Invicta Holdings Limited · JSE:IVT
Invicta — H1 FY2018 Earnings Presentation
57 slides from Invicta's earnings presentation, Nov 27, 2017
Slide 1: Interim Results Presentation
INTERIM RESULTS PRESENTATION for the six months ended 30 September 2017 Presented by Arnold Goldstone (Chief Executive Officer)
Slide 2: Agenda
Agenda 01 THE PERIOD IN PERSPECTIVE 02 DIVISIONAL REVIEW Capital Equipment Group (CEG) Engineering Solutions Group (ESG) 03 GROUP FINANCIAL OVERVIEW 04 PROSPECTS AND STRATEGY 05 APPENDIX Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 2
Slide 3: The period in perspective
THE PERIOD IN PERSPECTIVE Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 3
Slide 4: Highlights
Highlights REVENUE 2.7% TO R4.86 BILLION OPERATING PROFIT BEFORE FOREIGN EXCHANGE MOVEMENTS 3.8% R426 MILLION EARNINGS PER SHARE FROM CONTINUING OPERATIONS 0% 242 CENTS CONSISTENT DIVIDEND COVER Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 4
Slide 5: Highlights (continued)
Highlights (continued) PROFIT BEFORE TAXATION 8.7% R399 MILLION NAV PER SHARE 8.0% 4924 CENTS TNAV PER SHARE 11.1% 4218 CENTS DIVIDEND PER SHARE (DIVIDEND COVER MAINTAINED) 4.2% 69 CENTS Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 5
Slide 6: The period in perspective
The period in perspective Excellent results on the back of difficult trading conditions • Mining activity depressed in SA (Mining charter changed controversially in Mar 17) • Mining activity in rest of world improving (rising commodity prices) • Agriculture: Recovered from drought except in Western
Slide 7: Divisional Review
DIVISIONAL REVIEW Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 7
Slide 8: Divisional structure
Divisional structure CAPITAL EQUIPMENT GROUP ENGINEERING SOLUTIONS GROUP Importer & distributor of agricultural Leading distributor of engineering equipment, construction equipment, consumables and provider of forklifts and aftermarket engineering solutions replacement parts • Northmec • BMG • New H
Slide 9: Revenue contribution by operating segment
Revenue contribution by operating segment (excluding Head Office) R’million 7,000 5,749 5,773 6,000 5,269 5,306 5,129 917 5,000 1,023 565 837 936 4,000 1,978 2,346 2,270 2,028 2,085 3,000 2,000 1,000 2,583 2,404 2,285 2,380 2,556 0 SEP 2013 SEP 2014 SEP 2015 SEP 2016 SEP 2017 Discontinued operations
Slide 10: Operating profit contribution by operating segment
Operating profit before foreign exchange movements contribution by operating segment (excluding Head Office) R’million 600 503 488 500 32 437 44 446 421 18 400 48 46 220 241 300 202 209 194 200 251 219 218 100 180 181 0 SEP 2013 SEP 2014 SEP 2015 SEP 2016 SEP 2017 Discontinued operations 4% (9%) Cap
Slide 11: Revenue contribution by region
Revenue contribution by region (continued operations only) Other 5% Asia (4%) 11% (8%) 7% Africa (10%) 77% South Africa* (78%) Sep 2017 (Sep 2016) *Target: 50% by 2020 Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 11
Slide 12: Revenue contribution by sector
Revenue contribution by sector (continued operations only) 18% (28%) Construction General Trading 30% (18%) 27% (24%) 14% Mining (15%) Agriculture & Forestry 11% (15%) Manufacturing & Industry Sep 2017 (Sep 2016) Invicta Holdings Limited | Interim Results Presentation for the six months ended Septem
Slide 13: Return on Net Operating Assets (RONA)
Return on Net Operating Assets (RONA) (based on average net operating assets) 35% 30% 25% Sep’17 Annualised 20% 15% 10% 5% 25.8% 29.8% 30.9% 21.8% 19.4% 17.6% 20.6% 24.1% 27.3% 22.5% 17.1% 19.4% 17.0% 24.8% 17.5% 16.7% 0% FY 2015 FY 2016 FY 2017 SEP 2017 CEG ESG Discontinued operations IVT Group Inv
Slide 14: Divisional Review: Capital Equipment Group
DIVISIONAL REVIEW Capital Equipment Group
Slide 15: Review of 1H2018
Review of 1H2018 Revenue 7.4% Operating profit before foreign exchange movements 0% • Challenging market conditions in Agriculture and Construction sectors in SA • Agriculture – Record maize crop of 17 million tons however price per ton reduced by 67% resulting in demand for machinery remaining flat
Slide 16: Management structure
Management structure Chief Executive Officer Tony Sinclair New Northmec CSE Doosan HPE ESP Criterion Holland Managing Managing Managing Managing Managing Managing Managing Director Director Director Director Director Director Director Johan Tony Sinclair Brenton Darrel Holton Alex Andrew Brenton van
Slide 17: Interim results summary
Interim results summary 30 September 2017 OPERATING PROFIT BEFORE FOREIGN REVENUE (R’m) EXCHANGE MOVEMENTS (R’m) 6,000 600 4,955 5,000 4,484 500 470 4,000 400 362 2,575 251 2,199 2,556 3,000 300 218 181 2,000 200 1,000 2,285 2,380 2,556 100 219 218 181 0 0 MAR 2016 MAR 2017 MAR 2018 MAR 2016 MAR 201
Slide 18: Market volumes
Market volumes FY 2018 • Agriculture equipment volumes in total market (April to Sept 2017 compared to the same period 2016) o Tractors 9.7% o Combines 2.0% • Construction equipment volumes in total market o Segments serviced by Invicta 20% Invicta Holdings Limited | Interim Results Presentation for
Slide 19: Maize Safex Prices
Price in ZAR 1,000 2,000 2,500 3,000 3,500 4,000 4,500 5,000 1,500 5,500 18-Jan-10 11-Mar-10 4-May-10 25-Jun-10 18-Aug-10 11-Oct-10 2-Dec-10 25-Jan-11 18-Mar-11 11-May-11 4-Jul-11 25-Aug-11 18-Oct-11 9-Dec-11 6-Feb-12 29-Mar-12 24-May-12 17-Jul-12 7-Sep-12 31-Oct-12 26-Dec-12 19-Feb-13 12-Apr-13 5-J
Slide 20: Sales analysis
Sales analysis (includes New Holland equipment sales until 1 May 2017) Manufacturing & Industry 5% Construction 36% 59% Agriculture & Forestry Sep 2017 (Sep 2016) Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 20
Slide 21: New Assembly Plant – Camperdown, Kwa-zulu Natal
New Assembly Plant – Camperdown, Kwa-zulu Natal Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 21
Slide 22: Divisional Review: Engineering Solutions Group
DIVISIONAL REVIEW Engineering Solutions Group
Slide 23: Review of 1H2018
Review of 1H2018 Revenue 3% Operating profit before foreign exchange movements 16% • Tough industrial market during the period. • Focus has been on finalizing the BMG World site and the Simplify For Success across the group. • Cost saving initiatives have been implemented across the group; • Process
Slide 24: Review of 1H2018
Review of 1H2018 Divisional Performance: • BMG: Remained flat and improved market share. • Autobax: Excellent performance, has grown year on year. • Man-Dirk: Below prior period mainly due to the mining industry slowdown. • Hyflo: Lack of business in oil & gas, little project work has resulted in a
Slide 25: Management structure
Management structure Chief Executive Officer Gavin Pelser BMG Man-Dirk Autobax Hyflo (Bearing Man Group) Group Managing Director Managing Director Managing Director Managing Director Gavin Pelser Gavin Hall John Black Emil Berning Invicta Holdings Limited | Interim Results Presentation for the six m
Slide 26: Final results summary
Final results summary 30 September 2017 REVENUE (R’m) OPERATING PROFIT BEFORE FOREIGN EXCHANGE MOVEMENTS (R’m) 6,000 600 4,665 480 5,000 4,299 500 406 4,000 400 2,319 239 3,000 2,214 2,270 300 212 202 2,000 200 1,000 2,085 2,346 2,270 100 194 241 202 0 0 MAR 2016 MAR 2017 MAR 2018 MAR 2016 MAR 2017
Slide 27: Revenue analysis
Revenue analysis 30 September 2017 1.0% 13.0% (11.4%) 33% (35%) 67% (65%) 86.0% (88.0%) Consumables Engineering South Africa Africa Other Sep 2017 (Sep 2016) • Strategy of market differentiation by: • African revenue growing as a % of ESG o complementing product distribution with revenues technical
Slide 28: Sales by industry sector
Sales by industry sector 30 September 2017 1% Parastatals Construction 1% Oil & Gas Agriculture 6% Projects / Consultants 8% 21% Mining Food & Beverage 2% 5% Automotive & Transport 7% 19% Cash Sales 10% Industry 20% Other Sep 2017 Invicta Holdings Limited | Interim Results Presentation for the six m
Slide 29: BMG World upgrade
BMG World upgrade (completed September 2017) Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 29
Slide 30: BMG World site reveal
BMG World site reveal 14 - 16 September 2017 5,700 visitors over 3 days Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 30
Slide 31: Group Financial Overview
GROUP FINANCIAL OVERVIEW Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 31
Slide 32: Revenue
Revenue 12000 10,465 10,460 10000 9,632 8,799 8000 5,336 5,190 4,905 4,410 6000 4,857 4000 5,129 5,270 4,857 4,389 4,727 2000 0 MAR 2014 MAR 2015 MAR 2016 MAR 2017 MAR 2018 *Restated *Restated First Half Continuing Second Half Continuing Invicta Holdings Limited | Interim Results Presentation for th
Slide 33: Operating profit
Operating profit OPERATING PROFIT BEFORE FOREIGN OPERATING MARGIN (%) EXCHANGE MOVEMENTS (R’m) 1400 10.1% 1200 10.0% 1,043 1,051 9.0%** 1,014 8.0%** 1000 69 12.5% 783 10.3% 800 8.4% 550 34 611 10.0% 518 600 8.8% 372 426 400 9.6% 9.4% 8.6% 8.8% 493 8.1% 200 427 440 426 377 0 MAR 2014 MAR 2015 MAR 201
Slide 34: EBITDA %
EBITDA % 16% 677 14% 977 1,483 14% 13% 13% 12% 1,125 1,144 11% 11% 1,103 10% 10% 8% 6% 4% 2% 0% 2013 2014 2015 2016* 2017* SEP 2017* EBITDA (R’m) *Based on continuing operations Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 34
Slide 35: Attributable Earnings
Attributable Earnings 800 710 691 700 66 69 612 600 64 70 82 42 496 500 31 74 R’million 400 316 300 580 42 12 510 533 200 393 261 100 0 -2 -3 -100 MAR 2014 MAR 2015 MAR 2016 MAR 2017 SEP 2017 Ordinary s/h Minority s/h Pref s/h Once-off Invicta Holdings Limited | Interim Results Presentation for the
Slide 36: Earnings per share
Earnings per share 1,000 900 78m weighted average nr of 788 ordinary shares 800 742 700 88 Rights issue 600 430 Cents 107m weighted 500 average nr of 465 361 ordinary shares 396 400 29 223 300 160 242 200 358 293 242 242 100 207 0 MAR 2014 MAR 2015 MAR 2016 MAR 2017 SEP 2017 *Restated First Half Sec
Slide 37: Headline earnings
Headline earnings 30 Sep 2017 30 Sep 2016 R’000 Unaudited Unaudited % Change *Restated Attributable Earnings 260,651 272,245 (4) Adjustments Headline EPS adjustments on discontinued operations - (2) Gain from bargain purchase price recognised - (187) Impairment of PPE 3,491 (Profit)/loss on disposal
Slide 38: Dividend per share
Dividend per share 350 Feb 2015: Special dividend of 2 024 cps was paid 300 Cents per share 250 196 200 18% 167 142 150 112 95 100 75 50 84 72 67 69 - 2015 2016 2017 SEP 2017 Interim Final Salient dates for the 2018 Interim Dividend ▪ Last day to trade to be eligible for the dividend ▪ Tuesday 12 De
Slide 39: Cash flow movement – September 2017
Cash flow movement – 30 September 2017 * Capex of R137m less proceeds on sale of PPE R16m 1,400 500 (389) 1,200 1,000 (60) (152) R’million 800 701 174 (57) 600 (121)* (67) 2 538 7 (1) 536 400 200 - Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 39
Slide 40: Prospects and Strategy
PROSPECTS AND STRATEGY Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 40
Slide 41: Prospects
Prospects • Expect much of the same in H2 • SA awaiting outcome of December elective conference • Reduce costs further in some divisions • Labour unrest possibility • Positive environment for acquisitions: evaluating a number of opportunities in SA and abroad Invicta Holdings Limited | Interim Resul
Slide 42: Strategy
Strategy Invicta’s strategy is to: • Generate 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 stra
Slide 43: 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 Craig Barnard (CFO) craigb@invictaholdings.co.za Marlize Keyter (Keyter Rech Investor Solutions) mkeyter@kri
Slide 44: Appendix
APPENDIX Invicta Holdings Limited | Interim Results Presentation for the six months ended September 2017 44
Slide 45: Statement of Profit or Loss and other Comprehensive Income
Statement of Profit or Loss and other Comprehensive Income 30 Sep 2017 30 Sep 2016 R'million Unaudited Unaudited % Change *Restated Continuing operations Revenue 4,856,553 4,727,012 3 Operating profit before foreign exchange movements 426,425 443,423 (4) Net foreign exchange cost 5,072 (14,880) Oper
Slide 46: Statement of Profit or Loss and other Comprehensive Income
Statement of Profit or Loss and other Comprehensive Income 30 Sep 2017 30 Sep 2016 R'million Unaudited Unaudited % Change *Restated Profit attributable to: Owners of the company 260,651 272,245 (4) Non-controlling interest 12,487 (3,882) Preference shareholders 42,405 40,290 315,543 308,653 Earnings
Slide 47: Statement of Financial Position
Statement of Financial Position 30 Sep 2017 30 Sep 2016 R'million Unaudited Unaudited % Change *Restated ASSETS Non-current assets Property, plant and equipment 1,728,490 1,600,804 Financial investments and investment in associates 2,193,603 1,891,606 Goodwill and other intangible assets 765,999 828
Slide 48: Statement of Financial Position
Statement of Financial Position 30 Sep 2017 30 Sep 2016 R'million Unaudited Unaudited % Change *Restated Current assets Inventories 3,960,585 4,020,813 Trade and other receivables 2,089,355 2,080,179 Current portion of financial investments, finance leases and 875,421 725,099 long-term receivables T
Slide 49: Statement of Financial Position
Statement of Financial Position 30 Sep 2017 30 Sep 2016 R'million Unaudited Unaudited % Change *Restated EQUITY Equity attributable to the equity holders 5,342,435 4,947,405 Non-controlling interest 83,480 207,063 SHAREHOLDERS' EQUITY 5,425,915 5,154,468 5 Shares in issue (‘000) 108,495 108,495 - Ne
Slide 50: Statement of Financial Position
Statement of Financial Position 30 Sep 2017 30 Sep 2016 R'million Unaudited Unaudited % Change *Restated Non-current liabilities Long-term borrowings and financial liabilities 7,159,719 6,686,654 Deferred taxation 38,615 31,956 Non-current liabilities 7,198,334 6,718,610 7 Invicta Holdings Limited |
Slide 51: Statement of Financial Position
Statement of Financial Position 30 Sep 2017 30 Sep 2016 R'million Unaudited Unaudited % Change *Restated Current liabilities Trade, other payables and provisions 2,244,064 2,643,884 Share appreciation rights liability 4,357 6,111 Taxation liabilities 195,722 30,656 Shareholders for dividends 41,485
Slide 52: Group structure
Group structure Non - BBEE & Staff Invicta SA 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 Northmec Man-Dirk Mozambique New Holla
Slide 53: Capital Equipment (SA)
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 supp
Slide 54: 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 and Myanmar • Joint venture in India • Associate in China K
Slide 55: Engineering Solutions
Engineering Solutions 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 • Man-Dirk Group (incl SA To
Slide 56: Group profit drivers
Group profit drivers • Mining and industrial activity (ESG) • Agricultural activity (Northmec and aftermarket parts) • Construction activity (CSE, Doosan SA & HPE) • Warehousing (Criterion Equipment) • Global replacement spares market (Kian Ann) Invicta Holdings Limited | Interim Results Presentatio
Slide 57: 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 CRAIG BARNARD Capital Equipment Group TONY SINCLAIR GEOFF BALSHAW Engineering Solutions Group GAVIN PELSER BENNIE GROENEWALD