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Invicta financial results reflect ‘remarkable’ recovery

Board approves final dividend of 90 cents per share.
The industrials-sector holding group plans to have a geographical and sectorial diverse business within four years, with half of its profits derived outside of South Africa. Image: Supplied

JSE-listed investment holding and management company Invicta Holdings reported a 75.5% increase in net profit (continuing operations) on Monday, from R296.8 million in 2021 to R520.8 million for its financial year ended 31 March 2022.

The group says the net profit is reflected in its basic earnings per share of 408 cents and headline earnings per share of 343c, which increased by 92% and 99% for continuing operations respectively.

Operating profit before interest and forex improved by 15% to R670.6 million and revenue for ongoing operations rose by 15% to R7.2 billion, in comparison to R6.25 billion in FY21.

“Against the backdrop of a world facing both economic and geopolitical uncertainty, we are pleased to present a strong set of results for the group,” says Invicta CEO Steven Joffe.

“These results reflect how the group’s businesses have recovered remarkably well from the effects of the Covid-19 pandemic and the associated lockdowns.”

Invicta’s board approved a final dividend of 90c per share, compared to 60c per share in the prior financial year, following the improvement in results and current debt levels.

Analyst’s reaction 

Independent analyst at Small Talk Daily, Anthony Clark, says the leap in dividend is “extremely pleasing” and shows the group’s confidence in its ability to grow earnings for the next 12 to 18 months in order to continue paying “robust” dividends.

“As a company, you do not increase your dividend that far and that fast given what were a fairly lacklustre set of results, unless you were absolutely confident that going forward the rebuild of your underlying earning space was efficient to justify this dividend payment,” he adds.

Invicta noted in a results statement that results were also influenced by the restructuring of its Singaporean operations, Kian Ann Group (KAG), which resulted in a deal-related taxation of R16 million, a R14 million impairment of Invicta’s Ukrainian operations, and the acquisition of KMP Holdings Limited in January.

The group anticipates that KMP will deliver a 12.5% return and improve spare parts revenue contributions.

Clark says worth noting in Invicta’s results was the complicated transaction associated with the restructuring of KAG.

He adds that this “compromised the underlying accounting”. Excluding the KAG transaction, Clark says Invicta could have enjoyed significant benefits to underlying operations.

Invicta currently has a 48.8% shareholding in KAG after the transaction was completed and effected in August 2021, in comparison to its 100% shareholding prior to the deal.

The group says prospects for KAG will remain challenging due to the impact on business activities caused by the Covid-19 pandemic and ongoing Russia-Ukraine war.

Almost debt-free

Clark points out that the investment holding company is almost debt-free, which is a vast improvement from three years ago when the company was sinking under its own debt.

“Steven Joffe, to be fair, in the last two-and-a-half years has performed a Herculean task in transforming Invicta,” he adds.

Clark says the company’s R29 to R30 share price undervalues its prospects.

Read: Stock picks from top SA market watchers and money managers

Meanwhile, Joffe says Invicta intends to have a geographical and sectoral diverse group within four years, with 50% of the group’s profits being derived outside of South Africa.

“We will continue growing a diversified sustainable parts solutions group, providing above-market returns to stakeholders.”

Nondumiso Lehutso is a Moneyweb intern.

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