Wrap Text
Reviewed interim results for the six months ended 31 March 2018
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")
Reviewed interim results for the six months ended 31 March 2018
Salient features
- Disposal of Equipment Iberia progressing according to plan
- Logistics turnaround: improved positive returns
- Group return on invested capital at 11.0% (1H'17: 9.2%)
- Operating profit (from continuing operations) up 6% to R2.0 billion (1H'17: R1. 8 billion)
- Total headline earnings per share up 32% to 481 cents (1H'17: 365 cents)
- Return on equity (from continuing operations) at 9.7% (1H'17: 9.0%)
- Interim dividend per share of 145 cents up 16% (1H'17: 125 cents)
- Headline earnings per share (from continuing operations) up 14% to 457 cents (1H'17: 400 cents)
Dominic Sewela, CE of Barloworld, said:
"The group produced a much improved result for the six months ended 31 March 2018 despite challenging trading
conditions in some areas. We continue to drive focus on addressing underperformance across the business and in line
with that, on 25 April 2018 we announced the disposal of the Equipment Iberia business which is expected to be
concluded by 2 July 2018 with the sale price representing a premium to net asset value.
We continue to evaluate high return opportunities aligned to our capability in emerging markets and steady progress
is being made on reviewing potential growth areas for the group with active searches in both the local and targeted
international markets."
21 May 2018
Chief executive's report
ECONOMIC OVERVIEW
Despite a weaker first quarter, the global economy remains on track to show solid growth for 2018 in both developed
as well as emerging markets. Increased geopolitical risks following military actions in Syria together with the
current wave of protectionism could however negatively impact this recovery.
The outlook for the South African economy has improved since the appointment of President Ramaphosa as evidenced by
rising confidence levels. GDP growth of up to 2.0% is currently forecast for 2018. The decision by Moody's to retain
South Africa's investment grade ratings has further reduced the risks of the negative economic consequences that a
downgrade would have precipitated.
For the six months ended 31 March 2018, the group produced headline earnings per share (HEPS) from continuing
operations of 457 cents per share which was 57 cents per share (14.3%) up on the 400 cents last year.
Total HEPS (including discontinued operations) of 481 cents per share showed 116 cents or 32% improvement on
the 365 cents earned in the prior year.
An interim dividend of 145 cents per share was declared (1H'17: 125 cents).
OPERATIONAL REVIEW
Health and Safety
Tragically, there were two work-related fatalities in the period (Equipment Russia, December 2017; and Automotive,
March 2018). Our condolences go out to the bereaved families and friends; and Barloworld continues to support the
families at this time. Investigations into both incidents were conducted and management continues to enhance
safety awareness and practices with the aim of strengthening safety in the workplace.
Equipment
Equipment southern Africa
Equipment southern Africa delivered good operating performance in the first half of FY2018 driven by positive
global commodity price movements and a pick-up in mining activity.
Revenue to March of R8 670 million increased by R456 million (5.6%) compared to the prior year driven by higher
mining machine sales in South Africa, Mozambique and Zambia.
Operating profit to date of R734 million was R21 million (2.9%) ahead of last year while the operating margin
decreased to 8.5% (1H'17: 8.7%) due to the increase in mining machines in the sales mix and a stronger Rand.
Income from associates and joint ventures which mainly relates to Bartrac, our joint venture in the Katanga
province of the DRC, increased by R72 million to R107 million supported by increased mining activity in that
region.
Equipment Russia
Equipment Russia has continued to benefit from greenfield and brownfield mining projects, as well as a
recovery in commodity prices, particularly in the coal sector, and produced record US$ revenue and
operating profit for the first six months of FY2018. Revenue for the six months to March of
US$296.5 million was US$129 million (77%) ahead of last year supported by strong growth in both
prime product as well as aftermarket sales.
Mining unit sales in the first half increased by US$112 million and included a number of unit deliveries
to Polyus Gold and NordGold.
Operating profit to March of US$25.0 million exceeded the prior year by US$5 million (26%). The operating
margin of 8.2% was below the prior year due to the increase in machines in the overall sales mix.
Automotive and Logistics
Automotive
The Automotive division produced solid results despite challenging market conditions. Revenue for the six
months of R15.4 billion was 5.8% below last year as a result of the BMW and GM dealership closures and
disposals during the course of last year.
Operating profit to date of R883 million was R20 million (2.3%) up on last year. The operating margin of
5.7% was well ahead of the 5.3% achieved last year.
Car Rental
Revenue to March of R3.4 billion increased by R137 million (4.2%) compared to 2017. The business managed to
increase both billed days and average rate per day. Operating profit of R301 million showed a 1.3% improvement
on last year.
Fleet utilisation for the period of 76% was in line with the prior year.
Fleet Services
Revenue of R1.7 billion was 2.3% ahead of last year and operating profit increased by R16 million to
R308 million (5.5%) mainly as a result of higher used vehicle sales.
Motor Trading
Revenue for the first six months of R10.2 billion decreased by R1.1 billion (9.9%) compared to the prior year
mainly as a result of the closures and disposals last year. Both new and used vehicle sales were down on the
prior year with all premium brands under pressure.
Operating profit to March of R274 million was in line with last year with operating margin improving from
2.4% to 2.7%.
In February we acquired the remaining 48.1% shares in Salvage Management and Disposal.
Logistics
In Logistics the turnaround initiatives implemented towards the end of 2017 are bearing fruit with operating
profits, operating margins and overall return metrics all significantly up on the FY2017 first half results.
Year to date revenue of R2 989 million decreased by 6.6% compared to the prior year. This is mainly due to
the combination of a subdued economy driving less than optimal activity levels within contracts as well as
a rationalised customer portfolio. Revenue in the Transport segment was 8.3% up on 2017.
Operating profit of R99 million was significantly ahead of the R51 million generated last year. The operational
and overhead cost savings initiatives initiated in 2017 more than offset the R12.5 million restructure costs
incurred in the period.
The disposal of the Middle East business is progressing.
DIRECTORATE
In line with a structured board nomination process for Barloworld Limited, Ms Nomavuso Mnxasana was appointed
as an independent non-executive director with effect from 6 October 2017.
We would like to congratulate Ms Sibongile Mkhabela who was awarded the National Order of Luthuli in silver in
recognition of her contribution to the well-being of children, social justice and her role in the 1976 youth
uprising.
FUNDING
Net debt increased by R3.8 billion from September 2017 to R9.6 billion in March 2018, mainly as a result of the
absorption of working capital in Equipment southern Africa and Automotive. The build-up of inventories underpins
the forecast increase in mining unit deliveries in the second half. Net debt levels are therefore expected to
decrease by September 2018 as a result of reduced working capital and the initial proceeds on the disposal of
Equipment Iberia of approximately R2.1 billion.
HUMAN CAPITAL, DIVERSITY AND SUSTAINABLE DEVELOPMENT
Our group headcount shows a decrease compared to last year. This is in line with our strategy, and bears
witness to the 'fix and optimise' projects carried out during the period under review.
From a Diversity and Inclusion perspective, indications are that we are moving in the right direction, even
as we admit that we still have some way to go to achieve our bold targets.
Progress on photovoltaic installations during the period contributed towards our sustainability objectives,
which include a renewable energy target.
CORPORATE STRATEGY
The group continues to work on all four areas identified in the Corporate Strategy.
Fix - The disposal of Equipment Iberia is on track for completion before the end of the financial year. Legal
agreements were signed on 24 April 2018 and the transaction should close on 2 July 2018. Approval from the
Spanish and Portuguese Competition Authorities and the approval from the group's off-shore funders are
conditions precedent to closing.
The turnaround within the Logistics business is delivering in line with expectations. The exit of the Middle
East Logistics operations is progressing and the expectation is to sell this business within the next 12 months.
All options remain under consideration as we assess the performance and fit of the individual parts of the
South African business.
Optimise - Equipment Southern Africa is implementing an operational transformation programme that will ensure
that the business is value creating throughout the cycle, while Motor Retail continues to look closely at costs
and dealership portfolio while actively considering both acquisitions and selected disposals. The group is
currently evaluating various opportunities to optimise its capital allocation.
Grow - Steady progress is being made on reviewing opportunities for the group with active searches in both
the local and targeted international markets.
Active Shareholder Model - The rollout of the new approach, Managing for Value, centred on careful management
of the group's resources is going well. The process will better inform choices around strategic alternatives;
resource allocation; strategic planning and budgeting; and execution and monitoring. Good progress has been
made on the disposal of Barlow Park with a 1 April 2019 scheduled handover of the vacated site.
OUTLOOK
Recent Caterpillar Inc. results indicate an improvement in global mining aftermarket and rebuild activity and
they currently project the number of mining trucks produced in their factories to double in 2018. The Equipment
southern Africa firm order book at March 2018 has increased to R1.9 billion compared to the R1.3 billion at
September 2017 on the back of improved demand in mining and construction.
The improving global economy and current favourable commodity prices have resulted in improved mining output
in our region. This has increased demand from both mining companies and contract miners for replacement
machines and to a lesser extent machines for expansion projects. Higher machine utilisation levels in turn
are driving strong after sales demand. The Mining Charter is currently under review and it is hoped that broad
consensus can be achieved to ensure the long-term sustainability of South Africa's mining industry and to
unlock new mining projects.
Despite the recent surge in oil prices, the outlook for Angola remains clouded by the slump in oil production.
The availability of US Dollars remains a challenge to normal business operations in that country.
In the DRC the new Mining Code signed into law on 10 March 2018 is likely to impact new mining projects
following the removal of the stability clause which had provided some regulatory certainty to mining
investors in that country.
Equipment southern Africa firm orders at March of R2.9 billion were in line with the September 17 book
(including the Mota Engil transaction) with approximately R2.2 billion relating to mining and contract
mining machines.
The Russian economy is forecast to grow by close to 2% in 2018 supported by higher prevailing oil prices.
The tightening of US sanctions against Russia in early April has increased the risk of doing business
in Russia. These new sanctions added seven high profile Russian businessmen and their companies to the
Office of Foreign Assets Control sanctions list. These sanctions could in particular impact the Russian
aluminium producer Rusal.
The Russian firm order book at the end of March of US$132.1 million included mining orders of US$100 million
scheduled for delivery in the next six months. Total major projects currently under discussion stood at
US$187 million and we remain positive about achieving a strong second half.
Car rental industry volumes will remain subdued with positive growth expected from the inbound tourism segment.
The Avis Fleet financed fleet reduced following the non-renewal of the SANParks and ADT contracts during
the period. On the plus side we were the preferred bidder for the City of Johannesburg specialised vehicle
fleet. While a number of existing government contracts have been extended for the near term, the future of
these contracts remain uncertain pending the finalisation of the new tender processes.
NAAMSA is currently forecasting an increase in new vehicle sales of around 3% for the 2018 calendar year.
Despite the improved confidence levels in the South African economy we still expect trading for the rest of
the year to remain challenging particularly for the premium segment. The strategic projects, focused on
optimising our dealer network and aligning the costs and structures within our Motor Retail business, will
continue to be progressed in order to ensure sustainable returns of Motor Trading.
Logistics achieved the milestone target for the first six months. The target operating profit for the second
half is substantially higher but based on current progress we believe it is achievable. While Logistics ROIC
is unlikely to exceed our cost of capital by the end of September, the year on year increase in economic
profit generated this year will be significant to the group.
Dominic Sewela
Chief executive
Group financial review
As announced on 25 April 2018, the group's disposal of the Equipment Iberia operations is expected to close
by 2 July 2018. In compliance with IFRS 5, and as presented at the year-ended 30 September 2017, the results of
the Equipment Iberia operations for the six months ended 31 March 2018 have been reported separately as a
discontinued operation, and assets and liabilities held for sale at the interim period end date. The following
commentary regarding the first six months trends is against restated comparatives to reflect the results of the
group's continuing operations unless specifically stated.
FINANCIAL PERFORMANCE FROM CONTINUING OPERATIONS FOR THE SIX MONTHS ENDED 31 MARCH 2018
Revenue for the first six months grew by 1% to R30.9 billion (H1'17: R30.6 billion) primarily on the back of improved
performance in Equipment Russia and Equipment southern Africa. Revenue in Equipment Russia hit record first six month
levels and was up by over 77% in dollar terms to US$297 million (H1'17: US$167 million) driven by continued strong mining
activity levels in the region. Equipment southern Africa's revenue growth of 5.6% to R8.7 billion (H1'17: R8.2 billion)
was also ahead of the prior year and is reflective of positive global commodity price movements together with increased
activity levels in the mining sector. Revenues for both regions in Rand terms were negatively impacted by the stronger
Rand exchange rate, which reduced total revenue by R365 million. Year on year Automotive revenues were down by 5.8% to
R15.4 billion (H1'17: R16.3 billion) affected by the prior year closure and disposal of a number of our BMW and General
Motors dealerships. Logistics revenues were slightly behind that of the prior year at R3.0 billion (H1'17: R3.2 billion)
resulting from tough market conditions and the loss of a KLL contract in the latter part of last year.
The group generated an operating profit from continuing operations of R1 954 million which was R113 million (6.1%)
up on last year. The operating profit margin of 6.3% held strong against the 6.6% achieved at September 2017 and was
primarily impacted by stronger mining machine sales mix contributions in both Equipment southern Africa and Equipment
Russia. In spite of challenging market conditions, margins in the Automotive division have improved across all business
units. In Logistics, the turnaround in operating profit from R51 million in the prior period to R99 million in the
first half of 2018 is mainly as a result of cost reductions and other business optimisation initiatives.
The net negative fair value adjustments on financial instruments of R127 million (1H'17: R123 million) mainly comprise
the cost of forward points on foreign exchange contracts and net losses on foreign currency denominated monetary assets
and liabilities in Equipment southern Africa.
Finance costs decreased by R91 million to R583 million mainly due to lower interest rates and lower average borrowings
in South Africa.
Losses from non-operating and capital items of R14 million relate to impairments of certain assets within Logistics
offset by gains on asset sales in the Corporate division.
The taxation charge increased by R145 million to R406 million and the effective taxation rate for the period
(excluding prior year taxation and taxation on non-operating and capital items) increased to 31.0% (1H'17: 23.9%)
as a result of local currencies strengthening against the US Dollar functional currency of the offshore operations.
In particular, the Group's taxation charge was negatively impacted by local currency gains made on US$ linked
Angolan Bonds.
The Bartrac Equipment joint venture in the Katanga province of the DRC has benefited from improved copper
and cobalt prices and was the primary contributor to the increased profits from associates to R113 million
(H1' 17: R43 million). The BHBW joint venture in Agriculture and Handling contributed income of R11 million
for the period.
The discontinued operation of Equipment Iberia has benefited from cost reductions initiated in the prior year
recording profits of R57 million against losses of R93 million recognised in the prior period. Growth in new
machine sales and a marginal increase in aftersales revenue was offset by continuing losses in the associate
Energyst.
Profits were up by 16.7% to R1 001 million and were well ahead of the prior period R858 million. This growth was
reflected in the 14% increase in headline earnings per share (HEPS) to 457c against a prior period HEPS of 400c.
Total HEPS increased by 116 cents (32%) to 481 cents per share compared to 365 cents per share last year.
CASH FLOW
The group utilised R3.1 billion of working capital in the first half mainly as a result of increased inventory of
R1.8 million. The impact of Caterpillar lead times and the anticipated uptick in the mining cycle both in southern
Africa and in Russia has necessitated investment in working capital in the period. Additionally, wins and contract
extensions in our vehicle fleet leasing business, together with increased demand for leased mining machines, have
required investment in the rental and leasing fleets of R1.1 billion. Consequently, cash utilised in operations
of R1.4 billion was significantly down on the R929 million generated in the prior period.
Net cash used in investment activities of R482 million included an additional investment in Angolan US$ linked
government bonds of R188 million (US$16 million) using Kwanza cash on hand as a hedge against currency devaluation.
The total investment in Angolan US$ linked government bonds at March was US$82 million (September 2017:
US$66 million). The net cash outflow before financing activities and dividends for the period of R3.0 billion
was R2.7 billion lower than the R343 million utilised in the first half of 2017.
In line with previous years we expect to reduce our working capital utilisation in the second half to ensure that
we are cash positive for the full year.
FINANCIAL POSITION
Total assets employed in the group increased by R1.0 billion (2.2%) to R47.4 billion compared to September 2017
of R46.3 billion. This was driven by increased working capital and an increase in fleet leasing and Equipment
rental fleet. Consistent with the year ended September 2017 net assets held for sale of R2.3 billion
(September 2017: R2.5 billion) comprise Equipment Iberia and the Logistics Middle East business.
The stronger Rand reduced total assets by R1.7 billion.
Total interest-bearing debt at 31 March 2018 increased by R2.0 billion to R11.7 billion (September 2017:
R9.7 billion) while cash and cash equivalents decreased by R1.7 billion to R2.2 billion (September 2017:
R3.9 billion). Net interest-bearing debt at 31 March 2018 of R9.6 billion was R504 million up on the prior
year (March 2017: R9.1 billion) and R3.8 billion up on the September 2017 position of R5.8 billion.
DEBT
In October 2017 bonds (BAW3 and BAW8) totalling R425 million were repaid using existing facilities. In February 2018,
BAW29, a five-year bond for R400 million was issued in anticipation of bonds maturing in the latter part of the 2018
calendar year.
South African short-term debt at March 2018 includes commercial paper (CP) totalling R650 million (September 2017:
R643 million). Our continued participation in the CP market is dependent on overall liquidity and on competitive
pricing.
Cash and cash equivalents at March of R2.2 billion included US$12 million (September 2017: US$35 million) held
in Angola of which US$9 million (September 2017: US$30 million) was denominated in Kwanzas and is considered
restricted cash.
At the end of March the group had unutilised borrowing facilities of R8.1 billion, of which R7.1 billion was
committed. The group's ratio of long-term to short-term debt was 62:38 (September 2017: 79:21).
On 27 March 2018 Moody's raised Barloworld's Global Scale outlook from negative to stable following the change
of outlook on the Baa3 sovereign rating of South Africa and on 2 May 2018 Moody's affirmed the long-term and
short-term issuer Global Scale Rating of Baa3 and P-3 and long-term and short-term issuer National Scale Rating
of Aa1.za and P-1.
The group total debt to equity ratio at 31 March 2018 was 59% (September 2017: 46%), while group net debt to
equity was 48% (September 2017: 28%).
Gearing in the three segments remains in line with, or better than, the group target ranges:
Debt to equity (%) Group Group
Trading Leasing Car Rental total debt net debt
Target range 30 - 50 600 - 800 200 - 300
Ratio at 31 March 2018 29 521 254 59 48
Ratio at 31 March 2017 32 604 279 63 47
Ratio at 30 September 2017 21 560 203 46 28
OUTLOOK FOR THE YEAR END
With the disposal of the Equipment Iberia operations expected to be concluded by 2 July 2018, management
is focused on exploring various strategic opportunities for the deployment of the capital released in this
transaction. Capital allocation and returns in the existing businesses remain at the forefront of
management's agenda.
ROIC (rolling 12 month basis) improved to 11.0% against a prior year of 9.2% (1H'17) on the back of
management's efforts to improve returns amidst tough trading conditions. In appreciating movement in
he half year ROIC the cyclical nature of the businesses needs to be considered with the full year
positive impact of numerous initiatives in the group expected to shift ROIC even closer towards the
13% hurdle rate by year end.
The build-up of working capital to March 2018 has negatively impacted cash generation of the group. However,
in line with cyclical and historical trends, we expect working capital to be released into cash in the second
half of the year. Similarly, the recent investments in fleet and rental assets are reflective of growth in
these markets and will begin to contribute to returns in future reporting periods.
DG Wilson
Finance director
Operational reviews
EQUIPMENT AND HANDLING
Revenue Operating profit/(loss) Net operating assets
Year Year
Six months ended ended Six months ended ended
31 Mar 31 Mar
31 Mar 2017 30 Sept 31 Mar 2017 30 Sept 31 Mar 30 Sept
2018 Rm 2017 2018 Rm 2017 2018 2017
Rm Reviewed Rm Rm Reviewed Rm Rm Rm
Reviewed Restated* Audited Reviewed Restated* Audited Reviewed Audited
Equipment 12 489 11 084 24 193 1 035 978 2 362 16 538 15 534
- Southern Africa 8 670 8 214 18 287 734 713 1 785 11 748 10 106
- Europe* 2 007 2 441
- Russia 3 766 2 267 5 141 310 263 582 2 422 2 544
- Handling 53 603 765 (9) 2 (5) 361 443
Share of
associate profit 117 43 97
* Restated to classify Equipment Iberia as discontinued operation.
In Equipment southern Africa revenue increased by 5.6% to R8.7 billion in the period, on the back of improved
trading conditions in the South African mining sector. Contract mining equipment sales and rental hire both grew
by 20% compared to the same period last year. Operating profit increased by 2.9% to R734 million, while operating
margin reduced to 8.5% (1H'17: 8.7%). The business continues to focus on business improvement and cost reduction
initiatives.
Construction unit sales declined by 15%, on a relatively flat industry with no major infrastructure investment.
The aftermarket business remained stable, supported by 4% growth in parts sales in line with increased mining
equipment utilisation. Revenue from our rest of Africa operations grew by 9% despite low activities in Angola
and Botswana. Attributable profit contribution increased by 139% to R103 million, mainly as a result of the
contribution from our DRC joint venture on the back of rallying copper and cobalt prices.
Equipment Russia revenues and operating profit grew by 77% and 27% respectively in US Dollar terms. Operating
margin was negatively influenced by the sales mix which included a significant proportion of mining related
equipment deliveries at lower margins. It is pleasing to note that aftermarket business remained robust in the
period under review across the dealer territory. Net assets remained well controlled resulting in exceptional
returns and a marginally positive cash flow despite the seasonal increase in inventories. Demand in the mining
segment remains strong with coal and gold being the prevalent commodities.
Revenue in Handling is mainly related to activity in Mozambique where a small operating loss was incurred.
Further operating losses were incurred in respect of the close out of the South African handling and agriculture
operations. BHBW, our Agriculture and Handling associate in South Africa, generated associate income of
R11 million in the period.
AUTOMOTIVE AND LOGISTICS
Revenue Operating profit/(loss) Net operating assets
Year Year
Six months ended ended Six months ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept
2018 2017 2017 2018 2017 2017 2018 2017 2017
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited
Automotive 15 372 16 321 31 593 883 863 1 747 9 873 10 142 8 675
- Car Rental 3 399 3 262 6 446 301 297 562 3 676 3 687 2 750
- Avis Fleet 1 726 1 688 3 570 308 292 621 3 848 3 764 3 687
- Motor Trading 10 247 11 371 21 577 274 274 564 2 349 2 691 2 238
Logistics 2 989 3 199 6 171 99 51 101 2 334 2 783 2 082
- Southern Africa 2 932 3 108 6 011 96 56 102 2 251 2 668 1 970
- Europe and
Middle East 57 91 160 3 (5) (1) 83 115 112
18 361 19 520 37 764 982 914 1 848 12 207 12 925 10 757
Share of
associate loss (4) (4)
The Automotive division delivered another record result in a challenging trading environment, increasing operating
profit by 2.3% off a revenue decline of 5.8%. Revenue was impacted by dealer network restructuring in BMW and
General Motors during the 2017 financial year as well as the change of revenue recognition regarding the agency
model in the Motor Trading business. On a comparable basis revenue increased by 2.3% compared to prior year.
The division increased operating margin to 5.7% (1H'17: 5.3%), delivered a ROIC of 11.6% (1H'17: 11.9%) and
improved free cash flow on prior year. The ROIC is expected to improve in the second half as invested capital
reduces.
Car Rental delivered a pleasing result increasing revenue by 4.2% to R3.4 billion and generated operating profit
of R301 million, up 1.3% on prior year. Operating margin was negatively impacted by lower used vehicle margins as
a result of lower new vehicle price increases. On the upside, the business managed to contain fleet costs and
vehicle damage expenses below inflation. The business increased both rental days and rate per day. Fleet
utilisation was maintained at 76%.
Avis Fleet delivered a good result increasing revenue by 2.3% to R1.7 billion and operating profit by 5.5% to
R308 million. Operating margin increased to 17.9% (1H'18: 17.3%) complemented by strong used vehicle profit
contribution driven by increased units and margins. The business was awarded the City of Johannesburg contract
for specialised vehicles, subject to contract finalisation. The business continues to focus on addressing
underperforming businesses with specific focus on African territories.
Motor Trading delivered a credible result in a tough trading environment. Operating profit remained flat against
a revenue decline of 9.9%. Revenue was impacted by the dealer network restructuring and revenue recognition in
line with the agency model. On a comparable basis, revenue increased by 1.8% on prior year. New vehicle unit
sales were below the 1.2% dealer market industry growth, predominantly driven by declining volumes in the
premium segment. The business increased operating margin to 2.7% (1H'17: 2.4%), delivered a ROIC above the
group target of 13% and generated positive free cash flow. The remaining minority shareholding in Salvage
Management and Disposals (SMD) was acquired, effective 19 February 2018.
Logistics revenue to March of R2 989 million was R210 million (6.6%) down on last year mainly due to lower
trading in Supply Chain Management and a rationalised customer base. Transport, however, increased revenue
by R100 million (8.3%) due to contract retention and expansion. Year to date operating profit of R99 million
was R48 million (94%) above the prior year. The significant increase in profitability was mainly driven by
the implementation of the turnaround strategy that the business embarked on in early October 2017. The
operating and organisational model was simplified and optimised. Multiple initiatives to reduce costs,
including procurement savings, contributed to the improved results.
CORPORATE
Net operating assets/
Revenue Operating (loss)/profit (liabilities)
Year Year
Six months ended ended Six months ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 30 Sept
2018 2017 2017 2018 2017 2017 2018 2017
Rm Rm Rm Rm Rm Rm Rm Rm
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Audited
Southern Africa 2 (24) (13) (56) 588 553
Europe 2 (39) (38) (72) (2 016) (2 262)
2 (63) (51) (128) (1 428) (1 709)
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 incurred higher operating losses compared to last year mainly due to corporate activity costs.
Costs in the UK were adversely impacted by a weaker Rand.
DIVIDEND DECLARATION
Dividend number 179
Notice is hereby given that interim dividend number 179 of 145 cents (gross) per ordinary share in respect
of the six months ended 31 March 2018 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 145 cents per ordinary share;
- The net dividend amount is 116 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, 5 June 2018
- Shares trade ex-dividend Wednesday, 6 June 2018
- Record date Friday, 8 June 2018
- Payment date Monday, 11 June 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 6 June 2018 and
Friday, 8 June 2018, both days inclusive.
On behalf of the board
LP Manaka
Group company secretary
Directors
Non-executive: DB Ntsebeza (Chairman), NP Dongwana, FNO Edozien^, HH Hickey, MD Lynch-Bell*, SS Mkhabela,
NP Mnxasana, SS Ntsaluba, P Schmid, OI Shongwe
Executive: DM Sewela (Chief Executive), DG Wilson
^Nigerian *UK
Condensed consolidated income statement
Six months ended Year ended
31 Mar
31 Mar 2017 30 Sept
2018 Reviewed 2017
Reviewed Restated* Audited
Notes Rm Rm Rm
CONTINUING OPERATIONS
Revenue 30 850 30 604 61 959
Operating profit before items listed below (EBITDA) 3 228 3 134 6 694
Depreciation (1 212) (1 228) (2 468)
Amortisation of intangible assets (62) (65) (144)
Operating profit 3 1 954 1 841 4 082
Fair value adjustments on financial instruments (127) (123) (209)
Finance costs (583) (674) (1 329)
Income from investments 64 70 109
Profit before non-operating and capital items 1 308 1 114 2 653
Non-operating and capital items 4 (14) (38) (155)
Profit before taxation 1 294 1 076 2 498
Taxation 5 (406) (261) (565)
Profit after taxation 888 815 1 933
Profit from associates and joint ventures 113 43 93
Net profit from continuing operations for the period 1 001 858 2 026
DISCONTINUED OPERATION
Profit/(loss) from discontinued operation 8 57 (93) (269)
Net profit for the period 1 058 765 1 757
Net profit attributable to:
Owners of Barloworld Limited 1 007 710 1 643
Non-controlling interests in subsidiaries 51 55 114
1 058 765 1 757
Earnings per share (cents)
- basic 477.8 336.6 779.6
- diluted 474.2 334.7 774.7
Earnings per share from continuing operations (cents)
- basic 450.8 380.5 907.2
- diluted 447.4 378.4 901.5
Earnings per share from discontinued operation (cents)
- basic 27.0 (43.9) (127.6)
- diluted 26.8 (43.7) (126.8)
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 8.
Condensed consolidated statement of other comprehensive income
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Rm Rm Rm
Profit for the period 1 058 765 1 757
Items that may be reclassified subsequently to profit or loss: (1 090) (323) 75
Exchange (loss)/gain on translation of foreign operations (1 007) (366) 8
(Loss)/gain on cash flow hedges (115) 59 89
Deferred taxation on cash flow hedges 32 (16) (22)
Items that will not be reclassified to profit or loss: (28) 535
Actuarial gain on post-retirement benefit obligations 678
Taxation effect (28) (143)
Other comprehensive (loss)/income for the period (1 090) (351) 610
Total comprehensive (loss)/income for the period (32) 414 2 367
Total comprehensive (loss)/income attributable to:
Owners of Barloworld Limited (83) 359 2 253
Non-controlling interests in subsidiaries 51 55 114
(32) 414 2 367
Condensed consolidated statement of financial position
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Notes Rm Rm Rm
ASSETS
Non-current assets 19 028 20 174 18 613
Property, plant and equipment 12 931 13 852 12 659
Goodwill 1 902 2 003 1 932
Intangible assets 1 466 1 678 1 602
Investment in associates and joint ventures 6 1 246 1 178 1 093
Finance lease receivables 226 164 240
Long-term financial assets 7 564 363 404
Deferred taxation assets 693 936 683
Current assets 25 085 27 774 24 368
Vehicle rental fleet 3 472 3 572 3 222
Inventories 9 690 10 287 8 457
Trade and other receivables 9 583 10 600 8 676
Taxation 168 85 88
Cash and cash equivalents 13 2 172 3 230 3 925
Assets classified as held for sale 8 3 245 27 3 343
Total assets 47 358 47 975 46 324
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 441 441 441
Other reserves 3 858 4 804 5 144
Retained income 15 184 13 549 14 690
Interest of shareholders of Barloworld Limited 19 483 18 794 20 275
Non-controlling interest 535 716 602
Interest of all shareholders 20 018 19 510 20 877
Non-current liabilities 10 445 12 043 10 852
Interest-bearing 7 302 8 133 7 623
Deferred taxation liabilities 582 628 538
Provisions 32 135 19
Other non-current liabilities 2 529 3 147 2 672
Current liabilities 15 988 16 422 13 798
Trade and other payables 10 560 11 223 10 697
Provisions 844 930 929
Taxation 125 87 117
Amounts due to bankers and short-term loans 4 459 4 182 2 055
Liabilities directly associated with assets
classified as held for sale 8 907 797
Total equity and liabilities 47 358 47 975 46 324
Condensed consolidated statement of changes in equity
Attribu-
table to
Share Barloworld Interest
capital Limited Non- of all
and Other Retained share- controlling share-
premium reserves income holders interest holders
Rm Rm Rm Rm Rm Rm
Balance at 1 October 2016 (audited) 441 5 134 13 367 18 942 737 19 679
Total other comprehensive (loss)/
income for the period (323) 682 359 55 414
Other reserve movements (7) (11) (18) (51) (69)
Dividends (489) (489) (25) (514)
Balance at 31 March 2017 (reviewed) 441 4 804 13 549 18 794 716 19 510
Total other comprehensive
income for the period 398 1 496 1 894 59 1 953
Other reserve movements (147) 43 (104) 51 (53)
Other changes in minority
shareholders interest
and minority loans 89 (132) (43) (201) (244)
Dividends (266) (266) (23) (289)
Balance at 30 September 2017
(audited) 441 5 144 14 690 20 275 602 20 877
Total other comprehensive (loss)/
income for the period (1 090) 1 007 (83) 51 (32)
Other reserve movements (196) 234 38 (1) 37
Other changes in minority shareholders
interest and minority loans (183) (183) (75) (258)
Dividends (564) (564) (42) (606)
Balance at 31 March 2018 (reviewed) 441 3 858 15 184 19 483 535 20 018
Condensed consolidated statement of cash flows
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Notes Rm Rm Rm
Cash flow from operating activities
Operating cash flows before movements in working capital 3 416 3 262 7 307
Movement in working capital (3 075) (362) 1 539
Cash generated from operations before investment
in rental fleets 341 2 900 8 846
Fleet leasing and equipment rental fleet (1 117) (773) (1 661)
Additions (2 055) (1 614) (3 550)
Proceeds on disposal 938 841 1 889
Vehicles rental fleet (658) (1 198) (1 220)
Additions (2 352) (2 938) (4 373)
Proceeds on disposal 1 694 1 740 3 153
Cash (utilised in)/generated from operations (1 434) 929 5 965
Realised fair value adjustments on
financial instruments (115) (172) (270)
Finance costs and investment income (505) (600) (1 217)
Taxation paid (477) (395) (744)
Cash (outflow)/inflow from operations (2 531) (238) 3 734
Dividends paid (including non-controlling interest) (606) (514) (803)
Net cash (applied to)/retained from operating activities (3 137) (752) 2 931
Net cash used in investing activities (482) (105) (329)
Acquisition of subsidiaries, investments and intangibles 11 (282) (51) (393)
Proceeds on disposal of subsidiaries, investments,
intangibles and loans repaid 12 301 379
Net investment in leasing receivables 77 (47) (134)
Acquisition of property, plant and equipment (341) (368) (774)
Proceeds on disposal of property, plant and equipment 64 60 593
Net cash (outflow)/inflow before financing activities (3 619) (857) 2 602
Net cash from/(used in) financing activities 2 063 1 122 (1 642)
Shares proceeds/(repurchased) for equity settled
share-based payment 18 (154)
Purchase of non-controlling interest (257) (22) (201)
Non-controlling interest loan and equity movements (69) 4
Net increase/(decrease) in interest-bearing liabilities 2 302 1 213 (1 291)
Net (decrease)/increase in cash and cash equivalents (1 556) 265 960
Cash and cash equivalents at beginning of period 3 925 3 028 3 028
Cash and cash equivalents held for sale at beginning period 102
Effect of foreign exchange rate movements (130) (63) 39
Effect of cash balances held for sale (169) (102)
Cash and cash equivalents at end of period 2 172 3 230 3 925
Notes to the condensed consolidated financial statements
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements are prepared in accordance with the requirements
of the JSE Limited Listings Requirements for interim reports, and the requirements of the Companies Act
applicable to financial statements. The JSE Listings Requirements require interim reports to be prepared in
accordance with IAS 34 Interim Financial Reporting and the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and the Financial Pronouncements as issued by the Financial Reporting
Standards Council. The accounting policies applied in the preparation of the condensed consolidated interim
financial statements were 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.
This report was prepared under the supervision of RL Pole CA(SA) (Group general manager: finance).
Six months ended Year ended
31 Mar
31 Mar 2017 30 Sept
2018 Reviewed 2017
Reviewed Restated* Audited
Rm Rm Rm
2. RECONCILIATION OF NET PROFIT
TO HEADLINE EARNINGS
Net profit attributable to Barloworld Limited shareholders 1 007 710 1 643
Adjusted for the following:
Loss on disposal of subsidiaries and investments (IFRS 10) 42 25
Profit on disposal of plant, property, equipment and
other assets excluding rental assets (IAS 16 and IAS 38) (17) (15) (43)
Impairment of goodwill (IFRS 3) 73
Impairment of plant and equipment (IAS 16) and
intangibles (IAS 38) and other assets 24 11 98
Taxation effects of remeasurements (1) 10 (5)
Associate and non-controlling interest in
remeasurements 1 12 71
Headline earnings 1 014 770 1 862
Continuing operations
Profit from continuing operations 1 001 858 2 026
Non-controlling shareholders' interest in net profit from
continuing operations (51) (55) (114)
Profit from continuing operations attributable to Barloworld
Limited shareholders 950 803 1 912
Adjusted for the following:
Loss on disposal of subsidiaries and investments (IFRS 10) 42 25
Profit on disposal of plant, property, equipment and other
assets excluding rental assets (IAS 16 and IAS 38) (8) (15) (43)
Impairment of goodwill (IFRS 3) 73
Impairment of plant and equipment (IAS 16) and
intangibles (IAS 38) and other assets 24 11 98
Taxation effect of remeasurements (3) 10 (5)
Associate and non-controlling interest in remeasurements (7) (7)
Net remeasurements excluded from headline earnings from
continuing operations 13 41 141
Headline earnings 963 844 2 053
Discontinued operation
Profit/(loss) from discontinued operation attributable to
Barloworld Limited shareholders 57 (93) (269)
Adjusted for the following:
Profit on disposal of plant, property, equipment and other
assets excluding rental assets (IAS 16 and IAS 38) (9)
Taxation effect of remeasurements 2
Associate and non-controlling interest in remeasurements 1 19 78
Net remeasurements excluded from headline earnings from
discontinued operation (6) 19 78
Headline earnings/(loss) 51 (74) (191)
Weighted average number of ordinary shares in issue
during the period (000)
- basic 210 691 210 995 210 780
- diluted 212 360 212 138 212 095
Headline earnings per share (cents)
- basic 481.3 364.9 883.4
- diluted 477.4 363.0 877.9
Headline earnings per share from continuing operations (cents)
- basic 457.1 400.0 974.5
- diluted 453.5 397.9 968.0
Headline earnings/(loss) per share from discontinued
operation (cents)
- basic 24.2 (35.1) (91.1)
- diluted 23.9 (34.9) (90.1)
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 8.
3. OPERATING PROFIT
Included in operating profit from continuing operations are:
Cost of sales (including allocation of depreciation) 23 649 24 608 47 832
Expenses includes the following:
Loss on disposal of other plant, equipment and rental assets 37 43 85
Amortisation of intangible assets in terms of IFRS 3
business combinations 9 13 23
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 8.
4. NON-OPERATING AND CAPITAL ITEMS
Profit on disposal of property and other assets 10 15 41
Impairment of property, plant and equipment, intangibles
and other assets (24) (11) (98)
Loss on acquisitions and disposal of investments and subsidiaries (42) (25)
Impairment of goodwill (73)
Gross non-operating and capital items from continuing operations (14) (38) (155)
Taxation benefit/(charge) on non-operating and capital items 3 (10) 5
Non-operating and capital items included in associate income 7 7
Net non-operating and capital items from continuing operations (11) (41) (143)
Non-operating and capital items from discontinued operation 9
Taxation benefit on non-operating and capital items (2)
Non-operating and capital items included in associate income
from discontinued operation (1) (19) (78)
Net non-operating and capital items (5) (60) (221)
As per our group accounting policy the definition of non-operating and capital items does not include profit
or loss on property, plant and equipment, intangibles and investments. These items are adjusted for in the
headline earnings calculation.
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 8.
5. TAXATION
Taxation per income statement (406) (261) (565)
Prior year taxation (4) 14 65
Taxation on non-operating and capital items 3 (10) 5
Attributable to a change in the rate of income tax 1 25
Taxation on profit before prior year taxation, non-operating and
capital items and rate change (405) (266) (660)
Effective taxation rate excluding non-operating and capital items,
prior year taxation (%) 31.0% 23.9% 23.9%
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 8.
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Book Book Book
value value value
Reviewed Reviewed Audited
Rm Rm Rm
6. INVESTMENT IN ASSOCIATES AND JOINT VENTURES
Joint ventures 1 196 979 1 044
Unlisted associates 125 199 146
Total group 1 321 1 178 1 190
Amount classified as held for sale (75) (97)
1 246 1 178 1 093
7. LONG-TERM FINANCIAL ASSETS
Unlisted and listed investments at fair value 70 49 64
Other long-term financial assets 51 96 123
Unlisted debt instruments* 443 218 226
Total group 564 363 413
Amount classified as held for sale (9)
564 363 404
* The long-term element of the investment in Angolan US$ linked government bonds was US$37 million.
8. DISCONTINUED OPERATION AND ASSETS CLASSIFIED AS HELD FOR SALE
Consistent with the year ended 30 September 2017, Equipment Iberia is classified as held for sale. Negotiations
for the sale of these operations were concluded on 24 April 2018 and the sale is expected to be effective before
2 July 2018. Due to the significance of this geography, this segment has been classified as a discontinued operation.
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Book Book Book
value value value
Reviewed Reviewed Audited
Rm Rm Rm
Results from discontinued operation are as follows:
Revenue 2 277 1 928 4 076
Operating profit before items listed below (EBITDA) 140 71 58
Depreciation (55) (58) (121)
Amortisation of intangible assets (5) (5) (14)
Operating profit/(loss)^ 80 8 (77)
Finance costs (2) (6) (9)
Income from investments 1 1
Profit/(loss) before non-operating and capital items 78 3 (85)
Non-operating and capital items 9
Profit/(loss) before taxation 87 3 (85)
Taxation (21) (45) (51)
Net profit/(loss) after taxation 66 (42) (136)
Loss from associates# (9) (51) (133)
Profit/(loss) from discontinued operation per income statement 57 (93) (269)
The cash flows from the discontinued operation is are follows:
Cash flows from operating activities 53 160 381
Cash flows from investing activities (22) (15) (65)
Cash flows from financing activities 55 (76) (326)
The major classes of assets and liabilities comprising the
disposal group and other assets classified as held for sale
were as follows:
Property, plant and equipment 964 27 1 131
Investments 75 97
Long-term financial assets 9
Deferred tax asset 151 166
Intangible assets 41 42
Inventories 867 823
Trade and other receivables 978 973
Cash balances 169 102
Assets classified as held for sale 3 245 27 3 343
Interest-bearing short and long-term loans (75) (33)
Trade and other payables - short and long term (691) (637)
Deferred tax liability (2) (2)
Provisions (139) (125)
Total liabilities associated with assets classified
as held for sale (907) (797)
Net assets classified as held for sale 2 338 27 2 546
Per business segment:
Equipment Iberia 2 212 2 424
Logistics 126 27 122
Total group 2 338 27 2 546
^ Operating loss at 30 September 2017 includes restructuring costs of R137 million (EUR9.1 million).
# Loss from associates at 30 September 2017 includes an impairment on investment and goodwill of
R78 million (EUR5.1 million).
Changes to comparative information
Following the decision to dispose of the Equipment Iberia business, this segment is classified as a
discontinued operation. In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations,
the income statement comparatives for March 2017 of this business have been reclassified as a discontinued operation.
CONSOLIDATED INCOME STATEMENT
March 2017
Previously Discontinued
reported operation Restated
Reviewed Reviewed Audited
Rm Rm Rm
Revenue 32 532 1 928 30 604
Operating profit before items listed below (EBITDA) 3 205 71 3 134
Depreciation (1 286) (58) (1 228)
Amortisation of intangible assets (70) (5) (65)
Operating profit 1 849 8 1 841
Fair value adjustments on financial instruments (123) (123)
Finance costs (680) (6) (674)
Income from investments 71 1 70
Profit before non-operating and capital items 1 117 3 1 114
Non-operating and capital items (38) (38)
Profit before taxation 1 079 3 1 076
Taxation (306) (45) (261)
Profit after taxation 773 (42) 815
Loss from associates and joint ventures (8) (51) 43
Net profit from continuing operations 765 (93) 858
Discontinued operation
Loss from discontinued operation 93 (93)
Net profit for the period 765 765
Attributable to:
Owners of Barloworld Limited 710 710
Non-controlling interest in subsidiaries 55 55
765 765
Earnings per share (cents)
- basic 336.6 336.6
- diluted 334.7 334.7
Earnings per share from continuing operations (cents)
- basic 336.6 43.9 380.5
- diluted 334.7 43.7 378.4
Earnings per share from discontinued operation (cents)
- basic (43.9) (43.9)
- diluted (43.7) (43.7)
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Rm Rm Rm
9. FINANCIAL INSTRUMENTS
Carrying value of financial instruments by class:
Financial assets:
Trade receivables
- Industry 6 496 6 300 5 429
- Government 484 465 438
- Consumers 836 908 403
Other loans and receivables and cash balances 3 197 5 102 5 732
Finance lease receivables 446 317 499
Derivatives (including items designated as effective
hedging instruments)
- Forward exchange contracts 2 42
Other financial assets at fair value 53 114 49
Total carrying value of financial assets 11 512 13 208 12 592
Financial liabilities:
Trade payables
- Principals 4 178 3 689 3 336
- Other suppliers 4 643 3 169 5 234
Other non interest-bearing payables 110 313 435
Derivatives (including items designated as effective
hedging instruments)
- Forward exchange contracts 72 1 5
Interest bearing debt measured at amortised cost 11 761 14 995 9 134
Total carrying value of financial liabilities 20 764 22 167 18 144
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.
31 Mar 2018
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 48 48
Available-for-sale financial assets
Shares 5 5
Total 53 53
Financial liabilities at fair value through
profit or loss
Derivative liabilities designated as effective
hedging instruments 72 72
Total 72 72
31 Mar 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 2 42 44
Available-for-sale financial assets
Shares 5 5
Total 2 47 49
Financial liabilities at fair value through
profit or loss
Derivative assets designated as effective
hedging instruments 1 1
Total 1 1
30 Sept 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
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Rm Rm Rm
10. DIVIDENDS DECLARED
Ordinary shares
Final dividend No 178 paid on 16 January 2018:
265 cents per share (2017: No 176 - 230 cents per share) 564 489 489
Interim dividend No 177 paid on 12 June 2017: 125 cents per share 266
Paid to Barloworld Limited shareholders 564 489 755
Paid to non-controlling interest 42 25 48
606 514 803
11. ACQUISITION OF SUBSIDIARIES, INVESTMENTS AND INTANGIBLES
Investments and intangibles acquired (282) (51) (393)
Cash amounts paid to acquire subsidiaries, investments
and intangibles (282) (51) (393)
During the period R188 million (US$16 million) was invested in US$ linked Angolan bonds.
12. PROCEEDS ON DISPOSAL OF SUBSIDIARIES, INVESTMENTS, INTANGIBLES AND LOANS REPAID:
Inventories disposed 492 551
Receivables disposed 20 26
Payables, taxation and deferred taxation balances disposed (55) (60)
Property, plant and equipment, non-current assets, goodwill
and intangibles 145 151
Net assets disposed 602 668
Less: Non-cash translation reserves realised on disposal
of foreign subsidiaries
Investment in joint venture (301) (301)
Profit on disposal (9)
Net cash proceeds on disposal of subsidiaries 301 358
Proceeds on disposal of investments and intangibles 21
Cash proceeds on disposal of subsidiaries, investments,
intangibles and loans repaid 301 379
The net cash proceeds on disposal arises mainly from the sale of the assets of the Agriculture SA and
Handling SA business into a joint venture company with BayWa AG.
13. CASH AND CASH EQUIVALENTS
Cash balances not available for use due to reserving and
foreign exchange restrictions 150 874 444
This includes US$9.2 million (R109 million) of Angolan Kwanza cash
on hand (March 2017: US$47.5 million, R635 million) (Sept 2017: US$29.7 million, R401 million).
14. COMMITMENTS
Capital commitments to be incurred
Contracted - Property, plant and equipment 245 369 566
Contracted - Vehicle Rental Fleet 235 777 1 259
Approved but not yet contracted 511 334 168
Total continuing operations 991 1 480 1 993
Discontinued operation 18 57 24
Total group 1 009 1 537 2 017
Operating lease commitments:
Continuing operations 2 790 2 776 2 932
Discontinued operation 106 160 143
Total group 2 896 2 936 3 075
Capital expenditure will be financed by funds generated by the business, existing cash resources and
borrowing facilities available to the group.
15. CONTINGENT LIABILITIES
Performance guarantees given to customers, other
guarantees and claims
From continuing operations 517 871 578
From discontinued operation 182 252 207
Total group 699 1 123 785
Buy-back and repurchase commitments not reflected on
the statement of financial position
From continuing operations 90 99 102
From discontinued operation 14 12 24
Total group 104 111 126
On 13 October 2017 the Barloworld Equipment South Africa business (BWE SA) received notification from the
Competition Commission (the 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.
16. RELATED PARTY TRANSACTIONS
There has been no significant changes in related party relationships and the nature of related party
transactions since the previous year.
Other than in the normal course of business and those disclosed in note 11 and note 12 , there have been
no other significant transactions during the year with associate companies, joint ventures and other
related parties.
17. CHANGES IN ACCOUNTING POLICIES
New standards and interpretations adopted
The annual financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The basis is consistent
with the prior year. No new amended standards or new interpretations were adopted.
18. EVENTS AFTER THE REPORTING PERIOD
On 24 April 2018 the negotiations for the sale of the Equipment Iberia operations were concluded and the board
approved the entering into of a sale and purchase agreement with Tesa S.p.A, a privately owned Italian group
and the current Caterpillar dealer for Italy. The sale transaction is expected to be closed by 2 July 2018.
The sale price will be determined at the closing date using the shareholders' equity attributable to
Barloworld after negotiated asset impairments and an agreed premium. Part of the purchase price, €10 million
(R151 million), is deferred and payable in equal instalments over a five-year period. On closing, Tesa will
settle a maximum of €142 million (approximately R2.1 billion) in cash. This will subsequently be adjusted after
the true up period. The overall proceeds of the transaction are estimated to be €160 million (approximately
R2,4 billion). The group has also provided specific warranties and indemnities as well as a guarantee in
respect of its obligations post-closing.
The price represents a premium to the net asset value of the business with net assets at 31 March 2018
of €152 million.
There have been no further events subsequent to the reporting period.
19. AUDITOR'S REVIEW
These condensed consolidated interim financial statements for the period ended 31 March 2018 have been
reviewed by Deloitte & Touche, who expressed an unmodified review conclusion. A copy of the auditor's
review report is available for inspection at the company's registered office.
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 that report
together with the accompanying financial information from the issuer's registered office.
Any forward-looking statements included in this announcement have not been reviewed or reported on
by the auditors.
20. OPERATING SEGMENTS
Fair value adjustments
Revenue Operating profit/(loss) on financial instruments
Year Year Year
Six months ended ended Six months ended ended Six months ended ended
31 Mar 17 31 Mar 17 31 Mar 17
31 Mar 18 Reviewed 30 Sept 17 31 Mar 18 Reviewed 30 Sept 17 31 Mar 18 Reviewed 30 Sept 17
Reviewed Restated* Audited Reviewed Restated* Audited Reviewed Restated* Audited
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Equipment 12 489 11 084 24 193 1 035 978 2 362 (97) (113) (184)
Automotive and
Logistics 18 361 19 520 37 764 982 914 1 848 (9) (2) (6)
Corporate 2 (63) (51) (128) (21) (8) (19)
Total 30 850 30 604 61 959 1 954 1 841 4 082 (127) (123) (209)
Southern Africa 27 028 28 246 56 658 1 680 1 630 3 584 (104) (110) (187)
Europe 3 823 2 358 5 301 274 211 498 (23) (13) (22)
Total 30 850 30 604 61 959 1 954 1 841 4 082 (127) (123) (209)
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 8.
+ The net operating assets/(liabilities) includes assets/liabilities classified as held for sale.
20. OPERATING SEGMENTS (continued)
Segment result: Operating
profit/(loss) including Net operating
fair value adjustments Operating margin (%) assets/(liabilities)+
Year Year
Six months ended ended Six months ended ended
31 Mar 17 31 Mar 17
31 Mar 18 Reviewed 30 Sept 17 31 Mar 18 Reviewed 30 Sept 17 31 Mar 18 30 Sept 17
Reviewed Restated* Audited Reviewed Restated* Audited Reviewed Audited
Rm Rm Rm Rm Rm Rm Rm Rm
Equipment 938 865 2 178 8.3 8.8 9.8 16 538 15 534
Automotive and
Logistics 973 912 1 842 5.3 4.7 4.9 12 207 10 757
Corporate (84) (59) (147) (1 428) (1 709)
Total 1 827 1 718 3 873 6.3 6.0 6.6 27 317 24 582
Southern Africa 1 576 1 520 3 397 6.2 5.8 6.3 24 821 21 736
Europe 251 198 476 7.2 8.9 9.4 2 496 2 846
Total 1 827 1 718 3 873 6.3 6.0 6.6 27 317 24 582
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 8.
+ The net operating assets/(liabilities) includes assets/liabilities classified as held for sale.
Salient features
Six months ended Year ended
31 Mar
31 Mar 2017 30 Sept
2018 Reviewed 2017
Reviewed Restated* Audited
Financial
Group headline earnings per share (cents) 481.3 364.9 883.4
Continuing headline earnings per share (cents) 457.1 400.0 974.5
Dividends per share (cents) 145 125 390
Continuing operating margin (%) 6.3 6.0 6.6
Continuing net asset turn (times) 2.2 2.0 2.2
Continuing EBITDA/interest paid (times) 5.5 4.6 5.0
Continuing net debt/equity (%) 47.9 46.6 27.6
Group return on net operating assets (RONOA) (%) 18.0 15.0 18.4
Continuing return on net operating assets (RONOA) (%) 17.0 15.4 16.4
Return on invested capital (ROIC) (%) 11.0 9.2 11.2
Group return on ordinary shareholders' funds (%) 10.2 8.0 9.5
Continuing return on ordinary shareholders' funds (%) 9.7 9.0 10.5
Net asset value per share including investments at fair
value (cents) 9 160 8 837 9 533
Number of ordinary shares in issue (000) 212 693 212 693 212 693
Restated* Audited
Non-financial
Non-renewable energy consumption (GJ) 1 469 964 1 562 107 3 087 269
Greenhouse gas emissions (tCO2e)## 129 187 137 108 270 707
Water withdrawals (municipal sources) (ML) 292 333 674
Number of employees 18 171 18 848 18 085
Lost-time injury frequency rate (LTIFR)† 0.80 0.81 0.75
Number of work-related fatalities 2 2 3
dti^ B-BBEE rating (level)+ 3 3 3
* Restated to classify Equipment Iberia as a discontinued operation. Refer to note 8 (Financial).
## 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
Six months ended Year ended Six months ended Year ended
31 Mar 18 31 Mar 17 30 Sept 17 31 Mar 18 31 Mar 17 30 Sept 17
Reviewed Reviewed Audited Reviewed Reviewed Audited
Exchange rates (Rand)
United States Dollar 11.85 13.41 13.50 12.75 13.56 13.39
Euro 14.57 14.34 15.96 15.34 14.57 14.83
British Sterling 16.62 16.77 18.12 17.42 16.91 17.03
Corporate information
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 (car rental, motor retail, fleet services, used vehicles and disposal solutions) and Logistics
(logistics management, supply chain optimisation and waste management). We offer flexible, value adding, innovative
business solutions to our customers backed by leading global brands. 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 the
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 over 20 countries
around the world with 83% of just over 18 000 employees in South Africa.
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^, HH Hickey, NP Mnxasana, MD Lynch-Bell*,
SS Mkhabela, SS Ntsaluba, P Schmid, OI Shongwe
Executive: DM Sewela (Chief Executive), DG Wilson
^Nigerian *UK
Group company secretary
Lerato Manaka
Enquiries
Barloworld Limited: Lethiwe Hlatshwayo
Tel: +27 11 445 1000 E-mail: invest@barloworld.com
Brunswick: Iris Sibanda, Tel: +27 (11) 502 7421
E-mail: isibanda@brunswick.co.za
Sponsor
J.P. Morgan Equities South Africa (Pty) Ltd
www.barloworld.com
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