Chairman's review

The COVID-19 pandemic has reinforced the view that not only has the world undergone some profound change, but also that uncertainty and change are constants. Although the pandemic has impacted global economies and businesses, including Barloworld, I firmly believe however, that with a clear vision, focus and teamwork, there is no challenge we cannot overcome.

MACROECONOMIC OVERVIEW

In 2019 the International Monetary Fund forecast 2020 global economic growth to be 3.6%, a target that was undermined by the onset of the novel coronavirus (COVID-19) pandemic. The pandemic and the measures put in place by governments to contain its spread, resulted in a global recession. The World Bank's 2020 'Global Economic Prospects report' considers this the deepest recession since the Second World War with per capita incomes declining significantly, plunging millions of people into extreme poverty.

South Africa entered 2020 in a tenuous economic position accompanied by the perennial ills of sluggish growth, a weakened currency and low business confidence. The government's initial swift response to COVID-19 was the implementation of a national lockdown on 27 March 2020, one of the strictest globally. The lockdown inhibited trading activity, resulting in significant economic contraction and increasing unemployment levels to 30.1% in the first quarter of 2020, according to the Quarterly Labour Force Survey released on 23 June 2020. Statistics South Africa reported that South Africa's economy suffered a significant contraction during April, May and June, when the country operated under widespread lockdown restrictions. Gross domestic product (GDP) fell by just over 16% between the first and second quarters of 2020, resulting in an annualised negative growth rate of 51%. The economic stimulus packages and social grant programmes implemented by the government contributed significantly in assisting many in financial distress. Contributions made to the Solidarity Fund by several corporations, including Barloworld and other organisations to assist government efforts have been quite commendable.

BARLOWORLD RISES TO MEET THE CHALLENGES OF A NEW WORLD ORDER

In less than a year, the world has been radically transformed and we have had to accept the reality that the effects of COVID-19 will not be short-lived and we have been forced to reconfigure how we do business, thus creating a new world order. It is fair to say that the financial year has been characterised by a combination of a tough trading cycle and the ongoing impact of the COVID-19 pandemic. While the Group reported lower performance compared to 2019, the quick implementation of austerity measures by management combined with the recovery seen in recent months on the back of the relaxation of lockdown restrictions is expected to bolster performance in the short term and support results in the medium to long term. The potential threat and possible impact of the second wave of COVID-19 is a concern, however we believe the Group is now well positioned to weather any impending consequences thereof. The Group has retained its strong balance sheet with good liquidity, which has ensured the successful execution of the strategy and ultimately ensuring resilience. More importantly, changes to the operating model have allowed the Group to be responsive to change and better positioned to act swiftly to address the consequences of a volatile economic environment.

Generating long term value for all stakeholders has long been a priority for Barloworld with the Company being at the forefront of practice and policy in terms of Environmental, Social and Governance (ESG) issues in South Africa. This is exhibited by the Company's transparency and effective engagement while investing in employees, delivering value to customers, dealing fairly with suppliers and supporting communities in which businesses operate as well as promoting diversity and inclusion. Barloworld recognises that stakeholder interests are best served through an integrated and coordinated value creation approach addressing economic, environmental and social aspects. Adapting and transforming to the new world order will be accompanied by a continued focus on ESG which has become increasingly important in the drive to deliver sustainable value creation to all our stakeholders. The board and management is committed to implementing meaningful interventions that transform our society by investing in initiatives that drive economic inclusion, social cohesion and build resilient communities.

HEALTH AND SAFETY OF OUR PEOPLE AND CUSTOMERS

Safety is a focus area across the Group and we continue to target zero harm. This notwithstanding, during this period we unfortunately and tragically had two workrelated fatalities, both of which were motor vehicle accident related. In addition, we suffered six COVID-19 related deaths. I extend my sincere condolences to the families, friends and colleagues of the deceased to whom we offered support during the difficult time and continue to support where assistance is required.

GOVERNANCE

Barloworld has a long and proud legacy of being a values-driven organisation and therefore its leadership remains committed to implementing the highest standards of good corporate governance and embraces the pillars of integrity, responsibility, fairness, transparency, honesty and accountability to all stakeholders. These pillars preserve the Group's long term sustainability and ensure value can be created and delivered to all stakeholders. The outcomes of good corporate governance ensure an ethical and cohesive culture, effective internal controls, compliance, accountability, responsive and transparent stakeholder engagements, performing to strategic expectations, legitimacy and trust. Barloworld is committed to forwardthinking succession planning to ensure stability within the leadership. The board ensures that it has robust succession plans that recognise the businesses' current and future needs, taking into account the Group's strategy.

Over the years, I have witnessed Barloworld's evolution and the growth of its global interest's first-hand. I assumed my role as Chairman of the board at the February 2020 AGM, and am profoundly aware of my responsibility to the Group as we navigate the challenging time ahead.

DIVERSITY AND INCLUSION TARGETS

We achieved our goal of a gender mix of 40% women in 2020 which is a remarkable milestone for Barloworld. Diversity & Inclusion (D&I) is a critical part of our strategic targets and we continue to work towards creating a diverse and inclusive workforce. At the recent Gender Mainstreaming Awards, our D&I commitment was recognised with awards in Investing in Young Women, Women Empowerment in the Workplace (JSE-listed Company as well as OVERALL winner in this category) and Gender Mainstreaming Champions for 2020 awards.

OUTLOOK

The COVID-19 pandemic has reinforced the view that not only has the world undergone some profound change, but also that uncertainty and change are constants. Although, the pandemic has impacted global economies and businesses were not spared its devastation, including Barloworld, I firmly believe however that with a clear vision, focus and teamwork, there is no challenge we cannot overcome. Our rallying cry is "Defy limits and rise as one... with soul." I believe that we need to put that into action now more than ever. Perhaps a 'silver-lining' that has emerged from the pandemic is the recognition that our shared humanity and an acknowledgment that serving others and the greater community is good business. Compiling this report I was reminded of the words of the inimitable Rosa Parks: "To bring about change, you must not be afraid to take the first step. We fail when we fail to try." Barloworld has taken many brave new steps in recent months and will continue to adapt to the uncertain macroeconomic environment.

APPRECIATION AND ACKNOWLEDGEMENT

It is appropriate at this point to reflect on the more than two decades of service and commitment to Barloworld, its board and its people, 12 of which in the role of Chairman of my predecessor, Advocate Dumisa Buhle Ntsebeza. He instilled the board with his unshakable sense of justice and pursuit of equity, which helped shape Barloworld into the values-driven organisation it is today. It is these principles of integrity and enlightened leadership which have stood the Group in such good stead in this uncertain time in global history and has enabled us to embrace the modern standard of corporate governance and continue to make 'a world of difference'. We are grateful and humbled by the legacy he has left us. We also want to acknowledge the outgoing Chairman of our audit committee, Sango Siviwe Ntsaluba. We are grateful for his dedication and commitment to his portfolio and his meaningful contribution to the board. He has been a valued member of the board since 2008 and his contributions and insights will be greatly missed.

I would also like to thank Barloworld's management team for their unwavering commitment to the welfare of the Group during this difficult and uncertain time. They have faced unprecedented challenges head-on with swift and decisive action, which has been to the benefit of the long term sustainability of the business.

To the Barloworld family, thank you to each one of you for entrusting me with this legacy. I believe our people are important and we should treat them as such. Shareholders are key, but so are all of our stakeholders. Our customers, suppliers, employees and communities are of paramount importance as companies serve at the behest of the communities they operate in. If communities decide that the company no longer serves a need for them, the company will cease to exist.

We acknowledge and appreciate the continued role and support of our principals, such as Caterpillar, Avis Budget and all other OEM's with whom we are in business - we are 'team Barloworld'. All of us in the organisation represent Barloworld every day in both our personal and professional capacities. If we live our values together, we will be able to navigate most things with commitment, integrity, always striving for excellence and sustainability in everything we do.