2019 Year-end Results for the 12 months ended 30 September 2019 18 NOVEMBER 2019
FORWARD LOOKING STATEMENTS Barloworld may, in this document, make certain statements that are not historical facts that relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to, statements regarding exchange rate fluctuations, volume growth, increases in market share, return on invested capital, growth opportunities, capital distribution and cost reductions, including in connection with our business performance outlook. Words such as “believe”, “anticipate”, “expect”, “intend", “seek”, “will”, “plan”, “could”, “may”, “endeavour”, “target”, “forecast” and “project” and similar expressions are intended to identi such forward-looking statements, but are not the exclusive means of identiing such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. Forward-looking statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. All references to years refer to the financial year 30 September. Comprehensive additional information is available on our website: www.barloworld.com 1
PRESENTATION OVERVIEW Opening and welcome Zanele Salman, Head Investor Relations Safety video Highlights Dominic Sewela, Barloworld Group CE Financial overview Nopasika Lila, Barloworld Group FD Kamogelo Mmutlana, CEO Automotive and Logistics update Charl Groenewald, CE Barloworld Equipment Russia update Quinton Mcgeer, CEO Barloworld Equipment SnA update Emmy Leeka, CEO Strategy update and Group Outlook Dominic Sewela, Barloworld Group CE Questions and answers 2
Highlights and group strategy DOMINIC SEWELA GROUP CHIEF EXECUTIVE
BUILDING A SUSTAINABLE FUTURE FOR OUR PEOPLE, ENVIRONMENT AND COMMUNITIES Target: ZERO HARM KEY HIGHLIGHTS: WORK ENVIRONMENT Successful implementation of Khula 2017 2018 2019 Sizwe, scheme oversubscribed and funding target met Non-Renewable Mbewu programme launched, 3 060 499 2 922 370 2 829 289 Energy (GJ) focused on providing support and funding for the growth of social GHG Emissions enterprises (tCO 2 e) (Scope 1 267 940 255 103 243 478 and 2) Member of Dow Jones Sustainability Lost -Time Injury Emerging Markets, FTSE4Good and Frequency Rate 0.77 0.70 0.58 FTSE/JSE Responsible Investment (LTIFR) Indeces Number of Work 3 2 1 Related Fatalities 4
GROUP HIGHLIGHTS PLEASING EQUIPMENT AND STRONG AUTOMOTIVE RESULTS Normalised headline Revenue Free cash generated earnings per share during the period R56.8bn 1 167cents R3.1bn down 5.4% up 1.4% (2018: R60.1bn) (2018: R3.6bn) (2018: 1 151 cents) Return on invested capital Total dividend per share Special dividend declared 11.9% 462 cents 228 cents (2018: 12.3%) (2018: 462 cents) 5
2019 ACHIEVEMENTS DELIVERING VALUE BY FOCUSING ON THE RIGHT AREAS Strong free cash generated Group ROIC in line with expectations Business structure and leadership driving strategy implementation and culture change Managing for intrinsic value approach fully adopted Barloworld Business System journey on track, contributing to performance Avis Fleet held for sale at 30 September 2019 Wagner Asia in Mongolia due diligence complete 6
SEGMENTAL 12 MONTH ROLLING ROIC HURDLE RATE 13.0% 21.6% 2019 WACC 13.2% 18.4% 17.7% 13.2% 13.1% 12.8% 12.7% 12.5% 12.4% 12.3% 13.0% 11.9% 11.2% 11.0% 9.5% 6.3% Equipment Equipment Automotive Logistics* Group southern Russia^ Africa AVERAGE INVESTED CAPITAL (R million) 2017 10.2 2.6 10.0 2.1 27.1 2018 10.9 2.9 10.0 1.8 26.3 2019 11.5 3.3 9.6 1.4 25.5 * Core operations. ^ In terms of USD. 7
Financial overview
NEW ACCOUNTING STANDARDS IMPACTING THE FINANCIAL STATEMENTS – IFRS 15 AND 9 The accounting policies applied in the preparation of the financial statements are consistent with those applied in the prior year except for the adoption of IFRS 15 Revenue from contracts with customers (IFRS 15) and IFRS 9 Financial instruments (IFRS 9) (refer to annexure 4). The adoption of IFRS 9 and 15 has not materially affected the group’s results but has resulted in the separate disclosure of contract assets and liabilities on the statement of financial position, together with enhanced disclosures as required by these new accounting standards. 9
TRANSACTIONS IMPACTING THE FINANCIAL STATEMENTS OPERATIONAL CHANGES: AVIS FLEET AND NMI-DSM 2019 2018 Income statement Avis Fleet Held for sale (discontinued operation in 19; Continuing operation On dilution to 50% in 20 JV results will be equity accounted in continuing operations) NMI-DSM Consolidated for 11 months Fully consolidated for 12 months: Equity accounted for 1 month (51.18% shareholding) (50% shareholding and loss of control) Statement of financial position Avis Fleet Assets and liabilities held for sale Assets and liabilities consolidated in group Investment in associate Subsidiary NMI-DSM Statement of cash flows Avis Fleet Consolidated in the statement of cash flows Consolidated in the statement of cash flows – refer to Annexure 4 for a breakdown of Avis Fleet cash flows NMI-DSM Cashflows consolidated for 11 months. Cashflows consolidated for 12 months. From 1 September 2019 dividends received included in dividends from associates 10
FINANCIAL HIGHLIGHTS FROM CONTINUING OPERATIONS DISCONTINUED OPERATION: AVIS FLEET Revenue Operating profit incl. B-BBEE Continuing HEPS R56.8bn R3.3bn 867cents 5% 13% 5% (2018: R60.1bn) (2018: R3.8bn) (2018: 910 cents) Free cash flow* Special dividend per share Total dividend per share 228 cents ^ R3.1bn 462 cents (2018: R3.6bn) (2018: 462 cents) Finance Effective Fair value gain on costs tax rate** financial instruments R1 085m 28.8% R32m (2018: R1 145m) (2018: 29.1%) (2018: R122m loss) * Including discontinued operations. ** Excluding Avis Fleet finance costs (annexure 4). ^ Includes 6.6 million BEE Foundation shares. Refer to Supplementary schedules for closing and average exchange rates. 11
DIVIDENDS PER SHARE SPECIAL DIVIDEND OF R500 million DIVIDENDS PER SHARE (cents) 690 228 462 317 297 390 345 265 230 165 145 125 115 2016 2017 2018 2019 1H 2H Special 12
CONTINUING REVENUE SEGMENTAL RESILIENT IN TOUGH TRADING CONDITIONS REVENUE (R billion) 9 60.1 2018 2019 56.8 11 36 2019 (%) 33 11 20.4 20.0 19.8 18.7 n Equipment southern Africa n Equipment Russia n Automotive Trading n Rent A Car n Logistics 7.8 6.5 6.3 6.2 5.9 5.2 10 Equipment southern Africa Equipment Russia Automotive Trading Rent A Car Logistics Total Group 11 33 2018 (%) 33 13 13
OPERATING PROFIT SEGMENTAL POSITIVE EQUIPMENT AND MOTOR TRADING RESULT PRE-CORPORATE OPERATING PROFIT (R million) 3,762 1 14 2018 2019 3,272 2019 15 50 (%) 1 836 1 790 20 804 719 561 524 536 523 n Equipment southern Africa n Equipment Russia 262 n Automotive Trading n Rent A Car 38 n Logistics (133) (409) 6 Equipment southern Africa Equipment Russia Automotive Trading Rent A Car Logistics Corporate Total Group 14 2018 46 13 (%) 21 14
OTHER PERTINENT ISSUES IN 2019 ► Net operating expenses favourably impacted by improved GP margin resulting from change in sales mix in our Equipment businesses. ► Corporate costs impacted by: BEE transaction costs R73 million GMP charges R88 million Investments in skills R40 million Strategic projects R43 million ► Fair value gains recognised in the income statement of R32 million (2018: losses R122 million) impacted by an unrealised gain of R173 million driven by the decision to convert GBP150 million of the Equipment Iberia sale proceeds to USD in March 2019 in anticipation of the acquisition of the Mongolian Caterpillar dealership. ► Realised fair value adjustments in operating cash flows: R130 million (2018: R140 million). 15
* Refer to Annexure 3.1. INCLUDING AVIS FLEET* HEPS AND NORMALISED HEPS ANALYSIS 1,000 1,040 1,080 1,120 1,160 1,200 1,240 1,280 cents 1,192 HEPS - Sep 2018 -41 Equipment Iberia prior year profits 1,151 HEPS from continuing operations +35 BWE snA excl associates +8 DRC -8 Barzem and other -15 Equipment Russia +42 Automotive - excluding Avis fleet -13 Avis Fleet -50 Logistics excl KLL -16 KLL losses +1 Handling -34 Corporate excl abnormal +66 Fv adjustments on USD deposits CorpUK net of tax UK and RSA 1,167 Normalised HEPS - Sep 2019 -35 Pension fund GMP -33 B-BBEE costs 1,100 Group HEPS operations - Sep 2019 16
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