Toyota Financial Services (South Africa) Limited - General Business Update September 2020 - Toyota South Africa
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Toyota Financial Services (South Africa) Limited
General Business Update
September 2020
Contact Details 2
Toyota Financial Services (South Africa) Ltd
Name Position Contact
Marius Burger Chief Executive Officer MBurger1@toyfin.co.za
Shigeaki Matsui Senior Executive Coordinator SMatsui@toyfin.co.za
Thabo Manaka SVP: Corporate Administration TManaka@toyfin.co.za
Nishen Daya VP: Finance, Treasury & IT NDaya@toyfin.co.za +27 11 809 2188
Strategy
Toyota Motor Finance (Netherlands) B.V.
Richard Nelson General Manager, Treasury Richard.Nelson@toyota-Fs.com +44 (0) 1737 365 594
ABSA CIB
Kumeshen Naidoo Head: Debt Capital Markets Kumeshen.Naidoo@absa.africa +27 11 895 6555
Matthew Duggan Head: Syndication Matthew.Duggan@absa.africa +27 11 895 7864
Table of Contents 3 Overview of The Toyota Group 4 Toyota Financial Services (South Africa) Ltd Group Structure 7 Guarantee Structure and Credit Support Agreements 9 Performance Highlights a. Toyota Motor Corporation 13 b. Toyota Motor Finance (Netherlands) B.V. 17 c. Toyota South Africa Motors (Pty) Ltd 21 d. Toyota Financial Services (South Africa) Ltd 24 COVID-19 Response 36 Key Credit Highlights 46
OVERVIEW OF THE TOYOTA GROUP
Toyota Group Business Areas 5
Markets vehicles in over 190 countries / regions
50 overseas manufacturing facilities in 27 countries / regions
AUTOMOTIVE BUSINESS NON AUTOMOTIVE BUSINESS MOBILITY SERVICES*
OTHER
BUSINESSES
FINANCIAL SERVICES
Consumer Financing Housing
Dealer Support & Financing Marine
Banking Telecommunication
Securities Services e-Business
Intelligent Transport Services
Ancillary Products & Services
Toyota Research Institution
*New business area - announced 2020
Global Mobility Services: Kinto 6
Achieve transition “from asset business
Service to transaction business”
companies
Strategic Monetizing car Corporate fleet mobility Integrated multimodal
focus areas ownership solutions mobility services
Brand for all services Key asset enablers 5 Business models
KINTO One KINTO Share KINTO Flex
KINTO Protect Car Sharing Car Subscription
Full Maintenance
Insurance
Kintoun – Japanese for Rental
“flying nimbus”
KINTO Join
Carpooling
KINTO Link
Digital Payment KINTO Ride KINTO Go
Platform Ride Hailing Multi Modal
TOYOTA FINANCIAL SERVICES (SOUTH AFRICA) LTD GROUP STRUCTURE
Toyota Financial Services (South Africa) Ltd 8
Toyota Motor Corporation
(the “Parent”)
100% Subsidiary 100% Subsidiary
Toyota Financial Services
Corporation (“TFSC”)
100% Subsidiary 100% Subsidiary
Toyota Motor Finance WesInvest Holdings (Pty) Ltd,
Toyota Financial Services Toyota South
Toyota Africa
South
(Netherlands) B.V. a wholly owned subsidiary of
(UK) PLC (Pty) Ltd (Pty)
Africa
(“TMFNL”, the “Guarantor”) FirstRand Bank Ltd
Ltd
33.3% Ownership 33.3% Ownership 33.3% Ownership
Toyota Financial Services
(South Africa) Ltd
ZAR 10 Billion DMTN Programme (“TFSSA”, the Issuer)
GUARANTEE STRUCTURE AND CREDIT SUPPORT AGREEMENTS
Credit Support Structure 10
Toyota Motor Corporation
Credit Support Agreement
Toyota Financial Services Corporation
Credit Support Agreement
TCPR TMCC TLG TCCI TFA TFC TFNZ TFSUK TKG TMFNL
(Puerto Rico) (USA) (Germany) (Canada) (Australia (Japan) (New Zealand) (UK) (Germany (Netherlands)
Guarantee
TBR TLP TBP TFSSA TLT TCAPM
(Russia) (Poland) (Poland) (South Africa) (Thailand) (Malaysia)Guaranteed by TMFNL Under Credit Support Agreement 11
TMC / TFSC / TMFNL
Toyota Motor Corporation (TMC)
Rating Long Term ShortTerm
Credit Support Moody’s A1 P-1
Agreement Standard & Poor’s A+ A-1+
TFSSA
Toyota Financial Services Corp (TFSC)
Rating National Scale Rating Outlook
Credit Support Moody's Aaa.za Negative
Agreement
• TMC will own all the TFSC shares for so long as
Toyota Motor Finance (Netherlands) (TMFNL) TFSSA has outstanding bonds
• TMC will make available any cash to cover shortfall in
case TFSSA cannot cover its obligations
Guarantee
• TMC & TFSSA agree that holders have the right to claim
directly to TMC to perform any of its obligations
• There has been no change under Dutch Law in the last
Toyota Financial Services (South Africa) (TFSSA) yearPERFORMANCE HIGHLIGHTS
a. TOYOTA MOTOR CORPORATION
Global Vehicle Sales 14
10
8.98 8.96
9
-19.6%
1.77 1.35 1.39 1.33 1.37
8 1.64 1.76
1.59
7.20
7 1.59
1.28 1.54 1.68 1.61
1.61
UNITS (MILLION)
1.68 1.49 1.35
6
1.33 0.93 0.97 0.99 1.03
0.84 0.86 0.84
5 0.80
0.80
4
2.53 2.84 2.81 2.75 2.71 7.20
2.47 2.72 2.84
3 1.87
2
1 2.07 2.28 2.37 2.15 2.06 2.27 2.26 2.23 2.24
0
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
FORECAST
Japan N. America Europe Asia Other (Central and South America, Oceania, Africa, The Middle East etc.)
Source: Toyota Motor Corporation March 2020 Results Release Presentation and FY2021 First Quarter Financial ResultsToyota Motor Corporation – Consolidated Financial Summary 15
60 1.8
50
1.7
40
JPY (TRILLION)
DEBT:EQUITY
1.6
30
1.5
20
1.4
10
0 1.3
FY14 FY15 FY16 FY17 FY18 FY19 FY20
Total Assets (LHS) Total Liabilities (LHS) Total Equity (LHS) Debt to Equity (RHS)
Source: Toyota Motor Corporation March 2020 Results Release PresentationToyota Motor Corporation – Consolidated Financial Summary 16
31 3.0
30
2.5
29
2.0
28
JPY (TRILLION)
JPY (TRILLION)
27 1.5
26
1.0
25
0.5
24
23 0.0
FY14 FY15 FY16 FY17 FY18 FY19 FY20
Net Revenue (LHS) Net Income (RHS)
Source: Toyota Motor Corporation March 2020 Results Release Presentationb. TOYOTA MOTOR FINANCE
(NETHERLANDS) B.V.Toyota Motor Finance (Netherlands) B.V. 18
Business Overview
• The principal activity of TMFNL is to act as a group finance company for some of the subsidiaries and
affiliates of TMC and TFSC.
• TMFNL raises funds by issuing bonds and notes in the international capital markets and from other
sources and on-lends to other Toyota companies.
• TMFNL also issue guarantees for debt issuances of certain other Toyota companies.
• In addition, TMFNL generates income from other investments and deposits incidental to its primary
funding activities.
• As a group finance company, TMFNL is dependent on the performance of the subsidiaries and
affiliates of TMC and TFSC to which it grants loans.Toyota Motor Finance (Netherlands) B.V. – Financial Summary 19
18
16
14
12
EUR (BILLION)
10
8
6
4
2
0
FY14 FY15 FY16 FY17 FY18 FY19 FY20
Total Assets Total Liabilities
Source: Toyota Motor Finance (Netherlands) B.V. March 2020 AFSToyota Motor Finance (Netherlands) B.V. – Financial Summary 20
180 16
160 14
140
12
120
10
EUR (MILLION)
EUR (MILLION)
100
8
80
6
60
4
40
20 2
0 0
FY14 FY15 FY16 FY17 FY18 FY19 FY20
Revenues (LHS) Profit Before Tax and Derivative Effects (RHS)
Source: Toyota Motor Finance (Netherlands) B.V. March 2020 AFSc. TOYOTA SOUTH AFRICA MOTORS (PTY) LTD
New Vehicle Sales(1) – South Africa 22
700
600
552
537
500
400
380
UNITS (‘000)
300
200
100
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Forecast(2)
CALENDAR YEAR
Source: NAAMSA (including non-reporters)
1. Total vehicle sales for each year is based on a calendar year
2. 2020 based on forecasted figuresVolume and Market Share 23
140 35%
120 30%
100 25%
MARKET SHARE
80 20%
UNITS (‘000)
60 15%
40 10%
20 5%
0 0%
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Toyota New Vehicle Sales (LHS) % Toyota Market Share (RHS)
% TFSSA Market Share (RHS)
Source: NAAMSA (including non-reporters)c. TOYOTA FINANCIAL SERVICES
(SOUTH AFRICA) LTDToyota Financial Services (South Africa) Ltd - Financial Summary 25
18% 2.5% 600
16%
500
14% 2.0%
R409m
ZAR (MILLION)
12% 10.53% 400
1.5%
10%
300
8% 1.25%
1.0%
6% 200
4% 0.5% 100
2%
0% 0.0% 0
FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20
ROE (LHS) ROA (RHS) Net Income after taxZAR (MILLION)
-
200
400
600
800
1,000
1,200
1,400
1,600
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
FY17
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
New Business Production
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
FY18
Oct-17
Nov-17
Dec-17
Fixed Amount
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
FY19
Dec-18
Jan-19
Linked Amount
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
FY20
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Average monthly fixed amount: ZAR725m (55%)
Average monthly linked amount: ZAR585m (45%)
26Revenue Development 27
6 2,000
1,800
5
1,600
1,400
4
ZAR (MILLION)
ZAR (BILLION)
1,200
3 1,000
800
2
600
400
1
200
0 0
FY16 FY17 FY18 FY19 FY20
Revenue (LHS) Net Interest Income (RHS)Portfolio breakdown 28
% Split of existing business Split of business
7% 2%
23%
17%
55% 75%
21%
Private Individual Companies Self Employed Taxi No Balloon Balloon GFVIFRS 9 Provisions 29
Total Impairment Coverage Impairment Coverage Stage
60% 1.2%
Cumulative Movement 4.53% 1.07%
50% 1.0%
3.42% 1.11% 0.70%
40% 0.8%
0.51%
30% 39.14% 0.6%
1.41%
33.27%
20% 26.85% 0.4%
3.42%
10% 0.2%
2.01% 2.01% 7.88% 9.15% 10.52%
0% 0.0%
Mar-18 Mar-19 Mar-20
Stage 2 Stage 3 Stage 1
Mar-18 Mar-19 Mar-20Other Key Ratios 30
1.0% 1.5%
0.9% 0.87% 1.5%
0.8%
0.7% 1.4%
0.6%
1.4%
0.5%
0.4% 1.3%
1.28%
0.3%
1.3%
0.2%
0.1% 1.2%
0.0%
1.2%
FY16 FY17 FY18 FY19 FY20
FY16 FY17 FY18 FY19 FY20
Write-Off % OPEX RatioToyota Financial Services (South Africa) Ltd - Financial Summary 31
45 12.0
40 11.5
35 11.0
10.5
ZAR (BILLION)
30 10.1 x
10.0
25
9.5
20
9.0
15
8.5
10 8.0
5 7.5
0 7.0
FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20
Assets Liabilities Equity Debt to EquityFunding Balances 32
1%
FY20 2% 2%
6%
10%
16%
64%
Japanese Banks Bonds Intercompany Loans Local Banks
ABS Commercial Paper Overnight facilitiesZAR (MILLION)
-
200
300
400
500
600
100
Aug
Sep
Oct
Nov
Dec
FY21
Jan
R651m
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
FY22
Nov
TFSSA DCM Maturity Profile
R1,419m
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
FY23
Nov
R594m
Dec
Bonds
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
FY24
Nov
Dec
R2,049m
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
FY25
Nov
R1,006m
Dec
Jan
Feb
Mar
33Bond Issuances 34
TFSSA Redemptions and Issuances*
ZAR BILLION
2.00 1.4 1.4 1.5
0.8 0.9 1.0 1.2
0.6 0.7 0.5
1.00 0.4 0.4 0.3
0.0
0.4
0.00
-1.00 2015 2016 2017 2018 2019
-2.00 -1.3
-3.00 -2.1 -2.2 -2.1
-4.00
-3.0
Redemptions 1 yr 3 yr 5 yr
Redemptions 2020
Redeemed Upcoming Redemptions
3 year 5 year 12 months 3 year 3 year
Amount ZAR326,000,000 ZAR400,000,000 ZAR661,000,000 ZAR451,000,000 ZAR200,000,000
Coupon indicator Floating Floating Floating Floating Floating
Spread over
124bps 150bps 83bps 110bps 110bps
benchmark
Maturity 20-Mar-2020 6-Jul-2020 25-Apr-2020 12-Oct-2020 30-Nov-2020
Bond Code TFS144 TFS136 TFS160 TFS147 TFS151
*Notes included: R0.5bn 3 month CP issued in 2016 and R0.25bn 4 year FRN issued in 2017Bond Issuances 35
FY2021 Target Issuance*
1 year 3 year 5 year
Amount ZAR500,000,000 ZAR1,500,000,000 ZAR1,000,000,000
Coupon indicator Floating Floating Floating
Spread over benchmark TBC TBC TBC
Maturity TBC TBC TBC
ZAR BILLION
2
1.5
1
1
0.5
0
Maturities 1 yr 3 yr 5 yr
-1
-2 -1.7
*Indicative amounts subject to business requirementsCOVID-19 RESPONSE
Toyota South Africa Motors COVID-19 Response 37
•Lockdown regulations begin
•Toyota SA plant closed
26 March
•Staff COVID-19
testing
•Toyota SA plant closed
•Pre-screening
•Toyota dealerships closed
•Risk assessments
Level 5 •In line with COVID-19 government
regulations General •Social distancing
COVID-19 •PPE issued
controls •Sanitisation stations
•Plant operating per regulations (50% implemented •Sanitisation time
capacity)
•Daily health
•Toyota dealerships reopened (sales and
questionnaire
Level 4 services to level 4 & 5 essential workers
only) •Triage center
established
•Plant operating at full capacity
•Dealerships open
Level 3 •In line with COVID-19 government
regulationsToyota Financial Services SA COVID-19 Response 38
Office lockdown from 27 March 2020
All staff have been virtual from this date, and
continue to be 100% virtual at present. Full ability to
service the market
Enhanced usage of online tools for communication
and approvals, including Microsoft Teams, protected
e-signature approvals, etc.
Covid19 Task Committee set up to address all
potential impacts, including
• Employee wellness and support
• COVID-19 office protocols
• Office preparations for future useToyota Financial Services SA COVID-19 Response 39
• Availability period: 1 April 2020 – 31 June 2020
3 Month Relief Program • Eligibility criteria and pre-conditions needed to be met as at 29 February
to Retail Customers • Interest and fees to be charged during relief period
• Contract extended by 3 months
• Eligible to customers whose balloon payments expire within 12 months
Extension of Balloon
• Ability to refinance the balloon for an additional term subject to maximum
Payment term of 96 months
• Interest moratorium on all wholesale balances during level 5 lockdown
• Additional moratorium based on business activities during level 4
Dealer Assistance lockdown
• Total interest foregone of R9.62m
• Step up payments for 3 months, based on capacity constraints driven by
COVID-19 regulations
Specific Taxi Relief • Applicable period: August 2020 – October 2020
• Term extension by 3 months
• Interest and fees to be charged during relief periodToyota Financial Services SA COVID-19 Impact 40
Take-up rates of retail assistance programs
• 34,405 qualified applications received (20% of total book), with 83% take-up rate
amounting to R7.8b in loan balances, monthly cashflow of R227m (status as at 31 July
2020)
Impairment Coverage Per Stage Total Impairment Coverage
60% 1.07% 1.2% Cumulative Movement
6.28%
0.94%
50% 1.0%
0.70%
1.75%
40% 0.8% 4.53%
30% 39.14% 37.14% 0.6%
1.11%
33.27%
20% 0.4%
10% 0.2% 4.53%
9.15% 10.52% 11.58% 3.42% 3.42%
0% 0.0%
Mar-19 Mar-20 Jul-20
Stage 2 Stage 3 Stage 1
Mar-19 Mar-20 Jul-20Regulatory 41 Protection of Personal Information Act (POPI) and General Data Protection Regulations (GDPR) • The POPI Act came into effect on the 1st of July 2020 giving TFS 12 Months to implement and comply. • Programs TFS has embarked on for implementation include (but not limited to): • Managing 3rd party/supplier privacy risks, • Implementing privacy notices, Managing data privacy incidents and general training to staff. • Appointment of Privacy Officer. FAIS General Code of Conduct Amendments • Fit and Proper Amendments: - New representatives - FSP will need to enhance current controls to ensure it does not appoint a person who is an unrehabilitated insolvent. - Existing representatives - FSPs will need to put controls in place to ensure that those representatives that were sequestrated after appointment as representative do not create unfair outcomes for clients or damages the reputation of the FSP because of their sequestration/financial difficulties until they have been rehabilitated. • GCOC: Remuneration of representative should be linked to fair market outcomes attached to their performance indicators. • Complaints Management: The Complaints Management Framework should be enhanced to ensure no barriers for complainants.
NEW PRODUCTS, DEVELOPMENTS AND AWARDS
New Products 43
Investments 44
R4.28 billion
Total Investment
‘19-’21
Hiace ALC R450 million
Hilux SKD Kits R20 million
Hiace volume increases R91 million
Warehouse expansion R365 million
Ongoing investment R928 million
All new model R2.43 billionRecent Awards 45
Consumer Awards: Adventure SUV – Fortuner
2019 NADA DSI Awards – Toyota and Hino
Parts and Service Distributor of the year – HINO
NADA DSI Platinum Award
#1 in Data Track CE and CCE Surveys
ORCHID Awards- Corolla Hatch, Hilux Legend 50, Lexus Hybrid
SAVRALA 2019 Manufacturer of the year awardsKEY CREDIT HIGHLIGHTS
Key Credit Highlights 47
Outlook Negative
FC (P)A2
LC Aaa.za
Key Credit Highlights
• On 31 March 2020, Moody’s Japan K.K. downgraded
Toyota Financial Services (South Africa) Ltd’s (TFSSA)
• (P)A2 rated credit investment
global scale rating on its backed senior unsecured
• Strong track record and stable management team at TFSSA domestic medium-term note (DMTN) program to (P)A2
from (P)A1.
• Resilient sales during bull and bear markets thus serving as a
defensive investment • Ratings Rationale
The downgrade reflects the change in South
• South African operation benefits from the global brand name Africa's sovereign rating and local currency
bond ceiling.
• Reporting into and oversight from Japan
TFSSA is the South African captive finance
• Strong shareholder support with the ultimate shareholder’s
subsidiary of Toyota. Its notes are supported by
equity in excess of 2 trillion (ZAR equivalent) various entities within the Toyota group.
Key Rating Agency Highlights TFSSA's (P)A2 global scale rating is based on
the guarantee provided by Toyota Motor
Finance (Netherlands) B.V. (TMFNL, A1 review
• Strong parental support for downgrade).
• Substantial market share of Toyota dealer finance sales The one-notch difference between TFSSA and
its guarantor's A1 rating reflects the risk that
• Strong position in the global vehicle market with extensive TMFNL's guarantee may not provide for timely
geographic and product diversity and effective payments to creditors in the event
of potential tail risk scenarios, which is captured
• Strong engineering and technological leadership and ability
in South Africa's bond ceiling.
to consistently reduce costs
• Brand known for quality, durability and reliabilityDisclaimer
This brochure/document/material/report/communication/commentary (this commentary) has been prepared by Toyota Financial Services (South Africa)
Limited. TFSSA – an Authorised and Registered Credit Provider with company registration number 1982/010082/06 and with its registered offi ce at First Floor,
Spartan House, 15 Spartan Crescent, Woodmead, Johannesburg, Republic of South Africa. TFSSA has issued this commentary for information purposes only
and You must not regard this as a prospectus for any security or financial Product or transaction. TFSSA does not expressly, tacitly or by implication represent,
recommend or propose that the securities and/or financial or investment Products or services (the Products) referred to in this commentary are appropriate
and/or suitable for Your particular investment objectives or financial situation or needs. This commentary is not, nor is it intended to be, advice as defined
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subject to TFSSA’s internal approvals and a formal agreement between You and TFSSA. All the risks and significant issues related to or associated with the
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copying or use of this information or views may result in criminal or civil legal liability. Toyota Financial Services (South Africa) Limited, Reg. No.
1982/010082/06 Authorised Financial Services Provider. Registered Credit Provider, Reg. No. NCRCP62.You can also read
