ANNUAL RESULTS March 2015 PRESENTATION TO INVESTORS June 2015 - - PowerPoint PPT Presentation

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ANNUAL RESULTS March 2015 PRESENTATION TO INVESTORS June 2015 - - PowerPoint PPT Presentation

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ANNUAL RESULTS March 2015 PRESENTATION TO INVESTORS June 2015 Engineering Consumables BMG (Bearing Man Group) Engineering components & technical services 120 branches Bearings, Seals, PT, Tools, Fasteners Drives,

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SLIDE 1

ANNUAL RESULTS March 2015 PRESENTATION TO INVESTORS June 2015

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SLIDE 2

Engineering Consumables

  • BMG (Bearing Man Group)
  • Engineering components & technical services
  • 120 branches
  • Bearings, Seals, PT, Tools, Fasteners
  • Drives, Motors, Belting, Field Services
  • Filtration, Hydraulics, Lubrication, Pneumatics
  • Mandirk Group (incl SA Tool)
  • Tools & equipment
  • 20 branches
  • Autobax
  • Automotive
  • OST & Wegezi
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SLIDE 3

Capital Equipment (CEG SA)

  • 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
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SLIDE 4

Capital Equipment (Kian Ann Group)

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SLIDE 5
  • Kian Ann Engineering
  • One of the world's largest independent

distributors of equipment spare parts

  • HQ in Singapore
  • Subsidiaries in Indonesia, China
  • Kian Chue Hwa Industries
  • One of Asia’s largest independent

distributors of heavy truck spare parts

  • HQ in Singapore
  • Subsidiaries in Indonesia, Thailand

Capital Equipment (Kian Ann Group)

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SLIDE 6

Building Supplies (BSG)

  • Tiletoria
  • MacNeil Distributors
  • Brands 4 Africa
  • 15 outlets in SA
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SLIDE 7

Results highlights

  • Revenue

R10.46bn

  • Operating Profit

down 3% to R1.01bn

  • PBT

R842m

  • PAT

down 3% to R691m

  • Attributable PAT

R579m

  • Cash generated by operations

up 37% to R979m

  • Shares in issue (weighted ave)

up 5% to 78m

  • Shares issued in Feb rights offer

up 44% to 108.5m

  • EPS

down 6% to 742c

  • HEPS

down 5% to 726c

  • Normal DPS

196c

  • Special DPS

2024c

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SLIDE 8

Results Highlights

R’m 31 Mar 15 vs PY

Sales 10,460

0%

Gross Profit 3,089

+7%

GP%

29.5% 27.7%

Operating Profit 1,014

  • 3%

OP%

9.7% 10.0%

PBT 842

  • 1%

PAT 691

  • 3%
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SLIDE 9

Results Highlights

R’m 31 Mar 15 vs PY

PAT 691

  • 3%

Preference shareholders 70

+7%

Minority shareholders 42

  • 34%

PAT attrib to ordinary shareholders 579

0% Weighted average shares (‘000)

77,965 +6%

EPS (c) 742c

  • 6%

HEPS (c) 727c

  • 5%

DPS (c) 196c

Not meaningful

Special DPS (c) 2024c

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SLIDE 10

Results Highlights

R’m 31 March 15 vs PY

Inventories 3,803

+9%

Trade Receivables 1,942

+5%

Trade Payables (2,594)

+11%

NWC 3,151

+5% NWC as % of Sales 30% 29%

NAV (Equity) 4,636

+30% Debt*: Equity

*Excludes long-term funding secured by investments and loans

30% 37%

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SLIDE 11

Dividend calculation

R’m 31 Mar 15

vs PY

(R) # of shares Per share (cps)

vs PY

(per share)

Attributable PAT 579

0%

One-off non-cash profit* (70)

  • Adjusted Attrib PAT

509

  • 12%

Dividend cover

2.75x

Ordinary dividend 184

  • 12%

196c nm

  • Interim dividend

63

  • 16%

74.9m 84c

  • 18%
  • Final dividend

122

  • 10%

108.5m 112c

  • 39%

Special dividend 1,500

  • Total dividend

1,685

+700%

* R70m one-off gain on reversal of put option liability on purchase of remaining 25% of Kian Ann

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SLIDE 12

Commentary on Results

  • Difficult trading conditions
  • Mining & resource markets weak in southern Africa and SE Asia
  • Construction market in China very weak
  • Infrastructure spend in SA very slow
  • Drought & soft maize price impacted demand for Ag equipment
  • BMG showed growth in revenue and operating profit – a great result
  • CEG revenue dropped 10% but margin management good
  • BSG showed good growth again in a competitive sector
  • A few smaller acquisitions in the period
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SLIDE 13

Commentary on Results

  • Working capital well managed
  • Strong cash generation
  • One-off profit of R70m realised on acquiring remaining 25% of Kian Ann
  • Attributable PAT level with Mar 2014
  • EPS down 6% due to extra shares in issue (weighted ave)
  • Ordinary dividend (in Rand) for the year down 12% in line with

normalised earnings (excluding one-off profit)

  • Cover maintained at 2.75x normalised earnings (in Rand)
  • EPS calculated on wtd ave shares in issue – 78m
  • Final DPS paid on 108.5m shares
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SLIDE 14

Commentary on Results

  • Rights issue and special dividend in Feb 2015
  • Special dividend R1.5bn
  • Rights issues raised R2.25bn (net R750m)
  • 44% more shares in issue
  • Group structure simplified and streamlined
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SLIDE 15

Group Structure

Invicta Holdings Invicta Properties Invicta SA Invicta OH Invicta Treasury Invicta Finance BBBEE & Staff Trusts CE EC Invicta AH BS Invicta OT Kian Ann KCHI HHI API AT BMG Mandirk Autobax Wegezi OST SA Tool Northmec N Holland CSE Doosan HPE ESP Criterion MacNeil Tiletoria B4A

75% 25% 100% 100% 100% 100% 100% 100% 60% 100% 100%

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SLIDE 16

Turnover (Rm)

2 000 4 000 6 000 8 000 10 000 12 000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

10 yr CAGR = 18% p.a.

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SLIDE 17

Turnover (Rm)

1 986 2 173 2 563 3 514 5 129 5 270 1 983 2 361 3 036 4 044 5 336 5 190

2 000 4 000 6 000 8 000 10 000 12 000 2010 2011 2012 2013 2014 2015 H2 H1

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SLIDE 18

Engineering Consumables 40% (38%) Capital Equipment 44% (49%) Building Supplies 16% (13%)

Revenue Contribution

by Segment 2015 (2014)

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SLIDE 19

South Africa 76% (78%) International 24% (22%)

Revenue Contribution

SA vs International 2015 (2014)

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SLIDE 20

200 400 600 800 1 000 1 200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Profit (Rm)

10 yr CAGR = 16% p.a.

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SLIDE 21

Operating Profit (Rm)

100 200 300 400 500 600 700 2010 2011 2012 2013 2014 2015 H1 H2 One-off

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SLIDE 22

Engineering Consumables 48% (46%) Capital Equipment 44% (47%) Building Supplies 8% (7%)

Operating Profit Contribution by Segment 2015 (2014)

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SLIDE 23

Segmental Operating Profit (Rm)

320 371 390 473 499 158 247 339 484 457

14 39 67 87

  • 200
  • 200

400 600 800 1 000 1 200 2011 2012 2013 2014 2015 BMG CEG BSG Other

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SLIDE 24

Segmental Operating Margin (%)

0% 2% 4% 6% 8% 10% 12% 14% 16% 2010 2011 2012 2013 2014 2015 BMG CEG BSG

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SLIDE 25

Earnings (Rm)

354 492 535 580 579 100 200 300 400 500 600 700 800 2011 2012 2013 2014 2015 Ordinary s/h Minority s/h Pref s/h One-off

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SLIDE 26

EPS (cps)

170 292 356 437 453 504 647 737 788 742 218 100 200 300 400 500 600 700 800 900 1 000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 EPS One-off

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SLIDE 27

EPS (cps)

50 100 150 200 250 300 350 400 450 500 2010 2011 2012 2013 2014 2015 H1 H2 One-off

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SLIDE 28

EPS and DPS (cps)

68 104 138 138 151 183 254 268 287 196

100 200 300 400 500 600 700 800 900 1 000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 EPS One-off DPS

Excludes special dividend of 2024cps - Feb 2015

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SLIDE 29
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SLIDE 30

BMG Results Summary

31 Mar 2015

Rm 31 Mar 2015 vs PY

Sales 4 209 +6% Operating Profit 499 +6% OP% 11.9% 12.0% Ave NOA 1 675 +16% RoNOA 29.8% 32.9%

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SLIDE 31

Sales

1 350 1 550 2 056 1 928 2 395 2 742 3 425 3 955 4 209

  • 500

1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 2007 2008 2009 2010 2011 2012 2013 2014 2015

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SLIDE 32

Operating Profit

174 220 319 293 320 371 390 473 499

  • 100

200 300 400 500 600 2007 2008 2009 2010 2011 2012 2013 2014 2015

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SLIDE 33

OP %

6% 8% 10% 12% 14% 16% 18% 2007 2008 2009 2010 2011 2012 2013 2014 2015

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SLIDE 34

Sales by Segment

Consumables 64% Engineered Products 24% Fluid Power 12%

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SLIDE 35

Sales by Industry Sector

Mining (25%) Automotive & Transport (7%) Light Industry (18%) Heavy Industry (5%) Agriculture (8%) Food & Beverage (8%) Oil, Gas & Chemicals (1%) Forestry & Paper (2%) Building & Construction (4%) Projects & Consultants (7%) Resale/ Trade (1%) COD Accounts (13%) Other (1%)

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SLIDE 36

Sales by Region

Africa 13% South Africa 87%

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SLIDE 37
  • Adverse market conditions continue
  • Acquisitions effective 1 October 2014:
  • SA Tool & Klep Valves
  • Stand out performances:
  • BMG Core / Mandirk / BMG Africa
  • Engineering businesses affected by lack of project activity
  • Overheads (up 4%) and working capital well controlled
  • Strong cash generation
  • 40th celebrations & Expo
  • All companies’ BBBEE ratings maintained or improved
  • Simplify for Success initiative progressing well
  • Strategic positioning and differentiated value proposition paying off

Review of FY 2015

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SLIDE 38

BMGP Upgrade

Additional land being Acquired

7 971m2

Engineering Assembly Building

9 330m2

Parking Deck

6 000m2

BMG Park Existing

36 891m2

Land acquired for CDC

9 206m2

Land Acquired

2 500m2

Engineering Manufacturing Building

9 208m2

  • R350m

investment

  • R44m spent in

FY2015

  • 81,100m2 on

completion

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SLIDE 39

BMGP Upgrade

  • Objectives:
  • Invest in our central distribution capabilities
  • Consolidate up to 10 warehouses into 1
  • Rationalise our engineering/workshop facilities
  • Consolidation of duplicated head office setup
  • Optimise stock holding & improve operational efficiencies
  • Internalise property rentals
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SLIDE 40
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SLIDE 41

Market environment

  • Drought – 32% of maize crop lost
  • Maize price down 38%
  • Land tenure issue – Government threat
  • Load shedding – irrigation
  • Coal mine closures
  • Lack of infrastructure spending
  • Low hard commodity prices – hampering development
  • Strikes
  • Resource slow-down in Malaysia, Indonesia
  • Construction slow-down in China
  • Competitive market – GP margin pressure
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SLIDE 42

CEG Results Summary

31 Mar 2015

Rm 31 Mar 15 vs PY Sales 4,607

  • 10%

Operating Profit 457

  • 6%

OP% 9.9% 9.4% Ave NOA 1,771 +18% RoNOA% 25.8% 32.3%

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SLIDE 43

Turnover

31 Mar 2015

1 701 2 254 1 750 1 877 2 549 3 503 5 122 4 607

  • 1 000

2 000 3 000 4 000 5 000 6 000 2008 2009 2010 2011 2012 2013 2014 2015

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SLIDE 44

Operating Profit

31 Mar 2015

121 142 123 158 247 339 484 457

  • 100

200 300 400 500 600 2008 2009 2010 2011 2012 2013 2014 2015

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SLIDE 45

OP %

31 Mar 2015

4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 2008 2009 2010 2011 2012 2013 2014 2015

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SLIDE 46

Sales Analysis

March 2015

Equipment 52% Parts 45% Workshop 2% Rentals 1%

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SLIDE 47

Construction Market

Unit sales

2342 1382 1178 1636 1822 2379 2314 1900 1604 734 824 970 1167 1321 1199 990 1061 435 523 714 673 783 695 550 93 210 181 528 639 612 584 520

500 1 000 1 500 2 000 2 500 3 000 2008 2009 2010 2011 2012 2013 2014 2015

TLBS Excavators Loaders Skidsteers

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SLIDE 48

Tractor Sales

Unit sales

2207 3122 4679 4308 6049 5721 4015 2624 2668 2847 4428 4330 5280 4677 5727 6451 7549 5550 5155 7379 7899 7517 7370 6000

1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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SLIDE 49

70 135 209 191 291 228 165 124 125 97 175 178 278 165 168 179 341 275 188 260 343 352 339 220

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

Combine Sales

Unit sales

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SLIDE 50

Conclusion

  • Good results under very difficult conditions
  • Good cash generation
  • FY 2016 expected to be challenging in Construction and Agriculture
  • Focus on supporting and developing distribution network further
  • Focus on growing spare parts business in southern African markets
  • Restructured management in Kian Ann
  • Focus on growing distribution footprint further in SE Asia
  • Looking at distribution opportunities in Europe, ME and US
  • Thanks to my CEG team
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SLIDE 51
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BSG Results Summary 31 Mar 2015

Rm 31 Mar 15 vs PY Sales 1,638 +18% Operating Profit 87 +31% OP% 5.3% 4.8% Ave NOA 284 +37% RoNOA 30.6% 32.4%

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SLIDE 53

Sales 31 Mar 2015

308 630 1 388 1 639

  • 200

400 600 800 1 000 1 200 1 400 1 600 1 800 2012 2013 2014 2015

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SLIDE 54

Operating Profit 31 Mar 2015

14 39 67 87

  • 10

20 30 40 50 60 70 80 90 100 2012 2013 2014 2015

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SLIDE 55

OP % 31 Mar 2015

2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 2012 2013 2014 2015

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SLIDE 56

Sales Summary 31 Mar 2015

South Africa 74% Exports 26%

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SLIDE 57

Review of FY 2015

  • Good growth in a challenging market
  • Plastic pipe factory affected by load shedding
  • Closure of Marley plastics manufacturing a positive for market

consolidation

  • Tiletoria showed growth
  • MacNeil Johannesburg showed exceptional growth
  • Brands 4 Africa showed excellent growth
  • Exports into Zimbabwe, Mocambique Zambia
  • Penetration into Gauteng progressing very well
  • New facility in Cornubia (Durban) nearing completion
  • Secured new site in Midrand to enhance supply chain efficiency and

support growth in Gauteng and Africa

  • Earthworks to commence Sept 2015, consolidation of warehouses

into facility Dec 2016

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SLIDE 58

Shareholding March 2015

Wiese family 36% Sherrell family 11% Goldstone family 5% Samuels family 4% Exec Directors 3% Management & Staff 1% Treasury 1% Public 39%

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SLIDE 59

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)
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SLIDE 60

Prospects

  • Trading conditions expected to remain very challenging in coming year
  • Focus on customer service, value-added distribution and market share gain
  • Focus on gross margin management and tight expense control
  • Focus on working capital management and supply chain efficiency
  • Continued push into African markets
  • Develop our distribution networks in Asia
  • Local acquisition opportunity pipeline likely to grow in these conditions
  • Strong balance sheet
  • Streamlined Group structure
  • Experienced, competent and energetic management team (ave age 48)
  • Group is considering an international listing
  • Aim to increase non-SA income to 50% of total in medium term
  • Strategic goal – R20 billion market cap by 2020
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SLIDE 61

Thanks and Questions

THANK YOU