RMB Morgan Stanley Off Piste Conference 2 October 2013

Agenda

• About ARB

• Divisional overviews

• Financial performance

• Market performance

• Strategic intent

• Outlook and market potential

• Questions and answers

Overview

• Largest independent electrical distributor in sub-Saharan Africa

• Focused on electrical, lighting and related products

• Supply across all market segments

• Extensive distribution network across South Africa

Power cables

Overhead line

conductors and

equipment

General low

voltage products Lighting and lamps

Milestones

Founded by Alan R Burke

National branch network established

Listed on Johannesburg Stock Exchange

Opened Nelspruit and Polokwane branches

Acquired Paragon Electrical

Acquired 60% of Eurolux

Acquired 100% of Industrial Cable Suppliers

1980

2007

2010

2012

2012

2012

2013

Secured exclusive international agencies

Acquired 100% of Elektro Vroomen

84%

14%

2%

Revenue – FY2013

63%

19%

18%

Operating profit - FY2013

Group structure

ARB Holdings Limited

Corporate Electrical Lighting

100%

74%

60%

100%

Electrical

Wholesaling

Proprietary

Products

Directorate

Non-executive Chairman

Executive directors

Independent, non-executive directors

Non-executive director

Alan R Burke - Founder

Billy Neasham – FD

CA(SA)

Byron Nichles – CEO

CA(SA), ACMA, CGMA

Jacob Modise

CA(SA), MBA

Ralph Patmore – Lead Independent

B.Com, MBL

Boel Pretorius

B.Sc, B.Eng, LLB, PMD

Simon Downes

CA(SA), FCMA, MBA

Electrical

• Founded in 1980 (i.e. 33-year track

record)

• Largest independent distributor of

electrical products in sub-Saharan Africa

• 19 branches across SA

• ±600 staff

• Approx. 20 000 individual stock items

(R280m stock holding)

• Over 6 500 customers (no customer > 3%

of total revenue)

• Well established in industrial, mining,

public sector and contractor markets

• Revenue approaching R2 billion p.a.

Electrical

0

2

4

6

8

10

12

14

16

18

20

1980 1988 2000 2002 2003 2004 2008 2009 2010 2011 2012 2013

# of Branches

Electrical

Market segments serviced:

Large and Heavy Industry

Government and Parastatals

Construction Industry

Electrical Contractors

Mining Industry

Domestic Households / DIY

Electrical

Brands supplied include:

Electrical

Proprietary products – ACCC®

ACCC®

Conventional ACSR

Conductor Comparison

Steel Core Composite Core

• High performance transmission conductor

• Composite core

• 28% more aluminum

• High tensile strength and low thermal sag

• Can be reconductored under live conditions

• Over 22 000 km installed worldwide at over

260 sites in 28 countries

• Over 400km installed in SA (pilot project)

• Used in repair of Cahora Bassa line

• Local adoption remained slow - contribution

over medium term

Electrical

020406080

100120140160180200

Cable Theft - Transnet

2006/7

2007/8

2008/9

2009/10

2010/11

2011/2a

0102030405060708090

Cable Theft - Eskom

2006/7

2007/8

2008/9

2009/10

2010/11

2011/2a

Rm

Rm

Electrical

Proprietary products - Copperweld

• Unique patented bimetallic wire

• Variety of applications especially earthing of sub-

stations

• Benefits:

• Weight savings

• Lower cost

• With 10% of the copper, you get 63% of the

conductivity at 60% of the weight of pure copper

• Anti-corrosive properties

• Anti-theft properties – harder to cut / no scrap

value / pigmented to look like steel

• Included in NRCS standards

• Strong interest – BPC, Sasol, MTN, Eskom, Anglo, etc

Electrical

Proprietary products – Nexans Olex

• Niche mining and VSD cables

• Nexans - leading global cable manufacturer

• Olex – largest cable manufacturer in Australia

• Exclusivity for SADC over:

• Mining cable

• Varolex – variable speed drive cable

Electrical

8

Proprietary products – CHINT low voltage

• Largest manufacturer of electrical products in China

• Well established in local market

• 5 year agreement effective 1 May 2013 with renewal option

• Territory: SA (exclusive) and SADC (preferential)

• Sales, technical and marketing support from CHINT

Lighting

• Acquired 60% of Eurolux in January 2012 for

R78 million

• A leading importer and distributor of light

fittings, lamps and accessories

• 22-year track record

• Two custom designed and built distribution

centres (Johannesburg and Cape Town) with

state of the art lifestyle showrooms

• ±200 staff

• ±4 400 individual stock items

• Over 1 600 customers

• Launched range of pre-packed electrical

accessories

• Entered project and commercial lighting

market

• Revenue approximately R300 million p.a.

Lighting

Customers include:

Lighting

• Eskom — No funding for RMR project — Tendered for 5 million CFL contract, awaiting feedback — Did not stock up in anticipation of the above blue-sky opportunities!

Corporate

• Centralised treasury, IT, internal audit, HR and strategic leadership provided

• Successful deployment of Xact II ERP Solution across all 19 branches and CED

• Property portfolio:

• 17 properties countrywide measuring 85 950m2 in extent

• Ungeared and independently valued at R155 million

• Property project update:

Project Status

Extensions to:

- Durban head office

- Alrode branch

Completed

Completed

Renovations to:

- ICS (Johannesburg)

- Richards Bay branch

Completed

Completed

Nelspruit Construction commenced (occupation early 2014)

Rustenburg Awaiting approval of plans (to commence in 2014)

Polokwane Planned for late 2014 / early 2015

Financial

performance

Revenue increased by 24% R1.94 billion (2012: R 1.57 billion)

1 086 507

1 256 330

1 565 294

1 944 541

-

500 000

1 000 000

1 500 000

2 000 000

2 500 000

2010 2011 2012 2013

R'000

Revenue

CAGR =

21.4%

Financial

performance

Contractors, 42%

Government, 3%

Industry, 7% Mining, 4%

Retail, 16%

Other, 17%

Cash, 11%

Revenue by customer category

Cable, 48%

Overhead line, 15%

Lighting, 15%

Low voltage, 22%

Revenue by product category

Financial

performance

200 222

234 831

307 152

425 120

-

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

2010 2011 2012 2013

R'000

Gross profit

18.4 18.7 19.6

21.9

0

3

6

9

12

15

18

21

24

2010 2011 2012 2013

Gross profit margin (%)

CAGR =

28.5%

Financial

performance

HEPS increased by 15% 39.6 cps (2012: 34.3 cps)

29.2 30.6

34.3

39.6

-

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

2010 2011 2012 2013

Cents HEPS

CAGR =

10.7%

Operating profit increased by 26% R160 million (2012: R128 million)

96 635 110 245

127 504

160 475

-

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

2010 2011 2012 2013

R'000 Operating profit

CAGR =

18.4%

Financial

performance

Cash generated increased by 107% R197 million (2012: R95 million)

133 359

104 889

95 191

197 156

0

50 000

100 000

150 000

200 000

250 000

2010 2011 2012 2013

R'000 Cash generated by operating activities

• Ungeared with R203 million

cash

Market

performance

Listing particulars

JSE ticker ARH

JSE Main Board

Electronic & Electrical Equip.

NAV 279 cents per share

Share price 510 cents per share

Market cap R1.2 billion

Free-float 40%

Dividend increased by 18% 16.2 cps (2012: 13.7 cps)

11.5 12.3

13.7 16.2

2.5 2.5 2.5 2.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

2010 2011 2012 2013

Times

Cen

ts p

er

sh

are

Dividends

Dividend Dividend cover

Special dividend of 10 cps

0

100

200

300

400

500

600

02-Feb-09 02-Feb-10 02-Feb-11 02-Feb-12 02-Feb-13

cen

ts

ARB Share Price

Strategic intent E

lec

tric

al d

ivis

ion

Strategic objective

• Extending agreements

• Continue process of

local acceptance and

adoption

• Add further products

Progress in 2013 Looking ahead

Grow market

presence and share

Differentiated

product offering

Further market

consolidation in

targeted regions

• 4 new branches

• 3 new provinces

• R200 million

additional revenue

Four international

exclusive agencies

secured

Strategic intent L

igh

tin

g d

ivis

ion

Strategic objective

• Expand range of

electrical accessories

• Direct sourcing

• Continue to grow into

new product categories

and markets

Progress in 2013 Looking ahead

Grow market share

Broader product

offering

Continue to grow

market share through

expanded product

offering and superior

service

Key customers

secured

• Agreement with leading

LED manufacturer

• Launched range of

electrical accessories

•Entered commercial and

project lighting markets

Strategic intent C

orp

ora

te d

ivis

ion

Strategic objective Progress in 2013 Looking ahead

Related

diversification Actively pursuing

further acquisitions

Added Lighting

division and

Proprietary products

Insert photo

Prospects

Economic environment

• Macro-economic climate likely to remain unchanged

• Consumer spending to remain under pressure

Electrical

• Further integration of ICS and Elektro Vroomen to drive top and bottom line growth

• Well positioned for any upturn in the construction, mining and public sectors

Lighting

• Key customer gains and new markets entered to drive top and bottom line growth

General

• Potential value-adding acquisitions continue to be evaluated

Africa

The Dark Continent

• Total power generated in Africa (1 billion people) = Spain (48 million people)

• Average electrification rate in SADC (excl SA and Mauritius) <20% (source: United Nations)

• Richest continent in natural resources and recent oil and gas finds

• Africa has 9 of 15 fastest growing economies over next 5 years (source: World Bank)

• Challenges: corruption, poor infrastructure, access to funding, language barriers, need for

local partners, Chinese and Indian threat

Market potential

(Source: A review of SA’s electricity sector – January 2013 by Research Channel Africa)

• Eskom requires 420 000 tons of new steel pylons over next 10 years –

ACCC can reduce this significantly

• DSM, RMR and 49M – all promote use of CFL and LED lighting – Eurolux

3%

15%

2%

4%

6%

8%

10%

12%

14%

16%

South Africa International benchmark

Reserve margin for electricity

Massive expansion required

Older than 35

year design

life

50%

Within design life

50%

Eskom Power Stations

Market potential

(Source: A review of SA’s electricity sector – January 2013 by Research Channel Africa)

10 year Transmission Development Plan (R180 billion) - ACCC

• R150 billion to expand the transmission network, over 12 700km of new lines

• R12 billion on refurbishing of existing infrastructure

Distribution infrastructure – Overhead line division

• Lifespan of a distribution network = 50 years (SA’s distribution network is 47 years old)

• Protracted uncertainty of EDI vs REDs structure resulted in reluctance to invest in

maintenance

• Current backlog = R35 billion

• Need to spend R6.5 billion per year (double the current spend)

Electrification programme – Overhead line and low voltage divisions

• Budgeted spend = ±R3.5 billionn per annum

• At current rate, will take another 20 years to achieve universal access to electricity

Value

proposition

Well-balanced, strongly independent board

Experienced management with aligned, vested interests

Only focused distributor of electrical and lighting products on JSE

Proven / robust business models through the economic cycles

Ungeared with R203 million cash on hand (June 2013)

Questions and

Answers

Thank you for your attendance

www.arbhold.co.za

For further information, please contact:

Byron Nichles – CEO: (012) 663 5244

Lynne van der Schyff – Keyter Rech Investor Solutions: (011) 447 2993