Dr Christo Wiese
Non-executive chairman

Arnold Goldstone
Arnold Goldstone
Executive director



The market conditions in the regions served by the Group were mixed – South Africa (77% of revenue) had low economic growth, political uncertainty and low business confidence for the bulk of the financial year, whilst the rest of the world (23% of revenue) showed improved growth. Revenue from continuing operations was flat on last year at R9.6 billion.


The continuing operations comprise:

  • ESG (Engineering Solutions Group) – distributor of engineering products (e.g. bearings, belts, tools, electric motors, hydraulics etc.), technical services and solutions.
  • CEG (Capital Equipment Group) – distributor of agricultural machinery, construction and earthmoving machinery, forklifts
    and related spare parts, including Kian Ann Engineering, which is based in Singapore

Whilst revenue from continuing operations was flat, gross profit declined by 3.1% to R2.979 billion, reflecting the depressed conditions in which the Group trades in South Africa, viz; mining, agriculture, manufacturing and construction. Although costs were strictly controlled and increased by only 0.8%, the resultant operating profit before foreign exchange movements showed a decline of 10.6% from R1.051 billion to R940 million. (It should be noted that the prior year figure of R1.051 billion reflected an exceptional increase of 34% over FY 2016).

The gross profit percentage achieved in 2018 was 1% lower than last year, due to the South African operations being forced to reduce selling prices in the face of a suddenly strengthening Rand in the fourth quarter of the financial year, as well as the fiercely competitive environment. If the gross profit  percentage had remained the same as last year and the once-off cost of R20 million (referred to further below) not been incurred, the operating profit before foreign exchange movements would have been R5 million higher than last year. Net foreign exchange costs increased by R31 million from R41 million to R71 million, whilst profit before taxation from continuing operations decreased by 15% to R760 million.


  • The board of Invicta has noted both stakeholder and market commentary over the potential tax consequences of certain transactions which Invicta entered into several years ago, and which were referred to by the Independent Auditors in their report on the 2017 Annual Financial Statements (‘the transactions’).
  • Based upon advice received, the board is of the view that the transactions are tax compliant. However, the board is also of the view that the ongoing uncertainty is affecting the Group and hampering its ability to use equity to fund expansion, and therefore that a pragmatic solution which provides certainty is preferable to potentially protracted and costly litigation which would also require significant management time and result in material opportunity cost for the Group.
  • The Company therefore continues to negotiate with the South African Revenue Services (SARS) with a view to reaching agreement regarding the tax consequences of the transactions.
  • Taking all the above considerations into account, the board has concluded that an amount of R400 million (2017: R150 million) is the best estimate of an additional provision, which amount has been raised in the audited annual consolidated financial statements for the March 2018 financial year.
  • Should agreement not be reached with SARS and, on the basis that it elects to issue revised assessments, the Group will defend its position fully.

The effect of the provision on our summarised consolidated statement of profit or loss and other comprehensive income is as follows:


The Group disposed of Building Supply Group Proprietary Limited and its subsidiaries (“BSG”) on 30 September 2017. The Group still holds the MacNeil Plastics business (which manufactures specific ranges of plastic piping) as an asset which it intends selling. The discontinued profits for the current year include MacNeil Plastics for the full year and BSG for half a year, whilst the comparative includes them both for a full year.


The Group settled its material financial debts and released certain financial investments during the year. The settlement resulted in a non-recurring loss of R20 million which has been included in selling, administration and distribution costs. Inventories have increased in the period under review. This was a result of management’s decision to acquire specific stock ranges in advance of commodity and tariff increases, as well as to ensure stock availability from BMG World while the new systems and physical stock were being implemented and moved. This is expected to reverse in the coming financial year.


ESG’s revenue of R4.6 billion was 2% below last year, largely as a result of challenging trading conditions in South Africa.
The division did well to keep its operating profit before foreign exchange movements only to R1 million (0.2% below last year at R478 million). Most of the industries serviced by ESG have struggled, which is evidenced by the muted, but solid results. The resizing of the business through cost saving initiatives and the “Simplify for Success” program will continue and are expected to bear fruits in the coming year.

The only acquisition undertaken during the year by ESG was that of the Fenner Belting’s Sales and Marketing business, which was effective 1 February 2018. It did not have a material impact on the results under review. It is, however, expected to make an important contribution to both revenue and profitability in the year ahead.

On 3 May 2018 the Group announced the purchase of the Forge Industrial Group. It comprises of tools and related products (Toolquip and Allied), machining tools (F and H Machine Tools) and industrial conveyer belting and related components (Belt Brokers). It operates through 11 branches countrywide including 3 distribution centres in Gauteng. The acquisition will be completed after the fulfilment of certain conditions precedent, including Competition Commission approval.


CEG improved revenue by 2.4% despite relinquishing the New Holland Agricultural Equipment agency in May 2017. The results from CEG’s South African businesses declined due to challenging conditions in agricultural machinery and construction machinery markets, whilst the non-South African results improved as global economic conditions lifted.

The gross profit percentage of CEG declined in line with prevailing market conditions in South Africa. CEG’s operating profit before foreign exchange movements declined by 3.8%, but a focused effort by the division resulted in good cash generation. CEG is well structured to take advantage of any improvement in market conditions and is actively seeking suitable acquisitions.

On 2 January 2018, the Shamrock Handling Concepts business was acquired by CEG. Shamrock supplies and services forklifts and machines of the highest quality in niche markets with quality brands “Moffett”, “Combilift”, “Agrimac”, “Innolift” and “Multi Sweep”.


The Group continues to focus on improving efficiencies and processes in its existing operations.

An overall improvement in world commodity prices and market conditions in the coming year are expected to add momentum to the Group’s performance.

The process of internationalising the Group in order for it to be able to list offshore is on track for conclusion by the end of the new financial year. To remind stakeholders, the rationale for this is to enable Invicta to eventually list on an international stock exchange in addition to its current listing on the JSE. The listing on an international stock exchange will provide improved access to international funding for debt and/or equity, as the Group looks to expand its international footprint in a measured and focused approach.

Any forward-looking statement in this announcement has not been reviewed or reported on by the Company’s auditors.


The Group company secretary and legal advisor, Grace Chemaly resigned effective 27 September 2017 and was replaced by Lize Dubery effective 1 January 2018. The board expresses its thanks to Grace Chemaly for her dedicated service.

Gavin Pelser, the CEO of ESG joined the board on 7 September 2017 as an executive director. Nazlee Rajmohamed will further take up the position of financial director on 1 July 2018.


The board is once again highly appreciative to the executive management, the respective management teams of our businesses and most importantly all the staff, for the excellent commitment and performance in what can only be described as difficult and uncertain economic times.

The past year has been challenging with watershed changes to the political landscape in South Africa. We are confident that, with the strengths the Group possesses and the strategic plans, the Group will continue to deliver sustainable value to all stakeholders going forward. We enter the new year with hope and optimism.