FINAL RESULTS PRESENTATION

Transcription

1 FINAL RESULTS PRESENTATION for the year ended 31 March 2017 Presented by Arnold Goldstone (Chief Executive Officer)

2 Agenda 01 THE YEAR IN PERSPECTIVE 02 DIVISIONAL REVIEW Capital Equipment Group Engineering Solutions Group Building Supply Group 03GROUP FINANCIAL OVERVIEW 04 PROSPECTS AND STRATEGY 05 APPENDIX 2

3 THE YEAR IN PERSPECTIVE 3

4 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 4

5 Highlights (continued) PROFIT BEFORE TAX 58% R981 MILLION ATTRIBUTABLE EARNINGS 26% R533 MILLION NAV PER SHARE 5% CENTS TNAV PER SHARE 8% CENTS TOTAL DIVIDEND PER SHARE 18% 167 CENTS 5

6 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! 6

7 DIVISIONAL REVIEW 7

8 Divisional structure CAPITAL EQUIPMENT GROUP ENGINEERING SOLUTIONS GROUP BUILDING SUPPLY GROUP (Discontinued) Importer & distributor of agricultural equipment, construction equipment, forklifts and aftermarket replacement parts Northmec New Holland* CSE Doosan HPE ESP Criterion Kian Ann Group Leading distributor of engineering consumables and provider of engineering solutions BMG o o Hansen OST Mandirk o o SA Tool Sibuyile Autobax Hyflo Manufacturer, wholesaler and distributor of building supplies worldwide MacNeil o o Distribution Manufacturing Brands 4 Africa Tiletoria *Equipment sales discontinued. Aftermarket support continues (spare parts). 8

9 Revenue contribution by operating segment (excluding Head Office) R million ,513 10,465 10,455 10,620 1,893 1,388 1,639 1,837 7, ,955 4,209 4,299 4,665 3,425 3,503 5,122 4,607 4,484 4,955 MAR 2013 MAR 2014 MAR 2015 MAR 2016 MAR 2017 Building Supply Group 16% (17%) 43% (43%) Capital Equipment Group Engineering Solutions Group 41% (40%) 2017 (2016) 9

10 Operating profit contribution by operating segment (excluding Head Office) R million ,024 1, , MAR 2013 MAR 2014 MAR 2015 MAR 2016 MAR 2017 Building Supply Group 10% (9%) 44% (43%) Capital Equipment Group Engineering Solutions Group 46% (48%) 2017 (2016) 10

11 Revenue contribution by region (includes discontinued operations) Asia 14% (9%) 5% (3%) Other Africa 7% (11%) 74% (77%) South Africa* 2017 (2016) *Target: 50% by

12 Revenue contribution by sector (includes discontinued operations) Manufacturing & Industry Mining 12% (15%) 12% (14%) 27% (29%) Construction General Trading 24% (19%) 25% (23%) Agriculture & Forestry 2017 (2016) 12

13 25.8% 29.8% 30.9% 24.8% 17.5% 21.8% 19.4% 17.6% 20.6% 24.1% 27.3% 22.5% Return on Net Operating Assets (RONA) (based on average net operating assets) 35% 30% 25% 20% 15% 10% 5% 0% FY 2015 FY 2016 FY 2017 CEG ESG BSG IVT Group 13

14 DIVISIONAL REVIEW Capital Equipment Group

15 Review of 2017 Revenue 11% Operating profit before foreign exchange movements 30% 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

16 Final results summary 31 March REVENUE (R m) 4, ,955 4, * 470 2,203 2,199 2, ,404 2,285 2, MAR 2015 MAR 2016 MAR OPERATING PROFIT BEFORE FOREIGN EXCHANGE MOVEMENTS (R m) MAR 2015 MAR 2016 MAR 2017 * Including R69 million once-off Kian Ann profit 2,500 2,250 2,000 1,750 1,500 1,250 1,000 NET OPERATING ASSETS (R m) 2,255 2,306 1,892 MAR 2015 MAR 2016 MAR 2017 OPERATING PROFIT MARGIN (R m) 9.9%** 9.5% 8.1% 12.6% 8.2% 9.7% 7.5% 7.9% 9.2% MAR 2015 MAR 2016 MAR 2017 **The margin is 8.4% if the once-off Kian Ann profit is excluded First Half Second Half Once-off 16

17 Market volumes Agriculture equipment volumes FY 2017 o Tractors 10% o Combines 4% o Sprayers 50% Construction equipment volumes o Segments serviced by Invicta 14% 17

18 18-Jan Mar-10 4-May Jun Aug Oct-10 2-Dec Jan Mar May-11 4-Jul Aug Oct-11 9-Dec-11 6-Feb Mar May Jul-12 7-Sep Oct Dec Feb Apr-13 5-Jun Jul Sep Nov-13 6-Jan Feb Apr Jun-14 6-Aug Sep Nov Jan Mar-15 4-May Jun Aug-15 9-Oct-15 2-Dec-15 5-Feb Mar May Jul Sep Oct Dec Feb Apr May-17 Price in ZAR Yellow/White Maize prices/zar Maize Safex Prices January 2010 to May Yellow Maize White Maize 18

19 Sales analysis (includes New Holland) 31 March % Manufacturing & Industry Construction 32% 63% Agriculture & Forestry

20 New Assembly Plant Camperdown, Kwazulu Natal m² site 5 500m² building Occupation date 03 July

21 DIVISIONAL REVIEW Engineering Solutions Group

22 Review of 2017 Revenue 9% Operating profit before foreign exchange movements 18% 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: o Agriculture: o Heavy industry: positive changes in mineral commodity prices eased spending in certain parts of the mining industry. Major project work remained stagnant. much needed rain resulted in an increase in maintenance spend. this continued to be a challenging market. 22

23 Final results summary 31 March REVENUE (R m) 4,209 4,299 2,181 2,214 4,665 2, OPERATING PROFIT BEFORE FOREIGN EXCHANGE MOVEMENTS (R m) ,028 2,085 2, MAR 2015 MAR 2016 MAR MAR 2015 MAR 2016 MAR 2017 NET OPERATING ASSETS (R m) OPERATING PROFIT MARGIN (R m) % 9.4% 10.3% ,796 1,936 2, % 10.3% 9.6% 10.3% 9.3% 10.3% MAR 2015 MAR 2016 MAR 2017 MAR 2015 MAR 2016 MAR 2017 First Half Second Half 23

24 Review of 2017 Divisional performances: o o o o BMG: robust performance Autobax: excellent performance Mandirk: met expectations Hyflo: met expectations; project work lumpy, muted African operations: o o Good performance of African branches (weakened local currencies) Establishment of BMG Ghana in process Working capital: o o Stock in line with targeted levels Debtors book well managed; Debtors >R250,000 insured 24

25 Revenue analysis 31 March % 35% (35%) 11.4% (11%) 65% (65%) 88.0% (89%) Consumables Engineering 2017 (2016) South Africa Africa Other 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 25

26 Sales by industry sector 31 March 2017 Construction Agriculture Projects / Consultants 4% Food & Beverage 5% 6% 4% 1% Parastatals 1% Oil & Gas 24% Mining Automotive & Transport 7% Cash Sales 8% 20% Industry 20% Other

27 BMG World upgrade Droste Park, Jeppestown Additional land Acquired m 2 Engineering Assembly Building 9 330m 2 Parking Deck 6 000m 2 BMG Park Original m 2 Fluid Technology Building 9 208m 2 Additional Land rented for parking 6 000m 2 Additional Land Acquired 3 773m 2 Land acquired for CDC 9 206m 2 27

28 BMG World upgrade (continued) 28

29 DIVISIONAL REVIEW Building Supply Group (Discontinued)

30 Review of 2017 Revenue 3% Operating profit before foreign exchange movements 54% 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 m 2 (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 30

31 REVENUE (R m) 1, Final results summary 31 March , , OPERATING PROFIT BEFORE FOREIGN EXCHANGE MOVEMENTS (R m) MAR 2015 MAR 2016 MAR MAR 2015 MAR 2016 MAR 2017 NET OPERATING ASSETS (R m) OPERATING PROFIT MARGIN (R m) % 5.7% 4.9% 3.8% 7.2% 2.7% 5.7% 4.8% 4.4% - MAR 2015 MAR 2016 MAR 2017 MAR 2015 MAR 2016 MAR 2017 First Half Second Half 31

32 MacNeil Midrand property development m² site m² warehouse & offices Completion date Mar/Apr 2018 New leases signed DCLSA, B4A & MacNeil JHB 32

33 Tiletoria Malibongwe Drive property development Completion date Feb m² site 33

34 Revenue analysis 31 March 2017 BSG Revenue Contribution by Sector BSG Revenue Contribution by Region (35%) 2% 15% 24% 85% 74% Construction Manufacturing South Africa Africa Other 34

35 GROUP FINANCIAL OVERVIEW 35

36 Revenue ,465 10,460 10, , , MAR 2013 MAR 2014 MAR 2015 MAR 2016 MAR 2017 First Half Continuing First Half Discontinued Second Half Continuing Second Half Discontinued 36

37 Operating profit OPERATING PROFIT BEFORE FOREIGN EXCHANGE MOVEMENTS (R m) OPERATING MARGIN (%) , , , %** 9.6% 10.0% 10.3% 9.0%** 10.0% 10.1% 7.2% 8.0%** 2.8% 12.5% 8.4% 4.8% 4.4% % 9.6% 8.1% 8.6% 9.3% 0 MAR 2013 MAR 2014 MAR 2015 MAR 2016 MAR 2017 MAR 2013 MAR 2014 MAR 2015 MAR 2016 MAR 2017 **Excluding once-off items Once-off Second Half Discontinued Second Half Continuing First Half Discontinued First Half Continuing 37

38 EBITDA % 14% 977 1,483 12% 10% % 13% 1,125 1,144 11% 11% 1,103 13% 10% 8% 6% 4% 2% 0% * 2017* EBITDA (R m) *Based on continuing operations 38

39 R million Attributable Earnings MAR 2013 MAR 2014 MAR 2015 MAR 2016 MAR 2017 Ordinary s/h Minority s/h Pref s/h Once-off 39

40 Cents Earnings per share m weighted average nr of ordinary shares Rights issue m weighted average nr of ordinary shares MAR 2013 MAR 2014 MAR 2015 MAR 2016 MAR st Half 2nd Half Once-off 40

41 Headline earnings 31 March March 2016 R'000 Audited Restated % Change Attributable Earnings 533, , 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 Total adjustments 1,256 (35,056) Headline Earnings 534, ,

42 Cents per share Dividend per share Feb 2015: Special dividend of cps was paid % Interim Final 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

43 R million Cash flow movement ,000 1,800 1,600 1,400 1, (143) (245) (190) (356)* * Capex of R452m less proceeds on sale of PPE R96m ** Acquisitions of R142m less disposals of R9m 1,200 1, (133)** (65) (25) (46)

44 PROSPECTS AND STRATEGY 44

45 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) 45

46 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 46

47 Q & A Thank you for your attendance and participation 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@kris.co.za

48 APPENDIX 48

49 Statement of Profit or Loss and other Comprehensive Income 31 March March 2016 R'million Audited Restated % Change Continuing operations Revenue 9,632 8,799 9 Operating profit before foreign exchange movements 1, Net foreign exchange cost (41) (102) (60) Operating profit 1, Interest paid (889) (797) 12 Dividends received from financial investments (8) Share of profits of associates 4 5 (20) Interest received Profit before taxation from continuing operations Income tax expense (322) (92) 250 Profit for the year from continuing operations Discontinued operations Profit for the year from discontinued operations Profit for the year FY 2016 has been restated because Share Appreciation Rights have been changed from equity-settled to cash-settled. 49

50 Statement of Profit or Loss and other Comprehensive Income 31 March March 2016 R'million Audited Restated % Change Profit attributable to: Owners of the company Non-controlling interest (3) (2) 50 Preference shareholders Basic EPS from continuing operations (cents) Basic earnings and normalised EPS (cents) Headline EPS from continuing operations (cents) Normalised HEPS (cents) Weighted average shares in issue ( 000) 106, ,013 (0.06) 50

51 Statement of Financial Position 31 March March 2016 R'million Audited Restated % Change ASSETS Non-current assets Property, plant and equipment 1,641 1, Financial investments 1,982 1, Goodwill (7) Other intangible assets (5) Financial assets (38) Finance lease receivables Long-term receivables 3,374 2, Investment in associates Deferred taxation (3) Non-current assets 8,167 7,

52 Statement of Financial Position 31 March March 2016 R'million Audited Restated % Change 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 Current portion of financial investments Current portion of long-term receivables 2 5 (60) Taxation prepaid (41) Bank and cash balances 1, ,025 7,484 (6) Assets classified as held for sale (includes BSG) 1, ,842 TOTAL ASSETS 16,265 14,

53 Statement of Financial Position 31 March March 2016 R'million Audited Restated % Change EQUITY Equity attributable to the equity holders 5,116 4,857 5 Non-controlling interest (17) SHAREHOLDERS' EQUITY 5,268 5,040 5 Shares in issue ( 000) 108, ,495 - Net asset value per share (cents) 4,715 4,486 5 Net tangible asset value per share (cents) 4,000 3,

54 Statement of Financial Position 31 March March 2016 R'million Audited Restated % Change Non-current liabilities Long-term borrowings 6,793 6, Financial liabilities (36) Deferred taxation Non-current liabilities 6,892 6,

55 Statement of Financial Position 31 March March 2016 R'million Audited Restated % Change Current liabilities 4,105 3, Trade and other payables 1,939 2,210 (12) Provisions Share appreciation rights liability 6 9 (33) Taxation liabilities Shareholders for dividends Current portion of long-term borrowings (8) Current portion of financial liabilities Bank overdrafts (9) 3,433 3,661 (6) Liabilities associated with assets held for sale (includes BSG) 672 TOTAL LIABILITIES 10,997 9, TOTAL EQUITY AND LIABILITIES 16,265 14,

56 Group structure BBEE & Staff Trusts Invicta Holdings SA Non - SA 25% 75% 100% 100% 100% 100% Invicta SA ESG Invicta Properties CEG Invicta Treasury BSG (Discontinued) Invicta Finance Invicta African Holdings Invicta Offshore Holdings 100% 100% 60% 100% 100% Invicta Asian Holdings BMG Mandirk Autobax OST SA Tool Hansen Hyflo Sibuyile Northmec New Holland* CSE Doosan HPE ESP Criterion MacNeil Tiletoria B4A Mozambique Zambia Tanzania Kian Ann & subsidiaries in South East Asia *Equipment sales discontinued. Aftermarket support continues (spare parts) 56

57 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) 57

58 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 58

59 Engineering Solutions Engineering Solutions BMG (Bearing Man Group) o o o o o Engineering components & technical services 135 branches Bearings, Seals, PT, Tools, Fasteners Drives, Motors, Belting, Field Services Filtration, Hydraulics, Lubrication, Pneumatics Hansen Mandirk Group (incl SA Tool) o o Autobax o o OST Hyflo Tools & equipment 19 branches & subsidiaries Automotive 3 branch network 59

60 Building Supply Group (Discontinued) Tiletoria MacNeil Distributors Brands 4 Africa 15 outlets in SA 60

61 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) 61

62 Executive Management Team Dr Christo Wiese (Non-Executive Chairman) BOARD OF DIRECTORS 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 Building Supply Group (Discontinued) NEIL MALHERBE KEVIN DIAB 62

63 Shareholding as at 31 March % Samuels Family Goldstone Family Sherrell Family 7% 4% 1% Exec Directors 1% Treasury Directors Total % 53% Public % 47% 47% 38% Wiese Family Public 63