2020 Interim results for the 6 months ended 31 March 2020 30 JUNE - - PowerPoint PPT Presentation

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

• r 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

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PRESENTATION OVERVIEW

3

Opening and welcome Zanele Salman, Head Investor Relations Highlights Dominic Sewela, Group CEO Financial overview Nopasika Lila, Group FD Automotive and Logistics update Kamogelo Mmutlana, CE 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

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  Challenging trading conditions exacerbated by COVID-19  Low activity in key industries

 Lower average commodity prices and

subdued demand

 Severe business interruption through lockdowns

and supply chain interruptions

 Job losses and pressures on all industries to impact post–crisis recovery  Steady improvements as lockdown measures are lifted Proactive mitigating measures implemented  COVID-19 Policy and Crisis Committee in place to manage and mitigate impact on employees  Active reduction in operating costs  12 month remuneration sacrifice plan implemented

• n 1 May 2020

 Group-wide retrenchments (including early retirement)  Moratorium on external appointments  Deferment of non-essential capex  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

7

 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

Group normalised HEPS

354 cents

Down from

(1H’19: 521 cents) Revenue

R25.2bn

Down 12%

(1H’19: R28.7bn)

Committed funding capacity of

R8.1bn

Share Buy Back to enhance shareholder value

R1.6bn

(8.6% in issue at 1 October 2019) Return on Invested Capital

9.2%

(1H’19: 11.3%) Operating profit excl. B-BBEE

R1.2bn

Down 27%

(Mar 2019: R1.6bn)

ROIC%

12.4 19.4 14.4 9.9 3.3 11.0 12.7 20.6 13.7 9.1 6.4 11.3 8.6 14.2 9.2 8.0

• 4.0

9.2

Equipment southern Africa Equipment Russia Motor Trading Car Rental Logistics Group Mar-18 Mar-19 Mar-20

8

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

13.0%

Financial overview

NOPASIKA LILA GROUP FINANCE DIRECTOR

NEW ACCOUNTING STANDARDS IMPACTING THE FINANCIAL STATEMENTS – IFRS 16 LEASES

10

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.

TRANSACTIONS IMPACTING THE FINANCIAL STATEMENTS

11

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 (50% shareholding and loss of control) Fully consolidated: (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 included in dividends from associates Cashflows consolidated for 12 months.

FINANCIAL OVERVIEW MARCH 2020

12

A CHALLENGING SIX MONTHS

Normalised Headline Earnings#

354 cents

Down from (Mar 2019: 521 cents) Net profit after tax impact of IFRS 16:

R58m

(reduction in net profit) Effective 1 October 2019 Khula Sizwe transaction

(R132m)

Up from (Mar 2019: R24m) Non-operating and capital items

(R1 737m)

Up from (Mar 2019: R68m loss) Profit from Avis Fleet

R201m

Down from (Mar 2019: R 262m) Effective tax rate

(33%)

Down from (Mar 2019: 38%)

# Group excluding IFRS 16 and B-BBEE transaction charges

Rm 1H’20 (Not reviewed) IFRS 16 impact 1H’20 Excl. IFRS 16 1H’19 Restated Change % Incl. IFRS 16

Revenue 25 212 25 212 28 727 (12%) EBITDA 2 269 (294) 1 975 2 468 (8%) Depreciation and amortisation of intangibles (1 024) 201 (823) (898) 14% Operating profit before B-BBEE transaction 1 245 (93) 1 152 1 570 (21%) B-BBEE transaction charge (132) (132) (24) > 100% Operating profit 1 113 (93) 1 020 1 546 (28%) Fair value adjustment on financial instruments (84) (84) (70) 20% Net finance cost (551) 137 (414) (479) 15% Profit before non operating capital items 478 44 522 997 (52%) Non-operating and capital items (1 737) (1 737) (68) > 100% (Loss)/profit before taxation (1 259) 44 (1 215) 929 (> 100%) Taxation (415) 14 (401) (357) 16% (Loss)/profit after taxation (1 674) 58 (1 616) 572 (> 100%) (Loss)/Income from Associates and JVs (63) (63) 116 (> 100%) (Loss)/profit – Continuing operations (1 737) 58 (1 679) 688 (> 100%) Profit from discontinued operations 201 201 262 (23%) (Loss)/profit for the period (1 536) 58 (1 478) 950 (> 100%) EPS (862.2) 313.9 DEPS (862.2) 313.0

STATEMENT OF COMPREHENSIVE INCOME

 Revenue: On a comparable basis revenue decreased by 6% from 1H’19 considering the inclusion

• f R2bn in 1H’19 from NMI now

classified as an associate.  Non-operating and capital items largely impacted by goodwill impairments (R685m),investment write-offs (R317m) and Impairment

• f intangible assets (R728m).

 Included in the Fair value adjustment on financial instruments are forex losses of R72.7m which were incurred in the Equipment business in Angola due to the currency devaluation.  The results of Avis Fleet (discontinued operation) were impacted by lower used sales margins, lower maintenance profits and increased provisions for estimated credit losses.

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A CHALLENGING SIX MONTHS

     

CONTINUING REVENUE SEGMENTAL

14

TOUGH TRADING CONDITIONS PREVAILED IN 1H’20; 1H’19 INCLUDED MOTA DEAL AND NMI

 Equipment southern Africa  Equipment Russia  Automotive Trading  Rent A Car  Logistics

Rm 1H’20 IFRS 16 impact 1H’20

• Excl. IFRS 16

1H’19 Restated Change % (incl. IFRS 16)

Revenue 25 212 – 25 212 28 727 (12%)

10.0 3.2 9.3 3.3 2.9 28.7 8.9 3.8 7.2 3.2 2.1 25.2

Equipment southern Africa Equipment Russia Automotive Trading Rent A Car Logistics Total Group

REVENUE (R billion)

1H'19 1H'20

Includes R2.0bn NMI Revenue. Includes R2.0bn NMI Revenue.

1H’19 in Automotive Trading includes 2bn NMI revenue

35 15 29 13 8 1H’20 (%) 36 11 33 11 9 1H’19 (%)

OPERATING PROFIT SEGMENTAL ROBUST RUSSIAN RESULT AND AFRICAN RESULTS UNDER PRESSURE

15

806 314 275 281 68 (198) 1 546 722 370 85 194 (30) (240) 12 1 113

Equipment southern Africa Equipment Russia Automotive Trading Rent A Car Logistics Corporate Khula Sizwe Total Group

OPERATING PROFIT (R million)

1H'19 1H'20

Includes R63m NMI Operating profit. Includes positive R93m IFRS 16 impact.

Automotive Trading 1H’19 includes R63m NMI Operating profit Total group 1H’20 includes R93m IFRS 16 impact

Rm 1H’20 IFRS 16 impact 1H’20

• Excl. IFRS 16

1H’19 Restated Change % (incl. IFRS 16)

Operating profit 1 113 (93) 1 020 1 546 (28%)

53 27 6 14 1H’20 (%) 46 18 16 16 4 1H’19 (%)

 Equipment southern Africa  Equipment Russia  Automotive Trading  Rent A Car  Logistics

FAIR VALUE ADJUSTMENTS OF FINANCIAL INSTRUMENTS IMPACT OF FOREIGN EXCHANGE MOVEMENTS WELL MANAGED

16

Higher fair value adjustments of financial instruments was due to weakening local currencies against the USD offset by hedging gains in our Equipment business.

Rm 1H’20 IFRS 16 impact 1H’20

• Excl. IFRS 16

1H’19 Restated Change % (incl. IFRS 16)

Fair value adjustment on financial instruments (84) – (84) (70) 20%

NET FINANCE COSTS NET FINANCE COSTS CONTAINED THOUGH IMPACTED BY IFRS 16

17

Higher finance costs against 1H’19 were driven by IFRS 16 (R137m finance cost impact). Whilst debt levels are higher in the group there was some relief from marginally lower funding costs in SA.

Rm 1H’20 IFRS 16 impact 1H’20

• Excl. IFRS 16

1H’19 Restated Change % (incl. IFRS 16)

Net Finance cost (551) 137 (414) (479) 15%

NON-OPERATING AND CAPITAL ITEMS

18

COVID-19 AND ECONOMIC DOWNTURN IMPACT FUTURE EXPECTATIONS RESULTING IN IMPAIRMENTS

Rm 1H’20 IFRS 16 impact 1H’20

• Excl. IFRS 16

1H’19 Restated Change % (incl. IFRS 16)

Non-operating and capital items (1 737) – (1 737) (68) >100% Non-operating and capital items largely affected by impairments:

1H’20 1H’19

Car Rental Goodwill 619 – Equipment Botswana, Zambia, Angola, Mozambique, Malawi Goodwill and indefinite life intangibles 765 – BHBW Investment in JV 187 – NMI Investment in Associate 124 – Other impairments and losses 42 – Non-operating and capital items 1 737 68

TAXATION

19

EFFECTIVE TAX RATE IMPACTED BY LOCAL CURRENCY DEVALUATIONS AND TAXES INCURRED ON THE KHULA SIZWE PROPERTY DEAL

28

• 33

+0 +3

• 3
• 3
• 22
• 1
• 3
• 23
• 9
• 45
• 35
• 25
• 15
• 5

5 15 25 35

Group tax rate Prior year taxes Foreign rate differential Permanent differences Tax losses of prior periods Tax losses not utilised Rate change adjustment Withholding tax Exceptional tax Deferred tax recognised in terms of IAS12 para 41 Tax as a percentage

• f Profit before tax

SA tax rate

% Rm 1H’20 IFRS 16 impact 1H’20

• Excl. IFRS 16

1H’19 Restated Change % (incl. IFRS 16)

Taxation (415) 14 (401) (357) 16%

LOSSES FROM ASSOCIATES AND JOINT VENTURES

20

RESULTS UNDER PRESSURE

Rm 1H’20 IFRS 16 impact 1H’20

• Excl. IFRS 16

1H’19 Restated Change % (excl. IFRS 16)

(Loss)/Income from Associates and JVs (63) – (63) 116 (>100%)

Rm 1H’20 1H’19

Bartrac (DRC) (38) 134 NMI (DSM) 20 BHBW (Agriculture) (39) (1) Other (6) (17) Total (63) 116

20

• 38
• 39
• 6

134

• 1
• 17
• 60
• 40
• 20

20 40 60 80 100 120 140 160

NMI Bartrac BHBW Other

Associate and JV income (Rm)

1H20 1H19

HEPS AND NORMALISED HEPS ANALYSIS

21

CHALLENGES PERSIST; AVIS FLEET IS AN ACCOUNTING ANOMALY; KHULA SIZWE RENTALS ELIMINATE ON CONSOLIDATION

475 354 268 +199 +90 +34 +1 +22

• 38
• 83
• 18
• 74
• 81
• 42
• 21
• 39
• 16
• 40
• 16
• 58
• 28
• 20

40 100 160 220 280 340 400 460 520 580 640 700 760 820 880

STATEMENT OF FINANCIAL POSITION MARCH 2020

22

FINANCIAL POSITION REMAINS STRONG AGAINST SEPTEMBER 2020 (1H’19 NOT RESTATED FOR NMI DECONSOLIDATION AND AVIS FLEET HELD FOR SALE)

Commentary

Avis fleet was treated as a continued operation in 1H’19 and it is a discontinued operation in 1H’20. Impairments and JV losses offset by right of use assets recognised (IFRS 16) Investments in working capital were offset by a decrease in cash 1H’20: Avis Fleet and Smart Matta; Barlow Park; BWE snA properties (1H’19 excl. Avis Fleet and BWE snA properties and included Logistics Middle East) Losses were generated to 1H’20 and the special dividend of R500m and share buy back of R1.6bn has also contributed to lower equity Higher borrowings together with lease liabilities (IFRS16) partially offset by lower Pension Fund Deficit (GBP37m contributions paid in together with lower deficit valuation) Higher borrowings together with lease liabilities (IFRS 16) and contract assets (IFRS 15) partially offset by lower trade and other payables 1H’20: Avis Fleet and Smart Matta; Barlow Park; BWE snA properties (1H’19 excl. Avis Fleet and BWE snA properties and included Logistics Middle East)

R million 1H’20 (not reviewed) 1H’19 reviewed Sept 2019 audited

Non-current assets 14 996 19 469 14 540 Current assets 26 525 27 968 26 871 Assets classified as held for sale 5 606 311 5 780 Total assets 47 127 47 748 47 191 Equity 21 315 23 127 23 895 Non-current liabilities 9 300 9 480 7 336 Current liabilities 14 214 15 082 13 738 Liabilities classified as held for sale 2 289 59 2 222 Total equity and liabilities 47 127 47 748 47 191

CASH FLOWS AND NET DEBT (EXCL. IFRS 16)

23

HIGHER OPERATING CASH OUTFLOWS; DIVIDENDS; WC OUTFLOWS AND SHARE BUY BACK HAVE INCREASED NET DEBT

8 369

• 5 115

9 764 1 066 +2 444 +116 +41 +1 562 4 649 7 303

• 114
• 1 000

2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 10 000

Opening debt Opening cash Opening net debt Net cash applied to

• perating activities

after dividends Net cash used in investing activities Effect of USD denominated cash Share-buy back Other financing activities Closing net debt Closing Cash Closing Gross Debt

Rm

NET DEBT, EBITDA/ INTEREST COVER

24

1 066 1 066 5 115 5 115 5. 5.7 [VA VALUE] 1 2 3 4 5 6

• 1 000

1 000 2 000 2 000 3 000 3 000 4 000 4 000 5 000 5 000 6 000 6 000

Sep-19 1H'20 Net debt EBITDA/interest cover

R million times

Net debt/ EBITDA 0.9 x (2019: 0.2 x) Covenants excl. IFRS 16: Net debt/ EBITDA <3 times, EBITDA/Interest > 3.5 times

SUBSEQUENT EVENTS  Avis Fleet is no longer held for sale (discontinued operation) and will form part of continuing operations  The DMTN programme increased from R10bn to R15bil in line with strategy  Our covenants have been relaxed from all of the banks for the next cycle  Our cash flow forecasts have been adjusted for COVID-19  Austerity measures applied to other expenses resulting in savings

25

MANAGING THE IMPACT:

26

COST CONTAINMENT MEASURES Cost savings on retrenchments in FY2020 to the amount of R125m Total savings on salary sacrifices and pension holiday (FY2020) R276m Property operating leases savings on

• f R13m

Capex spend significantly reduced resulting in a saving of R597m Restructuring and consolidating subsidiaries Travel, consulting and events cancelled resulting in a saving

• f R53m

Cancelled all non-essential training Austerity applied to other expenses resulting in a saving

• f R204m

CURRENT INITIATIVES DEALING WITH COVID-19

CONCLUSION  Strong Balance Sheet  Healthy gearing positions  Comfortable liquidity position  Cost containment measures

27

Divisional overview

KAMOGELO MMUTLANA CE AUTOMOTIVE AND LOGISTICS

AUTOMOTIVE

29

1H’20 HIGHLIGHTS

Operating environment

 YTD February NAAMSA SA dealer market down -2.1% on prior year, with sharp decline of 33% in March  Challenging economic conditions and recent developments in COVID-19 impacting new vehicle sales  Volume brands decline and margins under pressure  SAVRALA car rental market, marginal growth on prior period – positive monthly growth to February, double digit decline in March

Financial performance

 ROIC at 9.1% impacted by lower operating results  Strong cash generation supported by sale of properties  Improved results from our NMI-DSM Joint Venture  In line with uncertainty, division considered fair value of assets, investments and expected credit losses  Goodwill and investment impairments of R743 million  Newly acquired BMW Centurion contributed positively to results

Enhancing returns

 Accelerated BBS implementation  Centralised Strategic Sourcing achieved 70% of realized savings target  Fit-for-purpose operating model and structure in place  Countermeasures in place to safeguard sustainability of business

FINANCIAL PERFORMANCE

 Revenue and operating profit down on comparable basis 1.4% and 43% respectively

 Deconsolidation of NMI-DSM  Initial impact of COVID-19  Depressed activity levels in Motor Trading and impact in rental days in March

 Impact of strategic investment in Khula Sizwe  Lower ROIC mainly due to lower operating result, across all businesses

30

AUTOMOTIVE (CONTINUING OPERATIONS)

Revenue (Rbn) Operating profit (Rm) ROIC (%) 12.6 10.4

• 17%

556 279

• 50%

11.2 9.1

• 1.8 bps

1H’19 1H’20 1H’19 1H’20 1H’19 1H’20

FINANCIAL PERFORMANCE

 On a comparable basis revenue down 0.2% and operating profit down 60%

 Depressed South African dealer market, down 7.9%  Volume brands decline with lower margins

 Impact of strategic investment in Khula Sizwe  Provision for COVID-19 related expected credit losses and net realisable value of used vehicle stock  Lower SMD contribution due to reduced volumes

31

MOTOR TRADING

Revenue (Rbn) Operating profit (Rm) EBITDA (Rm) 1H’19 1H’20 1H’19 1H’20 1H’19 1H’20 9.3 7.2 275 85 316 [VALUE]

• 22%
• 69%
• 38%

FINANCIAL PERFORMANCE

 Operating profit impacted by negative rate per day and rental days decline in March  Used vehicle operating profit contribution up on prior period despite lower revenue  Vehicle damage expenses lower than prior period assisted by implemented technology  COVID-19 related provisions for expected credit losses and estimated decline in net realizable value of rental fleet  Goodwill impairment of R619 million

32

CAR RENTAL

Revenue (Rbn) Operating profit (Rm) EBITDA (Rm) 3.3 3.2 281 194 649 644 1H’19 1H’20

• 4%
• 31%
• 2%

1H’19 1H’20 1H’19 1H’20

AUTOMOTIVE (CONTINUING OPERATIONS)

33

BUSINESS GEARING UP FOR IMPROVED ACTIVITY

Utilisation New and used vehicles sold After sales revenue Billed days

Limited growth

Disposable income under pressure Buying down trend expected to continue Oversupply expected to impact margins

Quicker recovery

Expected to reach 80%

• f prior activity levels

by year end

Alternative revenue streams

New value propositions Customer move to private transportation instead of ride hailing services

Off-airport growth

Limited domestic and international travel Increased activity Local and Replacement segments

February March April May

Current year Prior year

February March April May

Current year Prior year

February March April May

Current year Prior year

February March April May

Current year Prior year

AUTOMOTIVE OUTLOOK AND STRATEGIC FOCUS AREAS

Division to execute on fix and

• ptimise strategy following

impact of COVID-19 and depressed economic conditions Fit-for-purpose business

• perating model and

structure BBS: Disciplined focus to value extraction Avis Fleet will remain a fully

• wned subsidiary

Focus on cash generation, turning fleet into cash Motor Trading  Review dealership Portfolio, growth in aftersales and used vehicles  Estimated 30% reduction in cost base, including retrenchments  Rationalisation of leased and

• wned facilities

Car Rental  Estimated 40% to 60% reduction in cost base, including retrenchments  Rationalise branch network by about 30%  Review value added services and regional countries

Divisional overview

CHARL GROENEWALD CE LOGISTICS

35

LOGISTICS

 Good progress made on turnaround strategy

 Middle East sale concluded, SmartMatta exit  Contract retention rates remained high despite volume and margin pressures  Balance sheet management supported through revised funding model for on-balance sheet vehicles and trailers

 Revenue impacted by

 KLL, Middle East exit and non-renewal of non-profitable Managed Solutions contracts in the prior year

 Operating results impacted

 Early onset of COVID-19 on global freight and transport volumes in February, worsened by start of lock-down in March  High fixed costs and increased fleet running costs  Impact of strategic investment in Khula Sizwe

 EBITDA and invested capital impacted by IFRS 16

36

FINANCIAL PERFORMANCE

Revenue (Rbn) Invested Capital (Rm) EBITDA (Rm) 1H’19 1H’20 2.9 2.1 146 158

• 28%

+8% 1 751 2 008 +15% 1H’19 1H’20 1H’19 1H’20

LOGISTICS

37

OUTLOOK: RECOVERY PROMISING, BUSINESS GEARING UP FOR THE NEW NORMAL

 Industry will continue to be impacted by COVID-19 and related economic effects

 Variations in volumes due to significant changes in demand patterns including boarder/port restrictions  Expiring contracts given short term extensions related to uncertainties in the Market  SARS Import Duty Deferments granted in June

 Gradual improvement in activity levels to support cash generation

Oct Apr May Nov Dec Jan Mar Feb Global Freight Transport Oct Nov Dec Jan Feb Mar Apr May

Prior year Current year

LOGISTICS

38

CONTINUES FIX STRATEGY

Fix-for-purpose operating model and significant rationalisation at Head Office Support levels in 2020/2021 S189, estimated 21% to 25% employee costs reduction Consolidated business unit management whilst strengthening business development High contract renewals for 1 to 5 years coupled with new 2 to 5 year contracts in targeted segments Further invested capital reduction anticipated as we leverage Avis Fleet for vehicle financing and management Austerity measures in place, fixed/variable ratio to reduce in the future Accelerating Digital transformation, including efficiencies stemming from the new operating system in Freight Forwarding Leveraging capability and capacity of divisional shared services and strategic sourcing

FIX STRATEGY

Divisional overview

QUINTON MCGEER CE EQUIPMENT RUSSIA

39

FINANCIAL PERFORMANCE  Revenue up 15% due to robust mining activity, particularly in the gold  Operating profit up 17% driven by revenue growth  Aftermarket business remains active but impacted by the slowdown in the coal sector  Good operating margins but slightly influenced by sales mix  Positive cash flow generated USD2.5 million driven by profitable results and working capital management  ROIC of 15.8% well above the group threshold of 13%

40

STRONG RESULTS

Revenue (Rbn) Operating profit (Rm) Operating margin ((%) 1H’19 1H’20 1H’19 1H’20 1H’19 1H’20 3.3 3.8 315 370 9.5 9.7 +15% +17% +0.2bps

25% 29% 36% 28% 27% 33% 46% 61% 51% 51% 37% 51% 50% 43%

• 100

200 300 400 500 600 700 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H'19 1H'20

Product support Equipment sales OP Margin

3.4% 5.6% 9.6% 9.1% 8.7% 10.5% 11.2% 12.1% 11.0% 10.2% 6.1% Global Financial Crisis Crimea Crisis and Sanctions Sanctions and Retaliatory Duties Oil drops to ~USD30

Revenue mix: product support vs equipment sales

USDm 11.6%

85% 7% 4% 4%

Mining Infrastructure Power Other

1H’20 New equipment revenue (%)

Mining segment remains the main contributor to equipment sales

AFTERMARKET CONTRIBUTION REMAINS HEALTHY

41

9.5% 9.7%

DIVERSIFIED COMMODITY EXPOSURE DEFENDS AGAINST CYCLICALITY

42

35% 29% 8% 4% 8% 16% 1H’19 Revenue (%) 43% 17% 15% 3% 6% 16% 1H’20 Revenue (%)

 Gold Coal  Copper/nickel/aluminium  Diamond  Construction Other

43

Norilsk Mirniy Yakutsk Nerungry Omsk Barnaul Novosibirsk Kemerovo Achinsk Mezhdurechensk Krasnoyarsk Chita Ulan-Ude Irkutsk Magadan Anadyr Petropavloysk- Kamchatskiy Greenfields/Major Projects Firm order (March 2020) YTD March 2020

Polyus Existing Projects

USD56.2m USD36.4m

Norilsk Nickel USD28.6m USD21.0m USD30.7m

Alrosa USD9m USD3.4m Pavlik USD7.3m USD16.2m Udokan USD51.9m USD9.3m NordGold USD3.5m USD2.1 USD10.1m KazMinerals (2023-2025) USD300m Polyus Sukhoi Log USD325m

MINING ACCOUNTS

DIVISIONAL STRATEGY

44

KEY INITIATIVES REMAIN RELEVANT

OVERALL OUTLOOK  Russia remains key market with growth potential, despite geopolitical uncertainties  Current trading trajectory expected to continue, mining sector and commodity outlook remaining stable  Cash preservation remains a key focus area  Tight control on expenses and working capital management  Strong aftermarket revenues contribution expected in H2, supporting overall profitability  ROIC expected to remain above 13% hurdle rate

45

Strong Order book (USD million)

114 84 62

1H'19 FY'19 1H'20

+4%

56

Divisional overview

EMMY LEEKA CE EQUIPMENT SOUTHERN AFRICA

46

FINANCIAL PERFORMANCE

47

OPERATIONAL REVIEW

806 722 1H'19 1H'20 OPERATING PROFIT (Rm)

 Revenue down 11.1% vs. prior year due to tough trading conditions and a once off Mota Engil deal in 1H’19  Operating margin in line with prior year at 8.1% driven by cost reduction measures  Invested capital before IFRS 16 down by 8.5% to R10.9 billion (1H’19: R12.0 billion)  Positive cash generation of R738 million (1H’19: R331 million)

8.0 8.1 1H'19 1H'20 OPERATING MARGIN (%) 1 077 [VALU E] 1H'19 1H'20 EBITDA(Rm)*

• 10.4%

+0.1 bps

• 4,9%

* Rental Fleet Depreciation of R113 million (1H’19 R123 million)

NEW EQUIPMENT SALES BY MARKET SEGMENT

Mining Construction Energy & Transportation

1H’20

49% 12% 24% 15%

1H’19

48

Contract Mining

CONTRACT MINING IMPACTED BY ONCE OFF DEAL IN 1H’19; MINING RESILIENT

Construction includes agriculture & forestry

24% 6% 40% 30%

48 52 43 14 19 24 2 2 9 17 7 8 5 7 8 7 5 5 5 4 2 3 3 2

2019 1H'19 1H'20

Coal Platinum Gold Diamonds Copper Iron Ore Manganese Other

Other refers: Uranium, zinc, Gemstone and mineral sands

Mining machines sales split by commodity (%)

COMMODITY MIX

49

DIVERSE COMMODITY EXPOSURE DEFENDS AGAINST CYCLICALITY

SALES MIX

50

RESILIENT AFTERMARKET CONTRIBUTION TO TOTAL REVENUE

33% 41% 43% 50% 56% 57% 52% 54% 53% 58%

9.4% 8.7% 9.0% 9.0% 8.5% 9.8% 9.1% 9.0% 8.0% 8.1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% R- R5 000 R10 000 R15 000 R20 000 2012 2013 2014 2015 2016 2017 2018 2019 1H'19 1H'20

Sales in R million

Aftermarket Equipment Sales Operating margin

FINANCIAL RETURNS (ROIC%) BY COUNTRY

51

Average invested capital (R million) RSA Namibia Mozambique Zambia Malawi Botswana Angola Southern Africa 1H’19 7 311 419 935 785 85 503 1 659 11 843 1H’20 7 435 365 1 238 845 104 396 1 665 12 118

17.4% 24.0% 19.9% 6.5% 10.0%

• 12.1%
• 3.4%

12.6% 11.8% 25.1% 7.8%

• 3.8%

7.8% 2.4%

• 0.7%

8.6%

RSA Namibia Mozambique Zambia Malawi Botswana Angola Southern Africa 1H'19 1H'20 Hurdle rate

Group hurdle rate 13,0%

RETURNS BELOW HURDLE RATE AS ACTIVITY LEVELS REDUCE

BARTRAC JV  Lower returns due to a significant reduction in activity levels at key customers operations  Weakening global demand on the back of falling commodity prices  Investment delays due to uncertainties  Share of income expected to remain low for the remainder of current financial year

52

DISAPPONTING RESULTS DUE TO LOWER ACTIVITY LEVELS

268 134

• 38

2019 1H'19 1H'20 Associate income from Bartrac (R million)

DIVISIONAL STRATEGY

53

COVID19 HAS SET US BACK: FOCUS ON FIXING THE BUSINESS

Reduce Costs Optimise invested capital Improve performance in regions below our hurdle rate Grow Services revenue Enhance processes and efficiency through Barloworld Business System

MINING PROJECTS OUTLOOK

54

Vale USD15m USD15m

ANGOLA ZAMBIA MOZAMBIQUE NAMIBIA RSA ZIMBABWE BOTSWANA

Assmang USD30m

Seriti

USD60m Mogalakwena USD80m USD23m Greenfields/Major Projects Replacements Boikarabelo USD100m Orapa USD100m Maravi Copper USD17m

FQM

USD20m Tshukudu USD50m Gamsberg II USD67m Glencore USD10m Sasol USD103m Mafube USD23m Imvula USD50m Husab USD23m B2Gold USD12m Tshipi USD30m Kapstevel USD80m

PROJECT DEMAND REMAINS

Swartberg USD23m

OUTLOOK

55

CHALLENGING OUTLOOK FOR REST OF 2020 AND PART OF 2021

MINING CONSTRUCTION  Activity levels expected to improve as lockdown restrictions are eased in many countries  In the medium term, a slowdown in the global economy expected  Reduced activity levels in the DRC to continue  Infrastructure projects significantly impacted and unlikely to turn in the near term  Regional economies forecasting negative growth rates and redirecting public spend to healthcare CONTRACT MINING  Contract Mining operating model expected to remain  CATFin to continue supporting emerging contractors and contract miners GENERAL  Growth in machines market share and services growth remains a priority  Executing on identified austerity measures to minimize the impact of COVID-19  Leveraging BBS to support our strategic priorities

R2 394 million R 2 377 million

Order book 1H’20 1H’19

Strategy update and outlook

GROUP PRESENTATION

56

DOMINIC SEWELA GROUP CEO

STRATEGY UPDATE

57

Equipment southern Africa rightsizing and streamlining Botswana and Angola, improved ROIC Automotive and Logistics business review

Fix and optimise Shareholder active model Growth

Goal: create centres of excellence, provide strategic direction and collaboration for Group strategy delivery Corporate centre measures implemented to reduce costs and streamline functions BBS roll-out: significant improvement in employee engagement and ways

• f working

Opportunities to unlock value and improve efficiencies leveraged 180 Katherine Street precinct redevelopment Goal: value creation balanced against sustainable development framework Acquisition of Mongolia CAT dealership October 2020 Acquisition of Tongaat Hulett Starch October 2020 Due consideration of the current fluid macroeconomic environment

LOOKING AHEAD  Trading environment impacted by the negative short term outlook for recovery and growth

 Business confidence in some regions down significantly and average consumer expected to remain under pressure

 A strong balance sheet and mature business platforms are key strengths to navigate current challenges  Key focus areas

 cash preservation, lowering operating costs and ensuring business well positioned for recovery  strategic path to improve efficiencies and performance  assessment of long-term business fundamentals in ongoing portfolio review  accelerate customer solutions in the current environment

58

Thank you

GROUP PRESENTATION

BARLOWORLD INVESTOR RELATIONS TEL: +27 11 445 1000 E-MAIL: BAWIR@BARLOWORLD.COM

Supplementary Information

60

ANNEXURE 3.1: FOCUS AREAS GOING FORWARD MARCH 2020

61

METRICS FOCUSED ON RETURNS STRATEGY IMPLEMENTATION (EXCL IFRS 16) STRATEGY IMPLEMENTATION (INCL. IFRS 16) MANAGING FOR VALUE TARGETS (EXCL. IFRS 16)

HEPS* 354 cents 268 cents GEARING** 24% 35% 40 – 60% ROIC* 9.5% 9.6% >13% EP* (R1 018m) (R1 134m) Positive delta FCF* (R1 270m) (R1 443m) Cash conversion >50% EBITDA

* Group. ** Net debt:equity. Definitions ROIC: Return on Invested Capital EP: Economic Profit FCF: Free Cash Flow

ANNEXURE 3.2: IMPACT OF CURRENCY

62

(EXCLUDING THE FAIR VALUE IMPACT OF THE USD CASH HELD IN THE UK)

Closing rate Average rate Rand Mar 2020 Mar 2019 Mar 2020 Mar 2019

Exchange rates United States Dollar 17.86 14.42 15.10 14.10 British Sterling 22.15 18.79 19.50 18.28

R million Increase/ (decrease) in revenue Increase/ (decrease) in

• perating profit

Headline earnings improvement/ (decline) due to exchange rates

Equipment southern Africa 148 9

• 15

Equipment Russia 251 27 9 Automotive 17 2 1 Handling Logistics 1 Corporate Office

• 3

24 Total Group 416 35 20

ANNEXURE 3.3 IFRS 16 IMPACT ON NUMBERS

63

31 March 2020 Rm Right of use asset 1 769 Lease liability 2 345 Cash (utilised in)/generated from operations (175) Net cash (used in)/from financing activities 175 Depreciation 201 Operating profit 93 Finance costs 137 Profit before tax 44 Tax 14 Profit after tax 58

ANNEXURE 3.4: SEGMENTAL IMPACT OF IFRS 16 AND KHULA SIZWE RENTALS

64

Rm Group Equipment Southern Africa Equipment Russia Motor Trading Car Rental Logistics Corporate Khula Sizwe

Operating result before B-BBEE charges 1 245 736 370 99 203 (16) (224) 77 Impact of IFRS 16 – excluding Khula Sizwe 123 61 6 45 18 110 (37) (79) Impact of Khula Sizwe 78 41 29 6 2 IAS 17 lease expense (294) (116) (8) (168) (41) (161) 15 184 Operating result before B-BBEE charges and IFRS 16 1 152 722 369 5 185 (65) (246) 183

Proforma Avis Fleet as a continuing operation Rm Avis Fleet

Operating result before B-BBEE charges 683 IFRS 5 impairment reversal (413) Impact of IFRS 16 – excluding Khula Sizwe 2 Impact of Khula Sizwe IAS 17 lease expense (4) Operating result before B-BBEE charges and IFRS 16 268

ANNEXURE 3.5 INVESTMENT IN WORKING CAPITAL MARCH 2020

65

CASH INVESTED IN WORKING CAPITAL ACROSS ALL BUSINESSES WITH THE EXCEPTION OF EQUIPMENT SOUTHERN AFRICA

Rm

Mar 2020 Sep 2019

Working capital Inventories – movement (339) 686 Receivables – movement (251) 244 Payables – movement (1 780) (165) Total working capital – (increase)/decrease (2 370) 765

Rm

Mar 2020 Sep 2019

Segmental Equipment southern Africa 246 733 Equipment Russia (251) (7) Automotive (1 222) 501 Logistics (72) (129) Other (1 071) (333) Total working capital – (increase)/decrease (2 370) 765 Days

Mar 2020 Sep 2019

Working capital days 53 23

ANNEXURE 3.6 DEBT MATURITY PROFILE

 Ratio of long-term to short-term debt 62:38  R950 million bonds issued in May 2020  R16.3 billion (committed R13.5 billion) unutilised bank facilities at 1H’20  Cash and cash equivalents R4.6 billion (1H’19 – R6 billion)  Moody's downgraded Barloworld to Ba1 from Baa3 in line with the South African sovereign downgrade

66

BALANCE FUNDING PORTFOLIO AND STRONG BORROWING CAPACITY

3 970 1 005 2 699 715 89 121 1 164 38% 11% 29% 8% 1% 1% 12% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

• 500

1 000 1 500 2 000 2 500 3 000 3 500 4 000

FY20 FY21 FY22 FY23 FY24 FY25 FY26 onwards

MATURITY PROFILE OF DEBT ON BALANCE SHEET

Debt Repayment

Rm

18 82 RATE (%) 506 8 909 CURRENCY (Rm)  Fixed  Variable

RATE (%)

 South Africa  Offshore

CURRENCY (Rm)

ANNEXURE 3.7 B-BBEE ‘KHULA SIZWE’ TRANSACTION CHARGE

67

IFRS 2 and Implementation Charges 31 March 2020 Rm Total Barloworld Group Barloworld

• perating

segments Khula Sizwe segment IFRS 2 Management trust* 19 11 8 Employee trust** 55 43 12 Black public*** 45 – 45 Total IFRS 2 charge 119 54 65 Implementation charge 13 13 Total B-BBEE transaction charge 132 67 65

*Incurred over 5 years **incurred over 2 years ***once-off charge

ANNEXURE 3.8: EXPLAINING NET DEBT

68

AVIS FLEET: GROUP VS EXTERNAL FUNDING

R million 1H’19 Balance sheet as disclosed Avis Fleet (held for sale) 2019 Balance sheet including held for sale 2019 Balance sheet including held for sale Cash 4 578 71 4 649 7 303 Gross debt 9 235 529 9 764 8 369 Net debt 4 657 458 5 115 1 066

REGIONAL UPDATE

69

RSA

 Mining remains resilient with some reduction in commodity prices offset by weaker rand  Construction sector unlikely to recover in the near term

MOZAMBIQUE

 LNG project secures funding but project activity impacted by COVID-19  Coal mining operations not running at full capacity due to COVID-19

DRC

 New mining code continues to negatively impact the industry  Lower production volumes

ZAMBIA

 Recent rally in copper price positive but unclear if this is sustainable  Changes in the mining regulatory environment

ANGOLA

 Lower Oil prices resulting in lower activity  Low diamond prices also negatively impacting mining activity  Currency devaluation continues to impact economic growth

BOTSWANA

 Weak diamond prices and sharp decline in sales impacting mining activity

NAMIBIA

 Strong gold prices to support mining activity  Country likely to end 2020 with a 4th consecutive year of recession  Planned investment in power generation and transmission expected to boost construction

MALAWI

 Construction market remains subdued  Political uncertainty ahead

• f new presidential elections

ZIMBABWE

 New policy regulation to protect foreign and local investors  Hyperinflation fueled by weak exchange rate and lack of liquidity

MYRIAD OF CHALLENGES AND OPPORTUNITIES ACROSS OUR TERRITORIES