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2020 Debt Investor Roadshow
24 AUGUST 2020
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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 resultsand estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of suchforward-looking statements include, but are not limited to, statements regarding exchange rate fluctuations, volume growth, increases in market share, return oninvested 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 suchforward-looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks anduncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If oneor more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You shouldunderstand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentionsexpressed 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 aresult 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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http://www.barloworld.com/
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PRESENTATION OVERVIEW
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Opening and welcome Zanele Salman, Head Investor Relations
Group and Divisional Highlights Dominic Sewela, Group CEO
Financial overview Nopasika Lila, Group FD
Strategy Update and Group Outlook Dominic Sewela, Group CEO
Questions and answers
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MANAGING THE IMPACT:
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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
of R13m
Capex spend significantly
reduced resulting in a
saving of R597m
Restructuring
and consolidating
subsidiaries
Travel, consulting
and events cancelled
resulting in a saving
of R53m
Cancelled all
non-essential training
Austerity applied
to other expenses
resulting in a saving
of R204m
CURRENT
INITIATIVES
DEALING WITH
COVID-19
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ROIC%
12.4
19.4
14.4
9.9
3.3
11.012.7
20.6
13.7
9.1
6.4
11.38.6
14.2
9.28.0
-4.0
9.2
Equipment southernAfrica
Equipment Russia Motor Trading Car Rental Logistics Group
Mar-18 Mar-19 Mar-20
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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%
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Financial overview
NOPASIKA LILA
GROUP FINANCE DIRECTOR
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FINANCIAL OVERVIEW MARCH 2020
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A CHALLENGING SIX MONTHS
Normalised Headline
Earnings#
354 centsDown 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
R201mDown from
(Mar 2019: R 262m)
Effective tax rate
(33%)Down from
(Mar 2019: 38%)
# Group excluding IFRS 16 and B-BBEE transaction charges
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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 inclusionof 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 of 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
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NON-OPERATING AND CAPITAL ITEMS
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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
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STATEMENT OF FINANCIAL POSITION MARCH 2020
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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
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CASH FLOWS AND NET DEBT (EXCL. IFRS 16)
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HIGHER OPERATING CASH OUTFLOWS; DIVIDENDS; WC OUTFLOWS AND SHAREBUY BACK HAVE INCREASED NET DEBT
8,369
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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 tooperating activities
after dividends
Net cash used ininvesting activities
Effect of USDdenominated cash
Share-buy back Other financingactivities
Closing net debt Closing Cash Closing Gross Debt
Rm
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NET DEBT, EBITDA/ INTEREST COVER
12
1,066
5,115
5.75.5
0
1
2
3
4
5
6
-
1,000
2,000
3,000
4,000
5,000
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 3.5 times
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SUBSEQUENT EVENTS
Avis Fleet is no longer held for sale (discontinued operation) and will form part of continuing operations
The board approved the increase in the DMTN Programme 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
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CONCLUSION
Strong Balance Sheet
Healthy gearing positions
Comfortable liquidity position
Cost containment measures
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Strategy updateand outlook
GROUP PRESENTATION
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DOMINIC SEWELA
GROUP CEO
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STRATEGY UPDATE
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Equipment southern Africa
rightsizing and streamlining Botswana
and Angola, improved ROIC
Automotive and Logistics
business review
Fix and optimiseShareholder
active modelGrowth
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
of 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
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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
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Thank you
GROUP PRESENTATION
BARLOWORLD INVESTOR RELATIONS
TEL: +27 11 445 1000
E-MAIL: BAWIR@BARLOWORLD.COM
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