PRESENTATION TO THE

INVESTMENT ANALYST SOCIETY

1

OVERVIEW

!  ExpectedeconomicturnaroundfollowingtheappointmentofPresidentRamaphosahasnotyetmaterialised

!  The“expropria;onwithoutcompensa;on”decisionhashadanega;veeffectoninvestorconfidence

!  ZumaerahangovercontributedtotheworstquarterforGDPin9years:

•  miningdown9,9%

•  manufacturingdown6,9%

•  agriculturedown24%

!  Resultscommendableinprevailingcondi;ons

!  Capacityformoreacquisi;ons

!  Dividend190centsup6%

2

AGENDA

!  Resultssummary

!  Generalbusinessenvironmentandresultsdrivers

!  Businessmodelandopera;ngsegments

!  Financialreview

!  Outlook

3

RESULTSSUMMARY–H12018

Turnover 11%toR3bn

Opera;ngprofit 8%toR290m

Basicandheadlineearnings 9%to528cps

Comparableearnings 7%to517cps

Dividendspershare 6%to190cps

4

GENERALBUSINESSENVIRONMENTANDRESULTSDRIVERS

5

!  SouthAfricaisanextremelychallengingplacetodobusiness

!  Theop;mismaroundRamaphoriaisbeingstrangledbyZumahangover

!  Thistoughenvironmentinsomesectorsresultedinlowerdemandandcreatedaggressivepricingpressure

!  Exchangeratevola;lityisdisrup;ve

!  Consumerspendingunderpressure

GENERALBUSINESSENVIRONMENT

6

!  Consumer-relatedsegmentperformedwell

!  Engineeringconsumablessegmentunderpressure

!  Africabusinessremainsmoribund

!  The recent acquisi;ons targe;ng markets with stronger growth poten;alperformedwell

!  Thisdiversifica;onstrategycon;nuestopayoff

RESULTSDRIVERS–H12018

7

OPERATINGSEGMENTSANDACQUISITIONSUPDATE

8

THEHUDACOBUSINESSMODEL

!  Hudaco’smainbusinessistheimporta;onanddistribu;onofhigh-qualitybrandedautomo;ve,industrialandelectronicconsumableproducts

!  Theconceptof“valueaddeddistribu;on”iscoretoourbusinessmodel

!  Agencyagreementsgenerallyrestrictourac;vi;estoAfricasouthoftheequator

!  Hudacohastwomaineconomicdrivers

•  SouthAfrica’sGDPgrowthrate(disappoin;ng)

•  Randexchangerate(vola;le)

!  Thedecentralisedstructureprovidesagilitytorespondtomarketcondi;ons

!  Eachbusinessisledbyanexperiencedmanagementteam

9

OPERATINGSEGMENTS

!  Consumer-relatedproductssegmentimportsanddistributesproductsdrivenbyconsumerspendingandgenerallysoldtoinstallers

!  Engineeringconsumablessegmentimportsanddistributesbrandedproductsgenerallyusedintherepairandmaintenanceofmachines

10

OPERATINGSEGMENTS

Consumer-relatedproducts(11businesses)!  Automo;veaZermarketproducts!  Powertools!  Ba[eries!  Professionalcommunica;onequipment!  Securityequipment!  Datanetworkingequipment

Engineeringconsumables(21businesses)!  Mechanicalpowertransmission!  Electricalpowertransmission!  Dieselenginesandspares!  Hydraulicsandpneuma;cs!  Thermoplas;cpipesandfi]ngs!  Bearings!  Specialisedsteel

11

ContribuUontoH12018operaUngprofit(beforesharedservicesandheadoffice)

68%

32%

Consumer-relatedproducts Engineeringconsumables

CONTRIBUTIONBYSEGMENT

61%39%

Fullyear2017

12

2017SALESBYMARKETSECTOR(%)

1

2

3

3

8

9

13

16

20

25

Publicsector

Agriculture

ConstrucUon

AlternaUveenergy

Security

Exports

Mining

Manufacturing

AutomoUve

Wholesaleandretail

13

2017SALESBYMARKETSECTOR(%)

0

0

1

0

6

15

8

2

33

32

3

Other

Agriculture

Publicsector

ConstrucUon

AlternaUveenergy

Security

Exports

Mining

Wholesaleandretail

AutomoUve

Manufacturing

Consumer-relatedproducts

1

4

1

6

0

0

10

25

17

6

30

Engineeringconsumables

14

Successfulbolt-onsandacquisi;onsinstrongereconomicsectorscon;nuetodiversifyourrevenuebase

2018

!  Boltworld–H2only

2017(a^erDec2016)

!  EternityTechnologies

!  TheDishedEndCompany

!  GearPumpDistributors–UK

NEWBUSINESSES

15

"

Boltworld

!  Oneofthelargeststockistsofawideandcomprehensiverangeofhigh-qualityindustrialfasteners

!  MergingintoFTSdivisionofRutherford

!  MaximumpriceR111m,includingR24mexcessinventory

!  Effec;vedate1June2018

2018ACQUISITION

16

"

EternityTechnologies

!  Supplierofba[eries,highfrequencychargersandrelatedba[eryequipmenttothetrac;onba[erymarket

!  Theyalsodesign,buildandmanageba[erybaysforwarehouseanddistribu;oncentres

!  Es;matedpriceR200m

!  3yearearn-out

2017ACQUISITION

17

SEGMENTRESULTS–CONSUMER-RELATEDPRODUCTS

Turnover OpMargin OperaUngProfit

Rm 2018 %ch 2017 2018 2017 2018 %ch 2017

Ongoingopera;ons 1476 9,9 1343 13,4% 13,2% 197 11,8 177

Newbusinesses 127 11,0% 14

Segmenttotal 1603 19,3 1343 13,2% 13,2% 211 19,6 177

!  Theautomo;ve,powertool,datanetworking,communica;onandba[erybusinessesallhadagoodstarttotheyear

!  Whilstourprojectssideofoursecuritybusinesseshadagoodfirsthalf,thedistribu;onsidewaswelldown

!  Eternityhasintegratedwellandhadagreatfirstsixmonths

18

SEGMENTRESULTS–ENGINEERINGCONSUMABLES

Turnover OpMargin OperaUngProfit

Rm 2018 %ch 2017 2018 2017 2018 %ch 2017

Ongoingopera;ons 1334 0,5 1327 7,0% 8,0% 93 (13,1) 106

Newbusinesses 21 3 28,6% 27,7% 6 1

Segmenttotal 1355 1,8 1330 7,3% 8,0% 99 (7,8) 107

!  Ourelectrical,hydraulics&pneuma;csandthermoplas;cpipeandfi]ngsbusinessesmainlydependantonmining,manufacturingandagriculturereallystruggledinthefirsthalf

!  Theywereresoluteindefendingmarginsandholdingmarketshare

!  DishedEndsbusinessintegratedandperformingtoexpecta;ons

19

SEGMENTRESULTSFORTHESIXMONTHS

Turnover OpMargin OperaUngProfit

Rm 2018 %ch 2017 2018 2017 2018 %ch 2017

Consumer-relatedproducts

1603 19,3 1343 13,2% 13,2% 211 19,6 177

Engineeringconsumables 1355 1,8 1330 7,3% 8,0% 99 (7,8) 107

Headoffice,sharedservices&elimina;ons

(3) (2) (20) (15)

TotalGroup 2955 10,6 2671 9,8% 10,1% 290 7,7 269

20

FINANCIALREVIEW

21

PROFITFORTHESIXMONTHSRm 2018 %ch 2017Turnover 2955 10,6 2671-Ongoingopera;ons 2807 5,2 2668-Newbusinesses 148 3Grossprofit 1076 9,0 987Opera;ngexpenses 786 9,4 718-Ongoingopera;ons 749 4,3 717-Newbusinesses 34 1-Learnershipprogramme(Maharishi) 3OperaUngprofit 290 7,7 269-Ongoingopera;ons 270 0,5 268-Newbusinesses 20 1Margin(%)Turnover 100,0 100,0Grossprofit 36,4 37,0OperaUngexpenses 26,6 26,9OperaUngprofit 9,8 10,1

22

PROFITFORTHESIXMONTHS

Rm 2018 %ch 2017OperaUngprofit 290 7,7 269Fairvalueadjustmenttoamountsduetovendors(realised) 4

Netinterestonfunding (43) (42)Interestpaidtovendors(imputed) (13) (10)ProfitbeforetaxaUon 238 9,7 217Taxa;on(Rate2018:26,9%2017:28,4%) 64 62

Profita^ertax 174 12,0 155Incomefromjointventure 1 2Profitfortheperiod 175 11,6 157Non-controllinginterest (8) (4)Acributableearnings 167 9,3 153

23

COMPARABLEEARNINGSFORTHESIXMONTHS

Rm 2018 %ch 2017Acributableandheadlineearnings 167 9,3 153Fairvalueadjustmentofvendorliability (4)Non-controllinginterest 1Comparableearnings 164 7,0 153

24

COMPARABLEEARNINGSFORTHESIXMONTHS

123139 131

173

139153

164175 172

181197

231243

0

25

50

75

100

125

150

175

200

225

250

275

2012 2013 2014 2015 2016 2017 2018

1sthalf 2ndhalf

25

EARNINGSPERSHAREANDDIVIDENDS

Cents 2018 %ch 2017EarningspershareComparable 517 7,0 483Basic 528 9,3 483Headline 528 9,3 483

Dividendspershare-Interim 190 180-Final 380Total 560

Dividendcover(Umes)atmid-year 2,72 2,68

26

STATEMENTOFFINANCIALPOSITION

Rm May18 May17Workingcapital 2008 1735Property,plantandequipment 277 260Goodwillandintangibles 1536 1413Investmentinjointventure 11 8Tax 12Netassets 3832 3428

Equity 2422 2186Bankborrowings 1045 973Duetovendors 319 269Tax 46TotalequityandliabiliUes 3832 3428

27

WORKINGCAPITAL

! Workingcapitaltradi;onallypeaksendofH1tocopewithan;cipatedincreasedseasonaldemandinH2

!  Salesgenerallysplit45/55betweenH1andH2(2017:45/55)

0,00,51,01,52,02,53,03,54,04,5

H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1

2011 2012 2013 2014 2015 2016 2017 2018

Inmonthsofsales

Onemonthofsales:H12018=R493mH12017=R445m

28

Rm 2018 2017Cashfromtrading 338 329Increaseinworkingcapital (238) (67)CashfromoperaUons 100 262Financecosts (43) (42)Taxpaid (30) (52)Cashgenerateda^ertax 27 168Share-basedpayments (17) (12)Dividendspaid (144) (116)Investedinnewbusinessesandproperty,plantandequipment (51) (108)

Netmovement (185) (68)Openingborrowings (860) (905)Closingborrowings (1045) (973)

CASHFLOWFORTHESIXMONTHS

29

OPERATINGMARGINFORTHESIXMONTHS

11,410,8

9,5

11,4

9,8 10,1 9,8

13,612,9

12,411,7

13,012,5

0

2

4

6

8

10

12

14

16

2012 2013 2014 2015 2016 2017 2018

H1 H2

%

30

TURNOVERFORTHESIXMONTHS

1,61,8

2,1

2,6 2,52,7

3,0

1,92,1

2,4

2,7

3,03,2

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

2012 2013 2014 2015 2016 2017 2018

H1 H2

Rbillion

31

SUMMARY

!  Inventoriesareupinan;cipa;onofbusysecondhalf

!  Exis;ngbusinessesshouldgeneratestrongcashflowsinH2

!  Exchangerateimpactsworkingcapitalrequirements

!  Wearewellwithinourbankingcovenants

!  Bankfacili;esareavailable

!  Capacityremainsforacquisi;ons

32

OUTLOOK

33

OUTLOOK-REMINDERS

!  HudacosalesarepredominantlydrivenbyGDPac;vity

!  AnyGDFIaddscapacityforfutureGDPac;vity

!  Randexchangeratehasabigimpactonpricingandprofitability

!  Hudacoisadecentralisedgroupthatismadeupof32separatebusinesses

•  21inengineeringconsumables

•  11inconsumer-relatedproducts

34

OUTLOOKH22018

!  Theeconomicturnaroundhasbeenslowerthanexpected

!  Hudacoisresilientintough;mes

•  Decentralisedstructureprovidesagility

•  Focusonbalancebetweenmargin,expensesandstock

!  Wes;llexpecttheposi;veimpactofPresidentRamaphosa’sgrowthini;a;vestocomethrough

!  Ourbusinessesaresizedop;mallyforcurrentmarketcondi;onsandarewellplacedtobenefitimmediatelyfromanyimprovementintheeconomy

!  Weexpectconsumer-relatedproductsbusinessestocon;nuetodowell

!  Engineeringconsumableswillprobablyhavetogrinditoutbutthesecondhalfisgenerallystrongerthanthefirsthalf

35

GrahamDunfordChiefexecu;veTel+27116575004grahamd@hudaco.co.za

CliffordAmoilsFinancialdirectorTel+27116575002camoils@hudaco.co.za

www.hudaco.co.za

CONTACTDETAILS

36

Theprecedingpresenta;on contains forward looking statements about theHudacoGroup’sopera;onsandfinancialposi;on.TheyarepreparedingoodfaithandarebasedonHudaco’sbest es;matesandinforma;onatthe;meof preparing the presenta;on. They are nonetheless subject to significantuncertain;es and con;ngenciesmanyofwhich areunderstandably beyondHudaco’s control. Unan;cipated eventswill occur and actual future eventsmaydiffermaterially fromcurrentexpecta;ons formany reasons includingnew business opportuni;es, as well as many other internal and externalfactors.AnyofthesefactorsmaymateriallyaffectHudaco's futurebusinessac;vi;esandfinancial results.Noneof the forward looking statementshasbeenreportedonbyHudaco’sauditors.

DISCLAIMER