Invicta returns to profit in the year to March as restructuring pays off
INVICTA Holdings, the investment holding and management company, yesterday returned to profitability in the year to the end of March, boosted by strong working capital management and the restructuring of the business.
Invicta reported a 156 percent surge in profits to R376.07 million compared to a loss of R673.30m reported a year earlier, and a 310 percent increase in headline earnings per share from continuing operations to 172 cents a share, up from a loss of 82c, while basic earnings per share improved by 130 percent to 212c compared to a loss of 707c reported a year earlier.
Chief executive Steven Joffe said yesterday that the year had been characterised by major but very positive changes for the group, which included the sale of the Capital Equipment Group’s (CEG’s) agricultural and earthmoving businesses and the in-principle agreement to restructure the Kian Ann Group (KAG).
“The severe lockdown conditions of April and May 2020 led to a right-sizing of the South African businesses, and the support functions became skilled at working remotely.
“This, together with a strong focus on working capital management, all resulted in excellent cash generation and a significant reduction of debt, reducing the group’s net debt:equity ratio, excluding right-of-use liabilities, from 44 percent at the end of March 2020 to 16 percent at the end of March 2021,” Joffe said.
Invicta operates three businesses: the Engineering Solutions Group, CEG and KAG, which is based in Singapore.
Its revenue from continuing operations decreased by 9 percent to R6.25 billion, and operating profit improved by 283 percent to R585.2m compared to an operating loss of R319.2m.
The group said last year’s results were impacted by R1.1bn in impairments because of the Covid-19 outbreak.
Invicta reported a profit of R76.8m on the disposal of the agricultural businesses, and a profit of R21.8m on the disposal of branches to independent empowerment entities that service mines.
Its cash generated from operations increased to R1.86bn, up from R959.89m compared to last year, and the group declared a dividend of 60c a share. “The board has approved a final dividend of 60c a share following the good cash flow generation that reduced our debt levels significantly. This is based on the normal dividend policy of 2.75 times dividend cover based on normalised earnings, excluding results from discontinued operations, profit and loss from disposals and impairments,” Joffe said.
Looking ahead, Joffe said management would focus primarily on implementing the proposed restructure of KAG and pursuing growth opportunities.
“Additionally, the group will remain guided by the principles of targeting lower debt levels, driving operational performance on return on equity and assets, and the simplification of both the group structure and our reporting. We are confident that the group, having successfully faced the initial challenges, will continue to grow from strength to strength.”
Invicta shares closed 6.68 percent percent higher at R27.95 on the JSE yesterday.