Tax provision sets Invicta Holdings profits surging
It overcame some challenging conditions
JOHANNESBURG – JSE-listed investment holding and management company Invicta Holdings overcame some of the challenging conditions to report a strong surge in profits for the six months to end September.
The group was hit by a lack of infrastructure development in the country, the demise of numerous large local construction companies, a downturn in the Asian market and a drought in the agricultural sector.
This resulted in the Capital Equipment Group segment reporting a decline of 8 percent in revenue to R2.3 billion, while its operating profit before interest on capital equipment financing transactions and foreign exchange movements decreased by 21 percent to R148 million in the six months to end September.
Chief executive Arnold Goldstone said yesterday that a lack of liquidity and uncertainty in the agricultural sector resulted in a decline in demand for combine harvesters and higher kilowatt tractors. Despite the decline in volumes in every construction equipment sector, there is still activity in higher value, large equipment used in the mining sector,” Goldstone said.
However, despite the decline in CEG, the group still managed to grow its overall profits by 228 percent to R208m, up from R63m compared to last year, as a result of the non-occurrence of the once-off tax provision.
In September 2018 results, the group reached a settlement with SA Revenue Service for a settlement of R750m. Invicta maintained its group revenue at R5.3bn and operating profit declined by 6 percent to R383m. Its basic earnings per share increased by 1 046 percent to 149 cents a share and headline earnings per share increased by 2 029 percent to 149c.
The group did not declare a dividend,given the higher gearing levels, and said it would resume a normal dividend policy once cash flow and debt levels permit.
Goldstone said a pleasing feature of the period had been the major improvement in cash generated from operations that increased by 426 percent from R99m to R518m for the current period.
“Invicta’s strategic focus is based upon optimising current operations and cash flows to right-sizing the level of debt that resulted from the 2018 tax settlement of R750m,” he said.
Invicta shares closed 4.50 percent lower at R21 on the JSE on Monday.