interim results presentation for the six months ended 30 … presentation/invicta... · 2018. 5....
TRANSCRIPT
INTERIM RESULTS PRESENTATION
For the six months ended 30 September 2016
November 2016
Agenda
The period in perspective
Divisional review
Capital Equipment
Engineering Solutions
Building Supplies
Financial overview
Prospects
Appendix
1
Interim results at a glance
Revenue Operating profit
R5.75bn R485m
Profit before tax Attributable earnings
R399m R271m
Earnings per share Headline earnings per share
253 cents 254 cents
Interim dividend per share Cash generated by operations
72 cents R732m
2
6%
7%
408%7%
8%
3%
7% 32%
The period in perspective
An outstanding set of interim results for the period ended 30 September 2016
Macro-economic conditions, both in South Africa and Asia, remain challenging
Poor South African GDP growth
Volatile exchange rate against major currencies
Political uncertainty
Severe drought gripping the country
Drop in demand for earthmoving machinery
Subdued demand for commodities, both Africa and Asia
Cash generation from operations strong – R732 million for the period
Net operating debt reduced from 34% (31 Mar 2016) to 32% (30 Sep 2016)
3
The CEG and ESG businesses reported:
Strong revenue and operating profit growth; and
Operating profit margin recovery
Appointed Llewelyn Bricknell as CIO
Byron Nichles resigned as CEO: ESG
Remains a Non-Executive Director
New management structure in ESG
JSE public censure of company – matter finalised
4
The period in perspective (continued)
DIVISIONAL REVIEW
Divisional structure
Capital
Equipment Group
(CEG)
Engineering
Solutions Group
(ESG)
Building
Supplies Group
(BSG)
• Northmec
• New Holland
• CSE
• Doosan
• HPE
• ESP
• Criterion
• Kian Ann
• KCHI
• BMG
• Man-Dirk
• Autobax
• OST
• SA Tool
• Hansen
• Hyflo
• Sibuyile
• MacNeil
• Tiletoria
• B4A
6
1 683
2 583 2 404 2 285 2 380
1 635
1 978 2 028 2 085
2 346 196
565 837 936
1 023
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
SEP2012
SEP2013
SEP2014
SEP2015
SEP2016
R’million
Revenue contribution by segment(excluding Group segment)
41% (43%)
41% (40%)
18% (17%)
CEG ESG BSG
Sep 2016 (Sep 2015)
3 514
5 1295 269 5 306
7
5 749
Operating profit contribution
by segment (excluding Group segment)
43% (43%)
48% (46%)
9% (11%)
CEG ESG BSG
148
251
180 181 219
174
220
209 194
241 12
32
48 46
45
0
100
200
300
400
500
600
SEP2012
SEP2013
SEP2014
SEP2015
SEP2016
R’million
334
503
437421
8
505
Sep 2016 (Sep 2015)
Revenue contribution by region
78% (78%)
10% (11%)
8% (8%)
4% (3%)
South Africa Africa Asia Other
Sep 2016 (Sep 2015)
9
Revenue contribution by sector
28% (30%)
24% (23%)15% (15%)
15% (14%)
18% (18%)
Construction Agriculture & Forestry Manufacturing & Industry Mining General Trading
Sep 2016 (Sep 2015)
10
Return on Net Operating Assets
(RONA)
32.3%
25.8%
17.5%
19.4%
32.9%
29.8%
21.8%
25.1%
32.4%
30.6%
20.8%
23.7%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
MAR 2014 MAR 2015 MAR 2016 SEP 2016
CEG ESG BSG
11
Sep’16 Annualised
NorthmecNew
HollandCSE Doosan HPE ESP Criterion
CEO
Tony Sinclair
Managing
Director
Johan
van der Merwe
Managing
Director
Peter
Askew
Managing
Director
Brenton
Kemp
Managing
Director
Chris
Whitehead
Managing
Director
Brenton
Kemp
Managing
Director
Andrew
Grobler
Managing
Director
Alex
Ackron
Management structure
13
7.5% 7.9% 9.2%
12.6%8.2%
MAR 2015 MAR 2016 MAR 2017
OPERATING PROFIT MARGIN (%)
Interim results summary30 September 2016
2 404 2 285 2 380
2 203 2 199
0
1 000
2 000
3 000
4 000
5 000
MAR 2015 MAR 2016 MAR 2017
REVENUE (R’m)
180 181 219
208 181
0
100
200
300
400
500
MAR 2015 MAR 2016 MAR 2017
OPERATING PROFIT (R’m)
362
1 8922 255 2 259
1 000
1 250
1 500
1 750
2 000
2 250
2 500
MAR 2015 MAR 2016 SEP 2016
NET OPERATING ASSETS (R’m)
First Half Second Half* Including R69 million once-off Kian Ann profit
** Excluding R69 million - margin 8.4%
4 607 4 484 457*
9.9%**
8.1%
14
Review of 1H2017
South Africa
Good growth in a tough market
Revenue flat
Operating profit up more than 30%
Parts sales doing exceptionally well
Strong cash generation; reduction in working
capital
Construction of 5 250m2 Assembly Plant in
Camperdown, KwaZulu-Natal commenced
Outlook positive despite the market conditions
Revenue 4%
Operating profit 21%
15
Kian Ann
Results negatively impacted by weak Asian
economic conditions
Revenue flat in Singapore Dollars (SGD)
Operating profit declined
Business remains profitable but returns
disappointing
Good cash generated - 40% reduction of SGD debt
Turnaround strategy is underway – early signs
positive
Expansion of geographical footprint
UK, Canada, Malaysia, Myanmar, India
Market volumes9 months to Sep 2016
16
Agriculture equipment volumes
Tractors 14%
Combines 16%
Construction equipment volumes
Excavators 19%
TLB’s 18%
Loaders 22%
Skidsteers 22%
Manufacturing equipment volumes
Forklifts 15%
Sales analysis30 September 2016
42% (43%)
18% (20%)
4% (4%)
36% (33%)
Agriculture Equip & Parts Construction Equip & Parts Logistics Aftermarket parts
Sep 2016 (Sep 2015)
17
BMG
(Bearing Man Group)Man-Dirk Group Autobax Hyflo
Managing Director
Gavin Pelser
Managing Director
Gavin Hall
Managing Director
John Black
Managing Director
Emil Berning
Management structure
Executive Chairman
Charles Walters
19
Interim results summary30 September 2016
2 028 2 085 2 346
2 181 2 214
0
1 000
2 000
3 000
4 000
5 000
6 000
MAR 2015 MAR 2016 MAR 2017
REVENUE (R’m)
10.3% 9.3% 10.3%
13.3%9.6%
MAR 2015 MAR 2016 MAR 2017
OPERATING PROFIT MARGIN (%)
209 194 241
290212
0
100
200
300
400
500
600
MAR 2015 MAR 2016 MAR 2017
OPERATING PROFIT (R’m)
1 7961 936 1 902
1 400
1 500
1 600
1 700
1 800
1 900
2 000
MAR 2015 MAR 2016 SEP 2016
NET OPERATING ASSETS (R’m)
4 209 4 299499
406
11.9%
9.4%
First Half Second Half
20
Review of 1H2017
• Record first half revenue and operating profit achieved
• Double digit organic revenue growth reflects market share gains
• Good pricing and gross margin discipline maintained
• Organic overhead growth restricted to below inflation despite continued
operational disruptions
• Operating profit margin increased to 10.3% from 9.3%
• Strong cash generation; good working capital management
• Wegezi Power Holdings sold to Vele Investments, a BEE industrialist group,
effective 1 April 2016
• Excellent progress made on the BMG World distribution facility in Johannesburg –
to be delivered on time and within budget in March 2017
Revenue 13%
Operating profit 24%
21
Review of 1H2017 (continued)
• Sibuyile and Hyflo acquisitions have been settled and are performing ahead of
expectations
• Integration of Hansen business into BMG to be completed by December 2016,
significant cost savings already achieved with more to come
• Outstanding performances from BMG, Autobax & Man-Dirk
• Restructuring of BMG leadership under new MD, Gavin Pelser effective
1 September 2016
• Appointment of new Man-Dirk MD, Gavin Hall effective 1 October 2016
• Appointment of new Hyflo MD, Emil Berning effective 1 November 2016
• Approved opening of a BMG branch in Tema, Ghana - BMG's first foray into West
Africa (to commence trading by 2nd Quarter 2017)
22
Revenue analysis30 September 2016
Strategy of market differentiation by:• complementing product distribution with
technical expertise
• enhanced through the acquisitions of
Hansen and Hyflo during the year
• African growth remains a priority
despite current challenges
• Acquisitions made are SA-based
Consumables66%
Engineering34%
South Africa89% (88%)
Africa11% (12%)
23
Sep 2016 (Sep 2015)
Sales by industry sector30 September 2016
Mining25%
Industry22%
Construction4%
Oil & Gas1%
Food & Beverage6%
Projects / Consultants
5%
Agriculture5%
Automotive & Transport
8%
Cash Sales9%
Parastatals3%
Other12%
24
Interim results summary30 September 2016
837 936 1 023
802901
0
500
1 000
1 500
2 000
MAR 2015 MAR 2016 MAR 2017
REVENUE (R’m)
1 837
5.7% 4.9% 4.4%
4.9%3.2%
MAR 2015 MAR 2016 MAR 2017
OPERATING PROFIT MARGIN (%)
4.1%
48 46 45
3929
0
20
40
60
80
100
MAR 2015 MAR 2016 MAR 2017
OPERATING PROFIT (R’m)
7775
328
392368
200
300
400
MAR 2015 MAR 2016 SEP 2016
NET OPERATING ASSETS (R’m)
First Half Second Half
1 639
5.3%
26
Review of 1H2017
• Good sales growth in a challenging market
• Infrastructure and Government spend remain low
• Building material retail sector continues to consolidate
• Operating profit margin declined from 4.9% to 4.4%
• Disappointing results from wholesale division - downward pressure on margins
• Retail and exports trading well with increased margins and retail footprint
• Major upgrading of Tiletoria showrooms, branding and market position
resulting in positive impact on sales and margin
• Construction of expanded warehouse facilities (22 000 m²) in Samrand,
Gauteng, commenced
Revenue 9%
Operating profit 0%
27
FINANCIAL OVERVIEW
3 514
5 129 5 270 5 325 5 750
4 044
5 336 5 190 5 311
0
2 000
4 000
6 000
8 000
10 000
12 000
MAR 2013 MAR 2014 MAR 2015 MAR 2016 MAR 2017
R’m
illion
1st Half 2nd Half
7 558
10 465 10 460 10 636
Revenue
5 yr CAGR = 18%
(H1)
29
Operating profit
* Excluding once-off profit items
315
493 427 422
485
390
550
518
390
179
69
34
0
200
400
600
800
1 000
1 200
MAR2013
MAR2014
MAR2015
MAR2016
MAR2017
Operating profit (R’m)
1st Half 2nd Half Once-off
884
1 043 1 014
846
9.0% 9.6%8.1% 7.9% 8.4%
9.6%10.3%
10.0%7.4%
MAR2013
MAR2014
MAR2015
MAR2016
MAR2017
Operating margin (%)
1st Half 2nd Half
9.3%*10.0%
9.0%*
7.6%*
30
Statement of Comprehensive
Income
R’million
30 Sept 2016
Unaudited
30 Sept 2015
Unaudited % Change
Revenue 5 750 5 325 8
Operating profit 485 457 6
Finance costs (435) (461) (6)
Interest and dividends received 349 386 (10)
Share of associates’ (losses)/profits (-) 3 (106)
Profit before taxation 399 385 4
Taxation (79) (82) (4)
Profit for the period 320 303 6
31
R’million
30 Sept 2016
Unaudited
30 Sept 2015
Unaudited % Change
Attributable to ordinary shareholders 271 253 7
Non-controlling interests 9 14 (37)
Preference shareholders 40 36 12
EPS (cents) 253 236 7
HEPS (cents) 254 193 32
Normalised EPS (cents) 253 236 7
Normalised HEPS (cents) 254 210 21
Weighted average shares in issue (‘000) * 106 953 107 042 0
Statement of Comprehensive
Income (continued)
32
* Weighted average shares in issue reduced with general share repurchase
Earnings
226
263
217 214
271
11
37
37
14
9
33
35
36
40
39
0
50
100
150
200
250
300
350
SEP 2012 SEP 2013 SEP 2014 SEP 2015 SEP 2016
R’m
illion
Ordinary s/h Minority s/h Pref s/h Once-off
237
333
289303
33
320
EPS and HEPS
312
358
293
236 253
313
353
292
196
254
0
50
100
150
200
250
300
350
400
SEP 2012 SEP 2013 SEP 2014 SEP 2015 SEP 2016
Cents
EPS HEPS
107m shares in issue74m shares in issue
34
Headline earnings
R’000
30 Sept 2016
Unaudited
30 Sept 2015
Unaudited % Change
Earnings 270 543 252 794 7
Net profit on disposal of PPE (2 354) (55 182)
Net impairment of PPE 3 491 -
Negative goodwill (187) -
Taxation 444 10 204
Non-controlling interest 25 (1 371)
Headline earnings 271 962 206 445 32
35
Dividend per share
102 84 67 72
185
112
75
0
50
100
150
200
250
300
350
2014 2015 2016 2017
Cents
per
share
Interim Final
196
Feb 2015: Special dividend of 2 024 cps was paid
142
7%
287
Salient dates for the September 2016 Interim Dividend
Last day to trade to be eligible for the dividend Tuesday 29 Nov 2016
Shares commence trading “ex” the dividend Wednesday 30 Nov 2016
Record date in respect of dividend Friday 02 Dec 2016
Dividend payments Monday 05 Dec 2016
36
Statement of Financial Position
R’million
30 Sept 2016
Unaudited
30 Sept 2015
Unaudited % Change
ASSETS
Property, plant and equipment 1 601 1 355 18
Financial instruments and investment in
associates1 892 1 726 10
Goodwill and other intangible assets 829 821 1
Financial assets, finance lease and
long-term receivables3 283 2 884 14
Deferred taxation 199 263 (24)
7 804 7 050 11
37
R’million
30 Sept 2016
Unaudited
30 Sept 2015
Unaudited % Change
CURRENT ASSETS 7 832 7 438 5
Inventories 4 021 3 714 8
Trade and other receivables 2 080 2 144 (3)
Current portion of finance lease,
financial investments and long-term
receivables
725 1 137 (36)
Taxation prepaid 33 20 65
Assets-held-for-sale 16 - 100
Bank balances and cash 957 423 126
TOTAL ASSETS 15 636 14 487 8
Statement of Financial Position
38
R’million
30 Sept 2016
Unaudited
30 Sept 2015
Unaudited % Change
EQUITY
Equity attributable to equity holders 4 956 4 645 7
Non-controlling interests 207 189 9
Shareholders’ equity 5 163 4 834 7
Shares in issue (‘000) 108 495 108 495 -
Net asset value per share (cents) 3 877 3 590 8
Net tangible asset value per share
(cents)3 112 2 633 18
Statement of Financial Position
39
R’million
30 Sept 2016
Unaudited
30 Sept 2015
Unaudited % Change
Long-term borrowings, guaranteed
repurchase and financial liabilities6 687 5 620 19
Deferred taxation 32 124 (74)
Trade, other payables and provisions 2 644 2 231 19
Taxation liabilities 31 50 (38)
Shareholders for dividends 39 23 70
Current portion of long-term
borrowings, guaranteed repurchase and
financial liabilities
814 1 327 (39)
Bank overdrafts 227 278 (18)
TOTAL EQUITY AND LIABILITIES 15 636 14 487 8
Statement of Financial Position
40
Cash flow movement
556
559
173 (86)(133)
(97)(177)
(105) 53 (13) 730
0
200
400
600
800
1000
1200
1400
R’m
illion
41
PROSPECTS
Prospects
Expect improvement in most businesses in 2H2017 - off a low base
Trading conditions expected to remain challenging
South Africa; and
South East Asia
Benefits of relocations, restructurings and expansions have started
coming through
Focus of the Group will remain on:
margin management and cost control
working capital optimisation and cash generation
Actively seeking value-accretive acquisition opportunities
43
Q&A
Thank you for your attendance and participation
www.invictaholdings.co.za
For any further Investor Relations questions please contact:
Charles Walters
Chief Executive Officer
+27 11 620 7300
Arnold Goldstone
Executive Deputy Chairman
+27 21 929 4780
Craig Barnard
Chief Financial Officer
+27 11 620 7300
Marlize Keyter
Keyter Rech Investor Solutions
+27 87 351 3810
APPENDIX
A company managing industrial assets of R15,6 billion
A leading player in the sub-Saharan region:
Engineering consumable parts and technical solutions
Agricultural equipment and parts
Construction equipment and parts
Tiles, sanitaryware and building supplies
International ambitions:
Industrial distribution
Equipment spare parts
Excellent track record:
Market Cap – R6 billion at 30 September 2016
Group profile
Group structure
Invicta
Holdings
Invicta
PropertiesInvicta SA
Invicta Offshore
Holdings
Invicta
Treasury
Invicta
Finance
BBBEE &
Staff Trusts
CEGESGInvicta Asian
HoldingsBSG
Kian Ann
KCHI
HHI (Indo)
API (Indo)
AT (Thai)
BMG
Man-Dirk
Autobax
OST
SA Tool
Hansen
Hyflo
Sibuyile
Northmec
N Holland
CSE
Doosan
HPE
ESP
Criterion
MacNeil
Tiletoria
B4A
75%25% 100% 100% 100%100%
100%100%60%100%100%
Invicta African
Holdings
BMG Moz
BMG Zam
BMG Tanz
Nova Vida
MRO
Non
- SASA
SA
Northmec (Agric Parts & Machinery)
New Holland (Agric Parts & Machinery)
CSE (Earthmoving Parts & Machinery)
Doosan (Earthmoving Parts & Machinery)
HPE (Hyundai Earthmoving Parts & Machinery)
Criterion (Forklift Parts & Machinery)
ESP (Parts)
200 dedicated outlets
Business overview
Kian Ann Engineering
One of the world's largest independent
distributors of equipment spare parts
HQ in Singapore
Subsidiaries in Indonesia, China, UK and Canada
Kian Chue Hwa Industries
One of Asia’s largest independent
distributors of heavy truck spare parts
HQ in Singapore
Subsidiaries in Indonesia and Thailand
Kian Ann Group
Maize price performance Jan’16 to Oct’16
1 000.00
1 500.00
2 000.00
2 500.00
3 000.00
3 500.00
4 000.00
4 500.00
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Pri
ce in
ZA
R
Yellow Maize
Tractor unit sales
2207
3122
4679
4308
60495721
4015
262426682847
44284330
5280
4677
5727
6451
7549
5550
5155
7379
7899
7517 7466
6649
6000
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Combine unit sales
70
135
209
191
291
228
165
124125
97
175178
278
165
168
179
341
275
188
260
343
352
339
211
200
0
50
100
150
200
250
300
350
400
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
BMG (Bearing Man Group)
• Engineering components & technical services
• 120 branches
• Bearings, Seals, PT, Tools, Fasteners
• Drives, Motors, Belting, Field Services
• Filtration, Hydraulics, Lubrication, Pneumatics
Man-Dirk Group
• Tools & equipment
• 20 branches
Autobax
• Automotive
OST
Sibuyile
Hansen
Hyflo
Business overview
BMG World upgrade - 93 100m2
Additional land
being Acquired19 000m2
Engineering
Assembly
Building9 330m2
Parking Deck6 000m2
BMG Park
Original36 891m2
Land acquired
for CDC9 206m2
Fluid
Technology
Building9 208m2
1.
2.3.
4.
1. Fluid Technology Building 3 773m2
2. Central Distribution Centre 9 206m2
3. Additional land being acquired 10 467m2
4. Additional land being acquired 8 222m2
BMG World upgrade - 93 100m2
BMG World upgrade
BMG World upgrade
Tiletoria
MacNeil Distributors
Brands 4 Africa
15 outlets in SA
Business overview
Tiletoria Spec Studio
Tiletoria Showroom Paarden Eiland
38 000m² site22 000m² warehouse & officesCompletion date Mar/Apr 2018New leases signed – DCLSA & MacNeil JHB
Samrand Development
Aspen Group – DevelopersCompletion Jan 201813 000m² site9 000m² warehouse2 000m² showroomActively looking for site in Pretoria
TiletoriaJHB Malibongwe Drive
Group profit drivers
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)
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