Absa Business Banking

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Fuel Retail Industry James Noble

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About Absa

Barclays Africa Group Limited, listed on the JSE Limited is one of South Africa's largest financial services groups. Absa

is a subsidiary of Barclays Bank PLC (Barclays), which owns 22%. We offer a complete range of retail, business,

corporate and investment banking, insurance and wealth management products and services. The Group's business is

conducted primarily throughout Arica.

Interesting facts

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Extensive local distribution network in South Africa serving over 9.2. million clients

We have 789 branches,22 cash centres and 9467 ATM’s nationwide (1900 cash accepting ATM’s)

More than 100 000 Point of Sale Devices

Over 1.9 million Absa Reward members

Largest banking footprint in South Africa with more than 30,000 staff

We understand your challenges in the Fuel Retail Industry

Fixed margin per liter sold

Impact on industry Fuel Price fluctuations impacting on working

capital needs

Impact of shortages and security of supply

High Interchange Rates and Credit Card

Transactions

Transformation and Enterprise Development

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Price of fuel 12.50R Cost per litre

Credit card 1.55% 0.19R

Debit card 0.54% 0.07R

Fuel Prices since 2006

• Annual fuel retail industry turn over ±R220bn • Since 1980 the fuel price doubles every 6.5

years (slowed down since 2014)

YTD August 2014 YoY 2015 YoY 2016 YoY 2017 YoY

Petrol -5.38% 3.84% -0.55% -1.52%

Diesel 0.74% 8.80% -15.33% 3.01%

IP -6.12% 19.81% -5.86% 26.54%

Total -2.27% 6.75% -8.60% 1.34%

Ave Fuel Price 10.89% -12.58% 1.94% 6.11%

Year 2010 2011 2012 2013 2014 2015 2016 2017

Ave 95 ULP price 826 998 1,156 1,292 1,384 1,239 1,263 1,353

Ave % increase 11.67% 20.77% 15.88% 11.75% 7.09% -10.46% 1.90% 7.15%

Absa

Franchise

Relationship Executive

Client (Fuel Retailer)

Specialist Areas

Transactional Banker

Commercial Asset

Finance

Commercial Property Finance

International Banking

Electronic Banking

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Credit Analyst

Card Acquiring/ Issuing

Insurance/ Assurance

ATM Solutions Working Capital

Solutions

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Absa Relationship Approach - We’re Accessible

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Retail • Pick ‘n Pay • SPAR • Build It • OK • MICA

Restaurants, Quick Service Restaurants, Entertainment and Leisure • KFC • STEERS • Debonairs • WIMPY • Mugg & Bean

Services • Personal Services • Financial Services • Health and

Beauty • Telecoms • Business-to-

Business • Buildings, Office

and Home • Education &

Training • Real Estate • Automotive

Fuel Retail • BP • ENGEN • CHEVRON • Sasol • Shell • Total

Enablement &

Acquisition

Regional Franchise Specialists

Enablement &

Acquisition

Sector Analytics

Industry Focus

Help me start my business

Start-Up

Help me grow my business

Run, Manage & Grow

Help me protect my business

Mature

We have target market solutions that cater for the needs of our customers’ business of personal lifecycle stage

Holistic Solution

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Franchise Headquarters

Franchise Operations

Customer Level

In our customer value proposition we have classified Shell as a Top Tier brand This entitles Shell Dealer Network to our exclusive and preferential target market

criteria of lending and banking solutions

Absa Rewards programme rewards our members for banking with us. It does this by giving cash in the member’s pocket (Cash Rewards).

In addition to offering the member special offers and access to a range of value added services

Oil Company

Value Added Solutions

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Cash Handling Services

Investments

Transactional Banking

ATM Solutions Barclays Wealth, Investment Management

and Insurance (WIMI)

Workplace Banking

Merchant Payment Solutions

Card Issuing

Lending

Islamic Banking

Lending Solutions

Cash Solutions

Merchant Payment Solutions

• Overdraft Facility • Term Loan • Bank Guarantee or OneSure

and M&F • Commercial Asset Finance • Card Acquiring Solutions • Cash Management Solutions • Short-term Insurance • Investments

Our Solution to Fuel Retailers - Lending Options

Absa Business Banking

Business OpCo Entity (Franchise or Supply

Agreement –

C.O.D.O. vs. D.O.D.O.)

Oil Company

PropCo Entity

• Normally for 3 – 5 years with an option to renew for a further period negotiated upfront

• Normally for a 10 - 20 year period

• Oil Co to register servitude to protect interest and investment

• Mortgage Back Business Loan

• Commercial Property Finance

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Financing a service station business - Example

Transaction detail: Purchase Price R5,000,000 EBITDA of ±R139,000 per month

Guarantee/ LDP R 500,000 In favour of the oil company

Working Capital R1,500,000 Include wet and dry stock, operational expenses

Total finance need R7,000,000

Finance structure: Own contribution R3,500,000 50% cash contribution of total finance need

Term loan R1,500,000 Monthly pmt of R33,000 over 5 years at 11.5% p.a.

Overdraft facility R1,500,000 Ave interest cost of R9,000 p.m. based on 60% utilisation

LDP R 500,000 Can be replaced by an Onesure/ M&F Insurance Guarantee

Total Finance Need R7,000,000

• Business plan and financial information • Proof of source of own contribution • Personal statement of assets and liabilities • Current lifestyle and salary

• Business experience • Profile and personal background of the retailer • Bank and credit Record • Security

The four C’s in a lending proposal i.e. Character, Cash stake, Capability and Collateral

Finance solutions - Working capital

• 300,000 litre site (selling price of fuel at R14/ litre, cost ±R13/ litre)

• R350,000 convenience store turn over (gross profit % of 25%)

• Working capital requirement:

Litres Rand value

2 days stock (13,000 litres per day) 26,000 338,000

1 Delivery 40,000 520,000

Bottom waste (3 tanks) 4,000 52,000

Fuel on credit 10,000 130,000

Less: Deposits from debtors/ accounts 65,000

Working Capital for fuel 975,000

Working Capital for shop 262,500

Operational expenses 112,500

Delays in Cash and Card Banking 150,000

Total overdraft need for working capital 1,500,000

Facts: • Every time the fuel

price increases by 10c the retailer needs R10,000 additional working capital

• Ave fuel price increased by 35% since December 2011

• Overall profitability of service stations improved during this period but is still under pressure due to fixed margins

• Ave overdraft facility in fuel retail industry is ±R750,000 50% gearing/ finance of total value of business including stock

Enterprise Development Funds and Guarantees

Common Requirements Across all Funds

• The objective of the Funds is to provide assistance to SME’s with viable businesses but do not qualify for conventional banking as a result of lack of or insufficient collateral/security, lack of capital, bad credit history with valid reasons, proof of rectification and mitigation

• The Funds are for start-ups and for SMEs with existing businesses

• Applicants must be SA citizens who reside and operate in South Africa.

• SMEs must demonstrate skills and/or expertise relevant to business and/or the industry/sector

• Must have a well researched business plan which must include market analysis, feasibility study and cash-flow projections

• Demonstrate profitability by means of historical financials or realistic 12 month cash flow forecast

• Evidence of revenue stream

• Absa to be main and only Banker

Absa Development Credit Fund & Absa Women Empowerment Fund

• Open to SMEs who want to start a businesses, expand or purchase existing businesses

• The minimum loan amount to be disbursed is a minimum of R50K to a maximum amount of R6mil

• Products

o Reducible Overdraft which is reviewed annually

o Term Loan with a maximum term of 60 months

o Commercial Asset Finance with a maximum term of 60 months

Thembani International Guarantee Fund

• Funding provided to BEE SMEs with minimum 51% black company ownership

• Provides guarantees between 50% to 75% (for amounts greater than R3mil) of principal loans under the coverage i.e. loans amount minimum R50K and maximum guarantee amount R10 million (at 50% guarantee maximum loan amount will be R20 million)

• The client pays a 2.8% fee for the first year (0.5% initiation & 2.3% guarantee fees) and 2.3% for every year for the remaining duration of the loan

• Products

o Reducible Overdraft which is reviewed annually

o Term Loan with a maximum term of 60 months

o Commercial Asset Finance with a maximum term of 60 months

SME (Small and Medium Enterprise) Fund

• Contract finance — funding/credit is provided to previously disadvantage individuals where ownership, control and management representation is strictly 100% Black( as defined by the DTI)

• This fund is accessible for SMEs who have been awarded contracts/tenders by the Public Sector (Government Departments, Municipalities and Parastatals)

• 70% of the loan is paid directly to suppliers and the remaining 30% will be released periodically based on the assessed customer needs

• The loan amount applied for must be between R50K to a maximum of R3 million

• Products

o Reducible Overdraft which is reviewed annually

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We provide convenience by bringing Absa to your employees Absa Workplace Banking

Building enduring relationships between employer and employee

Specialised Team OnSite

Convenience Banking

• Fulfilment of Life-Stage Goals

Attract and Retain High

Calibre Talent

• Good Credit Ratings & Sound Debt Management

• Minimising Work

Disruptions

Tailored Employee Solutions

Financial Empowerment

• Fulfilment of Life-Stage Goals

• Debt Management Assistance

Convenience of Workplace

Banking

Access to Financial Advisors & Planning

Experts

Simple & Streamlined onboarding

Attraction and retention benefits which reflect the company’s care of – and commitment to their employees

Financial Empowerment to build financial stability through preferential solution benefits

Employer Employee

Financial Empowerment

Preferential Life-Stage Banking

Solutions

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Absa presentation title Date of presentation Company confidential use only / Unrestricted distribution

Thank you

Questions?

James Noble Business Development Manager: Fuel Retail Industry jamesjn@absa.co.za 011 350 8332 082 462 3163

Disclaimer Barclays offers corporate banking products and services to its clients through Barclays Bank PLC. This presentation has been prepared by Barclays Bank PLC

("Barclays"). This presentation is for discussion purposes only, and shall not constitute any offer to sell or the solicitation of any offer to buy any security,

provide any underwriting commitment, or make any offer of financing on the part of Barclays, nor is it intended to give rise to any legal relationship between

Barclays and you or any other person, nor is it a recommendation to buy any securities or enter into any transaction or financing. Customers must consult

their own regulatory, legal, tax, accounting and other advisers prior to making a determination as to whether to purchase any product, enter into any

transaction of financing or invest in any securities to which this presentation relates. Any pricing in this presentation is indicative. Although the statements of

fact in this presentation have been obtained from and are based upon sources that Barclays believes to be reliable, Barclays does not guarantee their

accuracy or completeness. All opinions and estimates included in this presentation constitute the Barclays’ judgment as of the date of this presentation and

are subject to change without notice. Any modelling or back testing data contained in this presentation is not intended to be a statement as to future

performance. Past performance is no guarantee of future returns. No representation is made by Barclays as to the reasonableness of the assumptions made

within or the accuracy or completeness of any models contained herein.

Neither Barclays, nor any officer or employee thereof, accepts any liability whatsoever for any direct or consequential losses arising from any use of this

presentation or the information contained herein, or out of the use of or reliance on any information or data set out herein.

Barclays and its respective officers, directors, partners and employees, including persons involved in the preparation or issuance of this presentation, may

from time to time act as manager, co-manager or underwriter of a public offering or otherwise deal in, hold or act as market-makers or advisers, brokers or

commercial and/or investment bankers in relation to any securities or related derivatives which are identical or similar to any securities or derivatives referred

to in this presentation.

Barclays Bank PLC is authorised and regulated by the United Kingdom Financial Services Authority and is a member of the London Stock Exchange.

Copyright in this presentation is owned by Barclays (© Barclays Bank PLC, 2012). No part of this presentation may be reproduced in any manner without the

prior written permission of Barclays.

Barclays is a trading name of Barclays Bank PLC and its subsidiaries. Barclays Bank PLC is registered in England and authorised and regulated by the Financial

Services Authority (FSA No. 122702). Registered Number is 1026167 and its registered office 1 Churchill Place, London E14 5HP.

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