Interim Results for the six months ended 31 March 2021 - Sustainable growth through transformation - Barloworld
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Sustainable growth through transformation Interim Results for the six months ended 31 March 2021 24 May 2021
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 interims refer to the six months ended 31 March 2021.
Comprehensive additional information is available on our website: www.barloworld.com
2
Presentation overview
Group highlights Dominic Sewela, Group CEO
Financial overview Nopasika Lila, Group FD
Industrial equipment and services
Equipment southern Africa Emmy Leeka, CE
Equipment Eurasia Quinton McGeer, CE
Consumer industries
Ingrain Garth Macpherson, MD
Car rental and Leasing
Avis Budget Rental & Avis Fleet Ramasela Ganda, CE
Discontinued operations
Motor Retail and Logistics Kamogelo Mmutlana, CE
Strategy update and outlook Dominic Sewela
Questions and answers
Thank you
3
Group highlights Dominic Sewela Group CEO
Creating value responsibly and sustainably
ESG excellence underpins group strategic actions
Recognized for our
efforts towards
We adopt a people centered approach in doing business, primarily ESG excellence
focused on the safety and well being of our employees.
People
We take seriously the impact of our business on our society and
deliberately seek to make a positive, long-lasting difference in the
communities in which we operate.
Communities
We understand the adverse effect of climate change as well as water
shortages and take meaningful actions to responsibly reduce our
environmental footprint.
Environment
We are governed by the highest standards and are overseen by an
independent, adequately capacitated and active board of directors.
Governance
5
Leadership driven focus towards ZERO HARM
Strategic initiatives contributed to a safer workplace
97% • Ongoing strategy deployment initiative focused on safety
30% 100% Target: FY21: 100% (also rolled out to acquired businesses) with SMART targets.
Reduction in Operational excellence Global leaders contracted • Inclusion of safety metrics in executive scorecards
LTIFR from improvement events and committed to operational to enhance accountability.
continuing ops with safety visibility performing safety
from 1H20* enhancements focused site walks
• Active COVID-19 management and support.
Lost-time Injury Frequency Rate (LTIFR) Work-related Fatalities
Group Continuing (Excluding Ingrain) Continuing Operations
Group Including Ingrain and Discontinued Ops Discontinued Operations
Number of work-related
0.99
fatalities
0.77
0.77
0.75
2
0.69
3
0.65
0.57
0.55
0.55
0.53
0.51
2
0.44
0.40
LTIFR
0.38
1 1
0.29
0.31
1
FY15 FY16 FY17 FY18 FY19 FY20 1H20 1H21 FY15 FY16 FY17 FY18 FY19 FY20 1H20 1H21
for our people, communities & environment
6 * Restated for continuing operations (Motor Retail and Logistics disclosed as discontinued operations and not included in the consolidated figures)
Fostering environmentally responsible operations
Exceeded environmental targets against baseline for continuing operations*
Carbon Water Energy
Emissions Withdrawals Efficiency
Scope 1 and 2 FY20/FY15: FY20/FY15: FY20/FY15:
40% improvement 18% improvement 41% improvement
80,000 2.5 500 14 700,000 25
2.1 12.7
450
70,000 11.4 12 600,000
1.9 2.0 400 19.3 20
60,000 17.4
10.4 10 500,000
350
50,000
1.5 300 15
1.3 8 400,000
40,000 250
6 300,000 11.3
1.0 200 10
30,000
150 4 200,000
20,000
0.5 100 5
2 100,000
10,000
50
0 0.0 0 0 0 0
FY15 FY16 FY17 FY18 FY19 FY20 1H21 FY15 FY16 FY17 FY18 FY19 FY20 1H21 FY15 FY16 FY17 FY18 FY19 FY20 1H21
Consumption
Withdrawal
Intensity
Intensity
Intensity
Emissions
Actual Emissions (tCO2e) Actual Water Withdrawals (ML) Actual non-renewable energy (GJ)
Actual Intensity (tCO2e/R'M revenue) Actual Intensity (KL/R'M revenue) Actual Intensity (GJ/R'M revenue) - Continuing excluding Ingrain
Intensity Target: 10% improvement by FY20 Intensity Target: 10% improvement by FY20
7 Intensity Target: 10% improvement by FY20
*Excludes Ingrain in 1H21
Financial Performance Overview
Highlights from continuing operations
Revenue Cost Savings^* Strong EBITDA HEPS
20.2bn 1.2bn 3.1bn 405cps
(1H20: 17.9bn) (FY20: 691mn) (1H20: 2.7bn) (1H20: 111cps)
Special Dividend*
EBITDA/FCF Solid net debt
conversion 200cps position* Motor retail**
substantive
121% Interim Dividend* 4.9bn conditions met
(FY’20: 2.6bn)
(1H20: 88%)
137cps
8 ^Further savings: austerity measures taken in 2020. Incl s189
*Total group including discontinued operations
**Discontinued operation
Financial overview Nopasika Lila Group Finance Director
Transactions impacting the Financial Statements
Key transactions impacting this period versus the prior period
Income statement Statement of financial position
1H21 1H20 1H21 1H20
Restated Assets and
Restated as a Assets and liabilities
Continuing operation liabilities consolidated
continued operation consolidated in group
in group
Restated as
Discontinued Assets and liabilities Assets and liabilities
discontinued
operations held for sale consolidated in group
operations
• The inclusion of Equipment Mongolia for the 6 months
• The inclusion of Ingrain for 5 months beginning 1 November 2020
10 The income statement and Statement of financial position for 1H20 and 1H21 are all inclusive of IFRS 16Statement of Comprehensive Income
Resilient operational performance
1H20
1H21 Unreviewed
Rmn Reviewed and restated Change % Group Revenue
(Incl
Revenue 20 209 17 900 13% discontinued operations)
EBITDA 3 145 2 659 18%
Depreciation and amortisation of intangibles (1 164) (1 207) (4%) R28.6bn*
Operating profit before B-BBEE transaction 1 981 1 452 37%
B-BBEE transaction charge (46) (109) (58%)
Operating profit 1 935 1 343 44%
Fair value adjustment on financial instruments (113) (88) 28%
Net finance cost and dividends received (434) (432) 0.5% Operating profit
Profit before non-operating capital items 1 388 823 69% R1.9bn
Non-operating and capital items 39 (1 741) (>100%) 44% up
Profit /(Loss) before taxation 1 427 (919) (>100%)
Taxation (540) (469) 15%
Profit/(Loss) after taxation 887 (1 388) (> 100%) Net finance costs in line with
Loss from Associates and JVs (55) (61) (10%) prior year despite cost of funding
Profit/(Loss) – Continuing operations 832 (1 449) (>100%) Ingrain purchase of R5.3bn
Loss from discontinued operations (98) (88) 11%
Profit from Motor Retail 125 5 Logistics and the Motor Retail
Loss from Logistics (223) (93) division are discontinued
Profit /(Loss) for the period 734 (1 537) (>100%) operations
11 Group revenue includes revenue from continuing and discontinued operationsRevenue Segmental
Our acquisitions contribute to revenue growth
1H20
1H21 Unreviewed and
Rmn Reviewed restated Change %
Revenue 20 209 17 900 13%
7 1
13
44 Revenue (Rbn)
1H21
10 (%) n Equipment southern Africa 1H20 1H21
n Equipment Eurasia
25 n Ingrain
n Car Rental
9 2
n Leasing
20.2
17.9
n Other
18
8.9 8.8
1H20 50 5.1 2.0 1.7
(%) 3.8 3.2 2.6 1.4 0.3 0.3
Equipment Equipment Ingrain Car rental Leasing Other Total Group
southern Africa Eurasia
21
12 The other segment includes Corporate, Digital Disposal Solutions (including SMD), Khula Sizwe and HandlingOperating Profit Segmental
Realising benefits from austerity measures
1H20
1H21 Unreviewed and
Rmn Reviewed restated Change %
Operating profit 1 935 1 343 44%
12
5
43 Operating Profit (Rmn)
14 1H21
(%) n Equipment southern Africa 1H20 1H21
n Equipment Eurasia
26 n Ingrain
n Car Rental
17 n Leasing 1,935
1,343
*Pie graph is exclusive
of the other segment 893
12 47 722
1H20 559
370 305 270 264
(%) 194 114 (213) (200)
Equipment Equipment Ingrain Car rental Leasing Other Total Group
southern Africa Eurasia
24
13 The other segment includes Corporate, Digital Disposal Solutions (including SMD), Khula Sizwe and HandlingNet Finance Costs from continuing operations
Net finance costs well managed
1H20
1H21 Unreviewed and
Rmn Reviewed restated Change %
Net finance cost and dividends received before Ingrain (345) (432) (20)%
Ingrain finance cost (89) - -
Net finance cost and dividends received including Ingrain (434) (432) 0.5%
Net finance costs were in line with the prior year driven
by the reduced debt levels in the divisions on the back
of the defleeting of rental assets and lower interest rates in
South Africa. The above is despite the cost of funding of the
Ingrain purchase price of R5.3bn.
Finance cost for
Ingrain Acquisition
R89m
14HEPS and normalised HEPS analysis
Improved earnings from operations
cents
600
550 +74 -36
+5 -95 Continued
500 Operations
+185 -26 +33 +23 448
450 +20 HEPS
405
400 405 cents
(2020: 111 cents)
350
300 +155
250
200
150 111
Group (incl
100 discontinued
50 operations)
HEPS
-
HEPS Ingrain BWE snA DRC and Equipment Equipment Car Rental Leasing Other HEPS IFRS 2 BEE IFRS 16 Normalised
Continued
ops - March
excl
associates
other
associates
Russia Mongolia segments continued and other
operations BEE
impact HEPS
Continued
367 cents
2020 charges ops - March (2020: 70 cents)
2021
15 Continuing operationsGroup Statement of Financial Position 31 March 2021
Balance sheet remains strong; good working capital management
1H20
Un
Reviewed
1H21 and FY20
Rmn Reviewed restated audited Commentary
31 March 2021 impact: The acquisition of Ingrain resulted in an increase in total assets of
R6bn and increase in liabilities (excluding debt) of 0.6bn.
The decision to hold Motor Retail and Logistics as held for sale impacted most items with
assets held for sale of R5.8bn and liabilities held for sale of R4.4bn.
Below explanations are in addition to the above.
Non-current assets 21 294 19 678 20 470 R4.8bn increase as a result of the Ingrain acquisition (PPE, Goodwill and intangibles).
Reduction in inventory in Equipment offset by increased cash reserves from R6.7bn to
Current assets 25 238 27 673 27 379 R8.1bn and increased vehicle fleet levels from September due to low base.
Assets classified as held Motor Retail and Logistics businesses disclosed as discontinued operations and assets
5 826 218 29 held for sale.
for sale
Total assets 52 358 47 569 47 878
Equity 20 120 21 537 19 750
Net increase in long term borrowings of R1.5bn for the period offset by a significant
Non-current liabilities 9 862 9 990 11 251 reduction in the UK pension fund liability to R0.6bn from R1.9bn in September.
Current liabilities 17 919 15 958 16 877 Short term borrowings increased by R2.9bn from funding of the Ingrain acquisition.
Liabilities classified as held Motor Retail and Logistics businesses disclosed as discontinued operations and liabilities
4 457 84 0 held for sale.
for sale
Total equity and liabilities 52 358 47 569 47 878
16Group Cash flow
Exceptional free cash flow generation of R4.0 billion before Ingrain acquisition in tough trading conditions
Rmn
4 500
-1,282
+2,454
-1,045
2 500
+242 -973 -5,282
+3,603
500
-1 500
-2 652
-3 500 Free cash flow R4bn
-4 935
-5 500
Opening Net debt Operating cashflows Working Capital Investment in fleet Net Finance costs Investing activity Share based Ingrain acquistion Closing net debt incl
before WC and vehicle assets and tax paid payments, lease pmts HFS
and translation
17Group Covenants as at 31 March 2021 – excluding IFRS 16
Remain well within our covenants
Covenants excl. IFRS 16: Net debt/ EBITDA shall be less than 3 times
Rmn times
6 000 1.0
0.9x
0.9
5 000
0.8
0.7
4 000 0.6x
0.6
3 000 0.5
0.4
4 935
2 000
0.3
2 652
0.2
1 000
0.1
- 0.0
FY20 Mar 21
Net debt
Reported March 2021: 0.9xNet Debt/ EBITDA
(September 2020: 0.6x)
18Group Covenants as at 31 March 2021 – excluding IFRS 16
Remain well within our covenants
Covenants Excl. IFRS 16: EBITDA/gross Interest shall be greater than 3 times
Rmn times
5 300 8.0
6.9x
5 200 7.0
6.0
5 100
4.7x 5.0
5 000
5 209 4.0
4 900
3.0
4 800
2.0
4 700 4 830
1.0
4 600 0.0
FY20 Mar 21
Reported EBITDA EBITDA/gross
March 2021: 6.9x (Septemberinterest
2020: 4.7x)
19Returns at 31 March 2021
Tracking well against targets
Managing for
Metrics focused on returns 1H21 1H20 FY20 value targets
ROE 0.9% 7.7% (1.5%) >15%
Normalised HEPS* 448 cents 180 cents 70 cents
Net gearing 35.6 35.3 25.2 40 – 60%
ROIC 3.8% 7.8% 1% >13%
EP (R3 147m) (R1 541m) (R3 037m) Positive delta
FCF R3 972m (R1 336m) R3 327m Positive
Cash conversion
FCF – YTD conversion
114% (23%) 70% >50% EBITDA
Definitions:
ROE: Return on Equity (rolling 12 months) FCF: Free Cash Flow - Excluding acquisitions and disposals
ROIC: Return on Invested Capital (rolling 12 months) FCF: Conversion – FCF / EBITDA
EP: Economic Profit
20 Normalised headline earnings from continuing operations is adjusted for the B-BBEE charges; impact of IFRS 16 and the USD denominated cash in the UK in September 2020 onlyResumption of dividend
Dividend policy : 2.5x – 3x normalised headline earnings from continuing operations
Cents per share Gross amount Withholding tax Net amount
Ordinary interim dividend 137 20% 109.60
Special dividend 200 20% 160.00
• No dividends declared in prior year – however, special
divided and share buyback were implemented
• Shares in issue at 31 March 2021 ~201.0 million - all of
them qualifying for a dividend (including 3.2 million
Treasury shares held for FSP).
• Board has declared ordinary dividend of 137 cps -
achieving a 3x cover
• Group will fund the special dividend from the proceeds
from the sale of Motor Retail
21Subsequent Events
No material changes post 31 March 2021
• The Motor Retail proposed disposal is subject to the fulfilment or waiver of a number of conditions
precedent and so far these are progressing as planned and with the Competition Tribunal approval,
the sale is expected to take place as planned in June 2021.
• The Logistics disposal process has commenced with a broad set of interested parties. Non-binding
proposals from the interested parties to acquire the Logistics business is anticipated in May 2021.
Following the receipt of the non-biding proposals, it is anticipated that a select set of parties shall be
permitted to conduct a detailed due diligence of the Logistics business prior to the selection of a
preferred bidder and the negotiation of appropriate transaction agreements to give effect to the
proposed disposal of Logistics.
• The impact of COVID-19 has been considered up to 31 March 2021. Subsequent to the interim
reporting there have been no significant changes in the COVID-19 restrictions impacting our
businesses and thus no subsequent events related to the COVID-19 crisis have occurred.
22Industrial equipment and services
Equipment southern Africa Emmy Leeka Chief Executive
Business Overview
Strong first half
Revenue down 1.8% mainly driven by a decline in machine sales.
Operating profit margin at 10.2% (2020: 8.1%) supported by cost reduction of 22.1%.
Invested capital significantly reduced by 33.3% to R8.19bn (2020: R12.28bn).
Strong free cash flow generation of R1.02bn (2020: R0.74bn).
Bartrac JV remained under pressure.
Efforts to fix the business yielding results.
Revenue (Rbn) EBITDA (Rbn)
Operating Margin (%)
-1.8% +15.7% +2.1 pp
+2.1 pp
1.18 10.2
8.92 8.76 1.02 8.1
1H20 1H21 1H20 1H21 1H20 1H21
25New equipment sales by segment
Lower mining sales offset by improvements in other sectors
New Equipment Sales (Rmn) New Equipment Sales Mix
-14.0%
2 945 1H20 1H21
E&T 353
2 532
206 15% 19%
707
Construction 24%
748
30%
442
Contract Mining
493
12%
43%
Mining 49%
8%
1 443
1 085
1H20 1H21
26 Note: Segmentation by customer segment and not machine typeSales mix
Strong aftermarket contribution improves operating profit margin
Sales in Rmn Operating Profit Margin (%)
10.2%
12%
20,000
9.4%
9.1%
9.0%
9.0%
9.0%
8.7%
8.5%
10%
8.1%
6.8%
9.8%
15,000
8%
6%
10,000
54%
57%
56%
4%
52%
50%
55%
5,000
43%
41%
2%
33%
58%
59%
0 0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 1H20 1H21
Aftermarket Equipment Sales Operating profit margin
27Financial returns by country
Optimisation of invested capital continues
Average Invested Capital (Rmn)
Southern
RSA Namibia Botswana Mozambique Zambia Angola Malawi Africa
1H20 7 435 365 396 1 238 845 1 665 104 12 118
1H21 6 641 271 164 1 147 679 1 155 71 10 235
11.8%
9.3%
25.1%
29.3% Group hurdle rate 13.0%
8.6%
7.8%
7.8%
6.5%
4.0%
28.6%
2.4%
-0.7%
-0.8%
-3.8%
-7.4%
-29.3%
1H20 1H21 Hurdle rate
28 Note: The reduced return on invested capital is due to rolling 12 months NOPAT to March.Bartrac JV
Negative returns due to lower activity levels
Democratic Republic of Congo Associate Income from Bartrac (Rmn)
Operations impacted as key customer
is still under care and maintenance.
-41 -38
1H21 impacted by write-off of non
operating capital items, change in
-104 amortisation methods and
restructuring provision.
Turnaround being executed with full
Katanga impact expected in 2022.
Income from Bartrac expected to
FY20 1H20 1H21 remain under pressure.
29Divisional strategy
Significant progress in fixing our business
Fix
Focus on Cost Improve Regional
services growth reduction performance
Improved parts Gross expenses Strong returns for
contribution to overall mix reduced by 22.1% Namibia and Botswana
Population Optimise Improve execution through
Growth Invested Capital Barloworld Business System
Market share flat Invested Capital reduced by Improving returns
in declining market R4.08bn and customer service
30Outlook
Cautiously optimistic outlook for the rest of 2021
Order Book
(Rmn)
2 541
2 394
Mining Construction & Power General 197
370
Power
Positive outlook for mining Construction industry likely Turnaround plan to continue
supported by robust to remain subdued in the delivering results 507
commodity prices. near term. supported by BBS. Construction 887
Strong free cash flow 660
Contract Mining 193
Increasing interest from LNG projects in Rovuma conversion to be sustained.
2 298
Asian miners in southern region on hold due to
African assets. escalating attacks. Return on invested capital Mining 1,117
expected to improve. 1,004
Increasing demand for Continued focus on
renewable energy / off grid services growth while 1H20 1H21
energy solutions. leveraging omni-channels.
31Equipment Eurasia Quinton McGeer Chief Executive Eurasia
Financial performance
Strong results and good progress with integrating Mongolia
Results include full half year of the new acquisition in Mongolia – pleasing start.
Revenue up 33% due to acquisition of Mongolia business supported by robust mining activity across both countries, particularly in gold and
other metals, with Russia contributing 73% of total revenue.
EBITDA up 53% driven by a combination of revenue growth, improved margins and reduced operating expenses with Russia generating
71% of total operating profit.
Aftermarket business remains active but was impacted by the slowdown in the coal sector.
Margin realisations were good across the segments and similar in both countries.
Positive cash flow generated USD116mn driven by profitable results and good working capital management.
Eurasia achieved a ROIC of 14.3% and continue to be well above the group threshold of 13%, with Russia at 18.3% (prior year – 15.8%).
Revenue (Rbn) EBITDA (Rmn) Operating margin (%)
+33% +53% 1.3%
R 5.1bn R698mn
1.4 204
11.0
3.8 9.7
3.7 457 494
1H20 1H21 1H20 1H21 1H20 1H21
33Aftermarket contribution remains healthy
1H21 New equipment revenue Revenue mix: product support vs equipment sales
(%) (USDmn)
700
Product support Equipment sales OP Margin
7% Oil drops
Sanctions
3% and
600 to ~USD30
Retaliatory
8%
Duties
Crimea COVID-19
Crisis and
500
Sanctions
Global
Financial
Crisis
400
10.2%
11.6%
12.1%
11.0%
11.0%
8.7%
300
9.6%
9.1%
82%
11.2%
61% 10.5%
49%
37%
51%
5.6%
200
9.6%
51%
51%
46%
33%
Mining Infrastructure Power Other
36% 3.4%
44%
27%
29% 6.1%
100
28%
43%
Mining segment remains the main
contributor to equipment sales
-
in both countries 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1H20 1H21
34Diversified commodity exposure defends against cyclicality
Revenue (%)
Russia 1H21
18%
3%
49%
11% Eurasia 1H21
Russia 1H20
10% n Gold
16% 15%
9% n Coal
2%
3%
8% n Copper/nickel/aluminium
6% 43% 44%
Mongolia 1H21 n Construction
11%
15% 0% n Diamond
0%9%
19% n Other
17% 31%
14%
46% 76%+ Coking Coal
35Mining accounts
KazMinerals (2023-2025)
Pavlik
USD200mn USD7mn
USD6mn USD7mn USD1mn
Polyus Alrosa
USD37mn USD62mn USD61mn USD23mn USD14mn USD 2mn
Polyus Sukhoi Log
Norilsk Nickel
USD385mn
USD9mn USD10mn USD11mn
BGK (Udokan)
Coal Customers USD120mn
USD27mn USD16mn USD6mn
BODI (ETT)
USD2mn
Aspire
USD80mn
MAK OT Khan Altai/TT/AK
USD150mn USD15mn USD4mn USD19mn USD1mn USD1mn USD20mn USD9mn USD25mn
Greenfields / Brownfields / Major Projects Firm order YTD March 2021
36Divisional strategy
Key initiatives remain relevant
Double services Win Develop online
By 2026 greenfields platform
Grow CI Improve salvage Improve digital
market share capabilities platforms
Focus on Focus on Improve talent
ROIC safety management
37Outlook
Integrating Mongolia, capitalising on mining
Strong Order book (USDmn) opportunities, and optimising best practice in
Eurasia region.
1H21 177 42
Firm order book as at March 31 at record levels supported
by diversified commodity mix (63% gold and 12% coal).
Current trading trajectory expected to continue with potential
upside in coal segment.
2020 105 Tight control on expenses and working capital management.
Aftermarket contribution for the first half of the financial year
remained healthy, supporting overall profitability with further
upside potential in coal segment.
1H20 62
Focus on capturing new Greenfields and Brownfields to
expand the volume of aftermarket business.
ROIC expected to remain well above 13% hurdle rate.
USD42mn firm orders
signed after close
38Consumer industries
Ingrain Garth Macpherson Managing Director
Financial performance
Resilient performance producing strong results
• Revenue growth of 16% compared to the period to March 2020.
• EBITDA up 43% (2021: R400mn; 2020: R279mn) driven by growth in sales volumes, improved margins and operating efficiencies.
• Margins supported by higher international starch and glucose prices and competitive South African maize prices relative to international prices.
• Margins also benefited from improved sales mix and ongoing operational improvements and cost disciplines.
• Operating profit margins increased to15,9% with operating profit at R306mn (2020: R226mn).
• Strong cash generation on the back of improved operating results and lower working capital requirements.
Revenue (Rmn) EBITDA (Rmn) Operating Margin (%)
16% 43% 21%
1 956 15,9
400
279
13,1
1 686
2020 2021 2020 2021 2020 2021
41Revenue
Split between Domestic, Export and Co-products
1H20 Revenue (%) 1H21 Revenue (%)
Domestic sales volumes comprise
starch and glucose sales (prime
18% 20% products) to the South African
market.
11%
R1 686mn 11% R1 956mn Exports comprise of sales to
markets which include regional
Sub-Saharan Africa, Far East and
Australia.
71% 69%
Co-products sales include sales to
n Domestic the animal feed, edible oils and
n Export protein markets.
n Co-products
42Domestic Sales Volumes by Sector
Continuing to benefit from diverse customer base
2019/20 2020/21 % Growth Outlook
Year to Date 2021 vs 2020 Domestic sales
Actual Actual Apr - Sep 21
volumes were
Alcoholic Beverages 71 989 74 048 2.9% 80 873 3.5% ahead of
period to March
2020
Operation
Coffee Creamers 31 847 37 969 19.2% 51 089 continues to
benefit from
Confectionery 26 011 24 092 -7.4% 34 919 diverse
customer
Strong growth segments
Paper 24 894 23 790 -4.4% 29 403 in coffee creamer,
canning, prepared
foods and paper
Prepared Foods 5 575 6 011 7.8% 9 084 converting
sectors Alcoholic
beverages
Other 17 896 18 536 3.6% 25 216 sector has been
resilient in the
Total 178 212 184 446 3.5% 230 584 face of various
Key focus bans on sales of
areas: Sales alcohol
growth of 8,4%
achieved in powdered
glucose and 16,8%
in modified
starches
43 Outlook period is for 6 trading months with actuals representing 5 monthsMaize outlook – South African Maize History
Forecast large local maize crop expected to continue to support margins
2021/22
Third production
Maize Season 2014/15 2015/16 2016/17 2017/18 2019/20 2020/21 estimate
Hectares planted (000 hectares) 2 653 1 947 2 629 2 319 2 301 2,612 2 755
Yield (tons/hectare) 3.75 3.87 6.37 5.39 4.89 5.86 5.84
Production (000 tons) 9 955 7 537 16 820 12 510 11 275 15 300 16 096
Imports (000 tons) 1 651 2 700 - - 525 463 -
Carry in stock (000 tons) 2 074 2 471 1 095 3 689 2 663 1 001 2 118
Total usage incl. Exports (000 tons) 11 209 11 613 14 226 13 536 13 462 14 646 14 646
Stock to Use Ratio 23.3% 10.2% 31.0% 23.6% 8.2% 17.9% 30.1%
Outlook for maize/corn International starch and glucose prices
• Global demand for corn remains high with increased demand ex China. • Higher international corn prices driving increases in starch and glucose prices.
• Weather concerns and planting delays in United States and other key • Cassava root shortages in Thailand continue to support cassava starch prices.
production markets impacting prices.
• Disruptions to global supply chains resulting in significant freight increases
• International prices remain at highest levels since 2013. and continue to impact starch and glucose pricing.
• Large South African maize crop ensuring local maize prices more competitive. • Escalating oil prices impacting supply and demand dynamics in agricultural
markets.
44Divisional strategy
Accelerating Market Development and Operational Focus Areas
Increased sales of powdered
Continuing improvements in glucose following resolution
Ongoing focus and investment sales mix and growth in import of prior period production
in capacity optimisation. replacement programme. constraints.
Expanding regional market Enhanced execution of
Increasing sales of modified presence and review market operational excellence through
starches following completion opportunities as new trade the implementation of the
of capital investments Q3 2020. regimes develop. Barloworld Business System.
45Outlook
Volume growth and continued favourable margin environment support earnings growth over prior year
Ingrain’s diverse customer base expected to continue to provide support to sales in the
domestic market.
Sales volumes for the remainder of the financial year expected to benefit from reduced restrictions
on economic activity that impacted the early part of the prior year.
Initial investments in plants, commissioned in the latter part of 2020, expected to contribute
to increases in sales of powdered glucose and modified starches.
Above should provide some cushion from the uncertain macro-economic outlook, with the possibility
being present of a third wave of Covid-19 infections and further associated lockdowns.
Current high international agricultural commodity prices and competitive South African maize prices
expected to continue to support margins going forward.
46Automotive
Car rental and leasing Ramasela Ganda Chief Executive
Car rental
Financial performance
Operational performance:
• The business traded at 83% of 1H20 levels, despite severely subdued international, corporate and public travel.
• Management’s focus on repositioning the business towards off-airport business by expanding into mobility subscription offerings yielded positive
results.
• Market for one-year-old vehicles continued to demonstrate buoyance, yielding good returns.
• Utilisation improved by 1.6bps.
Business achieved a reduction of 38% in operating expenses resulting from the restructure.
Strong cash generation as a result of the operating model agility to defleet in line with the rental market activity, and strategic channel selection.
Management continue to focus on decreasing damage expenses and maintaining the lower cost base.
Revenue (Rbn) Operating profit (Rmn) Cash flow (Rmn)
-17% -41.6%
481
194 101
114
3.2 (336) (664)
2.6
1.9
1H20 2H20 1H21 1H20 2H20 1H21 1H20 2H20 1H21
49Leasing: Avis fleet
Financial performance
Revenue:
• Down on prior year impacted by lower leasing revenue as a result of large contract lead out.
• Used vehicle revenue and margins positively impacted by the integrated model with Avis Car Sales network.
• Corporate customer contracts have been well retained.
• Management’s focus on diversifying the portfolio and capabilities into medium and heavy commercial fleets is yielding good results.
Operating margin benefited from lower operating cost structure.
Increased estimated credit losses.
Revenue (Rbn) Operating profit (Rmn) Cash flow (Rmn)
-16% -2%
831
1.7 1.4 270 264
1.3
176 310 264
1H20 2H20 1H21 1H20
1 2H20
2 1H21
3 1H20
1 2H20
2 1H21
3
50Integrated Car Rental and Leasing
Outlook and strategic focus areas
Operation Disciplined focus Technology
• International business is still • Sustain the reduced fixed-cost • Continue to develop and
expected to be subdued base to ensure an agile deploy the new generation
depending largely on the organization. fleet management system.
roll-out of the vaccine. • Cash generation. • Integrate systems and digitise
• The Used Car Market is still • Grow Commercial leasing processes.
expected to be strong on the business.
back of shortage of new cars
and expected high prices.
• Providing quality services and
not just prices will continue to
be a driving force for rental
and leasing business.
51Discontinued operations
Motor Retail and Logistics Kamogelo Mmutlana Chief Executive
Motor retail
Financial performance
Revenue marginally down 2.9%, impacted by:
• New vehicle dealer market down 3.8%, represented brands down 6.0%.
• Despite decline across all segments on prior year, improved results shown since 2H20.
Strong used vehicle contribution.
Improved operating margin 2.2% (1H20: 0.9%) driven by:
• Improved selling gross margins across segments.
• reduction in cost base of R100mn due to austerity measures implemented during 2H20.
Revenue (Rbn) EBITDA (Rbn) Cash flow (Rbn)
-3% +83% -87%
925
244
6.9 6.7 119
133
5.1
(638)
(43)
1H20 2H20 1H21 1H20 2H20 1H21 1H20 2H20 1H21
54Motor retail
Key performance indicators
New and used vehicles sold After sales Revenue
-11% -6%
+29%
+20%
1H20 2H20 1H21 1H20 2H20 1H21
55 2H’2020 impacted by 2 months of level 5 and level 4 trading restrictions. Significant impact on tradingLogistics
Financial performance
Operational performance impacted by:
• Subdued trading impacted by end-of-life cycle contracts, down trading and declining volumes due to Covid-19.
• Disruptive impact of community and civil unrest on the transport industries continues.
• Increased fleet running costs due to delayed contract renewals.
• Increased provision for credit losses.
• Despite volumes down on last year, shipments improved since 2H20.
• Reduction in employee costs of R77mn, net off retrenchment costs.
• Negative impact of R34mn once off preparation for disposal costs.
Revenue (Rbn) EBITDA (Rbn) Cash flow (Rbn)
-19% -48% -100%
62 0
158
(134)
2.1
1.7 1.7 87 82
1H20 2H20 1H21 1H20 2H20 1H21 1H20 2H20 1H21
56Logistics
Key performance indicators
National shipments Transport
-27% +3% -13% -16%
1H20 2H20 1H21 1H20 2H20 1H21
57Strategy and outlook Dominic Sewela
Strategic Update
Strategic actions yielding positive results
Motor Retail Disposal Ingrain Equipment
Conditions Precedent fulfilled. Integration progressing well. Deliver full potential in
southern Africa.
Value delivery ahead of expectations.
Mongolia integration progressing well
Value delivery ahead of expectations
Logistics Disposal Rent-a-Car/Avis Fleet
Formal sales process Review business performance
underway. in line with market conditions.
Exit in medium term. Governance
Process of appointing a new chairman
underway.
Active shareholder Capital Allocation Appointed Lead Independent Director.
model Continue with disciplined
Drive strategic priorities across capital allocation to ensure
the group through BBS. strong balance sheet.
59Return on Invested Capital
From continuing operations
13% 15.8 16.2
14.2 14.1
12.5
11.7 11.7 11.9
10.1
9.1 9.5
8.6
8
6.4 6.5
3.8
-3.2
-4.9
Car Rental Leasing Equipment southern Africa Equipment Eurasia Ingrain
Mar-20 Sep-20 Mar-21 Mar-21*
Invested Capital (R billion)
Mar 2020 3.9 3.7 12.3 4.2 N/A
Sep 2020 2.8 3.2 9.2 5.6 N/A
Mar 2021 2.4 3.0 8.2 4.0 5.1
60 *Annualised return for the 6 months Oct 2020 – Mar 2021Outlook
Pivoting Barloworld for the future Industrial
Consumer equipment
industries and services
Mining Equipment
southern
Africa
CORPORATE
Ingrain CENTRE Construction
Equipment
South
Africa Eurasia
Corporate Other** Energy and
Operations Transportation
UK
Corporate
Avis
Budget Avis
Car Fleet
Rental
Car Rental &
Leasing*
61 * Motor retail and Logistics are Discontinued operations from 1 February 2021, and the Group’s 50% holding in NMI-DSM is held as an associate.
** Other includes Digital Disposal Solutions (including SMD), Khula Sizwe, Handling and Corporate officeOutlook
We are an industrial Industrial
Consumer equipment
processing, distribution and
industries and services
services company
Mining Equipment
southern
Africa
CORPORATE
Ingrain CENTRE Construction
Equipment
South
Africa Eurasia
Corporate Other** Energy and
Operations Transportation
UK
Corporate
62
** Other includes Digital Disposal Solutions (including SMD), Khula Sizwe, Handling and Corporate officeThank you
Supplementary information
Fair value adjustments of financial instruments
from continuing operations
Foreign exchange movements impacted by currency volatility
1H20
1H21 Unreviewed
Rmn Reviewed Restated Change %
Fair value adjustment on financial instruments (113) (89) 28%
Included in the Fair value losses of R113mn
• UK Corporate has realised YTD losses of R45mn
compared to a gain of R36m in the prior year mainly due
to weakening of currencies against the British Sterling.
• Losses of financial instruments in Equipment snA were
62% lower at R47mn (Due to the stable Kwanza and
stronger Metical).
65Losses from Associates and Joint ventures from continuing operations
Bartrac key customer site under care and maintenance
1H20
1H21 Unreviewed
Rmn Reviewed Restated Change %
Loss from Associates and JV’s (55) (61) (10%)
1H20 1H21
Rmn 1H21 1H20
59
Bartrac (104) (38)
20 7
NMI-DSM 59 20
(4)
BHBW (17) (39)
(17)
(38) (39)
Other 7 (4)
Total (55) (61)
(104)
Bartrac NMI-DSM BHBW Other
66Group Net Debt
Increase in net debt of R2.3bn despite acquiring Ingrain for R5.3bn
Mar 2021 Sep 2020
Rmn Reviewed Audited Increase
Net Debt including held for sale (HFS) 4 935 2 652 2 283
0.4 0.2
4.8
Net Debt (Rmn)
Mar 2021
Rbn 12.9
n Debt Sep 2020 Mar 2021
8.1
n Cash
n Net Debt
n Debt HFS
2.7 n Cash HFS 12,872
9,395
8,114
6,743
Sep 2020 9.4
4,758
Rbn 2,652 400 223
6.7 Net Debt Debt Cash Debt - Held for sale Cash held for sale
67 The other segment includes Corporate, Digital Disposal Solutions (including SMD), Khula Sizwe and HandlingManaging the COVID-19 impact
Group cost containment measures
Current austerity initiatives
Cost savings on retrenchments at Restructuring and consolidating
1H21 to the amount of R571mn subsidiaries
Travel, consulting and events
Total savings on salary sacrifices and
cancelled resulting in a saving of
pension holiday (1H21) R66mn
R86mn
Property operating leases
Cancelled all non-essential training
savings on of R42mn
Capex spend significantly reduced Austerity applied to other expenses
resulting in a saving of R1 018mn resulting in a saving of R283mn
68Income statement impact of acquisitions
Continuing operations
1H21 1H21 excluding
Rmn Reviewed Mongolia Ingrain acquisitions
Revenue 20 209 1 401 1 956 16 852
EBITDA 3 145 204 399 2 552
Depreciation and amortisation of intangibles (1 164) (59) (94) (1 011)
Operating profit before B-BBEE transaction 1 981 145 305 1 531
B-BBEE transaction charge (46) (46)
Operating profit 1 935 145 305 1 485
Fair value adjustment on financial instruments (113) 1 1 (115)
Net finance cost and dividends received (434) (26) (66) (342)
Profit before non-operating capital items 1 388 119 240 1 029
Non-operating and capital items 39 39
Profit /(Loss) before taxation 1 427 119 240 1 068
Taxation (540) (50) (27) (463)
Profit/(Loss) after taxation 887 69 213 605
Loss from Associates and JVs (55) (55)
Profit/(Loss) – Continuing operations 832 69 213 550
Loss from discontinued operations (98) (98)
Profit /(Loss) for the period 734 69 213 452
69Revenue and Operating profit
Discontinued Operations
Revenue (Rbn) Operating Profit (Rmn)
187
9.0
175
8.4
6.9 6.7
2.1 6.2 42 38
1.7
(30) (30) 27
Logistics Motor Retail Total Logistics Motor Retail Intergroup elimination Total
1H20 1H21
70Equipment snA: Commodity mix
Diverse commodity exposure defends against cyclicality and coal continues to be a strong contributor
Mining machines sales split by commodity (%)
2
7 2
5 13
4
4 8
6 9
8
19 9 17 Coal
Platinum
4
24 Gold
17
14
Diamonds
Copper
Iron Ore
44 43 43 Manganese
Other
FY20 1H20 1H21
71 Other includes Uranium, Zinc, Gemstones and Mineral sandsEquipment snA: Mining projects outlook
Project demand remains
Copper Gold
USD130mn USD34mn
Coal Diamond
USD30mn MALAWI USD40mn
Diamond Platinum
ANGOLA
USD100mn ZAMBIA USD200mn MOGALAKWENA
MOZAMBIQUE
Copper ZIMBABWE
Coal
USD100mn USD65mn
NAMIBIA BOTSWANA
Manganese Coal
USD30mn USD23mn MAFUBE
Zinc Platinum
SWARTBERG/GAMSBERG USD43mn USD17mn PLATREEF
RSA
Iron Ore Coal
KAPSTEVEL USD70mn USD25mn IMPUNZI
Greenfields/Major Projects Brownfields/Replacements
72Equipment snA: Construction, Energy and Transportation projects
outlook
Project demand remains
Exxon LNG
USD30mn
Chivu Road
USD100mn
USD6.2mn
Total LNG
NSC Pipeline USD20mn
USD57mn MALAWI USD66mn
Tlou Energy - CBM Discovery CBM
ANGOLA
USD3mn ZAMBIA USD50mn
MOZAMBIQUE
NamPower ZIMBABWE
EB Cloete Interchange
USD280mn USD9.2mn
NAMIBIA BOTSWANA
OR Tambo Int. Data Centres
USD30mn USD20mn
REIPP - DMRE Sanral Various Projects
USD1bn USD1.2bn
RSA
Cape Town Int. Sanral Wild C
USD493mn USD350mn
Construction (Energy) Construction (Airports) Construction (Roads) Engines / Power
73 Notes: NSC – North-South Carrier; CBM - Coal Bed Methane; REIPP - Renewable Energy Independent Power Producers ; DMRE - Department of Minerals and Energy (SA); LNG - Liquified Natural Gas;
NamPower - Namibia Power CorporationEquipment snA: Several challenges and opportunities in 2021
Regional update
RSA Mozambique DRC
• Mining resilient with strong recovery on • Total’s LNG project on hold due to • Copper & cobalt prices in favor of mining
commodity prices and production levels. escalating terrorist attacks. investments
• Construction sector remains subdued with • Vale likely to sell Moatize mine to Chinese • New initiative launched to support
some optimism on infrastructure projects. or Indian buyers given decision to exit coal. artisanal & small-scale mining of cobalt.
Zambia Angola Botswana
• Copper prices rally expected to remain in • Increasing oil prices driving OPEC+ to • Demand improving for diamonds with De Beers
the near term. gradually increase production. increasing prices by 8% since Dec 2020.
• Mining firms calls for favorable investment • Currency depreciation continues • Government support to coal mining sector
climate. to impact economic growth. encouraging FDI’s.
• Government owned Mopani mine could • New copper T3 Motheo project will diversify
limit capital expenditure. Botswana’s mining.
Malawi Namibia Zimbabwe
• Construction market remains subdued. • Multiple uranium projects on the horizon • Introduction of foreign currency auction
• Reduced economic activity levels. depending on the price movement. system to stabilize the exchange rate
• Strong gold production forecasted to boost against the US dollar.
economic activities. • Government aims to fast-track exploration,
• Lack of funding for infrastructure projects evaluation and digitalization of selected
impacting the construction sector. mines.
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