| Wed 12 May 2004, 8:48 | | RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004 |
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BARLOWORLD LIMITED - REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 MARCH 2004
Barloworld Limited
(Registration number 1918/000095/06)
JSE codes: BAW and BAWP
ISIN codes: ZAE000026639 and ZAE000026647
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004
Strong first half performance underpins prospects for the full year
- Improved global trading conditions
- Operating margin rises to 6.8% (2003: 6.3%) as Value Based Management
continues to deliver
- Operating profits up 6% to R1 184 million
- Strong operating cash flows of R1 472 million (2003: R994 million)
- Active acquisition and disposals programme continues
- R1.5 billion Avis acquisition completed
- R1.4 billion equipment finance book disposal announced
- Headline earnings rise 77% to 374 cents per share (2003: 211 cents)
- reduced interest costs
- lower negative fair value adjustments on financial instruments R57 million
(2003: R313 million)
- Dividend increased 28% to 115 cents per share (2003: 90 cents)
Tony Phillips, CEO of Barloworld, said:
"Our strong first half operating result has been driven by margin improvements
as we continue to reap the benefits of our Value Based Management approach to
doing business. It has been underpinned by lower finance costs and fair value
adjustments relating to financial instruments. We are continuing to grow the
company organically and through acquisition. The outlook for the full year is
excellent and we look forward to reporting further progress as we take advantage
of the improved global economic environment."
12 May 2004
Enquiries:
Barloworld Limited:
Mark Drewell
Tel +27 11 445 1204,
e-mail invest@barloworld.com
For background information visit www.barloworld.com
Chairman and Chief Executive"s Report
A Strong Performance
During the first six months of 2004, Barloworld produced good results in
relevant trading currencies.
On a constant currency basis, worldwide revenues grew 8%. Our businesses outside
South Africa accounted for 52% of total revenue (2003: 52%). Despite marginally
lower rand revenues compared with the first half of last year, operating profit
rose 6% as we continued to improve the quality of our business through Value
Based Management. The operating margin increased from 6.3% for the six months
to March 2003 to 6.8% for the period under review.
Lower interest costs and fair value adjustments on financial instruments,
combined with the reversal of the pension fund closure provision from the 2002
financial year resulted in the solid operating performance translating into
headline earnings per share growth of 77% to 374 cents (2003: 211 cents). The
interim dividend was increased by 28% to 115 cents per share.
The strength of cement demand in South Africa resulted in substantially higher
profit contributions from Cement & Lime, while Coatings benefited from a
continuing improvement in margins. Growth in Equipment profits in South Africa
was due primarily to lower negative fair value adjustments on financial
instruments. The South African motor business performed well.
The Spanish equipment business maintained its strong performance and there was a
pleasing turnaround in Portugal. Improved conditions in the United States
economy were seen in higher dollar revenues in both Scientific and Industrial
Distribution however the full benefits will only be seen in the second half of
the year. Market conditions in Australia remained favourable although the
results of our Motor operations there continued to be impacted by dealership
renovations.
Acquisitions And Disposals To Improve Value Creation Continue
We have continued our strategy of incremental acquisitions to add geographic
territory and extend our total solutions, product and service offerings in the
things we do well.
The largest acquisition was the completion of the transaction to acquire 100% of
Avis Southern Africa Limited (Avis). In addition to the payment of R1 085
million in cash, approximately 5.6 million Barloworld shares were issued to Avis
shareholders. The effects are fully consolidated on the balance sheet at the
half year and integration of Avis with our existing motor operations is going
well.
The sale of our South African equipment finance book to Wesbank for
approximately R1.4 billion is under way. Subject to regulatory approvals, it is
expected to be completed before the end of the current financial year.
Black Economic Empowerment (BEE)
A key to South Africa"s future is that all South Africans participate fully in
every aspect of the economy. Our focus is to ensure that whatever we do in this
area creates long term sustainable value for all our stakeholders. As part of
this systematic structured approach, in the past six months we have entrenched
our position as the leaders in BEE in the motor industry through further equity
transactions involving our BMW and DaimlerChrysler dealerships.
Board And Management Changes
As previously announced, in January 2004 Russell Chambers retired from the board
and Gonzalo Rodrigues de Castro de los Rios was appointed as an independent
director. Mr de Castro is a former chief executive of the Madrid stock exchange
and will bring another valuable international perspective to the work of the
board. Peter Maybury who has served the organisation with distinction over 20
years, retired from the board on 31 March 2004 following his retirement as an
executive of the company. On 10 May 2004 John Blackbeard, CEO designate of
Barloworld Scientific and currently Chief Operating Officer of PPC was appointed
to the board. In accordance with international best practice in corporate
governance Warren Clewlow, the Chairman of Barloworld Limited has resigned from
the audit committee.
Excellent Prospects For The Full Year
In South Africa demand for cement, coatings and motor vehicles remains strong
and while we do not anticipate the same rate of growth, we expect further
progress across all these sectors in the second half of the year. The prospect
of continued high real interest rates remains a concern in an economy that is
still only growing slowly. Trading conditions are expected to remain positive in
the United Kingdom and Australia while the US recovery is expected to continue.
In Spain some uncertainty has been created by the terrorist attacks and
subsequent change of government.
A key uncertainty for the short term remains currency volatility. A strong rand
will continue to affect earnings through lower export volumes and/or margins,
the translation impact on offshore profits and fair value adjustments on
financial instruments. This remains difficult to forecast.
Against this background and the fact that Avis"s results and cash flows will be
consolidated from 1 April 2004, we anticipate an even stronger operating
performance in the second half. We are well positioned to take advantage of the
improvement in global trading conditions. Subject to a degree of exchange rate
stability we look forward to being able to report a better performance at the
headline earnings per share level for the full financial year compared with
2003.
The medium term outlook for Barloworld remains positive. We are continually
improving the quality of existing operations to generate sustainable higher
margins and profits, and strong cash flows. These are the foundation on which we
will implement our growth strategy to expand both organically and through
incremental acquisitions as we work to create a growing global organisation
producing value for all stakeholders.
WAM Clewlow AJ Phillips
Chairman Chief Executive Officer
GROUP FINANCIAL REVIEW
Revenues declined by 2% during the period to R17.5 billion mainly due to the
impact of the stronger rand on the translation of offshore revenues.
Operating profit improved by 6% to R1 184 million as a result of a continuing
improvement in margins and tight control of operating expenses. Included in
operating profit is a trading benefit of approximately R84 million (2003: R71
million) arising from the sale of inventories at selling prices based on rates
in forward cover contracts, whereas cost of sales is recorded at average spot
rates at the date of the transaction.
Fair value adjustments on financial instruments resulted in a charge to income
of R57 million (2003: R313 million). The considerable decline was due to a less
steep appreciation in the rand against the dollar in comparison to the six month
period to March 2003.
Finance costs decreased to R182 million (2003: R298 million) due to lower South
African interest rates and reduced average net borrowing levels.
Exceptional profits of R159 million include profits on the disposal of
properties, investments and subsidiaries (R64 million) and a write back of a
provision raised in 2002 for the closure of a South African pension fund (R100
million).
The taxation charge of R428 million is in line with the higher profits. The
effective tax rate, excluding STC, prior year taxation and taxation on
exceptional items increased slightly to 32.9% (2003: 31.6%).
Headline earnings per share increased by 77% to 374 cents. This is mainly
attributable to improved operating margins, lower fair value adjustments, lower
local interest rates and the reversal of the pension fund closure provision.
The balance sheet reflects the Avis acquisition which was effective on 29 March
2004, and is therefore fully consolidated at the half year. Total assets
employed in the business grew by R5 089 million in the past six months which is
attributable to the inclusion of the Avis assets and goodwill arising on the
acquisition.
Avis interest bearing debt of R2 028 million together with the R1 085 million
cash portion of the purchase consideration for the additional shareholding
contributed to borrowings increasing by R 4 084 million since September 2003.
In light of the Avis transaction we have reassessed the gearing ratios
appropriate for the different components of the group"s operations. For this
purpose three broad segments have been defined, namely Trading (manufacturing
and dealership businesses), Leasing (long term leasing solutions including fleet
services) and Car Rental. The target and actual debt to equity ratios for these
segments are as follows:
Total debt to equity (%) Trading Leasing Car Rental Total group
Target range 20 - 40 600 - 800 200 - 300
Ratio at 31 March 2004* 34 614 264 95
* The R1 085 million Avis acquisition debt has been allocated between Avis
Rent A Car and Fleet Services on a pro-forma basis in proportion to equity
The total debt to equity ratio for the group will depend on the relative mix of
assets between these three segments. Under the assumption that each segment is
geared at the mid-point of the target range as at 31 March 2004, the total debt
to equity ratio for the group would amount to approximately 95% which is in line
with the actual ratio as at this date. The recently announced sale of our
equipment finance book is anticipated to reduce the group"s total gearing ratio
by approximately 13 percentage points.
Total interest cover for the group improved considerably to 4.6 times (2003: 2.4
times) as did interest cover for the Trading segment at 6.6 times (2003: 3.0
times). These ratios have not been impacted by the Avis acquisition due to the
effective date being 29 March 2004.
Cash generated from operations was strong at R1 472 million (2003: R994
million). Net cash applied to investing activities of R2 255 million includes
the cash portion of the Avis acquisition and an amount of R189 million to
increase the group"s holding in Pretoria Portland Cement Company Limited (PPC)
to 70.1% from 67.4%. In addition, we acquired a logistics business ZA Trans for
R26 million, an additional Freightliner dealership, Texarkana Truck Centre for
US$8.2 million (R57 million) and Geveke Intern Transport B.V. for Euro4.9
million (R40 million). Proceeds on disposal of investments amounting to R184
million included the sale of three South African motor dealerships, the Melles
Griot operation in Ely, Cambridgeshire and our Henry Cooke paper mill in the
United Kingdom. The group has cash and cash equivalents at the end of the period
amounting to R1 637 million.
CB Thomson
Finance Director
Dividend Declaration
Notice is hereby given that an interim ordinary dividend (No. 150) of 115 cents
per ordinary share (2003: 90 cents per ordinary share) has been declared by the
directors for the half-year ended 31 March 2004. In compliance with the
requirements of the electronic settlement system of the JSE Securities Exchange
South Africa, the following dates are applicable:
Last day to trade "Cum" dividend Friday, 4 June 2004
Shares trade "Ex" dividend Monday, 7 June 2004
Record date Friday, 11 June 2004
Payment date Monday, 14 June 2004
Share certificates may not be dematerialised or rematerialised between Monday, 7
June 2004 and Friday, 11 June 2004, both days inclusive.
On behalf of the Board,
M J Barnett,
Secretary
SEGMENTAL REVIEW
The Segment result disclosed in the segmental review includes operating profit
net of goodwill amortisation and fair value adjustments on financial instruments
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 commentaries in the segmental reviews reflect performance in the relevant
local currencies.
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.
Equipment
Revenue Segment result Net assets
R million 6 months Year 6 months Year
ended ended ended ended
31 31 30 31 31 30 31 Mar 30
Mar Mar Sep Mar Mar Sep 04 Sep
04 03 03 04 03 03 03
Europe 2 564 2 900 5 303 248 262 505 1 552 1 601
South Africa 1 654 1 784 3 817 73 (148) 67 1 579 1 410
Rest of Africa 583 785 1 501 55 80 170 255 145
Trading 4 801 5 469 10 621 376 194 742 3 386 3 156
South Africa 92 91 207 20 7 43 1 445 1 375
Europe 35 53 80 3 9 7 221 304
Leasing 127 144 287 23 16 50 1 666 1 679
4 928 5 613 10 908 399 210 792 5 052 4 835
Share of associate income
after tax 2
The business in this segment arises mainly from our long standing relationship
with Caterpillar Inc. as their dealer-partner in 17 countries.
Activity levels in Europe remained high against a background of the ongoing
public sector infrastructure investment programme in Spain and a market recovery
in Portugal. Revenues grew 9% and operating margins were maintained at 9%
despite a volume trend towards smaller units. The Siberian business continued
its satisfactory development.
The southern African business (South Africa and the Rest of Africa) achieved a
solid result in a positive trading environment. Market share gains were made in
all sectors and the strong operating performance was enhanced by lower negative
fair value adjustments on financial instruments of R77 million (2003: R 298
million).
The South African equipment finance business, which is in the process of being
sold to Wesbank, performed well and the book grew from R1 377 million in
September 2003 to R1 438 million at 31 March 2004.
The division had a strong order book of R1 410 million at 31 March 2004 (30
September 2003: R1 113 million) and is expected to show an improved performance
for the full year compared with 2003.
Industrial Distribution
Revenue Segment result Net assets
R million 6 months Year 6 months Year
ended ended ended ended
31 31 30 31 Mar 31 30 31 Mar 30
Mar Mar Sep 04 Mar Sep 04 Sep
04 03 03 03 03 03
Europe 959 784 2 052 31 35 79 380 356
North America 2 038 1 632 3 135 14 8 10 1 047 1 029
Trading 2 997 2 416 5 187 45 43 89 1 427 1 385
Europe 201 223 383 24 20 40 1 789 1 660
North America 49 35 74 (12) 5 6 736 668
Leasing 250 258 457 12 25 46 2 525 2 328
3 247 2 674 5 644 57 68 135 3 952 3 713
Share of associate income
after tax (2) (2) (3)
In Europe, revenues improved in quiet trading conditions in the UK and Belgium
due to the acquisition of the Hyster dealership for the Netherlands on 1 October
2003. Profits were maintained and the order book at the end of the period was
strong.
In the US, the lift truck market showed a marked improvement and whilst unit
deliveries were in line with last year, the order book grew 46% compared with
the first half of 2003 to 984 units. Operational highlights included the winning
of the contracts to supply the new Hyundai and Mercedes Benz auto plants in
Alabama. The class 8 truck market continued its recovery and Barloworld
Freightliner delivered 1 919 units (2003: 649 units) however most of the sales
were to corporate fleets at low margins. The order book has grown from 480
units at 30 September 2003 to 2 751 units at 31 March 2004.
The European leasing business performed well however the US business made a
lower profit contribution due to the write off of US$2.9 million in doubtful
debts on pure finance loans written in 2002. Pure finance lending will be phased
out over the next year. The book grew from GBP207 million in September 2003 to
GBP231 million at 31 March 2004.
During the second half of the year improved margins on higher business volumes
should result in a higher contribution for the full year compared with 2003.
Motor
Revenue Segment result Net assets
R million 6 months Year 6 months Year
ended ended ended ended
31 31 30 31 31 30 Sep 31 Mar 30
Mar Mar Sep Mar Mar 03 04 Sep
04 03 03 04 03 03
South Africa 3 598 3 621 6 652 47 50 72 698 1 008
Rest of Africa 169 154 302 (5) 0 (7) 36 36
Australia 698 703 1 393 0 12 17 394 412
Trading 4 465 4 478 8 347 42 62 82 1 128 1 456
South Africa - 75 75 - 10 10 2 937 8
Rest of Africa - - - - - - 356 -
Europe - - - - - - 992 -
Car rental and
leasing* 75 75 10 10 4 285 8
4 465 4 553 8 422 42 72 92 5 413 1 464
Share of associate income
after tax 47 38 76
* Car rental and leasing operations" net assets reflect the consolidation of the
Avis balance sheet as at 31 March 2004, while the proportionate share of profit
is shown under share of associate income.
The South African operations did well in a strong market. The underlying
performance is stronger than the reported numbers suggest as a number of
dealerships have either been sold or transferred into empowerment joint ventures
where their results are now reported as a share of associate income after tax.
Namibia and Botswana experienced a poor trading period and made a loss.
In Australia, revenues and profits were adversely affected by lower demand for
the Mercedes brand, the residual effect of last year"s re-building programmes at
our largest dealership, Barloworld Holden/VW and strong competition to the
Holden brand from new models in other brands.
Avis produced a solid performance and retained market share in all its
operations. It"s Fleet Services division improved profitability in the six
months from an increased range of value added services. The Rent A Car southern
African operations grew rental days by 3% over the comparable six month period
resulting in a marginal improvement in profitability. Sound pricing improvements
and significantly lower fleet holding costs were achieved in the second quarter.
The Scandinavian operations increased rental days by 10% over the comparative
six month period, however the strength of the rand resulted in a reduced
profitability from this region.
The outlook for the second half of the year is positive in all territories and a
full contribution from 100% of Avis Southern Africa should result in a
significant increase in operating profits.
Cement & Lime
Revenue Segment result Net assets
R million 6 months Year 6 months Year
ended ended ended ended
31 31 30 31 Mar 31 30 Sep 31 Mar 30
Mar Mar Sep 04 Mar 03 04 Sep
04 03 03 03 03
South Africa 1 512 1 280 2 776 494 370 845 2 227 2
687
Rest of Africa 118 120 240 22 21 28 417 320
1 630 1 400 3 016 516 391 873 2 644 3
007
Share of associate income
after tax 5 1 6
The strong performance in the first half is largely attributable to the
continued growth in cement demand arising from improved levels of
infrastructural spending and buoyant housing construction prompted by the lower
interest rates. Domestic cement sales for the half-year increased by 15% over
the comparable period last year with Gauteng, the Western, Southern and Eastern
Cape being the regions showing the greatest volume growth. The Coega Harbour
project and associated development has been a major boost to construction
activity in the Eastern Cape and sales in the Port Elizabeth area for the month
of March 2004 were at an all time record.
This growth combined with further cost savings and efficiency improvements
resulted in a 32% increase in profits compared with the first half of 2003.
Demand for lime was lower than last year.
The Botswana operations performed satisfactorily. Although not consolidated for
the period under review, Portland Holdings Limited in Zimbabwe reported a small
operating profit.
Increased operating profits are anticipated for the full year however the rate
of growth is unlikely to match that achieved in the first half.
Coatings
Revenue Segment result Net assets
R million 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
04 03 03 04 03 03 04 03
South Africa 670 1 104 105 58 107 422 359
684
Rest of Africa 59 59 121 6 5 15 25 26
Australia & Asia 540 569 1 028 21 18 33 276 262
Europe - - - - - - - 7
1 269 1 312 2 253 132 81 155 723 654
Share of associate income
after tax 13 5 30
The trend of improved results continued as the business benefited from growth in
demand for decorative coatings. On a comparable basis revenue grew by more than
3%. This combined with further efficiency gains throughout the business and in
particular in South Africa, saw operating profits increase by 63%. The
Australian results reflect an improved retail performance and increased
operating efficiencies. The rest of Africa produced results in line with
expectations and sustained comparable levels of returns. The automotive coatings
division also performed well. The outlook for the second half remains positive
but the level of the strong showing of the first half will not be matched.
Notwithstanding this, the business is expected to show substantially improved
results for the full year compared with 2003.
Scientific
Revenue Segment result Net assets
R million 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
04 03 03 04 03 3 04 03
Europe 521 622 1 167 8 18 46 751 784
North America 206 243 466 0 (8) (34) 300 370
Asia 69 72 135 2 1 0 98 100
796 937 1 768 10 11 12 1 149 1 254
In Europe, the Laboratory business experienced weak first quarter demand
combined with some one-off restructuring and other costs. The second quarter
showed a strong recovery which should continue through the second half. Melles
Griot"s loss making UK operation in Ely, Cambridgeshire was sold.
In the United States, demand for Melles Griot"s laser and photonics products
increased steadily through the first half and the business showed a return to
break even, reflecting the benefits of the extensive restructuring carried out
over the previous two years.
The Scientific businesses are expected to make a substantially higher profit
contribution for the full year driven by the sustained upturn in demand for
Melles Griot"s products and the improved conditions in the Laboratory market.
Steel Tube
Revenue Segment result Net assets
R million 6 months Year 6 months Year
ended ended ended ended
31 Mar 31 Mar 30 Sep 31 31 30 Sep 31 30
04 03 03 Mar Mar 03 Mar Sep
04 03 04 03
South Africa 819 937 1 736 17 31 38 527 514
Share of associate income
after tax 3 3 5
Demand for steel tube from the mining industry and exporters, particularly for
capital projects was depressed. This combined with the adverse impact of the
stronger rand on export profit margins resulted in lower profits than the
comparative period last year.
The outlook for the business is considerably better in the second half due to a
recent sharp rise in international steel prices and a worldwide shortage of
steel products.
Corporate Operations and Other
Revenue Segment result Net assets
R million 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
04 03 03 04 03 03 04 03
South Africa 110 174 234 (21) (43) (72) 1 015 232
Rest of Africa 24 18 39 (1) (2) (4) 209 273
Europe 244 297 583 (24) (12) (2) 1 013 1 077
378 489 856 (46) (57) (78) 2 237 1 582
The corporate services operations are primarily the corporate offices in South
Africa and the United Kingdom, and include shared services such as treasury,
risk management and information technology.
In South Africa the segment result benefited from a reduction in fair value
adjustments on financial instruments. Net assets increased mainly due to
goodwill arising from the recent purchase of additional shares in PPC, the
reversal of the pension fund closure provision and movements in cash balances.
In the United Kingdom a charge of GBP3 million (R35 million) was taken to income
in respect of the funding and amortisation of pension fund deficits.
Other operations include the Logistics businesses in Spain and South Africa
which continued to develop satisfactorily.
Group income statement
Six months ended Year
ended
31 March 31 March % 30 Sept
2004 2003 Change 2003
R million Notes Reviewed Reviewed
Audited
Revenue 17 532 17 915 -2 34 603
Operating profit 1 1 184 1 120 6 2 353
Fair value adjustments on 2
financial instruments (57) (313) (334)
Finance costs 3 (182) (298) (531)
Income from investments 103 149 274
Profit before exceptional
items 1 048 658 59 1 762
Exceptional items 4 159 46 81
Profit before taxation 1 207 704 1 843
Taxation 5 (428) (274) (604)
Profit after taxation 779 430 81 1 239
Income from associates and
joint ventures 66 57 114
Minority interest and 6%
preference shareholders in
Barloworld Limited (101) (85) (212)
Net profit 744 402 85 1 141
Reconciliation of net
profit to headline
earnings
Net profit 744 402 1 141
Profit on disposal of
properties, investments
and subsidiaries (64) (50) (123)
Impairment losses 5 3 45
Goodwill amortisation 51 51 102
Interest in associate 6 3 9
goodwill amortisation
(Profit)/loss on sale of
plant and equipment
excluding rental assets (3) 1 (6)
Other exceptional items 1 4
Taxation on exceptional
items (3) (11)
Interest of outside
shareholders in
exceptional items 1 1
Headline earnings 736 412 1 162
Weighted average number of
ordinary shares in issue
during the period (000)
- basic 196 628 195 737 196 028
- fully diluted 203 073 198 930 202 460
Net profit per share
(cents)
- basic 378 205 84 582
- fully diluted 369 202 83 571
Headline earnings per
share (cents)
- basic 374 211 77 593
- fully diluted 365 207 76 581
Ordinary dividends per
share (cents) 115 90 28 290
Group balance sheet
31 March 31 March 30 Sept
2004 2003 2003
R million Notes Reviewed Reviewed Audited
Assets
Non-current assets 14 203 12 180 12 093
Property, plant and equipment 7 632 7 012 6 672
Other non-current assets 6 1 059 855 699
Goodwill and intangible assets 2 499 1 419 1 464
Investment in associates and 7 185 420 535
joint ventures
Finance lease receivables 2 311 2 075 2 267
Deferred tax assets 517 399 456
Current assets 14 526 12 738 11 547
Inventories 5 085 5 325 5 010
Vehicle rental fleet 1 881
Trade and other receivables 5 923 6 055 4 990
Cash and cash equivalents 1 637 1 358 1 547
Total assets 28 729 24 918 23 640
Equity and Liabilities
Capital and reserves
Share capital and premium 1 091 709 712
Other reserves 1 616 1 921 1 727
Retained income 7 444 6 763 7 137
Equity portion of convertible bond 30 36 36
Interest of shareholders of
Barloworld Limited 10 181 9 429 9 612
Minority interest 637 650 708
Interest of all shareholders 10 818 10 079 10 320
Non-current liabilities 5 323 4 215 4 870
Interest-bearing 3 750 2 736 3 404
Deferred tax liabilities 675 555 621
Convertible bond 207
Non-interest bearing 898 717 845
Current liabilities 12 588 10 624 8 450
Amounts due to bankers and
short-term loans 6 377 4 816 2 559
Convertible bond 100 180
Taxation 507 473 461
Trade and other payables 4 942 4 724 4 746
Provisions 662 611 504
Total equity and liabilities 28 729 24 918 23 640
Group cash flow statement
Six months ended Year
ended
31 March 31 March 30 Sept
2004 2003 2003
R million Reviewed Reviewed Audited
Cash flow from operating activities
Operating cash flows before movements 1 976 1 868 3 798
in working capital
Increase in working capital (504) (874) (275)
Cash generated from operations 1 472 994 3 523
Realised fair value adjustments on (15) (203) (320)
financial instruments
Finance costs and investment income (106) (131) (218)
Taxation paid (448) (300) (566)
Cash flow from operations 903 360 2 419
Dividends paid (596) (711) (940)
Net cash from (used in) operating 307 (351) 1 479
activities
Net cash applied to investing (2 255) (1 305) (1 812)
activities
Acquisition of subsidiaries and (1 525) (171) (294)
investments
Acquisition of property, plant and (291) (363) (843)
equipment
Investment in rental assets (315) (554) (1 039)
Investment in instalment sale and (308) (427) (1 103)
leasing receivables
Proceeds on disposal of subsidiaries,
investments and property, plant and
equipment 184 210 1 467
Net cash outflow before financing (1 948) (1 656) ( 333)
activities
Net cash available from financing 2 066 1 536 487
activities
Ordinary shares issued, net of buyback 10 23 26
Increase in interest-bearing 2 056 1 513 461
liabilities
Net increase / (decrease) in cash and 118 ( 120) 154
cash equivalents
Cash and cash equivalents at beginning 1 547 1 754 1 754
of period
Effect of foreign exchange rate (28) (276) (361)
movements
Cash and cash equivalents at end of 1 637 1 358 1 547
period
Statement of changes in equity
Six months ended Year
ended
31 March 31 March 30 Sept
2004 2003 2003
R million Reviewed Reviewed Audited
Interest of Barloworld Limited
shareholders
Balance at the beginning of the period 9 612 11 234 11 234
Net movements not recognised through 219 (1 647) (2 030)
the income statement
Buy-back of Barloworld Limited shares (4) (4)
Barloworld Limited ordinary shares 382 27 30
issued
Movement on foreign currency (221) (1 681) (2 072)
translation reserve
Other reserve movements 58 11 16
Net movements recognised through the 350 (158) 408
income statement
Net profit for the period 744 402 1 141
Reserve released on disposal of 3
investments
Dividends on ordinary shares (394) (560) (736)
Balance at the end of the period 10 181 9 429 9 612
Group salient features
Six months ended Year
ended
31 March 31 March 30 Sept
2004 2003 2003
Reviewed Reviewed Audited
Number of ordinary shares in issue, net 202 274 196 262 196 339
of buyback (000)
Net asset value per share including 5 123 4 920 5 063
investments at market value (cents)
Total liabilities to total
shareholders" funds (%) 159.3 141.7 123.1
Total borrowings to total shareholders"
funds (%)
- Trading segment 34.4 36.5 26.7
- Total group 94.5 77.0 59.5
Interest cover (times)
- Trading segment 6.6 3.0 4.1
- Total group 4.6 2.4 3.1
Notes
Six months ended Year
ended
31 March 31 March 30 Sept
2004 2003 2003
R million Reviewed Reviewed Audited
1. Operating profit
Included in operating profit are:
Cost of sales 13 891 14 666 27 264
Depreciation 614 694 1 226
Goodwill amortisation 51 51 102
Charge in respect of UK Pension 35 - -
Fund deficit
Profit/(loss) on sale of plant and 9 48 (19)
equipment
2. Fair value adjustments on financial
instruments
Losses on foreign currency (62) (308) (352)
contracts and other financial
instruments
Translation gains/(losses) on 5 (5) 18
foreign currency monetary items
(57) (313) (334)
3. Finance costs
Total finance cost 292 455 826
Less: Leasing interest classified 110 157 295
as cost of sales
182 298 531
4. Exceptional items
Profit on disposal of properties, 64 50 123
investments and subsidiaries
Impairment losses (5) (3) (45)
Reversal of provision for closure 100
of pension fund
Other (1) 3
Exceptional profits 159 46 81
Taxation on exceptional items (27) 11
Interest of outside shareholders (1) (1)
Net exceptional profits 132 45 91
5. Taxation
Taxation per Income Statement 428 274 604
Prior year taxation (11) 30
Taxation on exceptional items (27) 11
Secondary tax on companies (STC) (60) (59) (58)
Taxation on profit before STC and 341 204 587
exceptional items
Profit before exceptional items 1,048 658 1,762
Dividend income (12) (14) (30)
Profit before exceptional items and 1 036 644 1 732
dividends received
Effective taxation rate (excluding 32.9% 31.6% 33.9%
exceptional items, STC, prior year
tax and dividends received (%)
Reviewed Reviewed Audited
Six months ended Six months Year ended
ended
31-Mar-04 31-Mar-03 30 Sept 2003
Market Book Market Book Market Book
value/ value value/ value value/ value
Directors Directors Directors
valuation valuation valuation
R Million
6 Other non-current
assets
Listed investments 8 8 14 14 8 8
Unlisted
investments 294 294 292 292 295 295
Investment in
Portland Holdings
Limited 322 322 - - - -
624 624 306 306 303 303
7 Investment in
associates and
joint ventures
Listed associates 421 242 595 323
Unlisted
associates 377 196 316 168 393 208
377 196 737 410 988 531
Loans and advances -11 10 4
185 420 535
Six months ended Year ended
31-Mar 31-Mar 30-Sep
2004 2003 2003
Reviewed Reviewed Audited
8. Capital expenditure
606 917 1 882
Rental assets 315 554 1 039
Other 291 363 843
9. Commitments
Capital commitments to be incurred 578 584 442
Contracted 379 239 181
Approved 199 345 261
Operating lease commitments 1 503 1 403 1 363
10. Contingent liabilities
Guarantees and claims 382 166 284
11. Post Balance Sheet events
The Barloworld Equipment Finance debtors book is being sold for
approximately R1.4 billion to Wesbank, a division of First Rand Bank
Limited. The effective date of the transaction will be the 1st day of
the month following approval from the Competition Tribunal. The final
consideration will be based on the net asset value of finance
contracts on the effective date. Thereafter, Barloworld Equipment
will receive a share in the profits flowing from both the existing
finance contracts being sold to WesBank as well as any future new
business flows. Barloworld will not be required to inject any capital
into the alliance.
12. Basis of preparation
The interim financial results have been prepared in accordance with
IAS34 and AC127 (Interim Financial Reporting). The accounting
policies used to prepare the interim financial statements are
consistent with those used in the 2003 annual financial statements
and are in accordance with International Financial Reporting
Standards and South African Statements of Generally Accepted
Accounting Practice.
13. Comparative information
In terms of Circular 3/2004 issued by the South African Institute of
Chartered Accountants, goodwill amortisation has been included in
operating profit and comparatives are stated on a consistent basis.
In the cash flow statement, investment in lease receivables is shown
under investing activities and the buy back of Barloworld shares
under financing activities. Comparatives have been reclassified on a
consistent basis.
14. Deconsolidation of Portland Holdings Limited Porthold)
The results of Porthold, a wholly owned Zimbabwean subsidiary of
Pretoria Portland Cement Company Limited have not been consolidated
in the Group results as at 31 March 2004 in terms of the exclusions
contained in IAS27 (Consolidated Financial Statements and Accounting
for Investments in Subsidiaries).
15. Auditors review
Deloitte & Touche has reviewed these interim results. The unqualified
review opinion is available for inspection at the company"s
registered office.
About Barloworld
Barloworld is an international industrial brand management company founded in
1902. We have operations in thirty-three countries around the world and
approximately half of our 24 000 people are in South Africa. We offer our global
customer base business solutions backed by leading industrial brands, supported
by service, relationships and attention to detail. These include both rental
options and the sale of products and services. We operate under a philosophy of
Value Based Management which focuses on creating sustainable value for all our
stakeholders.
We market and distribute leading international brands on behalf of principals as
well as offering our own market-leading brands. Our principals include
Caterpillar (machines and engines), Hyster (lift trucks), Freightliner (trucks),
and many of the world"s leading motor vehicle brands. We manufacture, market and
distribute our own brand products and services under brand names such as PPC
Surebuild (cement), Plascon, Taubmans, Bristol and White Knight (coatings),
Robor (steel tube), Melles Griot (photonics) and Bibby Sterilin (laboratory
equipment). We are also developing logistics businesses in southern Africa and
Europe and are the Avis licensee for southern Africa, Sweden and Norway.
Striving for market leadership, the Barloworld team thrives on taking on
difficult business challenges. We do things differently and we use our diversity
to deliver value to our stakeholders.
Addresses
Registered office and business address: Transfer secretaries
Barloworld Limited Ultra Registrars (Pty) Ltd
180 Katherine Street
P O Box 782248 Physical address:
Sandton 2146, 5th Floor,
South Africa 11 Diagonal Street
Ph: +27 11 445 1000 Johannesburg
E mail: invest@barloworld.com 2000, South Africa
United Kingdom registrar Postal address:
Lloyds TSB Registrars P O Box 4844
The Causeway, Worthing Johannesburg
West Sussex, 2000, South Africa
BN99 6DA, England
Ph: +44 190 350 2541 Ph: +27 11 834 2266
E mail: info@ultrareg.co.za
Directors
Non-executive:
WAM Clewlow (Chairman) MJ Levett SB Pfeiffer**
Independent:
DB Ntsebeza LA Tager G Rodriquez de Castro de los Rios*** EP Theron RC
Tomkinson*
Executive:
AJ Phillips (Chief Executive)* PJ Blackbeard MD Coward LS Day* BP Diamond
JE Gomersall* AJ Lamprecht PM Surgey CB Thomson
*British **American ***Spanish
Segmental summary
R million Revenue Segment result
H1 04 H1 03 FY 03 H1 04 H1 03 FY 03
South Africa 8 455 8 646 16 601 735 335 1 110
Rest of Africa 953 1 136 2 203 77 104 202
Europe 4 524 4 879 9 568 290 332 675
North America 2 293 1 910 3 675 2 5 ( 18)
Australia & Asia 1 307 1 344 2 556 23 31 50
17 532 17 915 34 603 1 127 807 2 019
Revenue Operating Profit before
goodwill amortisation
6 months ended Year 6 months ended Year
ended ended
R million 31 31 30 31 31 30
Mar Mar Sep Mar Mar Sep
04 03 03 04 03 03
Equipment 4 928 5 613 10 908 476 509 1 125
Industrial 3 247 2 674 5 644 69 80 159
distribution
Motor 4 465 4 553 8 422 53 94 128
Cement & lime 1 630 1 400 3 016 517 377 866
Coatings 1 269 1 312 2 253 137 87 164
Scientific 796 937 1 768 21 23 34
Steel tube 819 937 1 736 2 10 10
Corporate operations 378 489 856 (40) (9) (31)
and other
17 532 17 915 34 603 1 235 1 171 2 455
Goodwill amortisation Fair value adjustments
on financial
instruments
6 months ended Year 6 months ended Year
ended ended
R million 31 31 30 31 31 30
Mar Mar Sep Mar Mar Sep
04 03 03 04 03 03
Equipment (1) (1) (77) (298) (332)
Industrial (12) (12) (24)
distribution
Motor (10) (9) (20) (1) (13) (16)
Cement & lime (1) 14 7
Coatings (1) (1) (1) (4) ( 5) (8)
Scientific (10) (12) (23) (1) 1
Steel tube 15 21 28
Corporate operations (18) (16) (33) 12 (32) (14)
and other
(51) (51) (102) (57) (313) (334)
Segment result Net assets
6 months ended Year
ended
R million 31 Mar 31 Mar 30 Sep 31 Mar 30 Sep
04 03 03 04 03
Equipment 399 210 792 5 052 4 835
Industrial
distribution 57 68 135 3 952 3 713
Motor 42 72 92 5 413 1 464
Cement & lime 516 391 873 2 644 3 007
Coatings 132 81 155 723 654
Scientific 10 11 12 1 149 1 254
Steel tube 17 31 38 527 514
Corporate operations (46) (57) (78) 2 237 1 582
and other
1 127 807 2 019 21 697 17 023
Date: 12/05/2004 07:00:50 AM Produced by the JSE SENS Department
