 795      1 645   913               –                –
Trade and other receivables                   19      670 979        688   106           7 146            7 008
Taxation prepaid                                          273         50   340               –                –
Bank balances and cash                        32      260 553        125   061          12 681           11 134

                                                    2 230 600      2 509 420           420 963          272 623

TOTAL ASSETS                                        5 937 114      6 004 730         1 366 227       1 217 887

EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital                        20        3   724        3 724             3 724            3 724
Share premium                                 21      282   715      282 715           282 715          282 715
Treasury shares                               22      (96   570)     (94 247)                –                –
Share appreciation reserve                             55   339       33 294                 –                –
Revaluation reserve                                     5   025        8 194                 –                –
Foreign currency translation reserve                   (6   149)        (449)                –                –
Retained earnings                                   1 198   882      972 824           857 021          810 180

Equity attributable to the equity holders           1 442 966      1 206 055         1 143 460       1 096 619
Minority interest                                     170 297        130 196                 –               –

SHAREHOLDERS’ EQUITY                                1 613 263      1 336 251         1 143 460       1 096 619

Non-current liabilities
Long-term borrowings                           24   3 026 890      2 846 638                688              688
Financial liabilities                          25     182 168        236 434                  –                –
Deferred taxation                             7.1      14 289         13 276                  –                –

                                                    3 223 347      3 096 348                688              688

Current liabilities
Trade and other payables                      26     947 777       1 191 155             2 431            2 440
Provisions                                    27      72 571         103 410                 –                –
Tax liabilities                                       13 287          14 935               665               34
Loan from subsidiary                          28           –               –           218 344          117 541
Shareholders for dividends                             2 967             565               639              565
Current portion of long-term borrowings       24      18 056           5 546                 –                –
Bank overdrafts and bankers’ acceptances      32      45 846         256 520                 –                –

                                                    1 100 504      1 572 131           222 079          120 580

TOTAL LIABILITIES                                   4 323 851      4 668 479           222 767          121 268

TOTAL EQUITY AND LIABILITIES                        5 937 114      6 004 730         1 366 227       1 217 887
42   Invicta Holdings Limited • Annual report 2010




              Statements of changes in equity
              for the year ended 31 March 2010




                                                                                                       Foreign                Attribu-
                                                                                  Share               currency                table to
                                                                                 appre-        Re-       trans-                 equity
                                               Share        Share   Treasury     ciation valuation       lation   Retained      share-   Minority
                                              capital    premium      shares    reserve    reserve     reserve    earnings     holders   interest      Total
                                               R’000        R’000      R’000       R’000     R’000        R’000      R’000       R’000     R’000       R’000

              GROUP

              Balance at 1 April 2008          3 724      282 715    (49 393)   14 024      8 194        2 630     763 697 1 025 591      92 147 1 117 738
              Total comprehensive
                income for the year                  –          –          –          –          –      (3 079)    312 812    309 733     50 000     359 733
              Dividends paid                         –          –          –          –          –           –    (103 685) (103 685)      (8 999) (112 684)
              Share appreciation rights
                issued                               –          –          –    19 270           –           –           –     19 270           –     19 270
              Net acquisition of
                minorities                           –          –          –          –          –           –           –          –      (2 952)     (2 952)
              Treasury shares acquired               –          –    (44 854)         –          –           –           –    (44 854)          –     (44 854)

              Balance at 31 March 2009         3 724      282 715    (94 247)   33 294      8 194         (449)    972 824 1 206 055     130 196 1 336 251
              Total comprehensive
                income for the year                  –          –          –          –          –      (5 700)    320 896    315 196     42 544     357 740
              Dividends paid                         –          –          –          –          –           –     (94 838)   (94 838)     (3 953)    (98 791)
              Share appreciation rights
                issued                               –          –          –    22 045           –           –           –     22 045           –     22 045
              Minority interest arising
                on acquisition of
                subsidiary                           –          –          –          –          –           –           –          –      1 510        1 510
              Revaluation reserve
                written off on liquidation
                of Group company                     –          –          –          –     (3 169)          –           –     (3 169)          –      (3 169)
              Treasury shares acquired               –          –     (2 323)         –          –           –           –     (2 323)          –      (2 323)

              Balance at 31 March 2010         3 724      282 715    (96 570)   55 339      5 025       (6 149) 1 198 882 1 442 996      170 297 1 613 263

              COMPANY

              Balance at 1 April 2008          3 724      282 715          –          –          –           –     745 446 1 031 885            – 1 031 885
              Total comprehensive
                income for the year                  –          –          –          –          –           –     171 986    171 986           –    171 986
              Dividends paid                         –          –          –          –          –           –    (107 252) (107 252)           –    (107 252)

              Balance at 31 March 2009         3 724      282 715          –          –          –           –     810 180 1 096 619            – 1 096 619
              Total comprehensive
                income for the year                  –          –          –          –          –           –    146 645     146 645           –    146 645
              Dividends paid                         –          –          –          –          –           –     (99 804)   (99 804)          –     (99 804)

              Balance at 31 March 2010         3 724      282 715          –          –          –           –     857 021 1 143 460            – 1 143 460
                                                                                             Invicta Holdings Limited • Annual report 2010   43




Statements of cash flows
for the year ended 31 March 2010




                                                                       GROUP                            COMPANY
                                                                   2010           2009                 2010             2009
                                                      Notes       R’000          R’000                R’000            R’000

CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations                          29      590   226        87   972              811              973
Finance costs                                                  (432   886)     (382   719)              (2)               –
Dividends paid to Group shareholders                    30      (92   436)     (103   627)         (99 730)        (107 194)
Dividends paid to minorities                                     (3   953)       (8   999)               –                –
Taxation (paid) refunded                                31      (25   329)     (194   445)             263             (567)
Interest and dividends received                                 408   498       360   115          146 057          171 990

Net cash inflow (outflow) from operating activities             444 120        (241 703)            47 399           65 202

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of property, plant and equipment                 9 872         11 910                     –                –
Proceeds on sale of investment                                        –            435                     –                –
Expansion to property, plant and equipment and
  intangible assets                                             (46  914)       (48 310)                 –                –
Replacement of property, plant and equipment                    (37  416)       (46 416)                 –                –
Acquisition of subsidiaries                                     (32  964)       (89 323)                 –                –
Acquisition of associate                                         (1  480)             –                  –                –
Investment in treasury shares                                    (2  323)       (44 854)                 –                –
Disposal of (increase in) investment in partnership           1 527  875       (177 875)                 –                –
Increase in long-term loans                                      (6  721)             –                  –                –
Increase in loans to subsidiaries                                      –              –           (146 655)        (131 923)
Investment in preference shares                               (1 684 987)             –                  –                –

Net cash outflow from investing activities                     (275 058)       (394 433)          (146 655)        (131 923)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term borrowings                                164 594        296 585                   –                –
Increase in loan from subsidiary                                      –              –             100 803           46 046
Increase (decrease) in current portion of
  long-term borrowings                                           12 510          (1 779)                   –                –

Net cash inflow from financing activities                       177 104        294 806             100 803           46 046

Net increase (decrease) in cash and cash equivalents            346 166        (341 330)             1 547          (20 675)
Cash and cash equivalents at the beginning of the year         (131 459)        209 871             11 134           31 809

Cash and cash equivalents at the end of the year        32      214 707        (131 459)            12 681           11 134
44   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements
              for the year ended 31 March 2010




              1.      ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
                      STANDARDS
                      During the year, the Company adopted all of the new and revised Standards and Interpretations issued by
                      the International Accounting Standards Board (the IASB) and the International Financial Reporting
                      Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for the
                      Company’s reporting period. The adoption of IFRS 7 Financial Instruments: Disclosure (amendments), IFRS 8
                      Operating Segments and related amendments to IAS 1 Presentation of Financial Statements has not
                      resulted in any significant changes to the Company’s accounting policies and the effects on the amounts
                      reported for the current or prior years have been disclosed.
                      At the date of authorisation of these financial statements, the following Standards applicable to the Group
                      and Company were in issue but not yet effective:
                      •   IFRS 2 Share-based Payments (Amendments)
                      •   IFRS 3 Business Combinations (Amendments)
                      •   IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (Amendments)
                      •   IFRS 8 Operating Segments (Amendments)
                      •   IFRS 9 Financial Instruments – Classification and Measurement
                      •   IAS 1 Presentation of Financial Statements (Revised)
                      •   IAS 7 Statement of Cash Flows (Amendments)
                      •   IAS 17 Leases (Amendments)
                      •   IAS 24 Related Party Disclosures (Revised)
                      •   IAS 27 Consolidated and Separate Financial Statements (Amendments)
                      •   IAS 28 Investments in Associates (Amendments)
                      •   IAS 31 Interests in Joint Ventures (Amendments)
                      •   IAS 32 Financial Instruments: Presentation (Amendments)
                      •   IAS 36 Impairment of Assets (Amendments)
                      •   IAS 38 Intangible Assets (Amendments)
                      •   IAS 39 Financial Instruments: Recognition and Measurement (Amendments)
                      The directors anticipate that the adoption of these Standards in future periods will have no material impact
                      on the financial statements of the Group and Company.
              2.      SIGNIFICANT ACCOUNTING POLICIES
                      The financial statements have been prepared in accordance with International Financial Reporting Standards
                      and in the manner required by the Companies Act of South Africa. The financial statements have been
                      prepared on the historical cost basis, except for the revaluation of certain properties and financial
                      instruments. The principal accounting policies adopted are set out below.
                      2.1    Basis of consolidation
                             The consolidated financial statements incorporate the financial statements of the Company and
                             entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the
                             power to govern the financial and operating policies of an entity so as to obtain benefits from its
                             activities. The results of subsidiaries acquired or disposed of during the year are included in the
                             consolidated income statement from the effective date of acquisition or up to the effective date of
                             disposal, as appropriate.
                             Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
                             accounting policies into line with those used by the Group.
                             All intra-Group transactions, balances, income and expenses are eliminated on consolidation. Minority
                             interests in the net assets of consolidated subsidiaries are identified separately from the Group’s
                             equity therein. Minority interests consist of the amount of those interests at the date of the original
                             business combination and the minority’s share of changes in equity since the date of the combination.
                             Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are
                             allocated against the interests of the Group except to the extent that the minority 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
                                                                                         Invicta Holdings Limited • Annual report 2010   45




Notes to the annual financial statements continued
for the year ended 31 March 2010




           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 minority shareholders in the acquiree is initially measured at the minority’s 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.

     2.4   Investments in associates

           The results and assets and liabilities of associates are incorporated in the consolidated financial
           statements using the equity method of accounting. Under the equity method, investments in
           associates are carried in the consolidated statement of financial position at cost as adjusted for
           post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in
           the value of individual investments. Losses of an associate in excess of the Group’s interest in that
           associate (which includes any long-term interests that, in substance, form part of the Group’s net
           investment in the associate) are recognised only to the extent that the Group has incurred legal or
           constructive obligations or made payments on behalf of the associate.

     2.5   Non-current assets held for sale
           Non-current assets and disposal groups are classified as held-for-sale if their carrying amount will be
           recovered through a sale transaction rather than through continuing use. This condition is regarded
           as met only when the sale is highly probable and the asset (or disposal Group) is available for
           immediate sale in its present condition. Management must be committed to the sale, which should be
           expected to qualify for recognition as a completed sale within one year from the date of classification.

           Non-current assets (and disposal groups) classified as held-for-sale are measured at the lower of the
           assets’ previous carrying amount and fair value less costs of disposal.

     2.6   Revenue recognition
           Revenue is measured at the fair value of the consideration received or receivable and represents
           amounts receivable for goods and services provided in the normal course of business, net of discounts
           and sales-related taxes. Sales of goods are recognised when goods are delivered and title has passed.
           Interest income is accrued on the time basis, by reference to the principal outstanding and at the
           effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts
           through the expected life of the financial asset to that asset’s net carrying amount.
           Dividend income from investments is recognised when the shareholders’ rights to receive payment
           have been established.
46   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                      2.7    Leasing

                             Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
                             and rewards of ownership to the lessee. All other leases are classified as operating leases.

                             The Group as lessor

                             Rental income from operating leases is recognised on the straight-line basis over the term of the
                             relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added
                             to the carrying amount of the leased asset and recognised on the straight-line basis over the lease
                             term.

                             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 balance sheet as a finance lease obligation. Lease
                             payments are apportioned between finance charges and a reduction of the lease obligation so as to
                             achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
                             charged to profit or loss.

                             Rentals payable under operating leases are charged to profit or loss on the straight-line basis over the
                             term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating
                             lease are also spread on the straight-line basis over the lease term.

                      2.8    Foreign currencies

                             The individual financial statements of each Group entity are presented in the currency of the primary
                             economic environment in which the entity operates (its functional currency). For the purpose of the
                             consolidated financial statements, the results and financial position of each entity are expressed in
                             currency units, which is the functional currency of the Company, and the presentation currency for the
                             consolidated financial statements.

                             In preparing the financial statements of the individual entities, transactions in currencies other than
                             the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing
                             on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign
                             currencies are retranslated at the rates prevailing on the balance sheet 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 balance sheet 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.

                      2.9    Borrowing costs

                             All borrowing costs are recognised in profit or loss in the period in which they are incurred.

                      2.10 Government grants

                             Government grants towards staff re-training costs are recognised in profit or loss over the periods
                             necessary to match them with the related costs and are deducted in reporting the related expense.
                                                                                        Invicta Holdings Limited • Annual report 2010   47




Notes to the annual financial statements continued
for the year ended 31 March 2010




     2.11 Retirement benefit costs

           Defined contribution pension and provident funds

           Current contributions to the defined contribution pension and defined contribution provident funds
           registered in terms of the Pension Fund Act, 1956 are based on current service and current salaries and
           are charged against income for the year. Payments to defined contribution retirement benefit plans
           are charged as an expense as they are incurred.

           Other post retirement obligations

           The Group provides a post-retirement medical aid subsidy to some of its retirees. The entitlement to
           these benefits is conditional on the employee having pensionable service from a particular date and
           continuous medical aid membership of a qualifying scheme from the same date. The expected costs of
           these benefits are accrued over the period of employment.

     2.12 Taxation

           Income tax expense represents the sum of the tax currently payable and deferred tax.

           The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as
           reported in the income statement because it excludes items of income or expense that are taxable or
           deductible in other years and it further excludes items that are never taxable or deductible. The
           Group’s liability for current tax is calculated using tax rates that have been enacted or substantively
           enacted at the balance sheet date.

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

           Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from
           the initial recognition (other than in a business combination) of other assets and liabilities in a
           transaction that affects neither the taxable profit nor the accounting profit.

           Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
           subsidiaries and associates, and interests in joint ventures, except where the Group is able to control
           the reversal of the temporary difference and it is probable that the temporary difference will not
           reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each
           balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable
           profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at
           the tax rates that are expected to apply in the period when the liability is settled or the asset realised.
           Deferred tax is charged or credited to profit or loss, except when it relates to items charged or
           credited directly to equity, in which case the deferred tax is also dealt with in equity.

           Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off tax
           assets against tax liabilities and when they relate to income taxes levied by the same
           taxation authority and the Group intends, and is able to, settle its tax assets and liabilities on a net
           basis.

     2.13 Property, plant and equipment

           Land is stated at cost whilst other fixed assets are stated at cost, less accumulated depreciation and any
           accumulated impairment losses.

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

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

           Depreciation is calculated on the straight-line basis, so as to write the cost of the assets down to their
           residual values, at the following per annum rates, which are considered to approximate the
           estimated useful lives of the assets concerned.
48   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                             Buildings                                                                                      1 – 10%
                             Plant and equipment                                                                           10 – 20%
                             Leasehold improvements                                                     Over the period of the lease
                             Motor 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.

                      2.14 Other intangible assets

                             Other intangible assets consist of computer software and are amortised on the straight-line basis over
                             a period of three to ten years.

                      2.15 Impairment of tangible and intangible assets excluding goodwill

                             At each balance sheet 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.
                      2.16 Inventories
                             Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and,
                             where applicable, direct labour costs and those overheads that have been incurred in bringing the
                             inventories to their present location and condition. Cost is calculated using the first-in first-out
                             method.
                             Net realisable value represents the estimated selling price less all estimated costs of completion and
                             costs to be incurred in marketing, selling and distribution.
                      2.17 Financial instruments
                             Financial assets and financial liabilities are recognised on the Group’s balance sheet 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.
                                                                                       Invicta Holdings Limited • Annual report 2010   49




Notes to the annual financial statements continued
for the year ended 31 March 2010




           Investments

           Investments are recognised and derecognised on a trade date basis where the purchase or sale of an
           investment is under a contract whose terms require delivery of the investment within the timeframe
           established by the market concerned, and are initially measured at fair value, plus directly
           attributable transaction costs.
           At subsequent reporting dates, debt securities that the Group has the expressed intention and ability
           to hold to maturity (held-to-maturity debt securities) are measured at amortised cost using the
           effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts.
           An impairment loss is recognised in profit or loss when there is objective evidence that the asset is
           impaired, and is measured as the difference between the investment’s carrying amount and the
           present value of estimated future cash flows discounted at the effective interest rate computed at
           initial recognition.
           Impairment losses are reversed in subsequent periods when an increase in the investment’s
           recoverable amount can be related objectively to an event occurring after the impairment was
           recognised, subject to the restriction that the carrying amount of the investment at the date the
           impairment is reversed, shall not exceed what the amortised cost would have been had the
           impairment not been recognised.
           Investments other than held-to-maturity debt securities are classified as either investments held for
           trading or as available-for-sale, and are measured at subsequent reporting dates at fair value. Where
           securities are held for trading purposes, gains and losses arising from changes in fair value are
           included in profit or loss for the period. For available-for-sale investments, gains and losses arising
           from changes in fair value are recognised directly in equity, until the security is disposed of or is
           determined to be impaired, at which time the cumulative gain or loss previously recognised in equity
           is included in the profit or loss for the period. Impairment losses recognised in profit or loss for
           equity investments classified as available-for-sale are not subsequently reversed through profit or loss.
           Impairment losses recognised in profit or loss for debt instruments classified as available-for-sale are
           subsequently reversed if an increase in the fair value of the instrument can be objectively related to
           an event occurring after the recognition of the impairment loss.
           Cash and cash equivalents
           Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly
           liquid investments that are readily convertible to a known amount of cash and are subject to an
           insignificant risk of changes in value.
           Financial liabilities and equity
           Financial liabilities and equity instruments issued by the Group are classified according to the
           substance of the contractual arrangements entered into and the definitions of a financial liability and
           an equity instrument. An equity instrument is any contract that evidences a residual interest in the
           assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific
           financial liabilities and equity instruments are set out below.
           Bank borrowings
           Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently
           measured at amortised cost, using the effective interest rate method. Any difference between the
           proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over
           the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs.
           Trade payables
           Trade and other payables are initially measured at fair value, and are subsequently measured at
           amortised cost, using the effective interest rate method.
           Equity instruments
           Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue
           costs.
           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
50   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                             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.
                      2.18 Provisions
                             Provisions are recognised when the Group has a present obligation as a result of a past event, and it
                             is probable that the Group will be required to settle that obligation. Provisions are measured at the
                             directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date,
                             and are discounted to present value where the effect is material.
                             The warranty provision represents warranty income that has been deferred and which is recognised
                             on a systematic basis over the warranty term. It is expected that the majority of warranty claims will
                             be incurred within two years after the reporting period.
                      2.19 Share-based payments
                             The Group issues equity-settled share-based payments to certain employees. Equity-settled
                             share-based payments are measured at fair value (excluding the effect of non market-based vesting
                             conditions) at the date of the grant. The fair value determined at the grant date of the equity-settled
                             share-based payments is expensed on the straight-line basis over the vesting period, based on the
                             Group’s estimate of the shares that will eventually vest and is adjusted for the effect of non
                             market-based vesting conditions. Fair value is measured using the Black-Scholes pricing model. The
                             expected life used in the model is adjusted, based on management’s best estimate, for the effects of
                             non-transferability, exercise restrictions and behavioural considerations.
                      2.20 Key judgements made by management
                             Preparing financial statements in conformity with IFRS requires judgements and assumptions that
                             affect reported amounts and related disclosures. Actual results could differ from these estimates.
                             Certain accounting policies have been identified as involving particularly complex or subjective
                             judgements or assessments as follows:
                             Asset lives and residual values
                             Property, plant and equipment is depreciated over its useful life taking into account residual values,
                             where appropriate. The actual lives of the assets and residual values are assessed annually and may
                             vary depending on a number of factors. In reassessing asset lives, factors such as technological
                             innovation, product life cycles and maintenance programmes are taken into account. Residual value
                             assessments consider issues such as future market conditions, the remaining life of the asset and
                             projected disposal values.
                             Intangible assets other than goodwill
                             Intangible assets other than goodwill are amortised over their useful lives. The actual lives of the
                             intangible assets are assessed annually and may vary depending on a number of factors. In reassessing
                             intangible asset lives, factors such as technological innovation are taken into account.
                             Provisions
                             Management bases their estimation for warranty provision on the number of products under
                             warranty at year-end, the age of these products and the remaining period under warranty. Actual
                             warranty costs may vary depending on a number of factors.
                             Valuation of derivatives
                             Derivatives valuations are determined by discounting the contractual stream of payments/receipts
                             using appropriate discount rates at the valuation date.
                             Valuation of investments
                             Investments are carried at cost or fair value. The directors determine the fair value on an annual basis
                             by assessing the future cash flows associated with the investment.
                                                                                              Invicta Holdings Limited • Annual report 2010   51




Notes to the annual financial statements continued
for the year ended 31 March 2010




3.   BUSINESS SEGMENTS

     3.1   Adoption of IFRS operating segments

           The Group has adopted IFRS 8 Operating Segments with effect from 1 April 2009. IFRS 8 requires
           operating segments to be identified on the basis of internal reports about components of the Group
           that are regularly reviewed by the chief operating decision maker in order to allocate resources to the
           segments and to assess their performance. The adoption of IFRS 8 has resulted in the Group’s
           reportable segments remaining fundamentally the same as the prior year.

     3.2   Segment revenues and results

           The following is an analysis of the Group’s revenue and results from operations by reportable segments:

                                                                    Segment revenue                   Segment profit

                                                                        2010           2009             2010             2009
                                                                       R’000          R’000            R’000            R’000

           Engineering consumables*                               2 018 304      2 136 572          292 673          325 567
           Capital equipment*                                     1 749 538      2 254 606          123 441          141 510
           Group, financing and other operations                    201 030        132 357           37 179           30 279

                                                                  3 968 872      4 523 535          453 293          497 356

           Share of profits of associate                                                                639                –
           Finance costs                                                                           (432 886)        (382 719)
           Interest and dividends received                                                          408 498          360 115

           Profit before taxation                                                                   429 544          474 752
           Taxation                                                                                 (64 155)        (111 940)

           Profit for the year                                                                      365 389          362 812

           The accounting policies of the reportable segments are the same as the Group’s accounting policies.
           Segment profit represents the profit earned by each segment without allocation of profits of
           associates, finance costs and income tax expense. This is the measure reported to the chief operating
           decision maker for the purposes of assessment of segment performance.

           * The Autobax division has been reclassified from the Capital Equipment to the Engineering Consumables segment
           in the current year and the comparatives have been accordingly restated.


     3.3   Segment assets and liabilities

                                                                                                        2010             2009
                                                                                                       R’000            R’000

           Segment assets

           Engineering consumables                                                                1 233 928        1 258 015
           Capital equipment                                                                        884 232        1 165 573
           Group, financing and other operations                                                  3 818 954        3 581 042

           Total segment assets                                                                   5 937 114        6 004 730
52   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




              3.      BUSINESS SEGMENTS              CONTINUED

                      3.3    Segment assets and liabilities continued

                                                                                                                2010          2009
                                                                                                               R’000         R’000

                             Segment liabilities

                             Engineering consumables                                                         300 217       521 607
                             Capital equipment                                                               631 884       967 168
                             Group, financing and other operations                                         3 391 750     3 179 704

                             Total segment liabilities                                                     4 323 851     4 668 479

                             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.

                      3.4    Other segment information

                                                                                  Depreciation and             Additions to
                                                                                    amortisation             non-current assets

                                                                                    2010          2009          2010          2009
                                                                                   R’000         R’000         R’000         R’000

                             Engineering consumables                              16 006        11 040        10 523        27 226
                             Capital equipment                                    22 993        10 847        25 815        14 329
                             Group, financing and other operations                 4 464         6 725        47 992        50 429

                                                                                  43 463        28 612        84 330        91 984

                             Geographical segments
                             The Group has not reported segment information by geographical location as the operations occur
                             substantially within Southern Africa.

                             Customers
                             The Group has not reported segment information by customer as no customer contributes in excess
                             of 10% of the Group’s total revenue.
                                                                                    Invicta Holdings Limited • Annual report 2010   53




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                  GROUP                        COMPANY

                                                              2010           2009             2010             2009
                                                             R’000          R’000            R’000            R’000

4.   OPERATING PROFIT BEFORE
     FINANCE COSTS, INTEREST AND
     DIVIDENDS RECEIVED

     Operating profit before finance costs, interest
     and dividends received is arrived at after taking
     into account the following items:

     Income
     Profit on disposal of property, plant and equipment     3 762          3 271                 –                 –
     Profit on disposal of investment                            –            232                 –                 –
     Release of deferred profit on issue of shares
       by subsidiary                                         3 870          3 870                 –                 –
     Negative goodwill recognised on acquisition
       of subsidiaries                                       7 952              –                 –                 –
     Credit default swap derivative                        (52 963)        14 239                 –                 –
     Interest rate swap derivative                           1 303              –                 –

     Expenses
     Auditors’ remuneration – audit fees                     3 557          2 967                 –                 –

      – Current year                                         3 123          2 442                 –                 –
      – Prior year                                             150            225                 –                 –
      – Other services                                         284            300                 –                 –

     Depreciation                                           30 215         25 700                 –                 –

      –   Buildings                                          3   420        2 915                 –                 –
      –   Plant and equipment                                3   404        3 195                 –                 –
      –   Leasehold improvements                             1   449          748                 –                 –
      –   Motor vehicles                                     4   144        3 690                 –                 –
      –   Furniture and fittings                             2   058        1 053                 –                 –
      –   Office equipment                                   4   064        3 890                 –                 –
      –   Computer equipment                                 6   630        4 806                 –                 –
      –   Golf cars                                          5   039        5 403                 –                 –
      –   Forklifts                                                7            –                 –

     Amortisation of intangible assets                       2 141          2 912                 –               –
     Put option/credit default swap derivative             (52 963)        14 239                 –               –
     Impairment of property, plant and equipment               190          4 000                 –               –
     Goodwill impaired                                       3 442            638                 –               –
     Interest rate swap derivative                               –          3 922                 –               –
     Loss on disposal of property, plant and equipment          30             39                 –               –
     Employment costs                                      430 712        411 308                 –             111

     Operating lease expenses                               14 390         29 896                92               86

      – Premises                                            13 271         29 349                92               86
      – Equipment                                              407            547                 –                –
      – Other                                                  712              –                 –                –

     Pension and provident fund contributions               20 491         13 066                 –                 –
     Share options expense                                  22 045         19 270                 –                 –
54   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                                  GROUP                 COMPANY

                                                                              2010           2009       2010        2009
                                                                             R’000          R’000      R’000       R’000

              5.      FINANCE COSTS

                      Bank overdrafts and loans                             22 631          5 249         2           30
                      Foreign exchange premiums                              9 496         20 676         –            –
                      Finance leases                                           827          1 270         –            –
                      Debentures, promissory notes and other
                       long-term borrowings                                399 932        355 524          –            –

                      Total                                                432 886        382 719         2           30

              6.      INTEREST RECEIVED

                      Bank balances and cash                                 2   419       10   167      23           68
                      Partnership income                                   123   035      210   736       –            –
                      Foreign exchange gains                                 5   240        1   687       –            –
                      Long-term receivables                                 67   748        3   255       –            –

                      Total                                                198 442        225 845        23           68

              7.      TAXATION

                      South African normal taxation

                      Current tax
                       – current year                                       18 044         35 126       433          567
                       – prior year                                          1 436             (3)      (65)           –

                      Deferred tax
                       – current year                                       (4 466)       (15 526)         –            –
                       – prior year                                         (5 127)          (123)         –            –

                      Secondary tax on companies                               808            955          –            –
                      Foreign tax                                           53 460         91 511          –            –

                      Total                                                 64 155        111 940       368          567

                      Reconciliation of tax rate                                  %              %        %           %

                      Statutory tax rate                                       28,0          28,0       28,0         28,0
                      Permanent differences and exempt income                 (25,3)        (21,4)     (27,7)       (28,3)
                      Secondary tax on companies                                0,2           0,2          –            –
                      Utilisation of tax losses                                (0,7)         (1,7)         –            –
                      Prior year underprovision                                 0,3          (0,5)         –            –
                      Foreign tax                                              12,4          19,0          –            –

                      Effective tax rate                                         14,9           23,6     0,3         (0,3)

                      Estimated tax losses in the Group amount to R59 403 245 (2009: R12 534 831). A deferred tax asset of
                      R2 970 595 (2009: Rnil) was raised with respect to certain of these tax losses.
                                                         Invicta Holdings Limited • Annual report 2010   55




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                      GROUP

                                                                   2010             2009
                                                                  R’000            R’000

7.   TAXATION      CONTINUED

     7.1   Deferred tax
           Net balance at the beginning of the year             43 901            22 647
           Arising on acquisition of subsidiaries                2 069             5 605
           Income statement charge                               9 593            15 649

           Net balance at the end of the year                   55 563            43 901

           Comprising:
           Capital allowances                                  (10 422)          (17 520)
           Tax losses                                            2 971                 –
           Provisions                                           45 272            52 612
           Other temporary differences                          18 252             8 936
           Prepayments                                            (510)             (127)

           Total                                                55 563            43 901

           Disclosed as:
           Deferred taxation asset                              69 852            57 177
           Deferred taxation liability                         (14 289)          (13 276)

           Total                                                55 563            43 901

8.   EARNINGS PER SHARE
     Basic earnings per share (cents)                               453              437
     Diluted earnings per share (cents)                             441              437

     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                                     320 896          312 812
           Weighted average number of ordinary
            shares for the purposes of basic earnings
            per share                                           70 779            71 536

     8.2   Diluted earnings per share

           The earnings used in the calculation of
           diluted earnings per share are as follows:

           Earnings used in the calculation of
            diluted earnings per share                         320 896          312 812
           Weighted average number of ordinary
            shares used in the calculation of
            diluted earnings per share                          72 767            71 536
56   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                                                   GROUP

                                                                                                                    Attributable
                                                                                                                       to equity
                                                                                    Gross    Taxation    Minorities      holders
                                                                                    R’000       R’000        R’000         R’000

              8.      EARNINGS PER SHARE             CONTINUED

                      8.3    Headline earnings per share

                             This calculation is based on the weighted
                             average number of 70 779 151
                             (2009: 71 536 181) ordinary shares in issue
                             during the year. It is derived, after taxation
                             and minority interest, as follows:

                             2010
                             Earnings attributable to ordinary shareholders       429 544     (64 155)     (44 493)     320 896
                             Adjusted for:
                             Release of deferred profit on issue of
                              shares by subsidiary                                 (3 870)       624             –        (3 246)
                             Net profit on disposal of property, plant
                              and equipment                                        (3 732)      1 045          537        (2 150)
                             Negative goodwill on business combinations            (7 952)          –        1 590        (6 362)
                             Impairment of property, plant and equipment              190         (53)         (27)          110
                             Impairment of goodwill                                 3 442           –         (688)        2 754

                             Headline earnings for purposes of headline
                              earnings per share                                  417 622     (62 539)     (43 081)     312 002

                             2009
                             Earnings attributable to ordinary shareholders       474 752    (111 940)     (50 000)     312 812
                             Adjusted for:
                             Release of deferred profit on issue of
                              shares by subsidiary                                 (3 870)       624             –        (3 246)
                             Profit on disposal of investment                        (232)        32            40          (160)
                             Net profit on disposal of property, plant
                              and equipment                                        (3 232)        905          465        (1 862)
                             Impairment of property, plant and equipment            4 000        (560)        (688)        2 752
                             Impairment of goodwill                                   638           –         (128)          510

                             Headline earnings for purposes of headline
                              earnings per share                                  472 056    (110 939)     (50 311)     310 806


                                                                                                                GROUP
                                                                                                              2010         2009
                                                                                                             R’000        R’000

                             Headline earnings for purposes of diluted headline
                              earnings per share                                                           312 002      310 806

                             Headline earnings per share (cents)                                               441          434

                             Diluted headline earnings per share (cents)                                       429          434
                                                                                      Invicta Holdings Limited • Annual report 2010   57




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                                                   GROUP
                                                                                                2010             2009
                                                                                               R’000            R’000

9.   PROPERTY, PLANT AND EQUIPMENT

     Land and buildings                                                                     196 784          151 040

      – Gross carrying amount                                                               225 213          176 523
      – Accumulated depreciation and impairment                                              28 429           25 483

     Plant and equipment                                                                     14 991            13 307

      – Gross carrying amount                                                                37 123            31 404
      – Accumulated depreciation and impairment                                              22 132            18 097

     Leasehold improvements                                                                    4 448            3 275

      – Gross carrying amount                                                                  6 809            4 219
      – Accumulated depreciation                                                               2 361              944

     Motor vehicles                                                                          10 430            10 657

      – Gross carrying amount                                                                31 341            29 618
      – Accumulated depreciation and impairment                                              20 911            18 961

     Furniture and fittings                                                                    8 347            9 112

      – Gross carrying amount                                                                15 556            13 865
      – Accumulated depreciation                                                              7 209             4 753

     Office equipment                                                                        16 392            16 567

      – Gross carrying amount                                                                49 402            45 740
      – Accumulated depreciation and impairment                                              33 010            29 173

     Computer equipment                                                                        9 229           11 953

      – Gross carrying amount                                                                48 876            51 823
      – Accumulated depreciation and impairment                                              39 647            39 870

     Golf cars                                                                               11 586            13 086

      – Gross carrying amount                                                                26 010            27 835
      – Accumulated depreciation                                                             14 424            14 749

     Forklifts                                                                               40 653                   –

      – Gross carrying amount                                                                93 728                   –
      – Accumulated depreciation and impairment                                              53 075                   –

     Net carrying value                                                                     312 860          228 997

     Total gross carrying amount                                                            534 058          381 027
     Total accumulated depreciation and impairment                                          221 198          152 030

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

     9.2   Encumbrances
           The Group has encumbered land and buildings, motor vehicles and golf cars having a carrying value
           of R155 million (2009: R173 million) to secure banking financing facilities as detailed in note 24.
58   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                                 GROUP
                                                                               2010        2009
                                                                              R’000       R’000

              9.      PROPERTY, PLANT AND EQUIPMENT
                      CONTINUED

                      9.3    Reconciliation of movement in carrying value

                             Land and buildings
                             Balance at the beginning of the year           151 040      101   280
                             Additions                                       47 227       48   310
                             Acquisitions of subsidiaries                         –       10   635
                             Impairment reversed                              4 000       (4   000)
                             Depreciation for the year                       (3 420)      (2 915)
                             Disposals                                       (2 063)      (2 270)

                             Balance at the end of the year                 196 784      151 040

                             Plant and equipment
                             Balance at the beginning of the year            13 307        6 760
                             Additions                                        4 207        6 325
                             Acquisitions of subsidiaries                       983        5 890
                             Impairment                                         (97)           –
                             Depreciation for the year                       (3 404)      (3 195)
                             Disposals                                           (5)      (2 473)

                             Balance at the end of the year                  14 991       13 307

                             Leasehold improvements
                             Balance at the beginning of the year             3 275          125
                             Additions                                        2 622        3 898
                             Depreciation for the year                       (1 449)        (748)

                             Balance at the end of the year                   4 448        3 275

                             Motor vehicles
                             Balance at the beginning of the year            10 657        8 549
                             Additions                                        4 183        3 884
                             Acquisitions of subsidiaries                         4        2 945
                             Impairment                                         (12)           –
                             Depreciation for the year                       (4 144)      (3 690)
                             Disposals                                         (258)      (1 031)

                             Balance at the end of the year                  10 430       10 657

                             Furniture and fittings
                             Balance at the beginning of the year             9 112        1 266
                             Additions                                        1 203        8 452
                             Acquisitions of subsidiaries                       110          447
                             Depreciation for the year                       (2 058)      (1 053)
                             Disposals                                          (20)           –

                             Balance at the end of the year                   8 347        9 112
                                                                                              Invicta Holdings Limited • Annual report 2010   59




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                                                           GROUP

                                                                                                        2010             2009
                                                                                                       R’000            R’000

9.   PROPERTY, PLANT AND EQUIPMENT
     CONTINUED

     9.3   Reconciliation of movement in carrying value
           continued

           Office equipment
           Balance at the beginning of the year                                                      16 567            13 807
           Additions                                                                                  4 037             7 616
           Acquisitions of subsidiaries                                                                  51               121
           Impairment                                                                                  (189)                –
           Depreciation for the year                                                                 (4 064)           (3 890)
           Disposals                                                                                    (10)           (1 087)

           Balance at the end of the year                                                            16 392            16 567

           Computer equipment
           Balance at the beginning of the year                                                      11 953             9 002
           Additions                                                                                  3 508             7 427
           Acquisitions of subsidiaries                                                                 614               357
           Impairment                                                                                  (158)                –
           Depreciation for the year                                                                 (6 630)           (4 806)
           Disposals                                                                                    (58)              (27)

           Balance at the end of the year                                                              9 229           11 953

           Golf cars
           Balance at the beginning of the year                                                      13   086          14   207
           Additions                                                                                  4   798           6   072
           Depreciation for the year                                                                 (5   039)         (5   403)
           Disposals                                                                                 (1   259)         (1   790)

           Balance at the end of the year                                                            11 586            13 086

           Forklifts
           Balance at the beginning of the year                                                             –                 –
           Additions                                                                                 11   639                 –
           Acquisitions of subsidiaries                                                              46   329                 –
           Impairment                                                                                (3   734)                –
           Depreciation for the year                                                                (11   114)                –
           Disposals                                                                                 (2   467)                –

           Balance at the end of the year                                                            40 653                   –

           Total
           Balance at the beginning of the year                                                     228 997          154    996
           Additions                                                                                 83 424           91    984
           Acquisitions of subsidiaries                                                              48 091           20    395
           Net impairment                                                                              (190)          (4    000)
           Depreciation for the year*                                                               (41 322)         (25    700)
           Disposals                                                                                 (6 140)          (8    678)

           Balance at the end of the year                                                           312 860          228 997

           * Depreciation relating to the forklift hire fleet is included in cost of sales.
60   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                                GROUP                 COMPANY

                                                                             2010          2009       2010       2009
                                                                            R’000         R’000      R’000      R’000

              10. FINANCIAL INVESTMENTS

                      Unlisted securities
                      Business Venture Investments No. 1048 (Pty)
                       Limited – 50 000 redeemable non-cumulative
                       preference shares                                  752 100       752 100          –          –

                      The shares are redeemable from 8 August 2011
                      to 8 February 2016 in semi-annual instalments.
                      Dividends are received at a rate of 10,9% per
                      annum compounded semi-annually. The
                      preference shares are pledged as security
                      to the debenture holders under a credit default
                      swap (refer note 24).

                      Business Venture Investments No. 1057 (Pty)
                       Limited – 50 000 redeemable non-cumulative
                       preference shares                                  443 000       443 000    443 000   443 000

                      The shares are redeemable from 8 August 2011
                      to 8 February 2016 in semi-annual instalments.
                      Dividends are received at a rate of 10,9% per
                      annum compounded semi-annually. The
                      preference shares are pledged as security to
                      the debenture holders under a credit default
                      swap (refer note 24).

                      Gryphon Financial Engineering (Pty) Limited
                       preference shares                                 1 684 987            –          –          –

                      Dividends are received at a rate of 10,35% per
                      annum compounded quarterly. Government bonds
                      have been pledged as security via a put option
                      with Gryphon Support Services (Pty) Limited
                      (refer note 25).

                      Total                                              2 880 087   1 195 100     443 000   443 000

                      Directors’ valuation                               2 880 087   1 195 100     443 000   443 000

              11. GOODWILL

                      Goodwill arising on acquisition of subsidiaries

                      At the beginning of the year                        242 491       219 087          –          –
                      Acquisition of subsidiaries                           6 354        13 476          –          –
                      Acquisition of minority interest in a subsidiary          –        10 566          –          –
                      Goodwill impaired during the year                    (3 442)         (638)         –          –

                      At the end of the year                              245 403       242 491          –          –
                                                                                 Invicta Holdings Limited • Annual report 2010   61




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                                              GROUP

                                                                                           2010             2009
                                                                                          R’000            R’000

11. GOODWILL        CONTINUED

     Goodwill arising on acquisition of subsidiaries
     continued

     The carrying amount of the goodwill has been allocated as follows:

     Cartcom (Pty) Limited                                                                   –            2 901
     Bearing Man Group                                                                 213 615          208 000
     Goldquest International
      Hydraulics SA (Pty) Limited                                                        1   683           1   683
     Disa Equipment (Pty) Limited                                                       11   793          11   793
     Tiletoria Cape Group                                                               13   292          13   094
     Humulani Marketing (Pty) Limited                                                    5   020           5   020

     Total                                                                             245 403          242 491

     The directors assess the carrying value of goodwill with reference to
     the future cash flows of the cash generating unit.

12. OTHER INTANGIBLE ASSETS

     Computer software
     – Gross carrying value                                                             18 529            17 623
     – Accumulated amortisation                                                          8 606             6 465

     Net carrying value                                                                   9 923           11 158

     Reconciliation of movement in carrying value

     Balance at the beginning of the year                                               11 158            11 327
     Additions                                                                             906             2 743
     Amortisation for the year                                                          (2 141)           (2 912)

     Balance at the end of the year                                                       9 923           11 158

13. FINANCIAL ASSET

     Credit default swap derivative                                                    179 549          232 512

     The fair value of the credit default swap derivative was determined
     by discounting the contractual stream of receipts on the long-term
     receivable using the zero swap curve at the valuation date.

14. LONG-TERM RECEIVABLE

     Opening balance                                                                 1 527 875        1 350 000
     Capitalisation of net income from partnership                                      73 789          177 875
     Disposal of partnership interest                                               (1 601 664)               –

     Closing balance                                                                           –      1 527 875

     The investment generated an interest return of 14,62% per annum and was secured by a forward sale
     agreement with Morgan Stanley Vaal LLC. Morgan Stanley Vaal LLC gave notice to exercise the forward sale
     agreement on the long-term receivable during the year. The settlement took place on 15 October 2009.
62   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                                                                                   GROUP
                                                                                                                            2010           2009
                                                                                                                           R’000          R’000

              15. INVESTMENT IN
                  SUBSIDIARIES

                      Details of the Company’s subsidiaries at 31 March 2010 are as follows:

                      Shares at cost                                                                                      502 264       502 264

                      Total                                                                                               502 264       502 264


                                                                                                                            Proportion of
                                                                                                                          ownership interest
                                                                                                                             and voting
                                                                                                                             power held

                                                               Principal                               Place of               2010         2009
                      Name of subsidiary                       activity                                operation                %            %

                      Direct holdings
                      Bearing Man 1955 Limited                 Investment holding company              South Africa            100          100
                      Humulani Investments (Pty) Ltd*          Investment holding company              South Africa             80           80

                      Indirect holdings
                      Bearing Man (Botswana)
                        (Pty) Ltd                              Trading company                         Botswana                 80            80
                      Bearing Man (Namibia)
                        (Pty) Ltd                              Trading company                         Namibia                  80            80
                      Bearing Man (Swaziland)
                        (Pty) Ltd                              Trading company                         Swaziland                80            80
                      Bearing Man (Mozambique) LDA             Trading company                         Mozambique               80            80
                      Bearing Man (Zambia)
                        (Pty) Ltd                              Trading company                         Zambia                   80            80
                      Invicta Properties (Pty) Ltd             Property holding company                South Africa             80            80
                      Oscillating Systems Technology
                        Africa (Pty) Ltd                       Trading company                         South Africa             80            80
                      Mangold Turf Equipment
                        Company (Pty) Ltd                      Trading company                         South Africa             80            80
                      Disa Equipment (Pty) Ltd                 Trading company                         South Africa             80            80
                      Criterion Equipment (Pty) Ltd            Trading company                         South Africa             80             –
                      Goldquest International
                        Hydraulics SA (Pty) Ltd                Trading   company                       South   Africa           80            80
                      Humulani Marketing (Pty) Ltd             Trading   company                       South   Africa           80            80
                      Farmmac (Pty) Ltd                        Trading   company                       South   Africa           80            80
                      Tiletoria Cape (Pty) Ltd                 Trading   company                       South   Africa           48            48
                      Spring Lights 149 (Pty) Ltd              Trading   company                       South   Africa           48            48

                      * The 5% of the ordinary issued share capital of Humulani Investments (Pty) Ltd owned by the Humulani Investments Share
                        Incentive Trust has been consolidated in terms of SIC12. Refer to the Report of the Directors on page 37 of the 2010 Annual
                        Report for further details.
                                                                                      Invicta Holdings Limited • Annual report 2010   63




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                                                       GROUP
                                                                                                2010             2009
                                                                                               R’000            R’000

15. INVESTMENT IN SUBSIDIARIES               CONTINUED
     The Group acquired 100% of the share capital of Criterion Equipment
     (Pty) Ltd, effective 1 June 2009.
     A register containing details of the other direct and indirect subsidiaries is
     available for inspection during business hours at the registered office of the
     Company by members or their duly authorised agents.
     The Company’s attributable interest in the aggregate profits and losses
     (after taxation and minority interest) of its subsidiaries is as follows:

     Profits                                                                                  272 077        267 571
     Losses                                                                                        41          4 022

16. INVESTMENT IN ASSOCIATE
                                                                                                Proportion of
                                                                                              ownership interest
                                                                                                 and voting
                                                                                                 power held

                                         Principal                          Place of              2010          2009
     Name of associate                   activity                           operation               %             %

     Compact Computers Solutions
      (Pty) Ltd                          Trading company                    South Africa             40              –

     The Group acquired a 40% interest in Compact Computers Solutions (Pty) Limited, effective 1 April 2009.

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

                                                                                                       GROUP

                                                                                                  2010           2009
                                                                                                 R’000          R’000

     Total assets                                                                                2 018               –
     Total liabilities                                                                           1 406               –

     Net assets                                                                                     612              –

     Group’s share of net assets of associate
     Revenue for the year                                                                       17 890               –
     Profit for the year                                                                         1 599               –

     Group’s share of profits of associate                                                          639              –

     Reconciliation of carrying amount:
     Acquisition of associate                                                                    2 080               –
     Equity accounted earnings, net of taxation                                                    639               –
     Dividends received                                                                           (600)              –

     Carrying value at the end of the year                                                       2 119               –
64   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                                 GROUP                   COMPANY

                                                                              2010          2009         2010       2009
                                                                             R’000         R’000        R’000      R’000

              17. LOANS TO SUBSIDIARIES

                      Bearing Man 1955 Limited                                    –              –    223 872   141 894
                      Humulani Investments (Pty) Limited                          –              –    177 264   112 587

                                                                                  –              –    401 136   254 481

                      The loans are unsecured, bear no interest and no
                      fixed terms of repayment have been negotiated.

              18. INVENTORIES

                      Merchandise                                        1 358 838     1 790 555            –          –
                      Work-in-progress                                      38 932         5 949            –          –
                      Obsolescence provision                               (98 975)     (150 591)           –          –

                      Total                                              1 298 795     1 645 913            –          –

                      Inventory carried at net
                        realisable value                                  159 151        107 118            –          –

                      Inventory write-down expensed                          3 062         4 666            –          –

                      Inventory recognised in the income statement       2 886 154     3 417 181            –          –

              19. TRADE AND OTHER RECEIVABLES

                      Trade receivables                                   598   856      599   890          –          –
                      Provision for doubtful debts                        (39   925)     (35   827)         –          –
                      Prepayments                                           3   367       45   312        121          –
                      Other receivables                                   108   681       78   731      7 025      7 008

                      Total                                               670 979        688 106        7 146      7 008

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

                      Movement in provision for
                       doubtful debt
                      Opening balance                                      35 827         18 231            –          –
                      Acquisition of subsidiaries                          11 583          7 294            –          –
                      Amounts written off during the year, net
                       of recoveries                                        (1 487)       (5 380)           –          –
                      Net provision (released) raised during the year       (5 998)       15 682            –          –

                      Closing balance                                      39 925         35 827            –          –
                                                                                     Invicta Holdings Limited • Annual report 2010   65




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                   GROUP                        COMPANY

                                                                2010          2009             2010             2009
                                                               R’000         R’000            R’000            R’000

19. TRADE AND OTHER RECEIVABLES
     CONTINUED

     Trade receivables past due and not impaired
     All past due receivable balances have been
     assessed for recoverability and it is believed
     that their credit quality remains intact. An
     ageing analysis of these past due trade
     receivables, is as follows:
     60 days                                                   4 754        11 087                 –                 –
     90 days                                                   2 343         5 180                 –                 –
     More than 120 days                                            –         4 414                 –                 –

     Total                                                     7 097        20 681                 –                 –

     Trade receivables past due and impaired

     60 days                                                   1 280         3 164                 –                 –
     90 days                                                  12 349         7 942                 –                 –
     More than 120 days                                       26 296        24 721                 –                 –

     Total                                                    39 925        35 827                 –                 –

20. ORDINARY SHARE CAPITAL

     Authorised
     134 000 000 (2009: 134 000 000)
      ordinary shares of 5 cents each                          6 700         6 700            6 700            6 700

     Issued
     74 480 555 (2009: 74 480 555)
       ordinary shares of 5 cents each                         3 724         3 724            3 724            3 724


                                                             Number of shares              Number of shares

                                                                2010         2009              2010             2009
                                                                 ‘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.                        63 288        63 199          63 288            61 297

     At the Company’s annual general meeting held on 31 July 2009, a special resolution was passed giving the
     directors general authority to repurchase shares not exceeding 20% of the issued share capital on the open
     market. This authority remains in force until the next annual general meeting.
66   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                                               GROUP                        COMPANY

                                                                                            2010              2009          2010           2009
                                                                                           R’000             R’000         R’000          R’000

              21. SHARE PREMIUM

                      The ordinary share premium is made up as follows:

                      Balance at the end of the year                                    282 715            282 715      282 715         282 715

              22. TREASURY SHARES

                      3 768 261 (2009: 3 679 062) ordinary shares
                       of 5 cents each                                                      (188)             (184)             –              –
                      Share premium                                                      (96 382)          (94 063)             –              –

                      Balance at the end of the year                                     (96 570)          (94 247)             –              –

              23. ORDINARY DIVIDENDS*
                      Final
                      85 cents paid on 13 July 2009 (2009: 91 cents)
                       to shareholders registered in the books of the
                       Company on 10 July 2009                                            63 308            67 777       63 308          67 777

                      Interim
                      49 cents paid on 7 December 2009 (2009: 53 cents)
                       to shareholders registered in the books of the
                       Company on 4 December 2009                                         36 496            39 475       36 496          39 475

                      Dividends received on treasury shares                               (4 966)           (3 567)             –              –

                      Total                                                               94 838           103 685       99 804         107 252

                      * In accordance with IAS 10 the final dividend of 102 cents per share (2009: 85 cents) proposed by the directors has not been
                      reflected in the financial statements as it had not been declared at the year-end.
                                                                                     Invicta Holdings Limited • Annual report 2010   67




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                   GROUP                        COMPANY

                                                                2010          2009             2010             2009
                                                               R’000         R’000            R’000            R’000

24. LONG-TERM BORROWINGS

     24.1 Secured borrowings
          Finance lease agreements                            27 368        10 073                 –                 –
          The lease agreements are repayable
          between 36 and 60 months and bear
          interest at fixed rates between 11%
          and 13,8% per annum. The leases are repaid
          in equal monthly instalments.
          No arrangements have been entered
          into for contingent rental payments. The
          borrowings are secured by certain motor
          vehicles and golf cars as detailed in note 9.2.

           Mortgage bonds                                    125 620       108 549                 –                 –
           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.

           Debentures                                       1 195 100   1 195 100                  –                 –
           The debentures bear interest at 12,5% per
           annum and are redeemable in semi-annual
           instalments from 8 August 2011 to
           8 February 2016. The rights of the debenture
           holders to the repayment of interest and
           capital are subordinated in favour of the
           claims of the creditors of certain of the
           Group’s companies. The debentures are
           secured by certain preference share
           investments by means of a credit default
           swap transaction entered into with
           Standard Bank of South Africa Limited
           as detailed in note 10.

           Serec Capital (Pty) Limited loan                 1 686 001   1 529 269                  –                 –
           The loan bears interest at a compounded
           quarterly fixed rate of 11,73% per annum.
           The fixed date of repayment is 15 August
           2018. The Group may however elect to
           repay the loan at an earlier date without
           premium or penalty. The loan is secured
           by a credit default swap as referred to in
           note 13.

           Balance carried forward                          3 034 089   2 842 991                  –                 –
68   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                                     GROUP                    COMPANY

                                                                                  2010          2009          2010         2009
                                                                                 R’000         R’000         R’000        R’000

                             Balance brought forward                         3 034 089     2 842 991             –             –

                      24.2 Unsecured borrowings

                             Other borrowings                                   10 857         9 193             –             –

                             The amounts payable are unsecured,
                             interest-free and no fixed repayment terms
                             have been negotiated. The loans are
                             long-term in nature.

                             Invicta Share Trust loan                                 –            –          688           688
                             The loan is unsecured, interest-free and
                             no fixed repayment terms have been
                             negotiated. The loan is long-term in nature.

                             Total borrowings                                3 044 946     2 852 184          688           688
                             Less: Current portion of long-term
                              borrowings disclosed in current liabilities      (18 056)       (5 546)            –             –

                             Total long-term borrowings                      3 026 890     2 846 638          688           688

                             Borrowings are repayable as follows:
                             On demand or within one year                       18 056         5 546            –             –
                             In second to fifth year inclusive                 145 789       236 452            –             –
                             After five years                                2 881 101     2 610 186          688           688

                             Total                                           3 044 946     2 852 184          688           688

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

              25. FINANCIAL LIABILITIES

                      Put option/credit default swap derivative                179 549       232 512             –             –
                      Interest rate swap derivative                              2 619         3 922             –             –

                                                                               182 168       236 434             –             –

                      The fair values of the put option/credit default swap derivative and the interest rate swap derivative were
                      determined by discounting the contractual stream of payments using the zero swap curve at the valuation
                      date.
                                                                                     Invicta Holdings Limited • Annual report 2010   69




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                  GROUP                         COMPANY

                                                               2010          2009              2010             2009
                                                              R’000         R’000             R’000            R’000

26. TRADE AND OTHER PAYABLES

     Trade payables                                         561 786       959 854                 –                –
     Other payables                                         373 007       215 071             2 431            2 440
     Deferred income                                         12 984        16 230                 –                –

     Total                                                  947 777     1 191 155             2 431            2 440

27. PROVISIONS

     Employee benefit provisions                             42 885        86 439                  –                 –
     Warranties and service provisions                       29 686        16 971                  –                 –

     Total                                                   72 571       103 410                  –                 –

     Movements in provisions
     Employee benefit provisions
     Balance at the beginning of the year                     86 439       47 999                  –                 –
     (Credited) charged to income                            (46 024)      36 038                  –                 –
     Acquisition of subsidiaries                               2 470        2 402                  –                 –

     Balance at the end of the year                          42 885        86 439                  –                 –

     Warranties and service provisions
     Balance at the beginning of the year                    16 971        14 743                  –                 –
     Charged (credited) to income                            10 884        (1 556)                 –                 –
     Acquisition of subsidiaries                              1 831         3 784                  –                 –

     Balance at the end of the year                          29 686        16 971                  –                 –

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

28. LOAN FROM SUBSIDIARY

     Humulani Marketing (Pty) Limited                              –            –          218 344          117 541

     Total                                                         –            –          218 344          117 541

     The loan is unsecured, bears no interest and no fixed terms of repayment have been negotiated.
70   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                                   GROUP                   COMPANY

                                                                                2010          2009        2010        2009
                                                                               R’000         R’000       R’000       R’000

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

                      Profit before taxation                                 429 544       474 752     147 013     172 553
                      Adjusted for:
                      Depreciation                                            30 215        25 700            –           –
                      Amortisation of intangible assets                        2 141         2 912            –           –
                      Impairment of property, plant and equipment                190         4 000            –           –
                      Interest rate swap gain                                 (1 303)            –            –           –
                      Net profit on disposal of property, plant
                        and equipment                                          (3 732)       (3 232)          –           –
                      Profit on disposal of investment                              –          (232)          –           –
                      Finance costs                                           432 886       382 719           2          30
                      Dividends received                                     (210 056)     (134 270)   (146 034)   (171 952)
                      Share of profits of associate                              (639)            –           –           –
                      Interest received                                      (198 442)     (225 845)        (23)        (68)
                      Negative goodwill on acquisition of subsidiaries         (7 952)            –           –           –
                      Goodwill impairment                                       3 442           638           –           –
                      Currency translation of foreign operations               (7 649)       (3 079)          –           –
                      Revaluation reserve reversed on liquidation of
                        Group company                                         (3 169)            –            –           –
                      Share appreciation rights charge                        22 045        19 270            –           –

                      Cash generated before movements in
                       working capital                                       487 521        543 333         958        563
                      Working capital changes:                               102 705       (455 361)       (147)       410

                      Decrease (increase) in inventories                     391 825       (393 269)          –          –
                      Decrease (increase) in trade and other receivables      60 925         69 292        (138)       294
                      (Decrease) increase in trade and other payables
                       and provisions                                        (350 045)     (131 384)         (9)       116

                      Cash generated from operations                         590 226        87 972         811         973

              30. DIVIDENDS PAID TO
                  GROUP SHAREHOLDERS

                      Amounts unpaid at the beginning of the year                565           507         565         507
                      Final dividend paid 13 July 2009 (2009: 7 July 2008)    63 308        67 777      63 308      67 777
                      Interim dividend paid 7 December 2009
                        (2009: 8 December 2008)                               36 496        39 475      36 496      39 475
                      Dividends received on treasury shares                   (4 966)       (3 567)          –           –
                      Amounts unpaid at the end of the year                   (2 967)         (565)       (639)       (565)

                      Total                                                   92 436       103 627      99 730     107 194
                                                                                       Invicta Holdings Limited • Annual report 2010   71




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                   GROUP                          COMPANY

                                                                 2010         2009               2010             2009
                                                                R’000        R’000              R’000            R’000

31. TAXATION PAID (REFUNDED)

     Amounts (prepaid) unpaid at the beginning
      of the year                                             (35 405)      25   925               34               34
     Acquisition of subsidiaries                                    –        5   526                –                –
     Charged to the income statement                           73 748      127   589              368              567
     Amounts (unpaid) prepaid at the end of the year          (13 014)      35   405             (665)             (34)

     Total                                                     25 329      194 445               (263)             567

32. CASH AND CASH EQUIVALENTS

     Bank and cash balances                                   260 553       125 061           12 681            11 134
     Bank overdrafts and bankers’ acceptances                 (45 846)     (256 520)               –                 –

     Total                                                    214 707      (131 459)          12 681            11 134


                                                                                                    GROUP

                                                                                                Bank          Trading
                                                                                                R’000           R’000

     Banking and trading facilities
     Gross facility balances                                                                 443 964        1 544 009
     Facilities utilised                                                                       8 981          636 844

     Facilities available                                                                    434 983          907 165

     These facilities are callable on demand.

     The directors are of the view that there are adequate facilities in place to operate for the next twelve
     months.

33. CONTINGENT LIABILITIES
     The Group has guaranteed certain finance facilities granted to customers of ABSA Bank. At the year-end, the
     finance facilities guaranteed were R313 233 (2009: R1 428 112).
72   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                   Audit and
                                                                Remuneration            Salary        Retire-                          Total
                                                     Directors’   Committee                and         ment                          emolu-
                                                          fees          fees          benefits       benefits         Bonus           ments
                                                         R’000         R’000             R’000         R’000           R’000          R’000

              34. DIRECTORS’
                  EMOLUMENTS
                      2010
                      Executive directors
                      C Barnard                              –               –           1   099         170           1 200           2   469
                      A Goldstone                            –               –           1   400         201           5 000           6   601
                      AM Sinclair                            –               –           1   656         103             470           2   229
                      CE Walters                             –               –           1   871         166             498           2   535

                                                             –               –           6 026           640           7 168         13 834

                      Non-executive directors
                      CH Wiese                            635               22                 –            –              –               657
                      J Mthimunye                          84               80                 –            –              –               164
                      DI Samuels                          332              262                 –            –              –               594
                      LR Sherrell                          63                –                 –            –              –                63

                                                         1 114             364                 –            –              –           1 478

                      Total                              1 114             364           6 026           640           7 168         15 312

                      * With effect from 31 March 2009, a portion of the cumulative total of the bonuses paid to the directors will be deducted
                      from the benefit accrued to the directors under the long-term bonus share incentive right (“LBSIR”) scheme. The relevant
                      percentages and cumulative portion of the bonuses to be deducted from the benefits accrued are reflected below:


                                                                                                                               Cumulative
                                                                                                                               bonus paid
                                                                                                                                subject to
                                                                                                                                deduction
                                                                                                                               from LBSIR
                                                                                                     Relevant              scheme benefit
                                                                                                   percentage                            R

                      C Barnard                                                                           20                        480 000
                      A Goldstone                                                                         70                     14 984 900
                      AM Sinclair                                                                         40                      1 200 000
                      CE Walters                                                                          40                      1 297 200
                                                                                                 Invicta Holdings Limited • Annual report 2010   73




Notes to the annual financial statements continued
for the year ended 31 March 2010




34. DIRECTORS’ EMOLUMENTS                  CONTINUED

                                                Audit and
                                             Remuneration                Salary        Retire-                             Total
                                  Directors’   Committee                    and         ment                             emolu-
                                       fees          fees              benefits       benefits          Bonus             ments
                                      R’000         R’000                 R’000         R’000            R’000            R’000
     2009
     Executive directors
     C Barnard                              –                –           1   057           178           2   400*          3   635
     A Goldstone                            –                –           1   463           216           5   580*          7   259
     AM Sinclair                            –                –           1   304            98           3   000*          4   402
     CE Walters                             –                –           1   866           161           3   243*          5   270

                                            –                –           5 690             653          14 223            20 566

     Non-executive directors
     CH Wiese                            540                20                 –             –                 –               560
     AK Masuku                             –                 –                 –             –                 –                 –
     J Mthimunye                          40                54                 –             –                 –                94
     DI Samuels                          304               198                 –             –                 –               502
     RE Sherrell                          80                 –                 –             –                 –                80

                                         964               272                 –             –                 –           1 236
     Total                               964               272           5 690             653          14 223            21 802

     * With effect from 31 March 2008, a portion of the cumulative total of the bonus paid to the directors will be deducted
     from the benefit accrued to the directors under the long-term bonus share incentive right (“LBSIR”) scheme. The relevant
     percentages and cumulative portion of the bonuses to be deducted from the benefits accrued are reflected below:


                                                                                                                   Cumulative
                                                                                                                   bonus paid
                                                                                                                    subject to
                                                                                                                    deduction
                                                                                                                   from LBSIR
                                                                                     Relevant                  scheme benefit
                                                                                   percentage                                R

     C Barnard                                                                              20                         480 000
     A Goldstone                                                                            70                      11 484 900
     AM Sinclair                                                                            40                       1 200 000
     CE Walters                                                                             40                       1 297 200


                                                                          Number of
                                                  Total number                 rights      Weighted
                                                      of grants            awarded          average
                                                      awarded                 during       incentive                       Grant
     Share appreciation rights awarded                  to date             the year            cost                        date

     2010
     A Goldstone                                       4   000   000         1 000   000         4,44          13   March   2009
     AM Sinclair                                       1   399   375           400   000         4,44          13   March   2009
     C Barnard                                         1   254   000           400   000         4,44          13   March   2009
     CE Walters                                        1   450   000           400   000         4,44          13   March   2009

     2009
     A Goldstone                                       3 000     000         1 000   000         7,13          14   March   2008
     AM Sinclair                                         999     375           360   000         7,13          14   March   2008
     C Barnard                                           854     000           300   000         7,13          14   March   2008
     CE Walters                                        1 050     000           500   000         7,13          14   March   2008
74   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




                                                                                        GROUP              COMPANY
                                                                                      2010         2009    2010       2009
                                                                                     R’000        R’000   R’000      R’000

              35. RETIREMENT BENEFITS

                      The Group contributes to a defined contribution
                      pension plan and a defined contribution provident
                      plan which are governed by the Pension Funds Act,
                      1956. No actuarial valuation of the plans is required.
                      All staff are members of a fund and the costs of
                      providing retirement benefits are charged to the
                      income statement as they are incurred. Refer to
                      note 4 for contributions made to retirement funds
                      during the year.

              36. COMMITMENTS

                      Commitments in respect of unexpired
                       rental agreements for premises:
                      – Payable within twelve months                                30 861       41 964     54        210
                      – Payable thereafter                                          43 618      154 500       –        54

                                                                                    74 479      196 464     54        264

                      Commitments in respect of unexpired rental
                       agreements for motor vehicles:
                      – Payable within twelve months                                12 624        8 485       –          –
                      – Payable thereafter                                          14 904       11 678       –          –

                                                                                    27 528       20 163       –          –

                      Commitments in respect of unexpired rental
                       agreements for office equipment:
                      – Payable within twelve months                                  231          550        –          –
                      – Payable thereafter                                            113         1 201       –          –

                                                                                      344         1 751       –          –

                      Commitments in respect of contracted
                       capital expenditure                                            988         7 026       –          –

                      Expenditure will be financed from existing cash facilities.
                                                                                                Invicta Holdings Limited • Annual report 2010   75




Notes to the annual financial statements continued
for the year ended 31 March 2010




37. FINANCIAL RISK MANAGEMENT

     The Group is considered to be exposed to interest rate, credit, liquidity and foreign currency risk. The
     Company has limited exposure to interest rate, credit and foreign currency risk.

     Interest rate management
     The interest rate profile of total borrowings is as follows:

                                                     Redemption                  Interest                 2010             2009
     Description                    Currency             period              rate % p.a.                 R’000            R’000

     Bank overdrafts                     ZAR                  N/A         8,25 – 10,50                 45 846          256 520
     Fixed rate borrowings               ZAR          2006 – 2012        11,00 – 13,80              1 222 468        1 205 173
     Variable rate borrowings            ZAR          2006 – 2017         8,50 – 14,10              1 804 422        1 641 465

     The Group is exposed to interest rate risk on its variable rate borrowings. The exposure to interest rate
     risk is managed using derivatives, where it is considered appropriate, and through a closely monitored
     cash management system. The impact of a change in the interest rate of 2% will have an effect of
     approximately R36 million (2009: R33 million) on the income statement.

     Credit risk management
     Potential areas of credit risk consist of trade accounts receivable and short-term cash investments. Trade
     accounts receivable consist mainly of a large, widespread customer base. Group companies monitor the
     financial position of their customers on an ongoing basis. Where considered appropriate, use is made of
     credit guarantee insurance. The granting of credit is controlled by application and account limits. Provision
     is made for specific bad debts and at the year-end management did not consider there to be any material
     credit risk exposure that was not already covered by credit guarantee or a bad debt provision (refer to note
     19 for further detail in this regard). It is Group policy to deposit short-term cash investments with only the
     major banks.

     Liquidity risk management
     The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised
     borrowing facilities are maintained.

     The following table details the Group’s contractual maturities on its financial liabilities (excluding the
     put option/credit default swap derivatives and interest rate swap derivatives):

                                                               Less than            2 to 5        More than
                                                                  1 year            years           5 years               Total
                                                                   R’000            R’000             R’000               R’000

     2010
     Mortgage bonds                                                  2 804         65 815              57 001          125 620
     Serec Capital loan                                                  –                  –       1 686 001        1 686 001
     Debentures                                                          –        566 477             628 623        1 195 100
     Finance lease liabilities and unsecured borrowings             15 252          8 736                3 380           27 368
     Trade and other payables                                   947 777                     –                 –        947 777

                                                                965 833           641 028           2 375 005        3 981 866

     2009
     Mortgage bonds                                                   331           1 571             106 647          108 549
     Serec Capital loan                                                  –                  –       1 529 269        1 529 269
     Debentures                                                          –        222 289             972 811        1 195 100
     Finance lease liabilities and unsecured borrowings              5 215         12 592                1 459           19 266
     Trade and other payables                                 1 191 155                     –                 –      1 191 155

                                                              1 196 701           236 452           2 610 186        4 043 339
76   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




              37. FINANCIAL RISK MANAGEMENT                     CONTINUED


                      Foreign currency risk management
                      All the Group’s monetary assets and liabilities are denominated in South African Rand, with the exception
                      of those assets and liabilities of BMG foreign entities which are fairly insignificant from a Group perspective.

                      The Group utilises currency derivatives to eliminate or reduce the exposure to its foreign currency
                      denominated assets and liabilities, and to hedge future transactions. The Group has entered into certain
                      forward exchange contracts in various currencies which do not relate to specific liabilities appearing on the
                      balance sheet at the year-end. These contracts will be utilised for settlement of orders already placed on
                      suppliers and which are due for payment in the coming year. It is the Group’s policy not to speculate in
                      foreign exchange contracts.

                      At year-end, open forward exchange contracts are marked-to-market and the profits and losses arising on
                      the contracts are recognised in the income statement. The estimated net fair values have been
                      determined at the year-end, using available market information and appropriate valuation methodologies.

                      As at year-end, no uncovered foreign exchange denominated transactions were in existence.

                      The forward exchange contracts in place at the year-end, are as follows:

                                                                                                Foreign      Average
                                                                                               currency     exchange           Rand
                                                                                                   ’000          rate           ’000

                      2010
                      US Dollar                                                                  40 490        7,6181       308 455
                      Euro                                                                       20 188       10,8838       219 723
                      Yen                                                                      786 602        11,6117        67 742
                      Australian Dollar                                                              19        5,6842           108
                      Singapore Dollar                                                              327        1,0734           351
                      British Pound                                                                 112       11,8036         1 322
                      Swiss Franc                                                                    17        7,5882           129

                      2009
                      US Dollar                                                                  43 847       10,5719       463 544
                      Euro                                                                       21 141       13,5172       285 768
                      Yen                                                                    1 065 974         8,8864       119 955
                      Australian Dollar                                                               6        6,8333            41
                      Singapore Dollar                                                                6        6,1667            37
                      British Pound                                                                  63       13,5714           855
                      Swiss Franc                                                                    29        8,5172           247

                      The forward exchange contracts mature within twelve months.
                                                                                    Invicta Holdings Limited • Annual report 2010   77




Notes to the annual financial statements continued
for the year ended 31 March 2010




37. FINANCIAL RISK MANAGEMENT                  CONTINUED

     Capital risk management
     Capital is managed to ensure that operations are able to continue as a going concern, whilst maximising
     return to stakeholders through an appropriate debt and equity structure. The capital structure of the Group
     consists of debt, which includes borrowings, cash and cash equivalents, preference shares, debentures, a
     put option/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 balance sheet 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

                                                                                              2010             2009
                                                                                             R’000            R’000

     Categories of financial instruments
     Financial assets
     Investments at cost or fair value
     Financial investments                                                              2 880 087        1 195 100

     Financial assets at fair value
     Financial asset                                                                      179 549          232 512

     Loans and receivables at amortised cost
     Long-term receivable                                                                       –        1 527 875
     Long-term loans                                                                        6 721                –
     Trade and other receivables                                                          667 612          688 106
     Bank balances and cash                                                               260 553          125 061

                                                                                        3 994 522        3 768 654

     Financial liabilities
     Financial liabilities at fair value
     Financial liabilities                                                                182 168          236 434

     Financial liabilities at amortised cost
     Borrowings                                                                         3 044 946        3 083 072
     Trade and other payables                                                             947 777        1 191 155
     Bank overdrafts and bankers’ acceptances                                              45 846          256 520

                                                                                        4 220 737        4 767 181
78   Invicta Holdings Limited • Annual report 2010




              Notes to the annual financial statements continued
              for the year ended 31 March 2010




              38. DIRECTORS’ INTERESTS IN THE SHARES OF THE COMPANY

                                                                                            Number of shares held

                                                                                        2010                       2009

                                                                                   Direct       Indirect      Direct       Indirect
                                                                                 interest       interest    interest       interest

                      C Barnard                                                  100 000         25 000     100 000         25 000
                      A Goldstone                                                588 966       3 749 008    588 966       5 023 686
                      DI Samuels                                                 800 460       4 000 000    800 460       4 000 000
                      RE Sherrell                                            3 760 018         6 253 400   3 960 018      6 253 400
                      AM Sinclair                                                137 000              –     145 000              –
                      CE Walters                                                 300 000              –     300 000              –
                      CH Wiese                                                         –    25 113 992             –   25 093 992

                      No material changes in the above shareholdings have been reported between 31 March 2010 and the date
                      of this report.

              39. RELATED PARTY TRANSACTIONS

                      Transactions between the Company and its subsidiaries, which are related parties, are limited to dividends
                      received from subsidiaries of R97 million (2009: R122 million).

                      Remuneration of key management personnel
                      The remuneration of the directors of the subsidiaries, who are the key management personnel of the Group,
                      is set out below:


                                                                                                                   GROUP
                                                                                                               2010           2009
                                                                                                              R’000          R’000

                      Short-term employee benefits                                                           33 521         23 930
                      Retirement benefits                                                                     1 279          1 114

                                                                                                             34 800         25 044

                      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 24 respectively). During the current and prior year, Bravura
                      provided financial services to the counterparty in the transaction giving rise to the investments and
                      derivative instruments (refer notes 10, 13 and 14) and borrowings (refer notes 24 and 25).
                                                                                    Invicta Holdings Limited • Annual report 2010   79




Notes to the annual financial statements continued
for the year ended 31 March 2010




                                                                                                 GROUP
                                                                                              2010             2009
                                                                                             R’000            R’000

40. ACQUISITION OF SUBSIDIARIES

     Acquisition of subsidiaries during the current year

     The significant acquisition included below is the acquisition of 100% of the
     share capital of Criterion Equipment (Pty) Limited, effective 1 June 2009.

     Fair value of assets acquired:

     Property, plant and equipment                                                         48   091         20   395
     Other assets                                                                          77   398        208   148
     Deferred tax                                                                           2   069          5   605
     Long-term borrowings                                                                 (15   658)        (7   585)
     Other liabilities                                                                    (75   828)      (164   234)
     Minority interest                                                                     (1   510)               –

     Net asset value                                                                       34 562            62 329
     Minority interest acquired in existing subsidiary                                          –             9 942

     Fair value of net assets acquired                                                     34 562            72 271
     Cash outflow on acquisitions                                                          32 964            89 323

     Net goodwill                                                                           (1 598)          17 052

     Positive goodwill                                                                       6 354           17 052
     Negative goodwill                                                                      (7 952)               –

     Profit after tax since acquisition date included in the consolidated
       results for the year                                                                10 350            25 008
     Revenue since acquisition date included in the consolidated results
       for the year                                                                       202 506          329 616
     (Loss) profit after tax should the business combinations have been
       included for the entire year                                                       (33 270)           29 825
     Revenue should the business combinations have been included
       for the entire year                                                                189 865          372 910
80   Invicta Holdings Limited • Annual report 2010




              Share information
              as at 31 March 2010




              SHAREHOLDER SPREAD

                                                                   Number of               Number
                                                                 shareholding       %     of shares               %

                        1 – 1 000 shares                                 902     54,93        279   647         0,38
                   1 001 – 10 000 shares                                 520     31,67    1   954   217         2,62
                10 001 – 100 000 shares                                  154      9,38    5   048   034         6,78
              100 001 – 1 000 000 shares                                  51      3,11   15   806   487        21,22
              1 000 001 shares and over                                   15      0,91   51   392   170        69,00

                                                                        1 642   100,00   74 480 555          100,00

              DISTRIBUTION OF SHAREHOLDERS
              Banks                                                         8     0,49    1 801     362         2,42
              Close corporations                                           21     1,28       88     285         0,12
              Endowment funds                                               7     0,43      305     490         0,41
              Individuals                                               1 283    78,14   13 848     266        18,59
              Insurance companies                                           8     0,49    1 171     711         1,57
              Investment companies                                         13     0,79    3 477     848         4,67
              Medical aid schemes                                           2     0,12       14     337         0,02
              Mutual funds                                                 48     2,92   10 248     161        13,76
              Nominees and trusts                                         135     8,22   23 346     859        31,34
              Other corporations                                           11     0,67       98     950         0,13
              Own holdings                                                  1     0,06    3 768     261         5,06
              Private companies                                            44     2,68   12 204     712        16,39
              Public companies                                              6     0,37    1 337     165         1,80
              Retirement funds                                             55     3,35    2 769     148         3,72

                                                                        1 642   100,00   74 480 555          100,00

              PUBLIC AND NON-PUBLIC SHAREHOLDERS

              Public shareholders                                       1 615    98,36   25 884 450            34,75
              Non-public shareholders                                      27     1,64   48 596 105            65,25

              Directors and associates of the Company holdings            26      1,58   44 827 844            60,19
              Treasury stock                                               1      0,06    3 768 261             5,06

                                                                        1 642   100,00   74 480 555          100,00

              Beneficial shareholders holding 5% or more
              Titan Shareholders                                                         15   066   992        20,23
              Dorsland Diamante (Pty) Limited                                            10   027   000        13,46
              The Sherrell Family Trust                                                   6   253   400         8,40
              RE Sherrell                                                                 3   760   018         5,05

                                                                                         35 107 410            47,14

              JSE LIMITED STATISTICS

                                                                                                2010           2009

              Ordinary shares
              Traded                                                                     10 127 369       13 094 880
              High (cents)                                                                    2 900            3 080
              Low (cents)                                                                     2 000            1 825
              Market price at year-end (cents)                                                 2 879          2 000
                                                Invicta Holdings Limited • Annual report 2010   81




Shareholders’ diary



Financial year-end                                            31 March 2010

Declaration of final dividend                                    25 May 2010

Publication of financial results for the year                    25 May 2010

Last day to trade “CUM” dividend                                   2 July 2010

Trading “EX” dividend commences                                    5 July 2010

Record date                                                        9 July 2010

Dividends payable                                                12 July 2010

Annual report posted to shareholders                            30 June 2010

Annual general meeting                                           29 July 2010

Publication of interim results                               November 2010
82   Invicta Holdings Limited • Annual report 2010




              Notice of annual general meeting of shareholders



              Invicta Holdings Limited                                        determined over the 5 (five) trading days
              (Registration number 1966/002182/06)                            immediately preceding the date of the repurchase
              (Incorporated in the Republic of South Africa)                  of such ordinary shares by the Company;
              Share code: IVT • ISIN: ZAE000029773                        •   the acquisitions of ordinary shares in the
              (“Invicta” or “the Company” or “the Group”)                     aggregate in any one financial year do not exceed
                                                                              20% (twenty percent) of the Company’s issued
              NOTICE OF ANNUAL GENERAL MEETING                                ordinary share capital from the date of the grant
              OF SHAREHOLDERS FOR THE YEAR ENDED                              of this general authority;
              31 MARCH 2010                                               •   the Company and the Group are in a position to
              Notice is hereby given that the annual general                  repay their debt in the ordinary course of business
              meeting of shareholders of Invicta Holdings Limited             for the following year;
              will be held in the boardroom, Invicta Holdings             •   the consolidated assets of the Company, being
              Limited, 3rd Floor, Pepkor House, 36 Stellenberg Road,          fairly valued in accordance with International
              Parow Industria, Cape Town on Thursday, 29 July 2010            Financial Reporting Standards, are in excess of the
              at 12:00 for the following purposes:                            consolidated liabilities of the Company for the
                                                                              following year;
              Special Resolution 1                                        •   the ordinary capital and reserves of the Company
              To consider and if deemed fit, to pass with or without          and the Group are adequate for the next twelve
              amendment, the following resolution as a special                months;
                                                                          •   the available working capital is adequate to
              resolution:
                                                                              continue the operations of the Company and the
              “RESOLVED THAT, the Company and/or any subsidiary               Group in the following year;
              of the Company be and is hereby authorised by way of        •   upon entering the market to proceed with the
              a general approval as contemplated in sections                  repurchase, the Company’s Sponsor has complied
              85(2) and 85(3) of the Companies Act 61 of 1973, as             with its responsibilities contained in Section 2.12
              amended (“Existing Companies Act”) or as                        and Schedule 25 of the JSE Listings Requirements;
              contemplated in section 48 of the Companies Act 71 of
                                                                          •   after such repurchase the Company will still
              2008, as amended (“New Companies Act”) (the
                                                                              comply with paragraphs 3.37 to 3.41 of the JSE
              Existing Companies Act and the New Companies Act
                                                                              Listings Requirements concerning shareholder
              being hereinafter collectively referred to as “the Act”),
                                                                              spread requirements;
              to acquire from time to time any of the issued ordinary
                                                                          •   the Company or its subsidiaries will not repurchase
              shares of the Company, upon such terms and
              conditions and in such amounts as the directors of the          securities during a prohibited period as defined in
              Company may from time to time determine, but                    paragraph 3.67 of the JSE Listings Requirements;
              subject to the Articles of Association of the Company,      •   when the Company has cumulatively repurchased
              the provisions of the Act and the Listings                      3% of the initial number of the relevant class of
              Requirements of the JSE Limited (“JSE”), when                   securities, and for each 3% in aggregate of the
              applicable, and provided that:                                  initial number of that class acquired thereafter, an
              • the repurchase of securities will be effected                 announcement will be made; and
                  through the order book operated by the JSE              •   the Company only appoints one agent to effect
                  trading system and done without any prior
                                                                              any repurchase(s) on its behalf.”
                  understanding or arrangement between the
                  Company and the counterparty;                           Other disclosure in terms of the JSE Listings
              • this general authority shall only be valid until the      Requirements Section 11.26 and 11.23, required for
                  Company’s next annual general meeting, provided         special resolutions 1 and 2.
                  that it shall not extend beyond 15 (fifteen) months
                  from the date of passing of this special resolution;    The JSE Listings Requirements require the following
              • in determining the price at which the Company’s           disclosure, some of which are elsewhere in the annual
                  ordinary shares are acquired by the Company in          report of which this notice forms part as set out below:
                  terms of this general authority, the maximum            –   Directors and management – pages 4 and 5;
                  premium at which such ordinary shares may be            –   Major beneficial shareholders – page 80;
                  acquired will be 10% (ten percent) of the               –   Directors’ interests in ordinary shares – page 78;
                  weighted average of the market price at which               and
                  such ordinary shares are traded on the JSE, as          –   Share capital of the Company – page 65.
                                                                                     Invicta Holdings Limited • Annual report 2010   83




Notice of annual general meeting of shareholders
continued




Litigation statement                                      The Company may not enter the market to proceed

In terms of section 11.26 of the JSE Listings             with the repurchase until Invicta’s Sponsor, Deloitte &
Requirements, the directors, whose names are given        Touche Sponsor Services (Proprietary) Limited, has
on pages 4 and 5 of the annual report of which this       confirmed the adequacy of Invicta’s working capital
notice forms part, are not aware of any legal or          for the purposes of undertaking a repurchase of shares
arbitration proceedings, including proceedings that       in writing to the JSE.
are pending or threatened, that may have or have had
in the recent past, being at least the previous 12        Pursuant to a general repurchase other than shares
(twelve) months, a material effect on the Group’s         repurchased by one or more of the subsidiary
financial position.                                       companies to be held as treasury stock, application will
Directors’ responsibility statement                       be made to the JSE for the cancellation and delisting
                                                          of the shares in question. The cancellation of the
The directors, whose names are given on pages 4 and
                                                          shares will be effected by way of a reduction of the
5 of the annual report, collectively and individually
                                                          ordinary share capital and a reduction of the ordinary
accept full responsibility for the accuracy of the
information pertaining to this special resolution and     share premium.
certify that to the best of their knowledge and belief    Special Resolution 2
there are no facts that have been omitted which
would make any statement false or misleading, and         To consider and if deemed fit, to pass with or without
that all reasonable enquiries to ascertain such facts     amendment, the following resolution as a special
have been made and that these special resolutions         resolution:
contain all information required by law and the JSE
                                                          “RESOLVED THAT, the Company be and is hereby
Listings Requirements.
                                                          authorised by way of a specific approval as
Material changes                                          contemplated in sections 85(2) and 85(3) of the
Other than the facts and developments reported on in      Companies Act 61 of 1973, as amended (“Existing
the annual report, there have been no material            Companies Act”) or as contemplated in section 48 of
changes in the affairs or financial position of the       the Companies Act 71 of 2008, as amended (“New
Company and its subsidiaries since the date of            Companies Act”) (the Existing Companies Act and the
signature of the audit report and the date of this        New Companies Act being hereinafter collectively
notice.                                                   referred to as “the Act”), to acquire from time to time
The reason for and the effect of the special resolution   any or all of the issued ordinary shares of the
is to grant to the Company a general approval in terms    Company, held by Humulani Marketing (Pty) Limited,
of the Companies Act for the acquisition by the           upon such terms and conditions and in such amounts
Company of its own shares, which general approval         as the directors of the Company may from time to time
shall be valid until the earlier of the next annual       determine, but subject to the Articles of Association of
general meeting of the Company or the variation or
                                                          the Company and the provisions of the Act, when
revocation of such general authority by special
                                                          applicable and provided that:
resolution by a subsequent general meeting of the
                                                          •   this specific authority shall only be valid until the
Company, provided that the general authority shall
                                                              Company’s next annual general meeting, provided
not extend beyond 15 (fifteen) months from the date
of this special resolution.                                   that it shall not extend beyond 15 (fifteen) months
                                                              from the date of passing of this special resolution;
General authority for the repurchase of shares on the
                                                          •   the repurchase price not be lower than the cost to
open market
                                                              the subsidiary of acquiring the shares and will not
The board, at the date of this annual report, has no          be more than 10% higher than the weighted
definite intention of repurchasing shares in Invicta on       average price (R25,63) at which the shares were
the open market of the JSE. It is, however, proposed,         acquired;
and the board believes it to be in the best interest of   •   the maximum number of shares that are to be
Invicta, that shareholders pass a special resolution          repurchased not to exceed 3 768 261;
granting the Company a general authority to acquire       •   the Company and the Group are in a position to
its own shares and permit subsidiary companies of             repay their debt in the ordinary course of business
Invicta to acquire shares in the Company.                     for the following year;
84   Invicta Holdings Limited • Annual report 2010




              Notice of annual general meeting of shareholders
              continued




              •    the consolidated assets of the Company, being         commercial manager. In 1998 he joined the Invicta
                   fairly valued in accordance with International        Group as financial manager, in 1999 he was appointed
                   Financial Reporting Standards, are in excess of the   director of CSE Equipment Company (Pty) Limited and
                   consolidated liabilities of the Company for the       in 2002 company secretary of Invicta Holdings Limited.
                   following year;                                       On 7 June 2007 he was appointed as executive director
              •    the ordinary capital and reserves of the Company      of Invicta Holdings Limited.

                   and the Group are adequate for the next twelve        Ordinary Resolution 3
                   months;                                               To re-elect as director Mr AM Sinclair who retires in
              •    the available working capital is adequate to          terms of the Company’s Articles of Association but,
                   continue the operations of the Company and the        being eligible, offers himself for re-election.
                   Group in the following year.
                                                                         In 1982 Mr Sinclair joined JI Case and in 1986 he was
              The shares which the Company wishes to obtain              appointed branch manager. In 1989 he joined CSE
              specific authority to repurchase are treasury shares       Equipment Company (Pty) Limited and in 1993 he was
              held at subsidiary level, which are currently eliminated   appointed a divisional managing director. In 1998
              on consolidation and are thus treated as cancelled         appointed managing director of CSE and in September
              from a financial reporting perspective to shareholders     2006 appointed as an alternate director of Invicta
              and any internal repurchase will therefore have no         Holdings Limited. On 7 June 2007 he was appointed
              financial effect.                                          executive director of Invicta Holdings Limited.
              Once shares have been repurchased in terms of this         Ordinary Resolution 4
              authority, these shares will be cancelled.
                                                                         To elect as director Mr LR Sherrell who was an
              Reason and effect                                          alternate to Mr RE Sherrell who now retires.
                                                                         Mr LR Sherrell will now therefore take up the position
              In terms of the Company’s specific authority to
                                                                         of non-executive director and no longer as alternate
              repurchase shares granted at all the annual general
                                                                         director.
              meetings held for the years ended 2008, 2009 and
              2010, Invicta, through its wholly-owned subsidiary         Mr LR Sherrell was appointed as alternate director to
              Humulani Marketing (Pty) Limited has over the years        Mr RE Sherrell on 27 May 2009 and has been
              purchased 3 768 261 shares in the company which            nominated as director of Invicta Holdings Limited with
              were held as “treasury shares”.                            effect from the 2010 annual general meeting, upon
                                                                         the retirement of Mr RE Sherrell. Mr LR Sherrell
              Source of funding for the repurchase will be from          studied commerce at UCT and has been involved in the
              within the Group.                                          hospitality and motor trade industries with interests in
                                                                         franchise dealerships. Mr LR Sherrell represented
              The effect of the special resolution and the reason
                                                                         South Africa as a rugby player in 1994.
              therefore is to grant directors of the Company a
              specific authority in terms of the Act, as amended, for    Ordinary Resolution 5
              the acquisition by Invicta of 3 768 261 Invicta shares     To elect as director Adv JD Wiese.
              held by the Company’s wholly-owned subsidiary,
              Humulani Marketing (Pty) Limited.                          Adv JD Wiese has been nominated as director of
                                                                         Invicta Holdings Limited with effect from the 2010
              Ordinary Resolution 1                                      annual general meeting. Adv JD Wiese obtained his
                                                                         BA degree after which he worked at Lourensford Wine
              To receive and consider the annual financial
                                                                         Estate, helping to initiate events partnerships. Adv
              statements and the Group annual financial statements
                                                                         JD Wiese subsequently obtained his Master’s Degree in
              for the year ended 31 March 2010.                          International Economics and Management and
              Ordinary Resolution 2                                      completed this degree as a participant in the MBA
                                                                         program. After returning to Lourensford for a brief
              To re-elect as director Mr C Barnard who retires in        period, Adv JD Wiese graduated as a Bachelor of Law
              terms of the Company’s Articles of Association but,        student in 2008. In 2009 Adv JD Wiese completed his
              being eligible, offers himself for re-election.            pupilage at the Cape Bar and was admitted as an
                                                                         Advocate of the High Court on 8 May 2009.
              Mr Barnard did his articles of clerkship at KPMG where
              he qualified as a chartered accountant. In 1993 he         Ordinary Resolution 6
              joined Sappi as management accountant, in 1996             To approve the directors’ emoluments for the year,
              he joined Group Five in their commercial                   which are set out in note 34 on pages 72 and 73 of the
              development subsidiary and in 1997 he was appointed        2010 Annual Report.
                                                                                        Invicta Holdings Limited • Annual report 2010   85




Notice of annual general meeting of shareholders
continued




Ordinary Resolution 7                                            extend beyond 15 (fifteen) months from the date
                                                                 that this authority is given;
“RESOLVED THAT the authorised but unissued shares
                                                             • a paid press announcement giving full details,
in the capital of the Company be and are hereby
                                                                 including the impact on the net asset value and
placed under the control and authority of the directors
                                                                 earnings per share, will be published at the time of
of the Company and that the directors of the
                                                                 any issue representing, on a cumulative basis
Company be and are hereby authorised and
empowered to allot, issue and otherwise dispose of               within 1 (one) financial year, 5% (five percent) or
such shares to such person or persons on such terms              more of the number of shares in issue prior to the
and conditions and at such times as the directors of             issue; and
the Company may from time to time and in their               • in determining the price at which an issue of
discretion deem fit, subject to the provisions of the            shares may be made in terms of this authority, the
Companies Act (Act 61 of 1973) as amended or                     maximum discount permitted will be 10% (ten
replaced (“the Act”), the Articles of Association of the         percent) of the weighted average traded price on
Company and the JSE Limited (“JSE”) Listings                     the JSE of those shares over the 30 (thirty) business
Requirements, when applicable, such authority to                 days prior to the date that the price of the issue is
remain in force until the next annual general                    determined or agreed by the directors of the
meeting.”                                                        Company.”
                                                             In terms of the JSE Listings Requirements, 75%
Ordinary Resolution 8                                        (seventy-five percent) of the votes cast by shareholders
“RESOLVED THAT the directors of the Company be and           present or represented by proxy at the annual general
they are hereby authorised by way of a general               meeting must be cast in favour of ordinary resolution
                                                             8 for it to be approved.
authority, to issue all or any of the authorised but
unissued shares in the capital of the Company, for           Ordinary Resolution 9
cash, as and when they in their discretion deem fit,
                                                             To confirm the reappointment of Deloitte & Touche,
subject to the Companies Act (Act 61 of 1973) as
                                                             Registered Auditors, as independent auditors of the
amended or replaced (“the Act”), the Articles of
                                                             Company and to appoint SBF Carter as the designated
Association of the Company, the Listings Requirements
                                                             auditor for the following year.
of the JSE Limited (“JSE”), when applicable, and the
following limitations, namely that:                          Ordinary Resolution 10
• the equity securities which are the subject of the
                                                             To elect as audit committee member Mr DI Samuels for
    issue for cash must be of a class already in issue, or
                                                             the financial year ending 31 March 2011.
    where this is not the case, must be limited to such
    securities or rights that are convertible into a class   Mr DI Samuels (CA(SA)) is a non-executive independent
    already in issue;                                        director of Invicta Holdings Limited. In 1971 he joined
• any such issue will only be made to “public                Trade and Industry Acceptance Corporation Limited
    shareholders” as defined in the JSE Listings             and from 1980 to 1984 was appointed director. From
    Requirements and not related parties, unless the         1989 to 2000 he was the managing director of
    JSE otherwise agrees;                                    Stenham (Pty) Limited. In 1996 he was appointed non-
• the number of shares issued for cash shall not in          executive director of Invicta. In 2001 he was appointed
    the aggregate in any one financial year exceed           non-executive director of Bearing Man Limited and in
                                                             2002 as chairman.
    15% (fifteen percent) of the Company’s issued
    share capital of ordinary shares. The number of          Ordinary Resolution 11
    ordinary shares which may be issued shall be based
                                                             To elect as audit committee member Mr J Mthimunye
    on the number of ordinary shares in issue, added
                                                             for the financial year ending 31 March 2011.
    to those that may be issued in future (arising from
    the conversion of options/convertibles) at the date      Mr J Mthimunye (CA(SA)) is a non-executive
    of such application, less any ordinary shares            independent director of Invicta Holdings Limited. In
                                                             1993 he was appointed financial accountant of the
    issued, or to be issued in future arising from
                                                             Department of Finance. In 1995 appointed financial
    options/convertible ordinary shares issued during
                                                             manager at Nampak Tissue. In 1997 he was a founding
    the current financial year, plus any ordinary shares
                                                             partner of Gobodo Inc and established the corporate
    to be issued pursuant to a rights issue which has        advisory service. Previously appointed managing
    been announced, is irrevocable and fully                 director of aloeCap (Pty) Limited and in May 2007 he
    underwritten, or an acquisition which has had            was appointed executive chairman. On 7 June 2007 he
    final terms announced;                                   was appointed alternate director to Mr AK Masuku on
• this authority be valid until the Company’s next           the Invicta board and on 31 July 2009 he was appointed
    annual general meeting, provided that it shall not       as executive director of Invicta Holdings Limited.
86   Invicta Holdings Limited • Annual report 2010




              Notice of annual general meeting of shareholders
              continued




              Ordinary Resolution 12                                     wish to attend the annual general meeting or send a
                                                                         proxy. If you wish to attend the annual general
              To elect as audit committee member Mr LR Sherrell for
                                                                         meeting, your CSDP or broker will issue the necessary
              the financial year ending 31 March 2011.
                                                                         letter of representation to you to attend the annual
              Mr LR Sherrell studied commerce at UCT and has been        general meeting.
              involved in the hospitality and motor trade industries
                                                                         Shareholders who have dematerialised their shares
              with interests in franchise dealerships. Mr LR Sherrell
                                                                         through a CSDP or broker, other than “own name”
              represented South Africa as a rugby player in 1994.
                                                                         registered dematerialised shareholders, who wish to
              Mr LR Sherrell was appointed as alternate director to
                                                                         attend the annual general meeting, must request their
              Mr RE Sherrell on the Invicta Holdings Limited board
                                                                         CSDP or broker to issue them with a letter of
              on 27 May 2009 and has been nominated as director of
                                                                         representation, or they must provide the CSDP or
              Invicta Holdings Limited with effect from the 2010         broker with their voting instructions in terms of the
              annual general meeting to be held on 29 July 2010,         relevant custody agreement/mandate entered into
              upon the retirement of Mr RE Sherrell.                     between them and the CSDP or broker.
              Voting instructions

              In terms of the Companies Act (Act 61 of 1973) as
              amended or replaced, any member entitled to attend
                                                                         By order of the board
              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).
                                                                         C Barnard
              If your Invicta shares have been dematerialised and        Company secretary
              are held in a nominee account, then your Central
                                                                         Johannesburg
              Securities Depository Participant (“CSDP”) or broker, as
                                                                         25 May 2010
              the case may be, should contact you to ascertain how
              you wish to cast your vote at the annual general
              meeting and thereafter cast your vote in accordance
              with your instructions.

              If you have not been contacted it would be advisable
              for you to contact your CSDP or broker, as the case
              may be, and furnish them with your instructions. If
              your CSDP or broker, as the case may be, does not
              obtain instructions from you, they will be obliged to
              act in terms of your mandate furnished to them, or if
              the mandate is silent in this regard to abstain from
              voting.

              Dematerialised shareholders whose shares are held in
              a nominee account must not complete the attached
              form of proxy.

              Unless you advise your CSDP or broker timeously in
              terms of the agreement between yourself and your
              CSDP or broker by the cut-off time advised by them
              that you wish to attend the annual general meeting or
              send a proxy to represent you at the annual general
              meeting, your CSDP or broker will assume you do not
                                                                                                  Invicta Holdings Limited • Annual report 2010




Form of proxy


                                                       INVICTA HOLDINGS LIMITED
                           Registration number 1966/002182/06 • Incorporated in the Republic of South Africa
                                 Share code: IVT • ISIN: ZAE000029773 • (“Invicta” or “the Company”)
For use only by certificated shareholders or dematerialised shareholders with “own name” registration at the annual general
meeting of shareholders to be held in the boardroom, Invicta Holdings Limited, 3rd Floor, Pepkor House, 36 Stellenberg Road,
Parow Industria, Cape Town on Thursday, 29 July 2010 commencing at 12:00 ("the annual general meeting").
Dematerialised shareholders holding shares other than with “own name” registration, must inform their CSDP or broker of their
intention to attend the annual general meeting and request their CSDP or broker to issue them with the necessary letter of
representation to attend the annual general meeting in person and vote or provide their CSDP or broker with their voting
instructions should they not wish to attend the annual general meeting in person. These shareholders must not use this form of
proxy.
I/We (please print name in full)
of (address)
being a shareholder(s) of Invicta and holding                                      shares hereby appoint (name in block letters)
1.                                                                                                                   or failing him
2.                                                                                                                   or failing him
3. The chairman of the annual general meeting as my/our proxy to act for me/us at the annual general meeting which will be held
   on Thursday, 29 July 2010 at 12:00 in the boardroom of Invicta Holdings Limited at 3rd Floor, Pepkor House, 36 Stellenberg
   Road, Parow Industria, Cape Town for the purposes of considering and, if deemed fit, passing with or without modification, the
   resolutions to be proposed thereat and at each adjournment or postponement thereof, and to vote for and/or against the
   resolutions and/or abstain from voting in respect of the shares in the issued share capital of the Company registered in my/our
   name(s) (see note 2).
                                                                                       Number of votes (one per share)
                                                                                     For            Against            Abstain
 Special resolution 1
 General authority to repurchase shares
 Special resolution 2
 Specific authority to acquire shares of the Company held by
 Humulani Marketing (Pty) Limited, a subsidiary company
 Ordinary resolution 1
 Adoption of the annual financial statements
 Ordinary resolution 2
 To re-elect as director Mr C Barnard
 Ordinary resolution 3
 To re-elect as director Mr AM Sinclair
 Ordinary resolution 4
 To elect as director Mr LR Sherrell
 Ordinary resolution 5
 To elect as director Adv JD Wiese
 Ordinary resolution 6
 Approval of directors’ emoluments
 Ordinary resolution 7
 To place the authorised but unissued shares under the control of
 the directors
 Ordinary resolution 8
 To authorise the directors to issue shares for cash
 Ordinary resolution 9
 To confirm the reappointment of Deloitte & Touche as independent
 auditors of the Company and SBF Carter as the designated auditor
 for the following year
 Ordinary resolution 10
 To elect as audit committee member Mr DI Samuels
 Ordinary resolution 11
 To elect as audit committee member Mr J Mthimunye
 Ordinary resolution 12
 To elect as audit committee member Mr LR Sherrell
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                                                                2010
Signature
Assisted by (where applicable)
Number of shares
Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder of the Company) to attend, speak and
vote in place of that shareholder at the annual general meeting.
Please read the notes overleaf.
Invicta Holdings Limited • Annual report 2010




         Notes to the proxy form



         1. A shareholder may insert the name or names of two alternative proxies of the shareholder’s choice in the space
              provided, with or without deleting “the chairman of the annual general meeting” but any such deletion must
              be initialled by the shareholder.

         2. A shareholder’s instruction to the proxy must be indicated by the insertion of the relevant number of votes
              exercisable by that shareholder in the space provided. Failure to comply with the above will be deemed to
              authorise the proxy to vote or abstain from voting at the annual general meeting as he deems fit in respect of
              all the shareholder’s votes exercisable thereat. A shareholder or his proxy is not obliged to use all the votes
              exercisable by the shareholder or his proxy, or cast them in the same way.

         3. Any alteration or correction made to this form must be initialled by the signatory/ies.

         4. Documentary evidence establishing the authority of a person signing this form of proxy in a representative
              capacity must be attached to this form unless previously recorded by the transfer secretaries or waived by the
              chairman of the annual general meeting.

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

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

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

         8. Where there are joint holders of any shares:

              •    any one holder may sign this form of proxy;

              •    the vote(s) of the senior shareholders (for that purpose seniority will be determined by the order in which
                   the names of shareholders appear in the company's register of shareholders) who tenders a vote (whether
                   in person or by proxy) will be accepted to the exclusion of the vote(s) of the other joint shareholder(s).

         9. Forms of proxy must be lodged with or posted to the Company’s transfer secretaries’ offices in Johannesburg
              (Computershare Investor Services (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001; PO Box
              61051, Johannesburg, 2107) to be received by 12:00 on Tuesday, 27 July 2010.
                                                                                  Invicta Holdings Limited • Annual report 2010




Corporate information



Company registration number                            Bankers
1966/002182/06                                         Standard Bank of South Africa Limited
Nature of business                                     Absa Bank Limited
Investment holding and management company              First National Bank (A division of FirstRand
Secretary                                              Bank Limited)
C Barnard                                              Nedbank Limited
PO Box 851, Isando, 1600                               Citibank

Business address                                       HSBC
3rd Floor, Pepkor House, 36 Stellenberg Road           Attorneys
Parow Industria, 7493                                  Bernadt, Vukic, Potash and Getz
Postal address                                         10th Floor, BP Centre, Thibault Square,
PO Box 6077, Parow East, 7501                          Cape Town, 8001
Auditors                                               PO Box 252, Cape Town, 8000
Deloitte & Touche
                                                       Website
Registered Auditors
                                                       www.invictaholdings.co.za
Deloitte & Touche Place, The Woodlands
Woodlands Drive, Woodmead, Sandton, 2196               Audit Committee
Private Bag X6, Gallo Manor, 2052                      DI Samuels – Chairman
Share transfer secretaries                             J Mthimunye
Computershare Investor Services (Pty) Limited
                                                       Risk Committee
Ground Floor, 70 Marshall Street, Johannesburg, 2001
                                                       DI Samuels – Chairman
PO Box 61051, Johannesburg, 2107
                                                       J Mthimunye
Sponsors
Deloitte & Touche Sponsor Services (Pty) Limited       Remuneration Committee
Deloitte & Touche Place, The Woodlands                 CH Wiese – Chairman
Woodlands Drive, Woodmead, Sandton, 2196               DI Samuels
Private Bag X6, Gallo Manor, 2052                      A Goldstone (ex officio)




                                                                                                           GRAPHICULTURE 1915
www.invictaholdings.co.za

								
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