CONTENTS · FINANCIAL HIGHLIGHTS Annual Report 2002 1 March March March March March March 2002 2001 2000 1999 1998 1997 R’000 R’000 R’000 R’000 R’000 R’000 Revenue 1 352

CONTENTS Financial highlights 1 Group at a glance 2 Profile 3 Board of directors 4 Corporate information 5 Joint report of chairman and managing director 6 – 7 Review of operations 8 – 17 Corporate governance 18 – 19 Approval of the annual financial statements 20 Certification by the company secretary 20 Report of the independent auditors 21 Report of the directors 22 – 23 Income statements 24 Balance sheets 25 Statements of changes in equity 26 Cash flow statements 27 Notes to the cash flow statements 28 – 29 Notes to the annual financial statements 30 – 46 Schedule of interests in subsidiaries 47 Shareholders’ information 49 – 50 Form of proxy 51 – 52 Shareholders’ diary IBC Invicta Holdings Limited

F I N A N C I A L H I G H L I G H T S

A n n u a l R e p o r t 2 0 0 2 1

March March March March March March2002 2001 2000 1999 1998 1997

R’000 R’000 R’000 R’000 R’000 R’000

Revenue 1 352 311 1 057 384 544 684 501 791 422 507 364 058

Operating profit beforefinance costs 121 851 90 417 45 975 45 872 46 537 33 061

Earnings attributable toordinary shareholders 45 991 39 584 36 646 42 768 43 648 30 781

Ordinary shareholders’ interest(including compulsory convertible 268 783 263 878 283 144 254 436 229 372 76 621debentures prior to theirconversion in 1998)

Earnings per share (cents) 60 46 38 45 54 53

Diluted earnings per share (cents) 58 45 36 44 44 44

Dividends per share (cents) 24 22 20 18 17 15

Operating profit before

finance costs (R’000)

Dividends per

share (cents)

0

5

10

15

20

25

1998

1999

2000

2001

2002

1997

1999

2000

2001

2002

0

20

40

60

80

100

120

140

1998

1997

G R O U P AT A G L A N C E

2 I n v i c t a H o l d i n g s L i m i t e d

CONSTRUCTIONGOLF AND UTILITY CARS

Bearing ManSouth Africa’s leading distributor of bearings,seals, power transmission components, gearedmotors and belting.

CSEDistributor of construction and earthmovingmachinery, turf grooming machinery, golf cars,utility vehicles and related spares.

AutobaxImporter and distributor of timing chains, timingbelts, timing components, oil pumps and pistonrings to the automotive industry and similar nicheproducts to the motorcycle industry.

Engineparts-TurbochargersDistributor of quality alternative spare parts tothe automotive industry.

SPUITE/SPRAYERS

MAAIERS & HARKE/MOWERS & RAKES

SKOTTELS/DISCS

BOONTJIETOERUSTING/BEAN HARVESTING

SUIKERRIETKAPPER/SUGAR CANE CHOPPER HARVESTER

HARKE/RAKES

BALERSTREKKERS & STROPERS/TRACTORS & COMBINES

NorthmecDistributor of leading agricultural machinery,implements and related spares.

FOAM AIR FILTERS

P R O F I L E

A n n u a l R e p o r t 2 0 0 2 3

Invicta Holdings Limited is an investment holding and management company, controlling andmanaging assets exceeding R815 million. Its operations comprise:

• the importation and distribution of a comprehensive range of bearings, belting, seals, powertransmission products and geared motors;

• the importation and sale of machinery and related spares for agriculture, construction,turf grooming and golf car markets;

• the distribution, wholesale and retail, of a wide range of alternative spare parts to theautomotive industry; and niche products to the motorcycle industry.

B O A R D O F D I R E C T O R S


M Rose-Innes (58)

Chairman

BCom

A Goldstone (41)

Managing Director

BSc (Mech Eng), BCom(Hons), CA(SA)

DL McCay (58)

Non-Executive Director

BCom

DI Samuels (62)


CA(SA)

CH Wiese (60)


BA, LLB, DCom(h.c)

Audit committee

DI Samuels (Chairman)

A Goldstone

C Barnard

Remuneration committee

M Rose-Innes

DI Samuels

From left to right: A Goldstone, CH Wiese, DI Samuels, M Rose-Innes, and DL McCay

C O R P O R AT E I N F O R M AT I O N

A n n u a l R e p o r t 2 0 0 2 5

Company registration number

1966/002182/06

Nature of business

Investment Holding and Management Company

Secretary

C Barnard

PO Box 851, Isando 1600

Business address

Constantia Uitsig Wine Farm

Spaanschemat River Road, Constantia 7806

Postal address

PO Box 89, Constantia 7848

Auditors

Deloitte & Touche

Deloitte & Touche Place, The Woodlands

Woodlands Drive, Woodmead, Sandton 2052

Share transfer secretaries

Computershare Investor Services Limited

PO Box 7184, Johannesburg 2000

Bankers

Standard Bank, BoE Bank, First National Bank

and ABSA Bank

Attorneys

Bernadt, Vukic, Potash and Getz

10th Floor, BP Centre, Thibault Square

Cape Town 8001

Website

www.invictaholdings.co.za

J O I N T R E P O R T O F C H A I R M A N A N DM A N A G I N G D I R E C T O R


INVICTA HOLDINGS LIMITED DELIVERED GOOD

RESULTS THIS YEAR . . . OPERATING PROFIT INCREASED

BY 50% AND HEADLINE EARNINGS PER SHARE

INCREASED BY 29% TO 62 CENTS PER SHARE.

Overview

Invicta Holdings Limited delivered good results this

year. Revenue increased by 28%, operating profit

increased by 50% and headline earnings per share

increased by 29% to 62 cents per share.

Trading conditions in the first half of the year were

flat, while the second half was more buoyant. The year

was characterised by the sharp decline in the Rand

during the second half, but it has recovered some of its

ground since the end of the year.

Bearing Man

Bearing Man, the group’s largest subsidiary, lifted its

operating profit by 66% and earnings by 74%,

compared with the previous nine month period. It was

the major contributor to the group’s profit during the

year. Bearing Man trades through five divisions,

namely Bearings, Seals, Power Transmission Products,

Geared Motors and Belting. Products are marketed

through two branch networks – Bearing Man and

Invicta Bearings. The integration of Invicta Bearings

into Bearing Man has been completed and

management expect tangible benefits to materialise

during the coming year.

The Bearing Man Group has continued to extend its

position as the foremost supplier of dynamic

engineering consumables in Southern Africa. It

continues to enhance its range of quality products and,

early this year, introduced Fenner Motoline, a range of

electric motors, to its portfolio. An extensive range of

complementary products, including power

transmission and seal consumables, and the Sumitomo

range of SM Cyclo speed reducers, has also been

introduced. Coupled with the planned expansion of its

branch network, Bearing Man’s contribution to bottom

line is expected to grow consistently. Bearing Man’s

creditable performance was further enhanced by a

reduction in its debt-to-equity ratio from 51% to 37%.

Bearing Man will continue to focus on the provision of

an extensive range of quality goods and services

throughout Sub-Saharan Africa. Diversification

through the introduction of new products and an

expanded branch network, will augment the existing

base and provide further opportunities for growth.

Northmec

Northmec, our agricultural machinery and implements

distributor, started the year slowly but conditions

improved markedly towards the year end as grain

farmers experienced a healthy increase in the Rand

price of grain. The grain farming community had the

benefit of low Rand input costs during the season, but

high revenue as a result of the weak Rand and high

US$ maize and wheat prices. Most farmers enjoyed a

good year and, as a result, demand for Northmec’s

products was strong. There was also buying in

anticipation of further price increases when the Rand

weakened, which contributed to the unusual demand.

Northmec was unable to keep up with demand, as

there are long lead times for stock from its suppliers,

but the demand trend has continued into the new

year. Northmec managed to improve its market share

in the tractor industry by 12%, while it held its position

in the combine industry. Its share of the baler market

has improved by 51% over the previous year.

The Case New Holland (“CNH”) merger internationally

three years ago has started to bear fruits and Case has

introduced a small tractor to the market, the new VJ

range of tractors. This tractor not only provides

Northmec with a new range, but allows it to compete

in the largest segment in the tractor market, from

which it has previously been excluded due to not

having a tractor suitable for that sector. It considerably

strengthens the range of products offered by

Northmec.

Northmec management is focusing on improving after

sales service in the coming year, with a concerted drive

to increase workshop service and improve parts sales.

Special attention will also be given to increased

training of staff.

CSE

CSE has experienced very competitive trading

conditions in the construction and earthmoving

machinery industry during the year. Market volumes

grew, but CSE found itself outpriced in the market

when the Rand suddenly declined, which resulted in a

loss of market share. CSE managed, however, to

diversify its customer base into the mining industry,

which enjoyed greater revenues due to the weak Rand.

This led to greater demand for CSE’s products in this

market segment.

By contrast, the turf grooming and golf utility car

divisions of CSE both experienced increased demand

for products during the year under review and were

A n n u a l R e p o r t 2 0 0 2 7

significant contributors to the profits of CSE.

Indications are that this demand will continue, with

many golf course developments being planned in

South Africa for the coming year. With its strong brand

names and dominant position in this market, CSE is

able to take advantage of the opportunities which this

presents.

Automotive spares

Invicta’s automotive spares companies, Engineparts-

Turbochargers and Autobax experienced similar

trading conditions during the year. During the first

half of the year margins were under pressure, but

this was reversed in the second half of the year, and

both divisions were able to show improvements in

turnover and operating margins during the latter part

of the year.

Engineparts-Turbochargers commissioned its new

computer system in January 2002 and the teething

problems have been ironed out. It now boasts one of

the leading IT systems in the industry and has been

able to improve its service levels dramatically. This puts

it in a position to improve its service to its 150-plus-on-

line customers and to expand its on-line customer base.

It intends opening branches in strategic areas and

is pursuing small value-added acquisitions which

will enhance its product range. To this end,

Turbochargers and Partlek was acquired during the

year, which has enabled the company to secure sole

distribution rights to world-class Garrett

turbochargers. At the same time, Engineparts adopted

the trade-name Engineparts-Turbochargers to more

comprehensively reflect its business activities.

Engineparts-Turbochargers now has a solid platform

on which it will build in the coming year.

Autobax has improved its turnover by 20%, with a

matching improvement in profitability. It will continue

to expand its niche product base and has recently

branched successfully into specialist motorcycle

components.

The future

The group has cash resources in excess of R65 million

which it intends to use for suitable acquisitions and to

repurchase its own shares. During the year under

review, the group repurchased 7,7 million shares on

the JSE and its strategy is to continue doing so for as

long as the repurchases add value to the group.

Shareholders will be asked to approve a special

resolution at the Annual General Meeting in this

regard.

Invicta has comfortably exceeded its self imposed

objective of growing earnings per share by 20% per

annum this year, and the dividend cover policy has

been maintained at 2,5 times. In the coming year,

management focus, as always, will be on strong cash

generation while achieving its stated long-term

objectives.

Early trading conditions have been favourable and,

barring something unforeseen, the group should

achieve satisfactory results in the coming year. The only

negative at this stage is the prediction of an El Nino

event this year, which, if severe, will negatively affect

the agricultural industry and the economy as a whole.

Management is monitoring developments carefully.

Finally, our sincere thanks to all staff members for their

contribution to this year’s good results. We are proud

of our group’s achievements and look forward to

another year of consistent performance.

M Rose-Innes A Goldstone

Chairman Managing Director

BEARINGMAN

Overview of operations

The Bearing Man group has continued to extend its

position as the foremost supplier of dynamic

engineering consumables, which are marketed

through two networks – Bearing Man and Invicta

Bearings.

Bearings division

The bearings division is the largest supplier of bearing

products in Africa, with exclusive distribution rights for

some of the world’s leading bearing manufacturers.

The range includes NSK, IKO, NTN and shared

distribution rights for TIMKEN taper roller bearings.

In addition to these leading brands, Bearing Man has

introduced its own line of bearings and accessories

under the brand name of BTC. The selection of

suppliers for the BTC brand is extensive, with quality of

product being a prerequisite. The BTC brand is

designed to offer high product quality and value

for money.

All products supplied by the bearings division receive

full technical backing from an experienced technical

support team, which offers services ranging from initial

design through to problem solving and preventative

maintenance training.

R E V I E W O F O P E R AT I O N S


Back row: K van Wyk, M Kardar, P McKinlay, F Paulsen,

M O’Kennedy, D Bassett, B Mosely and I King

Front row: L Marais, G Till (Managing Director) and

A Bekker

Absent: D Russell and R Strickland

Bearing Man product range

A n n u a l R e p o r t 2 0 0 2 9

Power Transmission Products

Seals

Seals division

The seals division stocks a comprehensive range of

seals, catering for all sectors of the market. This

division ranks as one of the largest suppliers of rotary

shaft seals, hydraulic seals and o-rings throughout

Southern Africa. A carefully selected series of

complimentary products such as silicone, adhesives,

circlips, gland packing, mechanical seals and nilos rings

completes the range.

In addition to this wide range, Bearing Man has three

state-of-the-art seal jet CNC lathes situated in Durban,

Johannesburg and Cape Town, capable of producing

custom-made seals within the hour. These seals are

available in a wide range of materials including nitrile,

viton, EPDM, silicone and polyurethane to suit all

requirements.

The seals division has two independently branded

Sealco outlets in Durban and Johannesburg, focusing

specifically on the specialised hydraulics and pneumatic

seal markets.

The power transmission division has recently been split

into three separate operating divisions, namely chain,

ironware and drive belts, each headed by an expert in

his field. The new structure provides greater focus,

better service and opportunities for growth in each

segment.

The power transmission division is involved in all

aspects of industry, from heavy mining through to light

manufacturing. As a whole this division has seen

tremendous growth and increase in market share over

the past five years.

The Fenner brand, a name synonymous with quality

power transmission products in South Africa for the

past 74 years continues to be the cornerstone of this

division along with Tsubaki chain products and

Goodyear belting.

Premium branded products and stockholding, coupled

with technical back-up and support throughout the

Bearing Man and Invicta Bearings branch networks

have made Bearing Man the industry’s first choice in

power transmission components.

Power transmission division



Bearings

Recent power transmission product developments

include Jervis B Webb conveyor systems, the

Hutchinson range of poly-vee belts and Fenlock locking

elements.

Geared motors division

The geared motors division, Power Drives, was

established in 1996 to satisfy market requirements for

products that provide the primary motive power for

industrial machines, and in so doing, extract maximum

benefit from its synergies with other products offered

by Bearing Man.

In order to provide for the diverse needs of South

African industry, the gear products are predominantly

stocked in component form and assembled and

serviced, to customers’ requirements in modern

assembly workshops in Johannesburg and Cape Town.

The division focusses on providing the optimum balance

of technical and commercial solutions with the fastest

response time. With these objectives in mind, the

division employs regionally based technical specialists,

who provide solution-finding, problem analysis and

after sales service to South African industry.

The Power Drives product line has grown to become

one of the leading suppliers of industrial gear products

and is the preferred gearbox source for many large

industries in Southern Africa.

There have been two significant additions to the

Power Drives product line-up: the recent introduction

of Fenner Motoline industrial electric motors; and the

range of Sumitomo Cyclo geared motors that are

distributed through the Invicta Bearings branch

network. These new product lines further expand

Bearing Man’s one-stop-shop philosophy in the

industrial consumables market.

Power transmission division (continued)

A n n u a l R e p o r t 2 0 0 2 11

Belting

Geared motors

Belting division

The belting division has evolved since 1996 through a

combination of acquisition and natural growth. The

division has seven service centres known as belting

hubs, strategically located across the country, servicing

all major industrial areas.

The belting division’s main target market can be

defined as light industrial belting, covering a wide

range of industrial, manufacturing and agricultural

operations. The belting division offers a wide range of

products ex stock, which are cut to order as custom

fitted endless or open-ended belts.

The belting hub technical workshops are manned by

skilled belting technicians and dedicated product sales

personnel who work through the Bearing Man branch

network to provide a specialised belting service to

industry.

The future

Bearing Man will continue to improve its extensive

range of quality goods and services supplied at the

right time and in the right place, throughout

Sub-Saharan Africa. Diversification through the

introduction of new products and an expanded branch

network, will augment the existing base and provide

further opportunities for growth.

N O R T H M E C

George North started his implement business in Port

Natal during 1869. Now, 133 years later, Northmec is

the oldest full line distributor of agricultural

equipment in South Africa.

Northmec imports and distributes agricultural

equipment which is predominantly focussed on the

grain producing areas. It markets its products through

ten wholly-owned branches and 43 dealers spread

across the country.

The company is renowned for the well-known brands

that are imported from around the world to serve the

South African farmer, for example Case tractors and

combines imported from the USA and Europe, Welger

balers from Germany, Jacto sprayers and Baldan

implements from Brazil, Storti feedmixers, Sitrex hay

rakes from Italy, and specialised equipment like Pickett

bean equipment from the USA and Shelbourne

headers from the UK.

Grain production during reporting period

Production of maize, the biggest grain crop in

South Africa, was down 30% on the previous year with

a yield of 7 384 000 tons, only enough for local

consumption. There was also a decline in grain sorghum

production, but other smaller crops like groundnuts,

sunflower, soybeans and dry beans reflected an increase

over the 1 April 2002 to 31 March 2001 period.

Wheat production was up 6% for the same period.

Industry sales for reporting period

For the period 1 April 2001 to 31 March 2002 the

industry sold 2 961 tractors which was an 11,6%

increase over the previous year. Northmec managed to

improve its market share over this period by 12%.



Back row: PHF Viljoen, GE Balshaw, BJP Grobler and

PJJ Bosman

Front row: WF McFarlane, PJ Le Grange, AM Sinclair and

MJ Walters

STX series Steiger tractors 275-440 HP

A n n u a l R e p o r t 2 0 0 2 13

RP 220 Baler

Arbus 2000/850 GE-3P

Condor M-12

Combine sales in South Africa also improved by 61%.

Unfortunately Northmec was unable to increase its

market share in this product range.

With the good rain during the year, it was an excellent

year for haymaking. Baler sales were up 8% over the

previous year and Northmec succeeded in improving its

market share by 51%.

Distribution

During the past year, a lot of emphasis was put on

growing the distribution network. The marketing

division successfully appointed six new dealers, all

situated in strategic grain producing areas.

Financial implications

Despite smaller summer crops and an almost static

position with winter crops, good grain prices improved

the liquidity of farmers dramatically. The deterioration

of the Rand after 11 September 2001 prompted

farmers to invest in capital equipment prior to any

price increases coming through on imported

equipment, which benefited Northmec. Workshop and

part sales also increased, and in total, Northmec

successfully increased its turnover by 21% and

profitability by 129% over the prior financial year.

The future

Northmec has introduced a new small tractor, the Case

VJ range. This tractor not only provides Northmec with

a new model, it also broadens the range of tractors

offered by the division. The company can therefore

now compete in kW classes from which it was

previously excluded. Furthermore, the new orchard

model, the PJN range, will be introduced shortly, as

well as the top of the range 320kW Steiger STX.

Equipment sales could deteriorate in the coming year,

as the full impact of the deterioration of the Rand

filters through to the end user. However, if the

exchange rate stabilises and improves, and grain prices

remain buoyant, the market should improve.

Further emphasis will be placed on the trading of used

equipment, as the general view is that the increase in

new equipment prices will result in a greater demand

for good used equipment.

During the coming year, management will focus on

improving after sales service. There is a concerted drive

to increase workshop efficiencies and improve parts

sales. Special attention will also be given to broadening

the technical knowledge of staff beyond the Northmec

product range in order to service more customers and

more products in the farming community.

C S E

CSE is a distributor of construction and earthmovingmachinery, turf related machinery and golf cars, andhas been well established in the local market for42 years. CSE has an extensive distribution network ofbranches and dealers which cover the major centres ofSouth Africa.

CSE imports and sells leading branded products such asCase and New Holland earthmoving equipment,

Jacobsen, Ransomes, Cushman and Ryan turf groomingequipment and Club Car golf cars.

Trading and economic conditions during the financialyear under review were difficult. Consequently, not alloperations performed up to expectation in terms ofvolume, with market share being lost in some sectors.Nevertheless, profits overall were well above forecast,despite turnover only increasing by 5%.

Management is confident, that with greater focus oneach division and by extending the areas covered fromboth a customer and product viewpoint, the trend inimproving profitability will continue.

Construction and earthmoving machinery divisionThe construction and earthmoving machinery marketshowed reasonable growth during the year underreview. The weak Rand to US Dollar exchange ratehowever, had an adverse effect on demand patterns inthe latter part of the year, which is expected tocontinue through into the early part of the nextfinancial year.

The growth in this division has been mainly in themining and construction sectors, while the plant hire,government and quasi government sectors showed adecline in demand during the year. The mining sector,which sells hard currency commodities, was not assensitive to the increased equipment pricing whicharose from the sudden decline of the Rand.Furthermore, with a major portion of work by SouthAfrican construction companies being done outside theborders of South Africa (yielding hard currency), thissector’s demand for equipment has also been largelyunaffected by the Rand’s deterioration.



From left to right: RC Watson, AM Sinclair, PC Askew,

J Bainbridge and C Barnard

C Series wheel loaders

A n n u a l R e p o r t 2 0 0 2 15

Case excavator

Turf 2 XRT Case 580 Super LE

Jacobsen Greens King IV

Club Car

This division performed below the market in volumegrowth but has met its profit target through carefulcurrency management and expense control.

CSE has been appointed the sole distributor of NewHolland construction machinery, which is predominantlyfocussed on the loader and backhoe markets. Futurestrategies will include the targeting of the lighterequipment market through our Northmec agriculturaldealer network using these products.

CSE continues to support its customers with superiorparts and workshop coverage throughout the country.A degree of optimism is returning after the uncertaintyof emerging market currencies, and stability andimprovement in the Rand remains a strong possibility.Management is confident of sustainable real growth inthe coming year against this more positive background.

Turf grooming divisionThe turf grooming division showed substantial growthin the financial year under review. Renewed focus inthe division has contributed to it being awarded largeorders and smaller contracts for premier and small golfcourses in South Africa.

Golf course development slowed down in South Africain the first half of the year, but since then many projectshave been planned for the coming year. These newcourse developments will allow for incrementalbusiness, which CSE is well positioned to capitalise ondue to its strong branch and dealer support base andculture of service.

Although the existing golf course market is resisting thenew equipment pricing levels, player demand is forcingstandards up and, coupled with an increase in thenumber of rounds being played, is forcing course

management to purchase new, and, in some cases,quality used machinery.

CSE places great emphasis on building customerconfidence – in its products, support, and after salesservice, and in order to maintain its high standards, CSEhas embarked on a long-term program of training staffacross a broad front.

CSE currently enjoys a market share of more than 50% andwill strive to maintain this position in the coming year.

Golf car divisionThis division has shown steady growth during the yearunder review, with demand increasing due to golf clubsoffering better playing conditions (including golf caravailability), and clubs identifying golf cars as a goodsource of rental revenue.

The weak Rand has placed pressure on margins and inorder to remain competitive, CSE has developed astrategy which has seen it enter the rental market asopposed to the outright purchase of equipment byselected courses. The quality of the imported,reconditioned golf cars sold by CSE has been recognisedby the market, and has led to constant demand forthese cars throughout the year.

CSE’s focus is to provide on-course servicing andmaintenance to enhance availability and reliability of thecars. It has been successful with this program on majorcourses such as Zimbali Country Estate, Sparrebosch,Fancourt and many others. The on-course support alsocovers private car owners living on the estates.

The diversity of the range from industrial and utility carsto golf cars provides CSE with continuity of demand, andmanagement is confident of another good year.

Turf 2 XRT Club Car

A U T O B A X

Autobax has been established for over 30 years and is

one of the largest importers of automotive timing

components, oil pumps and automotive belting in

Southern Africa. The company distributes its products

through a head office in Cape Town and a branch in

Johannesburg to all the major automotive

manufacturers and after-market wholesalers in

Southern Africa. These products are sourced from

numerous countries around the world and include

exclusive market-leading brands such as Gates Rubber

Company, Sachs Industries, Shimizu, Europart and

Universal Clips.

Trading conditions in the automotive industry were

challenging. Lower than forecast orders from the

automotive manufacturers due to re-sourcing from

their parent companies abroad, efforts to reduce stock-

levels in the after-market, an increase in the

counterfeiting of major brands and the on-going

devaluation of the Rand all had negative effects on the

results of the company. Despite this, turnover increased

by 27%, and operating profit by 10%.

In August 2001 the company established a motorcycle

parts and accessories division called Moto-Sport

Distribution, which distributes top quality brands to

the motorcycle industry. Moto-Sport Distribution has

secured a number of exclusive sole agencies and

supply-rights that should prove to be beneficial in the

near future. These include a number of the world’s

leading brands, such as Ferodo motorcycle products, EK

chain, Lazer helmets and Sidi boots.

Management anticipates that, with stability in the

economy and the Rand, results for the coming year

should be better than 2002 financial year.



From left to right: M Scullard, F Hall, T Raath and

N Whitehead

Autobax premises Johannesburg

Lazer helmets

Engine timing products

Sidi bootsParts warehouse

E N G I N E PA R T S -T U R B O C H A R G E R S

Engineparts-Turbochargers has been distributing highquality automotive replacement engine componentsto the automotive spares industry in Southern Africasince 1978.

The year under review was challenging, with thesudden weakening of the Rand after September 2001,placing pressure on margins. Despite this, Engineparts-

Turbochargers improved its performance in the secondhalf of the year. One of the highlights was theacquisition by Engineparts of the businesses ofTurbochargers and Partlek in July 2001. This acquisitionenables Engineparts to increase its market share inturbochargers, diesel fuel injection and auto electricalcomponent sales and to penetrate those markets moreeffectively. Engineparts-Turbochargers, as the divisionis now known, is the sole distributor for Garrettturbochargers, dual distributor for Holset andMitsibushi turbochargers and sole distributors for Firaddiesel injection components in South Africa. Majordevelopments are taking place in the dieselcommercial and passenger vehicle market in theturbocharger and fuel injection field. The advent ofturbocharged passenger vehicles in South Africa alsoforms part of this major business opportunity.

The Engineparts and Turbochargers branches inJohannesburg have been relocated into one larger site inBenrose, Johannesburg. This move will enable thecompany to expand its business cost effectively in future.

The migration from a legacy computer system to an in-house developed system was successfully implementedduring the past year. This core strength of Engineparts-Turbochargers will enable it to maximize all futurebusiness opportunities, as it now boasts one of themost comprehensive computer systems in theautomotive spares industry in South Africa.

Engineparts-Turbochargers will continue evaluatingpossible acquisitions and the opening of additionalbranches during the coming financial year.

A n n u a l R e p o r t 2 0 0 2 17

Cooling system, pump and parts

Ignition parts

Air and fuel filters

Electric cable and related parts

Cylinder head and parts

Back row: D Holmes, R Bosch, J Viljoen, E Crowder and

G Smith

Front row: A Goldstone and B McIntyre

C O R P O R AT E G O V E R N A N C E


The board of directors is committed to businessintegrity, transparency and professionalism in all itsactivities. As part of this commitment, the boardsupports the application of the King Code of CorporatePractices and Conduct in all entities in the group. It hasspecifically and in all respects adopted theseprinciples in all the group’s national operating entitiesof the size and nature identified in the King Report.The group will, during the current year, implementwhere appropriate the recommendations of theKing II report.

Board of directorsAll companies within the group have unitary boardstructures, which meet at least quarterly and retain fulland executive control over the companies concerned.The boards monitor management and ensure thatmaterial matters are subject to board approval.

The board of directors of Invicta Holdings Limitedspecifically:

• retains full control over the group, its plans andstrategy; and

• reserves for itself a range of key decisions toensure that it retains proper direction and controlof the group.

Company secretary and professional adviceAll directors have unlimited access to the services ofthe company secretary. All directors are entitled toseek independent professional advice at the group’sexpense, concerning the affairs of the group.

Composition of the board of directorsThe roles of chairman and managing director of thegroup and company do not vest in the same person.The roles of chairman and managing director areseparate, with responsibilities divided between them,so that no individual has unfettered power of decision.

The directors bring a wealth of experience from theirown fields of business, and ensure that debate onmatters of the group strategy, policy, progress andperformance is robust, informed and constructive.

All directors are appointed for specific terms andreappointment is not automatic. The maximum term ofoffice is three years and one third of the directorsretire by rotation annually, including the managingdirector, who is not obliged to do so in terms of thearticles of association of the company. If eligible, theirnames are submitted for re-election at the annualgeneral meeting.

In terms of the group’s policy in respect of closedperiods, directors, officers and any staff who may have

access to price sensitive information are precludedfrom dealing in the group or any of the subsidiarycompany’s shares forty business days prior to therelease of any of the group’s or subsidiary company’sinterim and final results.

Details of directors’ dealings in Invicta HoldingsLimited shares are disclosed to the board and theJSE Securities Exchange South Africa (“the JSE”)through SENS.

Group remuneration committeeThe group remuneration committee consists of twonon-executive directors, who review the remunerationof senior executives annually to ensure that they arefairly rewarded.

All reward schemes within the group reflect abalancing of the interests of the shareholders with theobjectives of management. Remuneration packagesare structured in such a way, that both short and long-term incentives depend on the achievement of businessobjectives and the delivery of shareholder value.

Non-executive directors receive fees for theircontribution to the boards and committees on whichthey serve.

Group audit committeeThe group audit committee operates in accordancewith a written charter authorised by the board ofdirectors. The committee comprises one executivedirector, one non-executive director who chairs thecommittee, and the company secretary. It is notpractical to have two non-executive directors on thecommittee as recommended in the Code. The externalauditors have unrestricted access to the chairman ofthe audit committee.

The committee provides assistance to the board withregard to:

• financial accounting, accounting policies,reporting and disclosure;

• internal and external audit policy and framework;

• review and approval of external audit plans,findings, problems, reports and fees; and

• compliance with the King Code of CorporatePractices and Conduct.

Internal auditThe internal audit function is an effective independentappraisal function, which examines and evaluates thegroup’s activities.

The scope of the internal audit function is to reviewthe reliability and integrity of financial operatinginformation, the systems of internal control, the means

A n n u a l R e p o r t 2 0 0 2 19

of safeguarding assets, the efficient management ofthe group’s resources and the effective conduct of itsoperations.

The group operates two internal audit departmentsthrough its two listed companies. A new process ofstandardised assessment and control self-assessment isbeing investigated.

The internal auditors have unrestricted access to thechairman of the audit committee.

Internal controlThe directors have responsibility for the group’s systemof internal controls. These are designed to providereasonable assurance of effective and efficientoperations, internal financial control and compliancewith laws and regulations.

The group’s system of internal control is designed toprovide reasonable, but not absolute assurance againstthe risk of material errors, fraud or losses occurring.Further, because of changes in conditions, theeffectiveness of an internal control system may varyover time and must be continually adapted.

The system of internal controls is monitoredthroughout the group by the audit committee, internalaudit department, management and employees as anintegrated approach. The board reports that:

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

• it is satisfied with the effectiveness of the group’sinternal controls and risk management;

• it has no reason to believe that the group’s code ofethics has been transgressed in any materialrespect; and

• to the best of its knowledge and belief, nomaterial breaches have occurred during the periodunder review, of compliance with any laws andregulations applicable to the group.

Risk managementThe monitoring of risk management currently fallswithin the responsibilities and activities of the variousaudit committees within the group. Specifically theyconsider:

• the risk profile and management of operationalrisk within the group;

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

• the adequacy of self-insurance and externalinsurance programmes.

Going concernThe annual financial statements have been preparedon the going concern basis and the directors haveevery reason to believe that the group will be able tocontinue its operations as a going concern in the yearahead. The auditors concur with this statement bythe directors.

ISO9002The group has maintained its ISO9002 certification inthe Northmec, CSE, Invicta Bearings and Autobaxdivisions. The upgrade to the ISO9001: 2000 is wellon course, with the expansion of the certificationto some of the Engineparts-Turbochargers businesselements where appropriate.

The ISO system has enabled the group to developadditional quality standards of procedures and serviceto customers.

Stakeholder communication and relationshipsThe board recognises the importance of ensuring anappropriate balance in meeting the diverse needs andexpectations of the group’s stakeholders and buildinglasting relationships with them. The group’s approachis to expand its communication and relationships withemployees, customers and resource providers.

The need for full, equal and timeous disclosure to allshareholders is recognised, as prescribed by the listingrequirements and guidelines of the JSE.

The board also recognises the importance of itsshareholders’ attendance at the annual generalmeetings and encourages their attendance. It providesan opportunity for shareholders to raise issues andparticipate in discussions relating to items included inthe notice of the meeting.

Employee training and equityThe group has through its various national operationsdeveloped formal training and skills developmentprogrammes that will identify core competencies andskills required by the companies and thereafter, on anongoing basis, implement recognised and beneficialtraining programmes for employees.

The group remains fully committed to fulfilling itsresponsibilities in terms of Equity Employment Actand to providing equal opportunities for its 1 498employees (2001: 1 300).

Code of ethicsThe group is committed to the highest standards ofintegrity, behaviour and ethics in dealing with itsstakeholders. The board provides leadership andguidance to all management and subsidiary boards inentrenching these principles.

A P P R O VA L O F T H E A N N U A L F I N A N C I A L S TAT E M E N T S

C E R T I F I C AT I O N B Y T H E C O M PA N Y S E C R E TA R Y


To the members of Invicta Holdings Limited

The directors are responsible for the preparation of the annual financial statements and ensuring that the annual

financial statements fairly present the state of affairs of the company and of the group.

The annual financial statements set out in this report have been prepared by management in accordance with

South African Statements of Generally Accepted Accounting Practice.

In discharging this responsibility to ensure the fairness and integrity of the annual financial statements, the

directors rely on the group’s systems of internal control, management responsibilities and information supplied by

internal and external auditors.

The directors are of the opinion that:

• appropriate accounting policies which have been consistently applied are supported by reasonable and

prudent judgements and estimates;

• proper accounting records have been maintained; and

• the annual financial statements fairly present the financial position of the group and the company as at

31 March 2002 and the results of their operations for the year then ended.

The annual financial statements set out on pages 22 to 46 were approved by the board of directors on 17 May 2002

and signed on its behalf by

M Rose-Innes A Goldstone Cape Town

Chairman Managing Director 17 May 2002

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 Johannesburg

Secretary 17 May 2002

A n n u a l R e p o r t 2 0 0 2 21

To the members of Invicta Holdings Limited

We have audited the annual financial statements and group annual financial statements of Invicta Holdings

Limited set out on pages 22 to 46 for the year ended 31 March 2002. These annual financial statements are the

responsibility of the company’s directors. Our responsibility is to express an opinion on these annual financial

statements based on our audit.

Scope

We conducted our audit in accordance with statements of South African Auditing Standards. Those standards

require that we plan and perform the audit to obtain reasonable assurance that the annual financial statements

are free of material misstatement. An audit includes:

• examining, on a test basis, evidence supporting the amounts and disclosures in the annual financial statements;

• assessing the accounting principles used and significant estimates made by management; and

• evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

Audit opinion

In our opinion the annual financial statements fairly present, in all material respects, the financial position of the

company and the group at 31 March 2002 and the results of their operations and cash flows for the year then

ended in accordance with South African Statements of Generally Accepted Accounting Practice, and in the manner

required by the Companies Act in South Africa.

Deloitte & Touche

Registered Accountants and Auditors Johannesburg

Chartered Accountants (South Africa) 17 May 2002

R E P O R T O F T H E I N D E P E N D E N T A U D I T O R S

R E P O R T O F T H E D I R E C T O R S


Invicta Holdings Limited

The directors have pleasure in presenting their annual

report, which forms part of the annual financial

statements of the group and of the company for the

year ended 31 March 2002.

Nature of business

The company is an investment holding and

management company. The various operations of the

group are summarised below with a more expanded

explanation of the various businesses detailed in the

review of operations.

Northmec

Distributor of leading agricultural machinery,

implements and related spares.

CSE

Distributor of construction machinery, turf-

grooming machinery, golf cars, utility vehicles and

related spares.

Bearing Man

South Africa’s major distributor of bearings, belts,

power transmission products, seals and geared

motors.

Autobax

Importer and distributor of timing chains, timing

belts, timing components, oil pumps and piston

rings to the automotive industry, and similar niche

products to the motorcycle industry.

Engineparts-Turbochargers

Distributor of alternative spare parts to the

automotive industry.

2002 2001

Group results R’000 R’000

Revenue 1 352 311 1 057 384

Profit before taxation 98 973 78 403

Management philosophyInvicta adopts a hands-on approach to managing itssubsidiaries. Each subsidiary is self contained and hasits own managing director and complete complementof financial and administration infrastructure. TheInvicta executive directors are, however, activelyinvolved in each of the subsidiaries and monitorperformance closely on a daily and weekly basis, inperson, and by means of daily and weekly reports. Cashflow is of paramount importance and the focus isalways on maximum cash generation. The board aimsto add value by providing expertise and guidance to

subsidiary management teams where feasible, and bypooling best practices within the group to the benefitof all subsidiaries.

Share capitalThe authorised share capital of the company remainedunchanged at 134 000 000 ordinary shares of 5 centseach.

During the year the company’s issued ordinary sharecapital was decreased by R402 183 (2001: decreased byR856 060) and its ordinary share premium accountwas decreased by R24 119 620 (2001: decreased byR38 433 603) as a result of the following:

• the general repurchase and cancellation of6 449 541 ordinary shares of 5 cents each at anaverage premium of 298,54 cents per share.

• the general repurchase of 1 594 126 ordinary sharesof 5 cents each at an average premium of 305,17cents per share, held for cancellation.

Invicta Holdings Share Trust schemeInvicta Holdings Limited makes use of a share incentivescheme which is designed to retain and incentivise keyemployees. Share options are granted periodically interms of the scheme and are subject to the followingvesting periods:

• three years after acceptance of the options, 50%may be taken up;

• four years after acceptance of the options, a further25% may be taken up; and

• five years after acceptance of the options, a further25% may be taken up.

Details of the existing options in issue are containedin the notes to the annual financial statements onpage 44.

SubsidiariesDetails of the company’s interests in its subsidiariesare set out in the attached annual financial statementson page 47.

DividendsDetails of the ordinary dividends paid are reflected innote 6 to the annual financial statements on page 34.

DirectorsDetails of the directors at 31 March 2002 are reflectedon page 4.

A n n u a l R e p o r t 2 0 0 2 23

Directors’ contracts

No material contracts have been entered into between

the company and the directors during the year under

review.

Directors’ fees

No directors’ receive any payments for services as

directors other than the emoluments paid to non-

executive directors. Members will be requested to

consider an ordinary resolution approving these

emoluments at the annual general meeting.

Directors’ interest in shares in the company

The total direct and indirect interest declared by the

directors in the issued share capital of the company at

31 March 2002 was 44,20% (2001: 43,5%).

The details of the shareholdings are reflected in note

26 to the annual financial statements on page 46.

Unissued share capital

The unissued ordinary shares are the subject of a

general authority granted to the directors in terms of

Section 221 and 222 of the Companies Act (Act 61 of

1973) as amended (“the Companies Act”), and the

Johannesburg Securities Exchange South Africa (“JSE”)

Listing Requirements. As this general authority remains

valid only until the next annual general meeting,

which is to be held on 26 July 2002, members will be

requested at the meeting to consider an ordinary

resolution placing the said ordinary shares under the

control of the directors until the year 2003 annual

general meeting.

Repurchase of shares

It makes sound business sense for a company to acquire

its own shares under certain circumstances. The

directors therefore consider it prudent 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 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 requested to consider a special

resolution 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.

A Goldstone M Rose-Innes

Managing Director Chairman

Cape Town

17 May 2002

for the year ended 31 March 2002

I N C O M E S TAT E M E N T S


Group Company2002 2001 2002 2001

Notes R’000 R’000 R’000 R’000

·

Revenue 1 352 311 1 057 384 148 330

Cost of sales 921 432 732 272 – –

Gross profit 430 879 325 112 148 330

Dividend income – – 19 030 28 036

Selling, administration and distribution costs 315 212 247 985 870 703

Profit before finance costs and interest received 3 115 667 77 127 18 308 27 663

Finance costs 4 22 878 12 014 3 –

Interest received 6 184 13 290 188 156

Profit before taxation 98 973 78 403 18 493 27 819

Taxation 5 27 949 23 061 610 2 103

Earnings attributable to shareholders 71 024 55 342 17 883 25 716

Earnings attributable to outside shareholders 25 033 15 758 – –

Earnings attributable to ordinary shareholders 45 991 39 584 17 883 25 716

Dividends per share – basic (cents) 6 24 22

Earnings per share – basic (cents) 7 60 46

Diluted earnings per share – basic (cents) 7 58 45

Headline earnings per share – basic (cents) 7 62 48

Diluted headline earningsper share – basic (cents) 7 60 47

at 31 March 2002

A n n u a l R e p o r t 2 0 0 2 25

B A L A N C E S H E E T S

Group Company2002 2001 2002 2001

Notes R’000 R’000 R’000 R’000

ASSETS

Non-current assets

Property, plant and equipment 8 74 098 60 456 3 5

Trademarks 9 508 791 – –

Deferred taxation 10 13 543 6 088 – –

Interests in subsidiaries 11 – – 139 984 163 328

Goodwill 12 15 078 16 871 – –

Long-term receivable 13 8 408 8 766 – –

111 635 92 972 139 987 163 333

Current assets

Inventories 14 426 408 340 066 – –

Finance lease receivables 15 – 686 – –

Accounts receivable 16 209 795 180 858 83 117

Bank balances and cash 67 643 74 028 268 370

703 846 595 638 351 487

TOTAL ASSETS 815 481 688 610 140 338 163 820

EQUITY AND LIABILITIES

Capital and reserves

Ordinary share capital 17 3 619 4 007 3 619 4 022

Share premium 18 124 211 147 504 124 211 148 331

Accumulated profits 140 953 112 367 11 220 10 742

268 783 263 878 139 050 163 095

Outside shareholders’ interest 108 402 88 342 – –

TOTAL EQUITY 377 185 352 220 139 050 163 095

Non-current liabilities

Long-term borrowings 19 11 661 13 107 720 384

Current liabilities

Trade, other payables and provisions 20 330 511 222 522 491 285

Taxation 15 708 17 956 – –

Shareholders for dividends 77 56 77 56

Current portion of long-term borrowings 19 1 805 2 422 – –

Bank overdrafts and bankers’ acceptances 78 534 80 327 – –

426 635 323 283 568 341

TOTAL LIABILITIES 438 296 336 390 1 288 725

TOTAL EQUITY AND LIABILITIES 815 481 688 610 140 338 163 820

S TAT E M E N T S O F C H A N G E S I N E Q U I T Y


ForexShare Share translation Accumulated

capital premium reserve profit TotalNotes R’000 R’000 R ’000 R’000 R’000

·

at 31 March 2002

GROUP

Balance at 31 March 2000 4 878 186 764 7 91 495 283 144

Earnings attributable toordinary shareholders – – – 39 584 39 584

Dividends paid – – – (18 712) (18 712)

Foreign currency movements – – (7) – (7)

Shares purchased in terms ofshare repurchase scheme (871) (39 260) – – (40 131)

Balance at 31 March 2001 4 007 147 504 – 112 367 263 878


Dividends paid – – – (17 405) (17 405)


Balance at 31 March 2002 3 619 124 211 – 140 953 268 783

COMPANY

Balance at 31 March 2000 4 878 186 764 – 3 738 195 380


Dividends paid – – – (18 712) (18 712)


Balance at 31 March 2001 4 022 148 331 – 10 742 163 095

Earnings attributableto ordinary shareholders – – – 17 883 17 883

Dividends paid – – – (17 405) (17 405)


Balance at 31 March 2002 3 619 124 211 – 11 220 139 050

In accordance with AC107 the final dividend of 16 cents per share (2001: 14 cents) proposed by the directorshas not been reflected above.

A n n u a l R e p o r t 2 0 0 2 27

C A S H F L O W S TAT E M E N T Sfor the year ended 31 March 2002

Group Company2002 2001 2002 2001

Notes R’000 R’000 R’000 R’000

CASH FLOWS FROM OPERATINGACTIVITIES

Cash generated from (utilised in) operations A 133 380 33 248 (480) (482)

Finance costs (22 878) (12 014) (3) –

Dividends received – – 19 030 28 036

Dividends paid to group shareholders B (17 384) (18 716) (17 384) (18 716)

Dividends paid to minority shareholders (5 416) (2 492) – –

Taxation paid C (37 652) (17 187) (610) (2 075)

Interest received 6 184 13 290 188 156

Net cash inflow (outflow) from operating

activities 56 234 (3 871) 741 6 919

CASH FLOWS FROM INVESTINGACTIVITIES

Proceeds on sale of property, plant andequipment 3 005 3 638 – –

Decrease (increase) in finance lease receivable 686 (686) – –

Investment in future operations (39 574) (153 478) (667) –

Additions to property, plant and equipment (30 560) (14 648) – –

Investment in subsidiaries D (9 014) (138 830) (667) –

Decrease in long-term receivable 358 23 718 – 23 568

Decrease in loans to subsidiaries – – 24 011 9 242

Net cash (outflow) inflow from investing activities (35 525) (126 808) 23 344 32 810

CASH FLOWS FROM FINANCING

ACTIVITIES

(Decrease) increase in long-term borrowings (1 446) 504 336 –

(Decrease) increase in short-term borrowings (617) 1 459 – –

Ordinary shares repurchased (388) (871) (403) (856)

Decrease in share premium (23 293) (39 260) (24 120) (38 433)

Increase in loans from outside shareholders 443 397 – –

Net cash outflow from financing activities (25 301) (37 771) (24 187) (39 289)

NET (DECREASE) INCREASE IN CASHAND CASH EQUIVALENTS (4 592) (168 450) (102) 440

Cash and cash equivalents at the beginningof the year (6 299) 162 151 370 (70)

CASH AND CASH EQUIVALENTS ATTHE END OF THE YEAR E (10 891) (6 299) 268 370

N O T E S T O T H E C A S H F L O W S TAT E M E N T S


Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

·


A. RECONCILIATION OF PROFITBEFORE TAXATION TO CASHGENERATED FROM (UTILISED IN)OPERATIONSProfit before taxation 98 973 78 403 18 493 27 819

Adjusted for:

Depreciation 15 251 11 611 2 2

Amortisation of trademarks 283 262 – –

Profit on disposal of property, plantand equipment (162) (126) – –

Movement in foreign currencytranslation reserve – (7) – –

Finance costs 22 878 12 014 3 –

Dividend received – – (19 030) (28 036)

Interest received (6 184) (13 290) (188) (156)

Amortisation of goodwill 1 819 1 299 – –

Outside shareholders interest insubsidiary acquired – (1 313) – –

Operating profit before workingcapital changes 132 858 88 853 (720) (371)

Working capital changes 522 (55 605) 240 (111)

Increase in inventories (81 814) (41 617) – –

(Increase) decrease in accounts receivable (23 197) (3 710) 34 (17)

Increase (decrease) in accounts payable 105 533 (10 278) 206 (94)

Cash generated from (utilised in) operations 133 380 33 248 (480) (482)

B. DIVIDENDS PAIDAmounts unpaid at the beginning of the year 56 60 56 60

Final dividend paid 29 June 2001(2001: 7 July 2000) 11 261 11 707 11 261 11 707

Interim dividend paid 3 December 2001(2001: 8 December 2000) 6 144 7 005 6 144 7 005

Amounts unpaid at the end of the year (77) (56) (77) (56)

17 384 18 716 17 384 18 716

C. TAXATION PAID

Amounts unpaid (paid in advance) at thebeginning of the year 17 956 3 869 – (28)

Acquisition of subsidiary – 4 563 – –

Charged to the income statement 35 404 26 711 610 2 103

Amounts unpaid at the end of the year (15 708) (17 956) – –

37 652 17 187 610 2 075

D. INVESTMENT IN SUBSIDIARIES

During the current year the group acquiredAftakas (Proprietary) Limited and the businessof Turbochargers and Partlek.

In the prior year the group acquired Bearing ManLimited and its subsidiaries.

The fair value of shareholder’s loans assumedwere as follows:

Property, plant and equipment (1 176) (47 102) – –

Land and buildings – (22 303) – –

Plant and equipment (133) (1 808) – –

Motor vehicles (318) (7 087) – –

Furniture and fittings (665) (8 194) – –

Computer equipment (60) (7 706) – –

Leasehold improvements – (4) – –

Deferred taxation – (2 438) – –

Intangible assets – (253) – –

Inventories (4 528) (172 830) – –

Receivables (5 740) (89 397) – –

Payables 2 456 120 956 – –

Taxation – 4 563 – –

Bank overdraft and bankers’ acceptances – 36 886 – –

Unsecured loans – 12 364 – –

Goodwill arising on acquisition (26) (19 436) – –

Long-term loans – (9 300) (667) –

Outside shareholders’ interest – 64 043 – –

Cash flow on acquisition, net of cashacquired (9 014) (101 944) (667) –

Adjusted for:

Bank overdraft and bankers’ acceptances – (36 886) – –

(9 014) (138 830) (667) –

E. RECONCILIATION OF CASH AND

CASH EQUIVALENTS

Bank balances and cash 67 643 74 028 268 370

Bank overdrafts and acceptances (78 534) (80 327) – –

(10 891) (6 299) 268 370

A n n u a l R e p o r t 2 0 0 2 29

Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

N O T E S T O T H E A N N U A L F I N A N C I A L S TAT E M E N T S


1. ACCOUNTING POLICIESThe annual financial statements are prepared on the historical cost basis and incorporate the followingprincipal accounting policies which are consistent with prior years.

1.1 Basis of consolidationThe consolidated financial statements incorporate those of the company and its subsidiaries. Theresults of any subsidiaries acquired or disposed of during the year are included from the effectivedate control was acquired and up to the effective date control ceased. Differences between theconsideration paid for subsidiaries acquired and the fair value of their net assets at dates ofacquisition are expressed as goodwill arising on acquisition of subsidiaries. Consolidated fixedassets are reflected at the cost and accumulated depreciation shown by subsidiaries. Allintragroup transactions and balances are eliminated on consolidation.

1.2 Property, plant and equipmentLand is stated at cost while other fixed assets (and capitalised leased assets) are stated at cost, lessaccumulated depreciation.Depreciation is calculated on the straight line basis at the following rates, which are consideredto approximate the estimated useful lives of the assets concerned.Buildings 1 – 10%Plant and equipment 10 – 20%Leasehold improvements over the period of the leaseMotor vehicles 20 – 25%Furniture and fittings 20%Office equipment 10 – 331/3%Computer equipment 22 – 331/3%

1.3 Patents and trademarks Patents and trademarks are written off over ten years which represents their estimated useful lives.

1.4 Deferred taxationDeferred taxation is provided at current rates using the balance sheet liability method. Fullprovision is made for all temporary differences between the taxation base of an asset or liabilityand its balance sheet carrying amount. No deferred tax asset or liability is recognised in thosecircumstances where the initial recognition of an asset or liability has no impact on accountingprofit or taxable income. Assets are not raised in respect of deferred taxation on assessed lossesunless it is probable that future taxable profits will be available against which the deferredtaxation asset can be realised in the foreseeable future.

1.5 GoodwillGoodwill arising on consolidation represents the excess of the cost of acquisition over the group’sinterest in the fair value of the identifiable assets and liabilities of a subsidiary at the date ofacquisition. Goodwill is capitalised and amortised on the straight line basis over its usefuleconomic life, a period generally not exceeding 10 years. Goodwill arising on the acquisition of an associate is included within the carrying amount of theassociate. Goodwill arising on the acquisition of subsidiaries and jointly controlled entities ispresented separately in the balance sheet.

1.6 InventoriesMerchandise is valued at the lower of cost, determined on the first-in-first-out basis whichapproximates actual cost, and net realisable value. The cost comprises direct materials and otherdirect costs that have been incurred in bringing the inventories to their present location andcondition, but excludes interest expense. Net realisable value represents the estimated sellingprice less all estimated costs to completion and costs to be incurred in marketing, selling anddistribution.

1.7 Finance leasesAssets held under finance leases are capitalised. At the commencement of the leases, these assetsare reflected at their cash cost and the related liability is recognised at an equivalent amount.Finance charges are written off over the periods of the leases based on the effective rates ofinterest.

1.8 ProvisionsProvisions are recognised when the group has a present obligation as a result of a past event,which is probable and will result in an outflow of economic benefits that can be reasonablyestimated.

1.9 RevenueGroup revenue comprises sales to customers, net of value added tax and discounts. Holdingcompany revenue comprises management fees earned.

·


A n n u a l R e p o r t 2 0 0 2 31

1.10 Revenue recognitionSales are recognised upon delivery of goods and customer acceptance.

1.11 Cost of salesCost of sales comprises all costs of purchase and other costs incurred in bringing inventories totheir present location and condition.

1.12 Foreign exchangeTransactions in foreign currencies are initially recorded at the rates of exchange ruling on thedate of the transaction. Monetary assets and liabilities denominated in such currencies areretranslated at the rates ruling at the balance sheet date. Profits and losses arising on exchangeare dealt with in the income statement.In order to hedge its exposure to foreign exchange risks, the group enters into forward exchangecontracts and options. Unrealised gains and losses arising on foreign currency forward contractsand options designated as hedges are deferred and matched against gains and losses arising onspecified transactions.

1.13 Retirement benefitsCurrent contributions to the defined contribution pension fund per the Pension Fund Act, 1956and provident fund, are based on current service and current salaries and are charged againstincome for the year.

1.14 Financial instrumentsFinancial assetsThe group’s principal financial assets are bank balances and cash, trade receivables, finance leasereceivables and equity investments.Trade receivables are stated at their nominal value as reduced by appropriate allowances forestimated irrecoverable amounts. Current asset investments are carried at market value at the balance sheet date. Increases ordecreases in the carrying amount of current investments are recognised as income or expenses ofthe period. Long-term investments, where the group is not in a position to exercise significantinfluence or joint control, are stated as cost less impairment loss, where the investment’s carryingamount exceeds its estimated recoverable amount.

Financial liabilities and equity instrumentsFinancial liabilities and equity instruments are classified according to the substance of thecontractual arrangements entered into. Debt instruments issued which carry a right to convert toequity that is dependent on the outcome of uncertainties beyond the control of both the groupand the holder, are classified as liabilities except where the possibility of non-conversion isremote.Significant financial liabilities include finance lease obligations, interest-bearing bank loans andoverdrafts, bankers acceptances, convertible loan notes and trade and other payables.Interest-bearing bank loans and overdrafts and convertible loan notes are recorded at theproceeds received, net of direct issue costs. Finance charges, including premiums payable onsettlement or redemption, are accounted for on the accrual basis and are added to the carryingamount of the instrument to the extent that they are not settled in the period in which they arise.Trade and other payables are stated at their nominal value.Equity instruments are recorded at the proceeds received, net of direct issue costs.

Off balance sheet derivative instrumentsDerivative financial instruments, comprising currency forward contracts and options and interestrate swap agreements, are not recognised in the financial statements on inception. The policyadopted for instruments designed to hedge foreign exchange risks is outlined under foreignexchange above.

1.15 ImpairmentAt each balance sheet date, the group reviews the carrying amounts of its tangible and intangibleassets to determine whether there is any indication that those assets have suffered an impairmentloss. If the recoverable amount of an asset is estimated to be less than its carrying amount, itscarrying amount is reduced to its recoverable amount. Impairment losses are recognised in theincome statement immediately.

1.16 Comparative figuresWhere necessary certain comparative figures have been restated to comply with current yearclassifications.

N O T E S T O T H E A N N U A L F I N A N C I A L S TAT E M E N T S ( c o n t i n u e d )

32 I n v i c t a H o l d i n g s L i m i t e d·


2. BUSINESS SEGMENTS

For management purposes, the group is currently organised into three operating segments –engineering consumables, automotive spares and capital equipment. These segments are the basis onwhich the group reports its primary information.

Segment information on these businesses is presented below:

Engineering Automotive Capital Non-segment Consoli-consumables spares equipment allocations dation

2002 R’000 R’000 R’000 R’000 R’000

REVENUE 756 002 237 658 358 651 – 1 352 311

Operating income beforefinance costs andinterest received 96 111 14 115 13 534 (8 093) 115 667

Interest received 6 184

Finance costs (22 878)

Income before tax 98 973

Taxation (27 949)

Earnings attributableto shareholders 71 024

OTHER INFORMATION

Depreciation and amortisation 11 851 2 157 1 824 1 521 17 353

Capital expenditure 25 845 2 143 2 572 – 30 560

BALANCE SHEET

Assets 484 791 113 811 184 281 32 598 815 481

Liabilities 252 060 130 081 108 749 (52 594) 438 296

2001

REVENUE 547 800 197 671 311 913 – 1 057 384

Operating income before financecosts and interest received 58 685 13 847 6 566 (1 971) 77 127

Interest received 13 290

Finance costs (12 014)

Income before taxation 78 403

Taxation (23 061)

Earnings attributableto shareholders 55 342

OTHER INFORMATION

Depreciation and amortisation 7 963 2 349 1 847 1 013 13 172

Capital expenditure 10 861 1 781 2 006 – 14 648

BALANCE SHEET

Assets 388 552 93 723 184 438 1 897 668 610

Liabilities 202 032 115 689 110 288 (91 619) 336 390

Geographical segments

The group has not reported segment information by geographical location as the operations occur withinSouthern Africa.

A n n u a l R e p o r t 2 0 0 2 33

3. OPERATING PROFIT BEFOREFINANCE COSTS AND INTERESTRECEIVED

Operating profit before finance costsand interest received is arrived at aftertaking into account the following items:

Income

Dividends received from subsidiaries – – 19 030 28 036

Foreign exchange gains – 2 308 – –

Profit on disposal of gilts – 392 – –

Profit on disposal of property, plantand equipment 162 126 – –

Expenses

Amortisation of goodwill 1 819 1 299 – –

Amortisation of trademarks 283 262 – –

Auditors remuneration 950 864 13 13

– Audit fees 798 650 13 13

– Other services 152 214 – –

Depreciation 15 251 11 611 2 2

– Buildings 1 805 1 389 – –

– Plant and equipment 956 725 – –

– Leasehold improvements 16 80 – –

– Motor vehicles 4 614 2 884 – –

– Furniture and fittings 233 160 1 –

– Office equipment 2 601 1 916 1 2

– Computer equipment 5 026 4 457 – –

Employment costs 156 462 120 654 131 133

Foreign exchange losses 6 738 149 – –

Operating lease expenses 16 078 15 604 27 27

– Premises 12 215 10 446 27 27

– Equipment 3 624 4 958 – –

– Motor vehicles 239 200 – –

Pension and provident fund contributions 8 725 9 297 – –

Restructuring costs – 1 442 – –

Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000



Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

·


4. FINANCE COSTS

Bank and other borrowings 20 936 10 475 3 –

Instalment sales 1 942 1 539 – –

22 878 12 014 3 –

5. TAXATION

South African normal taxation

– Current year 31 570 22 830 – –

– Prior years 484 – – –

Foreign taxation 1 024 986 – –

Deferred taxation

– Current year (2 951) (1 809) – –

– Prior years (4 504) (1 841) – –

Secondary tax on companies 2 326 2 895 610 2 103

27 949 23 061 610 2 103

The company's estimated tax loss availablefor set-off against future taxable incomeamounts to R902 000 (2001: R609 000).

Reconciliation of taxation rate % % % %

South African normal rate 30,0 30,0 30,0 30,0

Dividend and non–taxable income – – (30,0) (30,0)

Foreign taxation rate differential 0,1 0,1 – –

Permananent differences 0,7 (1,4) – –

STC 2,3 3,7 3,3 7,6

Utilisation of assessed losses (0,6) (1,2) – –

Prior years (4,3) (1,8) – –

28,2 29,4 3,3 7,6

6. ORDINARY DIVIDENDS*

8 cents paid on 3 December 2001(2001: 8 cents) to shareholders registered in the books of the company on 30 November 2001 6 144 7 005 6 144 7 005

16 cents declared on 18 May 2002(2001: 14 cents) to shareholders registered in the books of the company on 7 June 2002 11 838 11 261 11 838 11 261

17 982 18 266 17 982 18 266

* In accordance with AC107 the final dividend of 16 cents per share proposed by the directors has not beenreflected in the financial statements.

A n n u a l R e p o r t 2 0 0 2 35

Group2002 2001

R’000 R’000

7. EARNINGS PER SHARE

Earnings

Earnings for the purposes of earnings per share 45 991 39 584

Effect of dilutive potential ordinary shares:

Share options 1 140 1 674

Earnings for the purposes of diluted earnings per share 47 131 41 258

Number of shares

2002 2001‘000 ’000

Number of shares

Weighted average number of ordinary shares forthe purposes of basic earnings 76 772 86 286



Weighted average number of ordinary sharesfor the purposes of diluted earnings per share 81 776 91 877

Group

2002 2001R’000 R’000

Headline earnings basisThis calculation is based on:

Headline earnings of R47 648 000(2001: R41 375 000) and a weighted averagenumber of 76 772 351 (2001: 86 286 550) sharesin issue during the period.

This basis is a measure of the trading performanceand excludes profits and losses of a capital nature.

It is derived as follows:

Earnings attributable to ordinary shareholders 45 991 39 584

Adjusted for

Profit on disposal of property, plant and equipment (162) (126)

Goodwill amortisation 1 819 1 299

Reorganisation costs – 618

Headline earnings for the purposes of headlineearnings per share 47 648 41 375



Headline earnings for the purposes of dilutedheadline earnings per share 48 788 43 049



Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

·


8. PROPERTY, PLANT AND EQUIPMENT

Land and buildings 29 088 24 936 – –

– Cost 43 732 37 774 – –

– Accumulated depreciation 14 644 12 838 – –

Plant and equipment 2 741 2 352 – –

– Cost 9 413 7 829 – –


Leasehold improvements 13 29 – –

– Cost 448 448 – –

– Accumulated depreciation 435 419 – –

Motor vehicles 22 020 14 188 – –

– Cost 30 981 20 510 – –


Furniture and fittings 1 102 544 3 4

– Cost 2 158 1 376 23 23

– Accumulated depreciation 1 056 832 20 19

Office equipment 8 250 8 237 – 1

– Cost 19 970 17 797 37 37

– Accumulated depreciation 11 720 9 560 37 36

Computer equipment 10 884 10 170 – –

– Cost 34 570 29 207 14 14

– Accumulated depreciation 23 686 19 037 14 14

74 098 60 456 3 5

8.1 Details of the land and buildings

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

8.2 Encumberances

The group has encumbered land and buildings having a carrying value of approximately R2 400 000(2001: R2 400 000) and motor vehicles having a carrying value of R532 000 (2001: R650 000) to securebanking facilities as detailed in note 19.

A n n u a l R e p o r t 2 0 0 2 37

Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

8. PROPERTY, PLANT AND EQUIPMENT (continued)

8.3 Property, plant and equipment(details of movement)

Net book value Net book value

Land and buildings

Balance at the beginning of the year 24 936 5 118 – –

Acquisition of subsidiaries – 22 303 – –

Additions 5 957 276 – –

Depreciation for the year (1 805) (1 389) – –

Disposals – (1 372) – –

Balance at the end of the year 29 088 24 936 – –

Plant and equipment

Balance at the beginning of the year 2 352 673 – –

Acquisition of subsidiaries 318 1 808 – –

Additions 1 063 740 – –

Depreciation for the year (956) (725) – –

Disposals (36) (132) – –

Transfer – (12) – –


Leasehold improvements

Balance at the beginning of the year 29 140 – –

Acquisitions of subsidiaries – 4 – –

Depreciation for the year (16) (80) – –

Disposals – (35) – –

Balance at the end of the year 13 29 – –

Motor vehicles


Acquisition of subsidiaries 133 7 087 – –

Additions 14 993 8 899 – –

Depreciation for the year (4 614) (2 884) – –

Disposals (2 680) (1 605) – –

Transfer – (44) – –





Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

8. PROPERTY, PLANT AND EQUIPMENT (continued)

8.3 Property, plant and equipment(details of movement) (continued)

Net book value Net book value

Furniture, fittings, office and computer equipment

Balance at the beginning of the year 18 951 5 163 5 7

Acquisition of subsidiaries 725 15 900 –

Additions 8 547 4 733 –

Depreciation for the year (7 860) (6 533) (2) (2)

Disposals (127) (368) –

Transfer – 56 –

Balance at the end of the year 20 236 18 951 3 5

Total

Balance at the beginning of the year 60 456 13 829 5 7

Acquisition of subsidiaries 1 176 47 102 – –

Additions 30 560 14 648 – –

Depreciation for the year (15 251) (11 611) (2) (2)

Disposals (2 843) (3 512) – –

Balance at the end of the year 74 098 60 456 3 5

9. TRADEMARKS

Trademarks represent the rights to theexclusive use of certain trademarks,trading names and brand names

Balance at the beginning of the year 791 800 – –

Current year movements

Additions – 253 – –

Amortisation 283 262 – –

Balance at the end of the year 508 791 – –

Comprising

Cost 2 253 2 253 – –

Accumulated amortisation 1 745 1 462 – –

508 791 – –

A n n u a l R e p o r t 2 0 0 2 39

Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

10. DEFERRED TAXATION

Movement of deferred taxation asset

Balance at the beginning of the year 6 088 – – –

Acquisition of subsidiaries – 2 438 – –

Income statement movement 7 455 3 650 – –


Comprising

Capital allowances (992) (7 307) – –

Provisions 14 535 13 395 – –

13 543 6 088 – –

11. INTEREST IN SUBSIDIARIESShares at cost – – 103 580 102 913

Loans to subsidiaries – – 36 404 60 415

– – 139 984 163 328

12. GOODWILLGoodwill arising on acquisition of subsidiariesBalance at the beginning of the year 16 871 724 – –

Acquisition of subsidiary 26 19 436 – –

Credit from subsidiary – (3 303) – –

Outside shareholders interest insubsidiary acquired – 1 313 – –

Amortisation for the year (1 819) (1 299) – –




Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

·


13. LONG-TERM RECEIVABLE

Share Purchase Scheme – 358 – –

The loan was secured by a pledge of shares,and was repaid during the year.

Staff incentive scheme loan 8 408 8 408 – –

The loan is unsecured. Interest is chargedat the prime overdraft rate. No fixed repayment date has been set.

8 408 8 766 – –

14. INVENTORIES

Merchandise 426 408 340 066 – –

15. FINANCE LEASE RECEIVABLES

Gross investment in leases:

Due within one year – 265 – –

Due after one year – 711 – –

– 976 – –

Less: unearned finance income – 290 – –

– 686 – –

16. ACCOUNTS RECEIVABLE

Trade receivables 200 115 167 909 – –

Prepayments 2 119 2 356 80 109

Other receivables 7 561 10 593 3 8

209 795 180 858 83 117

17. ORDINARY SHARE CAPITAL

Authorised

134 000 000 (2001: 134 000 000)ordinary shares of 5 cents each 6 700 6 700 6 700 6 700

Issued

Ordinary share capital73 987 130 (2001: 80 436 671)ordinary shares of 5 cents each 3 699 4 022 3 699 4 022

Shares repurchased for cancellation1 594 126 (2001: 298 800) ordinaryshares of 5 cents each (80) (15) (80) –

3 619 4 007 3 619 4 022

A n n u a l R e p o r t 2 0 0 2 41

Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

17. ORDINARY SHARE CAPITAL (continued)

17.1 The unissued ordinary shares are underthe 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.

Unissued shares Number of shares (000) Number of shares (000)

Under option in terms of the InvictaHoldings Limited Share Option Scheme 7 908 8 788 7 908 8 788

– At 254 cents per share exercisableuntil 10 June 2001 – 13 – 13

– At 120 cents per share exercisableuntil 23 December 2003 583 1 500 583 1 500

– At 190 cents per share exercisableuntil 8 June 2004 4 175 4 175 4 175 4 175

– At 217 cents per share exercisableuntil 27 April 2005 2 900 2 900 2 900 2 900

– At 218 cents per share exercisableuntil 17 May 2005 200 200 200 200

– At 305 cents per share exercisableuntil 7 February 2007 50 – 50 –

Under the control of the directors untilthe next annual general meeting 52 105 44 775 52 105 45 074

60 013 53 563 60 013 53 862

18. SHARE PREMIUM

Movements in ordinary share premium

Balance at the beginning of the year 147 504 186 764 148 331 186 764

Less: premium on shares repurchased

and cancelled during the year

– Arising from repurchase in terms

of specific authority – 21 300 – 21 300

– Arising from repurchase in terms

of general authority 18 428 17 133 19 255 17 133

– Shares repurchased for cancellation 4 865 827 4 865 –

Balance at the end of the year 124 211 147 504 124 211 148 331




Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

19. LONG-TERM BORROWINGS

Secured borrowings

Standard Bank Bond Investments 88 119 – –

Secured by first mortgage bond over Erf 12308, 327 Loop Street, Bloemfontein,with buildings thereon as referred to in note 8.2.

The interest rate at the balance sheet datewas 13,0% per annum (2001: 14,5%)and fluctuated in accordance with lending rates throughout the period. The bond is repayable in annual payments of R31 000.

BOE Bank 612 974 – –

The liability is secured by certain of the vehicles, as referred to in note 8.2. The interestrate at the balance sheet date was 14,5% (2001: 14,5%). The loan is repayable in average monthly instalments of R17 376.

Stannic Instalment Sales 152 147 – –

The loans bear interest at the rate of 15,4%(2000: 16,0%) per annum and are repayableover 3 years and are secured by certain of thevehicles as referred to in note 8.2.

Total secured borrowings 852 1 240 – –

Unsecured borrowings

FirstRand Bank 11 367 12 554 – –

The loan bears interest at the rate of 10,2%(2001: 11,5%) per annum and is repayablein equal instalments, inclusive of interestuntil 2008.

African Life – 709 – –

The loan was repaid during the year

FirstRand Bank 527 642 – –

The loan bears interest at the rate of16,7% and is repayable in 2009.

Invicta Share Trust 720 384 720 384

The loan is non-interest-bearing, withno fixed repayment terms.

Total unsecured borrowings 12 614 14 289 720 384

Total long-term borrowings 13 466 15 529 720 384

Less: current portion of long-termborrowings (1 805) (2 422) – –

11 661 13 107 720 384

There is no limit on the group’s borrowingsand guarantees per the Company’s Articles of Association.

A n n u a l R e p o r t 2 0 0 2 43

Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

20. TRADE, OTHER PAYABLES AND PROVISIONS

Trade creditors 237 822 175 946 – –

Other payables 67 815 16 616 491 285

Employee benefit provisions 20 222 25 608 – –

Warranties and service provisions 4 652 4 352 – –

330 511 222 522 491 285

20.1 Movements in provisions

Employee benefit provisions


(Credited) charged to income (5 386) 19 657 – –


Warranties and service provisions


Charged to income 300 1 164 – –


21. CONTINGENT LIABILITIES

21.1 The company has subordinated R10 518 979 (2001: R8 498 277) of its loan receivable from a subsidiarycompany, Table Bay Holdings (Pty) Ltd, in favour of creditors of that company, until such time as theassets of that company, fairly valued, exceed its liabilities.

21.2 The company has guaranteed certain of the overdraft facilities, shipping facilities and long–termliabilities of its subsidiaries, Table Bay Holdings (Pty) Ltd and CSE Equipment Company(Pty) Ltd. At the year-end, liabilities of the aforementioned companies so secured were R30 082 236(2001: R43 199 947).

21.3 The group has guaranteed certain staff loans to a commercial bank. The individual loans are notsignificant in value, and the exposure risk is not considered to be material. The total guarantee hasbeen limited to R1 500 000 (2001: R1 500 000).

21.4 The group has guaranteed certain finance facilities granted to customers of BOE Bank. At the year-end, the finance facilities guaranteed were R29 501 371 (2001: R41 433 642).




22. DIRECTORS’ EMOLUMENTS

Executive directors

M Rose-Innes

– Salary 240 220

– Pension and provident fund contributions 96 90

– Medical aid contributions 39 29

375 339

A Goldstone

– Salary 303 305

– Pension and provident fund contributions 146 137

– Medical aid contributions 29 26

– Company motor vehicle 57 33

– Bonus 150 –

– Gains on exercise of share options 360 58

1 045 559

1 420 898

Non-executive directors

CH Wiese

– For services as a director 18 18

DI Samuels


DL McCay


60 60

Total directors emoluments 1 480 958

Paid by

– The company 60 60

– Subsidiary companies 1 060 840

– Gains on exercise of share options 360 58

1 480 958

Executive directors are eligible for anannual performance related bonus.

Performance is measured relative toappropriate group and business sector targets.

Executive directors’ interests in the share optionand share purchase schemes Number of shares

Options at the beginning of the year 4 400 000 1 500 000

Options (lapsed) granted (300 000) 2 900 000

Options at the end of the year 4 100 000 4 400 000

Group2002 2001

R’000 R’000

A n n u a l R e p o r t 2 0 0 2 45

Group Company2002 2001 2002 2001

R’000 R’000 R’000 R’000

23. RETIREMENT BENEFITS

The group contributes to a defined contributionpension plan and a defined contribution providentplan which are governed by the Pension Funds Act. No actuarial valuation of the plans are required.All staff are members of a fund and the costs ofproviding retirement benefits are charged to theincome statement as they are incurred.

24. COMMITMENTS

Commitments in respect of unexpiredrental agreements for premises:

– Payable within twelve months 6 863 5 777 – –

– Payable thereafter 13 440 15 752 – –

20 303 21 529 – –

Commitments in respect of unexpiredrental agreements for motor vehicles:

– Payable within twelve months 1 524 4 067 – –

– Payable thereafter 596 2 830 – –

2 120 6 897 – –

Commitments in respect of contractedcapital expenditure 2 121 7 008

Interest rate management

The interest rate profile of totalborrowings is as follows:

2002 2001 2002 2001Description Currency Redemption Interest Rate % R'000 R'000

Bank overdraft ZAR N/A 14,0 14,5 78 534 80 327

Credit risk management

Potential areas of credit risk consist of trade accounts receivable, short-term cash investments andreceivables discounted with recourse. Trade accounts receivable consist mainly of a large, widespreadcustomer 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 iscontrolled by application and account limits. Provision is made for both specific and general bad debtsand at the year end management did not consider there to be any material credit risk exposure that wasnot already covered by credit guarantee or a bad debt provision. It is group policy to deposit short-termcash investments only with the major banks.

Liquidity risk management

The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequateunutilised borrowing facilities are maintained.




25. OFF BALANCE SHEET DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Foreign currency management

Trade exposure:

The group's policy is to cover forward all foreign currency denominated purchases.

Foreign currency exposure

The group utilises currency derivatives to eliminate or reduce the exposure to its foreign currencydenominated assets and liabilities, and to hedge future transactions. The group has entered into certainforward exchange contracts in various currencies which do not relate to specific liabilities appearing onthe balance sheet at the year end. These contracts will be utilised for settlement of orders already placedon suppliers and due for payment in the coming year.

The estimated net fair values have been determined at the year end, using available market informationand appropriate valuation methodologies, and are not indicative of the amounts that the group couldrealise in the normal course of business.

Forward exchange contracts

Foreigncurrency

’000 R’000

US Dollar 5 118 59 625

Euro 4 239 42 232

Yen 791 348 73 893

British Pound 235 3 931

Swiss Franc 34 237

A liability of R2 442 000 (2001: asset of R217 000) arose on the revaluation of contracts to fair value.The liability has been included in accounts payable (2001: accounts receivable).

The forward exchange contracts all mature within 12 months.

Other financial assets and financial liabilities

The carrying amounts of other financial assets and financial liabilities approximate their fair value.These include trade receivables and payables, other receivables and payables, long-term debtors,overdrafts, bankers acceptances and short-term borrowings, long-term borrowings and shareholders fordividend.

26. DIRECTORS’ INTERESTS IN THE SHARES OF THE COMPANY

Number of shares held 2002 Number of shares held 2001

Direct interest Indirect interest Direct interest Indirect interest

CH Wiese – 22 345 928 – 22 214 348

DL McCay – 101 461 – 2 400 000

M Rose-Innes 19 458 7 680 512 – 7 680 512

DI Samuels – 1 638 703 – 1 853 200

A Goldstone – 916 163 96 796 729 598

No material changes in the above shareholdings have been reported between 31 March 2002 and the date of this

report.

In addition to the shares reflected above, the Invicta Holdings Limited Share Trust holds 23 850 (2001: 442 750)

shares. DL McCay and DI Samuels are trustees of the Invicta Holdings Limited Share Trust.

A n n u a l R e p o r t 2 0 0 2 47

S C H E D U L E O F I N T E R E S T S I N S U B S I D I A R I E S

Proportion helddirectly or Amount

Issued ordinary indirectly by Book value owing by(to)shared capital holding company of shares subsidiary

2002 2001 2002 2001 2002 2001 2002 2001R’000 R’000 % % R’000 R’000 R’000 R’000

DIRECT HOLDINGS

Subnova (Pty) Ltd(Investment holding company) 640 – 100 100 640 – 710 640

G North & Son (Pty) Ltd(Trading company) 460 460 100 100 – – 24 482 24 482

Table Bay Holdings (Pty) Ltd(Trading company) – – 100 100 – – (7 981) (8 912)

Trescor Investment (Pty) Ltd(Investing holding company) 9 9 100 100 969 969 978 978

Bearing Man Limited(Trading company) 57 031 57 031 56,3 56,3 101 971 101 944 – –

INDIRECT HOLDINGSBearing Man (Botswana)(Pty) Ltd (Trading company) 130 130 56,3 56,3 – – – –

Bearing Man House (Pty) Ltd(Property holding company) 400 400 56,3 56,3 – – – –

Bearing Man (Namibia)(Pty) Ltd (Trading company) 3 3 56,3 56,3 – – – –

Bearing Man (Swaziland)(Pty) Ltd (Trading company) 100 100 56,3 56,3 – – – –

FPT Distribution (South Africa)(Pty) Ltd (Trading company) 3 3 56,3 56,3 – – – –

CSE EquipmentCompany (Pty) Ltd(Trading company) 9 623 9 623 100 100 – – 18 215 43 227

Engine Parts (Pty ) Ltd(Trading company) 1 000 1 000 51 51 – – – –

NTN Bearings (SA)Property Company (Pty) Ltd(Property holding company) – – 100 100 – – – –

Mangold Turf EquipmentCompany (Pty) Ltd 1 1 100 100 – – – –

Petrosanne (Pty) Ltd(Property holding company) 4 4 51 51 – – – –

Shallcross (Pty) Ltd(Property holding company) 5 5 100 100 – – – –

DORMANT COMPANIES 92 755 91 303 – – – – – –

103 580 102 913 36 404 60 415

The company’s attributable interest in the aggregate profits (after taxation) of its subsidiaries is as follows:

2002 2001R’000 R’000

45 659 41 904

S H A R E H O L D E R S ’ I N F O R M AT I O N


at 31 March 2002

Number ofSHAREHOLDERS’ ANALYSIS Number of shares % Issued shareholders

Portfolio size

1 – 10 000 1 007 133 1,36 824

10 001 – 100 000 3 324 240 4,49 90

Over – 100 000 69 655 757 94,15 54

Total 73 987 130 100,00 968

SHAREHOLDERS HOLDING MORE THAN 5%OF THE ISSUED SHARE CAPITAL Number of shares % Issued

Name

Titan Nominees (Pty) Ltd 12 784 800 17,28

SIS Segaintersettle Ag 12 436 467 16,81

Old Mutual 7 447 769 10,07

Thalassa Shipping Ltd 6 653 684 8,99

Investment Solutions 6 387 662 8,63

Total 45 710 382 61,78

CLASSIFICATION Number of % of total Number of % of totalOF SHAREHOLDERS shareholders shareholders shares shares

Public 947 97,83 37 892 150 51,21

Non public 21 2,17 36 094 980 48,79

Total 968 100 73 987 130 100

JSE SECURITIES EXCHANGE SOUTH AFRICA STATISTICS 2002 2001

Ordinary shares

Traded 12 099 092 24 900 370

High (cents) 335 300

Low (cents) 265 200

Market price at year end (cents) 310 295

A n n u a l R e p o r t 2 0 0 2 49

N O T I C E T O S H A R E H O L D E R S

Invicta Holdings Limited (”Invicta” or ”the company”)Registration number 1966/002182/06Incorporated in the Republic of South AfricaNotice is hereby given that the annual general meeting of shareholders of Invicta Holdings Limited will be held in the boardroom,Invicta Holdings Limited, Constantia Uitsig Wine Farm, Spaanschemat River Road, Constantia, 7806 on Friday, 26 July 2002 at 11h00for the following purposes:

Special Resolution 1To consider and if deemed fit, to pass with or without amendment, the following resolution as a special resolution:“Resolved that, in terms of Article 13.7 of the Company’s Articles of Association, the company be and is hereby authorised, by wayof a general approval, to acquire ordinary shares issued by the company, in terms of Sections 85(2) and 85(3) of the Companies Act,1973 (Act 61 of 1973) as amended by the Companies Amendment Act, 1999 (Act 37 of 1999) (“the Companies Act”) and in termsof the Rules and Requirements of the JSE Securities Exchange South Africa (“the JSE”), and to permit subsidiary companies of thecompany to acquire shares in the company in terms of Section 89 of the Companies Act, being that:• any such acquisition of ordinary shares shall be implemented on the open market of the JSE;• this general authority shall only be valid until the company’s next annual general meeting, provided that it shall not extend

beyond 15 months from the date of this special resolution;• a paid press announcement will be published as soon as the company has acquired ordinary shares constituting, on a

cumulative basis, 3% of the number of ordinary shares in issue prior to the acquisition pursuant to which the 3% threshold isreached, containing full details of such acquisitions;

• acquisitions of ordinary shares in the aggregate in any one financial year may not exceed 20% of the company’s issuedordinary share capital in that financial year; and

• in determining the price at which ordinary shares issued by the company are acquired by it in terms of this general authority,the maximum premium at which such ordinary shares may be acquired will be 10% of the weighted average of the middlemarket price at which such ordinary shares are traded on the JSE, as determined over the five trading days immediatelypreceding the date of repurchase of such ordinary shares of the company.”

General authority for the repurchase of shares on the open marketThe board, at the date of this annual report has no definite intention of repurchasing shares in Invicta on the open market of theJSE. It is, however, proposed, and the board believes it to be in the best interest of Invicta, that shareholders pass a specialresolution granting the company a general authority to acquire its own shares and permit subsidiary companies of Invicta toacquire shares in the company.The effect of this special resolution and the reason therefore is to grant to the company a general approval in terms of theCompanies Act for the acquisition by the company of its own shares, which general approval shall be valid until the earlier of thenext annual general meeting of the company or the variation or revocation of such general authority by special resolution by asubsequent general meeting of the company, provided that the general authority shall not extend beyond 15 months from thedate of this special resolution.Assuming the general authority is granted and the company decides to undertake a repurchase of its shares, the directors are ofthe opinion that:• the company and the group will be able in the ordinary course of business to pay its debts for a period of 12 months after

the date of the notice of the annual general meeting;• the assets of the company and the group will be in excess of the liabilities of the company and group for a period of

12 months after the date of the notice of the annual general meeting; • the ordinary capital and reserves of the company and group are adequate for a period of 12 months after the date of the

notice of the annual general meeting; and• the working capital of the company and group is adequate for a period of 12 months after the date of the notice of the

annual general meeting.Pursuant to a general repurchase other than shares repurchased by one or more of the subsidiary companies to be held as treasurystock, application will be made to the JSE for the cancellation and delisting of the shares in question. The cancellation of the shareswill be effected by the way of a reduction of the ordinary share capital and a reduction of the ordinary share premium.

Special Resolution 2To consider and if deemed fit, to pass with or without amendment the following resolution as a special resolution:“Resolved that the Company’s Articles of Association be and are hereby amended by the replacement of Article 8 with thefollowing new article as Article 8:8. Transfer of shares shall be effected by using one of the following methods:

8.1 Every instrument of transfer of a share shall be lodged at the transfer office accompanied by the certificate of the sharesto be transferred and/or such other evidence as the company may require to prove the title of the transfer or or his rightto transfer the shares. Any authority to sign transfer deeds granted by a member for the purpose of transferring shareswhich may be lodged, produced or exhibited with or to the company at the transfer office shall be deemed to remainin full force, and the company may allow the same to be acted upon, until written notice of the revocation thereof islodged at the transfer office. Even after the lodging of such notice, the company may give effect to any instrumentsigned under the authority to sign and certified by any officer of the company as being in order before the lodging ofsuch notice.

8.2 Subject to the provisions of the Act and the requirements of the JSE Securities Exchange South Africa (”the JSE”) and anyother Stock Exchange on which the shares of the Company are or may be listed, all share transactions may be settled totallyelectronically, by the system Share Transactions Totally Electronic (STRATE) or any other electronic settlement system whichmay be approved by the JSE or any other Stock Exchange on which the share of the company are or may be listed.”

The reason and effect of special resolution 2 is to amend the Company’s Articles of Association to facilitate the implementation ofSTRATE as required by the JSE.

Special Resolution 3To consider and if deemed fit, to pass with or without amendment the following resolution as a special resolution:“Resolved that the Articles of Association be and are hereby amended by the replacement of Article 62 with the following newarticle as Article 62:

62 Subject to the provisions of these articles, a notice shall be in writing and shall be given or served by the company uponany member or director either by delivery or by sending it by post, properly addressed, to

62.1 a member at his address shown in the register of members;62.2 a director at his postal address shown in the directors’ register;

N O T I C E T O S H A R E H O L D E R S ( c o n t i n u e d )


and any such notice to members shall simultaneously be given to the secretary or other suitable official of any recognisedstock exchange on which the shares of the company are listed for the time being, in accordance with the requirements of thatstock exchange,or be permitted, subject to the requirements of the Act and the requirements of the JSE, to deliver and receive shareholderinformation, including any notice, via electronic medium such as facsimile, mail, bulletin boards, Internet web sites and computernetworks.”The reason and effect of special resolution 3 is to amend the Company’s Articles of Association to enable the company todisseminate information via electronic medium.

Ordinary Resolution 1To receive and consider the annual financial statements and the group annual financial statements for the year ended31 March 2002.

Ordinary Resolution 2To re-elect as director Mr M Rose-Innes who retires in terms of the Company’s Articles of Association but, being eligible, offershimself for re-election.

Ordinary Resolution 3To re-elect as director Mr DL McCay who retires in terms of the Company’s Articles of Association but, being eligible, offers himselffor re-election.

Ordinary Resolution 4To approve the directors fees for the year and fix the fees for the following year.

Ordinary Resolution 5Resolved that the authorised and un-issued ordinary share capital of the company be and is hereby placed under the control of thedirectors of the company which directors are, subject to the rules and regulations of the JSE and the provisions of Section 221 andSection 222 of the Companies Act as amended, authorised to allot and issue any of such shares at such time, to such person orpersons, company or companies and upon such terms and conditions as they may determine, such authority to remain in force untilthe next annual general meeting of the company.

Ordinary Resolution 6Resolved that the directors be authorised pursuant inter alia to Article 3 of the Company’s Articles of Association, until thisauthority lapses at the next annual general meeting of the company, unless it is then renewed at the next annual general meetingof the company, provided that it shall not extend beyond 15 months, to allot and issue any ordinary shares for cash subject to therules and requirements of the JSE on the following basis:1. the allotment and issue of the shares must be made to persons qualifying as public shareholders and not to related parties as

defined in the JSE Listing Requirements;2. the number of shares issued for cash shall not in the aggregate in any one financial year exceed 15 per cent of the company’s

issued share capital of ordinary shares. The number of ordinary shares which may be issued shall be based on the number ofordinary shares in issue at the date of such application less any ordinary shares issued during the current financial year,provided that any ordinary shares to be issued pursuant to a rights issue (announced and irrevocable and underwritten) oracquisition (concluded up to the date of application) may be included as though they were shares in issue at the date ofapplication;

3. the maximum discount at which ordinary shares may be issued is 10 per cent of the weighted average traded price on the JSEof those shares over 30 business days prior to the date that the price of the issue is determined or agreed by the directors ofthe company; and

4. after the company has issued shares for cash which represent, on a cumulative basis within a financial year, 5 per cent moreof the number of shares in issue prior that issue, the company shall publish an announcement containing full details of theissue, including the effect of the issue on net asset value and earnings per share.

In terms of the JSE Listing Requirements, a 75 per cent majority of the votes cast by shareholders present or represented by proxyat the annual general meeting must be cast in favour of ordinary resolution 6 for it to be approved.

Ordinary Resolution 7To appoint the auditors of the company for the following year.

Ordinary Resolution 8To authorise the directors to fix the auditors fees for the following year.In terms of the Companies Act, any member entitled to attend and vote at the above meeting may appoint one or more personsas proxy, to attend and speak and vote in his stead. A proxy need not be a member of the company. Forms of proxy must bedeposited at the office of the transfer secretaries not later than 48 hours before the time fixed for the meeting.If your Invicta shares have been dematerialised and are held in a nominee account, then your Central Securities DepositoryParticipant (”CSDP”) or broker, as the case may be, is obliged to contact you to ascertain how you wish to cast your vote at theannual general meeting and thereafter cast your vote in accordance with your instructions. If you have not been contacted it wouldbe advisable for you to contact your CSDP or broker, as the case may be, and furnish them with your instructions. If your CSDP orbroker, as the case may be, does not obtain instructions from you, they will be obliged to act in terms of your mandate furnishedto them, or if the mandate is silent in this regard to abstain from voting. Dematerialised shareholders should not complete theattached form of proxy.Unless you advise your CSDP or broker before 11h00 on 24 July 2002 that you wish to attend the annual general meeting or senda proxy to represent you at the annual general meeting, your CSDP or broker will assume you do not wish to attend the annualgeneral meeting or send a proxy. If you wish to attend the annual general meeting, your CSDP or broker will issue the necessaryletter of authority to you to attend the annual general meeting.

By order of the board

C Barnard JohannesburgSecretary 17 May 2002

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A n n u a l R e p o r t 2 0 0 2 51

F O R M O F P R O X Y

For use at the annual general meeting of shareholders to be held at Constantia on Friday, 26 July 2002 (“the annual general meeting”).

I/We

being a shareholder of Invicta 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 generalmeeting which will be held on Friday, 26 July 2002 at 11h00 in the boardroom of Invicta Holdings Limitedat Constantia Uitsig Farm, Spaanschemat River Road, Constantia, for the purposes of considering and, ifdeemed fit, passing with or without modification, the resolutions to be proposed thereat and at eachadjournment or postponement thereof, and to vote for and/or against the resolutions and/or abstainfrom voting in respect of the shares in the issued share capital of the company registered in my/ourname(s) (see note 2).

Signed at on 2002

Signature assisted by me (where applicable)

Number of shares

Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder of thecompany) to attend, speak and vote in place of that shareholder at the annual general meeting.

Shareholders who shares have been dematerialised and are held in a nominee account should not completethis form of proxy, they should contact their CSDP or broker as per the instructions contained in the noticeto shareholders.

Number of shares

For Against Abstain

Special Resolution 1



Ordinary Resolution 1








Invicta Holdings Limited (“Invicta” or “the company”)Registration number 1966/002182/06Incorporated in the Republic of South Africa

Notes

1. A shareholder may insert the name or names of two alternative proxies of the shareholder’s choicein the space provided, with or without deleting "the chairman of the annual general meeting" butany 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 numberof votes exercisable by that shareholder in the space provided. Failure to comply with the above willbe deemed to authorise the proxy to vote or abstain from voting at the annual general meeting ashe deems fit in respect of all the shareholder’s votes exercisable thereat. A shareholder or his proxyis not obliged to use all the votes exercisable by the shareholder or his proxy, or cast them in thesame way.

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

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

5. Where applicable, a married woman must be assisted by her husband unless proof of contractualcapacity has been lodged with the company.

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

7. Forms of proxy must be lodged with or posted to the company’s transfer secretaries’ offices inJohannesburg by 24 July 2002.

F O R M O F P R O X Y

T R A N S F E R S E C R E TA R I E S ’ O F F I C E


Computershare Investor Services Limited

Edura Building

41 Fox Street

Johannesburg 2001

PO Box 7184

Johannesburg 2000

SHAREHOLDERS’ DIARY

Financial year end 31 March 2002 Publication of financial results for the year 20 May 2002 Declaration of final dividend 20 May 2002 Annual report posted to shareholders 28 June 2002 Last date to register for final dividend 7 June 2002 Dividend payable 18 June 2002 Annual general meeting 26 July 2002 Publication of interim results November 2002

Documents

CONTENTS · FINANCIAL HIGHLIGHTS Annual Report 2002 1 March March March March March March 2002 2001 2000 1999 1998 1997 R’000 R’000 R’000 R’000 R’000 R’000 Revenue 1 352