FINAL RESULTS PRESENTATION - Invicta Holdings Presentation/Final Results... · FINAL RESULTS PRESENTATION for the year ended 31 March 2017 Presented by Arnold Goldstone (Chief Executive

FINAL RESULTS PRESENTATIONfor the year ended 31 March 2017

Presented by Arnold Goldstone (Chief Executive Officer)

2Invicta Holdings Limited | Results Presentation 2017

Agenda

THE YEAR IN PERSPECTIVE01DIVISIONAL REVIEW02

GROUP FINANCIAL OVERVIEW03PROSPECTS AND STRATEGY04APPENDIX05

Capital Equipment Group

Engineering Solutions Group

Building Supply Group


THE YEAR IN PERSPECTIVE


Highlights

REVENUE

8%TO R11.5 BILLION

OPERATING PROFIT BEFORE FOREIGN EXCHANGE MOVEMENTS

36%R1.16 BILLION

EARNINGS PER SHARE

26%499 CENTS

CASH GENERATED BY OPERATIONS

130%R1.35 BILLION


Highlights (continued)

PROFIT BEFORE TAX

58%R981 MILLION

NAV PER SHARE

5%4 715 CENTS

TOTAL DIVIDEND PER SHARE

18%167 CENTS

ATTRIBUTABLE EARNINGS

26%R533 MILLION

4 000 CENTS

TNAV PER SHARE

8%


The year in perspective

Excellent results on the back of difficult trading conditions

• The markets in which Invicta operates:

o Mining & construction: Still weak in Africa and South East Asia

o Agriculture: Severely impacted by worst El Niño drought on record

o Industrial & manufacturing: Deterioration in activity in South Africa

• Political upheaval in SA

• Q3 and Q4 – recession in SA

• Relocation of BMG head office from Durban to Johannesburg (now complete)

• Sale of BSG

• Loss of New Holland Agricultural machinery agency

• Loss of 2 key executives

• Volatile ZAR

• Mettle of group tested – came through with flying colours!


DIVISIONAL REVIEW


Divisional structure

CAPITAL EQUIPMENT

GROUP

• Northmec

• New Holland*

• CSE

• Doosan

• HPE

• ESP

• Criterion

• Kian Ann Group

• BMG

o Hansen

o OST

• Mandirk

o SA Tool

o Sibuyile

• Autobax

• Hyflo

• MacNeil

o Distribution

o Manufacturing

• Brands 4 Africa

• Tiletoria

Importer & distributor of agricultural equipment,

construction equipment, forklifts and aftermarket

replacement parts

Manufacturer, wholesaler and distributor of building

supplies worldwide

Leading distributor of engineering consumables

and provider of engineering solutions

BUILDING SUPPLY

GROUP (Discontinued)

ENGINEERING SOLUTIONS

GROUP

*Equipment sales discontinued. Aftermarket support continues (spare parts).


Revenue contribution by operating segment(excluding Head Office)

3,5035,122 4,607 4,484 4,955

3,425

3,955 4,209 4,299 4,665 630

1,388 1,639 1,837 1,893

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

MAR 2013 MAR 2014 MAR 2015 MAR 2016 MAR 2017

43%

41%

16%(17%)

10,46511,513

10,62010,455

7,558

R’million

(43%)

(40%)Engineering Solutions Group



2017 (2016)


Operating profit contribution by operating segment (excluding Head Office)

339 484 457

362 470

390

473 499

406

48039

67 87

70

108

0

200

400

600

800

1 000

1 200


44%

46%

10%

2017 (2016)

R’million

768

1,024 1,043

838

1,058

(48%)

(43%)




(9%)


Revenue contribution by region(includes discontinued operations)

74%

7%

14%

5%

South Africa*

Asia

Other

Africa

2017 (2016)

(77%)

(9%)

(11%)

(3%)

*Target: 50% by 2020


Revenue contribution by sector(includes discontinued operations)

27%

25%24%

12%

12%Mining

Manufacturing & Industry

Agriculture & Forestry

Construction

(29%)

General Trading (23%)(19%)

(15%)

(14%)

2017 (2016)


Return on Net Operating Assets (RONA)

(based on average net operating assets)

25

.8%

17

.5%

20

.6%

29

.8%

21

.8%

24

.1%

30

.9%

19

.4%

27

.3%

24

.8%

17

.6%

22

.5%

0%

5%

10%

15%

20%

25%

30%

35%

FY 2015 FY 2016 FY 2017

CEG ESG BSG IVT Group


DIVISIONAL REVIEW


Review of 2017

• Difficult trading conditions overcome by increased market share, better sales mix

• Activity in gold and coal mining is driving construction unit sales

• Reduced level of investment in infrastructure by both private and public sectors

• Strength of the South African Rand against the US Dollar contributing to more competitive prices

• Extreme drought in H1, but lots of rain in late H2 (La Niña had a significant impact on the business

in the last four months of the financial year)

• Operating margin increased from 8.1% in 2016 to 9.5% in 2017

Revenue 11%

Operating profit before foreign exchange movements 30%


Final results summary31 March 2017

2,404 2,285 2,380

2,203 2,199 2,575

0

1 000

2 000

3 000

4 000

5 000

6 000

MAR 2015 MAR 2016 MAR 2017

7.5% 7.9% 9.2%

12.6%8.2%

9.7%

MAR 2015 MAR 2016 MAR 2017

1,892

2,255 2,306

1,000

1,250

1,500

1,750

2,000

2,250

2,500

MAR 2015 MAR 2016 MAR 2017

180 181 219

208 181251

0

100

200

300

400

500

600

MAR 2015 MAR 2016 MAR 2017

REVENUE (R’m)

OPERATING PROFIT MARGIN (R’m)NET OPERATING ASSETS (R’m)

OPERATING PROFIT BEFORE FOREIGN EXCHANGE MOVEMENTS (R’m)

**The margin is 8.4% if the once-off Kian Ann profit is excluded

4,6074,955

4,484 470

362

457*

9.5%8.1%

9.9%**

* Including R69 million once-off Kian Ann profit

69

First Half Second Half Once-off


Market volumes

• Agriculture equipment volumes

o Tractors 10%

o Combines 4%

o Sprayers 50%

• Construction equipment volumes

o Segments serviced by Invicta 14%

FY 2017


Yellow/White Maize prices/ZAR

Maize Safex Prices – January 2010 to May 2017

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

18

-Jan

-10

11

-Mar

-10

4-M

ay-1

0

25

-Ju

n-1

0

18

-Au

g-1

0

11

-Oct

-10

2-D

ec-1

0

25

-Jan

-11

18

-Mar

-11

11

-May

-11

4-J

ul-

11

25

-Au

g-1

1

18

-Oct

-11

9-D

ec-1

1

6-F

eb

-12

29

-Mar

-12

24

-May

-12

17

-Ju

l-1

2

7-S

ep

-12

31

-Oct

-12

26

-De

c-1

2

19

-Fe

b-1

3

12

-Ap

r-1

3

5-J

un

-13

29

-Ju

l-1

3

19

-Se

p-1

3

12

-No

v-1

3

6-J

an-1

4

27

-Fe

b-1

4

22

-Ap

r-1

4

13

-Ju

n-1

4

6-A

ug-

14

29

-Se

p-1

4

20

-No

v-1

4

14

-Jan

-15

11

-Mar

-15

4-M

ay-1

5

25

-Ju

n-1

5

18

-Au

g-1

5

9-O

ct-1

5

2-D

ec-1

5

5-F

eb

-16

30

-Mar

-16

23

-May

-16

14

-Ju

l-1

6

06

-Se

p-1

6

28

-Oct

-16

21

-De

c-1

6

13

-Fe

b-1

7

06

-Ap

r-1

7

30

-May

-17

Yellow Maize

White Maize

Pri

ce in

ZA

R


Sales analysis (includes New Holland)

31 March 2017

63%

32%

5%

Manufacturing & Industry

Agriculture & Forestry

Construction

2017


New Assembly Plant –

Camperdown, Kwazulu Natal

140 000m² site5 500m² buildingOccupation date 03 July 2017


DIVISIONAL REVIEW


Review of 2017

Revenue 9%


• Encouraging results considering relocations of facilities (BMG World, regional service centres, financial head office)

• Focussed on tight cost management

• Simplify for success remained a high priority

• No acquisitions were made

• Strategic disposal of Wegezi

• Trading conditions:

o Mining: positive changes in mineral commodity prices eased spending in certain

parts of the mining industry. Major project work remained stagnant.

o Agriculture: much needed rain resulted in an increase in maintenance spend.

o Heavy industry: this continued to be a challenging market.



2,028 2,085 2,346

2,181 2,214 2,319

0

1 000

2 000

3 000

4 000

5 000

6 000

MAR 2015 MAR 2016 MAR 2017

10.3% 9.3% 10.3%

13.3%9.6%

10.3%

MAR 2015 MAR 2016 MAR 2017

1,796 1,936

2,039

1 400

1 500

1 600

1 700

1 800

1 900

2 000

MAR 2015 MAR 2016 MAR 2017

209 194 241

290212

239

0

100

200

300

400

500

600

MAR 2015 MAR 2016 MAR 2017

REVENUE (R’m)



First Half Second Half

4,2094,665

4,299480

406

499

10.3%9.4%

11.9%


• Divisional performances:

o BMG: robust performance

o Autobax: excellent performance

o Mandirk: met expectations

o Hyflo: met expectations; project work lumpy, muted

• African operations:

o Good performance of African branches (weakened local currencies)

o Establishment of BMG Ghana in process

• Working capital:

o Stock in line with targeted levels

o Debtors book well managed; Debtors >R250,000 insured

Review of 2017


Revenue analysis31 March 2017

• Strategy of market differentiation by:o complementing product distribution with

technical expertise

• African revenue growing as a % of ESG revenues

• Last year’s acquisitions have mainly SA-based revenues

65%

35%

Consumables Engineering

88.0%

11.4%

0.6%

South Africa Africa Other

(35%)

(65%)

(89%)

(11%)

2017 (2016)


24%

20%

20%

8%

7%

5%

4%

6%4%

1% Parastatals

Sales by industry sector31 March 2017

2017

Mining

Industry

Other

Cash Sales

Automotive & Transport

Food & Beverage

Projects / Consultants

Agriculture

Construction 1% Oil & Gas


BMG World upgrade – Droste Park,

Jeppestown

Additional land

Acquired10 467m2

Engineering

Assembly Building9 330m2

Parking Deck6 000m2

BMG Park Original36 891m2

Land acquired for

CDC9 206m2

Fluid Technology

Building9 208m2

Additional Land

rented for parking6 000m2

Additional Land

Acquired3 773m2


BMG World upgrade (continued)

Building Supply Group (Discontinued)

DIVISIONAL REVIEW


• Marginal sales growth in a challenging market

• Substantial growth in operating profit due to increased gross margin (13% up on PY) and expenses up only 5%

• Increased penetration of Gauteng market

• Export sales grew from 23% (2016) to 26% (2017) of revenue

• MacNeil’s new 20 000m2 (R160m) distribution facility in Midrand:

o Commenced construction in October 2016

o Expected completion in March/April 2018

o Enhance supply chain efficiency to support growth in Gauteng & Africa

• Sold to Steinbuild 31 March 2017 – all conditions met; awaiting Competition Commission approval

Revenue 3%


Review of 2017



837 954 1 023

802 883 870

0

500

1 000

1 500

2 000

MAR 2015 MAR 2016 MAR 2017

5.7% 4.8% 4.4%

4.9%

2.7%

7.2%

MAR 2015 MAR 2016 MAR 2017

328 392 401

-

100

200

300

400

500

MAR 2015 MAR 2016 MAR 2017

48 46 45

3924

63

0

20

40

60

80

100

MAR 2015 MAR 2016 MAR 2017

REVENUE (R’m)



1,6391,8931,837

108

70

87

5.7%

3.8%

5.3%

First Half Second Half


MacNeil – Midrand property development

38 000m² site20 000m² warehouse & officesCompletion date Mar/Apr 2018New leases signed – DCLSA , B4A & MacNeil JHB


Tiletoria – Malibongwe Drive property development

Completion date Feb 201813 000m² site


Revenue analysis31 March 2017

BSG Revenue Contribution by Sector

85%

15%

Construction Manufacturing

74%

24%

South Africa Africa Other

(35%)

BSG Revenue Contribution by Region

2%


GROUP FINANCIAL OVERVIEW


Revenue

3 514

5 129 5 2704 389 4 727

9541 023

4 044

5 336 5 1904 410

4 905

883

870

0

2000

4000

6000

8000

10000

12000

14000


First Half Continuing First Half Discontinued Second Half Continuing Second Half Discontinued

10,465 10,460 10,636

11,525

7,558


Operating profit


9.0% 9.6% 8.1% 8.6% 9.3%

4.8% 4.4%

9.6%10.3%

10.0%

8.4%12.5%

2.8%

7.2%


9.3%**

**Excluding once-off items

315

493 427 377 440

46 45

390

550

518

372

61124

63

179

69

34

0

200

400

600

800

1 000

1 200

1 400


884

1,159

853

1,043

OPERATING MARGIN (%)

10.1%

9.0%**10.0%

Once-off Second Half Discontinued Second Half Continuing First Half Discontinued First Half Continuing

1,014

8.0%**


EBITDA %

12%

13%

11% 11%

10%

13%

0%

2%

4%

6%

8%

10%

12%

14%

2012 2013 2014 2015 2016* 2017*

EBITDA (R’m)

652

977

1,125 1,144

1,103

1,483

*Based on continuing operations


535580

510

393

533

28

64

42

-2 -3

22

66

70

74

82

158 69

31

-100

0

100

200

300

400

500

600

700

800


Ordinary s/h Minority s/h Pref s/h Once-off

R’m

illio

n

743

612

496

691710

Attributable Earnings


312358

293

207253

425

430

361

160

246

218

88

29

0

100

200

300

400

500

600

700

800

900

1 000


1st Half 2nd Half Once-off

107m weighted average nr of ordinary shares

Cen

ts

955

Earnings per share

78m weighted average nr of ordinary shares

Rights issue

788

742

396

499


Headline earnings

31 March 2017

31 March 2016

R'000 Audited Restated % Change

Attributable Earnings 533,304 424,219 26

Adjustments

Headline EPS adjustments on discontinued operations (578) (366)

Impairment of intangible assets – 12,935

Gain from bargain purchase price recognised (235) –

Impairment of PPE 3,517 (2,663)

Loss/(profit) on disposal of investments 5,286 (35)

Profit on disposal of other assets (231) –

Net profit on disposal of PPE (11,355) (62,043)

Impairment of loans 3,089 –

Total adjustments before taxation and NCI (507) (52,172)

Taxation 1,456 16,974

NCI 307 142

Total adjustments 1,256 (35,056)

Headline Earnings 534,560 389,163 37


Dividend per share

84 67 72

112

7595

-

50

100

150

200

250

300

350

2015 2016 2017

Cen

ts p

er s

har

e

Interim Final

196

Feb 2015: Special dividend of 2 024 cps was paid

142167

Salient dates for the 2017 Final Dividend

Last day to trade to be eligible for the dividend Tuesday 1 August 2017

Shares commence trading “ex” the dividend Wednesday 2 August 2017

Record date in respect of dividend Friday 4 August 2017

Dividend payments Monday 7 August 2017

18%


Cash flow movement - 2017

556

1,250 98 (143)(245)

(190)

(356)*

(133)**(65)

(25) (46) 701 145 846

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

R’m

illio

n

* Capex of R452m less proceeds on sale of PPE R96m** Acquisitions of R142m less disposals of R9m


PROSPECTS AND STRATEGY


Prospects

• Signs of improvement in South East Asia at start of new year

• Recession in SA likely to continue

• Benefits of relocations, restructurings and expansions to start coming through

• Focus of the Group will remain on:

o margin management and cost control

o working capital optimisation

o cash generation

• Proceeds from sale of BSG likely to flow in next month or two

• R1bn + available for acquisitions. Stay focused on industrial consumables and capital equipment

• Local and international investments

• Regulatory approval obtained for secondary listing (only if it makes sense to do so to raise hard currency)


Strategy

Invicta’s strategy is to:

• Generate healthy cash from existing businesses

• Build on the strength of the current businesses

• Focus on customer service, value-added distribution and supply chain efficiencies

• Diversify the Group’s revenue stream geographically

• Acquire businesses that are a strategic fit for the Group

• Maintain RONA >20% for each of the underlying businesses


Q & AThank you for your attendance and participation

www.invictaholdings.co.za

For any further Investor Relations questions please contact:

Arnold Goldstone (CEO) [email protected]

Craig Barnard (CFO) [email protected]

Marlize Keyter (Keyter Rech Investor Solutions) [email protected]

087 351 3810

http://www.invictaholdings.co.za/

mailto:[email protected]




APPENDIX


Statement of Profit or Loss and other Comprehensive Income

● FY 2016 has been restated because Share Appreciation Rights have been changed from equity-settled to cash-settled.

31 March 2017 31 March 2016

R'million Audited Restated % Change

Continuing operations

Revenue 9,632 8,799 9

Operating profit before foreign exchange movements 1,051 783 34

Net foreign exchange cost (41) (102) (60)

Operating profit 1,010 681 48

Interest paid (889) (797) 12

Dividends received from financial investments 303 328 (8)

Share of profits of associates 4 5 (20)

Interest received 469 347 35

Profit before taxation from continuing operations 897 564 59

Income tax expense (322) (92) 250

Profit for the year from continuing operations 575 472 22

Discontinued operations

Profit for the year from discontinued operations 37 24 54

Profit for the year 612 496 23


Statement of Profit or Loss and other Comprehensive Income

31 March 2017 31 March 2016


Profit attributable to:

Owners of the company 533 424 26

Non-controlling interest (3) (2) 50

Preference shareholders 82 74 11

612 496 23

Basic EPS from continuing operations (cents) 465 374 24

Basic earnings and normalised EPS (cents) 499 396 26

Headline EPS from continuing operations (cents) 466 341 37

Normalised HEPS (cents) 500 380 32

Weighted average shares in issue (‘000) 106,953 107,013 (0.06)


Statement of Financial Position

31 March 2017 31 March 2016


ASSETS

Non-current assets

Property, plant and equipment 1,641 1,495 10

Financial investments 1,982 1,790 11

Goodwill 615 663 (7)

Other intangible assets 161 169 (5)

Financial assets 64 103 (38)

Finance lease receivables 46 28 64

Long-term receivables 3,374 2,945 15

Investment in associates 103 18 472

Deferred taxation 181 187 (3)

Non-current assets 8,167 7,398 10



31 March 2017 31 March 2016


Current assets 8,098 7,496 8

Inventories 3,663 4,093 (11)

Trade and other receivables 1,542 1,971 (22)

Current portion of finance lease receivables 41 37 11

Current portion of financial investments 709 569 25

Current portion of long-term receivables 2 5 (60)

Taxation prepaid 16 27 (41)

Bank and cash balances 1,052 782 35

7,025 7,484 (6)

Assets classified as held for sale (includes BSG) 1,073 12 8,842

TOTAL ASSETS 16,265 14,894 9



31 March 2017 31 March 2016


EQUITY

Equity attributable to the equity holders 5,116 4,857 5

Non-controlling interest 152 183 (17)

SHAREHOLDERS' EQUITY 5,268 5,040 5

Shares in issue (‘000) 108,495 108,495 -

Net asset value per share (cents) 4,715 4,486 5

Net tangible asset value per share (cents) 4,000 3,719 8



31 March 2017 31 March 2016


Non-current liabilities

Long-term borrowings 6,793 6,064 12

Financial liabilities 64 100 (36)

Deferred taxation 35 29 21

Non-current liabilities 6,892 6,193 11



31 March 2017 31 March 2016


Current liabilities 4,105 3,661 12

Trade and other payables 1,939 2,210 (12)

Provisions 198 197 1

Share appreciation rights liability 6 9 (33)

Taxation liabilities 170 32 431

Shareholders for dividends 50 48 4

Current portion of long-term borrowings 864 939 (8)

Current portion of financial liabilities – – –

Bank overdrafts 206 226 (9)

3,433 3,661 (6)

Liabilities associated with assets held for sale (includes BSG) 672 – –

TOTAL LIABILITIES 10,997 9,854 12

TOTAL EQUITY AND LIABILITIES 16,265 14,894 9


Group structure

BBEE & Staff

Trusts

Invicta

Holdings

SANon -

SA

Invicta SAInvicta

Properties

Invicta

Treasury

Invicta

Finance

Invicta Offshore

Holdings

ESG CEG BSG(Discontinued)

Invicta African

Holdings

Invicta Asian

Holdings

BMG

Mandirk

Autobax

OST

SA Tool

Hansen

Hyflo

Sibuyile

Northmec

New Holland*

CSE

Doosan

HPE

ESP

Criterion

Kian Ann &

subsidiaries in

South East

Asia

Mozambique

Zambia

Tanzania

MacNeil

Tiletoria

B4A

25% 75% 100% 100% 100% 100%

100% 100% 60% 100% 100%

*Equipment sales discontinued. Aftermarket support continues (spare parts)


Capital Equipment (SA))

• Northmec (Agricultural Machinery)

• New Holland* (Agricultural Machinery)

• CSE (Earthmoving Machinery)

• Doosan (Earthmoving Machinery)

• HPE (Hyundai Earthmoving)

• Criterion (Forklifts)

• ESP (Parts)

• 201 dedicated outlets

*Equipment sales discontinued. Aftermarket support continues (spare parts)


Capital Equipment (Kian Ann Group)

Kian Ann Engineering

• One of the world's largest independent distributors of heavy machinery and diesel engine parts

• HQ in Singapore

• Subsidiaries in Singapore, Indonesia, China, Canada, United Kingdom and Myanmar

• Joint venture in India

• Associate in China

Kian Chue Hwa Industries

• One of Asia’s largest independent distributors of commercial and industrial vehicle parts

• HQ in Singapore

• Subsidiaries in Indonesia, Thailand and Malaysia

• Associate in Myanmar


Engineering Solutions

• BMG (Bearing Man Group)

o Engineering components & technical services

o 135 branches

o Bearings, Seals, PT, Tools, Fasteners

o Drives, Motors, Belting, Field Services

o Filtration, Hydraulics, Lubrication, Pneumatics

• Hansen

• Mandirk Group (incl SA Tool)

o Tools & equipment

o 19 branches & subsidiaries

• Autobax

o Automotive

o 3 branch network

• OST

• Hyflo

Engineering Solutions


Building Supply Group (Discontinued)

• Tiletoria

• MacNeil Distributors

• Brands 4 Africa

• 15 outlets in SA


Group profit drivers

• Mining and industrial activity (ESG)

• Agricultural activity (Northmec and aftermarket parts)

• Construction activity (CSE, Doosan SA & HPE)

• Warehousing (Criterion Equipment)

• Building and renovations (BSG) (Discontinued)

• Global replacement spares market (Kian Ann)


ARNOLD GOLDSTONE

Executive Management Team

BOARD OF DIRECTORS

Dr Christo Wiese (Non-Executive Chairman)

ENTITY

Invicta Holdings




(Discontinued)

CHIEF FINANCIAL OFFICERCHIEF EXECUTIVE OFFICER

CRAIG BARNARD

TONY SINCLAIR GEOFF BALSHAW

GAVIN PELSER BENNIE GROENEWALD

KEVIN DIABNEIL MALHERBE


Shareholding as at 31 March 2017

47%

38%

7%

4%

Public

Directors’ Total % 53%

Public % 47%

Wiese Family

Sherrell Family

Goldstone Family

2% Samuels Family 1% Exec Directors

1% Treasury

Documents

FINAL RESULTS PRESENTATION - Invicta Holdings Presentation/Final Results... · FINAL RESULTS PRESENTATION for the year ended 31 March 2017 Presented by Arnold Goldstone (Chief Executive