| Tue 20 May 2003, 8:26 | | Barloworld Limited - Reviewed Interim Results for |
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Barloworld Limited
(Registration number 1918/000095/06)
JSE code: BAW
ISIN code: ZAE000026639
("Barloworld")
Reviewed Interim Results for the six months ended 31 March 2003
Strong operating performance in uncertain times
* Operating profits rise 41% to R1 171 million
* Improving quality of business seen in operating margin increase to 6.5%
(2002: 4.7%)
* 58% of profits outside South Africa
* Headline earnings per share of 211 cents (2002: 270 cents) impacted by
IAS fair value adjustments on financial instruments
* Dividend maintained at 90 cents per share
* Another US Freightliner dealership acquired
Tony Phillips, CEO of Barloworld, said:
"The Barloworld Limited interim results reflect further progress in
improving the performance of the company with strong operating profit
growth accompanied by good cash flow. The complex accounting standards IAS
21 and 39, that deal with transactions in foreign currencies and the
recognition and valuation of financial instruments, have adversely affected
the reported financial performance as a result of the strong appreciation
of the Rand in the period under review. We are determined to continue to
build value for our shareholders by enhancing our overall reputation as a
company that sets goals and achieves them."
20 May 2003
Enquiries
Barloworld Limited: Mark Drewell Tel +27 11 445 1204, e-mail
invest@barloworld.com. For a copy of these results please visit
www.barloworld.com
Chairman and Chief Executive"s Report
During the first six months of 2003, Barloworld delivered a strong
performance at the operating level, but was adversely affected by the
strength of the Rand.
Operating profits rose 41% as continued efforts to improve the quality of
our business produced further successes, despite marginally increased
revenues compared with the first half of last year. The appreciation of
the Rand against the US dollar was the major factor giving rise to negative
IAS fair value adjustments of R313 million (2002: R36 million gain). This
resulted largely from the marking-to-market of financial instruments taken
out to cover exposure to foreign currency denominated imports. The overall
impact was a 22% reduction in headline earnings per share, however the
interim dividend was maintained at 90 cents per share.
The relative strength of the South African economy was seen in the good
profit improvement in Cement & Lime and Coatings. Despite a strong trading
performance, the contribution from the Capital Equipment business in South
Africa was adversely affected by the appreciation of the Rand. Improved
results were achieved in difficult circumstances in the Industrial
Distribution business and it was pleasing to see reduced losses in the US
scientific business despite no upturn in the telecoms and semi-conductor
markets we serve.
The profit contribution from operations outside South Africa rose despite
the strength of the Rand and accounted for 58% of the total (2002: 52%).
The business environment remained difficult
Barloworld is impacted by changes in the performance of the global economy
in general and the South African, Spanish, US, UK and Australian economies
in particular. During the period, the global economy remained in a state of
flux, dominated by the absence of any signs of a recovery in the US
exacerbated by the uncertainties created by the prospect of a US invasion
of Iraq.
It is expected that the South African economy will slow down from the 3%
growth it achieved in 2002 to 2.6% this year. This trend was already
evident during the first half of our financial year. Total fixed capital
formation, accelerating to a 6% growth rate for the first three quarters of
2002, continued to grow. However it is only slightly above 15% of GDP and
remains at historically low levels. There were some signs of an increase in
infrastructure investment with national cement demand growing 8%. Interest
rates in SA remained at high levels resulting in lower demand for motor
vehicles and dealer sales declined approximately 5%.
In Spain, the economy sustained a growth rate double the European average
and the EU-led public works programmes continued at high levels. Recent
trends show a gradual movement away from national to regional and local
government projects. The economy of the United Kingdom grew at an
annualised average of 1.2% but showed signs of a manufacturing slowdown
towards the end of the period. By contrast Australia continued growing
well with housing starts at higher levels than last year.
A strong operating performance
Throughout the company we are working to increase value creation
substantially, having set aggressive targets over the period through to
2006. The benefits of this drive were evident during the past six months
in improved operating margins across the company. In addition to each
business unit improving its performance, the work of company-wide
benchmarking and a series of integrated task teams looking at specific
issues are identifying where further opportunities for improvement lie in
the future.
There were many operational highlights during the first half of the year. A
number of these revolve around our concept of Smart Partnerships, which is
a process through which we seek to deepen our relationships with our major
customers around the world. Examples are winning the lion"s share of the
three major earthmoving equipment and the cement supply contracts for the
Coega harbour in the Eastern Cape, South Africa and the ever-growing
success of our UK materials handling equipment contracts with the Ministry
of Defence. Other successes include the growth of our Mera equipment
rentals outlets in Spain and the continued rapid expansion of Barloworld
Logistics in South Africa.
Acquisitions and disposals continue
Our stated strategy of expanding through acquisition saw us acquire an
additional Freightliner truck dealership in northwest Arkansas (R49
million), a further 676 138 shares in Pretoria Portland Cement Company
Limited (R59 million) and an additional 4 630 617 shares in Avis Southern
Africa Limited (R43 million). We also expanded our UK Industrial
Distribution business through the acquisition of Unilift Limited (R30m).
Our stated criteria that all acquisitions must, on average through the
business cycle, exceed our real cash flow return on investment hurdle rate
of 8%, continue to apply. In April 2003 we completed the disposal of our
South African motor leasing business for R877 million.
Committed to meaningful Black Economic Empowerment (BEE) in South Africa
We believe meaningful BEE is an important ingredient in the creation of a
successful South Africa. Accordingly, on 7 May 2003 we were delighted to
announce the largest BEE initiative to date in the motor industry. In terms
of the transaction, we have entered into a 50/50 joint venture with Durban
South Motors, incorporating the ex-McCarthy Pinetown DaimlerChrysler
operations, to form a new company employing 650 people that will trade as
NMI Durban South Motors (Pty) Ltd. Headed by Mr Yunus Akoo (owner of
Durban South Motors), the business is expected to sell more than 6 000
DaimlerChrysler passenger and commercial vehicles annually generating some
R2 billion in revenue.
Board of Directors
With effect from 31 March 2003 Mr Des Arnold retired from the position of
Director, Finance and Administration. For 36 years he dedicated himself to
the company and was a major architect of many dimensions of the success
that we enjoy today. His successor Mr Clive Thomson has been appointed from
within the management team. This is testimony to the strength and depth of
financial expertise that Mr Arnold leaves as his legacy. Non-executive
director Mr Graham Ross Russell has also retired and his contribution that
brought a London-based perspective to the company over many years is
appreciated and will be missed.
Corporate Governance
The company remains committed to the principles of world-class corporate
governance and we note the growth in compliance issues arising from
initiatives such as King II in South Africa, Sarbanes-Oxley in the United
States and the Higgs report in the United Kingdom. We endorse the
sentiments expressed in these initiatives but are concerned about the
burgeoning of rules-based mechanisms seeking to enforce good governance.
We believe that the key to good corporate governance is the ethics and
attitude of the leadership in an organisation and the extent to which they
are committed to "doing the right thing" in all circumstances. That has
always been one of the cornerstones of Barloworld.
Looking ahead
In South Africa there are indications that the effects of the high interest
rates and the strength of the Rand are beginning to be felt across the
economy. Motor vehicle demand is soft and paint volumes static, while steel
tube export markets are more difficult. We are expecting a slowdown in the
growth rate of cement demand. Trading conditions have remained positive in
Spain and Australia, but Portugal is difficult as a result of the clampdown
on public sector spending. In the United States there are some indications
of an upturn, but by contrast, the United Kingdom manufacturing sector is
slowing.
A key uncertainty for the short term remains the current strength and
future direction of the Rand. The exchange rate has an impact on earnings
through lower export volumes and/or margins, the translation effects on
offshore profits and the IAS fair value adjustments on financial
instruments. This is difficult to forecast.
We are well positioned to take advantage of any improvement in trading
conditions, particularly in the US. Subject to a degree of exchange rate
stability, we look forward to being able to report a better performance at
the earnings per share level in the second half compared with the first
half.
In the medium term, we will continue improving the quality of our existing
operations to generate sustainable higher margins and profits. We will also
expand our business through acquisition as we work to create a growing
global organisation producing value for all our stakeholders.
WAM Clewlow AJ Phillips
Chairman Chief Executive Officer
GROUP FINANCIAL REVIEW
Revenues increased marginally to R17.9 billion (2002: R17.7 billion). With
the notable exception of the US, most geographic areas showed revenue
growth in local currency terms.
Operating profit increased 41% to R1 171 million as a result of improved
margins, good cost control, and a net benefit of approximately R71 million
largely due to the sale of inventories recorded using spot rates at the
transaction date (as required by IAS21) at prices based on rates in forward
cover contracts. This impact, however, is more than offset by the related
fair value adjustments on financial instruments referred to below. The year
on year improvement is achieved despite the fact that the strong overall
operating profit growth in the non-South African businesses was diluted on
translation due to the strength of the Rand.
Fair value adjustments on financial instruments resulted in a charge to
income of R313 million (2002: R36 million gain) of which R203 million is
realised. Our group policy is to cover forward all foreign exchange
commitments. In terms of IAS39 (Recognition and Measurement of Financial
Instruments), which was applied for the first time in the 2002 financial
year, financial instruments must be recorded at fair value with the
resultant mark-to-market gain or loss taken to income. The major impact for
the period under review is in the Capital Equipment business in South
Africa where, due to the strengthening of the Rand against the US dollar,
forward exchange contracts taken out to cover machine and parts purchases
are the principle reason for negative fair value adjustments amounting to
R292 million (2002: R9 million gain).
Finance costs rose to R298 million (2002: R207 million) as a result of
higher local borrowings due to growth in the rental business and higher
working capital arising from increased activity levels in certain
operations. Local interest rates were also higher compared to the same
period last year.
The decrease in the tax charge to R274 million is in line with the
reduction in profit before taxation, with the effective tax rate excluding
STC and taxation on exceptional items remaining relatively constant at
31.6% (2002: 32.4%).
Exceptional profits amount to R46 million (2002: R41 million) and comprise
mainly profits arising on the sale of motor dealerships as part of
manufacturer rationalisation programmes and certain property disposals.
Headline earnings per share of 211 cents (2002: 270 cents) reflect the
impact of the appreciation of the Rand during the period. In addition to
the fair value adjustments arising on marking-to-market financial
instruments, the strong currency also affected the translation of profits
from our non-South African businesses to the extent of approximately 23
cents per share.
Cash generated from operations of R567 million (2002: R1 157 million) is
after deducting an amount of R427 million which represents growth in the
lease receivables book. Significant cash outflows during the period
include dividends paid (R711 million) and net cash applied to investing
activities (R882 million). The net impact on the group"s gearing ratio
(excluding leasing operations) is an increase to 36.5% (March 2002: 31.1%)
and an increase to 77.0% (March 2002: 63.4%) including leasing. An amount
of R877 million was received in April 2003 from the disposal of the motor
leasing book which has the effect of improving the group"s gearing ratio
including leasing by approximately 9%. The balance sheet remains healthy
despite the impact of the strength of the Rand on the translation of non-
South African assets. Total assets decreased by R 2 179 million from 30
September 2002.
CB Thomson
Financial Director
SEGMENTAL REVIEW
The Segment result disclosed in the segmental review includes operating
profit, fair value adjustments on financial instruments and goodwill
amortisation but is stated before investment income, interest paid and
taxation. In the case of the leasing businesses, segment result is net of
interest paid. The prior year numbers have been stated on a consistent
basis.
Net assets disclosed in the segmental review comprise total assets
excluding current and deferred tax assets, less non-interest bearing
liabilities excluding current and deferred tax liabilities.
Capital Equipment
R million Revenue Segment result Net assets
6 months Year 6 months Year
ended ended ended ended
31 31 30 Sep 31 31 Mar 30 31 30
Mar Mar 02 Mar 02 Sep Mar Sep
03 02 03 02 03 02
- Europe 2 900 3 232 6 199 262 252 520 1 509 1 779
- South Africa 1 784 1 295 2 790 (148) 45 88 1 588 1 197
- Rest of 785 609 1 141 80 54 136 250 188
Africa
Total Trading 5 469 5 136 10 130 194 351 744 3 347 3 164
Leasing 144 98 168 16 10 23 1 581 1 363
5 613 5 234 10 298 210 361 767 4 928 4 527
Share of 2 4 0
associate
income
Most of the activity in this segment arises from our valued association
with Caterpillar.
Activity levels in Europe remained high against a background of the
continuing public sector infrastructure investment programme in Spain.
Government/European Union-led investment in high-speed trains, roads and
ports ensured strong demand for our products and services and a firm order
book. In Portugal business is being downsized as a result of a clamp down
on public sector spending. Operating margins in Europe rose from 8% to 9%
as the portion of higher margin after market business increased relative to
new and used equipment sales. The Siberian business continued its
satisfactory development.
The South African business achieved excellent margins in a good trading
environment. However the strong operating performance was more than offset
in the segment result by R292 million in negative fair value adjustments on
financial instruments. Market share gains were made in both the
Caterpillar-based mining and construction sectors. The mining division saw
repeat sales of Cat equipment fleets to satisfied customers. A notable
achievement in the construction division was being awarded the bulk of the
earthmoving equipment supply to all three of the main contractors on the
Coega harbour project in the Eastern Cape. The introduction of the full
Hyster range of warehousing equipment and growth in Smart PartnershipsTM
with key South African customers has allowed the Handling division to
increase operating profit. The agriculture division continues to increase
market share out of the two key brands, Massey Ferguson and Claas.
In the rest of Africa, we achieved excellent growth in Angola as improved
political stability resulted in improved demand for infrastructure
rehabilitation and mining expansion. This was supported by both Botswana
and Namibia, which continued to perform well.
The South African equipment finance business, which is an important part of
the total solution-based Smart Partnership offering to mining and
construction customers, performed well and the book grew from
R948 million in September 2002 to R1 150 million at 31 March 2003. The
Spanish leasing business is a small but growing component.
Given the strength of the Rand in the first half, the capital equipment
business is unlikely to show an improved performance for the full year
compared with 2002.
Industrial Distribution
R million Revenue Segment result Net assets
6 months Year 6 months Year
ended ended ended ended
31 31 30 31 31 30 Sep 31 30
Mar Mar Sep Mar Mar 02 Mar Sep
03 02 02 03 02 03 02
- Europe 784 838 2 202 35 25 95 400 550
- North America 1 632 2 008 3 812 8 9 28 1 292 1 545
Total trading 2 416 2 846 6 014 43 34 123 1 692 2 095
Leasing 258 270 582 25 14 35 2 315 2 759
2 674 3 116 6 596 68 48 158 4 007 4 854
Share of (2) (1) 0
associate
income
In Europe, the UK and Belgium Hyster lift truck operations achieved a good
improvement in their profit generation. A slower trading environment was
offset by better equipment deliveries and the contribution of the long term
contracts with the UK Ministry of Defence.
In the US, the lift truck market remained fairly static but improved market
shares helped to generate local currency profit improvement over the prior
year with deliveries up 18%. The benefits of restructuring the US Handling
business in the previous year also helped the operating profit levels. This
was achieved in a difficult business environment. Barloworld Freightliner
had a difficult first half-year with markets for trucks down in general.
They delivered the same number of trucks as last year"s first half, however
the aftermarket business was affected by the slow economy.
A good performance by the leasing business due to an improved rate of
delivery of contracted equipment in Europe and strong growth in the US from
a small base produced a significant improvement in leasing profits. The
book grew from Pounds171 million in September 2002 to Pounds190 million at
31 March 2003.
The US businesses are expected to show improvement in the second half
linked to an improvement in business confidence levels in the US economy.
The European businesses should maintain their current level of performance
in the second half, albeit in more difficult business conditions than the
period under review. Overall for 2003 Industrial Distribution should show
an improvement on the previous year.
Motor
R million Revenue Segment result Net assets
6 months Year 6 months Year
ended ended ended ended
31 31 Mar 30 31 31 30 31 30
Mar 02 Sep Mar Mar Sep Mar Sep
03 02 03 02 02 03 02
- South Africa 3 621 3 403 6 851 50 62 146 991 799
- Rest of 154 174 357 0 6 10 29 24
Africa
- Australia 703 848 1 656 12 13 28 408 472
Total trading 4 478 4 425 8 864 62 81 184 1 428 1 295
Leasing 75 56 112 10 6 19 936 870
4 553 4 481 8 976 72 87 203 2 364 2 165
Share of 38 19 46
associate
income
The South African operations did well to increase revenue in a weak market.
This was achieved after the sale of two DaimlerChrysler and one BMW
dealership in line with manufacturer imposed dealership restructuring.
In Australia, the sale and rationalisation of the Mitsubishi dealerships
resulted in lower revenue but a stronger segment result in local currency.
The benefit of this was masked by the impact of the stronger Rand on
translation.
Namibia produced another satisfactory result but the Botswana operations
experienced a poor trading period and a weaker contribution.
The leasing business, which was sold in April 2003, produced a satisfactory
result for the period. Our associate company Avis Southern Africa Limited
performed strongly.
The outlook for the second half of the year is positive in Australia and we
expect the Botswana operations to perform better out of a new facility.
However the outlook in South Africa is less positive and the prevailing
high interest rates are expected to continue depressing demand. Overall it
will be difficult to match last year"s performance for the total motor
business.
Cement & Lime
R million Revenue Segment result Net assets
6 months Year 6 months Year
ended ended ended ended
31 31 30 31 Mar 31 30 31 Mar 30
Mar Mar Sep 03 Mar Sep 03 Sep
03 02 02 02 02 02
South 1 280 994 2 226 370 219 586 2 304 2 591
Africa
Rest of 120 204 345 21 27 44 464 635
Africa
1 400 1 198 2 571 391 246 630 2 768 3 226
Share of associate 1 13 34
income
Stronger demand in both domestic and export markets resulted in
significantly increased profitability. Price realisation and cost
efficiencies also improved. Higher levels of activity were experienced at
the PPC Saldanha material handling facility.
Portland Holdings Limited Zimbabwe reported a small operating loss
following a planned shut down for maintenance in March, continued economic
difficulties and problems relating to the regular supply of power, diesel
and coal.
Increased operating profits are anticipated for the full year despite an
expected decline in export revenues due to the stronger Rand and the
situation in Zimbabwe which is not expected to improve in the short term.
In the second half of last year profits recovered strongly and accordingly
the second half performance for 2003 will be measured against a high
comparative base.
Scientific Products
R million Revenue Segment result Net assets
6 months Year 6 months Year
ended ended ended ende
d
31 31 30 Sep 31 31 30 31 30
Mar Mar 02 Mar Mar Sep Mar Sep
03 02 03 02 02 03 02
Europe 622 746 1 459 18 33 57 876 1 171
North America 243 365 720 (8) (40) (52) 447 601
Asia 72 79 157 1 2 4 103 133
937 1 190 2 336 11 (5) 9 1 426 1 905
In Europe, economic and political uncertainties were reflected in
destocking by our Laboratory distributors, particularly in the second
quarter. Lower demand for Melles Griot"s telecommunication products, which
are manufactured in the UK, also caused some reduction in performance.
In the United States, overall losses were reduced despite continuing weak
sales of Melles Griot"s laser and photonics products. The ongoing
programme of restructuring has achieved significant cost economies and the
consolidation of the Irvine operations onto an enlarged site in Carlsbad
positions the business to take full advantage of any upturn. Demand from
the semiconductor manufacturing sector remained at historically low levels.
Sales of laboratory products in the USA showed some growth over the
previous year.
The Scientific businesses are expected to show earnings growth for the full
year as the outlook for the second half is more positive driven by a
further improvement in Melles Griot"s performance and increased demand for
laboratory products, as customer destocking comes to an end.
Coatings
R million Revenue Segment result Net assets
6 months Year 6 months Year
ended ended ended ended
31 31 30 31 31 30 31 30
Mar Mar Sep Mar Mar Sep Mar Sep
03 02 02 03 02 02 03 02
South 684 607 1 071 58 41 78 477 445
Africa
Rest of 59 55 114 5 6 14 22 23
Africa
Australia & 569 609 1 235 18 18 36 251 312
Asia
Europe 0 54 81 0 0 3 8 16
1 312 1 325 2 501 81 65 131 758 796
Share of 15 12 28
associate income
In South Africa, the trend of good results continued and the business
benefited from an improved product mix with growth in the premium brand
segment and further market share gains in automotive coatings. Combined
with continuing efficiency gains throughout the business, operating profits
rose 51%.
With the exception of Zambia, the rest of Africa produced results in line
with expectations and sustained a high level of returns.
Progress is ongoing in Australia and all aspects of the business improved
with a consequent increase in returns. Notwithstanding a strengthening of
the Rand, the result was in line with the prior year.
The outlook for the second half remains positive but the strong showing of
the first half will not be matched. Notwithstanding this, the business is
expected to show improved results for the full year compared with 2002.
Steel Tube
R million Revenue Segment result Net assets
6 months Year 6 months Year
ended ended ended ended
31 31 30 31 31 30 31 30
Mar Mar Sep Mar Mar Sep Mar Sep
03 02 02 03 02 02 03 02
South Africa 937 793 1 720 31 29 84 505 486
Share of 3 7 11
associate income
Despite the adverse impact on exports of a substantially stronger Rand,
profits were similar to last year. The drop in associate income reflects
the sale of our 50% investment in steel trading company Stemcor at the end
of the prior year.
The continued strength of the Rand and deteriorating international prices
have reduced export margins further and last year"s record profit levels
will not be matched.
Corporate Services and Other
R million Revenue Segment result Net assets
6 months Year 6 months Year
ended ended ended ended
31 31 30 Sep 31 31 30 Sep 31 30 Sep
Mar Mar 02 Mar Mar 02 Mar 02
03 02 03 02 03
South 174 9 176 (43) (18) (33) 525 173
Africa
Rest of 18 18 80 (2) 1 6 187 287
Africa
Europe 297 314 745 (12) (6) 51 919 1 438
489 341 1 001 (57) (23) 24 1 631 1 898
The logistics operations in South Africa grew non-group revenues strongly
and traded profitably as the business continued to expand its supply chain
management offering and gain market share. High levels of re-investment in
capacity to fuel future growth continued in the current period. The
Spanish logistics business and the UK paper business were profitable.
Corporate services include the corporate offices in South Africa, the
United Kingdom, Namibia and Botswana, as well as shared services such as
treasury, risk management and information technology.
Group income statement
Six months ended Year
ended
31 March 31 March % 30 Sept
2003 2002 Change 2002
R million Notes Reviewed Unaudited
Audited
Revenue 17 915 17 678 1 35 999
Operating profit 1 1 171 832 41 2 067
Fair value 2 (313) 36 55
adjustments on
financial
instruments
Finance costs 3 (298) (207) (401)
Income from 149 148 253
investments
Goodwill (51) (60) (116)
amortisation
Profit before 658 749 -12 1 858
exceptional items
Exceptional items 46 41 369
Profit before 704 790 2 227
taxation
Taxation 4 274 283 636
Profit after 430 507 1 591
taxation
Income from 57 43 119
associates and
joint ventures
Minority interest and 6% (85) (47) (207)
preference shareholders
in Barloworld Limited
Net profit 402 503 1 503
Weighted average number of
ordinary shares
in issue during the period (000)
- basic 195 195 284 195 284
737
- fully diluted 198 202 655 199 755
930
Net profit per share
(cents)
- basic 205 258 -21 770
- fully diluted 202 252 -20 751
Earnings per share
excluding exceptional
items (cents)
- basic 182 233 -22 592
- fully diluted 179 228 -22 579
Headline earnings per
share (cents)
- basic 211 270 -22 622
- fully diluted 207 264 -22 608
Ordinary dividends per share 90 90 275
(cents)
Special centenary dividend per 100
share (cents)
Group balance sheet
31 March 31 March 30
September
2003 2002 2002
R million Notes Reviewed Unaudited Audited
Assets
Non-current assets 12 180 12 826 13 872
Property, plant and 7 012 7 440 7 811
equipment
Other non-current assets 7 855 812 971
Goodwill and intangible 1 419 1 890 1 657
assets
Investment in associates 8 420 392 373
and joint ventures
Finance lease 2 075 2 111 2 675
receivables
Deferred tax assets 399 181 385
Current assets 12 738 12 412 13 225
Inventories 5 325 5 401 5 895
Trade and other 6 055 5 525 5 576
receivables
Cash and cash 1 358 1 486 1 754
equivalents
Total assets 24 918 25 238 27 097
Equity and Liabilities
Capital and reserves
Share capital and 709 682 682
premium
Other reserves 1 921 3 666 3 789
Retained income 6 763 6 227 6 727
Equity portion of 36 17 36
convertible bond
Interest of shareholders of 9 429 10 592 11 234
Barloworld Limited
Minority interest 650 634 791
Interest of all 10 079 11 226 12 025
shareholders
Non-current liabilities 4 215 4 852 5 195
Interest-bearing 2 736 3 220 3 248
Deferred tax liabilities 555 367 617
Convertible bond 207 298 263
Non-interest bearing 717 967 1 067
Current liabilities 10 624 9 160 9 877
Amounts due to bankers and 4 816 3 599 3 677
short-term loans
Taxation 473 400 479
Trade and other payables 4 724 4 745 5 168
Provisions 611 416 553
Total equity and 24 918 25 238 27 097
liabilities
Group cash flow statement
Six months ended Year
ended
31 March 31 March 30
Septemb
er
2003 2002 2002
R million Reviewed Unaudited Audited
Cash flow from operating
activities
Operating cash flows before 1868 1386 3244
movements in working capital
(Increase)/decrease in working (874) (106) 416
capital
Increase in instalment sale and (427) (123) (828)
leasing receivables
Cash generated from operations 567 1 157 2 832
Realised adjustments on financial (203) 36 55
instruments
Finance costs and investment (131) (59) (111)
income
Taxation paid (300) (250) (567)
Cash flow from operations (67) 884 2 209
Dividends paid (711) (449) (649)
Net cash (used in) / from (778) 435 1 560
operating activities
Net cash applied to investing (882) (1 068) (1 793)
activities
Acquisition of subsidiaries and (171) (323) (431)
investments
Buy-back of Barloworld shares (4)
Acquisition of property, plant
and equipment
- rental assets (554) (301) (1 041)
- other (363) (645) (1 281)
Proceeds on disposal of
subsidiaries, investments
and property, plant and equipment 210 201 960
Net cash available from financing 1 540 133 (24)
activities
Ordinary shares issued 27
Increase in interest-bearing 1 513 133 (24)
liabilities
Net decrease in cash and cash (120) (500) (257)
equivalents
Cash and cash equivalents at 1 754 1 781 1 781
beginning of period
Effect of foreign exchange rate (276) 205 230
movements
Cash and cash equivalents at end 1 358 1 486 1 754
of period
Statement of changes in equity
Six months ended Year
ended
31 March 31 March 30
Septemb
er
2003 2002 2002
R million Reviewed Unaudited Audited
Interest of Barloworld Limited
shareholders
Balance at the beginning of the 11 234 9 077 9 061
period
Net movements not recognised (1 647) 1 295 1 160
through the income statement
Buy-back of Barloworld Limited (4)
shares
Barloworld Limited ordinary 27
shares issued
Movement on foreign currency (1 681) 1 344 1 359
translation reserve
Translation reserves realised on (201)
liquidation of offshore
subsidiaries
Other reserve movements 11 (49) 2
Net movements recognised through (158) 220 1 013
the income statement
Net profit for the period 402 503 1 503
Hedge reserve release to income (30)
Reserve released on disposal of (1)
available-for-sale investments
Dividends on ordinary shares (560) (283) (459)
Balance at the end of the period 9 429 10 592 11 234
Group salient features
Six months ended Year ended
31 March 31 March 30
September
2003 2002 2002
Reviewed Unaudited Audited
Number of ordinary shares 196 262 195 284 195 284
in issue (000)
Net asset value per share 4 920 5 633 5 872
including investments at
market value (cents)
Total liabilities to total 141.7 121.5 120.2
shareholders" funds (%)
Total borrowings to total
shareholders" funds
- gross excluding leasing 36.5 31.1 23.3
operations (%)
- gross including leasing 77.0 63.4 59.8
operations (%)
Interest cover (times)
- excluding leasing 3.0 4.5 6.1
operations
- including leasing 2.0 3.1 3.8
operations
Notes
Six months ended Year
ended
31 March 31 March 30
Septemb
er
2003 2002 2002
R million Reviewed Unaudited Audited
1 Operating profit
.
Included in operating profit
are:
Cost of sales 14 666 14 434 28 173
Depreciation 694 657 1 305
Profit on sale of plant and 48 24 77
equipment
2 Fair value adjustments on
. financial instruments
Foreign exchange (losses) /
gains arising from:
Financial instruments designated (14)
as hedging instruments
Forward exchange contracts and (308) 18 30
other financial instruments
Translation of foreign currency (5) 18 39
monetary items
(313) 36 55
3 Finance costs
.
Total finance costs 657 358 724
Less: Leasing interest 359 151 322
classified as cost of sales
Less: Capitalised to property, 1
plant and equipment
298 207 401
4 Taxation
.
Taxation per Income Statement 274 283 636
Prior year taxation (11) (1) 19
Taxation on exceptional items 2 32
Secondary tax on companies (STC) (59) (51) (56)
Taxation on profit before STC 204 233 631
and exceptional items
Profit before exceptional items
658 749 1,858
Dividend income (14) (29) (30)
Profit before exceptional items 644 720 1 828
and dividends received
Effective taxation rate
(excluding exceptional items,
STC,
prior year tax and dividends 31.6% 32.4% 34.5%
received)
5 Net profit excluding exceptional
. items
Net profit attributable to 402 503 1 503
ordinary shareholders
Profit realised on share issue (62) (60)
to minorities in subsidiary
Impairment losses 3 23 131
Profit on disposal of (50) (352)
properties, investments and
subsidiaries
Realisation of translation
reserve on liquidation
of offshore subsidiaries (201)
Attributable exceptional items 10
of associates
Provision for pension fund 100
closure costs
Other 1 (2) 3
Exceptional profits (46) (41) (369)
Taxation on exceptional items (2) (32)
Interest of outside shareholders 1 (5) 54
Net exceptional profits (45) (48) (347)
Net profit excluding exceptional
items
attributable to ordinary 357 455 1 156
shareholders
6 Headline earnings
.
Net profit excluding exceptional 357 455 1 156
items
Provision for pension fund (70)
closure costs net of taxation
Goodwill amortisation 51 60 116
Interest in associate goodwill 3 7 11
amortisation
Loss on sale of plant and 1 6
equipment* 1
412 528 1 214
*Excluding profit / loss on sale
of rental assets.
Reviewed Unaudited Audited
Six months Six months Year ended
ended ended
31 March 2003 31 March 2002 30 September
2002
R Million Market Book Market Book Market Book
value/ value value/ value value/ value
Directo Directo Direct
rs"valu rs"valu ors"va
ation ation luatio
n
7 Other non-current
. assets
Listed 14 14 16 12 17 17
investments
Unlisted 292 292 263 250 299 299
investments
306 306 279 262 316 316
Other non- 549 550 655
current assets
855 812 971
8 Investment in associates and
