Wrap Text
Interim results for the six months ended 31 March 2013
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Income Tax Registration number 9000/051/71/5)
(Share code: BAW)
(JSE ISIN: ZAE000026639)
(Share code: BAWP)
(JSE ISIN: ZAE000026647)
(Bond issuer code: BIBAW)
(Barloworld or the Company)
Interim results for the six months ended 31 March 2013
Salient features
- Revenue up 11% to R31.3 billion
- Operating profit up 14% to R1 463 million
- Profit before exceptional items up 20% to R995 million
- HEPS up 31% to 321 cents (H112: 245 cents)
- Interim dividend of 96 cents per share up 20%
Clive Thomson, CEO of Barloworld, said:
Our financial performance has been strong in the first half with headline earnings per share up 31% over the prior
period.
Within our Equipment division the newly-acquired Bucyrus businesses performed in line with expectation and offset
revenue declines in the traditional Caterpillar business on the back of a slowdown in mining capital expenditure. Our
Iberian business showed a good turnaround in profitability off a lower cost base.
The Automotive and Logistics division delivered a strong overall result with all business units performing ahead of
last year.
We completed the sale of our Handling business in Belgium which will enable the continued redeployment of capital into
higher returning opportunities.
Notwithstanding some short-term headwinds in the mining sector we expect to continue to make good progress in the
second half and deliver a solid result for the full year to September 2013.
20 May 2013
Chairman and Chief Executives report
Overview
The group produced a strong performance in the first half of the financial year with revenue of R31.3 billion up 11%
on 2012. Operating profit of R1 463 million is 14% up on last year.
Headline earnings per share of 321 cents represent a 31% improvement compared to 245 cents in 2012.
A dividend of 96 cents was declared being 20% ahead of the 80 cents last year.
Operational review
Equipment
Equipment southern Africa
Revenue to March of R9.0 billion was R1.5 billion (19.5%) ahead of the prior year mainly from the newly-acquired
Bucyrus (EMPR) businesses. General mining activity has shown some signs of slowdown particularly in Mozambique and Botswana
while contract mining in South Africa is also down on last year.
Construction and infrastructure demand showed some improvement, particularly in Angola but margins were negatively
impacted by intense competition in this segment.
Operating profit to March of R654 million is slightly below the comparative figure for 2012. The operating margin to
March of 7.2% (2012: 9.1%) was negatively impacted by the lower margins from EMPR, currency adjustments due to rand
weakness and some increase in fixed expenses on the back of investments made for future growth.
Bartrac, our joint venture in the Katanga province of the DRC, continued the strong performance.
Equipment Russia
Activity in mining continued positively in the first half of 2013. Total revenue to March of $248 million is $38
million (18.2%) ahead of 2012 as weaknesses in the coal sector were offset by growth in the gold and nickel sectors. Revenue
in the Russian Far East was well ahead of last year, while the newly-acquired EMPR businesses added only nominally to
revenue as certain existing orders were retained by Caterpillar.
After-sales revenue continued to grow strongly, improving by 24% compared to the first half of 2012.
Operating profit to March was similar to last year, impacted by EMPR acquisition costs and a rising fixed cost base to
support the enlarged dealer footprint.
Equipment Iberia
Revenue to March of 215 million was 34 million ahead of last year and was boosted by the delivery of the last
portion of the large package deal to Victorino Alonso, while the delivery on the EPSA package deal will continue into the
second half of 2014. The Spanish construction sector remains depressed with overall equipment industry sales continuing to
decline off an already low base. Power systems activity in both Spain and Portugal was up on the prior year.
The operating loss to March of 371 000 was a significant improvement compared to the prior years loss of 11.1
million, which included restructure costs of 7.1 million.
Handling
The restructured business generated revenue of £96 million which was 5% up on the comparable adjusted revenue
following the disposal of Handling US and UK in 2012.
Operating profit to March of £2.6 million was 9.9% above last year which included £1.4 million profit from the US and
UK businesses.
The Handling business in Belgium was sold on 8 May generating proceeds of 7.5 million.
Automotive and Logistics
The division generated revenue of R16.3 billion for the six months to March, a 15% increase on the prior period, with
all business units producing good revenue growth. The division increased operating profit to R673 million, a pleasing
27% improvement compared to R531 million in 2012.
Avis Rent a Car showed a 14% increase in revenue, as a result of a 6% increase in rental days, a slight improvement in
rate per day and higher used vehicle revenues. The operating profit of R163 million, which was 13% ahead of last year,
was supported by a good used vehicle performance.
Motor Retail increased revenue by 13% to R10.9 billion in the period with a 25% increase in operating profit to R258
million. The growth in Motor Retail southern Africa was driven by improved volumes, resulting in increased operating
profit of R45 million to R206 million (28%). All franchises performed well and the result was supported by another good
finance and insurance contribution. Motor Retail Australia improved results in line with expectations.
Avis Fleet Services increased revenue by 26% to R1.3 billion for the period. The financed fleet at March is now 12% up
on the prior period, following the finalisation of the City of Johannesburg contract which entailed a net investment of
R175 million. Operating profit to March of R208 million is 44% up on the prior period and this business also benefited
from a good performance in used vehicle sales.
Logistics lifted revenue by 25% to R2.1 billion, mainly as a result of good performances in supply chain management
and the newly-formed Barloworld Transport Solutions (BWTS). Operating profit to March of R44 million was 19% ahead of last
year, despite increased losses in the offshore freight management business.
Funding
Net debt increased by R3.5 billion to R11 billion at March, mainly as a result of increased working capital (R2.4
billion), the acquisition of the Bucyrus distribution business in Russia and the Manline acquisition in Logistics southern
Africa. All divisions are focused on driving down their working capital levels in the second half to below the previous
years closing.
Human resources, diversity and sustainable development
Our emphasis remains on ensuring we have the required leadership, talent and skills to implement our strategies. A
reduced Lost-Time Injury Frequency Rate and no work-related fatalities underscore our ongoing focus on safety.
Major business units have maintained their Level 2 or Level 3 B-BBEE rating; and Barloworld Limited, retained a Level
2 rating and was again ranked as the most empowered company in the General Industrial sector in the Mail & Guardian
Survey (2013). We continue to drive diversity, with particular focus on our employee profile across the group.
We are progressing towards our aspirational non-renewable energy and greenhouse gas emissions efficiency improvement targets,
and continue to implement water stewardship initiatives.
Stakeholder engagement remains central to our value creation activities and board level responsibility rests with an
executive director.
Directorate
Mr Gonzalo Rodriguez de Castro Garcia de los Rios retired from the board on 23 January 2013 having reached retirement
age. We would like to thank him for his contribution over the past nine years.
Outlook
The world economy continues on a path of gradual recovery. The Chinese economy has of late shown some signs of slowing
but should nonetheless continue to support long-term demand for commodities.
In the short term, however, mining sentiment has been impacted by the pronouncements of the newly-appointed CEOs of
certain large global mining companies. They are indicating a scaling back in new project expansion, capex curtailment and
cost containment. While this is leading to a near-term slowdown in global mining investment, we believe the medium- to
long-term outlook for the industry remains positive.
The Equipment SA firm order book at March of R5.2 billion is marginally down on the September 2012 level of R5.3
billion. The order book has been boosted by EMPR orders while the traditional Caterpillar product book of R3.0 billion is
down on the September levels.
In Russia the firm order book of $72 million is down on September 2012 following strong deliveries in the first half
but could be boosted with a number of potential mining deals currently nearing finalisation. The order book excludes any
EMPR orders at acquisition retained by Caterpillar on which we will earn a service fee.
Trading conditions in Spain continue to be extremely tough and it would now appear that 2013 industry sales could end
even lower than the weak 2012 levels. Consequently, the combined order book at March of 49 million is well down on the
September book and relates mainly to power systems. We therefore anticipate a difficult second half for 2013; however,
our year-on-year performance will still show improvement on a lower cost base.
The Handling businesses are expecting some slowdown in the second half as a result of reduced order book levels.
The Automotive and Logistics division is expected to build on the positive momentum across the division. Car rental
should continue to grow rental days in the traditionally slower second half, but rates will remain under pressure.
Despite difficult trading conditions and low consumer confidence levels, we still expect vehicle sales in southern
Africa to continue to grow moderately in 2013, assisted by current low interest rates. After a period of relatively low
vehicle price increases, manufacturers are now likely to increase prices due to a weaker rand and inflationary input cost
pressures, which in turn could favourably impact used vehicle demand. We continue to monitor labour activity in the
automotive sector which could result in supply shortages in the second half.
Avis Fleet Services is expected to capitalise on current market conditions and the benefits of newly-awarded contracts.
Logistics will benefit from the formation of BWTS and further improvements from management action in southern Africa,
while trading in the offshore freight businesses will remain difficult particularly in Spain and the Far East.
Notwithstanding some short-term headwinds in the mining sector, the group is expected to continue to make good
progress in the second half and deliver a solid result for the full year to September 2013.
DB Ntsebeza CB Thomson
Chairman Chief Executive
Group financial review
Revenue for the six months increased by 11% to R31.3 billion. The newly-acquired EMPR (Bucyrus) businesses in
Equipment southern Africa and Russia contributed to the increase.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 11% to R2 490 million while
operating profit rose by 14% to R1 463 million.
Headline earnings per share (HEPS) increased by 31% to 321 cents (1H12: 245 cents).
In Equipment southern Africa, operating profit declined by 5% on weaker demand in the mining and contract mining
sector, partly offset by the contribution from EMPR. Losses in Equipment Iberia declined substantially from R115 million last
year (which included a restructure charge of R73 million) to R5 million. Operating profits in Equipment Russia improved
by 9% in rand terms mainly due to currency weakness. The Automotive and Logistics division recorded substantially
increased profits of R673 million, up by 27% owing to increased earnings from all business units.
Financial instrument costs were well down on the prior year. Despite hedge accounting, the weakening rand negatively
affected the cost of inventory in Equipment southern Africa while favourably impacting financial instrument gains. This
more than offset ongoing foreign currency contract costs. The implementation of hedge accounting in Handling South Africa
has also reduced the impact of currency volatility on financial instruments.
Net finance costs of R475 million are R128 million higher than last year owing to increased average net debt. The
acquisition of the EMPR businesses contributed R54 million to the increase with the balance mainly attributable to higher
working capital requirements.
Exceptional charges of R34 million mainly relate to the impairment of assets in the handling Belgium business which
was held for sale at March and subsequently sold in May 2013.
Taxation, before Secondary Tax on Companies (STC), decreased by R10 million to R333 million. The charge last year
included the impairment of a deferred tax asset in handling USA (R61 million). The effective taxation rate (excluding STC,
prior year taxation and taxation on exceptional items) was 34.2% (1H12: 34.5%).
Income from associates of R64 million mainly comprises the contribution from the equipment joint venture in the
Democratic Republic of Congo which continued its strong trading performance.
Cash flow and debt
Improved activity across most of the businesses has led to increased investment in working capital. This, coupled with
the acquisition of the EMPR business in Russia and growth in leasing assets and the short-term vehicle rental fleet,
has led to an outflow of funds in the period of R2 914 million.
Net interest-bearing debt at 31 March 2013 of R11 003 million (September 2012: R7 465 million) represents a group debt
to equity ratio of 77% (September 2012: 57%). Short-term debt represents 45% of total debt. Cash balances of R1.4
billion are available to meet short-term commitments. In addition, the company has unutilised debt facilities with domestic
financial institutions totalling R3.0 billion and unutilised offshore debt facilities of R2.8 billion at 31 March 2013.
During the period we extended the maturity profile of the R1 billion Bucyrus funding facility into 2015. Gearing in the
trading segment is expected to reduce to the target range in the second half of the year.
Debt to equity (%) Trading Leasing Car rental Group Group
total debt net debt
Target range 30 - 50 600 - 800 200 - 300
Ratio at 31 March 2013 62 579 233 89 77
Ratio at 30 September 2012 50 472 217 77 57
The companys credit rating of A+ was recalibrated upwards to AA- (Stable Outlook) at the time the South African sovereign
credit was downgraded by Fitch Ratings in January 2013 and was re-affirmed by Fitch following a formal credit review in
February 2013.
Total assets employed by the group increased by R3 586 million in the six months to R39 396 million mainly due to
increased working capital, the acquisitions in Russia and logistics and additions to the rental and leasing fleets.
Going forward
Deliveries of firm customer orders in the second half of the year will see a significant reduction in working capital
and gearing by year end. This will also positively impact our financial returns for the full year.
DG Wilson
Finance director
Operational reviews
Equipment and handling
Revenue Operating profit/(loss) Net operating assets
Six months Year Six months Year
ended ended ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 30 Sept
2013 2012 2012 2013 2012 2012 2013 2012
Rm Rm Rm Rm Rm Rm Rm Rm
Equipment 13 672 11 186 24 273 806 718 1 740 13 828 10 600
- Southern Africa 9 021 7 548 16 326 654 689 1 535 8 573 6 587
- Europe 2 464 1 993 4 180 (5) (115) (139) 2 236 2 177
- Russia 2 187 1 645 3 767 157 144 344 3 019 1 836
Handling 1 329 2 790 4 774 36 28 38 920 733
15 001 13 976 29 047 842 746 1 778 14 748 11 333
Share of associate income 67 35 148
Equipment southern Africa faced weaker trading conditions caused by global economic uncertainties, decreasing
commodity prices and upheaval in the South African mining industry. The acquisition of the EMPR (Bucyrus) business during the
second half of the 2012 financial year provided a significant source of incremental revenue, albeit at lower margins.
Operating profit for the half-year was also adversely affected by currency adjustments to cost of sales in a period of rand
weakness, which favourably impacted financial instruments gains.
In terms of major projects, we were awarded a R1.3 billion contract by Swakop Uranium for the greenfield Husab Uranium
Project in Namibia. We have also signed an agreement with the Sishen Iron Ore Company for the trial of six 795F AC
trucks, Caterpillars first Electric Drive Truck. A R0.5 billion Caterpillar equipment order was secured from B2Gold Corp
for their Otjikoto project. The fleet to be supplied will include mining trucks, wheel loaders, and support equipment,
with the first half of the fleet being delivered during 2013, and the balance during 2014 and 2015.
The slowdown in global mining has had an impact on our firm order book which, at R5.2 billion, is slightly less than
the R5.3 billion at September last year. We are, however, seeing an increase in activity in the construction sector
driven by municipal and provincial government in South Africa.
Despite further reductions in the machine industry in Iberia, the Spanish operations successfully delivered additional
portions of the large mining packages outstanding in the previous financial year. The operations have maintained market
share within their regions and results have benefited from an absence of restructuring costs in the period. Management
has been able to transfer service technicians on fixed contracts to a number of countries in support of customers,
primarily in Africa, which is allowing us to maintain the Iberian regions technical capacity.
Equipment Russia produced a solid result with revenues up 18% in dollar terms from the previous year driven by mining
activity in the gold and nickel sectors. Operating profit was impacted by an increase in headcount, EMPR acquisition
costs and facility-related expenses as we continue to invest for future growth. There remains a number of significant
potential mining and construction contracts in the pipeline.
In the Handling operations, the market for forklift trucks was flat in South Africa and shrank in Europe. Operating
profits grew strongly in South Africa, aided by an improved sales mix and favourable currency variances and showed solid
growth in The Netherlands, bolstered by cost reductions and improved equipment margins.
The prior period included profits of £1.4 million from the Handling US and UK businesses which have now been sold. The
Belgian business, which broke even in the period, was sold effective 8 May, generating net proceeds of 7.5 million.
Automotive and logistics
Revenue Operating profit/(loss) Net operating assets
Six months Year Six months Year
ended ended ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 30 Sept
2013 2012 2012 2013 2012 2012 2013 2012
Rm Rm Rm Rm Rm Rm Rm Rm
Car rental
Southern Africa 2 019 1 777 3 555 163 144 251 2 163 1 966
Motor retail 10 858 9 623 20 256 258 206 479 3 348 3 096
- Southern Africa 8 159 7 240 15 209 206 161 352 1 886 1 669
- Australia 2 699 2 383 5 047 52 45 127 1 462 1 427
Fleet services
Southern Africa 1 309 1 043 2 294 208 144 349 2 913 2 587
Logistics 2 113 1 692 3 385 44 37 73 988 354
- Southern Africa 1 688 1 282 2 535 64 52 92 871 224
- Europe, Middle East and Asia 425 410 850 (20) (15) (19) 117 130
16 299 14 135 29 490 673 531 1 152 9 412 8 003
Share of associate loss (3) (4) (7)
The division produced another record result in a competitive trading environment. The operating margin improved to
4.1% from 3.8% in the prior period. The division continued to generate strong operating cash flows which have been invested
in strategic acquisitions and organic growth. Growing revenue by 15% improved the operating profit by 27%.
Avis Rent a Car southern Africa improved operating profit by 13% despite a slower turnaround than expected in the
luxury coach charter operation. The business achieved good fleet utilisation, grew rental day volumes and slightly improved
revenue per rental day, notwithstanding a surge in replacement segment volumes following the major hailstorm in Gauteng
during the period.
The southern African motor retail operations delivered a strong result, growing operating profit by 28%. Improved
margins and overall volumes, cost containment and a good finance and insurance contribution supported the result. The
Australian operations continued to perform in line with expectations.
Avis Fleet Services produced an excellent result, improving operating profit by 44%. The business continued to expand
through targeted growth in both the funded and non-funded fleets.
The logistics business has seen further improvements on the back of focused management actions. The establishment of
BWTS, through merging our Dedicated Transport business with Manline Logistics, provides a platform for growth. The
acquisition of a minority stake in re- positions the business in the environmental supply chain and waste management sector.
Overall volumes and margins remain under pressure in the international businesses; however, opportunities to improve the
mix of business continue to be progressed.
Associates include our Soweto and Sizwe BEE joint ventures, all of which performed in line with expectations. The
Soweto Toyota and Soweto Volkswagen dealerships continue to improve and will take time to mature in this developing market.
Corporate
Revenue Operating profit/(loss) Net operating assets/
Six months Year Six months Year (liabilities)
ended ended ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 30 Sept
2013 2012 2012 2013 2012 2012 2013 2012
Rm Rm Rm Rm Rm Rm Rm Rm
- Southern Africa 10 10 17 (50) (56) (10) 503 739
- Europe (2) 61 68 (1 207) (1 154)
10 10 17 (52) 5 58 (704) (415)
In Europe a change in the statutory measure for inflation on UK pension increases reduced the companys pension fund
liability giving rise to a once-off benefit to operating profit in 2012 of R74 million (£6.1 million).
Dividend declaration
Dividend number 169
Notice is hereby given that interim dividend number 169 of 96 cents (gross) per ordinary share in respect of the six
months ended 31 March 2013 has been declared subject to the applicable dividends tax levied in terms of the Income Tax
Act (Act No 58 of 1962)(as amended) (the Income Tax Act).
In accordance with paragraphs 11.17(a)(i) to (x) and 11.17(c) of the JSE Listings Requirements the following
additional information is disclosed:
- The dividend has been declared out of income reserves;
- Local dividends tax rate is 15% (fifteen per centum);
- There are no Secondary Tax on Companies (STC) credits utilised;
- Barloworld has 231 106 257 ordinary shares in issue;
- The gross local dividend amount is 96 cents per ordinary share;
- The net dividend amount is 81.6 cents per share.
In compliance with the requirements of Strate and the JSE Limited, the following dates are applicable:
- Dividend declared Monday, 20 May 2013
- Last day to trade cum dividend Friday, 7 June 2013
- Shares trade ex-dividend Monday, 10 June 2013
- Record date Friday, 14 June 2013
- Payment date Tuesday, 18 June 2013
Share certificates may not be dematerialised or rematerialised between Monday, 10 June 2013 and Friday, 14 June 2013,
both days inclusive.
On behalf of the board
LP Manaka
Group company secretary
Condensed consolidated income statement
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2013 2012 2012
Reviewed Reviewed Audited
Notes Rm Rm Rm
Revenue 31 310 28 121 58 554
Operating profit before items listed below (EBITDA) 2 490 2 244 4 905
Depreciation (955) (911) (1 806)
Amortisation of intangible assets (72) (51) (111)
Operating profit 3 1 463 1 282 2 988
Fair value adjustments on financial instruments 4 7 (106) (93)
Net finance costs and dividends received 5 (475) (347) (776)
Profit before exceptional items 995 829 2 119
Exceptional items 6 (34) (26) 190
Profit before taxation 961 803 2 309
Taxation 7 (333) (343) (789)
Secondary taxation on companies 7 (25) (26)
Profit after taxation 628 435 1 494
Income from associates and joint ventures 64 31 141
Net profit for the period 692 466 1 635
Net profit attributable to:
Owners of Barloworld Limited 643 429 1 559
Non-controlling interests in subsidiaries 49 37 76
692 466 1 635
Earnings per share^ (cents)
- basic 305.3 203.4 739.9
- diluted 304.2 202.1 734.5
^ Refer note 2 for details of headline earnings per share calculation.
Condensed consolidated statement of comprehensive income
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2013 2012 2012
Reviewed Reviewed Audited
Rm Rm Rm
Profit for the period 692 466 1 635
Items that may be reclassified subsequently to
profit or loss: 779 (439) (452)
Exchange gain/(loss) on translation of
foreign operations 744 (277) 276
Translation reserves realised on the disposal of
foreign joint ventures and subsidiaries (593)
Gain/(loss) on cash flow hedges 48 (225) (178)
Deferred taxation on cash flow hedges (13) 63 43
Items that will not be reclassified to profit or loss: (9) (133)
Actuarial losses on post-retirement benefit obligations (9) (149)
Taxation effect 16
Other comprehensive income for the period 779 (448) (585)
Total comprehensive income for the period 1 471 18 1 050
Total comprehensive income attributable to:
Owners of Barloworld Limited 1 422 (19) 974
Non-controlling interests in subsidiaries 49 37 76
1 471 18 1 050
Condensed consolidated statement of financial position
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2013 2012 2012
Reviewed Reviewed Audited
Notes Rm Rm Rm
ASSETS
Non-current assets 14 882 12 369 13 470
Property, plant and equipment 10 584 8 774 9 473
Goodwill 1 821 2 071 1 759
Intangible assets 1 265 398 1 049
Investment in associates and joint ventures 8 527 305 430
Finance lease receivables 82 98 125
Long-term financial assets 9 73 147 97
Deferred taxation assets 530 576 537
Current assets 24 221 19 510 22 340
Vehicle rental fleet 2 038 1 955 1 908
Inventories 12 401 9 372 10 855
Trade and other receivables 8 064 7 107 6 916
Taxation 9 23 37
Cash and cash equivalents 15 1 709 1 053 2 624
Assets classified as held for sale 10 293 636
Total assets 39 396 32 515 35 810
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 311 305 309
Other reserves 3 030 2 586 2 433
Retained income 10 445 9 275 10 127
Interest of shareholders of Barloworld Limited 13 786 12 166 12 869
Non-controlling interest 439 277 298
Interest of all shareholders 14 225 12 443 13 167
Non-current liabilities 9 087 7 558 8 964
Interest-bearing 6 950 5 971 7 048
Deferred taxation liabilities 427 197 371
Provisions 197 254 254
Other non-current liabilities 1 513 1 136 1 291
Current liabilities 15 879 12 514 13 679
Trade and other payables 8 983 8 343 9 548
Provisions 973 794 839
Taxation 161 239 252
Amounts due to bankers and short-term loans 5 762 3 138 3 040
Liabilities directly associated with assets
classified as held for sale 10 205
Total equity and liabilities 39 396 32 515 35 810
Condensed consolidated statement of changes in equity
Attributable to
Barloworld Non- Interest
Share capital Other Retained Limited controlling of all
and premium reserves income shareholders interest shareholders
Rm Rm Rm Rm Rm Rm
Balance at
1 October 2011 304 3 016 9 069 12 389 263 12 652
Total comprehensive income for the period
Transactions with owners, recorded directly in equity (448) 429 (19) 37 18
Other reserve movements 18 18 4 22
Dividends (223) (223) (27) (250)
Shares issued in current period 1 1 1
Balance at
31 March 2012 (Reviewed) 305 2 586 9 275 12 166 277 12 443
Total comprehensive income for the period (4) 997 993 39 1 032
Transactions with owners, recorded directly in equity
Other reserve movements (149) 25 (124) 5 (119)
Dividends (170) (170) (23) (193)
Treasury shares issued 3 3 3
Shares issued in current period 1 1 1
Balance at
30 September 2012 (Audited) 309 2 433 10 127 12 869 298 13 167
Total comprehensive income for the period 779 643 1 422 49 1 471
Transactions with owners, recorded directly in equity
Other reserve movements 27 (5) 22 1 23
Purchase of shares in subsidiaries (209) (209) 129 (80)
Dividends (320) (320) (38) (358)
Shares issued in current period 2 2 2
Balance at
31 March 2013 (Reviewed) 311 3 030 10 445 13 786 439 14 225
Condensed consolidated statement of cash flows
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2013 2012 2012
Reviewed Reviewed Audited
Notes Rm Rm Rm
Cash flow from operating activities
Operating cash flows before movements in working capital 2 653 2 384 5 199
Increase in working capital (2 408) (3 574) (3 128)
Cash generated from operations before investment in rental assets 245 (1 190) 2 071
Net investment in fleet leasing and equipment rental assets 11 (702) (685) (1 481)
Net investment in vehicle rental fleet 11 (406) (470) (633)
Cash utilised in operations (863) (2 345) (43)
Realised fair value adjustments on financial instruments 55 (33) (19)
Finance costs and investment income (407) (308) (696)
Taxation paid (378) (295) (596)
Cash outflow from operations (1 593) (2 981) (1 354)
Dividends paid (including non-controlling interest) 12 (358) (250) (443)
Net cash applied to operating activities (1 951) (3 231) (1 797)
Net cash applied to investing activities (963) (231) (1 120)
Acquisition of subsidiaries, investments and intangibles 13 (594) (88) (1 589)
Proceeds on disposal of subsidiaries, investments, intangibles and loans repaid 14 7 931
Net investment in leasing receivables (5) 33 98
Acquisition of property, plant and equipment (417) (327) (824)
Proceeds on disposal of property, plant and equipment 53 144 264
Net cash outflow before financing activities (2 914) (3 462) (2 917)
Net cash from financing activities 1 902 1 790 2 715
Ordinary shares issued 1 1 2
Shares repurchased for forfeitable share plan (24)
Purchase of non-controlling interest (125)
Increase in interest-bearing liabilities 2 026 1 789 2 737
Net decrease in cash and cash equivalents (1 012) (1 672) (202)
Cash and cash equivalents at beginning of period 2 624 2 754 2 754
Effect of foreign exchange rate movements 113 (29) 72
Effect of cash balances held for sale (16)
Cash and cash equivalents at end of period 1 709 1 053 2 624
Notes to the condensed consolidated financial statements
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), IAS 34: Interim Financial Reporting and in compliance with the
requirements of the Companies Act, No 71 of 2008 of South Africa. 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 2012.
This report was prepared under the supervision of IG Stevens, BCom CA (SA), Group General Manager - Finance.
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2013 2012 2012
Reviewed Reviewed Audited
Rm Rm Rm
2. RECONCILIATION OF NET PROFIT TO HEADLINE EARNINGS
Net profit attributable to Barloworld shareholders 643 429 1 559
Adjusted for the following:
Loss/(profit) on disposal of subsidiaries and investments (IAS 27) 31 32 (571)
Profit on disposal of properties (IAS 16) (14) (9)
Loss on sale of plant and equipment excluding rental assets (IAS 16) 2 1 2
Impairment of goodwill (IFRS 3) 3 8 363
Impairment of plant and equipment (IAS 16) and intangibles (IAS 38) 31
Gross remeasurements excluded from headline earnings 36 27 (184)
Taxation charge on disposal of subsidiaries (IAS 27) (3) 62 65
Taxation benefit on impairment of plant and equipment (IAS 16)
and intangible assets (IAS 38) (6)
Taxation effects of remeasurements (3) 62 59
Non-controlling interest in subsidiaries
in remeasurements (2) (2)
Net remeasurements excluded from headline earnings 33 87 (127)
Headline earnings 676 516 1 432
Weighted average number of ordinary shares in issue during the period (000)
- basic 210 636 210 946 210 693
- diluted 211 376 212 219 212 244
Headline earnings per share (cents)
- basic 320.9 244.6 679.7
- diluted 319.8 243.1 674.7
3. OPERATING PROFIT
Included in operating profit
Cost of sales (including allocation of depreciation) 25 195 22 333 46 677
Loss on disposal of other plant and equipment 2 1 19
Amortisation of intangible assets in terms of IFRS 3 Business Combinations 14 15 30
4. FAIR VALUE ADJUSTMENTS ON FINANCIAL INSTRUMENTS
Gains/(losses) arising from:
Forward exchange contracts and other financial instruments 2 (109) (119)
Translation of foreign currency monetary items 5 3 26
7 (106) (93)
5. NET FINANCE COSTS AND DIVIDENDS RECEIVED
Total finance costs (493) (376) (827)
Interest on financial assets not at fair value through profit or loss 17 28 49
Net finance costs (476) (348) (778)
Dividends - listed and unlisted investments 1 1 2
(475) (347) (776)
6. EXCEPTIONAL ITEMS
(Loss)/profit on acquisitions and disposal of properties, investments and subsidiaries (31) (16) 586
Impairment of goodwill (3) (8) (363)
Impairment of investments (2) (2)
Impairment of property, plant and equipment (31)
Gross exceptional (loss)/profit (34) (26) 190
Taxation charge on exceptional items 3 (62) (59)
Net exceptional (loss)/profit before
non-controlling interest (31) (88) 131
Non-controlling interest on exceptional items 2 2
Net exceptional (loss)/profit (31) (86) 133
7. TAXATION
Taxation per income statement (333) (343) (789)
Prior year taxation 4 5 (38)
Taxation on exceptional items 3 (62) (59)
Taxation on profit before STC, prior year taxation and exceptional items (340) (286) (692)
Secondary taxation on companies (25) (26)
Effective taxation rate excluding exceptional items, prior year taxation (%)
- excluding STC 34.2 34.5 32.7
- including STC 34.2 37.4 33.9
8. VENTURES
Joint ventures 268 161 253
Unlisted associates 240 125 159
508 286 412
Loans and advances 19 19 18
527 305 430
9. LONG-TERM FINANCIAL ASSETS
Listed investments* 1 9 7
Unlisted investments 25 25 25
26 34 32
Other long-term financial assets 47 113 65
73 147 97
* PPC shares held amounting to R1 million (March 2012: R9 million and
September 2012: R7 million) for the commitment to deliver PPC shares
to option holders following the unbundling of PPC.
10. ASSETS CLASSIFIED AS HELD FOR SALE
The major classes of assets and liabilities comprising the disposal
group and other assets classified as held for sale are as follows:
Property, plant and equipment 44 275
Inventories 83 154
Trade and other receivables 150 207
Cash balances 16
Assets of disposal group held for sale 293 636
Trade and other payables (155)
Other current and non-current liabilities (26)
Interest-bearing liabilities (24)
Total liabilities associated with assets classified as held for sale (205)
Net assets classified as held for sale 88 636
Per business segment:
Equipment 9
Handling 88 627
Total group 88 636
11. NET INVESTMENT IN FLEET LEASING AND RENTAL ASSETS
Net investment in fleet leasing and equipment rental assets (702) (685) (1 481)
Additions (1 356) (1 231) (2 626)
Proceeds and transfers on disposals 654 546 1 145
Net investment in vehicle rental fleet (406) (470) (633)
Additions (1 194) (1 202) (2 108)
Proceeds and transfers on disposals 788 732 1 475
12. DIVIDENDS PAID
Ordinary shares
Final dividend No 168 paid on 14 January 2013: 150 cents per share
(2012: No 166 - 105 cents per share) (320) (223) (223)
Interim dividend No 167 paid on 18 June 2012: 80 cents per share (170)
Paid to Barloworld Limited shareholders (320) (223) (393)
Paid to non-controlling interest (38) (27) (50)
(358) (250) (443)
6% cumulative non-redeemable preference shares
Preference dividends totalling R22 500 were declared and paid on
each of the following dates:
- 9 October 2012 (paid on 5 November 2012)
- 17 April 2012 (paid on 30 April 2012)
Preference dividends totalling R22 500 were declared on 8 April 2013
and paid on 6 May 2013.
13. ACQUISITION OF SUBSIDIARIES, INVESTMENTS AND INTANGIBLES
Inventories acquired (218) (4) (746)
Receivables acquired (154) (98) (221)
Payables, taxation and deferred taxation acquired 173 90 227
Borrowings net of cash 311 156 161
Provisions 99
Property, plant and equipment, other non-current assets and
non-controlling interest (421) (162) (197)
Total net assets acquired (309) (18) (677)
Goodwill arising on acquisition (17) (11) (54)
lntangibles arising on acquisition in terms of
IFRS 3 Business Combinations (134) (6) (706)
Total purchase consideration (460) (35) (1 437)
Deconsolidation of joint venture 21 21
Net cash cost of subsidiary acquired (460) (14) (1 416)
Bank balances and cash in subsidiaries acquired 3
Investments and intangibles acquired (134) (74) (176)
Cash amounts paid to acquire subsidiaries, investments and intangibles (594) (88) (1 589)
The group acquired the Bucyrus Russia mining equipment sales and support
business for a total cash consideration of R420 million with effect from
3 December 2012. The primary reason for acquisition was to align the
company with the increased product range offered by its principal,
Caterpillar Inc. The new product range comprised surface and underground
mining equipment including support service capability.
Barloworld Logistics Africa (Pty) Limited entered into a transaction which
resulted in the merger of its Dedicated Transport Services division (DTS)
with the Manline group. The primary reason for the acquisition was to align
with our strategy to build a leading, integrated logistics business.
The transaction involved the disposal of DTS together with a cash contribution
(R40 million) in exchange for shares (50.1%) in Manline (Pty) Limited. The
merged business is called Barloworld Transport Solutions and became a 50.1%
held subsidiary of Barloworld Logistics effective from 30 January 2013. The
initial accounting for deferred taxation, amortisation, intangible assets and
goodwill, at the end of the interim reporting period in respect of the above
acquisitions, is provisional. The goodwill and intangible assets valuations
are being finalised.
14. PROCEEDS ON DISPOSAL OF SUBSIDIARIES, INVESTMENTS, INTANGIBLES AND LOANS REPAID:
Inventories disposed 11 203
Receivables disposed 526
Payables, taxation and deferred taxation balances disposed (7) (268)
Borrowings net of cash (60)
Property, plant and equipment, non-current assets, goodwill and intangibles 548
Net assets disposed 4 949
Less: Non-cash translation reserves realised on disposal of foreign subsidiaries (593)
Total net assets disposed 4 356
Profit on disposal 3 596
Net cash proceeds on disposal of subsidiaries 7 952
Bank balances and cash in subsidiaries disposed of (21)
Cash proceeds on disposal of subsidiaries, investments, intangibles and loans repaid 7 931
15. CASH AND CASH EQUIVALENTS
Cash balances not available for use due to reserving and other restrictions 283 501 182
16. COMMITMENTS
Capital commitments to be incurred 2 233 1 308 1 556
Contracted - property, plant and equipment 1 179 980 644
Contracted - vehicle rental fleet 664 142 711
Approved but not yet contracted 390 186 201
Operating lease commitments 1 814 2 019 1 810
Capital expenditure will be financed by funds generated by the business, existing
cash resources and borrowing facilities available to the group.
17. CONTINGENT LIABILITIES
Bills, lease and hire-purchase agreements discounted with recourse, other guarantees
and claims 1 600 930 1 440
Litigation, current or pending, is not considered likely to have a material adverse
effect on the group
Buy-back and repurchase commitments* 317 197 131
*The related assets are estimated to have a value at least equal to the repurchase commitment.
17. CONTINGENT LIABILITIES continued
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 AU$5 million of any claim in terms of the unbundling arrangement.
Warranties and guarantees have been given as a consequence of the various disposals completed during the year and prior years. None is expected
to have a material impact on the financial results of the group.
The amount disclosed represents the Groups share of contingent liabilities. The extent to which an outflow of funds will be required is
dependent on future operations being more or less favourable than currently expected.
Progress has been made in respect of the equipment failure at a customer which was reported last year. The cause of the failure and the cost
of rectification has been determined and rectification is under way. The company has reciprocal agreements with suppliers and contractors and
as a result does not expect a material loss.
There are no material contingent liabilities in joint venture companies.
18. 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.
19. EVENTS AFTER THE REPORTING PERIOD
The Belgium Handling business was sold to management on 8 May 2013. The purchaser acquired the shares of the company and will represent the
Hyster forklift brand in the existing dealership territory in Belgium. The sale realised net cash proceeds of 7.5 million.
20. AUDITORS REVIEW
Deloitte & Touche has reviewed these interim results. This review was conducted in accordance with the International Standards on Review Engagement 2410,
Review of Interim Financial Information performed by the Independent Auditor.
Their unmodified review conclusion is available for inspection at the companys registered office. Any reference to future financial performance indicated
in this report has not been reviewed or reported on by the groups auditors.
Additionally, Deloitte & Touche has performed certain agreed-upon procedures in respect of certain of the non-financial salient features on page 24. No
assurance has been provided in relation to this information. Their agreed-upon procedures report is available for inspection at the companys registered office.
Operating segments
Fair value adjustments
Revenue Operating profit/(loss) on financial instruments
Six months ended Year ended Six months ended Year ended Six months ended Year ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept
2013 2012 2012 2013 2012 2012 2013 2012 2012
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Equipment and Handling 15 001 13 976 29 047 842 746 1 778 3 (111) (106)
Automotive and Logistics 16 299 14 135 29 490 673 531 1 152 3 5 12
Corporate 10 10 17 (52) 5 58 1 1
Total 31 310 28 121 58 554 1 463 1 282 2 988 7 (106) (93)
Southern Africa 22 999 19 679 41 420 1 290 1 160 2 630 8 (109) (79)
Europe 5 606 5 177 11 074 118 68 245 (1) 3 (14)
United States 6 882 1 013 3 9 (14)
Australia and Asia 2 699 2 383 5 047 52 45 127
Total 31 310 28 121 58 554 1 463 1 282 2 988 7 (106) (93)
Operating segments (continued)
Segment result: Operating profit/
(loss) including fair value Net operating assets/
adjustments Operating margin (%) (liabilities)
Six months ended Year ended Six months ended Year ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 30 Sept
2013 2012 2012 2013 2012 2012 2013 2012
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Audited
Rm Rm Rm % % % Rm Rm
Equipment and Handling 845 635 1 672 5.6 5.3 6.1 14 748 11 333
Automotive and Logistics 676 536 1 164 4.1 3.8 3.9 9 412 8 003
Corporate (51) 5 59 (704) (415)
Total 1 470 1 176 2 895 4.7 4.6 5.1 23 456 18 921
Southern Africa 1 298 1 051 2 551 5.6 5.9 6.3 17 557 14 353
Europe 117 71 231 2.1 1.3 2.2 4 452 3 156
United States 3 9 (14) 44.4 1.0 (1.4) (15) (15)
Australia and Asia 52 45 127 1.9 1.9 2.5 1 462 1 427
Total 1 470 1 176 2 895 4.7 4.6 5.1 23 456 18 921
Salient features
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2013 2012 2012
Financial
Headline earnings per share (cents) 320.9 244.6 679.7
Dividends per share (cents) 96 80 230
Operating margin (%) 4.7 4.6 5.1
Net asset turn (times) 2.5 2.7 2.7
EBITDA/interest paid (times) 5.1 6.0 5.9
Net debt/equity (%) 77.4 64.7 56.7
Return on net operating assets (RONOA) (%) 14.6 16.2 18.8
Net asset value per share including investments
at fair value (cents) 6 491 5 774 6 062
Number of ordinary shares in issue,
including BEE shares (000) 231 106 230 934 231 012
Non-financial
Energy Consumption (GJ)^* 946 614 982 120 1 921 347
Greenhouse gas emissions (tCO2e)^*~ 98 142 100 909 197 489
Water consumption (ML)* 346 386 799
Number of employees^* 19 645 19 122 19 238
LTIFR^*+ 1.10 1.19 1.22
Fatalities* 0 0 1
dti# B-BBEE rating (level)** 2 2 2
Closing rate Average rate
Six months ended Year ended Six months ended Year ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept
2013 2012 2012 2013 2012 2012
Rand Rand Rand Rand Rand Rand
Exchange rates
United States dollar 9.17 7.67 8.25 8.78 7.86 8.02
Euro 11.78 10.22 10.62 11.51 10.51 10.45
British Sterling 13.93 12.26 13.32 13.91 12.44 12.69
^ Agreed-upon procedures as at 31 March 2013, no assurance has been provided in this regard by the group auditors.
* Limited assurance provided at 30 September 2012.
~ Scope 1 and scope 2.
+ Lost time injuries x 200 000 divided by total hours worked.
# Department of Trade and Industry (South Africa).
**Audited and verified by Empowerdex at 12 December 2012.
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, Mazda, Mercedes-Benz, Toyota, Volkswagen,
Massey Ferguson 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 70% of just over 19 500 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
Directors
Non-executive: DB Ntsebeza (Chairman), NP Dongwana, AGK Hamilton*, SS Mkhabela, B Ngonyama, SS Ntsaluba, TH Nyasulu,
SB Pfeiffer
Executive: CB Thomson (Chief Executive), PJ Blackbeard, PJ Bulterman, M Laubscher, OI Shongwe, DG Wilson
*British American
Group company secretary
Lerato Manaka
Enquiries: Barloworld Limited: Lethiwe Motloung
Tel +27 11 445 1000
Email invest@barloworld.com
College Hill: Jacques de Bie
Tel +27 11 447 3030
Email Jacques.deBie@collegehill.co.za
For background information visit www.barloworld.com
Date: 20/05/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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