| Mon 17 Nov 2008, 8:03 | | BAW - Barloworld - Audited Results For The Year Ended 30 September 2008 and |
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BAW BAWP
BAW
BAW - Barloworld - Audited Results For The Year Ended 30 September 2008 and
Dividend declaration
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(JSE Ordinary Share code: BAW)
(JSE ISIN: ZAE000026639)
(JSE Preference Share code: BAWP)
(JSE ISIN: ZAE000026647)
("Barloworld or the Company")
Audited results for the year ended 30 September 2008
About Barloworld
Barloworld is a distributor of leading international brands providing integrated
rental, fleet management, product support and logistics solutions. The core
divisions of the group comprise Equipment (earthmoving and power systems),
Automotive (car rental, fleet services and motor trading), Handling (forklift
truck distribution and fleet management) and Logistics (logistics and supply
chain management).
We offer flexible, value adding, integrated business solutions to our customers
backed by leading global brands. The brands we represent on behalf of our
principals include Caterpillar, Hyster, Avis, Audi, BMW, Ford, General Motors,
Mercedes-Benz, Toyota, Volkswagen and others.
Barloworld has a proven track record of effectively managing 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 play a leading role in
empowerment and transformation.
The company was founded in 1902 and currently has operations in 42 countries
around the world with approximately half of our twenty thousand employees in
South Africa.
Directors
Non-executive:
DB Ntsebeza (Chairman), SAM Baqwa, AGK Hamilton*, MJ Levett, S Mkhabela, SS
Ntsaluba, TH Nyasulu, G Rodriguez de Castro de los Rios+, SB Pfeiffer#
Executive: CB Thomson (Chief Executive), PJ Blackbeard, M Laubscher,
OI Shongwe, DG Wilson
*British #American +Spanish
Enquiries
Barloworld Limited: Sibani Mngomezulu, Tel +27 11 445 1000
E-mail invest@barloworld.com
College Hill: Jacques de Bie, Tel +27 11 447 3030
E-mail Jacques.deBie@collegehill.co.za
For background information visit www.barloworld.com
Barloworld delivers strong operating performance for the full year
* Revenue up by 18% to R46 830 million
* Operating profit before BEE charge increases 31% to R2 988 million
* Normalised HEPS from continuing operations (excluding BEE charge and prior
year PPC gains and STC on special dividend) up 29%
* Broad based BEE transaction implemented
* Strong organic growth in Equipment southern Africa
* International acquisitions position Logistics division for future growth
* Decision taken to dispose of Scandinavian car rental operations
Clive Thomson, CEO of Barloworld, said:
"The Barloworld group delivered strong operating profit growth for the year.
This was driven by the equipment division in southern Africa which continued its
growth trajectory given robust demand from the mining and construction sectors.
In Spain, residential construction declined and public works activity slowed,
resulting in reduced sales and margins in the second half.
The automotive division experienced difficult trading conditions in South Africa
and Scandinavia. Following a strategic review the board has taken the decision
to dispose of car rental Scandinavia. Within the handling division, the strong
southern African performance and good growth in Belgium and the Netherlands was
offset by weak trading conditions in the USA and the UK. The logistics division
performed well and was boosted by the recent acquisitions.
Our broad based BEE transaction was finalised and we look forward to the long-
term benefits it will bring to the company, our employees and our empowerment
partners.
Our strategies and products are fundamentally sound, our balance sheet is strong
and the company is well positioned to take advantage of growth opportunities as
they arise. The global growth outlook has deteriorated following the financial
crisis and its impact on the real economy. We are likely to face more difficult
trading environments in most of our major markets and geographies in the year
ahead."
17 November 2008
Chairman and Chief Executive`s Report
Strong operating performance
Revenue from continuing operations rose by 18%, while operating profit,
excluding the IFRS 2 charge in respect of the black economic empowerment (BEE)
transaction, increased by 31% to R2 988 million.
The equipment division performed well with operating profits up by 34% to R2 057
million. This was driven by strong revenue growth coupled with improved margins
in South Africa, Angola and Zambia. In Spain, a slowdown in residential
construction and delays in public works spending led to a drop in demand for our
products, particularly in the second half of the year. Siberia continued with
strong revenue and profit growth.
The automotive division experienced difficult trading conditions in southern
Africa and Scandinavia. The Avis Rent a Car operations in southern Africa
improved revenue but profits declined mainly due to reduced utilisation and
lower used vehicle margins. The Scandinavian car rental business produced
disappointing results in a highly competitive and slowing market. The Avis fleet
services business continued to grow revenue and profit. The motor retail
business in southern Africa performed satisfactorily in a market where new
vehicle unit sales declined by 18%. The Australian motor retail business
performed well.
In the handling division, there was good growth in the southern African handling
and agriculture businesses. The USA and UK handling businesses came under
increasing pressure with both economies slowing, while Belgium and the
Netherlands showed satisfactory growth.
The logistics division continued to grow with operating profits rising by 38% in
southern Africa. The acquisition of the sea and air freight businesses in the
second half of the year boosted the contribution from non southern African
sources.
Headline earnings per share from continuing operations, excluding the BEE
charge, increased by 13% to 760 cents.
Earnings in both years have been impacted by largely once-off items. Excluding
these items headline earnings per share of 760 cents this year are 29% higher
than last year.
The Board declared a final dividend of 150 cents per share giving a total of 250
cents for the year.
Corporate activity
The strategic actions announced last year to reposition the group were completed
in the first quarter of this financial year. The sale of the laboratory business
was concluded and the sale proceeds of R1 077 million (?75 million) were
received in November 2007.
The shares in Freeworld Coatings Limited (formerly the coatings division of
Barloworld) were listed on the JSE Limited on 3 December 2007 and were
distributed as a dividend in specie to shareholders on 10 December 2007.
We acquired the Dubai-based Swift Group and Flynt International in Hong Kong,
including a number of their affiliates in the Far East, India, United Arab
Emirates, Africa and Germany in the second half of the year. These businesses
provide niche logistics services and activities in their markets and will
enhance the solutions offered by our growing logistics division.
Following a strategic review of the Scandinavian car rental operations, we have
approved a plan to dispose of the business and it is disclosed as discontinued
in the current year`s results.
At the end of the year agreement was reached whereby Toyota Tsusho Corporation
will acquire a 50% shareholding in Subaru Southern Africa. The transaction is
effective 1 November 2008.
BEE and transformation
The group`s broad-based black economic empowerment transaction was completed in
September 2008. The transaction provides for the issue of a maximum of 22,7
million new Barloworld ordinary shares. A total of 21 688 096 new shares were
issued and listed by 30 September 2008. Whilst the transaction entails
approximately 10% empowerment at holding company level, it results in an
effective 29% empowerment of our South African operations.
Participants in the transaction include South African based employees, current
and future black management, community based partners, black non-executive
directors, an education trust, as well as six strategic equity and black
business partners.
Board and other management changes
Brandon Diamond and Andre Lamprecht retired from the board in December 2007.
Trevor Munday and Robert Tomkinson retired from the board in January 2008 and
Peter Surgey in September 2008. The board appreciates the valuable contribution
they have made to the group, the board and board committees in various
capacities over the years. Sango Ntsaluba was appointed to the board on 28 July
2008
Khanyisile Kweyama was appointed Group Executive - Global Human Resources and
Transformation in February 2008.
Isaac Shongwe will take over as CEO of the logistics division from Paul Stuiver
on 1 January 2009.
Outlook
Government intervention in many of the developed economies following the global
financial crisis should bring a measure of stability to global credit markets in
the medium term. However, the effect on the real economy is still likely to be
felt for some time to come. Commodity prices have weakened, admittedly from very
high levels, and some of the larger developed economies will not be able to ward
off a recession next year. Our businesses in the USA, UK, Europe and Australia
will be adversely affected under this scenario, with some likely knock-on
effects for our operations in emerging markets.
Despite the deferral of some projects, ongoing demand in the mining and
construction sectors in southern Africa coupled with increased power systems
opportunities should contribute to another good year in the equipment business.
In Iberia, the construction sector is under significant pressure led by a
decline in the residential market. Funding constraints and delays in public
works spending are also leading to declines in the heavy construction market.
This trend became more pronounced in the second half of our financial year and
is expected to continue into 2009.
In Siberia, a slowdown in spending in mining and infrastructure projects will
impact on growth in revenue and profitability.
Sales of new and used motor vehicles in southern Africa are expected to remain
under pressure next year. The car rental business should be stable with
anticipated increasing activity in the second half of 2009. The fleet services
business is set to benefit from recently awarded contracts while demand from
fleet operators continues in response to the higher holding and operating costs
of vehicles.
The South African handling business is expected to show satisfactory growth in
2009. Trading conditions will be difficult in the USA and Europe but focus will
be on improving efficiency through management initiatives being implemented.
The benefits of the acquisitions made this year and growth in the African
business will contribute to improved results from the logistics division.
Our strategies and products are fundamentally sound, our balance sheet is strong
and the company is well positioned to take advantage of growth opportunities as
they arise. The global growth outlook has deteriorated following the financial
crisis and its impact on the real economy. We are likely to face more difficult
trading environments in most of our major markets and geographies in the year
ahead.
DB Ntsebeza CB Thomson
Chairman Chief Executive Officer
Group Financial Review
Financial results
Revenue from continuing operations increased by 18% to R46,8 billion. Equipment
southern Africa continued to benefit from increased spending on infrastructure
and mining. The acquisition of the Swift group of companies in April 2008 and
the consolidation of the NMI-DSM motor dealerships from March 2008 collectively
boosted revenue by R2,7 billion.
Operating profit, excluding the IFRS 2 charge of R337 million in respect of the
black economic empowerment transaction (BEE), rose by 31% to R3,0 billion.
Fair value adjustments on financial instruments include a loss of R115 million
(2007: R312 million gain) arising from the marking to market of Pretoria
Portland Cement Limited (PPC) shares held in respect of share option
obligations.
Net finance costs increased by R227 million to R694 million, due to higher
interest rates and increased borrowings to support growth in working capital,
mainly in the equipment division.
Taxation, before Secondary Tax on Companies (STC), increased by 11% to R608
million and the effective tax rate, excluding the BEE charge, STC, prior year
taxation and taxation on exceptional items, was 29,6% (2007: 28,5%). The STC
charge in 2007 included R125 million in respect of the special dividend of R5
per share paid in April 2007.
Headline earnings per share (HEPS) from continuing operations, excluding the BEE
charge, increased by 13% to 760 cents (2007: 672 cents). Excluding the BEE
charge and the largely once-off items in 2007 of R294 million (after tax gain on
the initial marking to market of the PPC shares) and R125 million (STC charge on
the special dividend), the current year`s HEPS from continuing operations of 760
cents reflects growth of 29% over last year`s adjusted 589 cents.
In terms of accounting standards the results of the coatings and scientific
divisions and the Scandinavian car rental business are included in discontinued
operations until the dates of unbundling or disposal. The loss from discontinued
operations of R11 million includes the earnings of coatings and the laboratory
business up to their unbundling or disposal, the loss incurred by the car rental
business for the year, the R326 million after tax profit on the disposal of the
laboratory business and R333 million attributable to the impairment of goodwill
in the car rental business.
BEE transaction
The BEE transaction was implemented during September 2008 following approval at
a shareholders` meeting on 8 September 2008. The company issued 21 688 096 new
Barloworld ordinary shares to the participants. Shares issued at par to the six
strategic partners and the three community service groups, totalling 14 485 013,
will be bought back at par in seven years and the nine parties will be required
to purchase an equivalent number of new Barloworld ordinary shares at R179,69
per share. Shares totalling 4 114 224 issued at par to the education and black
managers trusts are also subject to a buyback at par, based on an agreed
formula. 108 030 shares were issued to the non-executive directors trust for
R83,31 per share and the balance of the shares were issued at par to the general
staff trust. All participants are subject to lock-in periods of between five and
seven years. During this period they may either not sell their shares or may
only sell them to approved groups. In terms of the transaction, the strategic
partners and the community service groups advanced seven year loans totalling
R1,2 billion to Barloworld Limited at competitive interest rates. The company
used the proceeds to repay short-term debt.
Cash flow and borrowings
Operating cash flows before changes in working capital amounted to R5 281
million. These are not comparable to the prior period which includes cash flows
from cement, coatings and scientific divisions before their unbundling or
disposal.
Working capital increased by R1 547 million due to higher levels of trading
activity particularly in the equipment division where working capital increased
by R1 676 million.
Net cash applied to investing activities of R2 606 million includes the
acquisition of the Swift group of companies (R711 million), additions to
property, plant, equipment and intangibles of R973 million, a further net
investment in rental assets and car hire vehicles of R1 904 million and proceeds
of R1 077 million from the disposal of the laboratory business. A payment of
R759 million was made to fund the actuarial deficit following the merger of our
two UK pension funds.
Total assets employed in the group increased to R33 957 million (September 2007:
R30 655 million) mainly due to the weaker rand (R721 million) and increased
working capital.
Total interest-bearing borrowings of R10 644 million (September 2007: R9 066
million) represent a group debt to equity ratio of 82% (September 2007: 81%).
The weaker rand has resulted in an increase in net interest-bearing borrowings
at 30 September 2008 of R127 million.
Borrowings in the three segments utilised in the group for gearing purposes are
as follows:
Car Total
Total debt to equity (%) Trading Leasing rental group
Target range 30-50 600-800 200-300
Ratio at 30 September 2008 51 552 165 82
Ratio at 30 September 2007 38 646 216 81
Focus has been placed on improving the maturity of the group`s debt. The long-
term loans raised in the BEE transaction aided in reducing the ratio of short-
to long-term debt to 43:57 (September 2007: 52:48). Since 30 September 2008, the
company has issued a R750 million seven year bond. This will further improve the
company`s debt maturity profile.
Dividends totalling 250 cents per share were declared in respect of this year`s
earnings. Additional ordinary shares of 17,8 million issued in respect of the
BEE transaction, qualify to receive the final dividend of 150 cents per share.
The year ahead
The company`s balance sheet remains strong and operating cash flows are good.
The financial crisis has introduced considerable uncertainty in many markets
around the globe and our focus in the year ahead will be on improving cash flows
by limiting capital expenditure and reducing working capital.
DG Wilson
Finance Director
Operational Reviews
In the case of the leasing businesses, the operating profit is net of interest
paid. Income from associates, which includes our share of earnings from joint
ventures, is shown at the profit after taxation level.
Net operating assets comprise total assets less non-interest bearing
liabilities. Cash is excluded as well as current and deferred taxation assets
and liabilities. In the case of the leasing businesses, net assets are reduced
by interest-bearing liabilities.
Comparative numbers have been restated as per note 9.
Equipment
Revenue
Year ended
30 Sept
R million 2008 2007
- Southern Africa^ 11 930 8 568
- Europe 8 459 7 422
20 389 15 990
Share of associate income
Operating
profit
Year ended
30 Sept
R million 2008 2007
- Southern Africa^ 1 523 918
- Europe 534 612
2 057 1 530
Share of associate income 62 36
Net operating
assets
30 Sept
R million 2008 2007
- Southern Africa^ 4 178 2 270
- Europe 4 972 3 738
9 150 6 008
Share of associate income
^ The southern African materials handling operation has been included under the
Handling segment as from the current year. Comparatives have been reclassified
accordingly.
The commodities boom, infrastructure development and demand for power gave
Barloworld Equipment the impetus to produce record results in southern Africa
and we maintained our market leadership position.
South Africa, Angola and Namibia, in particular, recorded substantial growth and
the new joint venture dealership in the Democratic Republic of Congo produced a
profit in its first year of business.
We made good progress in our key strategic drive to attract, retain and develop
skilled people to sustain support for our growing customer base and machine
population.
A dedicated business unit was formed to take advantage of opportunities for the
supply and support of power solutions and the rental business delivered a
significant turnaround with increased utilisations and profitability.
Declining business confidence in Spain due to a slowdown in the residential
construction market and government delays in public works spending put pressure
on sales and margins. Demand and support activity for marine engines remained
strong.
Infrastructure remained slow in Portugal, however revenue was higher than the
previous year largely due to machine sales for cross-border projects at reduced
margins.
Vostochnaya Technica (VT), the Siberian joint venture, maintained robust growth
in its key markets including mining, construction, power, and oil and gas.
The total customer order book for the division has grown to R6,0 billion
(September 2007: R5,4 billion) and we have $1,0 billion (September 2007: $1,2
billion) of orders placed on Caterpillar, which together with equipment
inventory on hand positions us well to meet our future customer commitments.
Automotive
Revenue
Year ended
30 Sept
R million 2008 2007
Car rental Southern Africa 1 586 1 209
- Southern Africa 11 622 9 948
- Australia 2 849 2 448
Trading 14 471 12 396
Leasing Southern Africa* 948 701
17 005 14 306
Share of associate income
Operating
profit
Year ended
30 Sept
R million 2008 2007
Car rental Southern Africa 250 325
- Southern Africa 143 184
- Australia 62 48
Trading 205 232
Leasing Southern Africa* 85 76
540 633
Share of associate income 6 17
Net operating
assets
30 Sept
R million 2008 2007
Car rental Southern Africa 2 849 2 820
- Southern Africa 1 850 1 363
- Australia 983 743
Trading 2 833 2 106
Leasing Southern Africa* 366 346
6 048 5 272
Share of associate income
* Net operating assets after deducting interest-bearing borrowings.
Our integrated motor vehicle usage solutions strategy continued to support the
division`s performance, however strong competition in a tough trading
environment negatively impacted margins.
Avis Rent a Car southern Africa experienced a reduction in rental day growth,
lower fleet utilisation and a decreased used vehicle profit contribution.
Continued focus yielded a 10% average rental rate improvement for the year.
Car rental Scandinavia experienced difficult trading conditions and, following a
strategic review, the board approved a plan to dispose of the business and it is
disclosed as discontinued in the current year`s results.
In our South African motor retail operations, tightening credit and reduced
disposable income levels resulted in declining vehicle sales and lower margins.
The continued strategic alignment of our dealership network in support of our
business model led to a reduction of represented brands and dealerships. The
Subaru importation and distribution business suffered from a weak rand and we
have concluded a transaction to sell 50% of this business to Toyota Tsusho
Corporation effective 1 November 2008. Our Australian motor retail business
performed well in a slowing market.
Our fleet services business benefited from sustained fleet growth and delivered
a good result notwithstanding lower used vehicle profits.
Associate income includes our Phakisaworld and Sizwe BEE joint ventures, and
five months of our Daimler empowerment joint venture (NMI-DSM) which is now
consolidated after increasing our stake to 51,2%.
Handling
Revenue
Year ended
30 Sept
R million 2008 2007
- Southern Africa^ 1 027 765
- Europe 3 193 2 690
- North America 1 849 4 330
Trading 6 069 7 785
Leasing* 76 164
6 145 7 949
Share of associate income
Operating
profit
Year ended
30 Sept
R million 2008 2007
- Southern Africa^ 124 54
- Europe 8 55
- North America 40 72
Trading 172 181
Leasing* - 6
172 187
Share of associate income 3 -
Net operating
assets
30 Sept
R million 2008 2007
- Southern Africa^ 259 470
- Europe 636 687
- North America 638 579
Trading 1 533 1 736
Leasing* 76 107
1 609 1 843
Share of associate income
^ The southern African materials handling operation has been included under the
Handling segment as from the current year. Comparatives have been reclassified
accordingly.
*Net operating assets after deducting interest-bearing borrowings.
Trading in southern Africa for the first half was good, although higher interest
rates and the slowing economy have begun to impact the lift truck market. Market
share has grown and the order book is stronger than last year. The sale of the
rental assets yielded a profit of R25 million in the second half. The
agriculture business performed well on the back of high commodity prices and
favourable rainfall patterns.
The Netherlands and Belgium operations both produced solid results. While
trading in the first half was good, there has been a marked slowdown in Europe
and the UK in the second half. Customers are reluctant to commit to new orders
in the current economic climate. Losses and provisions relating to residual
values on used trucks resulted in a loss for the year in the UK.
The slowdown in the US economy has had a direct impact on our materials handling
operations resulting in poor trading results and a weaker order book. The
customer base is being diversified away from construction related industries and
additional resources have been deployed to boost sales. Good cost reductions
have been achieved.
A global project has commenced to upgrade and install best practice business
systems and procedures. This will enable better service to our customers and
higher profits due to improved efficiency and effectiveness.
Net operating assets have been reduced by 13% as a result of greater focus on
working capital, the sale of the rental assets in South Africa and the
deconsolidation of the Dutch lease book.
Logistics
Revenue*
Year ended
30 Sept
R million 2008 2007
Southern Africa 1 970 1 088
Europe, Middle East and Asia 1 238 371
3 208 1 459
Operating
profit
Year ended
30 Sept
R million 2008 2007
Southern Africa 105 76
Europe, Middle East and Asia 30 19
135 95
Net operating
assets
30 Sept
R million 2008 2007
Southern Africa 430 400
Europe, Middle East and Asia 855 67
1 285 467
* Excludes inter-group revenue of R400 million (2007: R747 million).
The highlight in our financial results was once again the strong organic growth
in our southern African operations. This resulted from significant growth in
existing clients as well as a number of new contracts that will maintain our
momentum into the future. The African business is also developing a number of
opportunities outside the borders of South Africa.
Building on our success in Africa during previous years, we stepped onto the
global logistics stage during April 2008 with the acquisition of Flynt
International based in Hong Kong, Swift Freight based in the UAE and Sea Air
Transport based in Germany.
The acquired businesses are active in all aspects of freight forwarding,
including inter-modal sea-air freight services, as well as warehousing and
distribution services and position us in a freight network stretching from Asia
to the Middle East, Africa and Europe. Results for 2008 were in line with
expectations, although they did include a number of once-off acquisition costs.
Our European operations in the UK and Iberia were both impacted by lower volumes
and by customers delaying projects in the face of economic uncertainty. However,
new opportunities are beginning to emerge as customers re-organise their
businesses and their supply chains to deal with the new economic realities in
Europe.
Corporate
Revenue
Year ended
30 Sept
R million 2008 2007
Southern Africa 83 53
Europe - -
83 53
Share of associate income
Operating
(loss)/profit
Year ended
30 Sept
R million 2008 2007
Southern Africa (263) (111)
Europe 10 (57)
(253) (168)
Share of associate income 1 -
Net operating
assets/(liabilities)
30 Sept
R million 2008 2007
Southern Africa 513 633
Europe (229) (807)
284 (174)
Share of associate income
The downsizing of the corporate offices in southern Africa and the UK is
complete.
In southern Africa the operating loss includes the BEE charge of R337 million.
The current period also includes a benefit of R85 million relating to a
reduction in the residual liability to share option holders following the
unbundling of Pretoria Portland Cement Limited (PPC), as a consequence of
movements in the PPC share price. The prior period includes redundancy costs of
R80 million in respect of the corporate restructuring.
In Europe, the reduction in net operating liabilities is mainly due to a payment
in December 2007 of R759 million (?55 million) to eliminate the actuarial
deficit following the merger of our two UK pension funds.
Cash Dividend
Dividend declaration for the year ended 30 September 2008: Dividend Number 160
Notice is hereby given that the following dividend has been declared in respect
of the year ended 30 September 2008: Number 160 (final dividend) of 150 cents
per ordinary share.
In compliance with the requirements of the JSE Limited, the following dates are
applicable.
Date declared Monday, 17 November 2008
Last day to trade cum dividend Friday, 9 January 2009
First trading day ex dividend Monday, 12 January 2009
Record date Friday, 16 January 2009
Payment date Monday, 19 January 2009
Share certificates may not be dematerialised or rematerialised between Monday,
12 January 2009 and Friday, 16 January 2009, both days inclusive.
On behalf of the board
S Mngomezulu
Secretary
Consolidated income statement
for the year ended 30 September
Audited
R million Notes 2008 2007* % change
CONTINUING OPERATIONS
Revenue 46 830 39 757 18
Operating profit before BEE 2 988 2 277 31
transaction charge
BEE transaction charge (337)
Operating profit 2 651 2 277 16
Fair value adjustments on (80) 295
financial instruments
Finance costs (889) (631)
Income from investments 195 164
Profit before exceptional items 1 877 2 105 (11)
Exceptional items 3 (17) (74)
Profit before taxation 1 860 2 031
Taxation (608) (549)
Secondary taxation on companies (67) (148)
Profit after taxation 1 185 1 334
Income from associates and joint 72 53
ventures
Net profit from continuing 1 257 1 387
operations
DISCONTINUED OPERATIONS
(Loss)/profit from discontinued 4 (11) 1 172
operations
Net profit 1 246 2 559
Attributable to:
Minority shareholders 14 289
Barloworld Limited shareholders 1 232 2 270
1 246 2 559
Earnings per share (cents)
- basic 602,2 1 120,0
- diluted 594,5 1 099,6
Earnings per share from
continuing
operations (cents)
- basic 608,1 679,4
- diluted 600,3 667,0
Earnings per share from
discontinued
operations (cents)
- basic (5,9) 440,6
- diluted (5,8) 432,6
* Reclassified - refer note 9.
Consolidated balance sheet
at 30 September
Audited
R million Notes 2008 2007
ASSETS
Non-current assets 13 269 12 019
Property, plant and equipment 8 056 6 847
Goodwill 2 421 2 046
Intangible assets 205 274
Investment in associates and joint 1 095 928
ventures
Finance lease receivables 436 619
Long-term financial assets 568 686
Deferred taxation assets 488 619
Current assets 20 688 18 636
Vehicle rental fleet 1 934 3 902
Inventories 7 495 5 869
Trade and other receivables 6 854 6 185
Taxation 11 32
Cash and cash equivalents 1 238 1 201
Assets classified as held for sale 4 3 156 1 447
Total assets 33 957 30 655
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 242 223
Other reserves 3 745 2 584
Retained income 8 861 8 334
Interest of shareholders of Barloworld 12 848 11 141
Limited
Minority interest 185 80
Interest of all shareholders 5 13 033 11 221
Non-current liabilities 6 252 6 638
Interest-bearing 5 022 4 379
Deferred taxation liabilities 266 610
Provisions 325 344
Other non-interest bearing 639 1 305
Current liabilities 14 672 12 796
Trade and other payables 7 335 6 854
Provisions 731 600
Taxation 344 445
Amounts due to bankers and short-term 4 266 4 687
loans
Liabilities directly associated with 4 1 996 210
assets classified as held for sale
Total equity and liabilities 33 957 30 655
Condensed consolidated cash flow statement
for the year ended 30 September
Audited
R million 2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Operating cash flows before movements in 5 281 6 370
working capital
Operating cash flows - continuing 4 914 3 970
operations
Operating cash flows - discontinued 367 2 400
operations
Increase in working capital (1 547) (531)
Cash generated from operations 3 734 5 839
Finance costs (980) (902)
Realised fair value adjustments on financial (157) (16)
instruments
Dividends received from investments and 26 41
associates
Interest received 188 338
Taxation paid (830) (1 412)
Cash flow from operations 1 981 3 888
Dividends paid (including minority (622) (2 629)
shareholders)
Cash retained from operating activities 1 359 1 259
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries, investments and (996) (349)
intangibles
Proceeds on disposal of subsidiaries, 1 098 1 432
investments and intangibles
Net investment in fleet leasing and rental (1 904) (2 283)
assets
Acquisition of other property, plant and (973) (1 485)
equipment
Replacement capital expenditure (305) (451)
Expansion capital expenditure (668) (1 034)
Proceeds on disposal of property, plant and 169 121
equipment
Proceeds on sale of leasing assets - 1 684
Net cash used in investing activities (2 606) (880)
Net cash (outflow)/inflow before financing (1 247) 379
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on share issue 23 139
Pension fund payment (759)
Proceeds from long-term borrowings 3 298 1 376
Repayment of long-term borrowings (1 285) (3 207)
Increase in short-term interest-bearing 70 704
liabilities
Net cash from/(used in) financing activities 1 347 (988)
Net increase/(decrease) in cash and cash 100 (609)
equivalents
Cash and cash equivalents at beginning of 1 201 2 134
year
Effect of foreign exchange rate movement on 54 (6)
cash balance
Effect of cash balances classified as held (31)
for sale
Effect of unbundling Coatings on cash balance (86)
Effect of unbundling Pretoria Portland Cement (318)
on cash balance
Cash and cash equivalents at end of year 1 238 1 201
Cash balances not available for use due to 292 235
reserving restrictions
Acquisition of subsidiaries, investments and
intangibles:
Inventories acquired 335
Receivables acquired 327
Payables, taxation and deferred taxation (526)
acquired
Borrowings net of cash (256)
Property, plant and equipment, non-current 532
assets, intangibles and minority shareholders
Net assets acquired 412
Less: Existing share of net assets of (234)
associates before acquisition
Net assets acquired 178
Goodwill arising on acquisitions 566
Total purchase consideration 744
Less: Non-cash purchase consideration (33)
Net cash cost of subsidiaries acquired 711
Investments and intangible assets acquired 285 349
Cash amounts paid to acquire subsidiaries, 996 349
investments and intangibles
Consolidated statement of recognised income and expense
for the year ended 30 September
Audited
R million 2008 2007
Exchange gains/(losses) on translation of 934 (229)
foreign operations
Translation reserves realised on disposal of (201) (284)
foreign subsidiaries
Gain/(loss) on cash flow hedges 81 (163)
Deferred taxation on cash flow hedges (20) 39
Loss on revaluation of available for sale - (22)
investments
Net actuarial losses on post-retirement (96) (54)
benefit obligations
Actuarial losses on post-retirement benefit (133) (42)
obligations
Taxation effect 37 (12)
Net income/(loss) recognised directly in 698 (713)
equity
Net profit 1 246 2 559
Total recognised income and expense for the 1 944 1 846
year
Attributable to:
Minority shareholders 14 289
Barloworld Limited shareholders 1 930 1 557
1 944 1 846
Salient features
for the year ended 30 September
Audited
2008 2007*
Number of ordinary shares in issue, net of 208 171 203 843
buy-back (000)
Net asset value per share including 6 451 5 713
investments at fair value (cents)
Total borrowings to total shareholders`
funds (%)
- Trading segment** 51,4 38,2
- Total group 81,7 80,8
Interest cover (times)^
- Trading segment** 4,4 5,3
- Total group 2,9 3,4
Return on net assets (%)^
- Trading segment - continuing operations** 21,0 17,8
- Total group 15,1 20,2
Cash flow return on investment - CFROIr (%) 10,3 12,2
Return on ordinary shareholders` funds 13,7 11,7
(excluding exceptional items) (%) ^
* Reclassified - refer note 9.
** Trading segment includes manufacturing and dealership businesses, but
excludes leasing and car rental.
^ From continuing operations excluding the impact of the BEE transaction charge.
Condensed notes to the consolidated financial statements
for the year ended 30 September
1 Basis of preparation
This report has been prepared in accordance with International Accounting
Standard (IAS) 34 Interim Financial Reporting and was extracted from the group
consolidated financial statements, which have been prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the IASB, in
compliance with the Companies Act of South Africa and the Listing Requirements
of the JSE Limited. The basis of preparation is consistent with the prior year,
except as detailed in note 9 below.
For a better understanding of the group`s financial position, the results of its
operations and cash flows for the year, this summarised report should be read in
conjunction with the annual financial statements from which it was derived.
Audited
R million 2008 2007*
2 Reconciliation of net profit to headline
earnings
Net profit attributable to Barloworld Limited 1 232 2 270
shareholders
(Profit)/loss on disposal of discontinued (168) 150
operations (IFRS 5)
Loss on disposal of subsidiaries (IAS 27) - 36
Profit on derecognition of subsidiary (IAS - (11)
27)
Realisation of translation reserve on (201) (284)
disposal of offshore subsidiaries (IAS 21)
Profit on disposal of properties (IAS 16) (30) (45)
Impairment of goodwill (IFRS 3) 343 169
Impairment of investments in associates (IAS 37 149
28) and joint ventures (IAS 31)
Impairment of plant and equipment (IAS 16) 2 45
Profit on sale of intangible assets (IAS 38) 2 (2)
Profit on sale of plant and equipment (3) (5)
excluding rental assets (IAS 16)
Taxation effects of remeasurements 42 (82)
Interest of outside shareholders in 4
remeasurements
Headline earnings 1 256 2 394
Headline earnings from continuing operations 1 259 1 362
Headline (loss)/earnings from discontinued (3) 1 032
operation
Weighted average number of ordinary shares in
issue during the year (000)
- basic 204 559 202 673
- diluted 207 216 206 444
Headline earnings per share (cents)
- basic 614,0 1 181,2
- diluted 606,1 1 159,6
Headline earnings per share from continuing
operations (cents)
- basic 615,5 672,0
- fully diluted 607,6 659,7
Headline earnings per share from continuing
operations (cents) excluding BEE charge (net
of tax)
- basic 760,2 672,0
- fully diluted 750,4 659,7
Headline (loss)/earnings per share from
discontinued operations
(cents)
- basic (1,5) 509,2
- diluted (1,5) 499,9
* Reclassified - refer note 9.
3 Exceptional items
Profit/(loss) on disposal of properties, 30 (9)
investments and subsidiaries
Realisation of translation reserve on - 197
disposal of foreign subsidiaries
Impairment of goodwill (10) (68)
Impairment of investments (35) (149)
Impairment of property, plant and equipment (2) (45)
Gross exceptional loss from continuing (17) (74)
operations
Taxation benefit on exceptional items 1 83
Net exceptional (loss)/profit from continuing (16) 9
operations
Gross exceptional loss from discontinued (335) (72)
operations
Taxation on exceptional items from - (4)
discontinued operations
Minority interest on exceptional loss from - (4)
discontinued operations
Net exceptional loss - total group (351) (71)
4 Discontinued operations and assets classified
as held for sale
Following the decision to dispose of the car
rental Scandinavia business and the
unbundling of coatings, these segments have
been classified as discontinued in the
current year.
Results from discontinued operations are as
follows:
Revenue 1 900 10 502
Operating profit 81 2 094
Fair value adjustments on financial (3) 5
instruments
Finance costs (91) (174)
Income from investments 13 79
Profit before exceptional items - 2 004
Exceptional items (gross of taxation) (335) (72)
(Loss)/profit before taxation (335) 1 932
Taxation (7) (721)
(Loss)/profit after taxation (342) 1 211
Income from associates and joint ventures 5 21
Net (loss)/profit of discontinued operations (337) 1 232
before impairment loss
Profit/(loss) on disposal of discontinued 168 (150)
operations before taxation*
Realisation of translation reserve 201 87
Taxation effect of profit/(loss) on disposal (43) 3
Net profit/(loss) on disposal of discontinued 326 (60)
operations after taxation
(Loss)/profit from discontinued operations (11) 1 172
per income statement
* Reclassified - refer note 9.
The cash flows from the discontinued
operations are as follows:
Cash flows from operating activities 289 550
Cash flows from investing activities 689 32
Cash flows from financing activities (553) (610)
Assets classified as held for sale consist of
the following:
- Laboratory 972
- Car rental Scandinavia 2 681
- Subaru 185
- Rental fleets, leasing and other assets 290 475
3 156 1 447
Liabilities directly associated with assets
classified as held for sale consist of the
following:
- Laboratory 210
- Car rental Scandinavia 1 880
- Subaru 116
1 996 210
5 Interest of all shareholders
Balance at the beginning of the year 11 221 14 360
Net income/(loss) recognised directly in 698 (713)
equity
Net profit for the year 1 246 2 559
Purchase of minority shareholding in 136
subsidiaries
Reclassifications and other reserve movements 63 9
Dividends/capital distributions on ordinary (622) (2 629)
shares
Effect of Cement unbundling (2 504)
Effect of Coatings unbundling (69)
BEE charge in terms of IFRS 2 337
Shares issued in current year 23 139
Interest of shareholders at the end of the 13 033 11 221
year
* Reclassified - refer note 9.
6 Dividends
Ordinary shares
Final dividend No 158 paid on 14 January 409 911
2008: 200 cents per share (2007: No 155 -
450 cents per share)
Special dividend paid on 2 April 2007: 500 - 1 017
cents per share
Interim dividend (Capital distribution) No 205 357
159 paid on 9 June 2008: 100 cents per share
(2007: No 157 - 175 cents per share)
614 2 285
Paid to minority shareholders 8 344
622 2 629
Dividends per share (cents) 250 375
- interim (declared May) 100 175
- final (declared November) 150 200
7 Contingent liabilities
Bills, lease and hire-purchase agreements 1 066 989
discounted with recourse, other guarantees
and claims
Litigation, current or pending, is not
considered likely to have a material adverse
effect on the group.
The group has given guarantees to the
purchaser of the coatings Australian business
relating to environmental claims. The
guarantees are for a maximum period of eight
years and are limited to the sales price
received for the business.
Buy-back and repurchase commitments not 517 449
reflected on the balance sheet
The related assets are estimated to have a
value at least equal to the repurchase
commitment.
There are no material contingent liabilities
in joint venture companies.
8 Commitments
Capital expenditure commitments to be
incurred:
Contracted 953 1 908
Approved but not yet contracted 131 383
1 084 2 291
Operating lease commitments 2 278 1 939
Finance lease commitments 943 877
Capital expenditure will be financed by funds
generated by the business, existing cash
resources and borrowing facilities available
to the group.
* Reclassified - refer note 9.
9 Accounting policies and comparative information
The group adopted the following new and amended Standards and new
Interpretations during the current year:
- IFRS 7 Financial Instruments: Disclosures and related amendments to IAS 1
Presentation of Financial Statements
- IFRIC Interpretation 13 Customer Loyalty Programmes
- IAS 32 Financial Instruments: Presentation (Revised) and related amendments to
IAS 1 Presentation of Financial Statements
- IFRIC Interpretation 15 Agreements for the Construction of Real Estate
- IFRIC Interpretation 16 Hedges of a Net Investment in a Foreign Operation
The impact on the condensed consolidated financial statements of adoption of
these standards and interpretations was not significant.
Comparative information has been restated for the treatment of Scandinavia Car
Rental and Coatings businesses as discontinued operations (refer note 4) as well
as for the treatment of inter-group interest received from leasing operations,
which from the current year has been offset against finance costs rather than as
an addition to income from investments.
The aggregate effect of the above changes on the annual financial statements for
the year ended 30 September 2007 is as follows:
Reclassification
Reclassification of inter-group
of interest from
Previously discontinued leasing
R million stated operations operations Restated
Income
statement
Revenue 43 238 (3 481) - 39 757
Operating 2 741 (464) - 2 277
profit
Fair value 287 8 - 295
adjustments
on financial
instruments
Finance (816) 88 97 (631)
costs
Income from 272 (11) (97) 164
investments
Profit 2 484 (379) - 2 105
before
exceptional
items
Exceptional (160) 86 - (74)
items
Profit 2 324 (293) - 2 031
before
taxation
Taxation (658) 109 - (549)
Secondary (151) 3 - (148)
taxation on
companies
Profit after 1 515 (181) - 1 334
taxation
Income from 68 (15) - 53
associates
and joint
ventures
Net profit 1 583 (196) - 1 387
from
continuing
operations
Profit from 976 196 - 1 172
discontinued
operations
Net profit 2 559 - - 2 559
Attributable
to:
Minority 289 - - 289
shareholders
Barloworld 2 270 - - 2 270
Limited
shareholders
2 559 - - 2 559
The restatements have not impacted earnings per share, headline earnings per
share, the balance sheet or the cash flow statement.
10 Acquisitions
The group exchanged its 65% interest in Garden City Motors (GCM) for additional
shares in the NMI Durban South Motors business (NMI) effective 1 March 2008. The
group`s shareholding in NMI increased from 50% to 51,18% as a result of this
transaction. Goodwill arising on the acquisition of NMI amounting to R4 million
is attributable to gaining control of the business. The business was previously
jointly controlled and therefore equity accounted in the group results up to 29
February 2008. The NMI result has been fully consolidated in the group results
effective 1 March 2008. The disposal of GCM to NMI had no profit or loss effect
for the group.
Agreements for the acquisition by the group`s Logistics business of the Hong
Kong based Flynt group as well as the Dubai-based Swift Group and its affiliates
in the Far East, India, United Arab Emirates (UAE), Africa and Germany were
concluded during the year with an effective date of 1 April 2008. The cost of
the acquisition was R711 million which includes goodwill of R558 million and is
subject to final adjustment based on profit and other warranties to be achieved.
The profit after tax of the acquisitions since the acquisition date included in
the group results amounts to R16 million. If the above transactions had taken
place at the beginning of the current period, the group would have reported
total revenue of R48 782 million and profit after tax of R1 225 million for the
12 months to 30 September 2008.
11 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.
12 Post balance sheet events
Subsequent to the year end the following material events have occurred:
- A corporate bond of R750 million was issued on 2 October 2008 and is listed on
the South African Bond Exchange under the code BAW2. The bond carries a fixed
coupon of 11,67% per annum and matures on 2 October 2015.
- An agreement has been signed for the disposal of 50% of the group`s interest
in Subaru southern Africa with effect from 1 November 2008. The transaction was
concluded at net asset value.
13 Audit opinion
The consolidated financial statements for the year have been audited by Deloitte
& Touche and the accompanying unmodified audit report as well as their
unmodified audit report on this set of condensed financial information is
available for inspection at the company`s registered office.
Segmental summary (audited)
Revenue
Year ended 30 Sept
2008 2007
Equipment^ 20 389 15 990
Automotive 17 005 14 306
Handling^ 6 145 7 949
Logistics 3 208 1 459
Corporate 83 53
Total continuing operations 46 830 39 757
Car rental Scandinavia 1 174 1 134
Scientific 209 1 700
Cement - 4 016
Steel tube - 348
Coatings 517 3 304
Total discontinued operations 1 900 10 502
Total group 48 730 50 259
Operating
profit/(loss)
Year ended 30
Sept
2008 2007
Equipment^ 2 057 1 530
Automotive 540 633
Handling^ 172 187
Logistics 135 95
Corporate (253) (168)
Total continuing operations 2 651 2 277
Car rental Scandinavia (10) 81
Scientific 13 104
Cement - 1 527
Steel tube - 32
Coatings 78 350
Total discontinued operations 81 2 094
Total group 2 732 4 371
Fair value
adjustments
on financial
instruments
Year ended 30 Sept
2008 2007
Equipment^ 49 (5)
Automotive 4 (7)
Handling^ (25) (4)
Logistics 1 -
Corporate (109) 311
Total continuing operations (80) 295
Car rental Scandinavia (2) -
Scientific - -
Cement - 13
Steel tube - -
Coatings (1) (8)
Total discontinued operations (3) 5
Total group (83) 300
Operating
profit/(loss)
including fair
value adjustments
Year ended 30 Sept
2008 2007
Equipment^ 2 106 1 525
Automotive 544 626
Handling^ 147 183
Logistics 136 95
Corporate (362) 143
Total continuing operations 2 571 2 572
Car rental Scandinavia (12) 81
Scientific 13 104
Cement - 1 540
Steel tube - 32
Coatings 77 342
Total discontinued operations 78 2 099
Total group 2 649 4 671
Net
operating
assets/
(liabilities)
30 Sept
2008 2007
Equipment^ 9 150 6 008
Automotive 6 048 5 272
Handling^ 1 609 1 843
Logistics 1 285 467
Corporate 284 (174)
Total continuing operations 18 376 13 416
Car rental Scandinavia 2 082 2 427
Scientific - 762
Cement - -
Steel tube - -
Coatings - 817
Total discontinued operations 2 082 4 006
Total group 20 458 17 423
^ The southern African materials handling operation has been included under the
Handling segment as from the current year. Comparatives have been reclassified
accordingly.
Corporate information
Registered office and business address
Barloworld Limited
180 Katherine Street
PO Box 782248
Sandton
2146, South Africa
Tel: +27 11 445 1000
Email: invest @barloworld.com
Transfer secretaries - South Africa
Link Market Services South Africa
(Proprietary) Limited
(Registration number 2000/007239/07)
11 Diagonal Street
Johannesburg, 2001
(PO Box 4844, Johannesburg)
Tel: +27 11 630 0000
Registrars - United Kingdom
Equiniti Limited
Aspect House, Spencer Road
Lancing, West Sussex
BN99 6DA, England
Tel: +44 190 383 3381
Transfer secretaries - Namibia
Transfer Secretaries (Proprietary) Limited
(Registration number 93/713)
Shop 8, Kaiser Krone Centre
Post Street Mall
Windhoek, Namibia
(PO Box 2401, Windhoek, Namibia)
Tel: +264 61 227 647
Sponsor:
J.P. Morgan Equities Ltd
Date:
17 November 2008
Date: 17/11/2008 08:03:49 Produced by the JSE SENS Department.
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