2020 Interim results for the 6 months ended 31 March 2020 30 JUNE 2020
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 identify such forward-looking statements, but are not the exclusive means of identifying 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 31 March 2020. Comprehensive additional information is available on our website: www.barloworld.com 2
PRESENTATION OVERVIEW Opening and welcome Zanele Salman, Head Investor Relations Highlights Dominic Sewela, Group CEO Financial overview Nopasika Lila, Group FD Kamogelo Mmutlana, CE Automotive and Logistics update Charl Groenewald, CE Barloworld Equipment Russia update Quinton McGeer, CE Barloworld Equipment snA update Emmy Leeka, CE Strategy Update and Group Outlook Dominic Sewela, Group CEO Questions and answers 3
Group highlights DOMINIC SEWELA GROUP CEO 4
BUILDING A SUSTAINABLE FUTURE FOR OUR PEOPLE, ENVIRONMENT AND COMMUNITIES Continued focus on zero harm across the Group, no work-related fatalities in the period To date 38 employees have tested positive for COVID-19, 29 are recovering while nine have recovered, no deaths R129 million paid in salaries to employees who were not able to work from home during lockdown in April and May Barloworld Siyakhula small and medium enterprise beneficiaries receiving COVID-19 relief 0% interest loan repayment holiday for 6 months, R1.8 million deferred R22.4 million six month relief fund, 41 beneficiaries and 454 jobs saved South African Solidarity fund partnership: goods and services worth R8.8 million Khula Sizwe BBBEE transaction, 49 of the 64 properties transferred for R2.2 billion Non-renewable energy consumption down 15%, greenhouse gas emissions (scope 1 and 2) down 17% 5
TRADING IN A COVID-19 WORLD Challenging trading conditions Proactive mitigating measures implemented Challenging trading conditions exacerbated COVID-19 Policy and Crisis Committee in place by COVID-19 to manage and mitigate impact on employees Low activity in key industries Active reduction in operating costs Lower average commodity prices and 12 month remuneration sacrifice plan implemented subdued demand on 1 May 2020 Severe business interruption through lockdowns Group-wide retrenchments (including early and supply chain interruptions retirement) Job losses and pressures on all industries Moratorium on external appointments to impact post–crisis recovery Deferment of non-essential capex Steady improvements as lockdown measures are lifted OEM extended payment terms and additional counter measures to contain invested capital Expected 2020 overhead cost containment of between R 700 million and R720 million before implementation costs 6
GROUP HIGHLIGHTS Revenue Operating profit excl. B-BBEE Group normalised HEPS R25.2bn R1.2bn 354 cents Down 12% Down 27% Down from (1H’19: 521 cents) (1H’19: R28.7bn) (Mar 2019: R1.6bn) Return on Share Buy Back to Committed funding Invested Capital enhance shareholder value capacity of 9.2% R1.6bn R8.1bn (1H’19: 11.3%) (8.6% in issue at 1 October 2019) Robust balance sheet remains key strength in these times Group Net debt-to-EBITDA* ratio of 0.9 times (FY19: 0.2 times) Group EBITDA to gross interest cover* ratio of 5.5 times (1H’19: 5.7 times) Business structure and leadership driving strategy implementation and culture change *excludes IFRS 16 impact 7
ROIC% 20.6 19.4 14.4 14.2 13.7 13.0% 12.7 12.4 8.6 11.3 11.0 9.9 9.2 9.2 9.1 8.0 6.4 3.3 Equipment southern Equipment Russia Motor Trading Car Rental Logistics Group Africa -4.0 Mar-18 Mar-19 Mar-20 AVERAGE INVESTED CAPITAL (R million) Mar 2018 10.9 2.6 2.9 4.4 2.7 29.1 Mar 2019 11.9 2.9 2.8 4.3 2.1 28.7 Mar 2020 12.1 3.8 3.2 4.1 1.9 28.3 8
Financial overview NOPASIKA LILA GROUP FINANCE DIRECTOR
NEW ACCOUNTING STANDARDS IMPACTING THE FINANCIAL STATEMENTS – IFRS 16 LEASES The accounting policies applied in the preparation of the interim financial statements, 31 March 2020 are consistent with those applied at 31 March 2019 except for the adoption of IFRS 16 Leases effective 1 October 2019. The adoption of IFRS 16 impacts the following: Operating profit/HEPS; Finance costs Operating and Investing cash flows; Right of Use (ROU) Asset and Lease Liability. 10
TRANSACTIONS IMPACTING THE FINANCIAL STATEMENTS OPERATIONAL CHANGES: AVIS FLEET AND NMI-DSM 1H'20 1H’19 Income statement Avis Fleet Held for sale (discontinued operation) It was treated as a continuing operation and therefore 2019 March has been restated NMI-DSM Equity accounted for Fully consolidated: (50% shareholding and loss of control) (51.18% shareholding) Statement of financial position Avis Fleet Assets and liabilities held for sale Assets and liabilities consolidated in group NMI-DSM Investment in associate Subsidiary Statement of cash flows Avis Fleet Consolidated in the statement of cash flows Consolidated in the statement of cash flows NMI-DSM From 1 September 2019 dividends received Cashflows consolidated for 12 months. included in dividends from associates 11
FINANCIAL OVERVIEW MARCH 2020 A CHALLENGING SIX MONTHS Net profit after tax Normalised Headline Effective tax rate impact of IFRS 16: Earnings# (33%) R58m 354 cents Down from (reduction in net profit) Down from (Mar 2019: 38%) Effective 1 October 2019 (Mar 2019: 521 cents) Khula Sizwe transaction Profit from Avis Fleet Non-operating and capital items (R132m) R201m (R1 737m) Up from Down from Up from (Mar 2019: R24m) (Mar 2019: R 262m) (Mar 2019: R68m loss) # Group excluding IFRS 16 and B-BBEE transaction charges 12
STATEMENT OF COMPREHENSIVE INCOME A CHALLENGING SIX MONTHS 1H’20 Change % Revenue: On a comparable basis 1H’20 IFRS 16 Excl. 1H’19 Incl. revenue decreased by 6% from Rm (Not reviewed) impact IFRS 16 Restated IFRS 16 1H’19 considering the inclusion Revenue 25 212 25 212 28 727 (12%) of R2bn in 1H’19 from NMI now EBITDA 2 269 (294) 1 975 2 468 (8%) classified as an associate. Depreciation and amortisation of intangibles (1 024) 201 (823) (898) 14% Non-operating and capital items Operating profit before B-BBEE transaction 1 245 (93) 1 152 1 570 (21%) largely impacted by goodwill B-BBEE transaction charge (132) (132) (24) > 100% impairments (R685m),investment Operating profit 1 113 (93) 1 020 1 546 (28%) write-offs (R317m) and Impairment of intangible assets (R728m). Fair value adjustment on financial instruments (84) (84) (70) 20% Net finance cost (551) 137 (414) (479) 15% Included in the Fair value Profit before non operating capital items 478 44 522 997 (52%) adjustment on financial Non-operating and capital items (1 737) (1 737) (68) > 100% instruments are forex losses of R72.7m which were incurred in the (Loss)/profit before taxation (1 259) 44 (1 215) 929 (> 100%) Equipment business in Angola due Taxation (415) 14 (401) (357) 16% to the currency devaluation. (Loss)/profit after taxation (1 674) 58 (1 616) 572 (> 100%) (Loss)/Income from Associates and JVs (63) (63) 116 (> 100%) The results of Avis Fleet (discontinued operation) were (Loss)/profit – Continuing operations (1 737) 58 (1 679) 688 (> 100%) impacted by lower used sales Profit from discontinued operations 201 201 262 (23%) margins, lower maintenance profits (Loss)/profit for the period (1 536) 58 (1 478) 950 (> 100%) and increased provisions for estimated credit losses. EPS (862.2) 313.9 DEPS (862.2) 313.0 13
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