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RMB/MORGAN STANLEY OFF PISTE CONFERENCE
VINEYARD HOTEL, CAPE TOEWN, 3 OCT 2014
PRESENTER: ARNOLD GOLDSTONE (CEO)
CORE BUSINESS
BMG (Bearing Man Group)
Leading distributor of engineering
components & technical services in
Africa
Over 120 branches Southern Africa
Bearings, Seals, Chains, Couplings
Fasteners, Tools
Drives, Motors, Belting
Filtration, Hydraulics, Lubrication
Field service, Con Mon
Man-Dirk, Autobax, Wegezi, OST
CORE BUSINESS
CEG (Capital Equipment Group) Northmec (Agric Machinery)
New Holland (Agric Machinery)
CSE (Earthmoving Machinery)
Doosan (Earthmoving Machinery)
HPE (Hyundai Earthmoving)
Criterion (Forklifts)
ESP (Parts)
200 Dedicated Outlets across SA
CORE BUSINESS
Kian Ann Engineering (Singapore)
One of the world's largest independent
distributors of
heavy machinery parts and
diesel engine components
for the earthmoving and heavy truck industries
Annual Revenue R1.1 bn+
Outlets in Singapore, Indonesia, China, Malaysia
CORE BUSINESS
BSG (Building Supplies)
Tiletoria
MacNeil Distributors (from 1 Oct 2012)
One Owl Distributors
Annual Revenue: R1.3 bn+
15 + outlets in SA
Big growth potential
BMG38%
CEG49%
Bldg Supplies13%
Revenue contribution FY MAR 2014:
Business Unit
Revenue contribution FY MAR 2014:
SA and Rest of World
South Africa78%
Rest of World22%
FY 2014 - RESULTS HIGHLIGHTS
Revenue up 38% to R10.5bn
Operating Profit up 18% to R1.04bn
Cash generated by operations R715m
EPS down 17% to 788c
Normalised EPS up 7% to 788c
HEPS down 14% to 765c
Normalised HEPS up 15% to 765c
DPS up 7% to 287c
Dividend cover 2.75x
Revenue (Rm)
0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
10 yr CAGR = 18% p.a.
0
200
400
600
800
1,000
1,200
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Operating Profit (Rm)
10 yr CAGR = 16% p.a.
EPS
0
100
200
300
400
500
600
700
800
900
1,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
EPS One-off
10 yr CAGR in EPS = 17% p.a.
EPS and DPS
0
100
200
300
400
500
600
700
800
900
1,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
EPS One-off DPS
10 yr CAGR in DPS = 16% p.a.
EPS
0
200
400
600
800
1,000
1,200
2010 2011 2012 2013 2014
EPS One-off
-17%
+7%
EPS (H1 v H2)
0
50
100
150
200
250
300
350
400
450
500
2010 2011 2012 2013 2014
H1 H2 One-off
Segmental Operating Profit (Rm)
293 320 371 390
473
123 158
247
339
484 14
39
67
37 27
-31
116
19
-200
0
200
400
600
800
1,000
1,200
2010 2011 2012 2013 2014
BMG CEG BSG Other
BMG Results Summary 31 Mar 2014
Rm 31 Mar 14 vs PY
Sales 3,955 +15%
Operating Profit 473 +21%
OP% 12.0% 11.4%
Ave NOA 1,438 +13%
RoNOA 32.9% 30.8%
Sales
1,550
2,056 1,928
2,395
2,742
3,425
3,955
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2008 2009 2010 2011 2012 2013 2014
Operating Profit
220
319
293
320
371 390
473
0
50
100
150
200
250
300
350
400
450
500
2008 2009 2010 2011 2012 2013 2014
CEG Results Summary 31 Mar 2014
Rm 31 Mar 14 vs PY
Sales 5,122 +46%
Operating Profit 484 +43%
OP% 9.4% 9.7%
Ave NOA 1,497 +87%
RoNOA% 32.3% 42.3%
Turnover 31 Mar 2014
1,700
2,254
1,749 1,877
2,549
3,503
5,122
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
2008 2009 2010 2011 2012 2013 2014
Operating Profit 31 Mar 2014
121
156
123
157
247
339
484
0
50
100
150
200
250
300
350
400
450
500
2008 2009 2010 2011 2012 2013 2014
BSG Results Summary 31 Mar 2014
Rm 31 Mar 14 vs PY
Sales 1,383 +121%
Operating Profit 67 +73%
OP% 4.8% 6.2%
Ave NOA 207 -
RoNOA 32.4% -
Sales 31 Mar 2014
625
1,383
0
500
1,000
1,500
2,000
2013 2014
Operating Profit 31 Mar 2014
39
67
0
10
20
30
40
50
60
70
80
2013 2014
OP % 31 Mar 2014
6.2%
4.8%
4%
5%
6%
7%
2013 2014
INVICTA SHARE PRICE at 31 Mar
225 295 310 550
935
1 550
1 850
2 750 2 550
2 000
2 880
4 350
6 500
10 200
11 530 10 550
-
2 000
4 000
6 000
8 000
10 000
12 000
14 000
Cent
s per
shar
e
CAGR SINCE 2000 = 32% p.a.
SHAREHOLDING SEP 2014
61%
36%
3%Public & Fin Institutions
Staff & Treasury
Directors
CH Wiese * (Chairman)
36.4%
Sherrell family (LR Sherrell) *
10.9%
A Goldstone (CEO) 5.7%
D Samuels * 4.8%
Other exec directors 3.0%
75.6 million shares in issue 1.5 million thereof held in treasury
* = non-executive
INVICTA GROUP PROFIT DRIVERS
General mining and industrial activity (BMG)
Agricultural activity (Northmec & New Holland)
Construction activity (CSE, Doosan SA & HPE)
Warehousing (Criterion Equipment)
Building and Renovations (BSG)
Global replacement spares market (Kian Ann)
PROSPECTS
Aim to grow EPS at CPI plus 10% over the long term
Last 13 financial yrs = 32% pa CAGR
Long term aggressive growth, focus on generating strong cash flows
Acquisitions and organic growth
Looking for acquisitions - will stay in core businesses
Dividend cover policy stays at 3.5 x EPS interims, 2.75 x NEPS FY
Group is considering an international listing
Historically acquisitions were made using gearing, but may need to
raise equity for larger acquisitions in future
Aim to increase non-SA income to 50% of total in medium term
Trading conditions in SA proving to be very challenging this year
PROSPECTS CONTD
SENS update Jul 2014 – expect EPS to be down 20-30% in H1 to
Sep 2014
SENS announcement yesterday: Acquis. of remainder (25%) of
Kian Ann
Industrial consumables market (BMG) recovering from industrial
action but not yet fully back to normal; GP % under pressure
Agric machinery market soft. Total SA market Y-o-Y tractor sales
to Aug 2014 down 13 %. Maize price down by 50% since Apr 2014
Construction machinery: Total SA volumes on decline since
mining strikes; no new major infrastructural spend
South East Asian markets still soft. Recovery expected by 2016
Ride the cycles
Acquisition opportunities
INVICTA GROUP
Changes to Executive Roles
Now Next year
Exec. Dep. - Arnold Goldstone
Chairman
Group CEO Arnold Goldstone Charles Walters
BMG CEO Charles Walters Byron Nichles
- CEO of ARB Holdings
Limited (listed on JSE)
- Appointed CEO of BMG
from 1 November 2014
THANK YOU & QUESTIONS
THANK YOU
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