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Barloworld Limited - Audited Results For The Year Ended 30 September 2004
Release Date: 17/11/2004 07:29:26 Code(s): BAW BAWP
Barloworld Limited - Audited results for the year ended 30 September 2004
Barloworld Limited
(Registration number 1918/000095/06)
JSE codes: BAW and BAWP
ISIN codes: ZAE000026639 and ZAE000026647
Audited results for the year ended 30 September 2004
Value Based Management delivers strong operational performance
- Operating profits +21% to R2 836 million
- Operating profit margin up to 7.7% (2003: 6.8%)
- Cash generated from operations +21% to R4 251 million
- Headline earnings per share +45% to 857 cents
- Active acquisition and disposal programme continued
- R1.5 billion Avis transaction completed
- Equipment finance book sold for R1.5 billion
- Total dividend + 31% to 380 cents per share
Tony Phillips, CEO of Barloworld, said:
`In 2004 we delivered strong growth in profits, margins and returns.
Barloworld`s five year record of 22% compound annual growth in headline earnings
per share is a testimony to the way the company is managed. Against a background
of only moderately favourable economic conditions in our major markets, this
performance has been achieved by focussing on value creation at every level.
Value Based Management will continue to create benefits for all our
stakeholders. For shareholders, we are well on track to achieve our goal of
doubling the value of the company over the 4 years to 2006.
In 2005 we will continue to focus on growing profits and returns throughout the
business. Supported by similar economic conditions to the past year, we look
forward to being able to report another year of progress.`
17 November 2004
Enquiries
Barloworld Limited: Mark Drewell Tel +27114451204, e-mail invest@barloworld.com
For background information visit www.barloworld.com
Chairman and Chief Executive`s report
The long term strategy is to build our diversified business and to create value
for all stakeholders. We are doing this in three ways:
by improving the quality of our existing operations to generate sustainable
higher profits, margins and returns.
by continuing to evolve and develop new products, services and business
solutions as we expand organically.
by incremental acquisitions which are complementary to our existing operations
and disposals of underperforming or non-core businesses.
Barloworld`s performance in 2004 reflects once again the success of this
strategy. Through an absolute focus on value creation at every level we have now
achieved a five year compound annual growth rate in headline earnings per share
of 22%.
An excellent result in 2004
Operating profits rose 21% as the sustained implementation of Value Based
Management continued to deliver improved margins and returns and the Avis
acquisition contributed in the second half of the year. Headline earnings per
share rose 45% to 857 cents and the total dividend in respect of this year`s
earnings was increased by 31% to 380 cents per share (2003: 290 cents).
We have made good progress this year in improving returns. We use Cash Flow
Return on Investment (CFROI) in real terms as a key performance metric. CFROI
for 2004 rose strongly to 8.9% (2003: 8.1%) compared to our hurdle rate of 8%.
Operating profits in our African operations increased 32% against a 7% revenue
increase as we reaped the benefits of cost control and market leadership.
Particularly noteworthy was the substantial contribution of our cement and lime
business, Pretoria Portland Cement Company Limited (PPC). Strong operating
profit growth before goodwill amortisation was also achieved in coatings and
motor (167% and 237% respectively). The latter benefited from a 100%
contribution from Avis in the second half. Our equipment business substantially
increased its contribution to profits as negative fair value adjustments on
financial instruments declined by R 211 million from the previous year.
The operations outside Africa also performed well. Our Iberian equipment
business continued to be the largest single profit contributor and generated
high returns. Management action to bring underperforming operations to
acceptable returns produced improvements in the industrial distribution and
scientific businesses.
Corporate activity continues to enhance value
During the year under review we acquired 100% of Avis Southern Africa, increased
the stake in PPC to 71.6% from 67.4%, and disposed of the South African
equipment finance book, the Henry Cooke paper business in the UK and a number of
motor dealerships.
New business development to create future profit streams continues throughout
the company and in this context the expansion of our Caterpillar dealership
territory in Russia as well as the start up of our R97 million (Euro12 million)
biomass power plant in Valencia, Spain were pleasing developments.
Black Economic Empowerment (BEE)
In South Africa we continued to make good progress on a broad-based scorecard
approach to BEE. We already have excellent programmes in skills development,
employment equity, enterprise development and social investment. To these we
added a formal preferential procurement policy this year. In the area of equity
ownership, we completed further value adding transactions in the cement,
coatings, motor and steel tube businesses.
A favourable outlook
The future outlook is positive and we are well on track to achieve our medium
term goal of doubling the value of the company in the 4 years to September 2006.
In 2005 we will continue to focus on growing profits and returns in all our
businesses and, supported by modestly favourable economic conditions in the
territories in which we operate, we look forward to being able to report another
year of progress.
WAM Clewlow AJ Phillips
Chairman Chief Executive Officer
Group financial review
Revenues increased by 6% to R36 673 million. Avis contributed to revenues for
six months of the year, however overall growth was again tempered by the
stronger rand.
Operating profit rose by 21% to R2 836 million and profit margins improved in
most areas resulting in the group margin rising to 7.7% (2003: 6.8%).
Included in operating profit is a trading benefit of R152 million (2003: R218
million), mainly in the South African equipment business. This arose primarily
from the sale of inventories at selling prices based on foreign exchange rates
in forward cover contracts, compared to cost of sales which are recorded at
average spot rates at the transaction date.
A sharp drop in the charge for fair value adjustments on financial instruments
to R107 million (2003: R334 million) was mainly due to lower rand appreciation
against the US dollar in the reporting period compared with the previous
financial year.
Finance costs reduced from R531 million to R468 million reflecting a 5% drop in
average South African interest rates year-on-year. The acquisition of Avis
however, resulted in a rise in finance costs in the second half of the year to
R286 million from R 182 million. Interest cover at 5.2 times is above our target
of 4.0 times and well up on last year`s 3.1 times.
Income from investments declined to R259 million (2003: R274 million) mainly due
to lower interest received.
Taxation increased by 48% to R891 million, with the effective taxation rate
(excluding exceptional items, Secondary Tax on Companies, prior year taxation
and goodwill) reducing to 30.8% (2003: 31.7%).
Income from associates and joint ventures decreased by R7 million to R107
million. Improved contributions from the Motor joint ventures were offset by
the reduced contribution from Avis following its consolidation as a subsidiary
from April 2004.
The minority interest in profits rose by 22%, reflecting the strong performance
of PPC.
Exceptional profits of R40 million (2003: R81 million) included gains on
disposal of properties, investments and subsidiaries of R108 million and the
reversal of a
R100 million provision for the closure of a South African pension fund. These
were partly offset by asset impairments of R108 million.
Headline earnings per share grew strongly by 45% to 857 cents.
Total assets grew by R4 086 million to R27 842 million. This increase is
largely attributable to the acquisition of Avis Southern Africa Limited which
was effective on 29 March 2004.
Total interest-bearing borrowings increased by only R1 567 million to R7 710
million, despite consolidating Avis` debt of R2 025 million at the acquisition
date and incurring a further R1 085 million to fund the cash portion of the
purchase consideration. This was achieved mainly as a result of strong operating
cash generation and the sale of the equipment finance book for R1 478 million in
September 2004.
In light of the Avis transaction the gearing ratios appropriate for the
different components of the group`s operations were reassessed. For this
purpose three broad segments have been defined, namely Trading (manufacturing
and dealership operations), 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 30 21 598 300 65
September 2004
The group remains comfortably geared with a debt to equity ratio of 65% (2003:
59%) which has reduced from 95% at the half year. The individual segments
remain within or marginally below the target ranges.
Cash generated from operations increased by 21% to R4 251 million. Working
capital was well contained increasing by only R206 million in the year (2003:
R275 million). Net cash applied to investing activities of R2 124 million
includes the cash portion of the Avis acquisition and the proceeds from the
disposal of the equipment finance book. A further R324 million was spent on
increasing our shareholding in PPC by 4.2% to 71.6% and R190 million in
acquiring a number of businesses in logistics, coatings and industrial
distribution.
Cash raised from financing activities includes R1.5 billion from the inaugural
domestic bond issued in July 2004 which has also lengthened the maturity profile
of the group`s borrowings.
CB Thomson,
Finance Director
Segmental reviews
The segment result includes operating profit (net of goodwill amortisation) and
fair value adjustments on financial instruments. In the case of the leasing
businesses, segment result is net of interest paid. Income from associates,
which includes our share of earnings from joint ventures, is shown at the profit
after tax level.
Net assets comprise total assets less non-interest bearing liabilities. Cash is
excluded as well as current and deferred tax assets and liabilities.
The commentaries in the segmental reviews reflect performance in local
currencies. Accordingly any apparent inconsistencies between the analysis and
the numbers are a consequence of exchange rate changes from 2003 to 2004.
Equipment
R million Revenue Segment result Net assets
Year ended 30 Sept Year ended 30 30 Sept
Sept
2004 2003 2004 2003 2004 2003
- Europe 5 117 5 383 474 512 1 925 1 887
- Southern Africa 4 939 5 318 406 237 1 830 1 506
Trading 10 056 10 701 880 749 3 755 3 393
- Southern Africa 180 207 28 43 1 375
Leasing 180 207 28 43 1 375
10 236 10 908 908 792 3 755 4 768
Associate income 3
This segment principally comprises our Caterpillar dealer business.
Trading activity levels in Europe remained high against a background of the
continuing public sector infrastructure investment programme in Spain. This
programme ensured strong demand for our Caterpillar products and services and a
firm order book. In Portugal, the business also recovered as public sector
spending rose. Operating margins in Europe were slightly lower at 9.3% (2003:
9.5%) due to the higher proportion of new and used equipment sales in the
revenue mix compared to parts and service. The Siberian business, which
continued its satisfactory development, grew revenues by 50% to R207 million
(US$31 million) and was again profitable.
Southern Africa revenues declined due to the lower average selling price of US$
based imports. Substantially higher profits were achieved in part due to lower
fair value adjustments on financial instruments. Demand from the mining sector
was mixed with the strength of the rand leading to the deferral of a number of
new projects. Market share rose through the continued expansion of our
Maintenance and Repair Contract offering and successes in developing the
underground mining market where we have had a historically low market share. By
contrast increased construction, handling and agricultural activity resulted in
significantly higher unit delivery volumes. The South African equipment finance
business was sold in September 2004.
Industrial distribution
R million Revenue Segment result Net assets
Year ended 30 Year ended 30 30 Sept
Sept Sept
2004 2003 2004 2003 2004 2003
- North America 4 300 3 135 29 10 928 1 112
- Europe 1 888 2 052 74 79 335 320
Trading 6 188 5 187 103 89 1 263 1 432
- North America 99 74 (6) 6 813 633
- Europe 386 383 55 40 1 853 1 637
Leasing 485 457 49 46 2 666 2 270
6 673 5 644 152 135 3 929 3 702
Associate income (1) (3)
The US economy showed signs of improvement and our handling business saw a 6%
growth in Hyster unit sales. Demand in the transport sector, a core component of
the US economy, accelerated. This resulted in growth of 145% in unit sales in
our Freightliner business, primarily into the lower margin large fleet
businesses.
In Europe lift truck deliveries grew 5.2% largely due to the addition of the
Dutch dealership acquired at the beginning of the year. The Barloworld Handling
UK market share in counter-balance trucks was static. The new Hyster product
range which will be launched midway through 2005 is expected to increase
competitiveness. Our warehouse truck market share grew steadily to 5.8% and is a
strong potential growth area.
The handling operations in the United Kingdom and United States are strongly
supported by our leasing business. Assets grew in both regions due to success in
the Smart Partnership long-term maintenance business. Financing of Freightliner
trucks has been discontinued.
Motor
R million Revenue Segment result Net assets
Year ended 30 Year ended 30 30 Sept
Sept Sept
2004 2003 2004 2003 2004 2003
- Southern Africa 7 501 6 954 100 65 561 995
- Australia 1 331 1 393 (2) 17 337 379
Trading 8 832 8 347 98 82 898 1 374
- Southern Africa 295 75 51 10 1 190 8
Leasing 295 75 51 10 1 190 8
- Southern Africa 369 59 1 956
- Europe 246 40 1 119
Car Rental 615 99 3 075
9 742 8 422 248 92 5 163 1 382
Associate income 59 76
The Southern African motor retail business performed well, growing unit sales by
19% to over 60 000 units and increasing profitability despite the sale of a
number of dealerships in pursuit of our strategy of focusing on fewer, bigger,
better outlets. New unit sales from dealerships increased 24% to 31 962 units.
The Australian dealerships had a disappointing year with unit sales decreasing
3% to 9 042 units as our main brands lost market share to competitors which were
more aligned to the rapid growth in demand for SUV`s (Sports Utility Vehicles).
The leasing result represents the contribution by Avis Fleet Services since its
acquisition at end March 2004. During the year the fleet under maintenance-
finance grew 3% to
15 567 units. As the business increased its focus on services, the fleet under
maintenance contracts grew 16% to 18 699 units. Profitability decreased as
financing margins were negatively affected by the lower interest rates, and
margins on used cars declined.
Avis Rent a Car, which was consolidated from end March 2004, grew its market
shares with rental days growing 5% over the year to 4.6 million. In southern
Africa, the rand`s strength caused a decrease in international tourism and
consequently rental days only increased by 2%. In Scandinavia, Avis rental days
increased 10%, while a further 2% growth in rental days was achieved through the
acquisition of the Budget license in Norway as from March this year. Solid gains
in vehicle utilization and people productivity, together with price increases in
line with inflation and significantly lower financing costs assisted a
satisfactory growth in profitability.
Associate income includes Avis for the first half of the year. Other associates
performed strongly, particularly the KwaZulu Natal NMI-DSM empowerment joint
venture.
Cement & lime
R million Revenue Segment result Net assets
Year ended 30 Year ended 30 30 Sept
Sept Sept
2004 2003 2004 2003 2004 2003
Southern Africa 3 440 3 016 1 171 873 2 145 2 103
Associate income 11 6
Southern African cement sales volumes grew 14% with the rate of growth slowing
slightly in the second half of the year. Volume growth was evident throughout
the region, with the coastal belt from Cape Town to Port Elizabeth reflecting
the highest levels. This strong growth more than compensated for the lower
export volumes which were constrained by the strength of the rand. Cement demand
in Zimbabwe remained low, with the country continuing to struggle with high
inflation and foreign currency shortages. Lime volumes declined by 2%.
An excellent result was achieved as operating profits increased by 35%. The
cement margin improved on higher volumes, continued production efficiencies and
tight cost control. The lime and packaging margins remained substantially in
line with the prior year.
As a consequence of market demand and the high utilisation of our existing
plant, detailed project planning to increase capacity in the inland region of
South Africa was brought forward and construction is anticipated to commence in
2006.
Coatings
R million Revenue Segment result Net assets
Year ended 30 Year ended 30 30 Sept
Sept Sept
2004 2003 2004 2003 2004 2003
Southern Africa 1 374 1 225 212 122 409 376
Europe 7
Australia & Asia 1 034 1 028 22 33 266 243
2 408 2 253 234 155 675 626
Associate income 27 30
The division experienced a record year with the operating margin increasing to
10% and profit up by 51%.
Good southern African profits were driven by growth in Plascon`s premium brands.
There were further volume improvements in automotive coatings and continuing
efficiency gains throughout the business.
The performance of the Australian business was adversely affected by non-
recurring costs and difficult trading conditions in the third quarter of the
year.
Scientific
R million Revenue Segment result Net assets
Year ended 30 Year ended 30 30 Sept
Sept Sept
2004 2003 2004 2003 2004 2003
Europe 928 1 167 30 46 708 834
North America 536 466 (4) (34) 307 356
Asia 159 135 5 76 88
1 623 1 768 31 12 1 091 1 278
The laboratory business experienced mixed trading conditions and profits were
adversely affected by distributor de-stocking and raw material cost increases
(for example polystyrene prices rose 60%).
A R52 million (US$8 million) improvement in Melles Griot`s profitability
resulted from improved demand in international markets and the benefits of a
lower cost base flowing from previous restructuring.
Steel tube
R million Revenue Segment result Net assets
Year ended 30 Year ended 30 30 Sept
Sept Sept
2004 2003 2004 2003 2004 2003
Southern Africa 1 739 1 736 52 38 481 507
Associate income 8 5
Improved second half demand in the South African market was driven by increased
international steel prices which more than offset continuing low levels of
demand from the mining and export sectors. Export margins were adversely
affected by the strength of the rand.
Corporate and Other
R million Revenue Segment result Net assets
Year ended 30 Year ended 30 30 Sept
Sept Sept
2004 2003 2004 2003 2004 2003
Southern Africa 312 273 (53) (87) 1 495 1 110
Europe 500 583 (14) (2) 134 116
812 856 (67) (89) 1 629 1 226
Corporate consists primarily of the corporate offices in South Africa and the
United Kingdom. In Southern Africa net corporate office costs were lower,
while in Europe profits were impacted by an additional contribution of R70
million (GBP6 million) for the funding of pension fund deficits. This was
partly offset by favourable fair value adjustments. Net assets increased mainly
due to goodwill arising from the purchase of additional shares in PPC.
Other operations include the developing logistics businesses in Spain and South
Africa. Profits in the logistics business in Spain increased. The southern
African business, which was also profitable, was successful in securing a number
of important long-term contracts and continued to acquire new businesses to
expand the logistics offering.
Dividend declaration for the year ended 30 September 2004: Dividend Number 151
Notice is hereby given that the following dividend has been declared in respect
of the year ended 30 September 2004: Number 151 (final dividend) of 265 cents
per ordinary share (2003:200 cents per ordinary share)
In compliance with the requirements of the JSE Securities Exchange South Africa,
the following dates are applicable:
Last day to trade cum dividend Friday, 7 January 2005
Shares trade ex dividend Monday, 10 January 2005
Record date Friday, 14 January 2005
Payment date Monday, 17 January 2005
Share certificates may not be dematerialised or rematerialised between Monday,
10 January 2005 and Friday, 14 January 2005, both days inclusive.
On behalf of the Board, M J Barnett, Secretary
Directors
Independent: WAM Clewlow (Chairman), MJ Levett, DB Ntsebeza, LA Tager, G
Rodriquez de Castro de los Rios***, EP Theron, RC Tomkinson* Non-executive:
SB Pfeiffer**
Executive: AJ Phillips (Chief Executive)*, PJ Blackbeard, MD Coward, LS Day*, BP
Diamond, JE Gomersall*, AJ Lamprecht, PM Surgey, CB Thomson
*British **American ***Spanish
Group income statement (audited)
R million Year ended 30 Sept % change
2004 2003
Revenue 36 673 34 603 6
Operating profit 2 836 2 342 21
Fair value adjustments on financial instruments (107) (334)
Finance costs (468) (531)
Income from investments 259 274
Profit before exceptional items 2 520 1 751 44
Exceptional items (note 1) 40 81
Profit before taxation 2 560 1 832
Taxation 891 604
Profit after taxation 1 669 1 228 36
Income from associates and joint ventures 107 114
Net profit 1 776 1 342 32
Attributable to: 259 212
Minority shareholders
Barloworld Limited shareholders 1 517 1 130
Net profit per share (cents)
- basic 761 576
- fully diluted 743 565
Group balance sheet (audited)
R million 30 September
2004 2003
Assets
Non-current assets 13 946 12 209
Property, plant and equipment 7 728 6 672
Other non-current assets 1 096 699
Goodwill and intangible assets 2 674 1 580
Investment in associates and joint ventures 319 535
Finance lease receivables 1 631 2 267
Deferred taxation assets 498 456
Current assets 13 896 11 547
Inventories 5 134 5 010
Vehicle rental fleet 2 006
Trade and other receivables 5 266 4 924
Taxation 47 66
Cash and cash equivalents 1 443 1 547
Total assets 27 842 23 756
Equity and Liabilities
Capital and reserves
Share capital and premium 1 209 712
Other reserves 1 957 1 893
Retained income 7 988 7 087
Equity portion of convertible bond 36
Interest of shareholders of Barloworld Limited 11 154 9 728
Minority interest 721 708
Interest of all shareholders 11 875 10 436
Non-current liabilities 6 889 4 870
Interest-bearing 4 871 3 404
Deferred taxation liabilities 803 621
Non-interest bearing 1 215 845
Current liabilities 9 078 8 450
Amounts due to bankers and short-term loans 2 839 2 559
Convertible bond 180
Taxation 468 461
Trade and other payables 5 272 4 746
Provisions 499 504
Total equity and liabilities 27 842 23 756
Group cash flow statement (audited)
Year ended 30
R million September
2004 2003
Cash flow from operating activities
Operating cash flows before movements in 4 457 3 798
working capital
Increase in working capital (206) (275)
Cash generated from operations 4 251 3 523
Realised adjustments on financial instruments (52) (320)
Finance costs and investment income (172) (218)
Taxation paid (874) (566)
Cash flow from operations 3 153 2 419
Dividends paid (including outside (871) (940)
shareholders)
Net cash retained from operating activities 2 282 1 479
Net cash applied to investing activities (2 124) (1 812)
Acquisition of subsidiaries and investments (1 555) (294)
Acquisition of property, plant and equipment (899) (843)
Investment in fleet and equipment rental (1 425) (1 039)
assets
Net investment in car hire vehicles (138)
Investment in instalment sale and leasing (608) (1 103)
receivables
Proceeds on disposal of lease receivable book 1 478 881
Proceeds on disposal of subsidiaries,
investments and property, plant and equipment 1 023 586
Net cash inflow / (outflow) before financing 158 (333)
activities
Net cash flows from financing activities (258) 487
Ordinary shares issued 13 30
Buy-back of Barloworld Limited shares (271) (4)
(Decrease) / increase in interest-bearing 461
liabilities
Net (decrease) / increase in cash and cash (100) 154
equivalents
Cash and cash equivalents at beginning of year 1 547 1 754
Effect of foreign exchange rate movements on (4) (361)
cash balance
Cash and cash equivalents at end of year 1 443 1 547
Other group salient features
Year ended 30 Sept
2004 2003
Number of ordinary shares in issue (000) 203 802 196 339
Net asset value per share including investments at fair
value (cents) 5 576 5 122
Total borrowings to total shareholders` funds (%)
- Trading 21.0 29.1
- Group 64.9 58.9
Interest cover (times)
- Trading 7.3 4.1
- Group 5.2 3.1
Return on net assets (%)
- Trading 22.2 18.6
- Group 17.1 14.8
Cash flow return on investment-CFROI(R) (%) 8.9 8.1
Statement of changes in equity
R million Year ended 30
Sept
Interest of shareholders 2004 2003
Balance at the beginning of the year 10 436 12 025
(restated)
Net movements not recognised through the 534 (1
income statement 994)
Buy-back of Barloworld Limited shares (4)
Barloworld Limited ordinary shares 467 30
issued
Movement on foreign currency (158) (2
translation reserve 072)
Translation reserve realised on 57
liquidation of offshore subsidiary
Translation effect of deconsolidation 157
of Porthold
Other reserve movements 11 52
Net movements recognised through the income 905 405
statement
Net profit for the year 1776 1342
Reserve released on disposal of available-for- 3
sale investments
Dividends paid on ordinary shares (871) (940)
(note 2)
Interest of shareholders at end of 11 875 10 436
year
Reconciliation of net profit to headline earnings
R million Year ended 30 Sept %
chang
e
2004 2003
Net profit 1 776 1 342 32
Minority Shareholders (259) (212)
Profit on disposal of properties, investments and (108) (123)
subsidiaries
Impairment of assets 108 45
Goodwill amortisation 148 113
Realisation of translation reserves on liquidation 57
of offshore subsidiary
Interest in associate goodwill amortisation 6 9
Profit on sale of plant and equipment excluding (15) (6)
rental assets
Other exceptional items 4
Taxation on exceptional items (7) (11)
Attributable exceptional items of associates 3
(impairment of assets)
Interest of outside shareholders in exceptional 1
items
Headline earnings 1 709 1 162 47
Weighted average number of ordinary shares in
issue during the year (000)
- basic
199 375 196 028
- fully diluted
204 212 202 460
Headline earnings per
share (cents)
- basic 857 593 45
- fully diluted 837 581
Notes
30 Sept
R Million 2004 2003
1. Exceptional items
Profit on disposal of properties, investments 108 123
and subsidiaries
Impairment of assets (108) (45)
Realisation of translation reserve on (57)
liquidation of offshore subsidiary
Reversal of pension fund closure provision 100
Attributable exceptional items of associates (3) 3
(impairment losses)
Other
Gross exceptional profits 40 81
Taxation (23) 11
Interest of outside shareholders (1)
Net exceptional profits 17 91
2. Dividends paid on ordinary shares
Final dividend paid on 12 January 2004: 431 399
200 cents per share (2003: 185 cents per
share)
Centenary dividend paid on 20 January 2003: 215
100 cents per share
Interim dividend paid on 14 June 2004: 255 195
115 cents per share (2003: 90 cents per
share)
686 809
Dividend attributable to the Barloworld (60) (73)
treasury shares
Paid to Barloworld Limited shareholders 626 736
Paid to minorities 245 204
871 940
3. Contingent liabilities
Guarantees and claims 277 284
4. Accounting policies and disclosures
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) on a basis consistent with
the prior year except for the adoption of the following new or revised
Standards:
IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations
IAS 1 - Presentation of Financial Statements
IAS 2 - Inventories
IAS 10 - Events after the Balance Sheet Date
IAS 17 - Leases
IAS 21 - The effect of Changes in Foreign Exchange Rates
IAS 24 - Related Party Disclosures
IAS 28 - Investments in Associates
IAS 31 - Interest in Joint Ventures
IAS 32 - Financial Instruments: Disclosure and Presentation
IAS 33 - Earnings per Share
IAS 39 - Financial Instruments: Recognition and Measurement
IAS 40 - Investment Property
In terms of the revised IAS 21 foreign currency goodwill must be translated at
exchange rates ruling at the balance sheet date. The group`s previous accounting
policy was to translate foreign currency goodwill at rates ruling on the
transaction date. The impact of this change was an increase in the carrying
value of intangible assets of R116 million as at 30 September 2003 and an
increase in the goodwill amortisation charge of R9 million for 2004 and R11
million for 2003. There is no effect on headline earnings. The impact of
implementing the other new or revised Standards was not material.
In terms of IAS 14 - Segment Reporting, the following changes were implemented
in the current year:
- the geographical segment `Rest of Africa` has fallen below the 10% threshold
in relation to Revenue, Segment result and Segment net assets and has therefore
been combined under the `Southern Africa` geographic segment.
- cash balances are excluded from Segment assets as the related interest
received does not form part of Segment result.
- the Spanish finance business, which is an internal funding entity, has been
reclassified as part of Trading within the equipment segment.
In terms of Circular 3/2004 issued by the South African Institute of Chartered
Accountants, goodwill amortisation has been included in operating profit.
In the cash flow statement, investment in lease receivables is shown under
investing activities and the buy back of Barloworld shares under financing
activities.
In all cases, comparative information has been restated on a consistent basis.
5. Deconsolidation of Portland Holdings Limited (Porthold)
The results of Porthold, a wholly owned Zimbabwean subsidiary of PPC have, in
terms of the exclusion contained in IAS 27 - Consolidated and Separate Financial
Statements, not been consolidated into the Group results as at 30 September
2004.
6. Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the year ended 30 September 2004. A copy of their
unqualified report is available for inspection at the company`s registered
office.
Addresses
Registered office and business Transfer secretaries
address Ultra Registrars (Pty) Ltd
Barloworld Limited Physical address:
180 Katherine Street 5th Floor,
PO Box 782248 11 Diagonal Street
Sandton Johannesburg
2146, South Africa 2000, South Africa
Ph: +27 11 445 1000
E mail: invest@barloworld.com Postal address:
United Kingdom registrar P O Box 4844
Lloyds TSB Registrars Johannesburg
The Causeway, Worthing 2000, South Africa
West Sussex, BN99 6DA, England
Ph: +44 190 350 2541 Ph: +27 11 834 2266
E mail: info@ultrareg.co.za
About Barloworld
Barloworld is a diversified industrial company founded in 1902. We have
operations in thirty-three countries around the world and approximately half of
our twenty five thousand people are in South Africa. We offer our customers
business solutions backed by leading industrial brands, supported by service,
relationships and attention to detail. These include both the sale of products
and services and rental and fleet service options .
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 leading brands. Our principals include Caterpillar
(machines and engines), NACCO (Hyster lift trucks), DaimlerChrysler
(Freightliner trucks) as well as many of the world`s other 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 the Avis licensee
for southern Africa, Sweden and Norway and are also developing logistics
businesses in southern Africa and Europe.
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
customers.
Segmental Summary
30 September 2004
Consolidated Eliminations
R millions 2004 2003 2004 2003
BUSINESS AND GEOGRAPHICAL
SEGMENTS*
Revenue
Southern Africa 20,149 18,804
Europe 9,065 9,568
North America 4,935 3,675
Australia and 2,524 2,556
Asia
36,673 34,603
Inter-segment revenue ** - - (1,578) (1,247)
36,673 34,603 (1,578) (1,247)
Segment result
Operating profit before
goodwill amortisation
Southern Africa 2,240 1,700
Europe 664 682
North America 49 16
Australia and 31 57
Asia
2,984 2,455
Goodwill amortisation (148) (113)
Operating profit 2,836 2,342
Fair value adjustments on (107) (334)
financial instruments
Total segment result 2,729 2,008
By geographical region
Southern Africa 2,026 1,301
Europe 659 675
North America 19 (18)
Australia and 25 50
Asia
Total segment result 2,729 2,008
Income from associates and 107 114
joint ventures
Segment result including 2,836 2,122
associate income
Finance costs (468) (531)
Income from investments 259 274
Exceptional items 40 81
2,667 1,946
Taxation (891) (604)
Net profit for the year 1,776 1,342
Cash flows per segment
Cash flows from operating 2,282 1,479
activities
Cash flows from investing (2,124) (1,812)
activities
Cash flows from financing (258) 487
activities
Non cash expenses per
segment
Depreciation 1,535 1,226
Amortisation of intangibles 69 61
excluding goodwill
Impairment losses 108 45
*The geographical segments are determined by the location of assets.
** Inter segment revenue is priced on an arms` length basis.
Assets
Property, plant and 7,728 6,672
equipment
Other non-current assets 1,096 699
Goodwill and intangible 2,674 1,580
assets
Investment in associates 319 535
and joint ventures
Long term finance lease 1,631 2,267
receivables
Inventories 5,134 5,010
Vehicle rental fleet and 2,006 -
held for sale
Trade and other receivables 5,266 4,924
Segment assets 25,854 21,687
By geographical region
Southern Africa 13,635 10,874
Europe 8,758 7,302
North America 2,462 2,510
Australia and 999 1,001
Asia
Total segment assets 25,854 21,687
Taxation 47 66
Deferred tax assets 498 456
Cash and cash equivalents 1,443 1,547
Consolidated total assets 27,842 23,756
Liabilities
Long term non-interest 1,215 845
bearing
Trade and other payables 5,771 5,250
including provisions
Segment liabilities 6,986 6,095
By geographical region
Southern Africa 3,568 2,894
Europe 2,684 2,501
North America 414 409
Australia and 320 291
Asia
Total segment liabilities 6,986 6,095
Interest-bearing 7,710 6,143
liabilities
Deferred tax liabilities 803 621
Taxation 468 461
Consolidated total 15,967 13,320
liabilities
Capital additions
Southern Africa 1,900 1,184
Europe 1,078 420
North America 301 185
Australia and 77 55
Asia
3,356 1,844
*The geographical segments are determined by the location of assets.
Barloworld Ltd
30 September 2004
Equipment
Trading Leasing
R millions 2004 2003 2004 2003
BUSINESS AND GEOGRAPHICAL SEGMENTS*
Revenue
Southern Africa 4,939 5,318 180 207
Europe 5,117 5,383 - -
North America - - - -
Australia and Asia
