Wiese's Invicta provides for SARS settlement


Wiese's Invicta provides for SARS settlement

Published Date: 2018-06-18 | Source: Stephen Gunnion | Author: Stephen Gunnion

Wiese's Invicta provides for SARS settlement

The engineering and capital equipment group has provided a further R400 million against a potential tax settlement as it continues to barter with the Receiver

Invicta Holdings has raised an additional R400 million tax provision as it tries to settle a long-standing dispute with the SA Revenue Service. That's in addition to the R150 million raised last year. Business tycoon and former Steinhoff chairman Christo Wiese is the company's biggest shareholder.

In a trading statement on Friday ahead of the release of its annual results today, the engineering and capital equipment group said certain transactions entered into several years ago had been the subject of stakeholder and market commentary. Although it's received advise that the transactions are tax compliant, it's led to uncertainty that has weighed on its share price. That's hampered the group's ability to use equity to fund its expansion.

In February, the Financial Times drew attention to a number of derivative positions included on its balance sheet as well as the group's complex funding structure, which may have been put in place to to reduce its tax burden.

Related article: : Invicta's profit down on the "true economic reality" of South Africa

Although Invicta says its board is of the view everything is above board, it says 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 with a view to reaching agreement regarding the tax consequences of the transactions," it said in a statement. "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."

Invicta said it expects earnings (EPS) for the year to March to fall by 76% to 118c, while headline EPS from continuing operations are likely to decrease by 81% to 90c.

Its shares closed 1.8% lower at R40.05 on Friday. The trading statement was released after the close of trade.

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