Invicta starts new year with a clean slate


Invicta starts new year with a clean slate

Published Date: 2020-07-28 | Source: Stephen Gunnion | Author: Stephen Gunnion

Invicta starts new year with a clean slate

The investment holding and management company took a decision to seriously review its balance sheet, resulting in significant impairments.

Invicta Holdings says its operating performance remained resilient last year despite big write downs that left it with a loss. It shares rallied as much as 28%.

The investment holding and management company booked impairments and once-off items totalling R1.1 billion after it took a serious look at its balance sheet due to Covid-19. These included a goodwill impairment of R639 million, R196 million for obsolete stock, a further R196 million property impairment and the write-off of R71 million in deferred tax assets.

Revenue fell 4% to R10 billion for the year to end-March mainly due to a big drop in demand for capital equipment in all sectors, various economic and infrastructure challenges at its Engineering Solutions Group and highly competitive trading conditions in South East Asia, which impacted its Singapore-based Kian Ann business. It reported a loss of R673 million, down from a profit of R229 last year, while headline earnings per share declined by 48% to 58c.

Excluding the impairments and once-off items, sustainable operation profit rose 3% to R707 million and sustainable profit increased by 1% to R423 million, leaving headline earnings per share 4% higher at 302c. Net interest bearing debt at the end of the period was 11% lower at R2 billion after it paid a further R100 million towards a settlement with SARS. It said the outstanding SARS settlement balance of R200 million would be repaid over the next two years. It's not paying an interim dividend, saying its normal dividend policy would resume once cash flow and gearing permitted.

Invicta said it would focus on finalising the recent sale of a number of businesses to CNH Industrial in the period ahead as it right-sized its business and reduced its gearing.

Its shares retraced some of their gains to close 19% up at R9.75.

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