| Mon 16 Nov 2009, 7:05 | | BAW/BAWP - Barloworld Limited - Results for the year ended 30 September 2009 |
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BAW BAWP
BAW
BAW/BAWP - Barloworld Limited - Results for the year ended 30 September 2009
Barloworld Limited
(Registration number 1918/000095/06)
JSE codes: BAW and BAWP
ISIN codes: ZAE000026639 and ZAE000026647
Results for the year ended 30 September 2009
Strong operating cash generation in difficult trading environment
Cash generated from operations up 20% to R4 469 million
Operating profit (after BEE transaction charges) decreased 25% to
R1 994 million
Strong trading performance from Automotive in difficult market
R1 334 million reduction in net borrowings and lengthening of debt maturity
profile
Decisive action taken to reduce cost base
HEPS from continuing operations down 43%
Total dividend of 110 cents per share for the year
Clive Thomson, CEO of Barloworld, said:
"Equipment southern Africa delivered a solid operating performance while the
automotive division performed exceptionally well in a very difficult year for
the industry. The southern African handling and logistics businesses returned
satisfactory results.
However challenging trading conditions prevailed in our international operations
and restructuring charges of R139 million, principally in Iberia were incurred
to realign our cost base with lower activity levels. Negative financial
instrument adjustments due to the strengthening of the rand and higher net
finance costs also impacted the group`s profits for the year.
The overall trading environment in the second half remained difficult. However
we retained our focus on expense and working capital management which resulted
in strong cash flow for the year.
While we anticipate that 2010 will be another challenging year, sentiment has
improved, and we believe that the company is well placed to capitalise on the
expected upturn when it occurs."
16 November 2009
Chairman and Chief Executive`s Report
The group performance for the year, particularly our operations outside southern
Africa, was significantly impacted by the global economic downturn. However an
intense focus on cash flow and working capital management resulted in positive
cash generation, reduced debt levels and a strong balance sheet.
The group operating profit was 25% lower than in 2008 while headline earnings
per share from continuing operations declined 43% due to higher finance costs
and adverse financial instrument adjustments resulting from the stronger rand.
The board declared a final dividend of 70 cents per share giving a total of 100
cents for the year.
Decisive action was taken to realign our cost base to reflect lower activity
levels and this resulted in restructuring charges of R139 million, principally
in Iberia. We maintained or improved our market leadership position in many of
our operations through the downturn, which will ensure we are well placed to
take advantage of the upturn when it comes.
While we have tried to minimise the impact of the downturn on our people, there
have regrettably been some reductions in the past year. Our geographic and
market diversity allowed us to redeploy a significant number of people who might
otherwise have been retrenched.
The equipment division has achieved a solid result in southern Africa in a
slowing market. The diversity of this division`s market offering and geographic
presence in 11 southern African countries, together with its integrated
solutions model, has proved resilient in the difficult environment.
Stringent cost reductions and restructuring enabled us to generate a small
profit in Iberia despite steep declines in the construction industry. Revenue
and profitability declined in our Siberian joint venture, although mining
activity held up better than other segments.
The automotive division performed exceptionally well under difficult industry
conditions. The southern African and Australian motor retail operations
increased their market share, Avis Rent a Car improved its margin in a
competitive environment and our fleet services operations increased their total
fleet under management and improved overall profitability.
Continued declines in the lift truck market in the UK, the USA and the
Netherlands resulted in operating losses in our handling division. South Africa
produced a profit despite a shrinking market in the past year. We increased
market share in most territories and there are some signs of stabilisation in
the UK and the USA.
The logistics division increased revenue, mainly due to the Swift acquisition in
the previous year, and the southern African operations continued to perform
satisfactorily in a declining market. Losses were incurred in Europe, the Middle
East and Asia, but the rate of loss slowed in the last quarter following
restructuring initiatives.
Corporate activity
Discussions are continuing with interested parties on the disposal of our
Scandinavian car rental operations.
During the period under review, we sold 50% of Subaru Southern Africa to Toyota
Tsusho Corporation.
BEE and transformation
During the year, the value of the Barloworld shares held by the banks as
security for funding our Black Economic Empowerment partners declined below
specified levels. In the interests of the sustainability of the transaction our
board resolved that the company place R125 million in an interest bearing
deposit account to underpin the security held by the banks. Subsequently our
share price improved and in September 2009 R31 million of the deposit was
returned.
Each of our South African business units has achieved Level 4 or better on the
Department of Trade and Industry`s Broad Based Black Economic Empowerment
(BBBEE) scorecard. This means that companies purchasing from the group will
receive 100% credit for their procurement spend with our subsidiaries for the
purpose of their own BEE scorecards. Comprehensive plans are in place to ensure
continued improvement.
Directorate
Two new members were appointed to the board.
Johnson Njeke was appointed as an independent non-executive director and a
member of the audit committee with effect from 16 September 2009 and Peter
Bulterman, CEO of Barloworld Equipment southern Africa, joined the board as an
executive director on 1 October 2009.
Mike Levett retired in January 2009 after 23 years of committed service to the
board and various board committees. His valuable contribution is greatly
appreciated.
Outlook
Just over 12 months after the demise of Lehman Brothers, economists are now
forecasting a recovery in the global real economy. It would appear that the
emerging market economies have shown greater resilience and have been quicker to
rebound from the global downturn. The expectation is that the major European
economies will have emerged from the recession by year end while June may have
been the last month of the US recession. The general expectation is that the
developing economies will grow at a faster rate than the developed economies in
the coming year.
The South African economy has seen 3 consecutive quarters of contraction and the
expectation is that GDP will shrink by 2% in 2009. The South African Reserve
Bank has cut interest rates by 500 bps since December 2008 and rates are
currently back to levels last seen in June 2006. The South African consumer
however remains relatively indebted and the decline in rates has yet to
translate into increased consumer demand.
The recovery in world economic growth should result in an increase in the demand
for commodities, while the prevailing low interest rate environment should
favourably impact new mining projects. Nevertheless our mining order book going
into 2010 is considerably lower than a year ago.
The South African economy will remain under pressure into the new year with the
strong rand hampering the recovery. While public infrastructure projects will
underpin demand, we nonetheless expect the construction market in South Africa
to remain slow.
In Iberia the construction sector will continue to be under pressure as the
oversupply situation prevails in the residential market. The current expectation
that the Spanish budget deficit will worsen to close to 12% of GDP in 2010 means
that the government is unlikely to be able to fund increased spending on major
public work projects.
The recession in Spain has been particularly harsh and current unemployment
levels are approaching 19%. Spain is only forecast to exit the recession in late
2010 and we are therefore forecasting limited recovery in the coming year.
Our automotive business remains well positioned to benefit from the improvement
in consumer confidence that we expect in 2010. The decline in new vehicle sales
would appear to have bottomed and will further improve as consumer confidence
returns and banks soften their credit extension policies.
The car rental business is likely to be difficult in the first half but should
see a strong improvement in the second half with the build up to the World Cup
tournament. The fleet services business will benefit from increased demand as
fleet operators continue to outsource both financing and management of their
fleets.
The handling operations in the USA and Europe should show some improvement in
trading as the economic recovery gains traction. Handling in South Africa was
impacted later in the cycle and we therefore expect the recovery to be later in
2010.
Our logistics business should benefit as new supply chain projects come to
fruition in the new year. We anticipate organic growth in our African operations
while the Middle East and Asian operations should benefit from the forecast
improvement in world trade.
The focus on cash flow and working capital has resulted in reduced debt levels
while cost reduction initiatives undertaken will ensure that any upturn in
economic activity will translate into improved profitability.
While we anticipate that 2010 will be another challenging year, sentiment has
improved, and we believe that the company is well placed to capitalise on the
expected upturn when it occurs.
DB Ntsebeza CB Thomson
Chairman Chief Executive Officer
Group Financial Review
Revenue declined by 10% to R42.2 billion after being 6% ahead at the half year.
The financial crisis and the resultant global recession contributed to lower
demand for our products in most of our businesses and in all regions during this
financial year. Our European and USA businesses experienced lower revenues from
the start of the financial year while in southern Africa, the decline in revenue
became more pronounced in the second half of the year. As a result, whilst
revenue in southern Africa reduced by 4% this year, it was down by a combined
20% in the other regions.
Operating profit, before the BEE transaction charge, declined by 33% to R2 000
million. Operating profit, including the BEE charge, declined by 25% to R1 994
million. The decline in the second half of the year (-29%) was higher than the
first half (-20%) as the slowdown spread to southern African equipment and
handling businesses. Lower revenue contributed to the decline in profit in the
equipment and handling divisions. A strong performance, under difficult trading
conditions, resulted in the automotive division improving profits by 30%.
Logistics division increased revenue following the acquisitions last year, but
the decline in world trade adversely impacted profits outside South Africa.
Operating profit was reduced by redundancy and restructuring charges totalling
R139 million, particularly in Iberia (R95 million) where the expense base was
realigned with the lower activity levels.
The volatility and strength of the rand, particularly since January 2009,
resulted in losses mainly arising from marking to market foreign currency
contracts on unhedged transactions in equipment southern Africa and the South
African agriculture business. The total negative fair value adjustments on
financial instruments of R201 million compares with R80 million in 2008. That
year however included a mark to market loss of R115 million on shares in
Pretoria Portland Cement Limited, held in respect of the company`s liability to
share option holders (2009: R1 million gain).
Finance costs increased by R49 million (5,5%) to R938 million. This was largely
due to higher average working capital, particularly in the equipment southern
Africa business. Working capital in this business has been declining since May
favourably impacting our funding costs. Finance costs in the second half of this
year reduced by 13% as borrowings and interest rates declined.
Taxation declined by 66% to R207 million. The effective taxation rate (excluding
the BEE charge, exceptional items, STC and prior year taxation) was 22.0% (2008:
29.6%). The reduction was largely due to the recognition of deferred taxation
assets not previously raised.
Income from associates fell by R29 million to R43 million. Good results in the
equipment joint venture in the Democratic Republic of Congo were offset by lower
contributions from the European equipment joint ventures.
The loss of R82 million from discontinued operations is mainly attributable to
losses incurred in the Scandinavian car rental business.
The minority interest in the current year`s earnings have increased by R54
million to R68 million.
This includes R28 million representing the dividends paid to the holders of 14
485 013 ordinary shares in terms of the BEE transaction concluded in 2008. While
these shares qualify for dividends, they are not included in issued shares for
purposes of calculating headline earnings per share (HEPS). HEPS from continuing
operations of 351 cents is 43% lower than 2008
(616 cents).
Cash flow and borrowings
Particular focus has been given this year to improving cash flows in all our
businesses following the drop in demand for our products and the tightening of
lending conditions by the banks.
Action commenced in the first quarter when equipment orders were curtailed. By
March 2009 working capital in equipment Iberia had declined by R494 million and
in our automotive division, by
R247 million. Subsequently we have seen further reductions in Iberia of R500
million. The southern African equipment business, which only experienced a drop
off in demand after March 2009, reduced working capital by R620 million in the
second half of this year. In addition capital expenditure in the group was
curtailed to essential projects only.
The effect of these actions has been to reduce group working capital by R882
million this year (2008: increase R1 547 million) and to limit net cash used in
investing activities to
R1 211 million (2008:R2 606 million).
As a consequence net cash flow generated from operations increased by R735
million (20%) this year to R4 469 million. Net cash flow before financing
activities for the year was an inflow of R1 207 million compared with last
year`s outflow of R1 247 million.
Total assets employed in the group decreased by R3 862 million to R30 095
million. The decrease was largely due to the focus on reducing working capital
and limiting capital expenditure. The stronger rand resulted in a further
decrease of R905 million.
Further improvement in working capital is expected during 2010 as the southern
African equipment business continues to align its requirements to the lower
trading activity.
Total interest bearing borrowings were R9 813 million (2008: R10 644 million)
including R968 million (2008: R1 280 million) attributable to the Scandinavian
car rental business. This represented a total debt to equity ratio of 81% at
September 2009 as set out in the table below:
Trading Leasing Car Total
Total debt to equity (%) rental group
Target range 30 - 50 600 - 800 200 - 300
Ratio at 49 567 205 81
30 September 2009
Ratio at 51 552 165 82
30 September 2008
Strong collections from customers in the closing days of the financial year and
reduced supplier and short term funding commitments resulted in cash and cash
equivalents increasing to R1 772 million (2008: R1 269 million). Net debt after
deducting cash and cash equivalents, reduced by R1 334 million to R8 041
million.
The initiative to reduce the company`s reliance on short-term funding, which
started in 2008, contributed to a further improvement in the borrowings profile.
The long-term maturity profile at 30 September 2009 was 63% (2008: 57%). Long-
term debt raised during the year included a seven year corporate bond of R750
million (BAW2) in October 2008 and a five loan of R700 million with a South
African bank. In addition the UK syndicated facility was renewed ahead of its
maturity in 2010. With lower forecast requirements, the facility was reduced
from GBP120 million to GBP80 million, and matures in 2012.
Debt maturity profile
Total debt
September Redemption
R million 2009 2010 2011 2012 2013
onwards
South Africa 8 115 3 191 1 648 85 3 191
Offshore 1 698 481 161 932 124
Total 9 813 3 672 1 809 1 017 3 315
In South Africa, short-term borrowings due for redemption in 2010 include a
maturing long-term loan of R500 million and commercial paper totalling R2 022
million. The commercial paper market has remained fairly liquid during the
current year and it is expected that maturing paper will be rolled over as
required in future. At 30 September 2009 the company had unutilised funding
facilities totalling R8 980 million.
Dividends totalling 110 cents per share were declared in respect of this year`s
earnings (2008: 250 cents). Dividends are payable on 17 837 387 of the shares
issued in respect of the BEE transaction. The dividends declared this year are
covered
3.0 times by headline earnings from continuing operations
(2008: 2.9 times).
The year ahead
In the coming year focus will remain on cash flow. While there has been a
reduction in working capital in most divisions, further improvement can be made
particularly in the southern African equipment and agriculture businesses.
Further investment will be made next year ahead of the 2010 World Cup,
specifically in our car rental fleet. This expenditure will be funded from
operating cash flows, and where necessary, existing funding facilities.
DG Wilson
Finance director
Operational Reviews
EQUIPMENT
Revenue Operating Net operating
profit assets
Year ended Year ended 30 Sept
30 Sept 30 Sept
R million 2009 2008 2009 2008 2009 2008
- Southern 10 902 11 930 1 282 1 523 4 703 4 178
Africa
- Europe 5 559 8 459 11 534 3 462 4 972
16 461 20 389 1 293 2 057 8 165 9 150
Share of 51 62
associate
income
Barloworld Equipment southern Africa delivered a solid result despite difficult
trading conditions. This was supported by country and market diversity and the
large installed Caterpillar machine population requiring after sales support.
Our integrated solutions business model, incorporating new, used and rental
offerings, helped to sustain this performance.
Our South African business remained profitable in the face of declining machine
demand. Angola was slower in the second half due to the lower oil price and
Botswana and Zambia showed signs of recovery in line with global demand for
diamonds and copper. Namibia recorded pleasing results.
The transformation of our Power business into a consolidated southern African
regional operation continued in anticipation of major future opportunities.
Stringent cost reductions and restructuring resulted in a small profit in Iberia
despite declines of 70% and 45% in the Spanish and Portuguese equipment markets
respectively.
The marine engine order book held up in Spain and Portugal due mainly to new
ship building and pending work on large vessels. Product support market share
increased, with particularly strong demand for Power Systems after sales
business.
The profitability of the Siberian joint venture was significantly reduced due to
a decline in all market segments. While construction and power were severely
impacted, mining revenue held up better due to a strong order book and
resilience in the after sales business.
The development of skills in anticipation of the upturn continued as a strategic
priority in all territories.
AUTOMOTIVE
Revenue Operating Net operating
profit assets
Year ended Year ended 30 Sept
30 Sept 30 Sept
R million 2009 2008 2009 2008 2009 2008
Car rental 1 516 1 586 254 250 2 266 2 849
Southern Africa
- Southern Africa 11 381 11 622 232 143 1 682 1 850
- Australia 2 937 2 849 59 62 946 983
Trading 14 318 14 471 291 205 2 628 2 833
Leasing Southern 1 111 948 158 85 387 366
Africa*
16 945 17 005 703 540 5 281 6 048
Share of (11) 6
associate (loss)/
income
*For Leasing Southern Africa, operating profit before interest paid is R293
million (2008: R215 million) resulting in total divisional operating profit
before interest of R838 million
(2008: R670 million). Net operating assets after deducting interest-bearing
borrowings.
Our integrated motor vehicle usage solutions strategy proved resilient, and the
division has delivered a very good result in difficult trading conditions.
Overall operating margin has improved to 4.9% against the prior year`s 3.9%. The
operations generated strong positive cash flow during the year under review.
Avis Rent a Car southern Africa produced a credible result in a declining rental
day market by focussing on fleet utilisation, cost control and rate per day; and
benefited from a robust used vehicle profit contribution.
The southern African motor retail operations delivered solid results in a tough
market. This result was driven by improved used vehicle and after sales
profitability. The Australian operations produced operating profit ahead of the
prior year in local currency, despite softer market conditions.
Our fleet services business showed a strong overall improvement, supported by
quality fleet growth and a profitable used vehicle contribution.
Associates include our Phakisaworld and Sizwe BEE joint ventures and now also
include our Subaru importation and distribution joint venture.
HANDLING
Revenue Operating Net operating
profit/(loss) assets
Year ended Year ended 30 Sept
30 Sept 30 Sept
R million 2009 2008 2009 2008 2009 2008
- Southern Africa 930 1 027 80 124 518 259
- Europe 2 052 3 193 (76) 8 593 636
- North America 1 675 1 849 (54) 40 499 638
Trading 4 657 6 069 (50) 172 1 610 1 533
Leasing* 60 76 23 0 69 76
4 717 6 145 (27) 172 1 679 1 609
Share of 4 3
associate income
*Operating profit after deducting interest paid and net operating assets after
deducting interest-bearing borrowings.
While trading in southern Africa was relatively good in the first half, the
slowing economy impacted negatively in the second half and the lift truck market
ended 47% down. The agriculture business performed well in the first half, but
the stronger rand, delayed rainfall and the weak economy depressed the overall
result.
In Europe the Netherlands produced a small profit and Belgium broke even in
extremely difficult trading conditions, while the UK business produced a loss.
All markets were depressed and sales of counterbalance trucks, which are
Hyster`s strong suit, were down by more than 50% compared to last year. Sales of
used trucks reached a record high but margins were lower.
The US lift truck market fell by 41% on the back of an already severe reduction
in activity in the previous year. While we grew market share significantly and
improved the order book, the business produced a loss.
Good cost reductions have been achieved in all businesses, including a 15%
decrease in staff numbers.
The global project to upgrade and install best practice business systems and
procedures has gone live in the US and other countries will follow. This will
enable better service to our customers and higher profits due to improved
efficiency and effectiveness.
Net operating assets have been reduced in all countries except South Africa and
Belgium. Stock levels in agriculture grew as a result of late deliveries from
factories and lower sales in the second half. Used truck stocks were above plan
due to saturated sales channels and higher than expected truck returns from
distressed customers.
LOGISTICS
Revenue* Operating Net operating
profit/(loss) assets
Year ended Year ended 30 Sept
30 Sept 30 Sept
R million 2009 2008 2009 2008 2009 2008
Southern Africa 2 257 1 970 92 105 342 430
Europe, Middle 1 830 1 238 (15) 30 707 855
East and Asia
4 087 3 208 77 135 1 049 1 285
*Excludes inter group revenue of R81 million (2008: R400 million).
Southern Africa results were impacted by volume reduction in the construction
and automotive segments as well as in the freight forwarding business.
These reductions were however countered by strong performances in the FMCG and
retail segments and in the dedicated transport business.
The supply chain management business model which is largely fee based also
mitigated the effect of volume declines.
Significant new contracts acquired at the end of the financial year will
contribute to growth in the next period.
The international businesses were all negatively affected by volume reductions
due to the global economic crisis. Cost saving and rationalisation initiatives
taken during the year assisted in mitigating the effect of the volume
reductions. Included in these initiatives was the consolidation of our European
operations under one management team which will enhance focus on developing the
supply chain management business model in the European market. Excellent
customer service ensured that no clients were lost during the period and
recovering volumes on the back of an upturn in world trade will contribute to
improved returns going forward.
CORPORATE
Revenue Operating Net operating
(loss)/ assets/
profit (liabilities)
Year ended Year ended
30 Sept 30 Sept 30 Sept
R million 2009 2008 2009 2008 2009 2008
Southern Africa 22 83 (42) (263) 372 513
Europe (10) 10 (475) (229)
22 83 (52) (253) (103) 284
Share of associate (1) 1
(loss)/income
In southern Africa, the operating loss includes the BEE charge of R6 million
(2008: R337 million) and a R2 million charge (2008: R85 million gain) relating
to an increase in the residual liability to share option holders. In Europe an
increase of R321 million in the liability for post-retirement benefit
obligations in the UK contributed to the reduction in net operating assets.
Dividend declaration for the full year ended 30 September 2009
Dividend Number 162
Notice is hereby given that the following dividend has been declared in respect
of the year ended 30 September 2009.
Number 162 (final dividend) of 70 cents per ordinary share.
In compliance with the requirements of Strate and the JSE Limited, the following
dates are applicable.
Date declared Monday 16 November 2009
Last day to trade cum dividend Friday 8 January 2010
Shares trade ex dividend Monday 11 January 2010
Record date Friday 15 January 2010
Payment date Monday 18 January 2010
Share certificates may not be dematerialised or rematerialised between Monday,
11 January 2010 and Friday, 15 January 2010, both days inclusive.
On behalf of the board
S Mngomezulu
Secretary
Consolidated income statement
for the year ended 30 September
Audited
R million Notes 2009 2008 % change
CONTINUING OPERATIONS
Revenue 42 232 46 830 (10)
Operating profit before BEE 2 000 2 988 (33)
transaction charge
BEE transaction charge (6) (337)
Operating profit 1 994 2 651 (25)
Fair value adjustments on (201) (80)
financial instruments
Finance costs (938) (889)
Income from investments 149 195
Profit before exceptional 1 004 1 877 (47)
items
Exceptional items 3 22 (17)
Profit before taxation 1 026 1 860
Taxation (207) (608)
Secondary taxation on (41) (67)
companies
Profit after taxation 778 1 185
Income from associates and 43 72
joint ventures
Net profit from continuing 821 1 257
operations
DISCONTINUED OPERATIONS
Loss from discontinued 4 (82) (11)
operations
Net profit 739 1 246
Attributable to:
Minority shareholders 68 14
Barloworld Limited 671 1 232
shareholders
739 1 246
Earnings per share (cents)
- basic 321.8 602.2
- diluted 319.6 594.5
Earnings per share from
continuing operations
(cents)
- basic 361.1 608.1
- diluted 358.6 600.3
Loss per share from
discontinued operations
(cents)
- basic (39.3) (5.9)
- diluted (39.0) (5.8)
Consolidated balance sheet
at 30 September
Audited
R million Notes 2009 2008
ASSETS
Non-current assets 12 582 13 269
Property, plant and equipment 7 854 8 056
Goodwill 2 319 2 421
Intangible assets 280 205
Investment in associates and joint 731 1 095
ventures
Finance lease receivables 463 436
Long-term financial assets 279 568
Deferred taxation assets 656 488
Current assets 17 513 20 688
Vehicle rental fleet 1 692 1 934
Inventories 6 737 7 495
Trade and other receivables 4 747 6 854
Taxation 53 11
Cash and cash equivalents 1 627 1 238
Assets classified as held for sale 4 2 657 3 156
Total assets 30 095 33 957
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 252 242
Other reserves 2 688 3 745
Retained income 8 913 8 861
Interest of shareholders of Barloworld 11 853 12 848
Limited
Minority interest 217 185
Interest of all shareholders 5 12 070 13 033
Non-current liabilities 6 486 6 252
Interest-bearing 5 278 5 022
Deferred taxation liabilities 249 266
Provisions 185 325
Other non-interest-bearing 774 639
Current liabilities 11 539 14 672
Trade and other payables 5 775 7 335
Provisions 580 731
Taxation 108 344
Amounts due to bankers and short-term 3 567 4 266
loans
Liabilities directly associated with 4 1 509 1 996
assets classified as held for sale
Total equity and liabilities 30 095 33 957
Condensed consolidated cash flow statement
for the year ended 30 September
Audited
R million 2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Operating cash flows before movements in 3 587 5 281
working capital
Operating cash flows - continuing operations 3 403 4 914
Operating cash flows - discontinued 184 367
operations
Decrease/(increase) in working capital 882 (1 547)
Cash generated from operations 4 469 3 734
Finance costs (994) (980)
Realised fair value adjustments on financial (180) (157)
instruments
Dividends received from investments and 14 26
associates
Interest received 146 188
Taxation paid (603) (830)
Cash flow from operations 2 852 1 981
Dividends paid (including minority (434) (622)
shareholders)
Cash retained from operating activities 2 418 1 359
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries, investments and 219 (996)
intangibles
Proceeds on disposal of subsidiaries, 7 1 098
investments and intangibles
Net investment in fleet leasing and rental (707) (1 904)
assets
Acquisition of other property, plant and (910) (973)
equipment
Replacement capital expenditure (522) (305)
Expansion capital expenditure (388) (668)
Proceeds on disposal of property, plant and 180 169
equipment
Net cash used in investing activities (1 211) (2 606)
Net cash inflow/(outflow) before financing 1 207 (1 247)
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Audited
R million 2009 2008
Proceeds on share issue 12 23
Pension fund payment (759)
Proceeds from long-term borrowings 4 379 3 298
Repayment of long-term borrowings (4 328) (1 285)
(Decrease)/increase in short-term (710) 70
interest-bearing liabilities
Net cash (used in)/from financing (647) 1 347
activities
Net increase in cash and cash 560 100
equivalents
Cash and cash equivalents at beginning 1 238 1 201
of year
Cash and cash equivalents held for sale 31
at beginning of year
Effect of foreign exchange rate movement (57) 54
on cash balance
Effect of cash balances classified as (145) (31)
held for sale
Effect of unbundling Coatings on cash (86)
balance
Cash and cash equivalents at end of year 1 627 1 238
Cash balances not available for use due 360 292
to 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- 532
current assets, intangibles and minority
shareholders
Total 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 (219) 285
acquired
Cash amounts (received from)/paid to (219) 996
acquire subsidiaries, investments and
intangibles
Consolidated statement of recognised income and expense
for the year ended 30 September
Audited
R million 2009 2008
Exchange (losses)/gains on translation of (926) 934
foreign operations
Translation reserves realised on disposal of (201)
foreign subsidiaries
(Loss)/gain on cash flow hedges (105) 81
Deferred taxation on cash flow hedges 25 (20)
Loss on revaluation of available for sale (1)
investments
Net actuarial losses on post-retirement (232) (96)
benefit obligations
Actuarial losses on post-retirement benefit (321) (133)
obligations
Taxation effect 89 37
Net (loss)/income recognised directly in (1 239) 698
equity
Net profit 739 1 246
Total recognised income and expense for the (500) 1 944
year
Attributable to:
Minority shareholders 68 14
Barloworld Limited shareholders (568) 1 930
(500) 1 944
Salient features
for the year ended 30 September
Audited
2009 2008
Number of ordinary shares in issue, 227 440 226 879
including BEE shares (000)
Net asset value per share including 5 731 6 451
investments at fair value (cents)
Total borrowings to total shareholders`
funds (%)
- Trading segment** 49 51
- Total group 81 82
**Trading segment includes dealership businesses, but excludes leasing and car
rental.
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), 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.
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 2009 2008
2. Reconciliation of net profit to headline
earnings
Net profit attributable to Barloworld 671 1 232
Limited shareholders
Profit on disposal of discontinued (60) (168)
operations (IFRS 5)
Realisation of translation reserve on (201)
disposal of offshore subsidiaries (IAS
21)
Profit on disposal of properties (IAS 16) (14) (30)
Impairment of goodwill (IFRS 3) 343
(Reversal of impairment)/impairment of (12) 37
investments in associates (IAS 28) and
joint ventures (IAS 31)
Impairment of plant and equipment (IAS 2
16)
(Profit) /loss on sale of intangible (1) 2
assets (IAS 38)
Profit on sale of plant and equipment (3)
excluding rental assets (IAS 16)
Taxation effects of remeasurements 5 42
Headline earnings 589 1 256
Headline earnings from continuing 731 1 259
operations
Headline loss from discontinued (142) (3)
operations
Weighted average number of ordinary
shares in issue during the year (000)
- basic 208 518 204 559
- diluted 209 967 207 216
Headline earnings per share (cents)
- basic 282.5 614.0
- diluted 280.5 606.1
Headline earnings per share from
continuing operations (cents)
- basic 350.6 615.5
- fully diluted 348.1 607.6
Headline earnings per share from
continuing operations (cents) excluding
BEE charge (net of tax)
- basic 350.1 760.2
- fully diluted 347.6 750.4
Headline loss per share from discontinued
operations (cents)
- basic (68.1) (1.5)
- diluted (67.6) (1.5)
3. Exceptional items
Profit on disposal of properties, 18 30
investments and subsidiaries
Impairment of goodwill (10)
Reversal/(impairment) of investments 4 (35)
Impairment of property, plant and (2)
equipment
Gross exceptional profit/(loss) from 22 (17)
continuing operations
Taxation (charge)/benefit on exceptional (5) 1
items
Net exceptional profit/(loss) profit from 17 (16)
continuing operations
Gross exceptional loss from discontinued (1) (335)
operations
Net exceptional profit/(loss) - total 16 (351)
group
4. Discontinued operations and assets
classified as held
for sale
Following the decision to dispose of the
Car rental Scandinavia business, it has
been classified as a discontinued
operation.
Results from discontinued operations are
as follows:
Revenue 1 121 1 900
Operating (loss)/profit (135) 81
Fair value adjustments on financial (1) (3)
instruments
Finance costs (56) (91)
Income from investments 11 13
Loss before exceptional items (181) -
Exceptional items (gross of taxation) (1) (335)
Loss before taxation (182) (335)
Taxation 39 (7)
Loss after taxation (143) (342)
Income from associates and joint ventures 5
Net loss of discontinued operations (143) (337)
before profit on disposal
Profit on disposal of discontinued 168
operations before taxation
Realisation of translation reserve 201
Taxation effect of profit on disposal (43)
Release of contingency provision on prior 61
year disposal
Net profit on disposal of discontinued 61 326
operations after taxation
Loss from discontinued operations per (82) (11)
income statement
The cash flows from the discontinued
operations are as follows:
Cash flows from operating activities 147 289
Cash flows from investing activities 8 689
Cash flows from financing activities (40) (553)
Assets classified as held for sale
consist of the following:
- Car rental Scandinavia 2 345 2 680
- Subaru 186
- Rental fleets, leasing and other assets 312 290
2 657 3 156
Liabilities directly associated with
assets classified as held for sale
consist of the following:
- Car rental Scandinavia 1 509 1 880
- Subaru 116
1 509 1 996
5. Interest of all shareholders
Balance at the beginning of the year 13 033 11 221
Net (loss)/income recognised directly in (1 239) 698
equity
Net profit for the year 739 1 246
Purchase of minority shareholding in 136
subsidiaries
Reclassifications and other reserve (47) 63
movements
Dividends on ordinary shares (434) (622)
Effect of Coatings unbundling (69)
BEE charge in terms of IFRS 2 6 337
Shares issued in current year 12 23
Interest of shareholders at the end of 12 070 13 033
the year
6. Dividends
Ordinary shares
Final dividend No 160 paid on
19 January 2009:
150 cents per share (2008: 312 409
No 158 - 200 cents per share)
Interim dividend No 161 paid on 8 June
2009:
40 cents per share (2008: 84 205
No 159 - 100 cents per share)
396 614
Paid to minority shareholders 38 8
434 622
Dividends per share (cents) 110 250
- interim (declared May) 40 100
- final (declared November) 70 150
7. Contingent liabilities
Bills, lease and hire-purchase agreements 1 212 1 066
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.
Freeworld Coatings Limited is responsible
for the first AUD5 million of any claim
in terms of the unbundling arrangement.
Buy-back and repurchase commitments not 294 517
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 920 953
Approved but not yet contracted 503 131
1 423 1 084
Operating lease commitments 2 151 2 278
Finance lease commitments 986 944
Capital expenditure will be financed by
funds generated by the business, existing
cash resources and borrowing facilities
available to the group.
9. Accounting policies
The group adopted the following new and amended Standards and
new Interpretations during the current year:
- IFRIC Interpretation 18 Transfers of Assets from Customers
(IFRIC 18)
- The South African Institute of Chartered Accountants
Circular 3/2009 on Headline Earnings
- IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations (Amended - April 2009) (IFRS 5)
The impact on the condensed consolidated financial statements
of adoption of these standards and interpretations was not
significant.
10. 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.
11. Post balance sheet events
No material events have occurred between year-end and the date
of these financial statements.
12. 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 Operating
profit/(loss)
Year ended Year ended
30 September 30 September
R million 2009 2008 2009 2008
Equipment 16 461 20 389 1 293 2 057
Automotive 16 945 17 005 703 540
Handling 4 717 6 145 (27) 172
Logistics 4 087 3 208 77 135
Corporate 22 83 (52) (253)
Total continuing 42 232 46 830 1 994 2 651
operations
Car rental Scandinavia 1 121 1 174 (135) (10)
Scientific 209 13
Coatings 517 78
Total discontinued 1 121 1 900 (135) 81
operations
Total group 43 353 48 730 1 859 2 732
Segmental summary (audited) (continued)
Fair value Operating
adjustments on profit/(loss)
including
financial fair value
instruments adjustments
Year ended Year ended
30 September 30 September
R million 2009 2008 2009 2008
Equipment (151) 49 1 142 2 106
Automotive (2) 4 701 544
Handling (29) (25) (56) 147
Logistics (6) 1 71 136
Corporate (13) (109) (65) (362)
Total continuing (201) (80) 1 793 2 571
operations
Car rental Scandinavia (1) (2) (136) (12)
Scientific 13
Coatings (1) 77
Total discontinued (1) (3) (136) 78
operations
Total group (202) (83) 1 657 2 649
Segmental summary (audited) (continued)
Net operating
assets/(liabilities)
30 September
R million 2009 2008
Equipment 8 165 9 150
Automotive 5 281 6 048
Handling 1 679 1 609
Logistics 1 049 1 285
Corporate (103) 284
Total continuing operations 16 071 18 376
Car rental Scandinavia 1 804 2 082
Scientific
Coatings
Total discontinued operations 1 804 2 082
Total group 17 875 20 458
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 management and
supply chain optimisation).
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, Budget, 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, transformation and sustainable development.
The company was founded in 1902 and currently has operations in
41 countries around the world with approximately half of our nineteen thousand
employees in South Africa.
Corporate information
Registered office and business address
Barloworld Limited, 180 Katherine Street
PO Box 782248, Sandton, 2146, South Africa
Tel: +27 11 445 1000
Email: invest@barloworld.com
Transfer secretaries - South Africa
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
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
Directors
Non-executive: DB Ntsebeza (Chairman), SAM Baqwa, AGK Hamilton*,
S Mkhabela, MJN Njeke, SS Ntsaluba, TH Nyasulu, G Rodriguez de Castro de los
Rios+, SB Pfeiffer
Executive: CB Thomson (Chief Executive), PJ Blackbeard,
PJ Bulterman, M Laubscher, OI Shongwe, DG Wilson
*British 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
Date: 16/11/2009 07:05:14 Produced by the JSE SENS Department.
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