Summarised audited consolidated results for the year ended 30 June - PowerPoint PPT Presentation

Summarised audited consolidated results for the year ended 30 June 2019

Disclaimer Forward-looking statements This presentation, which sets out ARB’s results for the year ended 30 June 2019, contains 'forward- looking statements‘ with respect to, inter alia , ARB’s financial condition, results of operations and certain of its plans, strategies and objectives, which have not been reviewed or reported on by ARB’s auditors. By their nature, forward-looking statements are not guarantees of future performance but are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future, involve known and unknown risks, uncertainties and other facts or factors which may cause ARB’s actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements.

Agenda ▪ Highlights ▪ The year in review ▪ Group financial review ▪ Divisional review • Electrical • Lighting • Corporate ▪ Strategy and outlook ▪ Q&A ▪ Appendix: Environmental, Social & Governance (ESG)

FINANCIAL REVIEW

Highlights Revenue Up 4.5% to R2 706m Operating profit Down 24.0% to R155m HEPS Down 18.8% to 58.20 cps Ungeared R181 million cash on hand Dividend Maintained at 25.0 cents

The year in review Low growth & unstable Low business confidence local economy Dire state of construction Radiant rationalisation industry Volatile Republic Eskom in crisis Copper Price Cable supply inconsistencies Right-sizing in the market operational structures Poor payments by SOEs / Major supplier goes parastatals direct to customers

The year in review – strong fundamentals Experienced Remain largely Sound business executive and ungeared, with and financial management cash reserves fundamentals teams in place on hand remain key

The year in review – strong fundamentals

Group financial review % Year ended Year ended Year ended change 30 June 2019 30 June 2018 30 June 2017 R000’s R000’s R000’s Revenue 4.5 2 706 186 2 590 150 2 479 419 Gross profit 5.7 650 355 615 186 594 412 Gross profit margin 24.0% 23.8% 24.0% Operating profit (24.0) 155 367 204 326 214 455 Operating profit margin 5.7% 7.9% 8.6% Profit before tax (24.3) 145 165 191 647 171 466

Group financial review Revenue (Rm) Operating Profit (Rm) 3 000 2 706 2 500 250 2 590 2 490 2 479 222 2 000 2 151 200 214 204 196 1 500 150 155 1 000 100 500 50 0 0 '15 '16 '17 '18 '19 '15 '16 '17 '18 '19 Cash generated from operations Headline earnings per share (cents) 250 236 225 226 80,00 226 217 200 207 205 70,00 71,70 60,00 168 61,89 150 168 167 59,74 58,20 50,00 51,71 40,00 100 30,00 20,00 50 10,00 0 0,00 '15 '16 '17 '18 '19 '15 '16 '17 '18 '19 Cash generated from trading (pre working capital) Cash generated from operations (after working capital)

Group financial review Unusual items in operating expenses: ▪ Reduction in put option liability R21.3m ▪ Negative goodwill on Radiant acquisition R18.8m ▪ Goodwill write off in Eurolux (R18.4m) ▪ Goodwill write off in ARB Electrical Wholesalers (R26.2m) ▪ Gauteng relocation costs (R0.8m) ▪ Radiant retrenchment costs and restructuring costs (R5.3m)

Group financial review Unusual items in results (“attributable to ordinary share holders”) % change Year ended Year ended 30 30 June 2019 June 2018 R000's R000's (24.0) 137 633 104 595 Put option liability adjustment 29 944 30 914 - Change in put option assumptions 17 025 26 000 - Dividends paid to NCI's (3 735) (4 800) - Undiscounting of liability net of minority (1 304) (1 558) - NCI's share of the results 18 010 11 272 Straight line of leases (51) 389 (19.9) 168 496 134 977

Group financial review Revenue (Rm) Operating profit (Rm) 250 3 000 2 500 200 1 349 1 248 1 206 112 1 254 110 2 000 97 88 150 1 051 64 1 500 100 1 000 1 342 1 357 1 274 1 236 108 107 105 105 1 100 50 92 500 0 0 '15 '16 '17 '18 '19 '15 '16 '17 '18 '19 First 1/2 Second 1/2 First 1/2 Second 1/2

Group financial review Earnings per share (cents) Headline earnings per share (cents) 80,0 80,0 70,0 70,0 60,0 60,0 34,0 34,1 50,0 50,0 34,5 33,8 34,2 35,0 22,3 22,2 40,0 25,5 40,0 25,5 30,0 30,0 37,7 20,0 37,6 20,0 27,7 27,8 28,1 27,8 24,8 23,3 24,8 23,2 10,0 10,0 0,0 0,0 '15 '16 '17 '18 '19 '15 '16 '17 '18 '19 First 1/2 Second 1/2 First 1/2 Second 1/2

Group financial review Cash flow 2019 600 000 19 136 500 000 58 125 109 290 400 000 48 770 167 676 300 000 204 257 200 000 38 851 259 420 180 891 100 000 0 Opening From Net working Interest Dividends Taxation Assets Funding Closing Cash operations capital received paid paid acquired raised cash balance balance Base End Fall Rise Start

Group financial review Dividends (cents) 40 35 10 10 30 10 10 25 20 15 25,0 25,0 25,0 23,1 20,1 10 5 0 '15 '16 '17 '18 '19 Ordinary Special

Group financial review Group days in working capital Group working capital as a % of revenue 200 150 56 62 56 60 64 100 108 50 94 91 87 83 23% 23% 23% - 22% 22% (56) (61) (61) (67) (60) (50) ‘15 ‘16 ‘17 ‘18 ‘19 ‘15 ‘16 ‘17 ‘18 ‘19 Inventory Debtors Creditors (100)

Group financial review Sales by customer 2019 Sales by customer 2018 5% 5% Cash 17% 18% 19% Contractors 22% Government Mining 8% Export 5% 27% 25% Industry 6% 5% Wholesalers 6% 8% 2% 4% 7% 3% 3% 6% OHL contractors Retail & independents Other

Group financial review Sales by product 2018 Sales by product 2019 26% 34% 29% 36% Cable OHL Lighting General products 22% 28% 12% 13%

Group financial review Republic Copper Price Cu/ton 105 000 100 000 95 000 90 000 85 000 80 000 75 000 70 000

Group financial review US$ price of copper and average R/US$ exchange rate 7 500 15,50 15,00 7 000 14,50 14,00 6 500 13,50 13,00 6 000 12,50 12,00 5 500 11,50 5 000 11,00 Copper US$ / ton R/$ average

DIVISIONAL REVIEW

Divisional contribution Operating profit contribution per division (Rm) Revenue contribution per division (Rm) 250 3 000 56 46 38 39 27 30 649 2 500 502 200 507 35 511 27 34 38 30 351 60 39 425 2 000 58 40 281 46 150 30 44 45 1 500 30 35 100 2 120 2 097 2 006 1 996 1 876 1 741 1 000 1 679 139 141 134 129 123 50 101 86 500 0 0 '13 '14 '15 '16 '17 '18 '19 '13 '14 '15 '16 '17 '18 '19 Electrical Eurolux Corporate Electrical Eurolux Corporate

ELECTRICAL

Electrical Division Good contribution from Cable / copper supply challenges CraigCor Reduced activity in infrastructure & development Eskom electrification projects projects Disruption to existing contracts Volatile exchange rate and effect large construction companies on commodity prices Occupation taken of Loss-making branch closed Lords View DC

Electrical Division Operating profit (Rm) Revenue (Rm) 2 500 160 140 141 139 2 120 2 120 2 097 134 2 000 129 2 006 120 123 1 876 1 741 1 679 100 1 500 101 80 86 1 000 60 40 500 20 0 0 '13 '14 '15 '16 '17 '18 '19 '13 '14 '15 '16 '17 '18 '19

Electrical Division % change Year ended Year ended Year ended 30 June 2019 30 June 2018 30 June 2017 R000’s R000's R000's Revenue (1.1%) 2 096 776 2 119 913 1 996 374 Operating profit (33.7%) 85 555 129 036 134 199 Profit margin 4.1% 6.1% 6.7% Profit before tax (42.8%) 85 748 149 841 154 275 • Good performance by CraigCor • ARB Electrical Wholesalers suffered the most • Major supplier goes directly to customers • Cable supply challenges / change in route to market • Increase in [low margin] cable distributors • OHL sales still impacted by very low Eskom spend • GMC acquisition not yet delivering to expectation • Low voltage products growing but at a slower rate • Bad debts remain a challenge • Move to Midrand – short-term costs; long-term benefits • Key focus on optimising existing operations and gaining efficiencies

LIGHTING

Lighting Division Inclusion of Radiant Current focus on for six months Radiant integration Inventory management Consumer spending low – improved and still meet retailers results customer needs “Hardware” revenue decline at Volatile exchange rate retailers Supply challenges with Inclusion of Crabtree sales packaging plant – still not fully operational

Lighting Division Revenue (Rm) Operating profit (Rm) 700 70 649 600 60 59,9 500 50 511 507 502 45,9 43,8 425 400 40 39,5 37,2 351 35,4 300 30 30,5 281 200 20 100 10 0 0 '13 '14 '15 '16 '17 '18 '19 '13 '14 '15 '16 '17 '18 '19