INTERIM RESULTS 6 months to Sep 2014 PRESENTATION TO … Presentation/Invicta... · 2018-05-14 ·...
Transcript of INTERIM RESULTS 6 months to Sep 2014 PRESENTATION TO … Presentation/Invicta... · 2018-05-14 ·...
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INTERIM RESULTS
6 months to Sep 2014
PRESENTATION TO INVESTORS 10-11 NOV 2014
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Core Business
BMG (Bearing Man Group)
Leading distributor of engineering
components & technical services
Africa
Over 140 branches Southern Africa
Bearings, Seals, Chains, Couplings
Fasteners, Tools
Drives, Motors, Belting
Filtration, Hydraulics, Lubrication
Field service, Condition monitoring
Man-Dirk, Autobax, Wegezi, OST
in
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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
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Core Business
Kian Ann Engineering (Singapore)
(CEG) One of the world's largest independent
distributors of
heavy machinery parts (KAE) and
diesel engine components (KCHI)
for the earthmoving and heavy truck industries
Annual Revenue R1.1 bn+
Outlets in Singapore, Indonesia, China, Malaysia
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Core Business
BSG (Building Supplies)
Tiletoria
MacNeil Distributors (from 1 Oct 2012)
One Owl Distributors (Brands 4 Africa)
Annual Revenue: R1.5 bn+
15 + outlets in SA
Big growth potential
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BMG
38%
CEG
46%
BSG
16%
Revenue Contribution
6 months to Sep 2014
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Revenue Contribution
6 months to Sep 2014
South Africa
77%
International
23%
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Results Highlights
R’m 30 Sep 14 vs PY
Sales 5,270 +3%
Gross Profit 1,424 +0%
GP% 27.0% 27.8%
Operating Profit 427 -13%
OP% 8.1% 9.6%
PBT 351 -17%
PAT 289 -13%
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Results Highlights
R’m 30 Sep 14 vs PY
PAT 289 -13%
Preference Shareholders 35 +7%
Attributable PAT 217 -17%
EPS/NEPS 293c -18%
HEPS/NHEPS 292c -17%
DPS 84c -18%
Dividend Cover 3.5x No change
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Results Highlights
R’m 30 Sep 14 vs PY
Inventories 3,600 -5%
Trade Receivables 2,145 +15%
Trade Payables (2,478) -14%
NWC 3,267 +18%
NWC as % of Sales 31% 27%
NAV (Equity) 3,723 +13%
Debt*: EquityExcludes long-term funding secured by investments and loans
38% 34%
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Interim Results Highlights
Difficult trading conditions in all sectors & regions
Mining and industrial unrest impacted BMG
Maize price, late rains, subdued construction market impacted CEG
Chinese and SE Asian markets weakened further, impacting KA
BSG performed extremely well against peers, posting good growth
No significant acquisitions in the period
Margin pressure due to competitive markets across all businesses
Expenses well contained
Working capital well managed
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Turnover (Rm)
0
1 000
2 000
3 000
4 000
5 000
6 000
2010 2011 2012 2013 2014 2015
H1 H2
+3%
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Operating Profit (Rm)
0
100
200
300
400
500
600
2010 2011 2012 2013 2014 2015
H1 H2 One-off
-13%
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Operating Margin (%)
0%
2%
4%
6%
8%
10%
12%
14%
16%
2010 2011 2012 2013 2014 2015
H1 H2
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NEPS (cps)
0
50
100
150
200
250
300
350
400
450
500
2010 2011 2012 2013 2014 2015
H1 H2 One-off
-18%
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NEPS and DPS (H1)
0
50
100
150
200
250
300
350
400
450
500
2010 2011 2012 2013 2014 2015
EPS DPS
-18%
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Segmental H1 Operating Profit (R’m)
115 142 159 174
220 209
39
54
94
148
251
180
12
32
48
-100
0
100
200
300
400
500
600
2010 2011 2012 2013 2014 2015
BMG CEG BSG Other
-13%
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Segmental H1 Operating Margin (%)
0%
2%
4%
6%
8%
10%
12%
14%
2010 2011 2012 2013 2014 2015
BMG H1 CEG H1 BSG H1
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BMG Results Summary 6 months to 30 Sep 2014
R’m H1 Sep 14 vs PY
Sales 2,028 +3%
PBIT 209 -5%
PBIT% 10.3% 11.1%
NOA 1,592 +16%
RoNOA% 28.2%
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Sales
0
500
1 000
1 500
2 000
2 500
2010 2011 2012 2013 2014 2015
H1 H2
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Operating Profit
0
50
100
150
200
250
300
2010 2011 2012 2013 2014 2015
H1 H2
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Operating Profit %
0%
2%
4%
6%
8%
10%
12%
14%
16%
2010 2011 2012 2013 2014 2015
BMG H1
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Sales by Segment
Consumables62%
Engineered Products23%
Fluid Power15%
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Mining25%
Processing10%Light Industry
10%Heavy Industry
9%
Cash/COD8%
Agriculture6%
Trade4%
OEM4%
Automotive3%
Construction2%
Petro Chemical1%
Other14%
Sales by Industry Sector
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Sales by Region
Africa13%
South Africa87%
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Highlights of H1 2015
• Resilient performance in the difficult trading conditions in mining
and industrial markets
• Growth of new product lines
• Opened 2 new branches in the period (Nacala, Mwanza)
• Working capital management
• R300m, 3-year investment in central distribution capabilities (Jhb)
• Conclusion of two acquisitions:
– SA Tool (subject Comp Comm approval)
– Mpumulanga agency minority buy-out
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CEG Results Summary 6 months to 30 Sep 2014
R’m H1 Sep 14 vs PY
Sales 2,404 -7%
PBIT 180 -29%
PBIT% 7.5% 9.7%
NOA 1,664 +5%
RoNOA% 22.1%
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Sales
0
500
1 000
1 500
2 000
2 500
3 000
2010 2011 2012 2013 2014 2015
H1 H2
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Operating Profit
0
50
100
150
200
250
300
2010 2011 2012 2013 2014 2015
H1 H2
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OP %
0%
2%
4%
6%
8%
10%
12%
2010 2011 2012 2013 2014 2015
CEG H1
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Features of H1 2015
• Expected record maize crop - maize price down 50%
since March
• Agricultural equipment sales and margins affected by:
– Late rains, drought conditions in certain parts
– Fight for market share
– Correction of over-stocked position, now complete
• Construction equipment sales and margins affected by:
– Reduced project work
– Industrial unrest
– Competitive market
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Features of H1 2015
• Forklift demand significantly reduced in period
(imports down 33%)
• ESP continues to grow well despite challenging market
• KA contribution declined
• KA performance relative to peers very good
• Parts contribution to GP improving - defensive quality
• Expense management (reduction)
• Good working capital management
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Yellow Maize Safex Prices from 1 Jan 2014
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BSG Results Summary 6 months to 30 Sep 2014
R’m H1 Sep 14 vs PY
Sales 837 +48%
PBIT 48 +50%
PBIT% 5.7% 5.7%
NOA 283 +42%
RoNOA% 39.8%
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Sales
0
100
200
300
400
500
600
700
800
900
2013 2014 2015
H1 H2
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Operating Profit
0
10
20
30
40
50
60
2013 2014 2015
H1 H2
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OP %
0%
2%
4%
6%
8%
10%
2013 2014 2015
BSG H1
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Sales Analysis
South Africa77%
Exports23%
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Highlights of H1 2015
• Good growth in a challenging market
• Plastic pipe factory affected by July strike
• Closure of Marley plastics manufacturing a positive for market
consolidation
• Tile business showed good growth
• Increasing penetration of all products in Gauteng
• Brands 4 Africa growing well - exports into Africa
• Looking for new premises in Gauteng to enhance logistics
capabilities and support growth
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0
2000
4000
6000
8000
10000
12000
14000
Share Price History
CAGR since 2000 = 29% p.a. (15 years)
7th in Sunday Times Top 100 = 41% p.a. (5 years)
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Directors61%
Staff and Treasury
3%
Public36%
Analysis of shareholders
Shareholding Sep 2014
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 held in treasury)
* Non-Executive
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Strategic Objectives
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 3.5x NEPS interims, 2.75x NEPS FY
Group is considering an international listing
Historically acquisitions were made using gearing
Will need to raise equity for larger acquisitions in future
Aim to increase non-SA income to 50% of total in medium term
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Group Developments
Kian Ann 25% minority buy-out completed:
Effective 1 October 2014
Final price based on NAV to Mar 2015
Executive management changes at KA in place
Several local and international acquisitions under
investigation
Capital raising announcement imminent
Capital required to fund operational and strategic growth
International listing still under investigation
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Group Executive Management
Byron Nichles appointed CEO of BMG
Charles Walters
Deputy CEO of Invicta, Chairman of BMG and KA
Becomes CEO of Invicta on 1 April 2015
Arnold Goldstone
Executive Deputy Chairman
CEO of Invicta until 31 March 2015
Craig Barnard – Executive Director, Finance and Commercial
Tony Sinclair – CEO of CEG
Neil Malherbe – CEO of BSG
Loy Soo Chew – CEO of KA
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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 (KA)
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Prospects
Trading conditions expected to remain very challenging in H2
Mining and industrial activity expected to be better than
experienced in H1 but has reduced to a lower base
Conditions in agricultural market expected to remain challenging
Construction equipment industry sales expected to be flat
Commodity cycle in a weak phase
Building supplies market expected to show modest growth
Good time to be making acquisitions
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Sunday Times Top 100 Companies
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Thank you and Questions
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