Wrap Text
BAW/BAWP - Barloworld Limited - Audited results for the year ended 30 September
2011
Barloworld Limited
(Registration number 1918/000095/06)
JSE codes: BAW and BAWP
ISIN codes: ZAE000026639 and ZAE000026647
Audited results for the year ended 30 September 2011
Salient features
- Revenue up 22% to R49 823 million
- Operating profit up 51% to R2 289 million
- HEPS from continuing operations up 120% to 465 cents
- Strong cash generation from operations R3 104 million
- Net debt to equity declines to 36% from 47%
- Total dividend of 155 cents per share up 107%
Clive Thomson, CEO of Barloworld, said:
"Trading results were ahead of expectation and the group delivered a strong
performance for the 2011 financial year. Good growth in the mining sector,
together with some significant contract awards, led to significantly higher
profits in Equipment southern Africa and Russia. Automotive and Logistics
produced a pleasing performance in a competitive trading environment, while the
Handling division showed a substantial turnaround from the prior year.
We expect to maintain the positive momentum into the new financial year. While
commodity prices are off their highs, they are anticipated to remain favourable
for mining investment and production. This will benefit trading in the first
half of 2012, while growth in the second half will be slower due to the higher
base. Overall we expect to make solid progress in the year ahead".
14 November 2011
Chairman and Chief Executive`s report
Overview
The global demand for commodities, led by China, which started in the latter
part of our 2010 financial year, continued strongly in the current year. While
developed economies have shown little growth during the period, growth in
emerging economies has been much stronger and resource intensive.
The group produced a very strong performance in the current year with operating
profit of R2 289 million being 51% up. Headline earnings per share from
continuing operations of 465 cents is 120% above the 212 cents earned in 2010.
The total dividend for the year of 155 cents is 107% up on the prior year.
Strategic developments
Progress was made on a number of important strategic transactions which position
the group for future growth and reallocate capital to higher returning
businesses.
We acquired the remaining 50% of our Russian Caterpillar dealership for US$52
million (R361 million) effective 1 October 2010 and the business has delivered
well ahead of expectations.
The disposal of car rental Scandinavia was successfully concluded with the
receipt of the final balance owing of R174 million by mid-December 2010.
The sale of the loss making Logistics African and Asian non-corporate trader
businesses was completed on 28 February 2011. Following the transaction we took
a decision effective 1 May to integrate our Automotive and Logistics divisions
and this has progressed well.
The transaction between Caterpillar Inc. and Bucyrus International closed in
July 2011. We have entered into preliminary discussions with Caterpillar with a
view to the possible acquisition of Bucyrus distribution rights and assets in
our existing dealership territories. We are still in the early stages of this
process and are not in a position to estimate with any accuracy how this could
affect our future cash flows and profitability.
Operational review
Equipment
Southern Africa
The increased activity levels reported in the first half of the year and driven
mainly by mining and contract mining demand, accelerated in the second half of
the year on the back of strong commodity prices. Revenue for the year of R12.6
billion was 50% up on 2010.
Due to a number of significant contract awards, the current year represented a
record for the sale of large mining equipment which in unit sales surpassed the
previous high set in 2008.
South Africa remains the largest source of revenue in the region based on coal
and iron ore mining. Mozambique has emerged as the second largest contributor to
revenue following the deliveries to Vale and contract miners for the Moatize and
Riversdale coal projects respectively. Zambia produced good revenue growth
supported by strong global copper demand while revenue in Botswana more than
doubled in response to improved diamond mining activity. Revenue in Angola which
declined significantly in 2010 showed a solid increase in the current year
following recent government attempts to stimulate the economy through
infrastructure development.
The construction sector in South Africa remains subdued with some activity
coming from public corporations such as Eskom and SANRAL as well as the mining
sector.
The overall performance was boosted by good after sales revenues. This
contributed to a pleasing improvement in the operating margin for the year to
9.8% which was strongly up on the prior year (8.7%).
Iberia
The sovereign debt crisis in the Eurozone and the fiscal austerity measures
introduced in both Spain and Portugal to reduce their budget deficits have
severely impacted these economies, in particular the investment in public works
and construction.
The Spanish economy is currently in a state of limbo ahead of the upcoming
general elections on 20 November and while the economy is not yet officially
back in recession, domestic demand continues to decline. The equipment market in
Spain has suffered a further decline in the current year and is estimated to
have decreased by over 90% since 2007. Against this backdrop, Iberia revenue in
Euro terms dropped by a further 6% in the current year.
Corrective action to further realign the cost base with lower activity levels
was necessary in both Spain and Portugal with restructure costs of Euro7.5
million (R71 million) incurred including Euro0.6 million to rationalise the
short-term rental business. The rental fleet (in particular the non-Caterpillar
allied component) has also been dramatically reduced, to ensure improved
utilisation rates.
The management team has however produced some noteworthy successes. Importantly,
our market share in Spain has been steadily rising on the back of the strength
of our aftermarket support for customers and the durability of the Caterpillar
machines.
While the firm order book at September 2011 of Euro250 million is significantly
up, it includes two large package deals recently awarded and belies the general
underlying market weakness. The power systems business in Iberia still shows
life particularly in the electric power generation segment while the marine
market has declined following cuts in government subsidiaries to the Spanish
shipping industry.
Russia
The timing of the acquisition of the remaining 50% of the Russian operations
proved opportune. Revenue for the year of US$374 million was 81% up on the prior
year, being strongly driven by mining as well as a recovery in construction.
A pleasing aspect of the current year`s performance was the continued increase
in parts revenue. Current year revenue was 45% ahead of the prior year (which in
turn showed a similar increase in 2010). The success in growing the machine
population in Russia would now appear to be driving profitability as this young
dealership shows signs of the more mature Caterpillar business model.
The power business which benefited from the introduction of new management
generated a significant increase in revenue driven by sales into the electric
power and mining segments.
The total operating profit after amortisation of intangibles of US$32.8 million
for the year was almost three times that generated in 2010 while the operating
margin of 8.8% was a pleasing achievement for a dealership in the early stages
of its development.
Automotive and Logistics
The newly combined division which accounts for a sizeable part of total group
revenue generated an 8% revenue increase in the current year.
Car rental
Avis Rent a Car increased revenue by 4% compared to 2010, a year which included
the FIFA World Cup. Rental days increased by 2% however rental related revenue
was down by 3% as competition for market share intensified. Operating profit for
the business was below the prior year due to the abnormal used vehicle profits
earned in 2010 ahead of the FIFA World Cup. The second half of this year
generated a pleasing operating profit slightly ahead of the same period in the
prior year.
Motor retail
Revenue in Motor Retail southern Africa increased by 14%, in line with industry
growth for new passenger car sales. Operating profit improved as a result of
increased new vehicle sales and improved finance and insurance profitability.
Motor Retail Australia generated an operating profit of R100 million which was
22% up on 2010, notwithstanding industry sales in Australia being 4% down. Our
Volkswagen dealerships in particular generated a strong performance.
Fleet services
Avis Fleet Services increased revenue by 15% by growing the fleet under
management by 27% and the finance fleet by 4%. However, interest margins in the
current low interest rate environment remained under pressure.
Logistics
Logistics generated an operating profit of R27 million for the year compared to
a profit of R10 million in 2010. The southern African business continued to be
plagued by lower volumes in the building and construction industry, but saw some
improvement in the mining, consumer goods and furniture segments. The
international businesses generated some improvement in activity, but over-
capacity in the airfreight market has resulted in a reduction in air rates,
especially from Asia to Europe.
Handling
This has been a recovery year for the Handling businesses. Revenue for the year
is well up on 2010 with the most notable growth in Belgium, The Netherlands as
well as the SEM and agriculture businesses in southern Africa. Short-term hire
revenue was 18% up on the prior year, with double digit increases achieved in
all territories.
The division returned to profitability in the current year generating an
operating profit of R72 million compared to a loss of R3 million in 2010. All
territories except for the US and the nascent agriculture businesses in
Mozambique and Siberia were profitable at the operating level. The South African
agriculture business in particular generated strong growth in profitability
boosted by a 35% increase in equipment sales.
Funding
The group once again produced a positive inflow of funds for the year of R946
million notwithstanding the payment of R361 million to acquire the 50%
shareholding in the Russian equipment business and working capital demands in
the wake of strong growth in our mining territories. Net debt of R4 489 million
(2010: R5 049 million) is well below the prior year and the group`s financial
position is strong.
The remaining balance outstanding on corporate bond BAW1 of R1 270 million was
repaid in July 2011 and long-term debt at year end comprise 76% of total debt.
Cash and cash equivalents at 30 September 2011 were R2 754 million, R826 million
higher than last year.
Sustainable development and transformation
In line with our integrated approach to creating value, we continue to entrench
sustainable development in our strategic planning and value creation activities.
Tragically there were two work related fatalities during the year and several
actions have already been taken to improve safety processes and training.
Our medium-term focus is on improving energy and emission efficiency as well as
more efficient water consumption. In 2009 we set an aspirational target of a 12%
non-renewable energy and greenhouse gas emissions efficiency improvement by end
2014 off a 2009 baseline year. We have made good progress towards these goals
with a 3% reduction in energy consumption and a 6% year-on-year reduction in GHG
emissions.
Empowerment and Transformation is one of our key strategic focus areas and
measureable annual targets have been put in place. In the annual assessment by
Empowerdex and Financial Mail of South Africa`s Top Empowerment Companies,
Barloworld currently leads the general industrial sector. In this regard, each
of our South African business units has improved its BBBEE score over 2010 and
all of our South African businesses have now achieved a Level 2 rating with the
exception of one that retained their Level 3 rating. Barloworld Limited received
an overall Level 2 rating from Empowerdex which improved from Level 3 last year
Governance
We continue to embed the principles of King III into our governance practices.
In light of this, while the overall board composition remains unchanged, a
number of appointments have been made to bolster the various board committees.
Outlook
The outlook will be affected by the ability of policy makers to find a solution
to the Eurozone debt crisis and restoring financial stability in that region. It
also requires the governments of developed economies managing and controlling
their ballooning public debt levels.
Equipment southern Africa goes into the new financial year with a firm order
book of R5.2 billion mainly in mining and contract mining. While commodity
prices have declined in recent months we have not seen any slowdown in mining
activity as prices remain at levels favourable for mining investment and
production. The major challenge facing us will be securing the equipment in the
wake of increasing Caterpillar lead times due to rising demand for mining
equipment globally.
We are not forecasting any recovery in the Iberian machine industry in the year
ahead but activity will be assisted by the commencement of deliveries in 2012 of
the large package deals in our closing order book. Nonetheless we are planning
to take further action to align workforce levels with the current depressed
state of the market. The overhead structure of the business has already been
substantially reduced but requires further streamlining to position the business
to return to acceptable levels of profitability once the market recovers.
In Russia the firm order book is slightly down on the prior year but activity
levels remain strong. While we are expecting continued growth in 2012 it will be
at a slower rate than the current year.
Avis Rent a Car is expected to maintain the current momentum, despite the
competitive trading environment. The business will continue to focus on
improving rates, maintaining high fleet utilisation and maximising used vehicle
profits on ex-fleet vehicles.
The South African car market will continue to grow in 2012 albeit at a slower
pace as the disposable income of households remains under strain. The weakening
Rand is likely to create some pressure on manufacturers to increase prices
following the relative price stability in 2011. Our Australian business is
expected to maintain its good performance.
Avis Fleet Services will see further growth in the fleet under maintenance as
well as the finance fleet. There are currently a number of large tenders
awaiting adjudication which could materially impact revenues.
Logistics is expected to benefit from the divisional integration and the
internal focus on improving volumes and margins across all businesses.
Activity in the handling business in Europe and the US will be driven by
economic growth in these regions. Recent economic data out of the US is mixed.
The agriculture business in southern Africa should continue to benefit from
strong food prices and we will continue to grow this business in other southern
African countries as well as Russia.
We expect to be able to maintain the positive momentum into the new financial
year. This will benefit trading in the first half of 2012, while growth in the
second half will be slower due to the higher base. Overall we expect to make
solid progress in the year ahead.
DB Ntsebeza CB Thomson
Chairman Chief Executive Officer
Group financial review
Revenue for the year increased by 22% to R49.8 billion. Improved trading
conditions in the mining sector resulted in a 50% increase in revenue earned in
Equipment southern Africa. The consolidation of the Russian equipment business
following the acquisition of the remaining 50% in October 2010, contributed
revenue of R2.5 billion.
Earnings before interest, taxation, depreciation and amortisation (EBITDA)
increased by 20% to R3 993 million while operating profit rose by 51% to R2 289
million. Operating profit of R1 435 million for the second half of 2011 was R581
million (68%) up on the profit earned in the first half.
Operating profit in Equipment southern Africa increased by 69% to R1 228
million. The Russian equipment business delivered an excellent result,
contributing R226 million to the group`s operating profit in the first year of
consolidation. The Automotive and Logistics division performed well in a
competitive trading environment, holding operating profit steady at R911 million
for the year. The Handling division recorded a pleasing turnaround while trading
conditions in Equipment Iberia remained difficult. Redundancy and restructuring
charges of R71 million were incurred this year (2010: R59 million), principally
in Spain. The increase in the company`s share price since September 2010
resulted in an increased charge of R33 million in respect of the provision
required for cash-settled Share Appreciation Rights previously awarded to
employees.
The total negative fair value adjustments on financial instruments of R65
million (2010: R89 million) mainly comprised the cost of forward points in
foreign exchange contracts.
Net finance costs decreased by R32 million to R693 million due to lower short-
term borrowing rates and reduced average debt.
Exceptional gains of R62 million mainly comprise the impact of writing up the
existing 50% interest in the Russian business in terms of IFRS 3 Business
Combinations (R64 million), profits on disposals of properties (R214 million),
reduced by goodwill impairments of R211 million.
Taxation, before Secondary Tax on Companies (STC), increased by 179% to R566
million. The effective taxation rate (excluding STC, prior year taxation and
taxation on exceptional items) was 34.2% (2010: 33.8%). The tax rate was
adversely impacted by the decision not to increase the deferred tax asset in
Iberia.
Income from associates rose by R55 million to R71 million mainly owing to a
substantially increased contribution from the Democratic Republic of Congo
equipment joint venture.
The non-controlling interest in the current year`s earnings includes R15 million
representing the dividends paid to the holders of 14 485 013 ordinary shares in
terms of the BEE transaction concluded in 2008. These shares are not included in
issued shares for purposes of calculating headline earnings per share (HEPS).
HEPS from continuing operations increased by 120% to 465 cents (2010: 212
cents).
Cash flow and debt
The continued focus on cashflow resulted in a net inflow for the year of R946
million (2010: R2 286 million). Working capital increased by a modest R27
million following the reduction of R1 069 million in 2010. Notwithstanding the
substantial growth achieved in the southern African equipment business, working
capital decreased by R100 million in the year due to increased payables.
The final balance of R174 million owing from the disposal of the Scandinavian
car rental business last year was received in December 2010 and the remaining
50% shareholding in the Russian equipment business was acquired for R361 million
(US$52 million).
Net interest bearing debt at 30 September 2011 was reduced by R560 million to R4
489 million (2010: R5 049 million).
Strong collections from customers, including contractual deposits on equipment
sales, in the closing days of the financial year and reduced short-term funding
commitments resulted in cash and cash equivalents increasing by R826 million to
R2 754 million (2010: R1 928 million).
Further progress was made in our initiative to address the group`s funding
maturity profile and to reduce the company`s reliance on short-term funding.
Long-term debt raised during the year included three corporate bonds totalling
R1 234 million (BAW9 to 11). The funds raised were utilised to repay the
remaining balance outstanding in respect of corporate bond BAW1 (R1 270 million)
which matured in July 2011. The long-term maturity profile at 30 September 2011
was 76% (2010: 61%).
Debt profile
R`million Debt 2012 Redemption 2014 2015
September 2013 onwards
2011
South Africa 6 500 1 141 347 922 4 090
Offshore 743 580 61 38 64
Total 7 243 1 721 408 960 4 154
In South Africa, short-term debt due for redemption in 2012 includes commercial
paper (CP) totalling R800 million. The CP market has remained liquid during the
current year and we expect to maintain our participation in this market. The
company has unutilised borrowing facilities with domestic banks totalling R3 866
million at 30 September 2011. The offshore facilities include a syndicated loan
(undrawn at September 2011) of GBP80 million (R1 002 million) and other
unutilised bank lines totalling the equivalent of R1 569 million. We are well
advanced to replace the GBP80 million syndicated loan with bilateral banking
facilities of GBP100 million, with maturity profiles of between four and five
years.
Debt in the three segments utilised in the group for gearing purposes are as
follows:
Total debt to equity Trading Leasing Car Group Group
(%) rental debt net debt
Target range 30 - 50 600 - 800 200 - 300
Ratio at 30 September 30 577 196 57 36
2011
Ratio at 30 September 34 482 202 64 47
2010
Total assets employed by the group increased by R5 242 million to R30 932
million. The increase was driven by the weaker Rand (R1 625 million) and
increased inventories and trade receivables (R3 423 million), up 33% on the back
of higher revenue.
Going forward
Net debt of R4 489 million at 30 September 2011 is at the lowest level in the
past decade, placing the company in a good position to pursue growth
opportunities in its territories.
Some increase in debt is expected in 2012 from higher activity levels,
particularly in Equipment southern Africa and Russia. A great deal of focus has
been placed on improving financial returns in the group. In the current year our
key Return on Equity ratio has substantially improved from 3.2% last year to
8.6%. This is an important step towards achieving our cost of equity target.
DG Wilson
Finance Director
Operational reviews
Equipment
Revenue Operating Net operating
Year ended profit/(loss) assets
30 Sept Year ended 30 Sept
30 Sept
R million 2011 2010 2011 2010 2011 2010
- Southern Africa 12 578 8 379 1 228 725 3 395 2 990
- Europe 3 574 3 854 (102) (69) 2 496 2 626
- Russia 2 535 226 1 049
18 687 12 233 1 352 656 6 940 5 616
Share of associate 59 8
income
Barloworld Equipment southern Africa produced record results driven mainly by
mining and contract mining. Both machine sales and the aftersales business
improved dramatically on the back of strong commodity prices and significant
contract awards, generating a 50% increase in revenue and a 69% improvement in
operating profit over 2010.
Activity levels improved in all regions, with parts and service achieving a
record high as aftersales demand grew to support the large and growing installed
Caterpillar machine population. Angola returned to profitability after two
difficult years and exceptional results were recorded in Zambia and Mozambique
due to sizeable projects in copper and coal mining respectively.
Deliveries of large mining and support fleets to Moatize and Benga coal mines in
Mozambique for Vale and Riversdale respectively are progressing on schedule and
a new facility is planned in Tete to support these mining customers. The
delivery of Caterpillar machines and Atlas Copco drills to Majwe Mining, the
mining services contractor for the Cut 8 Phase 2 expansion project at Debswana`s
Jwaneng diamond mine in Botswana, has commenced.
Barloworld Equipment continued to enjoy firm market leadership in mining
machines and improved market share in most earthmoving machine families despite
a decline in construction activity.
The new Barloworld Remanufacturing Centre (BRC) in Boksburg, our biggest
investment ever in a single project, will double our component rebuilding
capability when it opens in mid-2012. Together with our Technical Academy, it
will also provide opportunities to develop sustainable skills and capacity to
support our customers well into the future.
The on-going Eurozone sovereign debt issues, which escalated over the European
summer, continued to weigh heavily on economic sentiment and market activity in
the Iberian region. The Spanish and Portuguese governments continue to reduce
their budget deficits through a combination of higher taxes and austerity
measures with the public works and construction segments showing on-going
contraction.
Management focused on customer satisfaction, market penetration and coverage,
cost control and working capital and asset management in order to limit the
impact of the continued industry contraction. Actions included staff reductions,
the closure of unprofitable facilities, and a reduction of the rental fleet. We
were awarded the orders for some significant machine and power systems deals
with local clients to support their operations both regionally and
internationally which has resulted in a substantially improved firm order book
at year end. Deliveries will commence in 2012 with the majority delivering in
the 2013 financial year.
The Russian business produced the best result in its 12 year history with over
US$374 million in revenues and US$32.8 million in operating profit, providing
immediate tangible return on Barloworld`s acquisition of the remaining 50%.
Our flagship component rebuild centre opened in Novosibirsk in July 2011.
Construction of new facilities started in Irkutsk and Magadan, with Krasnoyarsk
and Neryungry to follow.
The mining sector was one of the primary drivers of the Russian revenue
performance, supported by a major turnaround in the construction segment and
significant opportunities in the power systems business. Strong growth in
aftermarket revenues resulted from the significant increase in our installed
machine population in the past few years.
Automotive and Logistics
Revenue Operating Net operating assets
Year ended profit/(loss) 30 Sept
30 Sept Year ended 30 Sept
R million 2011 2010 2011 2010 2011 2010
Reclassified* Reclassified*
Car rental 3 341 3 204 220 283 2 429 2 580
Southern
Africa
Motor retail 17 895 16 078 379 340 2 982 2 607
- Southern 14 050 12 341 279 258 1 650 1 599
Africa
- Australia 3 845 3 737 100 82 1 332 1 008
Fleet 1 779 1 545 285 277 2 455 2 269
services
Southern
Africa
Logistics 3 400 3 678 27 10 870 855
- Southern 2 294 2 256 49 50 392 398
Africa
- Europe, 1 106 1 422 (22) (40) 478 457
Middle East
and Asia
26 415 24 505 911 910 8 736 8 311
Share of 9 4
associate
income
*Reclassification of interest paid in the leasing business from cost
of sales to finance costs.
The division produced a pleasing result in a competitive trading environment. An
overall operating margin of 3.5% was achieved. The division generated strong
positive operating cash flow, continued to invest into rental and leasing
fleets, and remained net cash positive for the year.
Avis Rent a Car southern Africa continued to face difficult trading conditions.
While the business maintained high fleet utilisation and marginally improved
rental day volumes, it was negatively impacted by lower rental related revenue
per day in an aggressive trading environment. In the prior year, the business
benefited from extraordinary used vehicle profits, which have now normalised.
Notwithstanding this, the business delivered higher profits in the second six
months compared to the same period in the prior year, which included the full
impact of the 2010 FIFA World Cup.
The southern African motor retail operations delivered a good result in a mixed
market. This was supported by increased new vehicle sales and a strong finance
and insurance contribution, but trading in the aftersales environment was
marginally lower than the prior year. The Australian operations reported a
record result by focusing on margins and an improved aftersales contribution.
Our fleet services business produced a stable result in the current low interest
rate environment. Prudent financed fleet growth was complemented by strong
growth in the fleet under maintenance.
The logistics business experienced a better second six months than anticipated,
driven primarily by an improvement in the international business units.
Increased volumes in southern Africa supported the result. The loss-making
African and Asian non-corporate trader businesses were exited effective 28
February 2011.
Associates also include our Phakisaworld and Sizwe BEE joint ventures which
performed in line with expectations.
Handling
Revenue Operating Net operating assets
Year ended profit/(loss) 30 Sept
30 Sept Year ended 30 Sept
R million 2011 2010 2011 2010 2011 2010
Reclassified* Reclassified*
- Southern 1 141 912 76 42 457 369
Africa
- Europe 1 983 1 734 (2) (26) 675 723
- North America 1 585 1 440 (2) (19) 430 399
4 709 4 086 72 (3) 1 562 1 491
Share of 3 3
associate
income
The division returned to profitability with all businesses showing improvement
over last year. The market for new forklift trucks grew strongly across all our
territories and end-September orders on hand were up by over a third over last
year-end, with particularly pleasing growth in Agriculture. Used sales were
hampered by a shortage of stock, but overall margins continued to show growth.
Short-term rental utilisation continued to steadily improve and additional
investment was made into the rental fleets.
The UK and Belgium operations both moved back into profit and the US operation
reported a significantly reduced loss. Profits declined in the Netherlands due
to some once off costs. Market shares improved in the Netherlands, Belgium and
Agriculture.
Profits in the South African operations rose as did markets, but cost pressures
impacted margins. Agricultural sentiment improved and the increased availability
of low cost tractors in the second half bolstered sales and market share. The
new agricultural operations in Mozambique and Siberia both incurred start-up
costs in line with expectations and future prospects remain bright. The SEM
activity in South Africa again showed strong growth and the products line was
introduced to Siberia and Mozambique by year end.
The division continued to exercise tight control over the asset base, and
improved year-end working capital days from 50 to 41. The investment in short-
term rental assets was balanced by a number of asset disposals.
The global project to upgrade and install best practice business systems and
processes has gone live in the US, UK and Belgium, with South Africa following
just after year-end. This will underwrite improved service to our customers and
higher profits due to improved efficiency and effectiveness.
Given current order books and the favourable trends in short-term rental
activity, the outlook for the first half of 2012 is positive.
Corporate
Revenue Operating loss Net operating
Year ended Year ended assets/
30 Sept 30 Sept (liabilities)
30 Sept
R million 2011 2010 2011 2010 2011 2010
Southern Africa 12 6 (32) (41) 587 498
Europe (14) (4) (889) (390)
12 6 (46) (45) (302) 108
Share of associate 1
income
Corporate comprises the activities of the corporate offices, including the
treasuries, in South Africa and the United Kingdom. In Europe the net operating
liabilities have increased due to actuarial losses in the UK pension fund
largely arising from lower than expected asset returns, which have been charged
to the statement of comprehensive income.
Dividend declaration
Dividend declaration for the year ended 30 September 2011
Dividend number 166
Notice is hereby given that the following dividend has been declared in respect
of the year ended 30 September 2011
Number 166 (final dividend) of 105 cents per ordinary share.
In compliance with the requirements of Strate and the JSE Limited, the following
dates are applicable.
Dividend declared Monday, 14 November 2011
Last day to trade cum dividend Friday, 06 January 2012
Shares trade ex dividend Monday, 09 January 2012
Record date Friday, 13 January 2012
Payment date Monday, 16 January 2012
Share certificates may not be dematerialised or rematerialised between Monday,
09 January 2012 and Friday, 13 January 2012, both days inclusive.
On behalf of the board
B Ngwenya
Secretary
Consolidated income statementfor the year ended 30 September
Audited
R million Notes 2011 2010 %
Reclassified* change
CONTINUING OPERATIONS
Revenue 49 823 40 830 22
Operating profit before 3 993 3 318
items listed below (EBITDA)
Depreciation (1 620) (1 736)
Amortisation of intangible (84) (64)
assets
Operating profit 2 289 1 518 51
Fair value adjustments on (65) (89)
financial instruments
Finance costs (755) (809)
Income from investments 62 84
Profit before exceptional 1 531 704 117
items
Exceptional items 3 62 (176)
Profit before taxation 1 593 528
Taxation (566) (203)
Secondary taxation on (18) (25)
companies
Profit after taxation 1 009 300
Income from associates and 71 16
joint ventures
Net profit from continuing 1 080 316 242
operations
DISCONTINUED OPERATIONS
Loss from discontinued 4 (272)
operations
Net profit 1 080 44
Net profit attributable to:
Non-controlling interest in 63 51
subsidiaries
Owners of Barloworld Limited 1 017 (7)
1 080 44
Earnings/(loss) per share
(cents)
- basic 482,7 (3,3)
- diluted 479,1 (3,3)
Earnings per share from
continuing operations
(cents)
- basic 482,7 126,5
- diluted 479,1 126,1
*Reclassification of interest paid in the leasing business from cost
of sales to finance costs.
Consolidated statement of comprehensive incomefor the year ended 30 September
Audited
R million 2011 2010
Profit for the year 1 080 44
Other comprehensive income
Exchange gains/(losses) on translation of foreign 1 048 (820)
operations
Translation reserves realised on disposal of foreign 11 (102)
joint ventures and subsidiaries
Gain/(loss) on cash flow hedges 246 (24)
Deferred taxation on cash flow hedges (62) 8
Net actuarial losses on post-retirement benefit (274) (176)
obligations
Actuarial losses on post-retirement benefit (351) (238)
obligations
Taxation effect 77 62
Other comprehensive income for the year 969 (1 114)
Total comprehensive income for the year 2 049 (1 070)
Total comprehensive income attributable to:
Non-controlling interest in subsidiaries 63 51
Owners of Barloworld Limited 1 986 (1 121)
2 049 (1 070)
Consolidated statement of financial positionat 30 September
Audited
R million Notes 2011 2010
ASSETS
Non-current assets 12 667 11 626
Property, plant and equipment 8 743 7 575
Goodwill 2 092 2 078
Intangible assets 421 297
Investment in associates and joint ventures 329 552
Finance lease receivables 286 236
Long-term financial assets 147 133
Deferred taxation assets 649 755
Current assets 18 252 14 012
Vehicle rental fleet 1 695 1 679
Inventories 7 323 5 318
Trade and other receivables 6 448 5 030
Taxation 32 57
Cash and cash equivalents 2 754 1 928
Assets classified as held for sale 4 13 52
Total assets 30 932 25 690
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 304 295
Other reserves 3 016 1 750
Retained income 9 069 8 548
Interest of shareholders of Barloworld 12 389 10 593
Limited
Non-controlling interest 263 233
Interest of all shareholders 12 652 10 826
Non-current liabilities 7 279 5 670
Interest-bearing 5 522 4 285
Deferred taxation liabilities 229 302
Provisions 265 217
Other non-interest-bearing 1 263 866
Current liabilities 10 996 9 136
Trade and other payables 8 395 5 807
Provisions 633 476
Taxation 247 161
Amounts due to bankers and short-term loans 1 721 2 692
Liabilities directly associated with assets 4 5 58
classified as held for sale
Total equity and liabilities 30 932 25 690
Condensed consolidated statement of changes in equityfor the year ended 30
September
R million Share Other Retained Attribu- Non-con- Interest
capital reserves income table to trolling of all
and Barloworld interest share-
premium Limited holders
share-
holders
Balance at 252 2 688 8 913 11 853 217 12 070
1 October 2009
Total (938) (183) (1 121) 51 (1 070)
comprehensive
income for the
year
Transactions
with owners,
recorded
directly in
equity
Other reserve 7 7 (1) 6
movements
Dividends (189) (189) (34) (223)
Shares issued 43 43 43
in current year
Balance at 295 1 750 8 548 10 593 233 10 826
30 September
2010
Total 1 243 743 1 986 63 2 049
comprehensive
income for the
year
Transactions
with owners,
recorded
directly in
equity
Other reserve 23 1 24 1 25
movements
Dividends (223) (223) (34) (257)
Treasury shares 3 3 3
issued
Shares issued 6 6 6
in current year
Balance at 304 3 016 9 069 12 389 263 12 652
30 September
2011
Consolidated statement of cash flowsfor the year ended 30 September
Audited
R million 2011 2010
Reclassified*
CASH FLOWS FROM OPERATING ACTIVITIES
Operating cash flows before movements in 4 528 3 599
working capital
Operating cash flows - continuing operations 4 528 3 486
Operating cash flows - discontinued 113
operations
(Increase)/decrease in working capital (27) 1 069
Cash generated from operations before 4 501 4 668
investment in rental assets
Net investment in fleet leasing assets (1 013) (847)
Net investment in vehicle rental fleet (384) (209)
Cash generated from operations 3 104 3 612
Finance costs (755) (833)
Realised fair value adjustments on financial (172) (102)
instruments
Dividends received from investments, 67 6
associates and joint ventures
Interest received 60 82
Taxation paid (389) (200)
Cash flow from operations 1 915 2 565
Dividends paid (including non-controlling (257) (223)
interest)
Cash retained from operating activities 1 658 2 342
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries, investments and (271) (3)
intangibles
Proceeds on disposal of subsidiaries, 185 309
investments and intangibles
Net investment in leasing receivables 56 135
Acquisition of other property, plant and (880) (565)
equipment
Replacement capital expenditure (305) (346)
Expansion capital expenditure (575) (219)
Proceeds on disposal of property, plant and 198 68
equipment
Net cash used in investing activities (712) (56)
Net cash inflow before financing activities 946 2 286
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on share issue 6 43
Shares repurchased for forfeitable share plan (21)
Proceeds from long-term borrowings 2 653 1 920
Repayment of long-term borrowings (1 470) (2 928)
Decrease in short-term interest-bearing (1 346) (826)
liabilities
Net cash used in financing activities (178) (1 791)
Net increase in cash and cash equivalents 768 495
Cash and cash equivalents at beginning of 1 928 1 627
year
Cash and cash equivalents held for sale at 6 145
beginning of year
Effect of foreign exchange rate movement on 52 (106)
cash balances
Effect of cash balances classified as held (6)
for sale
Effect of disposal of car rental Scandinavia (227)
on cash balances
Cash and cash equivalents at end of year 2 754 1 928
Cash balances not available for use due to 503 413
reserving restrictions
* Reclassification of interest paid in the leasing business from cost
of sales to finance costs.
Condensed notes to the consolidated financial statementsfor the year ended 30
September
1. Basis of preparation
The condensed financial information has been prepared in
accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting
Standards (IFRS), the AC 500 standards as issued by the
Accounting Practices Board and the information as required by IAS
34: Interim Financial Reporting. The report has been prepared
using accounting policies that comply with IFRS which are
consistent with those applied in the financial statements for the
year ended 30 September 2010, except for the new or amended
Standards and new Interpretations adopted as detailed in note 8.
Audited
R million 2011 2010
2. Reconciliation of net profit to headline
earnings
Net profit/(loss) attributable to Barloworld 1 017 (7)
shareholders
Adjusted for the following:
Loss on disposal of discontinued operations 289
(IFRS 5)
Profit on disposal of subsidiaries and (73) (38)
investments (IAS 27)
Realisation of translation reserve on disposal 11 (102)
of foreign joint venture and subsidiaries (IAS
21)
Profit on disposal of properties (IAS 16) (213) (22)
Impairment of goodwill (IFRS 3) 211 152
(Reversal)/impairment of investments in (3) 33
associates (IAS 28) and joint ventures (IAS
31)
Impairment of plant and equipment (IAS 16) 5 51
Profit on sale of intangible assets (IAS 38) 1 4
Profit on sale of plant and equipment (7) (2)
excluding rental assets (IAS 16)
Taxation effects of remeasurements 30
Headline earnings 979 358
Headline earnings from continuing operations 979 443
Headline loss from discontinued operation (85)
Weighted average number of ordinary shares in
issue during the year (000)
- basic 210 708 209 469
- diluted 212 261 210 187
Headline earnings per share (cents)
- basic 464,6 170,9
- diluted 461,2 170,3
Headline earnings per share from continuing
operations (cents)
- basic 464,6 211,5
- fully diluted 461,2 210,7
Headline loss per share from discontinued
operations (cents)
- basic (40,6)
- diluted (40,4)
3. Exceptional items
Profit on disposal of properties, investments 286 60
and subsidiaries
Realisation of translation reserve on disposal (11)
of foreign joint venture
Impairment of goodwill (211) (152)
Reversal/(Impairment) of investments in 3 (33)
associates and joint ventures
Impairment of plant and equipment (5) (51)
Gross exceptional profit/(loss) from 62 (176)
continuing operations
Taxation charge on exceptional items (30)
Net exceptional profit/(loss) - total group 32 (176)
4. Discontinued operations and assets classified
as held for sale
The car rental Scandinavia business segment
was sold on 31 July 2010.
Results from discontinued operations are as
follows:
Revenue 1 219
Operating profit before items listed below 104
(EBITDA)
Depreciation (190)
Amortisation of intangible assets (3)
Operating loss (89)
Finance costs (24)
Income from investments 4
Loss before taxation (109)
Taxation 24
Net loss of discontinued operations before (85)
loss on disposal
Loss on disposal of discontinued operations (289)
Realisation of translation reserve 102
Net loss on disposal of discontinued (187)
operations
Loss from discontinued operations per income (272)
statement
The cash flows from the discontinued
operations are as follows:
Cash flows from operating activities (6)
Cash flows from investing activities 183
Cash flows from financing activities (92)
Assets classified as held for sale consist of
the following:
- Automotive dealerships in the process of 13
being sold
- Logistics African and Asian trading business 52
13 52
Liabilities directly associated with assets
classified as held for sale consist of the
following:
- Automotive dealerships in the process of 5
being sold
- Logistics African and Asian trading business 58
5 58
5. Dividends
Ordinary shares
Final dividend No 164 paid on 17 January 2011: 117 147
55 cents per share (2010: No 162 - 70 cents
per share)
Interim dividend No 165 paid on 13 June 2011: 106 42
50 cents per share (2010: No 163 - 20 cents
per share)
223 189
Paid to non-controlling interest 34 34
257 223
Dividends per share (cents) 155 75
- interim (declared May) 50 20
- final (declared November) 105 55
6. Contingent liabilities
Bills, lease and hire-purchase agreements 1 316 1 367
discounted with recourse, other guarantees and
claims
Litigation, current or pending, is not
considered likely to have a material adverse
effect on the group.
The group has given guarantees to the
purchaser of the coatings Australian business
relating to environmental claims. The
guarantees are for a maximum period of eight
years up to July 2015 and are limited to the
sales price received for the business.
Freeworld Coatings Limited is responsible for
the first AUD5 million of any claim in terms
of the unbundling arrangement.
Buy-back and repurchase commitments not 161 224
reflected on the statement of financial
position
The related assets are estimated to have a
value at least equal to the repurchase
commitment.
There are no material contingent liabilities
in joint venture companies.
7. Commitments
Capital expenditure commitments to be
incurred:
Contracted 1 236 1 016
Approved but not yet contracted 80 331
1 316 1 347
Operating lease commitments 2 009 1 950
Finance lease commitments 634 820
Capital expenditure will be financed by funds generated by the
business, existing cash resources and borrowing facilities
available to the group.
8. Accounting policies
The group adopted the following new and amended Standards and new
Interpretations during the current year:
- IFRS 3 Business combinations (Improvement project May 2010)
- IAS 27 Consolidated and Separate Financial Statements
(Improvement project May 2010)
9. Related party transactions
There has been no significant change in related party
relationships since the previous year.
Other than in the normal course of business, there have been no
other significant transactions during the year with associate
companies, joint ventures and other related parties.
10. Events after the reporting period
No material events have occurred between the end of the reporting
period and the date of the release of these financial statements.
11. Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the
group`s financial statements for the year ended 30 September
2011. The audit was conducted in accordance with International
Standards on Auditing. They have issued an unmodified audit
opinion. These summarised provisional financial statements have
been derived from the group financial statements and are
consistent in all material respects, with the group financial
statements. A copy of their audit report is available for
inspection at the company`s registered office. Any reference to
future financial performance included in this announcement, has
not been reviewed or reported on by the company`s auditors.
In addition, Deloitte & Touche have issued a limited assurance
report on the non-financial salient features included on page 21.
Their report was issued in accordance with International
Standards for Assurance Engagements 3000. They have issued an
unmodified limited assurance report.
12. Preparer of financial statements
These condensed consolidated financial statements have been
prepared under the supervision of IG Stevens BCom CA (SA).
Salient featuresfor the year ended 30 September
Audited
2011 2010
Financial#
Headline earnings per share (cents) 465 212
Dividend per share (cents) 155 75
Operating margin (%) 4.6 3.7
Net asset turn (times) 2.7 2.2
EBITDA/Interest paid (times) 5.3 4.1
Net debt/equity (%) 35.5 46.6
Return on ordinary shareholders funds (%) 8.6 3.9
Net asset value per share including investments 5 839 5 032
at fair value (cents)
Number of ordinary shares in issue, including 230 878 230 452
BEE shares (000)
Non-financial#@
Energy consumption (Gj) 1 807 244 1 871 756
GHG emissions (Co2e tons) 189 043 201 733
Water consumption (Ml) 767 731
Number of employees 18 671 18 167
LTIFR* 1.31 1.51
Fatalities 2 1
Corporate social investment (Rmillion) 16 11
BEE rating (level) 2 3
Closing rate Average rate
Exchange rates (Rand) 2011 2010 2011 2010
United States Dollar 8,04 6,97 6,91 7,49
Euro 10,79 9,52 9,67 10,16
British Sterling 12,52 10,99 11,12 11,68
*Lost-time injuries x 200 000 divided by total hours worked.
#Continuing operations.
@Limited assurance (note 11).
Operating segments (audited)for the year ended 30 September
Revenue Operating profit/(loss)
Year ended Year ended
30 Sept 30 Sept
R million 2011 2010 2011 2010
Reclassified*
Equipment 18 687 12 233 1 352 656
Automotive and 26 415 24 505 911 910
Logistics
Handling 4 709 4 086 72 (3)
Corporate 12 6 (46) (45)
Total continuing 49 823 40 830 2 289 1 518
operations
Car rental Scandinavia 1 219 (89)
Total discontinued 1 219 (89)
operations
Total group 49 823 42 049 2 289 1 429
* Reclassification of interest paid in the leasing business from cost
of sales to net finance costs.
Operating segments (audited)for the year ended 30 September (continued)
Fair value Operating profit/(loss) Net operating
adjustments on including fair value assets/(liabilities)
financial instruments adjustments 30 Sept
Year ended Year ended
30 Sept 30 Sept
2011 2010 2011 2010 2011 2010
Reclassified* Reclassified*
(89) (58) 1 263 598 6 940 5 616
3 (5) 914 905 8 736 8 311
17 (28) 89 (31) 1 562 1 491
4 2 (42) (43) (302) 108
(65) (89) 2 224 1 429 16 936 15 526
(89)
(89)
(65) (89) 2 224 1 340 16 936 15 526
About Barloworld
Barloworld is a distributor of leading international brands providing integrated
rental, fleet management, product support and logistics solutions. The core
divisions of the group comprise Equipment (earthmoving and power systems),
Automotive and Logistics (car rental, motor retail, fleet services, used
vehicles and disposal solutions, logistics management and supply chain
optimisation) and Handling (materials handling and agriculture). We offer
flexible, value adding, integrated business solutions to our customers backed by
leading global brands. The brands we represent on behalf of our principals
include Caterpillar, Hyster, Avis, Audi, BMW, Ford, General Motors, Mercedes-
Benz, Toyota, Volkswagen and others.
Barloworld has a proven track record of long-term relationships with global
principals and customers. We have an ability to develop and grow businesses in
multiple geographies including challenging territories with high growth
prospects. One of our core competencies is an ability to leverage systems and
best practices across our chosen business segments. As an organisation we are
committed to sustainable development and playing a leading role in empowerment
and transformation. The company was founded in 1902 and currently has operations
in 26 countries around the world with approximately 60% of our eighteen thousand
employees in South Africa.
Corporate information
Registered office and business address
Barloworld Limited, 180 Katherine Street
PO Box 782248, Sandton, 2146, South Africa
Tel +27 11 445 1000
Email invest@barloworld.com
Transfer secretaries - South Africa
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
13th Floor, Rennie House
19 Ameshoff Street, Braamfontein, Johannesburg 2001
(PO Box 4844, Johannesburg)
Tel +27 11 630 0000
Registrars - United Kingdom
Equiniti Limited, Aspect House
Spencer Road, Lancing, West Sussex, BN99 6DA, England
Tel +44 190 383 3381
Transfer secretaries - Namibia
Transfer Secretaries (Proprietary) Limited
(Registration number 93/713)
Shop 8, Kaiser Krone Centre, Post Street Mall
Windhoek, Namibia
(PO Box 2401, Windhoek, Namibia)
Tel +264 61 227 647
Directors
Non-executive: DB Ntsebeza (Chairman), SAM Baqwa, AGK Hamilton*,
SS Mkhabela, MJN Njeke, SS Ntsaluba, TH Nyasulu G Rodriguez de Castro de los
Rios+, SB Pfeiffer
Executive: CB Thomson (Chief Executive), PJ Blackbeard, PJ Bulterman,
M Laubscher, OI Shongwe, DG Wilson
*British +Spanish American
Enquiries: Barloworld Limited: Jacey de Gidts
Tel +27 11 445 1000
E-mail invest@barloworld.com
College Hill: Jacques de Bie, Tel +27 11 447 3030
E-mail Jacques.deBie@collegehill.co.za
For background information visit www.barloworld.com
www.barloworld.com
Date: 14/11/2011 07:10:52 Supplied by www.sharenet.co.za
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