Executive Review
of Performance
for the year ended 31 March 2026
The Year Under Review
FY2026 was a year defined by external pressure and internal resolve. Sustained Rand strength affected the translation of our foreign operations, while US trade tariffs on Chinese manufactured goods and the supply chain disruption triggered by the Middle East conflict created headwinds across nearly every market in which we operate. That we were able to deliver sustainable headline earnings per share of 594 cents, up 7% on the prior year, reflects both to the quality of our diversified operations and the discipline of Steven Joffe our management teams.
Operating Context and Strategic Response
The operating environment did not ease as the year progressed. Currency volatility, with the Rand fluctuating between R15.97 and R19.77 to the Dollar, required active currency and exchange rate management, along with careful inventory positioning. US tariffs affected Kian Ann’s USA distribution business (“KTSU”) materially, contributing to a 15.4% decline in KTSU’s sales, although the subsequent reversal of the IEEPA tariffs partially offset this. The Middle East conflict resulted in extended lead times and increased freight costs, and required the Capital Equipment segment to accelerate local stockholding of critical parts.
Management responded with agility. We converted certain branches to agencies to reduce fixed costs, tightened expense control across all segments and maintained pricing discipline that held gross profit margin at 33.1%, up from 32.6% in the prior year. The balance sheet strength we built over the preceding five years meant we could absorb these conditions without compromising our strategic agenda.
Strategic Delivery
The Group achieved its long stated objective of generating approximately 50% of income from operations outside South Africa. This geographical diversification materially reduces our dependence on any single market and positions the Group for the next phase of growth.
Revenue grew 4% with the inclusion of Spaldings, acquired effective 1 September 2025 for GBP 10.5 million. Spaldings is a well-established UK distributor of agricultural and ground care parts, and its acquisition extends our RPE platform into Europe with its established customer base, a profitable operating model and clear integration opportunities across the broader Group. The Capital Equipment segment delivered net profit after tax of RR89.7 million, 22% ahead of the prior year, with an EBT margin of 8.9%. RPI protected its bottom line through cost discipline, despite top-line pressure, delivering profit before tax of R273.8 million. RPA and the Kian Ann businesses faced the most difficult conditions; both are subject to focused management attention and specific improvement plans for FY2027.
We repurchased 5.6 million shares for R188 million during the year, returning value to shareholders in a manner consistent with our capital allocation framework. The Group also continued to evaluate acquisition opportunities aligned to our geographic diversification strategy. Our disciplined approach of ensuring a strategic fit, earnings quality and appropriate pricing, continues to guide our capital allocation decisions in this regard.
People, Culture and Sustainability
Our people remain the cornerstone of the Group’s success. FY2026 brought meaningful leadership transitions across several of our businesses, and we thank departing leaders for their long service and welcome those who have stepped into new roles. Continuity of institutional knowledge and the deliberate development of our leadership pipeline, remain priorities as the Group grows in scale and complexity.
We remain committed to operating responsibly across our geographic footprint. Our investment in the Invicta trusts, our B-BBEE commitments and our environmental stewardship obligations, are reported in the Sustainability section of this report. The Group’s socio-economic contribution, employee wellbeing initiatives and transformation progress, are matters the Board and management take seriously and continue to advance.
Outlook
We enter FY2027 with measured confidence. The recovery in commodity prices, evident in the final quarter, gives grounds for improved mining sector activity. The Capital Equipment segment is well-stocked and positioned to benefit from this. Structural improvements across RPI, the Spaldings full-year contribution and, the anticipated commissioning of the new Warehouse Management System in Q2 FY2027 each represent meaningful operational catalysts.
The uncertainties, however, are real: steel tariffs, Middle East conflict logistics disruptions, African subsidiary cash repatriation constraints and currency volatility, remain live risks that we continue to manage proactively. What gives me confidence is that Invicta has demonstrated, through a year of genuine difficulty, that our business model works, our teams deliver and our balance sheet is fit for
purpose. I finally want to thank our Board, management teams, employees, shareholders and other stakeholders for their continued trust and commitment.
CAPITAL MANAGEMENT AND CASH FLOW
Net debt increased by R204 million during the year, primarily due to the R173 million net investment in finance leases in our Capital Equipment business segment. Cash generation remained strong, with R725 million generated from operations. The net investment in working capital for the year totalled R215 million, with most of this investment directed towards finance leases for customers in the Capital Equipment segment.
Our management teams remained focused on tightly managing working capital levels to ensure our investment in inventory is relatively flat, notwithstanding our current operating environment and inflationary effects on product pricing.
Over the year, we returned R166 million in dividends to ordinary and preference shareholders and undertook a strategic buyback of the entire outstanding balance of 6.9 million preference shares, at a cost of R703 million. This redemption marks a significant milestone for the Group and reflects our ongoing efforts to enhance long-term value for ordinary shareholders.
We also acquired 4.9 million ordinary shares at a cost of R157 million. The benefit to shareholders will be seen in the year ahead and should positively impact earnings per share.
The Group continues to benefit from significant available banking facilities, providing ample capacity to fund operations and support strategic growth initiatives.
Our internal measure of net debt has always included the listed preference shares, and the redemption of these has already delivered a net gain to ordinary shareholders during the interim
period. The benefit is expected to increase annually going forward, creating a more robust and simplified capital structure aligned with our long-term strategy. Our net debt position is appropriate, and we are now in a position to evaluate growth opportunities in the market.
Reporting Segments
Consistent with the prior year, the Group reports its operations across five business segments. While the KAG forms part of the broader Replacement Parts, Services and Solutions: Earthmoving Equipment (“RPE”) segment, we continue to report on KAG separately due to its relative size and contribution.
The five reporting segments are:
» Replacement Parts for Earthmoving Equipment (“RPE”)
» Kian Ann Group (“KAG”)
» Replacement Parts for Industrial Equipment (“RPI”)
» Replacement Parts for Auto and Agri (“RPA”)
» Capital Equipment and Related Services (“CE”)
Financials per segment
» Comprises ESP, NWB and Spaldings.
» ESP is a supplier of aftermarket replacement spare parts, groundengaging tools and undercarriage parts for earthmoving equipment in Southern Africa.
» NWB, based in the United Kingdom, supports the Group’s strategy of growing in developed markets. NWB supplies consumable parts to the earthmoving and agricultural machinery aftermarkets.
» Spaldings, acquired in September 2025, is a UK based supplier of aftermarket parts for earthmoving and agricultural machinery, extending the RPE segment’s footprint in developed markets alongside NWB.
» KAG is a strategic growth platform and during FY2026, completed the Safe Harbor acquisition which contributed to revenue growth.
» One of Asia’s largest independent distributors of heavy machinery and diesel engine components.
» Global distribution of parts used in excavators, bulldozers, wheel loaders, motor graders, trucks, trailers, power generation sets, and marine engines.
» Operates across Singapore, China, Malaysia, Thailand, India, the United Kingdom, the United States and Canada.
» Kian Chue Hwa Industries (“KCHI”) is an automotive business based in Singapore operating under KAG.
» Kunshan Kensetsu Buhin Co. Ltd (“KKB”), based in China, manufactures rollers, track chains, idlers and sprockets for undercarriage systems, servicing both internal requirements and global OEM clients.
» USA distribution is conducted through KTSU and KSP, accelerating growth in undercarriage distribution for heavier machinery across the North American market.
» KMP, now operating under KAG, has a presence in the UK, USA, Singapore and Malaysia and extends the Group’s reach in aftermarket core engine parts for earthmoving equipment.
» Comprises BMG, Industri, OST, Beltbrokers.
» Distributor of engineering consumable products, technical services and 360 degree solutions across Africa.
» RPI’s competitive edge stems from a multinational network that includes 117 BMG branches and an additional 92 vendor managed inventory (“VMI”) consignment sites strategically located to service customer needs.
» Activities include international and local sourcing of leading global brands, distribution of premium engineering components and consumable products, technical support, value added assembly, and bespoke manufacturing of components into customised systems and solutions.
» Supplier of imported and locally sourced automotive and agricultural aftermarket replacement parts and kits.
» Euro Driveshafts forms part of RPA and consolidates the operations in the United Kingdom, Poland and Ukraine.
» UPG UK & Ireland operates within the RPA segment, distributing automotive aftermarket parts to motor factors. Following a strategic repositioning, UPG UK & Ireland now distributes automotive aftermarket parts directly to motor factors (dealers) rather than to the end market.
» Driveshaft Parts, based in Spain, extends the Group’s European footprint within the RPA segment.
» Comprises DISA Equipment (Develon), HPE, Criterion and Shamrock, and Humulani Marketing (central support services).
» Distributes earthmoving and materials handling equipment and related parts through operations in Southern Africa, serving the Mining, Earthmoving, Materials Handling/ Logistics, and Construction sectors.
» Provides aftermarket support through dedicated workshops, spare parts and service offerings, ensuring equipment uptime and lifecycle value.
Repurchase of Shares
During the financial year, the Group repurchased and cancelled 4,921,642 ordinary shares (FY2024: 3 002 164) on the open market for R157 million. Post year-end, an additional 3,130,629 shares were acquired for R97 million.
A central pillar of our strategy is to reduce leverage. In line with this, we have successfully redeemed all outstanding preference shares without issuing new ordinary shares and without a significant increase in debt, but rather using cash from the disposal of underperforming assets as well as and operational profits. The removal of the preference shares enhances earnings available to ordinary shareholders, as previously declared dividends to preference shareholders were deducted before calculating distributions to ordinary shareholders.
These repurchases have been earnings accretive and will continue to benefit shareholders going forward.
Dividend
We are pleased to declare a dividend of 115 cents per share, up 10 cents from the prior year’s 105 cents – reflecting our strong operational performance and prudent capital allocation.
FY 2025 Strategy Review
The group strives to be a world-leading industrial products supplier in Southern Africa and selected international markets – often exclusively – offering readily available products supported by technical and solution-based services.
We create value through our robust distribution chain, extensive inventory holdings, reliable product availability and strong technical support. This technical support offering is a key differentiator, helping to prevent disintermediation and reinforcing our commitment to customer value.
Our overarching aim is to grow a diversified, sustainable replacement parts group that delivers above-market returns to stakeholders. To achieve this, we regularly review and restructure our businesses to meet return expectations. We also aim to achieve both geographic and sectoral diversification.
To realise our Group strategy, we are focused on the following key strategic objectives:
- Business optimisation: Continuously review and restructure our operations to ensure they deliver the desired financial returns.
- Geographic diversification: Expand into international markets aligned with our investment criteria, with the goal of generating 50% of Group net income from outside South Africa in the next year.
- Sectoral diversification: Grow into aligned sectors that leverage the Group’s core competencies and capabilities over the same timeframe.
Assessment of our Performance in FY 2025
The Group delivered a solid performance despite persistent global economic challenges. Below is a self-assessment of our performance against the key objectives we set for FY2025:
FY 2025 Objective
Managing working capital and optimising operations
Generating cash
Managing supply chain challenges
Looking for appropriate acquisitions
Self Assessment
1.5 – Between achieved and partially achieved
1.0. – Achieved
1.5 – Between achieved and partially achieved
1.5 – Between achieved and partially achieved
Looking ahead, the Group remains focused on driving performance and resilience across all core areas. Our key objectives for FY2026 are:
- Maintaining earnings growth
- Managing working capital and optimising operations
- Generating cash
- Managing and limiting geopolitical impacts on the business
- Identifying and pursuing appropriate acquisition opportunities
- Optimising capital allocation and the return thereon
Appreciation
We are proud of our strong performance and extend our sincere thanks to our loyal suppliers, customers and all stakeholders for their continued partnership and support.
To our exceptional team – across factory floors, offices and boardrooms – thank you for your dedication, expertise and resilience throughout the year. Your efforts are the cornerstone of our success.
We also express our deep appreciation to our Chairman and the Non-executive Directors for their participation and involvement at various levels. Their engagement and strategic input have played an instrumental role in helping the Group realise improved outcomes.