Wrap Text
Preliminary audited year-end results for the 12 months to 30 September 2017
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Income tax registration number 9000/051/71/5)
(JSE share code: BAW)
(JSE ISIN: ZAE000026639)
(Share code: BAWP)
(JSE ISIN: ZAE000026647)
(Namibian Stock Exchange share code: BWL)
("Barloworld" or "the company")
Preliminary audited year-end results for the 12 months to 30 September 2017
Salient features
- Revenue (from continuing operations) maintained at R62.0 billion
- Operating profit (from continuing operations) maintained at R4.1 billion
- Headline earnings per share (from continuing operations) up 16% to 975 cents (2016: 841 cents)
- Cash inflow before financing activities of R2.6 billion (2016: R3.5 billion)
- Net debt to equity (from continuing operations) at 27.6% (2016: 40.7%)
- Return on equity (from continuing operations) at 10.5% (2016: 9.3%)
- Total dividend per share of 390 cents up 13% (2016: 345 cents)
Dominic Sewela, CE of Barloworld, said:
"Equipment southern Africa’s operating performance has been resilient in the year following a rebound in mining and
infrastructure demand. Increased activity has generated improved results in our joint venture in the Katanga province
of the Democratic Republic of Congo (DRC). Strong mining and aftermarket in Equipment Russia drove the solid performance
in that business. The discontinued Iberian Equipment operation is now held for sale.
The Automotive division produced pleasing results despite challenging market conditions with both revenue and operating
profit exceeding 2016 levels. Trading in Logistics was up on last year due to the full year impact of acquisitions and
new contracts secured in 2016, however, the operating performance was negatively impacted by the loss of a major
customer and once-off costs.
The group is making good progress in implementing its strategy to fix and optimise existing businesses and has started
to realise the benefits. As a result of strong positive cash generation and well managed debt levels, we are well
placed to capitalise on acquisitive growth opportunities as they arise. The full benefit of initiatives progressed in
the current year will continue to have a positive impact into 2018."
20 November 2017
Chairman and chief executive's report
Overview
The latest IMF World Economic Outlook forecasts the global economy to grow by 3.6% in 2017 with the advanced economies
set to grow by 2.2% and the emerging economies by 4.6%.
The US economy is projecting GDP growth of 2.2% this year and 2.3% in 2018. Productivity growth in the US remains
disappointing and represents a limiting factor to higher growth. The lack of inflation in the US economy could influence
the pace of monetary tightening by the US Federal Reserve in the coming year.
The South African economy exited the technical recession in the second quarter of 2017 with the World Bank's outlook
for full year growth now down to 0.6%. However, local business and consumer confidence levels remain under pressure in
the wake of current political and economic uncertainty.
Against this backdrop, the group posted a pleasing 134 cents growth in headline earnings per share to 975 cents per
share from continuing operations. This represents a 16% increase on the prior year of 841 cents per share. Moreover, the
group generated a strong cash inflow before financing activities of R2.6 billion mainly driven by a R1.5 billion decrease
in working capital and lower cash applied to investing activities. Net debt of R5.8 billion was R2.2 billion down on
September 2016 net debt of R8.0 billion.
A total dividend for the year of 390 cents per share was declared in respect of the current year's earnings (2016:
345 cents).
Operational review
Equipment
Equipment southern Africa
Revenue for the year of R18.3 billion was 1.4% down on the prior year (R18.5 billion) but in line with the guidance
given to the market in November last year. The stronger rand compared to the prior year shaved R431 million off
revenue for the year. Approximately 69% of total revenue was generated in South Africa with aftersales representing 57%
of the total sales mix.
We have seen a rebound in mining unit sales following the low level in 2016. While mining unit sales have improved
compared to last year, the growth has been driven by increased demand for smaller sized truck units by contract
miners.
Operating profit of R1.8 billion is R200 million (13%) up on last year with the operating margin increasing from
8.5% to 9.8%.
Income from associates, which mainly relates to the Bartrac joint venture in the Katanga province of the DRC, increased
from R14 million to R94 million with the recommencement of mining activities at the Glencore Katanga Mine during the
current year and improved commodity prices.
In August, Equipment southern Africa celebrated its 90th anniversary as a Caterpillar dealer. This coincided with the
official opening of the new Caterpillar/Barloworld parts facility at Kempton Park which will further improve parts
availability to our customers.
Equipment Russia
Revenue for the year of US$385 million was US$56 million (17.1%) up on the prior year driven by strong growth in
mining unit sales particularly into opencast gold mining projects. In addition we have experienced 16% growth in
after sales revenue which in the current year represented 51% of total sales (2016: 51%).
The division generated operating profit of US$43.7 million which was 6.8% up on the prior year. The operating margin
of 11.3% was down on the 12.4% achieved in 2016 mainly as a result of lower new machine margins.
Automotive and Logistics
Automotive
Automotive delivered a solid result in tough trading conditions.
Revenue for the year of R31.6 billion was marginally up on the prior year while operating profit of R1.7 billion
was R93 million (5.6%) higher than last year.
The total operating margin showed a pleasing increase to 5.5% from 5.3% in 2016.
Car Rental
Revenue for the year of R6.4 billion was R479 million (8.0%) up on the prior year’s R6.0 billion.
The car rental market grew by 3.6%. The business increased rental days and rate per day, however, margins were
impacted by higher parts and vehicle prices and increased damage costs. Another strong used vehicle contribution
supported the overall results.
Operating profit of R562 million was 4.9% up on the R536 million earned last year with an operating margin of 8.7%
which was slightly down on the 9.0% achieved last year.
Fleet utilisation for the year improved by 1% to 76%.
Avis Fleet
Revenue for the year decreased by R71 million (1.9%) to R3.6 billion while operating profit increased by 11% to
R621 million. The current year produced a much improved used vehicle margin compared to the prior year which was
impacted by the disposal of the defleeted vehicles from the government of Lesotho contract. Consequently operating
margin for the year increased to 17.4% compared to 15.4% in the prior year.
Motor Trading
For the 2017 financial year, the total new vehicle market declined by 2.2%. The industry is forecast to grow by close
to 1.5% for the 2017 calendar year.
Revenue for the year decreased by R242 million (1.1%) from R21.8 billion in 2016 to R21.6 billion in the current year
impacted by the disposal of one and closure of four dealerships in the year. New vehicles sold decreased by 7.4%
impacted by a weaker dealer market, down 4.0%. There was good contribution from aftermarket revenues.
Operating profit of R564 million for the year was R6 million up on the prior year assisted by the full year impact of
the two Union Motors dealerships and Salvage Management and Disposal (SMD) acquisitions made in the prior year.
Margins contracted across certain franchises with the premium brands affected the most.
Logistics
Revenue for the year of R6.2 billion was R415 million (7.2%) ahead of last year driven by the acquisitions of KLL and
Aspen in January 2016, as well as the full impact of additional contracts within Supply Chain Management and Transport
won last year.
Year to date operating profit of R101 million was, however, R122 million (54.7%) below the prior year due to the low
growth in the South African economy, difficult trading conditions, the negative impact of the loss of a major client
as well as the retention impairments in the close out of the Supply Chain Software disposal reported in 2016.
On 1 July we acquired the 21.2% minority interest in Barloworld Transport for a consideration of R141 million. This
step has laid the foundation for further rationalisation of the overhead structure of the Logistics group.
Strategic Review
Work continues in respect of all four areas identified in the group strategy.
Fix - The board has taken the decision to continue with the disposal of Equipment Iberia. The turnaround within the
Logistics business is ongoing and progress on the exit of the Middle East Logistics operations is advancing well with
several offers being negotiated. All options remain under consideration as we continue to closely monitor the performance
of the business against this plan.
Optimise - Equipment southern Africa has commenced the roll-out of the operational transformation project, while Motor
Retail has completed the bulk of the work around the restructuring contemplated through various dealership closures and
further cost rationalisations.
Grow - Steady progress is being made in assessing opportunities that offer synergies to the group.
Active shareholder model - The group has adopted an approach of managing for intrinsic value which focuses on value
creation through the structured assessment of opportunities, a strong focus on resource allocation (capital, talent and
operating costs) and robust business performance management. The roll-out of this programme is continuing. Good progress
has been made on the project for the redevelopment of the Barlow Park property with legal agreements expected to be
signed before the end of the 2017 calendar year.
Human Capital, Diversity and Sustainable development
Despite our ongoing strong focus on safety across the group, we regrettably had three tragic work-related fatalities
during the year in our Logistics operations in unrelated incidents. We extend our sincere condolences to the bereaved
families to whom we offered support. We continue to drive awareness of health and safety in the workplace.
We continue to engage emerging and black-owned professional service providers to drive diversity in our supply chain
and provide them with access to the broader market.
We have also engaged our various principals to advance the localisation of some of their products and services. The
equity equivalent investment programme in partnership with the Department of Trade and Industry recently announced by
Caterpillar will assist in increasing the local content in CAT equipment and assist Barloworld Equipment’s competitiveness
by improving their BBBEE rating.
Sustainability plays a key role in how Barloworld does business. As a result of the sustainability practices we have
adopted over the years, we are a constituent of the Dow Jones Sustainability Emerging Markets Index, the FTSE/JSE
Responsible Investment Top 30 Index and the FTSE4Good Emerging Index.
Changes in directorate and executive management
As reported during the course of the 2017 financial year, Messrs Steven Pfeiffer, Clive Thomson and Peter Bulterman
retired as directors of the board at the annual general meeting held on 8 February 2017. Mr John Blackbeard retired from
the board of Barloworld Limited at the end of April 2017 and Ms Babalwa Ngonyama resigned from the Barloworld Limited
board with effect from 11 May 2017.
In line with a structured board nomination process for the appointment of non-executive directors of Barloworld
Limited, Ms Hester Hickey and Messrs Peter Schmid and Michael Lynch-Bell were appointed independent non-executive
directors with effect from 1 April 2017 and Ms Nomavuso Mnxasana was appointed with effect from 6 October 2017.
The board wishes to thank the non-executive and executive directors that have departed for their valuable service and
contribution to the board and Barloworld.
Funding
Following the reduction in group net debt of R2.7 billion in 2016, net debt further decreased by R2.3 billion in the
current year from R8.0 billion to R5.8 billion. This was mainly due to strong cash generation in Equipment southern Africa.
Outlook
The South African economy is projected to grow by 1.1% in 2018. The markets, however, remain focused on the December
2017 ANC elective conference, the result of which could impact the sovereign rating, confidence levels as well as the
value of the rand.
The outlook for mining in Equipment southern Africa remains positive with demand for commodities and related commodity
pricing holding up. We are forecasting mining unit sales and mining after sales to show continued growth in 2018.
The Equipment firm order book of R1.5 billion is up on the R1.3 billion at September 2016 but down on the R1.9 billion
at March with construction representing 50% of the book.
Equipment southern Africa has embarked on a number of cost saving measures driven by achieving process efficiencies
that will address weaknesses in the current IT environment, together with procurement saving initiatives. The project
will run into the 2020 financial year and will further improve the operating performance of the division.
The Russian economy is likely to show growth of just under 2% in 2017 with further growth improvement into 2018
expected. The firm order book at September of US$203 million is well up on the US$21 million at September 2016. The
bulk of these orders (94%) relate to mining projects and include the machines for the Polyus Gold and NordGold projects.
This together with a number of other potential mining projects under discussion should ensure strong growth in machine
revenue in the coming year.
In Car Rental we expect to see further growth in the foreign in-bound segment while the corporate and local leisure
markets will remain subdued.
Avis fleet will continue to benefit from retaining the existing customer portfolio and gain new business.
The South African motor industry is going through a period of transition with the exit of General Motors from South
Africa and dealer footprint realignments. In response to these challenges, Motor Trading has closed one and disposed of
another BMW dealership and closed three of the existing GM dealerships. These actions will reduce annualised revenue by
close to R1.5 billion in 2018 with marginal impact at the operating level. We expect vehicle sales in 2018 to be in line
with the current year and the premium market to remain challenging.
In early October, Logistics management embarked on a turnaround strategy aimed at improving performance through
operational efficiency, and to simplify and optimise the operating an organisational model. This initiative entails
multiple initiatives of cost reduction and procurement savings. Management are further focused on returning
underperforming businesses to required performance targets.
Logistics have been successful in securing a number of new contracts in the current year which will underpin further
growth in 2018.
The group is making good progress in implementing its strategy to fix and optimise existing businesses and has started
to realise the benefits. As a result of strong positive cash generation and well managed debt levels, we are well
placed to capitalise on acquisitive growth opportunities as they arise. The full benefit of initiatives progressed in
the year in review will continue to have a positive impact into 2018.
DB Ntsebeza DM Sewela
Chairman Chief executive
Group financial review
Following the board’s decision to sell the group’s Equipment Iberia operations, the group has in terms of IFRS 5
reported the results of Equipment Iberia separately as a discontinued operation and assets and liabilities held for
sale in the financial statements for the year ended 30 September 2017. The following commentary regarding current
year trends is against restated comparatives to reflect the results from continuing operations unless specifically
stated.
Financial performance from continuing operations for the year ended 30 September 2017
Revenue for the year of R62.0 billion remained resilient and in line with the prior year (2016: R62.1 billion) on the
back of an impressive performance in Equipment Russia while our Logistics business was boosted by the full year impact
of contracts and acquisitions in the prior year. Equipment Russia benefited from strong mining unit and after sales
demand, generating revenue growth of 17.1% in US dollar terms. Demand for mining equipment in southern Africa showed some
improvement as commodity prices held up. Automotive revenues were marginally up by 0.5% notwithstanding the sale and
closure of a number of BMW and General Motor dealerships in Motor Trading. With approximately 20% of the group’s revenue
generated outside of South Africa the stronger rand negatively impacted revenues by R1.1 billion.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) of R6.7 billion improved by 3.2% while
operating profit and the operating margin remained consistent with the prior year at R4.1 billion and 6.6% respectively.
Key to this achievement amidst tough trading conditions was the high level of after sales in both Equipment southern Africa
and Russia, and the continued profitability from the sale of used vehicles in Automotive.
Operating profit in Equipment southern Africa was up 13% on the prior year with Equipment Russia increasing by 6.8%
in US dollar terms. Automotive produced another record result increasing operating profits by 5.6% to R1.8 billion. Avis
Fleet produced a strong performance increasing their operating margin to 17.4% (2016: 15.4%). In Logistics, the loss of
a key customer, restructuring and other costs associated with implementing a turnaround strategy have negatively
impacted operating margins in this business with operating profit falling to R101 million (2016: R223 million).
The net negative fair value adjustments on financial instruments of R209 million (2016: R209 million) mainly represent
the cost of forward points on foreign exchange contracts and translation gains and losses on foreign currency denominated
monetary assets and liabilities in Equipment southern Africa. During the year, the strengthening of the rand resulted in
exchange losses in respect of US dollar deposits held.
Finance costs of R1.3 billion are down by R2 million on prior year due to lower average borrowings despite higher
short-term rates in South Africa.
Losses from non-operating and capital items of R155 million consist largely of impairments of goodwill, other
intangibles and other assets of R158 million in Automotive and Logistics and losses on disposal of the Handling business
of R46 million. Offsetting these losses were gains of R63 million recognised by Automotive on the sale of properties and
a dealership.
The taxation charge decreased by R231 million and the effective tax rate (excluding prior year taxation and non-operating
and capital items) reduced to 23.9% (2016: 27.0%) largely as a result of local currency fluctuations against the US
dollar functional currency of the offshore operations. In this respect Barloworld’s taxation charge was favourably
impacted by movements in the Russian ruble, Angolan kwanza, and the Mozambican metical against the US dollar.
The increase in income from associates and joint ventures in the year is mainly attributable to the profitability of
the Equipment joint venture in the Katanga province of the DRC and follows from improved copper and cobalt prices and the
resumption of mining activities at the Katanga Mine.
The discontinued Equipment Iberia operations generated losses of €17.7 million (R269 million) in the year which were
negatively impacted by restructuring costs of €9.1 million (R137 million) and an impairment of €5.1 million (R78 million)
for the investment and goodwill in the associate Energyst. In addition the deferred tax asset in Spain was impaired by
€3.4 million (R52 million) following the change in Spanish legislation regarding the annual recovery of such losses. The
decision to sell this business is expected to release capital for allocation to new growth opportunities for the Group.
Overall, profit from continuing operations increased by R76 million (3.9%) to R2.0 billion (2016: R1.9 billion) and
HEPS from continuing operations increased by 16% to 974.5 cents (2016: 840.9 cents). Total HEPS including discontinued
operations increased by 5% from 838.1 cents to 883.4 cents, a pleasing result against challenging trading conditions and
illustrative of our ability to deliver sustainable financial results.
Cash flows
Generating free cash flow is a strategic imperative for the group. Despite a strong reduction in working capital in
the current year of R1.5 billion (2016: R2.1 billion), cash generated from operations of R6.0 billion was down on the
prior year (2016: R7.8 billion). These cash flows were impacted by increased net investment in leasing assets and vehicle
rental fleet of R2.9 billion (2016: R1.5 billion).
Investing activities of R329 million (2016: R1.4 billion) were driven by additional investment in Angolan US
dollar-linked government bonds of R201 million (US$15 million) using Kwanza cash on hand as protection against
currency devaluation. The total investment in Angolan US dollar-linked government bonds at September was
US$66 million (2016: US$51 million). The disposal of the Handling and Agriculture assets generated proceeds of
R301 million.
Net cash flows before financing activities for the year to R2.6 billion were down from R3.5 billion in the prior year
but were well up on our forecasts.
Financial position
Total assets employed in the group increased by R302 million driven by investments in leasing assets and vehicle
rental fleet together with the improved cash position of the group. This was offset by a decrease in inventories.
Assets held for sale of R3.3 billion comprise Equipment Iberia and the Logistics Middle East business.
For the second consecutive year total debt dropped substantially, reducing by R1.3 billion to R 9.7 billion
(2016: R11.0 billion). Coupled with the increase in cash at the year end, net debt of R5.8 billion was R2.3 billion down
on prior year (2016: R8.0 billion).
The UK pension scheme deficit decreased from R2.8 billion (£161 million) to R2.2 billion (£123 million) due to an
increase in the AA corporate bond yield and changes in demographic factors which impacted the estimated future pension
liability. The recent interest rate increase by the Bank of England (the first in 10 years) represents a first step in the
gradual increase of UK rates which should have a positive impact in the reduction of the scheme deficit going forward.
Return on equity from continuing operations increased to 10.5% from 9.3% last year while return on equity including
discontinued operations increased from 9.2% to 9.5%.
Debt
In April 2017 the R450 million BAW13 bond matured and was redeemed through available banking facilities. During May
and June 2017 R1 582 million was raised through bond issuances of four three to five-year floating rate notes under our
existing South African Domestic Medium Term Note programme. The issuance of these notes effectively refinanced and
prefunded the settlement of notes (totalling R925 million) which matured late September and early October 2017. Overall
debt maturity is well balanced in future years.
In South Africa, closing short-term debt includes commercial paper totalling R643 million (September 2016: R807 million).
This market saw a change in investor appetite in the current year with a shift in liquidity from three-month paper
to six-month paper resulting in higher spreads for this debt instrument. We aim to maintain our participation in this
market but this is dependent on overall liquidity and relative pricing in the market.
In June 2017, Moody’s affirmed the Barloworld long-term and short-term issuer Global Scale Ratings of Baa3 and P-3,
raised the long-term National Scale Rating to Aa1.za from Aa3.za and affirmed the short-term National Scale Rating
P-1.za. The outlook on the ratings of Barloworld changed from stable to negative following the change of outlook on
the Baa3 sovereign rating of South Africa.
At September, R7.6 billion (79%) of our total debt of R9.7 billion was long term, which was slightly up on the 76%
last year while R2 billion (21%) is short-term debt.
At year end we had total unutilised facilities of R10.7 billion (2016: R9.6 billion) of which R8 billion was committed
(2016: R7.2 billion).
Net debt to EBITDA of 0.8 times is a strong improvement on the prior year of 1.2 times and supports our capacity for
future transactions. Net debt to equity has also reduced to 27.6% from 40.7% in the prior year with 94% of our year-end
net debt in the leasing and car rental business segments.
Total debt to equity (%) Car Group Group
Trading Leasing Rental debt net debt
Target range 30 - 50 600 - 800 200 - 300
Ratio at 30 September 2017 21 560 203 46 28
Ratio at 30 September 2016 29 720 216 56 41
Dividends
Barloworld’s dividend policy is to pay dividends within an annual headline earnings per share (HEPS) cover range of
2.5 - 3.0 times. On the back of the results of the year dividends totalling 390 cents per share have been declared,
representing cover of 2.5 times.
2018 Outlook
We remain committed to optimising the returns of our existing businesses with specific focus on the turnaround of
Logistics and gaining cost efficiencies across the group. With the recovery of global mining, we expect to see higher
returns across our Equipment businesses in the year ahead. The local automotive industry is facing a number of challenges
yet we remain positive that our integrated model can withstand these pressures. Generating free cash flows remains an
imperative together with ensuring that the group’s assets generate a return on invested capital above our stated target
weighted average cost of capital target of 13%. We continue to explore options to rationalise the group’s asset base and
unlock capital to take advantage of future high growth opportunities.
DG Wilson
Finance director
Operational reviews
Equipment
Revenue Operating Net operating assets
profit/(loss)
Year ended 30 September Year ended 30 September Year ended 30 September
Restated* Restated*
2017 2016 2017 2016 2017 2016
Rm Rm Rm Rm Rm Rm
Equipment 23 428 23 384 2 367 2 191 15 091 15 642
- Southern Africa 18 287 18 547 1 785 1 585 10 106 10 546
- Europe 7 2 441 2 694
- Russia 5 141 4 837 582 599 2 544 2 402
Handling 765 1 505 (5) 25 443 910
24 193 24 889 2 362 2 216 15 534 16 552
Share of associate income 97 6
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 6.
BWE southern Africa produced a pleasing result for the 2017 financial year. Revenue of R18.3 billion was R260 million
down on last year in rand terms, however, operating profits increased by 13% to R1.8 billion, with significant
improvement in operating margins.
A recovery in commodity prices saw improvement in trading activities in South Africa, driven largely by mining
activities in Middelburg and the Northern Cape regions. Operating profit improved in Angola, while performance from the
remaining African operations remained in line with the previous year. Revenue in Construction and Contract mining activities
grew by 5% with our rental and used business growing significantly at 28.5%, in response to improved market conditions.
The aftermarket business remained strong, contributing 57% of total revenue.
Attributable profit contribution from our joint venture in the Katanga province of the DRC increased to R97 million
from R13 million in 2016 on the back of improved copper and cobalt prices.
In addition, our drive to improve efficiency in our operations, delivered a step change in cost containment and improved
performance. Return on equity increased from 9.1% to 15.2% with strong net cash generation of R1 363 million mainly
as a result of working capital reduction. Our inventory optimisation programme delivered an improvement in inventory
turns from previous 2.5 to 3.2 times.
Although the global economic outlook is improving, policy and political uncertainty continues to restrict growth in
southern African economies. BWE will continue to drive operational efficiencies through operational transformation and a
new operating model.
In Russia, revenue for the year of R5 141 million showed a R304 million (6.3%) increase over the prior year driven by
improved mining machine demand into the opencast gold mining segment and a rebound of the coal mining segment. The
aftermarket business has also demonstrated strong growth.
While operating profit of R582 million was R17 million down on last year in rand terms due to the strengthening of the
rand during the year, it was up 6.8% in US dollar terms. Operating margin decreased from 12.4% to 11.3% primarily due
to lower margins on new machine deliveries. Russia produced excellent returns and again generated positive cash flows
in 2017.
Automotive and logistics
Revenue Operating Net operating assets
profit/(loss)
Year ended 30 September Year ended 30 September Year ended 30 September
2017 2016 2017 2016 2017 2016
Rm Rm Rm Rm Rm Rm
Automotive 31 593 31 427 1 747 1 654 8 675 8 686
- Car Rental 6 446 5 967 562 536 2 750 2 534
- Avis Fleet 3 570 3 641 621 560 3 687 3 786
- Motor Trading 21 577 21 819 564 558 2 238 2 366
Logistics 6 171 5 756 101 223 2 082 2 472
- Southern Africa 6 011 5 527 102 226 1 970 2 348
- Europe and Middle East 160 229 (1) (3) 112 124
37 764 37 183 1 848 1 877 10 757 11 158
Share of associate loss (4) (4)
The Automotive division delivered another record result with operating profit up 5.6% on prior year off a revenue
growth of 0.5%. Revenue was impacted by dealer network restructuring with the sale of one BMW dealership and closure
of one BMW and three GM dealerships. On a comparable basis, excluding the closure and disposal of dealerships, revenue
increased by 2.3% on prior year. This year’s result was impacted by a weaker new vehicle market, depressed consumer
confidence, price increases and dealer network restructuring in the Motor Trading business. On the upside, the business
benefited from cost alignment initiatives and strong used vehicle profit contribution. The business increased operating
margin to 5.5% (2016: 5.3%). The division continues to deliver a ROE and ROIC above the group hurdle rates and generated
positive cash flow.
Car Rental delivered a pleasing result increasing revenue by 8.0% to R6.4 billion and generated an operating profit of
R562 million, up 4.9% on prior year. Operating margin declined from 9.0% to 8.7%, impacted by higher vehicle damage
expenses and increased vehicle and parts prices. Lower than planned rate per day increases were achieved due to highly
competitive pricing in the market. The result is underpinned by increased rental days and strong used vehicle contribution.
Optimal fleet utilisation remains a key focus with the business achieving a 76% utilisation rate.
Avis Fleet delivered a strong result increasing operating profit by 11% to R621 million against a 1.9% revenue decline
on prior year. Higher used vehicle volumes in the prior year driven by the disposal of the defleeted government of
Lesotho vehicles, contributed to the decline in revenue. Operating margin increased from 15.4% in prior year to 17.4%
supported by improved used vehicle profits and major contracts performing well. African countries are still impacted by
challenging macro-economic environments. Turnaround strategies have been implemented to address underperforming businesses.
Motor Trading delivered a credible result in a tough trading environment and a declining new vehicle dealer market
which was down by 4.0%. Revenue declined by 1.1% but operating profit increased by 1.1%, maintaining an operating margin
of 2.6%. Revenue was impacted by the dealer network restructuring, and on a comparable basis revenue increased by 1.3% on
prior year. Returns and margins were further impacted by double digit declines in the premium segment due to increasing
vehicle pricing. Improved aftersales performance and cost alignment initiatives favourably, impacted the overall
returns. The business continues to benefit from acquisitions made in the previous financial year.
In Logistics while revenue was up by 7.2%, operating profit was down 54.7% on last year. The results were negatively
impacted by the loss of an anchor client as well as lack of desired integration efficiencies coupled with high network
cost and increased cost of doing business within the KLL acquisition. An asset refinancing transaction was concluded within
the Transport business resulting in an overall reduction in net operating assets.
The Freight Management and Services segment continues to show a pleasing operating profit performance within southern
Africa. The Middle East business continues to face challenging trading conditions as a result of both market conditions
and loss of major clients, therefore disposal options within this region are being reviewed. Barloworld Logistics Africa
concluded a minority buyout during the period under review and now owns 100% of Barloworld Transport providing for
better integration efficiencies into the new financial year.
Corporate
Revenue Operating Net operating
profit/(loss) assets/(liabilities)
Year ended 30 September Year ended 30 September Year ended 30 September
2017 2016 2017 2016 2017 2016
Rm Rm Rm Rm Rm Rm
Southern Africa 2 2 (56) 48 553 578
Europe (72) (54) (2 262) (2 908)
2 2 (128) (6) (1 709) (2 330)
Share of associate loss 1
Corporate Office primarily comprises the operations of the group headquarters and treasury in Johannesburg, the
treasury in Maidenhead (United Kingdom) and the captive insurance company.
Southern Africa has incurred higher operating losses compared to the previous comparative period largely as a result of
once-off charges relating to group strategic projects and higher employment costs as a result of the group leadership
transition. In Europe, claim losses incurred in BIL, our captive insurance company, led to increased operating costs.
In line with the strategic direction which includes a more activist role of the centre, the group has introduced
Strategy and M&A, Talent Management and Project Management capabilities to the corporate office with focus on driving
the value-maximising allocation of both human and financial capital.
Dividend declaration
Dividend number 177
Notice is hereby given that final dividend number 178 of 265 cents (gross) per ordinary share in respect of the 12
months ended 30 September 2017 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 20% (twenty per centum);
- Barloworld has 212 692 583 ordinary shares in issue;
- The gross local dividend amount is 265 cents per ordinary share;
- The net dividend amount is 212 cents per share.
In compliance with the requirements of Strate and the JSE Limited, the following dates are applicable:
- Last day to trade cum dividend Tuesday, 9 January 2018
- Shares trade ex-dividend Wednesday, 10 January 2018
- Record date Friday, 12 January 2018
- Payment date Monday, 15 January 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 10 January 2018 and
Friday, 12 January 2018, both days inclusive.
On behalf of the board
LP Manaka
Group company secretary
Directors
Non-executive: DB Ntsebeza (Chairman), NP Dongwana, FNO Edozien^, H Hickey, NP Mnxasana, M Lynch-Bell*, SS Mkhabela,
SS Ntsaluba, P Schmid, OI Shongwe
Executive: DM Sewela (Chief executive), DG Wilson
^Nigeria *UK
Summarised consolidated income statement
for the year ended 30 September
Audited
Restated*
2017 2016 %
Note Rm Rm change
CONTINUING OPERATIONS
Revenue 61 959 62 074 (0)
Operating profit before items listed below (EBITDA) 6 694 6 486
Depreciation (2 468) (2 294)
Amortisation of intangible assets (144) (105)
Operating profit 4 082 4 087 (0)
Fair value adjustments on financial instruments (209) (209)
Finance costs (1 329) (1 331)
Income from investments 109 111
Profit before non-operating and capital items 2 653 2 658 (0)
Non-operating and capital items 3 (155) 85
Profit before taxation 2 498 2 743
Taxation (565) (796)
Profit after taxation 1 933 1 947 (1)
Income from associates and joint ventures 93 3
Profit for the year from continuing operations 2 026 1 950 4
DISCONTINUED OPERATION
(Loss)/profit from discontinued operation 6 (269) 29
Profit for the year 1 757 1 979
Net profit attributable to:
Owners of Barloworld Limited 1 643 1 883 (13)
Non-controlling interest in subsidiaries 114 96
1 757 1 979
Earnings per share from group (cents)
- basic 779.6 890.5
- diluted 774.7 888.2
Earnings per share from continuing operations (cents)
- basic 907.2 876.8
- diluted 901.5 874.5
(Loss)/earning per share from discontinued operation (cents)
- basic (127.6) 13.7
- diluted (126.8) 13.7
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 6.
Summarised consolidated statement of comprehensive income
for the year ended 30 September
Audited
2017 2016
Rm Rm
Profit for the year 1 757 1 979
Items that may be reclassified subsequently to profit or loss: 75 (550)
Exchange gains/(loss) on translation of foreign operations 8 (377)
Translation reserves realised on disposal of foreign joint
venture and subsidiaries (83)
Gain/(loss) on cash flow hedges 89 (121)
Deferred taxation on cash flow hedges (22) 31
Items that will not be reclassified to profit or loss: 535 (1 134)
Actuarial gains/(losses) on post-retirement benefit obligations 678 (1 343)
Taxation effect of net actuarial (losses)/gains (143) 209
Other comprehensive income/(loss) for the year, net of taxation 610 (1 684)
Total comprehensive income for the year 2 367 295
Total comprehensive income attributable to:
Owners of Barloworld Limited 2 253 199
Non-controlling interest in subsidiaries 114 96
2 367 295
Summarised consolidated statement of financial position
at 30 September
Audited
2017 2016
Note Rm Rm
ASSETS
Non-current assets 18 613 20 179
Property, plant and equipment 12 659 13 806
Goodwill 1 932 2 015
Intangible assets 1 602 1 713
Investment in associates and joint ventures 1 093 923
Finance lease receivables 240 147
Long-term financial assets 404 448
Deferred taxation assets 683 1 127
Current assets 24 368 25 015
Vehicle rental fleet 3 222 2 789
Inventories 8 457 10 317
Trade and other receivables 8 676 8 826
Taxation 88 55
Cash and cash equivalents 3 925 3 028
Assets classified as held for sale 6 3 343 828
Total assets 46 324 46 022
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 441 441
Other reserves 5 144 5 134
Retained income 14 690 13 367
Interest of shareholders of Barloworld Limited 20 275 18 942
Non-controlling interest 602 737
Interest of all shareholders 20 877 19 679
Non-current liabilities 10 852 12 446
Interest-bearing 7 623 8 379
Deferred taxation liabilities 538 703
Provisions 19 111
Other non-current liabilities 2 672 3 253
Current liabilities 13 798 13 830
Trade and other payables 10 697 10 054
Provisions 929 931
Taxation 117 180
Amounts due to bankers and short-term loans 2 055 2 665
Liabilities directly associated with assets classified as
held for sale 6 797 67
Total equity and liabilities 46 324 46 022
Summarised consolidated statement of changes in equity
at 30 September
Attribu-
table to
Share Barloworld Interest
capital Limited Non- of all
and Other Retained share- controlling share-
premium reserves income holders interest holders
Audited Rm Rm Rm Rm Rm Rm
Balance at 1 October 2015 282 5 793 13 351 19 426 616 20 042
Total comprehensive income for the year (550) 749 199 96 295
Transactions with owners, recorded directly in equity
Other reserve movements (109) (109) (109)
Acquisition of subsidiary 96 96
Other changes in minority shareholders interest and minority loans (55) (55)
Dividends (733) (733) (16) (749)
Share buy-back during the year (127) (127) (127)
Share issue during the year 286 286 286
Balance at 30 September 2016 441 5 134 13 367 18 942 737 19 679
Total comprehensive income for the year 75 2 178 2 253 114 2 367
Transactions with owners, recorded directly in equity
Other reserve movements (154) 32 (122) (122)
Other changes in minority shareholders interest and minority loans 89 (132) (43) (201) (244)
Dividends (755) (755) (48) (803)
Balance at 30 September 2017 441 5 144 14 690 20 275 602 20 877
Summarised consolidated statement of cash flows
for the year ended 30 September
Audited
2017 2016
Note Rm Rm
CASH FLOWS FROM OPERATING ACTIVITIES
Operating cash flows before movements in working capital 7 307 7 161
Movement in working capital 1 539 2 119
Cash generated from operations before investment in leasing
and rental fleets 8 846 9 280
Fleet leasing and equipment rental fleet (1 661) (506)
Additions (3 550) (2 580)
Proceeds on disposal 1 889 2 074
Vehicles rental fleet (1 220) (947)
Additions (4 373) (3 798)
Proceeds on disposal 3 153 2 851
Cash generated from operations 5 965 7 827
Finance costs (1 338) (1 346)
Realised fair value adjustments on financial instruments (270) (105)
Dividends received from investments, associates and
joint ventures 13 31
Interest received 108 113
Taxation paid (744) (805)
Cash inflow from operations 3 734 5 715
Dividends paid (including non-controlling interest) (803) (772)
Cash retained from operating activities 2 931 4 943
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries, investments and intangibles 4 (393) (1 057)
Proceeds on disposal of subsidiaries, investments and intangibles 5 379 258
Movements in investments in leasing receivables (134) 9
Acquisition of other property, plant and equipment (774) (980)
Replacement capital expenditure (315) (459)
Expansion capital expenditure (458) (521)
Proceeds on disposal of property, plant and equipment 593 334
Net cash used in investing activities (329) (1 436)
Net cash inflow before financing activities 2 602 3 507
CASH FLOWS FROM FINANCING ACTIVITIES
Shares repurchased for equity-settled share-based payment (154) (95)
Share buy-back (162)
Share issue 286
Purchase of non-controlling interest (201) (142)
Non-controlling interest loan and equity movements 4 24
Proceeds from long-term borrowings 4 260 2 500
Repayment of long-term borrowings (5 005) (3 311)
Movement in short-term interest-bearing liabilities (546) (1 853)
Net cash from financing activities (1 642) (2 753)
Net increase in cash and cash equivalents 960 754
Cash and cash equivalents at beginning of year 3 028 2 372
Effect of foreign exchange rate movement on cash balance 39 (112)
Effect of cash balances classified as held for sale (102) 14
Cash and cash equivalents at end of year 3 925 3 028
Cash balances not available for use due to reserving restrictions 444 580
Summarised notes to the consolidated financial statements
for the year ended 30 September
1. BASIS OF PREPARATION
The summarised consolidated financial statements are prepared in accordance with the
requirements of the JSE Limited Listings Requirements (Listings Requirements) for
preliminary reports, and the requirements of the Companies Act applicable to the
summarised financial statements. The Listings Requirements require preliminary reports
to be prepared in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards (IFRS), the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council, and to also, as a
minimum, contain the information required by IAS 34 Interim Financial Reporting. The
accounting policies applied in the preparation of the summarised consolidated financial
statements are derived in terms of International Financial Reporting Standards and are
consistent with those accounting policies applied in the preparation of the previous
consolidated financial statements. Note that in the current year, Equipment Iberia has
been classified as a discontinued operation and assets and liabilities held for sale. As such,
comparatives have been restated where required by IFRS 5 Non-current assets held for sale and
discontinued operations as detailed in note 11. This announcement is a summary of the complete
set of financial statements available for inspection at our registered office. An unmodified
audit opinion was issued on the complete set of the consolidated financial statements.
This preliminary report and the complete set of the consolidated financial statements were prepared
under the supervision of RL Pole (Group general manager: finance) CA(SA).
Audited
Restated
2017 2016*
Rm Rm
2. Reconciliation of net profit to headline earnings
Net profit attributable to Barloworld shareholders 1 643 1 883
Adjusted for the following:
Loss/(profit) on disposal of subsidiaries and investments (IFRS 10) 25 (168)
Profit on disposal of plant, property, equipment and intangibles
excluding rental assets (IAS 16 and IAS 38) (43) (11)
Impairment of goodwill (IFRS 3) 73 15
Impairment of investments in associates and joint ventures (IAS 36) 37
Impairment of plant and equipment (IAS 16), intangibles (IAS 38) and other assets 98 6
Taxation effects of remeasurements (5) 10
Associate and non-controlling interest in remeasurements 71
Net remeasurements excluded from headline earnings 219 (111)
Headline earnings 1 862 1 772
Headline earnings from continuing operations 2 053 1 778
Headline loss from discontinued operation (191) (6)
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 6.
Audited
2017 2016
Rm Rm
2. Reconciliation of net profit to headline earnings continued
Weighted average number of ordinary shares in issue during the year (000)
- basic 210 780 211 425
- diluted 212 095 211 973
Headline earnings per share (cents)
- basic 883.4 838.1
- diluted 877.9 836.0
Headline earnings per share from continuing operations (cents)
- basic 974.5 840.9
- diluted 968.0 838.8
Headline loss per share from discontinued operation (cents)
- basic (91.1) (2.8)
- diluted (90.1) (2.8)
3. Non-operating and capital items
(Loss)/profit on acquisitions and disposal of investments and subsidiaries (25) 85
Impairment of goodwill (73) (15)
Reversal of impairment of investments 9
Profit on disposal of property and other assets 41 11
Impairment of property, plant and equipment, intangibles and other assets (98) (6)
Gross non-operating and capital items (155) 85
Taxation charge on non-operating and capital items 5 (10)
Non-operating and capital items included in associate income from continuing operations 7
Net non-operating and capital items from continuing operations (143) 75
Net non-operating and capital items from discontinued operations 35
Non-operating and capital items included in associate income from discontinued operations (78)
Non-operating and capital items from discontinuing operations (78) 35
Net non-operating and capital items (loss)/profit (221) 110
4. Acquisition of subsidiaries, investments and intangibles
Inventories acquired (154)
Receivables acquired (183)
Payables, taxation and deferred taxation acquired 457
Borrowings net of cash (34)
Property, plant and equipment, non-current assets, goodwill and non-controlling interest (239)
Total net assets acquired (153)
Goodwill arising on acquisitions (290)
Intangibles arising on acquisition in terms of IFRS 3 Business Combinations (196)
Total purchase consideration (639)
Deemed disposal of associate at fair value on obtaining control 21
Net cash cost of subsidiaries acquired (618)
Bank balances and cash in subsidiaries acquired 142
Investment and intangible assets acquired (393) (581)
Cash amounts paid to acquire subsidiaries, investments and intangibles (393) (1 057)
* R200 million (US$15 million) of investments acquired relates to dollar linked Angolan
government bonds. These Kwanza denominated bonds are pegged to the United States Dollar.
5. Proceeds on disposal of subsidiaries, investments and intangibles
Inventories disposed 551 39
Receivables disposed 26 22
Payables, taxation and deferred taxation balances disposed and settled (60) (46)
Borrowings net of cash 9
Property, plant and equipment, non-current assets, goodwill and intangibles 151 146
Net assets disposed 668 170
Receivable from subsidiary disposed (22)
Less: Non-cash translation reserves realised on disposal of foreign subsidiaries 1
Investment in joint venture (301)
(Loss)/profit on disposal (9) 117
Net cash proceeds on disposal of subsidiaries 358 266
Bank balances and cash in subsidiaries disposed (9)
Proceeds on disposal of investments and intangibles 21 1
Cash proceeds on disposal of subsidiaries, investments and intangibles 379 258
The net cash proceeds on disposal of subsidiaries mainly arises from the sale of the assets
of the Agriculture SA and Handling SA business into a joint venture company with BayWa AG.
6. Discontinued operation and assets classified as held for sale
Following the decision to dispose of the Equipment Iberia business, this segment
is classified as a discontinued operation. Management believes the sale of this
business will take place in the next financial year.
Results from discontinued operation are as follows:
Revenue 4 076 4 473
Operating profit before items listed below (EBITDA)^ 58 188
Depreciation (121) (132)
Amortisation of intangible assets (14) (8)
Operating (loss)/profit (77) 48
Finance costs (9) (15)
Income from investments 1 2
(Loss)/profit before non-operating and capital items (85) 35
Non-operating and capital items 35
(Loss)/profit before taxation (85) 70
Taxation (51) (13)
Net (loss)/profit of after taxation (136) 57
Loss from associates# (133) (28)
(Loss)/profit from discontinued operations per income statement (269) 29
^ Operating loss in 2017 includes restructuring costs of R137 million (€9.1 million).
# Loss from associates includes an impairment of investment and goodwill of R78 million
(€5.1 million).
The cash flows from the discontinued operation are as follows:
Cash flows from operating activities 381 (26)
Cash flows from investing activities (65) (81)
Cash flows from financing activities (326) 156
The major classes of assets and liabilities classified as held for sale are as follows:
Property, plant and equipment 1 131 152
Investments 97
Long-term financial assets 9
Deferred tax assets 166
Intangible assets 42 2
Inventories 823 650
Trade and other receivables* 973 24
Cash balances 102
Assets classified as held for sale 3 343 828
Interest-bearing long-term loans (33)
Trade and other payables - short and long-term** (637) (67)
Deferred tax liability (2)
Provisions (125)
Total liabilities associated with assets classified as held for sale (797) (67)
Net assets classified as held for sale 2 546 761
Per business segment:
Equipment Iberia 2 424 746
Logistics Middle East 122 15
Total group 2 546 761
* Include financial assets of R798 million.
** Include financial liabilities measured at amortised cost of R369 million.
7. Financial instruments
Carrying value of financial instruments by class:
Financial assets:
Trade receivables
- Industry 5 429 5 654
- Government 438 423
- Consumers 403 540
Other loans and receivables and cash balances 5 732 4 900
Finance lease receivables 499 379
Derivatives (including items designated as effective hedging instruments)
- Forward exchange contracts 42 2
Other financial assets at fair value 49 33
Other financial assets at fair value 12 592 11 930
Financial liabilities:
Trade payables
- Principals 3 336 2 603
- Other suppliers 5 234 5 686
Other non interest-bearing payables 435 369
Derivatives (including items designated as effective hedging instruments)
- Forward exchange contracts 46
- Other derivatives 5
Interest-bearing debt measured at amortised cost 9 134 10 085
Total carrying value of financial liabilities 18 144 18 789
Fair value measurements recognised in the statement of financial position
Level 1 measurements are derived from quoted prices in active markets. Level 2 and level 3
measurements are determined using discounted cash flows.
2017
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss
Financial assets designated at fair value through profit or loss 49 49
Available-for-sale financial assets
Shares 5 5
Derivative assets designated as effective hedging instruments 42 42
Total 42 54 96
Financial liabilities at fair value through profit or loss
Financial liabilities designated at fair value through profit or loss 5 5
Total 5 5
2016
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss
Financial assets designated at fair value through profit or loss 28 28
Available-for-sale financial assets
Shares 5 5
Derivative assets designated as effective hedging instruments 2 2
Total 2 33 35
Financial liabilities at fair value through profit or loss
Financial liabilities designated at fair value through profit or loss 2 2
Derivatives 91 91
Total 93 93
Audited
2017 2016
Rm Rm
8. Dividends
Ordinary shares
Final dividend No 176 paid on 16 January 2017: 230 cents per share
(2016: no 174 - 230 cents per share) 266 488
Interim dividend No 177 paid on 12 June 2017: 125 cents per share
(2016: No 175 - 115 cents per share) 489 245
755 733
Paid to non-controlling interest 48 16
803 749
Dividends per share (cents) 390 345
- interim (declared May) 125 115
- final (declared November) 265 230
9. Contingent liabilities
Performance guarantees given to customers, other guarantees and claims
From continuing operations 578 1 017
From discontinued operation 207
Total group 785 1 017
Buy-back and repurchase commitments not reflected on the statement of
financial position
From continuing operations 102 98
From discontinued operation 24
Total group 126 98
On 13 October 2017, the Barloworld Equipment South Africa business (BWE SA) received notification
from the Competition Commission that it intended referring BWE SA and the members of the Contractors
Plant Hire Association to the Competition Tribunal in respect of a contravention of section 4(1)(b)(i)
of the South African Competition Act. Based on preliminary internal investigations, BWE SA’s view is
that these allegations are unfounded. At the date of this report management are not in a position to
conclude on the possible outcome of this matter, nor can management reliably measure the potential
financial impact at this stage.
Audited
2017 2016
Rm Rm
10. Commitments
Capital expenditure commitments to be incurred:
Contracted - Property, plant and equipment 566 392
Contracted - Vehicle rental fleet 1 259 1 196
Approved but not yet contracted 168 643
Total continuing operations 1 993 2 231
Discontinued operation 24
Total group 2 017 2 231
Commitments will be spent substantially in the next financial year. Capital expenditure will be
financed with funds generated by the business, existing cash resources and borrowing facilities
available to the group.
11. Changes in comparatives
Equipment Iberia has been classified as a discontinued operation in the current year. Per IFRS 5: Non-current
assets held for sale and discontinued operations, the income statement comparatives for this business have
been reclassified to discontinued operation.
2016
Previously Discontinued
stated operation Restated
Rm Rm Rm
CONSOLIDATED INCOME STATEMENT
Revenue 66 547 (4 473) 62 074
Operating profit before items listed below (EBITDA) 6 674 (188) 6 486
Depreciation (2 426) 132 (2 294)
Amortisation of intangible assets (113) 8 (105)
Operating profit 4 135 (48) 4 087
Fair value adjustments on financial instruments (209) (209)
Finance costs (1 346) 15 (1 331)
Income from investments 113 (2) 111
Profit before exceptional items 2 693 (35) 2 658
Non-operating and capital items 120 (35) 85
Profit before taxation 2 813 (70) 2 743
Taxation (809) 13 (796)
Profit after taxation 2 004 (57) 1 947
Income from associates and joint ventures (25) 28 3
Net profit from continuing operations 1 979 (29) 1 950
Discontinued operation
Profit from discontinued operation 29 29
Net profit for the period 1 979 1 979
Attributable to:
Owners of Barloworld Limited 1 883 1 883
Non-controlling interest in subsidiaries 96 96
1 979 1 979
Earnings per share (cents)
- basic 890.5 890.5
- diluted 888.2 888.2
Earnings per share from continuing operations (cents)
- basic 890.5 (13.7) 876.8
- diluted 888.2 (13.7) 874.5
Earnings per share from discontinued operation (cents)
- basic 13.7 13.7
- diluted 13.7 13.7
12. 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.
13. Audit opinion
Independent auditor’s report on summarised financial statements
To the shareholders of Barloworld Limited
Opinion
The summarised consolidated financial statements of Barloworld Limited, which comprise the summarised
consolidated statement of financial position as at 30 September 2017, the summarised consolidated
income statement, the summarised consolidated statements of comprehensive income, changes in equity
and cash flows for the year then ended, and related notes, are derived from the audited consolidated
financial statements of Barloworld Limited for the year ended 30 September 2017.
In our opinion, the accompanying summarised consolidated financial statements are consistent, in
all material respects, with the audited consolidated financial statements of Barloworld Limited, in
accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports,
set out in note 1 to the summarised consolidated financial statements, and the requirements of the
Companies Act of South Africa as applicable to summarised financial statements.
Summarised consolidated financial statements
The summarised consolidated financial statements do not contain all the disclosures required by the
International Financial Reporting Standards and the requirements of the Companies Act of South Africa
as applicable to annual financial statements. Reading the summarised consolidated financial statements
and the auditor’s report thereon, therefore, is not a substitute for reading the audited consolidated
financial statements of Barloworld Limited and the auditor’s report thereon.
The audited consolidated financial statements and our report thereon
We expressed an unmodified audit opinion on the audited consolidated financial statements in our report
dated 17 November 2017. That report also includes the communication of key audit matters as reported in
the auditor’s report of the audited financial statements.
Directors’ responsibility for the summarised consolidated financial statements
The directors are responsible for the preparation of the summarised consolidated financial statements
in accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports,
set out in note 1 to the summarised consolidated financial statements, and the requirements of the
Companies Act of South Africa as applicable to summarised financial statements, and for such internal
control as the directors determine is necessary to enable the preparation of the summarised consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
The Listings Requirements require preliminary reports to be prepared in accordance with the framework
concepts and the measurement and recognition requirements of International Financial Reporting Standards
(IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council, and to also, as a minimum, contain
the information required by IAS 34, Interim Financial Reporting.
Auditor’s responsibility
Our responsibility is to express an opinion on whether the summarised consolidated financial statements
are consistent, in all material respects, with the consolidated audited financial statements based on
our procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810
(Revised), Engagements to Report on Summarised Financial Statements.
Deloitte & Touche
Registered auditors
Per: Bongisipho Nyembe
Partner
17 November 2017
Building 1 and 2, Deloitte Place
The Woodlands, Woodlands Drive
Woodmead, Sandton
National Executive: *LL Bam Chief Executive Officer, *TMM Jordan Deputy Chief Executive Officer,
*MJ Jarvis Chief Operating Officer, *AF Mackie Audit & Assurance, *N Sing Risk Advisory, *NB Kader Tax,
TP Pillay Consulting, S Gwala BPaaS, *K Black Clients & Industries, *JK Mazzocco Talent & Transformation,
MG Dicks Risk Independence & Legal, *TJ Brown Chairman of the Board
*Partner and Registered Auditor
A full list of partners and directors is available on request.
B-BBEE rating: Level 1 contribution in terms of the DTI Generic Scorecard as per the amended Codes of
Good Practice
Associate of Deloitte Africa, a Member of Deloitte Touche Tohmatsu Limited
The auditor’s report does not necessarily report on all of the information contained in this announcement/
financial results. Shareholders are therefore advised that in order to obtain a full understanding of the
nature of the auditor’s engagement they should obtain a copy of the auditor’s report together with the
accompanying financial information from the issuer’s registered office.
We have not audited future financial performance and expectations by management included in the
accompanying summarised consolidated financial statements and accordingly do not express any opinion
thereon.
14. Events after the reporting period
To the knowledge of the directors, no material events have occurred between the statement of financial
position date and the date of approval of these financial statements that would affect the ability of
the users of the financial statements to make proper evaluations and decisions.
15. Operating segments (audited)
Revenue Operating profit/(loss)
Year ended 30 September Year ended 30 September
Restated* Restated*
2017 2016 2017 2016
Rm Rm Rm Rm
Equipment 24 193 24 889 2 362 2 216
Automotive and Logistics 37 764 37 183 1 848 1 877
Corporate 2 2 (128) (6)
Total group 61 959 62 074 4 082 4 087
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 6.
Operating segments (audited) continued
Fair value adjustments on Operating profit/(loss) Net operating
financial instruments including fair value adjustments assets/ (liabilities)
Year ended 30 September Year ended 30 September Year ended 30 September
2017 2016 2017 2016 2017 2016
Rm Rm Rm Rm Rm Rm
Equipment (184) (201) 2 178 2 015 15 534 16 552
Automotive and Logistics (6) (7) 1 842 1 870 10 757 11 158
Corporate (19) (1) (147) (7) (1 709) (2 330)
Total group (209) (209) 3 873 3 878 24 582 25 380
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 6.
Salient features
for the year ended 30 September
Audited
2017 2016
Financial
Group headline earnings per share (cents) 883 838
Continuing headline earnings per share (cents) 975 841
Dividend per share (cents) 390 345
Continuing operating margin (%) 6.6 6.6
Continuing net asset turn (times) 2.2 2.0
Continuing EBITDA/interest paid (times) 5.0 4.9
Continuing net debt/equity (%) 27.6 40.7
Group return on net operating assets (RONOA) (%) 18.4 15.9
Continuing return on net operating assets (RONOA) (%) 16.4 15.5
Group return on ordinary shareholders’ funds (%) 9.5 9.2
Continuing return on ordinary shareholders’ funds (%) 10.5 9.3
Net asset value per share including investments at fair value (cents) 9 533 8 997
Number of ordinary shares in issue, including BBBEE shares (000) 212 693 212 693
Non-financial*#
Non-renewable energy consumption (GJ) 3 087 269 3 037 034
Greenhouse gas emissions (tCO2e)@ 270 707 266 769
Water withdrawals (municipal sources) (ML) 674 755
Number of employees 18 085 19 547
Lost-time injury frequency rate (LTIFR)† 0.75 0.75
Work-related fatalities 3 1
Corporate social investment (R million) 18 17
DTI^ BBBEE rating (level)+ 3 3
* Continuing operations.
# Deloitte & Touche have issued an unmodified limited assurance report on the non-financial salient
features included above, in accordance with International Standard 3000 (Revised) on Assurance
Engagements Other Than Audits or Reviews of Historical Financial Information.
@ Scope 1 and 2.
† Lost-time injuries multiplied by 200 000 divided by total hours worked.
^ Department of Trade and Industry (South Africa).
+ Audited and verified by Empowerdex.
Closing rate Average rate
Exchange rates (rand) 2017 2016 2017 2016
United States dollar 13.50 13.75 13.39 14.75
Euro 15.96 15.45 14.83 16.32
British sterling 18.12 17.86 17.03 20.99
Exchange rates used:
Balance sheet - closing rate (rand)
Income statement and cash flow statement - average rate (rand)
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 equipment and power
systems), Automotive and Logistics (car rental, motor retail, fleet services, used vehicles and disposal solutions,
logistics management, supply chain optimisation and waste management). We offer flexible, value adding, innovative
business solutions to our customers backed by leading global brands. 115 years of heritage built on solid relationships
with our principals and customers. The brands we represent on behalf of our principals include Caterpillar, Avis, Budget,
Audi, BMW, Ford, Jaguar, Land Rover, Mazda, 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 diversity and inclusion.
The company was founded in 1902 and currently has operations in over 20 countries around the world with 83% of over
18 000 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, FNO Edozien^, H Hickey, NP Mnxasana, M Lynch-Bell*,
SS Mkhabela, SS Ntsaluba, P Schmid, OI Shongwe
Executive: DM Sewela (Chief executive), DG Wilson
^Nigeria *UK
Group company secretary
Lerato Manaka
Enquiries
Barloworld Limited: Lethiwe Motloung
Tel +27 11 445 1000
Email: invest@barloworld.com
Instinctif: Hartwell Tshuma Tel +27 11 447 3030
Email: hartwell.tshuma@instinctif.com
Sponsor
J.P. Morgan Equities South Africa (Pty) Ltd
www.barloworld.com
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