FINAL RESULTS PRESENTATION for the year ended 31 March 2018 Presented by Arnold Goldstone (Chief Executive Officer)
Agenda 01 First things first 02 Results at a glance 03 Divisional review Capital Equipment Group (CEG) Engineering Solutions Group (ESG) 04 Group financial overview 05 Prospects and strategy 06 Appendix 2 Invicta Holdings Limited | Results Presentation 2018
First things first Invicta Holdings Limited | Results Presentation 2018 3
First things first 1. Specific Taxation Provision • Stakeholder and market commentary over the potential tax consequences of certain transactions which Invicta entered into several years ago • Based on advice received, the board is of the view that the transactions are tax compliant • However, ongoing uncertainty is affecting the Group and hampering its ability to use equity to fund expansion • Pragmatic solution, which provides certainty, is preferable to potentially protracted and costly litigation (significant management time and material opportunity cost for the Group) • The company therefore continues to negotiate with SARS with a view to reaching agreement regarding the tax consequences of these transactions • Taking all the above considerations into account, the board has concluded that an amount of R400 million is the best estimate of an additional provision for taxation, which has been raised in the AFS for FY 2018 • Should agreement not be reached with SARS and, if SARS elects to issue revised assessments, the Group will defend its position fully Invicta Holdings Limited | Results Presentation 2018 4
First things first (continued) 2. Effect of Steinhoff collapse on Invicta • In wake of the collapse of Steinhoff International’s share price in Dec 2017, Invicta undertook a full review and considered all possible contagion risks • No direct links to Steinhoff • Common major shareholder (Wiese family) • BSG sold to Steinhoff Africa Retail Ltd in Sep 2017. All proceeds were received in full on the due date • No direct fallout on Invicta • No sale of shares by Wiese family • Business as usual Invicta Holdings Limited | Results Presentation 2018 5
First things first (continued) 3. Involuntary sale of shares by CEO • Recent SENS announcement regarding the involuntary sale of shares by an associate company of the CEO • Shares were owned by an associate company of the CEO, owned by a trust of which the director is a beneficiary but not a trustee • Shares were pledged to the bank as security for a loan to associate 7 years ago • Margin call (as a result of decline in IVT share price) which the borrower could not meet • Some of the shares which had been pledged to the bank were sold by the bank • Total of 300 000 shares were sold which equates to < 7% of CEO’s holdings • JSE waiver obtained Invicta Holdings Limited | Results Presentation 2018 6
The year in perspective Invicta Holdings Limited | Results Presentation 2018 7
Results at a glance Revenue 0% to R9.6 billion Operating profit before foreign exchange movements -11% to R940 million Headline earnings per share before specific tax provision -23% to 464 cents Headline earnings per share after specific tax provision -81% to 90 cents Invicta Holdings Limited | Results Presentation 2018 8
Results at a glance (continued) Profit before tax -15% to R760 million NAV per share 0% 4 691 cents TNAV PER SHARE 2.0% to 3 921 CENTS Invicta Holdings Limited | Results Presentation 2018 9
The year in perspective Tough markets, satisfactory results • The markets in which Invicta operates: o Mining : Weak in South Africa but improving in rest of world o Agriculture: Severe drought in Western Cape, low maize prices, land expropriation uncertainty o Industrial & manufacturing: Deterioration in activity in South Africa o South East Asia: trading conditions improving • Credit ratings downgrade in SA in Apr 2017 • 1Q2018: GDP -2.2%. Worst Quarter since 1Q2009 › agriculture -24.2% › mining -9.9% and › manufacturing -6.4% Invicta Holdings Limited | Results Presentation 2018 10
The year in perspective (continued) • Sale of BSG Sep 2017 • SARS negotiations • Loss of New Holland Agricultural machinery agency May 2017 • Volatile ZAR, political uncertainty until Dec 2017 • Reduced staff by 265 (7%) in SA • Bottom of cycle? • Better outlook Invicta Holdings Limited | Results Presentation 2018 11
The year in perspective Exchange rate volatility 1 Apr 2017 (13.42) 15 June 2018 (13.39) 31 Mar 2018 (11.82) Invicta Holdings Limited | Results Presentation 2018 12
Divisional review Invicta Holdings Limited | Results Presentation 2018 13
Divisional structure Engineering Solutions Group Capital Equipment Group ESG CEG Importer & distributor of agricultural Leading distributor of engineering equipment, construction equipment, consumables products, technical forklifts and aftermarket services and provider of engineering replacement spare parts solutions • Northmec • BMG New Holland* • Hansen o • CSE OST o • Doosan Screen Doctor o • HPE Man-Dirk Group • • Criterion SA Tool o • Shamrock Handling Concepts Sibuyile o • ESP • Autobax • Landboupart • Hyflo Group • Kian Ann Group (Singapore) *Equipment sales discontinued May 2017 Aftermarket support continues (spare parts). Invicta Holdings Limited | Results Presentation 2018 14
Revenue contribution by operating segment (excluding Head Office) R’million 12,000 9,633 9,620 9,077 10,000 8,783 8,816 8,000 4,559 4,665 3,955 4,209 4,299 6,000 4,000 5,122 4,955 5,074 4,607 4,484 2,000 0 MAR 2014 MAR 2015 MAR 2016 MAR 2017 MAR 2018 47% 53% Engineering Solutions Group Capital Equipment Group (48%) (52%) 2018 (2017) Invicta Holdings Limited | Results Presentation 2018 15
Operating profit contribution by operating segment after forex costs (excluding Head Office) R’million 1,200 957 956 912 1,000 864 768 800 473 499 486 460 600 406 400 484 457 426 200 404 362 0 MAR 2014 MAR 2015 MAR 2016 MAR 2017 MAR 2018 53% 47% Engineering Solutions Group Capital Equipment Group (47%) (53%) 2018 (2017) Invicta Holdings Limited | Results Presentation 2018 16
Revenue contribution by region (continuing operations only) Africa 5% Asia (6%) 11% (10%) Other 5% (4%) 79% South Africa** (81%) **Target: 50% by 2020 2018 (2017) Invicta Holdings Limited | Results Presentation 2018 17
Revenue contribution by sector (continuing operations only) Mining Construction 16% 14% (14%) (16%) (5%) 12% 30% Manufacturing & (11%) (30%) Agriculture & Industry Forestry (63%) 28% (29%) General Trading 2018 (2017) Invicta Holdings Limited | Results Presentation 2018 18
Return on Net Operating Assets (RONA) (based on average net operating assets) 30% 25% 20% 15% 10% 5% * 17.5% 21.8% 19.4% 17.6% 20.6% 24.1% 27.3% 22.5% 19.2% 22.0% 18.5% 9.0% 0% FY 2016 FY 2017 FY 2018 CEG ESG Discont. Ops IVT Group *Discontinued operations represents the Building Supplies Group which has been disposed of during the current year as well as the MacNeil Plastics business which remains as a discontinued operation. Invicta Holdings Limited | Results Presentation 2018 19
DIVISIONAL REVIEW Capital Equipment Group
Review of 2018 Revenue 2.4% Operating profit before foreign exchange movements 3.8% • Difficult trading conditions overcome by increased market share, better sales mix • Activity in mining in general is saving construction unit sales • Reduced level of investment in infrastructure by both private and public sectors • Increase in demand in the South East Asia markets • Strength of the South African Rand against the US Dollar contributing to more competitive prices – lower margins • Good rains resulted in a record crop of 16.7m tons of maize however the maize price dropped by 37% on yellow and 52% on white to below R2000 a ton, affecting farmers liquidity. • Operating margin decreases from 9.5% in 2017 to 8.9% in 2018 Invicta Holdings Limited | Results Presentation 2018 21
Review of 2018 Managing Director Chief Executive Officer Loy Soo Chew Tony Sinclair Northmec NHSA CSE Doosan HPE Africa ESP Criterion Shamrock Managing Managing Managing Managing Managing Managing Managing Managing Director Director Director Director Director Director Director Director Johan Tony Ross Darrel Andrew Brenton Marius Alex van der Merwe Sinclair Collard Holton Grobler Kemp Schutte Ackron Invicta Holdings Limited | Results Presentation 2018 22
Final results summary 31 March 2018 Operating profit before foreign Revenue (R’m) exchange movements (R’m) 6,000 600 5,074 4,955 470 452 4,484 5,000 500 362 4,000 400 2,518 2,575 251 2,199 234 3,000 300 181 2,000 200 2,556 2,380 2,285 219 218 1,000 100 181 0 0 MAR 2016 MAR 2017 MAR 2018 MAR 2016 MAR 2017 MAR 2018 Net operating assets (R’m) Operating profit margin (R’m) 9.5% 2,500 8.9% 8.1% 2,250 9.7% 2,000 9.3% 8.2% 1,750 2,410 2,306 2,255 1,500 9.2% 8.5% 7.9% 1,250 1,000 MAR 2016 MAR 2017 MAR 2018 MAR 2016 MAR 2017 MAR 2018 First Half Second Half Invicta Holdings Limited | Results Presentation 2018 23
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