Invicta Holdings Limited · JSE:IVT
Invicta — H1 FY2019 Earnings Presentation
64 slides from Invicta's earnings presentation, Nov 19, 2018
Slide 1: Interim Results Presentation
INTERIM RESULTS PRESENTATION for the six months ended 30 September 2018 Presented by Arnold Goldstone (Chief Executive Officer)
Slide 2: Agenda
Agenda 01 First things first 02 The period in perspective 03 Divisional review Capital Equipment Group (CEG) Engineering Solutions Group (ESG) 04 Group financial overview 05 Prospects and strategy 06 Appendix Invicta Holdings Limited | Interim results presentation for the six months ended 30 Septemb
Slide 3: First things first
First things first Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 3
Slide 4: First things first: SARS settlement
First things first 1. SARS settlement • SENS announcement 27 September 2018 • R750m settlement – due and payable over four years: › R300m in October 2018 (completed) › R100m due in October 2019, October 2020 and October 2021 – total R300m › R150m in October 2022 (final) • The R750m is the full and f
Slide 5: First things first (continued): Offshore plans
First things first (continued) 2. Offshore plans • Exchange one Invicta SA ordinary/preference share for one Invicta Global ordinary/preference share • Delist Invicta SA and list Invicta Global on the JSE • Decision to not proceed with corporate action mainly due to: › Brexit uncertainty › Worldwide
Slide 6: First things first (continued): Cashflow and dividends
First things first (continued) 3. Cashflow and dividends • Specific taxation expense has had a materially negative impact on the results • Cash flow is improving with further improvement expected in 2H2019 • Made it possible to pay interim dividend of 50cps • Expected improvement in cash flow should
Slide 7: First things first (continued): Recent cautionary announcement
First things first (continued) 4. Recent cautionary announcement • SENS released on 8 October 2018 • General repurchase of shares in November 2015 included shares which were acquired from two directors - breach of JSE Listings Requirements • Company immediately notified the JSE and its auditors of t
Slide 8: The period in perspective
The period in perspective Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 8
Slide 9: Results at a glance
Results at a glance Tough markets, satisfactory results excluding anomalies Revenue ↑ 5% to R5,3 billion Operating profit before foreign exchange movements ↓ 11% to R403 million Headline earnings per share before specific tax expense ↓ 17% to 189 cents Headline earnings per share after specific tax
Slide 10: Results at a glance (continued)
Results at a glance (continued) Profit before tax ↓ 8% to R368 million NAV per share ↓ 2% to 4842 cents TNAV per share ↓ 3% to 4073 cents Share price 15 November 2018 R29.50 39 % discount to NAV 28 % discount to TNAV Invicta Holdings Limited | Interim results presentation for the six months ended 30
Slide 11: The period in perspective
The period in perspective Exchange rate volatility USD to ZAR chart Opening: 11.83198 Closing: 14.17908 17 % weaker in 6 months, with volatility Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 11
Slide 12: Divisional review
Divisional review Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 12
Slide 13: Divisional structure
Divisional structure Capital Equipment Group Engineering Solutions Group CEG ESG Importer & distributor of agricultural Leading distributor of engineering equipment, construction equipment, consumables services and provider forklifts and aftermarket replacement of engineering solutions spare parts •
Slide 14: Revenue contribution by operating segment (R’m)
Revenue contribution by operating segment (R’m) (excluding Head Office) *Re-presented Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 14
Slide 15: Operating profit contribution by operating segment after forex costs (R’m)
Operating profit contribution by operating segment after forex costs (R’m) (excluding Head Office) (53%) *Re-presented Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 15
Slide 16: Revenue contribution by region
Revenue contribution by region (excluding Head Office) *Target: 50% offshore Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 16
Slide 17: Revenue contribution by sector
Revenue contribution by sector (excluding Head Office) (14%) (16%) (5%) (11%) (63%) (29%) Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 17
Slide 18: Return on Net Operating Assets (RONA)
Return on Net Operating Assets (RONA) (based on average net operating assets) Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 18
Slide 19: Divisional Review: Capital Equipment Group
DIVISIONAL REVIEW Capital Equipment Group
Slide 20: Review of 1H2019
Review of 1H2019 Revenue – down 2% Operating profit before foreign exchange movements 14% • Markets are challenging with major pressure on equipment margins • Good cash generation • Working capital under control • Agriculture - Customer liquidity issues - Value of land (expropriation of land) making
Slide 21: Review of 1H2019
Review of 1H2019 Divisional Performance: • Agriculture - Market share for CaseIH Tractors and Combine Harvesters maintained - Retained large portion of the New Holland spare parts business - New equipment business restricted by value of trade ins • Construction - Retained and grown market share in s
Slide 22: Management structure
Management structure Chief Executive Officer Tony Sinclair Northmec NHSA Landboupart Doosan HPE Africa CSE Criterion Shamrock ESP Kian Ann MD MD MD MD MD MD MD MD MD MD Johan David Danie van Darrel Alex Ross Brenton Marius Andrew Loy van der Merwe Visser Aswegen Holton Ackron Collard Kemp Schutte Gr
Slide 23: Interim results summary 30 September 2018
Interim results summary 30 September 2018 Revenue (R’m) Operating profit before foreign exchange movements (R’m) Net operating assets (R’m) Operating profit margin (%) First Half Second Half Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 23
Slide 24: Sales analysis
Sales analysis Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 24
Slide 25: Gross profit analysis by income type
Gross profit analysis by income type Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 25
Slide 26: Market volumes
Market volumes H1 2019 • Agriculture equipment volumes in total market o Tractors 6.7% o Combines 2.5% • Construction equipment volumes in total market o Segments serviced by Invicta Flat Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 26
Slide 27: Maize Safex Prices – May 2013 to Sep 2018
Price in ZAR 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 8-May-13 14-Jun-13 23-Jul-13 29-Aug-13 7-Oct-13 13-Nov-13 23-Dec-13 29-Jan-14 7-Mar-14 15-Apr-14 22-May-14 30-Jun-14 6-Aug-14 12-Sep-14 21-Oct-14 27-Nov-14 6-Jan-15 12-Feb-15 25-Mar-15 1-May-15 9-Jun-15 16-Jul-15 24-Aug-15 30-S
Slide 28: New TLBs supplied to customer entering the plant hire market
New TLB’s supplied to customer entering the plant hire market Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 28
Slide 29: Outlook
Outlook Take advantage of the opportunities in each market sector by: • Securing aftermarket business • Selling volumes of machines to secure annuity business (spare parts) • Improve efficiencies within the group – stock turns, expense control etc. • Implement new ERP system • Participating in a R4
Slide 30: Divisional Review: Engineering Solutions Group
DIVISIONAL REVIEW Engineering Solutions Group
Slide 31: Review of 1H2019
Review of 1H2019 Revenue 13% Operating profit before foreign exchange movements 3% • A strong performance by the majority of business units • Cost saving initiatives still a key management focus • The Simplify for Success initiatives are completed in BMG and is underway at the Man Dirk Group • New a
Slide 32: Review of 1H2019
Review of 1H2019 Divisional Performance: • BMG - Solid performance ahead of plan • Autobax - Met expectations • Man-Dirk - Disappointing performance due to poor activity in the mining sector with huge pressures on GP’s related to BBBEE and competitor activity • Hyflo - The continued lack of project
Slide 33: Review of 1H2019
Review of 1H2019 • Acquisition of Fenner belting boosting sales performance and technical offering for heavy belting applications • The strategic acquisition of Rustenburg Engineering and Joerg Foundry solidifies our supply base for cast iron products and gives an opportunity to manufacture more pro
Slide 34: Management structure
Management structure Chief Executive Officer Gavin Pelser BMG Man-Dirk Autobax Hyflo (Bearing Man Group) Group MD MD MD MD Gavin Pelser Gavin Hall John Black Wayne Holton Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 34
Slide 35: Interim results summary 30 September 2018
Interim results summary 30 September 2018 Revenue (R’m) Operating profit before foreign exchange movements (R’m) Net operating assets (R’m) Operating profit margin (%) First Half Second Half Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 35
Slide 36: Revenue analysis 30 September 2018
Revenue analysis 30 September 2018 (65%) (88%) • Strategy of market differentiation by: • African revenue growing as a % of ESG o complementing product distribution with revenues technical expertise Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 36
Slide 37: Sales by industry sector 30 September 2018
Sales by industry sector 30 September 2018 Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 37
Slide 38: Group financial overview
Group financial overview Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 38
Slide 39: Revenue (R’m)
Revenue (R’m) *Re-presented Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 39
Slide 40: Operating profit
Operating profit Operating profit before foreign Operating margin exchange movements (R’m) (%) *Re-presented **Excluding once-off items Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 40
Slide 41: EBITDA (%)
EBITDA (%) EBITDA (R’m) Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 41
Slide 42: Attributable earnings (R’m)
Attributable earnings (R’m) Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 42
Slide 43: Earnings per share (cents)
Earnings per share (cents) Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 43
Slide 44: Headline earnings
Headline earnings 30 Sep 2018 30 Sep 2017 R’million Unaudited Unaudited % Change Attributable Earnings 8 712 260 651 (97) Adjustments Impairment of investment in associate 1 588 – Gain from bargain purchase price recognised (3 639) – Profit on disposal of investments – (24 439) Profit on disposal of
Slide 45: Dividend per share (cents)
Dividend per share (cents) Salient dates for the 2019 Interim Dividend Last day to trade to be eligible for the dividend Tuesday 4 December 2018 Shares commence trading “ex” the dividend Wednesday 5 December 2018 Record date in respect of dividend Friday 7 December 2018 Dividend paymen
Slide 46: Cash flow movement 30 September 2018
Cash flow movement 30 September 2018 Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 46
Slide 47: Prospects and strategy
Prospects and strategy Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 47
Slide 48: Prospects
Prospects • Current trading conditions: • ESG improving – hopefully the end of downward cycle and bed down acquisitions • CEG expect similar trading conditions until elections • South East Asia continue to grow • Focus on business - avoid distractions • Room for improvement of working capital, which
Slide 49: Strategy
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 ar
Slide 50: Q&A
Q&A Thank you for your attendance and participation www.invictaholdings.co.za For any further Investor Relations questions please contact: Arnold Goldstone (CEO) arnoldg@invictaholdings.co.za Nazlee Rajmohammed (CFO) nazlee@invictaholdings.co.za Marlize Keyter (Keyter Rech Investor Solutions) mkeyte
Slide 51: Appendix
Appendix Invicta Holdings Limited | Interim results presentation for the six months ended 30 September 2018 51
Slide 52: Statement of profit or loss and other comprehensive income (R’000)
Statement of profit or loss and other comprehensive income (R’000) 30 Sep 2018 30 Sep 2017 R'million Unaudited Unaudited % Change Revenue 5 284 191 5 040 650 5 Operating profit before foreign exchange movements 403 268 452 680 (11) Net foreign exchange (cost)/profit (3 111) 5 072 Operating profit 40
Slide 53: Statement of profit or loss and other comprehensive income (R’000)
Statement of profit or loss and other comprehensive income (R’000) 30 Sep 2018 30 Sep 2017 R'million Unaudited Unaudited % Change Profit attributable to: Owners of the Company 8 712 260 651 (97) Non-controlling interest 7 956 12 487 Preference shareholders 41 426 42 405 58 094 315 543 Earnings per s
Slide 54: Statement of financial position (R’000)
Statement of financial position (R’000) 30 Sep 2018 30 Sep 2017 R'million Unaudited Unaudited % Change ASSETS Non-current assets Property, plant and equipment 1 879 999 1 728 490 Financial investments and investment in associates 120 765 2 193 603 Goodwill and other intangible assets 834 528 765 999
Slide 55: Statement of financial position (R’000)
Statement of financial position (R’000) 30 Sep 2018 30 Sep 2017 R'million Unaudited Unaudited % Change Current assets Inventories 4 464 861 3 960 585 Trade and other receivables 2 262 473 2 089 355 Current portion of financial investments, finance leases and 678 371 875 421 long-term receivables Tax
Slide 56: Statement of financial position (R’000)
Statement of financial position (R’000) 30 Sep 2018 30 Sep 2017 R'million Unaudited Unaudited % Change EQUITY Capital and reserves Equity attributable to the equity holders 5 141 986 5 342 435 (4) Non-controlling interest 111 584 83 480 34 Shares in issue (‘000) 108 495 108 495 – Net asset value per
Slide 57: Statement of financial position (R’000)
Statement of financial position (R’000) 30 Sep 2018 30 Sep 2017 R'million Unaudited Unaudited % Change LIABILITIES Non-current liabilities Long-term borrowings and financial liabilities 1 895 252 7 159 719 Deferred taxation 54 202 38 615 Non-current liabilities 1 949 454 7 198 334 (73) Current liabi
Slide 58: Group structure
Group structure BBEE & Staff Invicta SA Non - SA Trusts Holdings 25% 75% 100% 100% 100% 100% Invicta Invicta Invicta Invicta Offshore Invicta SA Properties Treasury Finance Holdings 100% 100% 100% 100% Invicta African Invicta Asian ESG CEG Holdings Holdings BMG Hansen Northmec OST New Holland* Mozam
Slide 59: Capital Equipment (SA)
Capital Equipment (SA)) • Northmec (Agricultural Machinery) • New Holland* (Agricultural Machinery) *Equipment sales discontinued. Aftermarket support continues (spare parts) • CSE (Earthmoving Machinery) • Doosan (Earthmoving Machinery) • HPE (Hyundai Earthmoving) • ESP (Spare Parts) • Landboupart
Slide 60: Capital Equipment (Kian Ann Group)
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, USA and Myanmar • Joint venture in India • Associate in Ch
Slide 61: Engineering Solutions
Engineering Solutions Engineering Solutions • BMG (Bearing Man Group) o Engineering components & technical services o 102 branches o Bearings, Seals, PT, Tools, Fasteners o Drives, Motors, Belting, Field Services o Filtration, Hydraulics, Lubrication, Pneumatics • Hansen • Rustenburg Engineering & J
Slide 62: Group profit drivers
Group profit drivers • Mining and industrial activity (ESG and CEG) • Agricultural activity (Northmec and aftermarket parts) • Construction and earthmoving activity (CSE, Doosan SA & HPE) • Warehousing (Criterion Equipment and Shamrock) • Global replacement spares market (Kian Ann) Invicta Holdings
Slide 63: Executive management team
Executive management team BOARD OF DIRECTORS Dr Christo Wiese (Non-Executive Chairman) ENTITY CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER Invicta Holdings ARNOLD GOLDSTONE NAZLEE RAJMOHAMED Capital Equipment Group TONY SINCLAIR GEOFF BALSHAW Engineering Solutions Group GAVIN PELSER BENNIE GROENE
Slide 64: Shareholding as at 30 September 2018
Shareholding as at 30 September 2018 1% Exec Directors 2% Samuels Family 1% Treasury Goldstone Family 2% Sherrell Family 4% Directors’ Total % 48% Public % 52% 52% 38% Public Wiese Family Invicta Holdings Limited | Results Presentation 2018 1