Invicta Holdings Limited · JSE:IVT
Invicta — FY2019 Earnings Presentation
60 slides from Invicta's earnings presentation, Aug 14, 2019
Slide 1: Final Results Presentation for the year ended 31 March 2019
FINAL RESULTS PRESENTATION for the year ended 31 March 2019 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 | Final results presentation for the year ended 31 March 2019 2
Slide 3: First things first
First things first Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 3
Slide 4: First things first: SARS settlement
First things first 1. SARS settlement • SENS announcement 27 September 2018 • R750m full and final settlement – due and payable over four years: › R300m in October 2018 › R100m x 3 payments October 2019, October 2020 and October 2021 (total R300m) › R150m in October 2022 (final) › Fully provided for
Slide 5: First things first (continued): Effect of IFRS changes
First things first (continued) 2. Effect of IFRS changes • IFRS 9 › FY 2018: Decrease in opening retained earnings of R5.6m › FY 2019: not material • IFRS 15: No significant impact • IFRS 16: Coming in next year. Effect on the FY 2019 figures (which will be comparatives next year) disclosed in AFS n
Slide 6: First things first (continued): Cash flow and dividends
First things first (continued) 3. Cash flow and dividends • Cash generation has been in line with prior year, but tax settlement this year has resulted in higher gearing • Board prefers to conserve cash (improve gearing; market conditions tough; may be acquisition opportunities) • Hence no final div
Slide 7: First things first (continued): Early retirement of CEO
First things first (continued) 4. Early retirement of CEO • April 2019 the company announced retirement of the Group CEO (Arnold Goldstone) on 31 December 2019 due to relocation. • Appointment of replacement is imminent • Management strengthened by: › Appointment of CFO (Nazlee Rajmohamed) on 1 July
Slide 8: First things first (continued): Revision of write off period of agency rights
First things first (continued) 5. Revision of write off period of agency (franchise) rights (Other Intangible Assets) • New auditors (EY) appointed in January 2019 • As a consequence of a first-year audit, the application of all accounting policies and estimations were rigorously checked as part of
Slide 9: The year in perspective
The year in perspective Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 9
Slide 10: Results at a glance
Results at a glance Tough markets, satisfactory results excluding anomalies Revenue ↑ 5% to R10.4 billion Operating profit ↓ 18% to R690 million Headline earnings per share ↑ 93% to 112 cents Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 10
Slide 11: Results at a glance (continued)
Results at a glance (continued) Profit before tax ↓ 15% to R614 million NAV per share ↑ 7% to 4085 cents TNAV per share ↑ 9% to 3420 cents Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 11
Slide 12: Results at a glance (continued)
Results at a glance (continued) Share price 21 June 2019 R24.65 40 % discount to NAV 28 % discount to TNAV 3 New acquisitions R331m Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 12
Slide 13: The period in perspective
The period in perspective Exchange rate volatility USD to ZAR chart Opening: 11.85610 Closing: 14.34217 17% weaker in 12 months, with volatility Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 13
Slide 14: The period in perspective (continued)
The period in perspective (continued) Source: SASFIN Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 14
Slide 15: The period in perspective (continued)
The period in perspective (continued) Source: Stats SA (data as at June 2019) Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 15
Slide 16: The period in perspective (continued)
The period in perspective (continued) Source: Financial Mail May 2019 Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 16
Slide 17: Divisional review
Divisional review Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 17
Slide 18: Divisional structure
Divisional structure Capital Equipment Group Engineering Solutions Group CEG ESG Importer & distributor of agricultural equipment, Leading distributor of engineering consumables construction equipment, forklifts and aftermarket services and provider of engineering solutions replacement spare parts •
Slide 19: Revenue contribution by operating segment
Revenue contribution by operating segment (R’m) (excluding Head Office) R'million Chart Title 12 000 10,069 9,620 9,633 10 000 8,816 8,783 8 000 4 831 4 955 5 074 4 607 4 484 6 000 4 000 4 665 4 559 5 238 2 000 4 209 4 299 0 MAR 2015 MAR 2016 MAR 2017 MAR 2018 MAR 2019 52% 48% ESG CEG Invicta Holdin
Slide 20: Operating profit contribution by operating segment before forex costs
Operating profit contribution by operating segment before forex costs (R’m) (excluding Head Office) R'million Chart Title 1200 956 931 1000 912 768 800 716 457 426 452 600 362 374 400 499 486 479 200 406 342 0 MAR 2015 MAR 2016 MAR 2017 MAR 2018 MAR 2019 48% 52% (53%) ESG CEG Invicta Holdings Limite
Slide 21: Revenue contribution by region
Revenue contribution by region (excluding Head Office) 18% 5% Asia Other South Africa 76% Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 21
Slide 22: Revenue contribution by sector
Revenue contribution by sector (excluding Head Office) 4% (14%) (16%) 12% (5%) 23% Agriculture & Forestry (11%) Mining Construction Manufacturing & Industry Automotive 16% (63%) (29%) 17% Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 22
Slide 23: Divisional Review: Capital Equipment Group
DIVISIONAL REVIEW Capital Equipment Group
Slide 24: Review of 2019
Review of 2019 Revenue 5% Operating profit before foreign exchange movements 17% • 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 it diffi
Slide 25: Review of 2019 (continued)
Review of 2019 (continued) Divisional Performance: • Agriculture • Market share for CaseIH Tractors and Combine Harvesters increased • Retained large portion of the New Holland spare parts business • New equipment business restricted by value of trade ins • Construction • Retained and grown market s
Slide 26: Management structure
Management structure Chief Executive Officer Tony Sinclair Northmec NHSA Landboupart Doosan HPE Africa CSE Criterion Shamrock ESP Kian Ann MD DH DH MD MD MD MD MD MD MD Johan David Danie Darrel Alex Ross Brenton Marius Andrew Loy van der Merwe Visser van Aswegen Holton Ackron Collard Kemp Schutte Gr
Slide 27: Final results summary 31 March 2019
Final results summary 31 March 2019 Operating profit before interest on Revenue (R’m) financing transactions and foreign exchange movements (R’m) 6 000 600 4 955 5 074 4 831 5 000 500 470 452 4 000 400 373 2 575 2 518 2 314 251 234 3 000 300 186 2 000 200 2 380 2 556 2 517 219 218 1 000 100 187 0 0
Slide 28: Revenue contribution by market sector
Revenue contribution by market sector Agriculture 30.9% Parts 43.7% Construction 20.1% Logistics 5.3% Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 28
Slide 29: Gross profit value contribution by income stream
Gross profit value contribution by income stream Rent 3.0% Equipment 21.7% Parts 75.3% Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 29
Slide 30: Equipment volumes (South Africa)
Equipment volumes (South Africa) • Agriculture equipment volumes o Tractors 18% o Combines 7% o Sprayers 8% • Construction equipment volumes o TLB’s 17% o Skidsteers 36% o Excavators 8% o Loaders 5% Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 30
Slide 31: Maize - Safex Prices 2018/19
ZAR per ton 1500 1700 1900 2100 2300 2500 2700 2900 3100 3300 3500 01-Jan-18 12-Jan-18 23-Jan-18 03-Feb-18 14-Feb-18 25-Feb-18 08-Mar-18 19-Mar-18 30-Mar-18 10-Apr-18 21-Apr-18 02-May-18 13-May-18 24-May-18 04-Jun-18 15-Jun-18 26-Jun-18 07-Jul-18 18-Jul-18 29-Jul-18 09-Aug-18 Invicta Holdings Limite
Slide 32: Wheat prices/ZAR
Wheat prices/ZAR Wheat - Safex Prices 2018/19 4800 4600 4400 4200 ZAR per ton 4000 3800 3600 3400 01-Jan-18 01-Dec-18 Wheat Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 32
Slide 33: 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 Invicta Holdings Limited
Slide 34: Divisional Review: Engineering Solutions Group
DIVISIONAL REVIEW Engineering Solutions Group
Slide 35: Review of 2019
Review of 2019 Revenue 15% Operating profit before foreign exchange movements 29% Divisional Performance: • BMG • Below expectations due to H2 decline & demand and margin pressures • Autobax • Met expectations • ManDirk Group • Disappointing performance with challenges post acquisition of Tool Quip
Slide 36: Management structure
Management structure Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 36
Slide 37: Highlights 2018/2019
Highlights 2018/2019 Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 37
Slide 38: Noteworthy milestones 2018/2019
Noteworthy milestones 2018/2019 • Belt Brokers (Acquired 1 September 2018 ) – Performed well • Joerg Foundry & Rustenburg Engineering - Securing strategic supply of cast iron products • Drive Shaft Parts Group (Acquired 1 December 2018) - South Africa - UK - Poland - Ukraine - Spain First expansion
Slide 39: Final results summary 31 March 2019
Final results summary 31 March 2019 Operating profit before interest on Revenue (R’m) financing transactions and foreign exchange movements (R’m) 6 000 600 5 239 480 479 5 000 4 665 4 559 500 4 000 400 342 2 675 239 2 319 2 289 277 3 000 300 134 200 2 000 2 564 100 241 202 208 1 000 2 346 2 270 0 0
Slide 40: Revenue analysis 31 March 2019
Revenue analysis 31 March 2019 1% 12% 37% 63% (65%) 87% (88%) Consumables Engineering South Africa Africa Other • Strategy of market differentiation by: • African revenue growing as a % of ESG o complementing product distribution with revenues technical expertise Invicta Holdings Limited | Final res
Slide 41: Sales by industry sector 31 March 2019
Sales by industry sector 31 March 2019 Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 41
Slide 42: Group financial overview
Group financial overview Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 42
Slide 43: Revenue (R'm)
Revenue (R’m) 12 000 10 460 10 450 9 632 9 994* 10 000 8 799 8 000 5 190 5 166 4 905 4 953 4 410 6 000 4 000 5 270 5 041 5 284 4 389 4 727 2 000 0 MAR 2015 MAR 2016 MAR 2017 MAR 2018 MAR 2019 First half Second half * Re-presented Invicta Holdings Limited | Final results presentation for the year end
Slide 44: Operating profit
Operating profit Operating profit before interest on Operating margin (%) financing transactions and foreign exchange movements (R’m) 1 200 25.0% 1 051 10.9% 1 000 905* 20.0% 8.5%** 9.1% 783 800 34 611 699 15.0% 12.5% 6.7% 479 8.4% 9.7% 600 372 296 10.0% 5.7% 400 5.0% 9.4% 440 8.6% 8.5% 200 426 403
Slide 45: EBITDA (%)
EBITDA (%) 14.0% 1 483 12.0% 1 019 1 144 1 103 10.0% 870 8.0% 13.0% 6.0% 11.0% 10.1% 10.0% 4.0% 8.3% 2.0% 0.0% 2015 2016 2017 2018 2019 EBITDA (R’m) Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 45
Slide 46: Attributable earnings (R'm)
Attributable earnings (R’m) 800 691 700 69 612 589 600 70 42 496 150 500 31 429 74 82 400 400 200 300 510 200 393 383 83 84 11 100 21 135 -3 84 -2 0 MAR 2015 MAR 2016 MAR 2017 MAR 2018 MAR 2019 -100 Ordinary s/h Minority s/h Pref s/h Once off Specific taxation expense Invicta Holdings Limited | Fina
Slide 47: Earnings per share (cents)
Earnings per share (cents): what it would have been if there was no specific tax provision 1000 900 78m weighted average nr of ordinaryshare 800 742 Rights issue 700 88 107m 600 weighted average nr of ordinary 499 500 shares 452 361 396 400 29 246 359 210 313 300 160 118 200 293 78 253 242 100 207 1
Slide 48: Dividend per share (cents)
Dividend per share (cents) 250 Feb 2015: Special dividend of 2024cps was paid 196 200 167 18% 142 150 112 119 95 100 75 50 No final dividend 50 50 84 67 72 69 50 0 MAR 2015 MAR 2016 MAR 2017 MAR 2018 MAR 2019 Interim Final Invicta Holdings Limited | Final results presentation for the year ended 31 M
Slide 49: Prospects and strategy
Prospects and strategy Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 49
Slide 50: Prospects
Prospects • Trading conditions have settled (no load-shedding, elections over), but they still remain challenging • Expect coming year to more positive than FY2019 (less distractions), but anticipate a slow return to growth • Rest of world slowing down, expect lead times for products to decline and
Slide 51: Strategy
Strategy Invicta’s strategy is unchanged. • 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
Slide 52: Q&A
Q&A Thank you for your attendance and participation The accounting treatments this year are complex. We are happy to discuss any queries which you may have www.invictaholdings.co.za For any further Investor Relations questions please contact: Arnold Goldstone (CEO) arnoldg@invictaholdings.co.za Nazl
Slide 53: Appendix
Appendix Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 53
Slide 54: 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 Holdings Properties Treasury Finance 100% 100% 100% 100% Invicta African Invicta Asian ESG CEG Holdings Holdings BMG Hansen Northmec OST New Holland* Mozam
Slide 55: 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 56: 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 57: Engineering Solutions Group
Engineering Solutions Group 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 Engineeri
Slide 58: Group profit drivers
Group profit drivers • Mining and industrial activity (ESG and CEG) • Agricultural activity (Northmec and aftermarket spare parts) • Construction and earthmoving activity (CSE, Doosan SA & HPE) • Warehousing (Criterion Equipment and Shamrock) • Global replacement spares market (Kian Ann) Invicta Hol
Slide 59: 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 60: Shareholding as at 31 March 2019
Shareholding as at 31 March 2019 Samuels family Exec directors 1% 2% Goldstone family 3% Sherrell family 7% Public 49% Wiese family 38% Directors’ Total % 51% Public % 49% Invicta Holdings Limited | Final results presentation for the year ended 31 March 2019 60