| Thu 15 Nov 2001, 0:00 | | Barloworld Limited - Audited Preliminary Report Fo |
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September 2001
Headline EPS + 30% to 499 cents
Operating profit + 29% to R1.5 billion
61% operating profit from outside South Africa (2000: 57%)
Total dividend + 22% to 220 cents
Cash flow from operations R1.6 billion (2000: R1.4 billion)
R1 billion in acquisitions
Results
Revenues grew 24% to R27 945 million assisted by good growth in Europe,
particularly in Spain and Portugal as well as by acquisitions which added
new revenue of R1 510 million. Market conditions in the USA and Australia
worsened in the second half whereas South Africa fared somewhat better. The
rest of Africa continued its strong progress.
The implementation of Value Based Management throughout Barloworld continued
to bear fruit in the results for the year under review. There was an
improved performance from most business units, margins improved and
operating profit rose 29 % to R1 487 million. This result was achieved
through excellent performances from Capital Equipment in Europe and Africa
(outside South Africa), Materials Handling in the UK and from Cement and
Lime. Difficult market conditions were experienced by Melles Griot and
Coatings in Australia. Nearly all segments in the group increased operating
profit compared to the previous year.
Finance costs increased to R305 million (2000: R247 million) largely as a
result of higher borrowings following
R1 billion of acquisitions.
Amortisation of goodwill increased to R88 million (2000: R47 million) due
mainly to the acquisition of Barloworld (Barton) Freightliner in October
2000.
Total tax rose 27% to R383 million and the effective rate of tax before
exceptional items was 28.6% (2000: 27.7%).
Fully diluted earnings per share from continuing operations before
exceptional items increased 20% to
444 cents (2000: 370 cents*). Headline earnings per share rose 30% to 499
cents (2000: 383 cents).
Exceptional costs of R278 million are primarily impairments. These relate
mainly to the impairment to the cost of the investment in Avis Southern
Africa to current market value, the assets of Robor Stewarts and Lloyds
which are in the process of being sold and the closure of the ink,
protective coatings and wood finishes businesses.
Cash flow available from operations remained strong at R1 652 million (2000:
R1 423 million). The disposal of assets also generated R411 million in cash
(2000: R1 285 million).
The balance sheet remains healthy and gearing excluding leasing operations
was 31.1% (2000: 12.6%).
The directors have declared a final dividend of 145 cents per share (2000:
120 cents) resulting in a 22% increase in the total dividends declared for
the year to 220 cents (2000: 180 cents).
*includes the results of the paper business which were previously classified
as discontinued.
Segmental review
Capital Equipment
Year ended 30 Sept Revenue Operating profit Net assets
R million 2001 2000 2001 2000 2001 2000
Europe 4 629 3 912 418 317 1 518 967
South Africa 2 065 1 811 74 49 749 626
Other Africa 1 266 439 130 16 377 200
Share of associate
Income (3) 7
7 960 6 162 619 389 2 644 1 793
European revenues rose 18% and effective cost control saw margins improve.
The Spanish and Portuguese operations produced another excellent performance
on the back of the continued strength of the ongoing public sector fixed
investment programmes. Major equipment deals were secured with a number of
contracting companies and the after market (parts and service) business was
also very strong. Our success in increased market penetration was recognised
through the award from Caterpillar as European Dealer of the Year for both
dump trucks and excavators. In Siberia the order book and activity levels
continue to grow. The increase in net assets in Europe compared with the
previous year was due to the impact on inventories of the timing of sales
over the year end.
A steady recovery in the second half of the year saw an improved performance
from operations in South Africa. Demand for mining equipment was buoyant and
sales were enhanced by the growth in long term maintenance and repair
contracts. The market for construction equipment remained depressed due to
the continuing low levels of infrastructural spending. The Hyster lift truck
business experienced a modest increase in volumes and having been fully
absorbed into the capital equipment infrastructure, made an improved profit
contribution.
The other African operations continued the solid first half performance with
substantial contributions from sales to the mining sectors in Angola,
Botswana, Namibia and Zambia.
Industrial Distribution
Year ended 30 Sept Revenue Operating profit Net assets
R million 2001 2000 2001 2000 2001 2000
North America 3 367 1 897 109 139 1 527 703
Europe 1 684 1 167 75 48 728 582
Share of associate
Income (8) -
5 051 3 064 176 187 2 255 1 285
Substantial revenue growth occurred in North America due to the acquisition
of Barloworld Freightliner in October 2000. Notwithstanding a sharp decline
in demand for heavy-duty trucks, Barloworld Freightliner finished the year
with an operating profit. The recession in the US lift truck and trenching
equipment markets resulted in a decline in profits from the region despite
good progress in restructuring the business to lower its cost base.
The materials handling business in Europe performed well, increasing market
share in difficult trading conditions. Revenue growth was enhanced by the
first nine months of the Tri-Services contract with the UK Ministry of
Defence. Margin improvements resulted from ongoing restructuring programmes.
Motor
Year ended 30 Sept Revenue Operating profit Net assets
R million 2001 2000 2001 2000 2001 2000
South Africa 5 805 5 008 99 72 735 990
Other Africa 281 248 7 9 30 19
Australia 460 367 8 13 414 81
Share of associate
Income 29 10
6 546 5 623 143 104 1 179 1 090
In South Africa, an unchanged share a slightly improved market saw revenues
rise 16%. Effective cost containment saw margins improve and operating
profit grew 38%. The investment in Avis made a good contribution to the
performance of Barloworld Motor.
In the rest of Africa, an improved performance in Namibia contrasted with a
slowdown in Botswana.
In Australia, the dealerships produced lower profits in a depressed market
and the increased year end asset base was the result of the acquisition of
three dealerships late in the year.
Cement & Lime
Year ended 30 Sept Revenue Operating profit Net assets
R million 2001 2000 2001 2000 2001 2000
South Africa 1 771 1 537 406 271 2 106 2 016
Other Africa 199 150 39 27 117 87
Share of associate
Income 24 15
1 970 1 687 469 313 2 223 2 103
Revenue grew 17% and a 50% increase in operating profit, was largely
attributable to initiatives linked to value based management.
Cement sales volumes grew by 0.7% and the focus on improving the quality of
the customer base continued. Cost reductions in the manufacturing process
resulted from improved process efficiencies, better plant utilisation and
innovative waste burning solutions. Increased cement exports, the newly
acquired Mooiplaas quarry and a better performance from the aggregate
operations all contributed to the increase in turnover and profits.
Lime sales volumes rose 3% mostly due to increased sales of burnt dolomite.
Energy costs were reduced following the commissioning of a second pre-heater
and the introduction of waste burning at the Lime Acres plant.
Returns from PPC Saldanha are now approaching the levels anticipated.
The packaging business also did well with increased sales of self-opening
bags, higher productivity and the benefits flowing from restructuring in the
prior year.
Scientific Products
Year ended 30 Sept Revenue Operating profit Net assets
R million 2001 2000 2001 2000 2001 2000
Europe 903 746 80 52 819 620
North America 724 547 62 55 450 315
Asia 178 179 8 17 127 120
1 805 1 472 150 124 1 396 1 055
The European operations, dominated by the laboratory equipment business, did
well. Higher demand for laboratory products combined with firmer pricing and
the effects of cost reductions flowing from the rationalisation of operating
sites in the previous year. The Protean group of companies, acquired in
August 2001, also made a contribution to the results for the year.
In North America, there was a significant slowdown in the laser and optics
business (Melles Griot) in the second half of the year. However the good
first half performance and rapid restructuring as business volumes declined
ensured increased profits for the year.
The Asian business, which is predominantly Melles Griot, did not benefit
from demand growth in the first half of the year and accordingly showed
reduced profits for the full year.
Coatings
Year ended 30 Sept Revenue Operating profit Net assets
R million 2001 2000 2001 2000 2001 2000
South Africa* 911 873 43 36 395 412
Other Africa 85 68 8 5 22 14
Australia &
Asia 796 863 (43) (11) 293 310
Europe 98 84 4 8 21 17
Share of associate
Income 7 13
1 890 1 888 19 51 731 753
* Included in the figures for South Africa are the inks, protective coatings
and wood finishes businesses prior to their disposal/closure. These
businesses incurred R6 million of trading losses in 2001 and R1 million in
the prior year.
Decorative coatings volumes in South Africa were unchanged from the previous
year; however revenues were lower due to the effect of the closure of the
industrial coatings joint ventures. A buoyant automotive market and cost
reductions throughout the operations resulted in improved margins and a 19%
profit increase.
In the rest of Africa the decorative paint businesses did well in growing
markets.
While market share was maintained in Australia, revenues declined sharply
and margins were reduced in a market which was depressed post the Olympics
and the introduction of general sales tax. An eight week strike at the
Sydney factory at the end of the period under review also contributed to the
increased loss. The export business to China continues to develop
satisfactorily.
Profits from the speciality coatings business in the United Kingdom declined
with reduced margins due to market pressure.
Steel Tube
Year ended 30 Sept Revenue Operating profit Net assets
R million 2001 2000 2001 2000 2001 2000
South Africa* 1 343 1 211 9 3 419 440
Share of associate
Income 7 4
1 343 1 211 16 7 419 440
* The trading loss of R11 million (2000: R16 million)in Robor Stewarts and
Lloyds is included in these figures.
Revenues rose in real terms despite a depressed southern African steel tube
market. Exports of tube products increased. The benefits of restructuring
were seen in a steady improvement in operating profits in the second half of
the year. A decision has been made to exit the loss making Robor Stewarts &
Lloyds distribution business.
Financial Services and Other
Year ended 30 Sept Revenue Operating profit Net assets
R million 2001 2000 2001 2000 2001 2000
Leasing 629 591 (2) 16 3 455 2 725
Other 751 759 (47) 13 2 005 1 112
1 380 1 350 (49) 29 5 460 3 837
A satisfactory performance in the leasing operations in the United Kingdom
was offset by the adverse effect in South Africa of lower interest rates and
an increased provision for non-performing debt, due to the decline in the
building and construction industry. The motor book performed well. The
United Kingdom and USA books increased to R1 849 million (2000: R1 017
million) and the book in South Africa was R1 606 million (2000: R1 708
million).
Other comprises treasury, insurance, information technology, property and
corporate activities as well as the UK-based speciality paper business and
the newly constituted logistics operation. The increase in net assets
compared with the previous year was due primarily to a short term increase
in treasury cash.
Value Based Management
The implementation of Value Based Management (VBM) throughout the
organisation continues to progress well. VBM is designed to drive every
management team within Barloworld to focus on shareholder, customer and
employee value. It is a long-term strategic focus which is fundamentally
changing the way the group is managed and was a key driver of the improved
performance in the year under review. Each operating division is required to
demonstrate that on average it can achieve a cash flow return on investment
(CFROI) in excess of the group's real cost of capital through a business
cycle. The group achieved a real CFROI of 8.3% in 2001 (2000: 6.7%),
surpassing the target we set in September 1999 to exceed a real cost of
capital hurdle rate of 8% within two years.
Acquisitions
The more significant acquisitions during the year included Barloworld
(formerly Barton) Freightliner Inc. headquartered in Memphis, Tennessee for
R478 million; the Protean Laboratory business in the UK for R267 million;
three motor dealerships in Melbourne, Australia for R207 million; Mooiplaas
Dolomite (Pty) Ltd in South Africa for R25 million through our listed
subsidiary Pretoria Portland Cement Company Limited; the vehicle accident
repair operations of Avis Southern Africa Limited, Flemingo Plant Hire and
several motor dealerships in South Africa.
After the year end, PPC acquired Portland Holdings Limited in Zimbabwe for
R432 million settled by a combination of cash and PPC shares. As a
consequence of the issue of these shares, Barloworld's interest in PPC
reduced from 68% to 63%.
Prospects
We remain focused on value creation for all stakeholders. The drive to
implement Value Based Management throughout the organisation provides a
platform to enhance the growth of the group and the benefits will be felt in
the year ahead.
The spread of Barloworld's business activities means that we are well
positioned to take advantage of any improvement in the global outlook as
well as any growth opportunities that may arise.
While it will be difficult to show an improvement in the first half of 2002
we plan to make progress over the full year.
Dividend declaration for the year ended 30 September 2001: Dividend No 144
Notice is hereby given that the directors of Barloworld Limited have
declared a final ordinary dividend of 145 cents per share to all
shareholders.
The salient dates for the final dividend are as follows:
Last date to trade ordinary shares "CUM" dividend - Friday, 11 January 2002
Ordinary shares trade "EX" dividend - Monday, 14 January 2002
Record Date - Friday, 18 January 2002
Payment date - Monday, 21 January 2002
Share certificates may not be dematerialised or rematerialised between,
Monday, 07 January 2002 and Friday, 18 January 2002, both dates inclusive.
Income Statement
R million 2001 2000 % change
Revenue 27 945 22 457 24
Operating profit 1 487 1 155 29
Finance costs (305) (247)
Income from investments 254 256
Goodwill amortisation (88) (47)
Profit from continuing operations
1 348 1 117 21
Loss from discontinuing
operations (30)
Profit before exceptional items 1 348 1 087 24
Exceptional items (note 2) (278) 668
Profit before taxation 1 070 1 755
Taxation 383 302
Profit after taxation 687 1 453
Income from associates 31 40
Minority interests (101) (87)
Net profit for the year 617 1 406
Weighted average number of
ordinary shares in issue during
the year after deducting those
repurchased in the buy-back
programme (000)
- Basic 195 613 205 594
- Fully converted 201 946 209 977
Net profit per share (cents)
- basic 316 684
- fully diluted 311 675
Earnings per share from continuing
operations excluding exceptional
items (cents)
- basic 452 373
- fully diluted 444 370 20
Headline earnings per share 499 383 30
Dividends per share (cents) 220 180 22
- interim 75 60
- final 145 120
Balance Sheet
R million 2001 2000
Assets
Non-current assets 10 714 8 319
Property, plant and equipment 6 053 5 297
Other non-current assets 819 627
Goodwill and intangible assets 1 530 890
Investment in associates and joint
ventures 332 310
Finance lease receivables 1 723 1 007
Deferred tax assets 257 188
Current assets 11 232 8 419
Inventories 4 771 3 677
Trade and other receivables 4 680 3 798
Cash and cash equivalents 1 781 944
Total assets 21 946 16 738
Equity and liabilities
Capital and reserves
Share capital and premium 682 690
Non-distributable reserves 2 319 1 240
Retained surplus 6 059 5 951
Equity portion of convertible bond 17 17
Interest of shareholders of Barloworld
Limited 9 077 7 898
Minority interest 625 556
Interest of all shareholders 9 702 8 454
Non-current liabilities 3 845 2 881
Interest-bearing 2 411 1 912
Deferred tax liabilities 318 281
Convertible bond 225 180
Non-interest bearing 891 508
Current liabilities 8 399 5 403
Amounts due to bankers and short-
term loans 3 586 1 602
Taxation 361 214
Trade and other payables 4 113 3 178
Provisions 339 409
Total equity and liabilities 21 946 16 738
Cash Flow
R million 2001 2000
Cash available from operations 1 652 1 423
Dividends paid (including outside
shareholders) (436) (381)
Net cash from operating activities 1 216 1 042
Net cash from investing activities (2 004) (1 693)
Acquisition of subsidiaries and
investments (1 018) (696)
Buy back of Barloworld shares (90) (768)
Acquisition of property, plant and
equipment
- replacement (613) (551)
- expansion
- rental assets (654) (795)
- other (40) (168)
Proceeds on disposals 411 1 285
Net cash outflow before financing
activities (788) (651)
Net cash from financing activities 1 625 411
Net increase / (decrease) in cash
and cash equivalents 837 (240)
Cash and cash equivalents at
beginning of year 944 1 184
Cash and cash equivalents at end of
Year 1 781 944
Statement of Changes in Equity
R million 2001 2000
Interest of Barloworld Limited
shareholders at the beginning of
the year 7 898 7 244
Net movements not recognised in
income statement 943 (418)
Buy-back of Barloworld shares (90) (768)
Exchange gains on translation of the
financial statements of foreign
operations 993 264
Increase in other reserve movements 40 86
Net movements recognised through
the income statement 236 1 072
Earnings attributable to ordinary
Shareholders 617 1 406
Dividends on ordinary shares (381) (334)
Interest of Barloworld Limited
shareholders at the end of the year 9 077 7 898
Other group salient features
2001 2000
Number of ordinary shares in issue,
net of buy back (000) 195 284 197 330
Net asset value per share including
investments at market value (cents) 4 774 4 081
Total liabilities to total
shareholders' funds 122.9 94.7
Total borrowings to total
shareholders' funds
- gross excluding leasing 31.1 12.6
- gross including leasing 64.1 43.7
Interest cover (times)
- gross excluding leasing 5.4 5.4
- gross including leasing 3.3 3.3
SEGMENTAL SUMMARY
R million
Revenue Operating profit
2001 2000 2001 2000
Capital Equipment 7 960 6 162 622 382
Industrial Distribution 5 051 3 064 184 187
Motor 6 546 5 623 114 94
Cement & Lime 1 970 1 687 445 298
Scientific Products 1 805 1 472 150 124
Coatings 1 890 1 888 12 38
Steel Tube 1 343 1 211 9 3
Financial Services &
Other 1 380 1 350 (49) 29
27 945 22 457 1 487 1 155
R million
Share of associate Net Assets
Income
2001 2000 2001 2000
Capital Equipment (3) 7 2 644 1 793
Industrial Distribution (8) 2 255 1 285
Motor 29 10 1 179 1 090
Cement & Lime 24 15 2 223 2 103
Scientific Products 1 396 1 055
Coatings 7 13 731 753
Steel Tube 7 4 419 440
Financial Services &
Other 5 460 3 837
56 49 16 307 12 356
*includes dividends from associates and share of retained income.
Notes
1. Accounting policies
These results have been prepared in accordance with International Accounting
Standards (IAS).
There have been no changes in accounting policies during the year. The
increase in provisions for further constructive obligations in respect of
plant closure costs and employee related costs at or after retirement
required under IAS have been treated as an exceptional item to the extent
they relate to prior years.
The paper operations in the United Kingdom which were previously regarded as
discontinuing have been reclassified as continuing under "Financial Services
and Other". The Logistics operations included previously in the Cement,
Motor and Capital Equipment divisions have also been reclassified under
"Financial Services and Other". Prior year results have been revised
accordingly.
2. Net profit from continuing operations
R million 2001 2000
Net profit for the year 617 1 406
Discontinuing operations
Loss from discontinuing
operations 30
Exceptional items 267 (670)
Profit on disposal of shares in Comparex
Holdings Ltd and Dimension Data
Holdings Ltd (698)
Impairment losses 207 59
Additional obligations under
International Accounting Standards 93
Provision for closure costs no
longer required (29)
Profit on sale of property and
investments (6) (29)
Attributable exceptional items of
associates 13
Exceptional items before taxation 278 (668)
Taxation 3 1
Interest of outside shareholders (14) (3)
Net profit from continuing operations 884 766
3. Headline earnings
Net profit from continuing operations 884 766
Goodwill amortisation 88 47
Loss/(profit) on disposal of fixed
assets (excluding rental assets) 4 (24)
Headline earnings 976 789
DIRECTORS
Executive: A J Phillips* (Chief Executive), D C Arnold, K Brown*,
M D Coward, L S Day*, J E Gomersall*, A J Lamprecht, P M Surgey.
Non-executive: W A M Clewlow (Chairman) #, R K J Chambers #, P T W Curtis #,
Sir Andrew Hugh-Smith*#, M J Levett #, D B Ntsebeza, S B Pfeiffer~, L A
Tager, E P Theron #.
*British ~American #Member of audit committee
ADDRESSES
Registered office Transfer secretaries: Auditors:
and business
address:
Barloworld Limited Mercantile Registrars Deloitte &
Katherine Street 11 Diagonal Street Touche
P O Box 782248 Johannesburg The Woodlands
Sandton, 2146 2091 Cnr Woodlands
South Africa South Africa /Kelvin Drives
Woodmead, 2119
South Africa
Company registration number: 1918/000095/06
Share code: BAW ISIN code: ZAE 000026639
United Kingdom
registrar: Postal address:
Lloyds TSB Registrars P O Box 1053
The Causeway, Worthing Johannesburg
West Sussex, BN99 6DA, 2000
England South Africa
FOR MORE INFORMATION CONTACT BARLOWORLD CORPORATE COMMUNICATION, Ph +27 11
445 1202 OR E-MAIL: invest@barloworld.com OR VISIT THE BARLOWORLD WEBSITE
www.barloworld.com
