We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Barloworld Ld | LSE:BWO | London | Ordinary Share | ZAE000026639 | ORD R0.05 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 590.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMBWO
RNS Number : 6336O
Barloworld Limited
21 May 2018
Barloworld Limited
Reviewed interim results for the six months ended 31 March 2018
About Barloworld
Barloworld is a distributor of leading international brands providing integrated rental, fleet management, product support and logistics solutions. The core divisions of the group comprise Equipment (earthmoving equipment and power systems), Automotive (car rental, motor retail, fleet services, used vehicles and disposal solutions) and Logistics (logistics management, supply chain optimisation and waste management). We offer flexible, value adding, innovative business solutions to our customers backed by leading global brands. The brands we represent on behalf of our principals include Caterpillar, Avis, Budget, Audi, BMW, Ford, Jaguar Land Rover, Mazda, Mercedes-Benz, Toyota, Volkswagen and others.
Barloworld has a proven track record of long-term relationships with global principals and customers. We have the ability to develop and grow businesses in multiple geographies including challenging territories with high growth prospects. One of our core competencies is an ability to leverage systems and best practices across our chosen business segments. As an organisation we are committed to sustainable development and playing a leading role in empowerment and transformation. The company was founded in 1902 and currently has operations in over 20 countries around the world with 83% of just over 18 000 employees in South Africa.
Corporate information
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Income tax registration number 9000/051/71/5)
(JSE share code: BAW) (JSE ISIN: ZAE000026639)
(Share code: BAWP) (JSE ISIN: ZAE000026647)
(Namibian Stock Exchange share code: BWL)
("Barloworld" or "the company")
Registered office and business address
Barloworld Limited, 180 Katherine Street
PO Box 782248, Sandton, 2146, South Africa
Tel: +27 11 445 1000
Email: invest@barloworld.com
Directors
Non-executive: DB Ntsebeza (Chairman), NP Dongwana,
FNO Edozien^, HH Hickey, NP Mnxasana, MD Lynch-Bell*,
SS Mkhabela, SS Ntsaluba, P Schmid, OI Shongwe
Executive: DM Sewela (Chief Executive), DG Wilson
^Nigerian *UK
Group company secretary
Lerato Manaka
Enquiries
Barloworld Limited: Lethiwe Hlatshwayo
Tel: +27 11 445 1000 E-mail: invest@barloworld.com
Brunswick: Iris Sibanda, Tel: +27 (11) 502 7421
E-mail: isibanda@brunswick.co.za
Sponsor
J.P. Morgan Equities South Africa (Pty) Ltd
Salient features
-- Disposal of Equipment Iberia progressing according to plan -- Logistics turnaround: improved positive returns -- Group return on invested capital at 11.0% (1H'17: 9.2%) -- Operating profit (from continuing operations) up 6% to R2.0 billion (1H'17: R1. 8 billion) -- Total headline earnings per share up 32% to 481 cents (1H'17: 365 cents) -- Return on equity (from continuing operations) at 9.7%(1H'17: 9.0%) -- Interim dividend per share of 145 cents up 16%(1H'17: 125 cents)
-- Headline earnings per share (from continuing operations) up 14% to 457 cents (1H'17: 400 cents)
Dominic Sewela, CE of Barloworld, said:
"The group produced a much improved result for the six months ended 31 March 2018 despite challenging trading conditions in some areas. We continue to drive focus on addressing underperformance across the business and in line with that, on 25 April 2018 we announced the disposal of the Equipment Iberia business which is expected to be concluded by 2 July 2018 with the sale price representing a premium to net asset value.
We continue to evaluate high return opportunities aligned to our capability in emerging markets and steady progress is being made on reviewing potential growth areas for the group with active searches in both the local and targeted international markets."
21 May 2018
Chief executive's report
Economic overview
Despite a weaker first quarter, the global economy remains on track to show solid growth for 2018 in both developed as well as emerging markets. Increased geopolitical risks following military actions in Syria together with the current wave of protectionism could however negatively impact this recovery.
The outlook for the South African economy has improved since the appointment of President Ramaphosa as evidenced by rising confidence levels. GDP growth of up to 2.0% is currently forecast for 2018. The decision by Moody's to retain South Africa's investment grade ratings has further reduced the risks of the negative economic consequences that a downgrade would have precipitated.
For the six months ended 31 March 2018, the group produced headline earnings per share (HEPS) from continuing operations of 457 cents per share which was 57 cents per share (14.3%) up on the 400 cents last year.
Total HEPS (including discontinued operations) of 481 cents per share showed 116 cents or 32% improvement on the 365 cents earned in the prior year.
An interim dividend of 145 cents per share was declared (1H'17: 125 cents).
Operational review
Health and Safety
Tragically, there were two work-related fatalities in the period (Equipment Russia, December 2017; and Automotive, March 2018). Our condolences go out to the bereaved families and friends; and Barloworld continues to support the families at this time. Investigations into both incidents were conducted and management continues to enhance safety awareness and practices with the aim of strengthening safety in the workplace.
Equipment
Equipment southern Africa
Equipment southern Africa delivered good operating performance in the first half of FY2018 driven by positive global commodity price movements and a pick-up in mining activity.
Revenue to March of R8 670 million increased by R456 million (5.6%) compared to the prior year driven by higher mining machine sales in South Africa, Mozambique and Zambia.
Operating profit to date of R734 million was R21 million (2.9%) ahead of last year while the operating margin decreased to 8.5% (1H'17: 8.7%) due to the increase in mining machines in the sales mix and a stronger Rand.
Income from associates and joint ventures which mainly relates to Bartrac, our joint venture in the Katanga province of the DRC, increased by R72 million to R107 million supported by increased mining activity in that region.
Equipment Russia
Equipment Russia has continued to benefit from greenfield and brownfield mining projects, as well as a recovery in commodity prices, particularly in the coal sector, and produced record US$ revenue and operating profit for the first six months of FY2018. Revenue for the six months to March
of US$296.5 million was US$129 million (77%) ahead of last year supported by strong growth in both prime product as well as aftermarket sales.
Mining unit sales in the first half increased by US$112 million and included a number of unit deliveries to Polyus Gold and NordGold.
Operating profit to March of US$25.0 million exceeded the prior year by US$5 million (26%). The operating margin of 8.2% was below the prior year due to the increase in machines in the overall sales mix.
Automotive and Logistics
Automotive
The Automotive division produced solid results despite challenging market conditions. Revenue for the six months of R15.4 billion was 5.8% below last year as a result of the BMW and GM dealership closures and disposals during the course of last year.
Operating profit to date of R883 million was R20 million (2.3%) up on last year. The operating margin of 5.7% was well ahead of the 5.3% achieved last year.
Car Rental
Revenue to March of R3.4 billion increased by R137 million (4.2%) compared to 2017. The business managed to increase both billed days and average rate per day. Operating profit of R301 million showed a 1.3% improvement on last year.
Fleet utilisation for the period of 76% was in line with the prior year.
Fleet Services
Revenue of R1.7 billion was 2.3% ahead of last year and operating profit increased by R16 million to R308 million (5.5%) mainly as a result of higher used vehicle sales.
Motor Trading
Revenue for the first six months of R10.2 billion decreased by R1.1 billion (9.9%) compared to the prior year mainly as a result of the closures and disposals last year. Both new and used vehicle sales were down on the prior year with all premium brands under pressure.
Operating profit to March of R274 million was in line with last year with operating margin improving from 2.4% to 2.7%.
In February we acquired the remaining 48.1% shares in Salvage Management and Disposal.
Logistics
In Logistics the turnaround initiatives implemented towards the end of 2017 are bearing fruit with operating profits, operating margins and overall return metrics all significantly up on the FY2017 first half results.
Year to date revenue of R2 989 million decreased by 6.6% compared to the prior year. This is mainly due to the combination of a subdued economy driving less than optimal activity levels within contracts as well as a rationalised customer portfolio. Revenue in the Transport segment was 8.3% up on 2017.
Operating profit of R99 million was significantly ahead of the R51 million generated last year. The operational and overhead cost savings initiatives initiated in 2017 more than offset the R12.5 million restructure costs incurred in the period.
The disposal of the Middle East business is progressing.
Directorate
In line with a structured board nomination process for Barloworld Limited, Ms Nomavuso Mnxasana was appointed as an independent non-executive director with effect from 6 October 2017.
We would like to congratulate Ms Sibongile Mkhabela who was awarded the National Order of Luthuli in silver in recognition of her contribution to the well-being of children, social justice and her role in the 1976 youth uprising.
Funding
Net debt increased by R3.8 billion from September 2017 to R9.6 billion in March 2018, mainly as a result of the absorption of working capital in Equipment southern Africa and Automotive. The build-up of inventories underpins the forecast increase in mining unit deliveries in the second half. Net debt levels are therefore expected to decrease by September 2018 as a result of reduced working capital and the initial proceeds on the disposal of Equipment Iberia of approximately R2.1 billion.
Human Capital, Diversity and Sustainable Development
Our group headcount shows a decrease compared to last year. This is in line with our strategy, and bears witness to the 'fix and optimise' projects carried out during the period under review.
From a Diversity and Inclusion perspective, indications are that we are moving in the right direction, even as we admit that we still have some way to go to achieve our bold targets.
Progress on photovoltaic installations during the period contributed towards our sustainability objectives, which include a renewable energy target.
Corporate Strategy
The group continues to work on all four areas identified in the Corporate Strategy.
Fix - The disposal of Equipment Iberia is on track for completion before the end of the financial year. Legal agreements were signed on 24 April 2018 and the transaction should close on 2 July 2018. Approval from the Spanish and Portuguese Competition Authorities and the approval from the group's off-shore funders are conditions precedent to closing.
The turnaround within the Logistics business is delivering in line with expectations. The exit of the Middle East Logistics operations is progressing and the expectation is to sell this business within the next 12 months. All options remain under consideration as we assess the performance and fit of the individual parts of the South African business.
Optimise - Equipment Southern Africa is implementing an operational transformation programme that will ensure that the business is value creating throughout the cycle, while Motor Retail continues to look closely at costs and dealership portfolio while actively considering both acquisitions and selected disposals. The group is currently evaluating various opportunities to optimise its capital allocation.
Grow - Steady progress is being made on reviewing opportunities for the group with active searches in both the local and targeted international markets.
Active Shareholder Model - The rollout of the new approach, Managing for Value, centred on careful management of the group's resources is going well. The process will better inform choices around strategic alternatives; resource allocation; strategic planning and budgeting; and execution and monitoring. Good progress has been made on the disposal of Barlow Park with a 1 April 2019 scheduled handover of the vacated site.
Outlook
Recent Caterpillar Inc. results indicate an improvement in global mining aftermarket and rebuild activity and they currently project the number of mining trucks produced in their factories to double in 2018. The Equipment southern Africa firm order book at March 2018 has increased to R1.9 billion compared to the R1.3 billion at September 2017 on the back of improved demand in mining and construction.
The improving global economy and current favourable commodity prices have resulted in improved mining output in our region. This has increased demand from both mining companies and contract miners for replacement machines and to a lesser extent machines for expansion projects. Higher machine utilisation levels in turn are driving strong after sales demand. The Mining Charter is currently under review and it is hoped that broad consensus can be achieved to ensure the long-term sustainability of South Africa's mining industry and to unlock new mining projects.
Despite the recent surge in oil prices, the outlook for Angola remains clouded by the slump in oil production. The availability of US Dollars remains a challenge to normal business operations in that country.
In the DRC the new Mining Code signed into law on 10 March 2018 is likely to impact new mining projects following the removal of the stability clause which had provided some regulatory certainty to mining investors in that country.
Equipment southern Africa firm orders at March of R2.9 billion were in line with the September 17 book (including the Mota Engil transaction) with approximately R2.2 billion relating to mining and contract mining machines.
The Russian economy is forecast to grow by close to 2% in 2018 supported by higher prevailing oil prices.
The tightening of US sanctions against Russia in early April has increased the risk of doing business in Russia. These new sanctions added seven high profile Russian businessmen and their companies to the Office of Foreign Assets Control sanctions list. These sanctions could in particular impact the Russian aluminium producer Rusal.
The Russian firm order book at the end of March of US$132.1 million included mining orders of US$100 million scheduled for delivery in the next six months. Total major projects currently under discussion stood at US$187 million and we remain positive about achieving a strong second half.
Car rental industry volumes will remain subdued with positive growth expected from the inbound tourism segment.
The Avis Fleet financed fleet reduced following the non-renewal of the SANParks and ADT contracts during the period. On the plus side we were the preferred bidder for the City of Johannesburg specialised vehicle fleet. While a number of existing government contracts have been extended for the near term, the future of these contracts remain uncertain pending the finalisation of the new tender processes.
NAAMSA is currently forecasting an increase in new vehicle sales of around 3% for the 2018 calendar year. Despite the improved confidence levels in the South African economy we still expect trading for the rest of the year to remain challenging particularly for the premium segment. The strategic projects, focused on optimising our dealer network and aligning the costs and structures within our Motor Retail business, will continue to be progressed in order to ensure sustainable returns of Motor Trading.
Logistics achieved the milestone target for the first six months. The target operating profit for the second half is substantially higher but based on current progress we believe it is achievable. While Logistics ROIC is unlikely to exceed our cost of capital by the end of September, the year on year increase in economic profit generated this year will be significant to the group.
Dominic Sewela
Chief executive
Group financial review
As announced on 25 April 2018, the group's disposal of the Equipment Iberia operations is expected to close by 2 July 2018. In compliance with IFRS 5, and as presented at the year-ended 30 September 2017, the results of the Equipment Iberia operations for the six months ended 31 March 2018 have been reported separately as a discontinued operation, and assets and liabilities held for sale at the interim period end date. The following commentary regarding the first six months trends is against restated comparatives to reflect the results of the group's continuing operations unless specifically stated.
FINANCIAL PERFORMANCE FROM CONTINUING OPERATIONS FOR THE SIX MONTHSED 31 MARCH 2018
Revenue for the first six months grew by 1% to R30.9 billion (H1'17: R30.6 billion) primarily on the back of improved performance in Equipment Russia and Equipment southern Africa. Revenue in Equipment Russia hit record first six month levels and was up by over 77% in dollar terms to US$297 million (H1'17: US$167 million) driven by continued strong mining activity levels in the region. Equipment southern Africa's revenue growth of 5.6% to R8.7 billion (H1'17: R8.2 billion) was also ahead of the prior year and is reflective of positive global commodity price movements together with increased activity levels in the mining sector. Revenues for both regions in Rand terms were negatively impacted by the stronger Rand exchange rate, which reduced total revenue by R365 million. Year on year Automotive revenues were down by 5.8% to R15.4 billion (H1'17: R16.3 billion) affected by the prior year closure and disposal of a number of our BMW and General Motors dealerships. Logistics revenues were slightly behind that of the prior year at R3.0 billion (H1'17: R3.2 billion) resulting from tough market conditions and the loss of a KLL contract in the latter part of last year.
The group generated an operating profit from continuing operations of R1 954 million which was R113 million (6.1%) up on last year. The operating profit margin of 6.3% held strong against the 6.6% achieved at September 2017 and was primarily impacted by stronger mining machine sales mix contributions in both Equipment southern Africa and Equipment Russia. In spite of challenging market conditions, margins in the Automotive division have improved across all business units. In Logistics, the turnaround in operating profit from R51 million in the prior period to R99 million in the first half of 2018 is mainly as a result of cost reductions and other business optimisation initiatives.
The net negative fair value adjustments on financial instruments of R127 million (1H'17: R123 million) mainly comprise the cost of forward points on foreign exchange contracts and net losses on foreign currency denominated monetary assets and liabilities in Equipment southern Africa.
Finance costs decreased by R91 million to R583 million mainly due to lower interest rates and lower average borrowings in South Africa.
Losses from non-operating and capital items of R14 million relate to impairments of certain assets within Logistics offset by gains on asset sales in the Corporate division.
The taxation charge increased by R145 million to R406 million and the effective taxation rate for the period (excluding prior year taxation and taxation on non-operating and capital items) increased to 31.0% (1H'17: 23.9%) as a result of local currencies strengthening against the US Dollar functional currency of the offshore operations. In particular, the Group's taxation charge was negatively impacted by local currency gains made on US$ linked Angolan Bonds.
The Bartrac Equipment joint venture in the Katanga province of the DRC has benefited from improved copper and cobalt prices and was the primary contributor to the increased profits from associates to R113 million (H1' 17: R43 million). The BHBW joint venture in Agriculture and Handling contributed income of R11 million for the period.
The discontinued operation of Equipment Iberia has benefited from cost reductions initiated in the prior year recording profits of R57 million against losses of R93 million recognised in the prior period. Growth in new machine sales and a marginal increase in aftersales revenue was offset by continuing losses in the associate Energyst.
Profits were up by 16.7% to R1 001 million and were well ahead of the prior period R858 million. This growth was reflected in the 14% increase in headline earnings per share (HEPS) to 457c against a prior period HEPS of 400c. Total HEPS increased by 116 cents (32%) to 481 cents per share compared to 365 cents per share last year.
Cash flow
The group utilised R3.1 billion of working capital in the first half mainly as a result of increased inventory of R1.8 million. The impact of Caterpillar lead times and the anticipated uptick in the mining cycle both in southern Africa and in Russia has necessitated investment in working capital in the period. Additionally, wins and contract extensions in our vehicle fleet leasing business, together with increased demand for leased mining machines, have required investment in the rental and leasing fleets of R1.1 billion. Consequently, cash utilised in operations of R1.4 billion was significantly down on the R929 million generated in the prior period.
Net cash used in investment activities of R482 million included an additional investment in Angolan US$ linked government bonds of R188 million (US$16 million) using Kwanza cash on hand as a hedge against currency devaluation. The total investment in Angolan US$ linked government bonds at March was US$82 million (September 2017: US$66 million). The net cash outflow before financing activities and dividends for the period of R3.0 billion was R2.7 billion lower than the R343 million utilised in the first half of 2017.
In line with previous years we expect to reduce our working capital utilisation in the second half to ensure that we are cash positive for the full year.
Financial position
Total assets employed in the group increased by R1.0 billion (2.2%) to R47.4 billion compared to September 2017 of R46.3 billion. This was driven by increased working capital and an increase in fleet leasing and Equipment rental fleet. Consistent with the year ended September 2017 net assets held for sale of R2.3 billion (September 2017: R2.5 billion) comprise Equipment Iberia and the Logistics Middle East business. The stronger Rand reduced total assets by R1.7 billion.
Total interest-bearing debt at 31 March 2018 increased by R2.0 billion to R11.7 billion (September 2017: R9.7 billion) while cash and cash equivalents decreased by R1.7 billion to R2.2 billion (September 2017: R3.9 billion). Net interest-bearing debt at 31 March 2018 of R9.6 billion was R504 million up on the prior year (March 2017: R9.1 billion) and R3.8 billion up on the September 2017 position of R5.8 billion.
Debt
In October 2017 bonds (BAW3 and BAW8) totalling R425 million were repaid using existing facilities. In February 2018, BAW29, a five-year bond for R400 million was issued in anticipation of bonds maturing in the latter part of the 2018 calendar year.
South African short-term debt at March 2018 includes commercial paper (CP) totalling R650 million (September 2017: R643 million). Our continued participation in the CP market is dependent on overall liquidity and on competitive pricing.
Cash and cash equivalents at March of R2.2 billion included US$12 million (September 2017: US$35 million) held in Angola of which US$9 million (September 2017: US$30 million) was denominated in Kwanzas and is considered restricted cash.
At the end of March the group had unutilised borrowing facilities of R8.1 billion, of which R7.1 billion was committed. The group's ratio of long-term to short-term debt was 62:38 (September 2017: 79:21).
On 27 March 2018 Moody's raised Barloworld's Global Scale outlook from negative to stable following the change of outlook on the Baa3 sovereign rating of South Africa and on 2 May 2018 Moody's affirmed the long-term and short-term issuer Global Scale Rating of Baa3 and P-3 and long-term and short-term issuer National Scale Rating of Aa1.za and P-1.
The group total debt to equity ratio at 31 March 2018 was 59% (September 2017: 46%), while group net debt to equity was 48% (September 2017: 28%).
Gearing in the three segments remains in line with, or better than, the group target ranges:
Hot Features
Premium
Group Group
Debt to equity (%) Trading Leasing Car Rental total debt net debt
--------------------------- ------- ------- ---------- ----------- ---------
30 - 600 -
Target range 50 800 200 - 300
Ratio at 31 March 2018 29 521 254 59 48
Ratio at 31 March 2017 32 604 279 63 47
Ratio at 30 September 2017 21 560 203 46 28
--------------------------- ------- ------- ---------- ----------- ---------
OUTLOOK FOR THE YEAR
With the disposal of the Equipment Iberia operations expected to be concluded by 2 July 2018, management is focused on exploring various strategic opportunities for the deployment of the capital released in this transaction. Capital allocation and returns in the existing businesses remain at the forefront of management's agenda.
ROIC (rolling 12 month basis) improved to 11.0% against a prior year of 9.2% (1H'17) on the back of management's efforts to improve returns amidst tough trading conditions. In appreciating movement in the half year ROIC the cyclical nature of the businesses needs to be considered with the full year positive impact of numerous initiatives in the group expected to shift ROIC even closer towards the 13% hurdle rate by year end.
The build-up of working capital to March 2018 has negatively impacted cash generation of the group. However, in line with cyclical and historical trends, we expect working capital to be released into cash in the second half of the year. Similarly, the recent investments in fleet and rental assets are reflective of growth in these markets and will begin to contribute to returns in future reporting periods.
DG Wilson
Finance director
Operational reviews
EQUIPMENT AND HANDLING
Net operating
Revenue Operating profit/(loss) assets
Six months Year Six months Year
ended ended ended ended
------------------- --------------------- -------- --------------------- -------- --------- --------
31 Mar 31 Mar
31 Mar 2017 30 Sept 31 Mar 2017 30 Sept 31 Mar 30 Sept
2018 Rm 2017 2018 Rm 2017 2018 2017
Rm Reviewed Rm Rm Reviewed Rm Rm Rm
Reviewed Restated* Audited Reviewed Restated* Audited Reviewed Audited
------------------- --------- ---------- -------- --------- ---------- -------- --------- --------
Equipment 12 489 11 084 24 193 1 035 978 2 362 16 538 15 534
--------- ---------- -------- --------- ---------- -------- --------- --------
- Southern Africa 8 670 8 214 18 287 734 713 1 785 11 748 10 106
- Europe* 2 007 2 441
- Russia 3 766 2 267 5 141 310 263 582 2 422 2 544
- Handling 53 603 765 (9) 2 (5) 361 443
--------- ---------- -------- --------- ---------- -------- --------- --------
Share of associate
profit 117 43 97
------------------- --------- ---------- -------- --------- ---------- -------- --------- --------
* Restated to classify Equipment Iberia as discontinued
operation.
In Equipment southern Africa revenue increased by 5.6% to R8.7 billion in the period, on the back of improved trading conditions in the South African mining sector. Contract mining equipment sales and rental hire both grew by 20% compared to the same period last year. Operating profit increased by 2.9% to R734 million, while operating margin reduced to 8.5% (1H'17: 8.7%). The business continues to focus on business improvement and cost reduction initiatives.
Construction unit sales declined by 15%, on a relatively flat industry with no major infrastructure investment. The aftermarket business remained stable, supported by 4% growth in parts sales in line with increased mining equipment utilisation. Revenue from our rest of Africa operations grew by 9% despite low activities in Angola and Botswana. Attributable profit contribution increased by 139% to R103 million, mainly as a result of the contribution from our DRC joint venture on the back of rallying copper and cobalt prices.
Equipment Russia revenues and operating profit grew by 77% and 27% respectively in US Dollar terms. Operating margin was negatively influenced by the sales mix which included a significant proportion of mining related equipment deliveries at lower margins. It is pleasing to note that aftermarket business remained robust in the period under review across the dealer territory. Net assets remained well controlled resulting in exceptional returns and a marginally positive cash flow despite the seasonal increase in inventories. Demand in the mining segment remains strong with coal and gold being the prevalent commodities.
Revenue in Handling is mainly related to activity in Mozambique where a small operating loss was incurred. Further operating losses were incurred in respect of the close out of the South African handling and agriculture operations. BHBW, our Agriculture and Handling associate in South Africa, generated associate income of R11 million in the period.
AUTOMOTIVE AND LOGISTICS
Revenue Operating profit/(loss) Net operating assets
Six months Year Six months Year Six months Year
ended ended ended ended ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept
2018 2017 2017 2018 2017 2017 2018 2017 2017
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited
---------------- --------- --------- -------- --------- --------- -------- --------- --------- --------
Automotive 15 372 16 321 31 593 883 863 1 747 9 873 10 142 8 675
--------- --------- -------- --------- --------- -------- --------- --------- --------
- Car Rental 3 399 3 262 6 446 301 297 562 3 676 3 687 2 750
- Avis Fleet 1 726 1 688 3 570 308 292 621 3 848 3 764 3 687
- Motor Trading 10 247 11 371 21 577 274 274 564 2 349 2 691 2 238
--------- --------- -------- --------- --------- -------- --------- --------- --------
Logistics 2 989 3 199 6 171 99 51 101 2 334 2 783 2 082
--------- --------- -------- --------- --------- -------- --------- --------- --------
- Southern
Africa 2 932 3 108 6 011 96 56 102 2 251 2 668 1 970
- Europe
and Middle
East 57 91 160 3 (5) (1) 83 115 112
--------- --------- -------- --------- --------- -------- --------- --------- --------
18 361 19 520 37 764 982 914 1 848 12 207 12 925 10 757
---------------- --------- --------- -------- --------- --------- -------- --------- --------- --------
Share of
associate
loss (4) (4)
---------------- --------- --------- -------- --------- --------- -------- --------- --------- --------
The Automotive division delivered another record result in a challenging trading environment, increasing operating profit by 2.3% off a revenue decline of 5.8%. Revenue was impacted by dealer network restructuring in BMW and General Motors during the 2017 financial year as well as the change of revenue recognition regarding the agency model in the Motor Trading business. On a comparable basis revenue increased by 2.3% compared to prior year. The division increased operating margin to 5.7% (1H'17: 5.3%), delivered a ROIC of 11.6% (1H'17: 11.9%) and improved free cash flow on prior year. The ROIC is expected to improve in the second half as invested capital reduces.
Car Rental delivered a pleasing result increasing revenue by 4.2% to R3.4 billion and generated operating profit of R301 million, up 1.3% on prior year. Operating margin was negatively impacted by lower used vehicle margins as a result of lower new vehicle price increases. On the upside, the business managed to contain fleet costs and vehicle damage expenses below inflation. The business increased both rental days and rate per day. Fleet utilisation was maintained at 76%.
Avis Fleet delivered a good result increasing revenue by 2.3% to R1.7 billion and operating profit by 5.5% to R308 million. Operating margin increased to 17.9% (1H'18: 17.3%) complemented by strong used vehicle profit contribution driven by increased units and margins. The business was awarded the City of Johannesburg contract for specialised vehicles, subject to contract finalisation. The business continues to focus on addressing underperforming businesses with specific focus on African territories.
Motor Trading delivered a credible result in a tough trading environment. Operating profit remained flat against a revenue decline of 9.9%. Revenue was impacted by the dealer network restructuring and revenue recognition in line with the agency model. On a comparable basis, revenue increased by 1.8% on prior year. New vehicle unit sales were below the 1.2% dealer market industry growth, predominantly driven by declining volumes in the premium segment. The business increased operating margin to 2.7% (1H'17: 2.4%), delivered a ROIC above the group target of 13% and generated positive free cash flow. The remaining minority shareholding in Salvage Management and Disposals (SMD) was acquired, effective 19 February 2018.
Logistics revenue to March of R2 989 million was R210 million (6.6%) down on last year mainly due to lower trading in Supply Chain Management and a rationalised customer base. Transport, however, increased revenue by R100 million (8.3%) due to contract retention and expansion. Year to date operating profit of R99 million was R48 million (94%) above the prior year. The significant increase in profitability was mainly driven by the implementation of the turnaround strategy that the business embarked on in early October 2017. The operating and organisational model was simplified and optimised. Multiple initiatives to reduce costs, including procurement savings, contributed to the improved results.
corporate
Net operating
Revenue Operating (loss)/profit assets/(liabilities)
Six months Year Year
ended ended Six months ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 30 Sept
2018 2017 2017 2018 2017 2017 2018 2017
Rm Rm Rm Rm Rm Rm Rm Rm
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Audited
--------- ---------- ---------- -------- --------- --------- -------- ------------ ---------
Southern
Africa 2 (24) (13) (56) 588 553
Europe 2 (39) (38) (72) (2 016) (2 262)
--------------------------------- -------- --------- --------- -------- ------------ ---------
2 (63) (51) (128) (1 428) (1 709)
------------------------------- -------- --------- --------- -------- ------------ ---------
Corporate Office primarily comprises the operations of the group headquarters and treasury in Johannesburg, the treasury in Maidenhead (United Kingdom) and the captive insurance company.
Southern Africa incurred higher operating losses compared to last year mainly due to corporate activity costs. Costs in the UK were adversely impacted by a weaker Rand.
DIVID DECLARATION
Dividend number 179
Notice is hereby given that interim dividend number 179 of 145 cents (gross) per ordinary share in respect of the six months ended 31 March 2018 has been declared subject to the applicable dividends tax levied in terms of the Income Tax Act (Act No. 58 of 1962) (as amended) ("the Income Tax Act").
In accordance with paragraphs 11.17(a)(i) to (x) and 11.17(c) of the JSE Listings Requirements the following additional information is disclosed:
-- The dividend has been declared out of income reserves;
-- Local dividends tax rate is 20% (twenty per centum);
-- Barloworld has 212 692 583 ordinary shares in issue;
-- The gross local dividend amount is 145 cents per ordinary share;
-- The net dividend amount is 116 cents per share.
In compliance with the requirements of Strate and the JSE Limited, the following dates are applicable:
Tuesday,
-- Last day to trade cum dividend 5 June 2018
Wednesday,
-- Shares trade ex-dividend 6 June 2018
Friday, 8
-- Record date June 2018
Monday, 11
-- Payment date June 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 6 June 2018 and Friday, 8 June 2018, both days inclusive.
On behalf of the board
LP Manaka
Group company secretary
Directors
Non-executive: DB Ntsebeza (Chairman), NP Dongwana, FNO Edozien^, HH Hickey, MD Lynch-Bell*, SS Mkhabela, NP Mnxasana, SS Ntsaluba,
P Schmid, OI Shongwe
Executive: DM Sewela (Chief Executive), DG Wilson
^Nigerian *UK
Condensed consolidated income statement
Six months
ended Year ended
31 Mar
31 Mar 2017 30 Sept
2018 Reviewed 2017
Reviewed Restated* Audited
Notes Rm Rm Rm
------------------------------------------ ----- --------- ---------- ----------
CONTINUING OPERATIONS
Revenue 30 850 30 604 61 959
------------------------------------------ ----- --------- ---------- ----------
Operating profit before items
listed below (EBITDA) 3 228 3 134 6 694
Depreciation (1 212) (1 228) (2 468)
Amortisation of intangible assets (62) (65) (144)
------------------------------------------ ----- --------- ---------- ----------
Operating profit 3 1 954 1 841 4 082
Fair value adjustments on financial
instruments (127) (123) (209)
Finance costs (583) (674) (1 329)
Income from investments 64 70 109
------------------------------------------ ----- --------- ---------- ----------
Profit before non-operating and
capital items 1 308 1 114 2 653
Non-operating and capital items 4 (14) (38) (155)
------------------------------------------ ----- --------- ---------- ----------
Profit before taxation 1 294 1 076 2 498
Taxation 5 (406) (261) (565)
------------------------------------------ ----- --------- ---------- ----------
Profit after taxation 888 815 1 933
Profit from associates and joint
ventures 113 43 93
Net profit from continuing operations
for the period 1 001 858 2 026
DISCONTINUED OPERATION
Profit/(loss) from discontinued
operation 8 57 (93) (269)
------------------------------------------ ----- --------- ---------- ----------
Net profit for the period 1 058 765 1 757
Net profit attributable to:
Owners of Barloworld Limited 1 007 710 1 643
Non-controlling interests in subsidiaries 51 55 114
------------------------------------------ ----- --------- ---------- ----------
1 058 765 1 757
------------------------------------------ ----- --------- ---------- ----------
Earnings per share (cents)
- basic 477.8 336.6 779.6
- diluted 474.2 334.7 774.7
Earnings per share from continuing
operations (cents)
- basic 450.8 380.5 907.2
- diluted 447.4 378.4 901.5
Earnings per share from discontinued
operation (cents)
- basic 27.0 (43.9) (127.6)
- diluted 26.8 (43.7) (126.8)
------------------------------------------ ----- --------- ---------- ----------
* Restated to classify Equipment Iberia as discontinued
operation. Refer to note 8.
Condensed consolidated statement of other comprehensive
income
Six months Year
ended ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Rm Rm Rm
-------------------------------------------- --------- --------- --------
Profit for the period 1 058 765 1 757
Items that may be reclassified subsequently
to profit or loss: (1 090) (323) 75
--------- --------- --------
Exchange (loss)/gain on translation
of foreign operations (1 007) (366) 8
(Loss)/gain on cash flow hedges (115) 59 89
Deferred taxation on cash flow hedges 32 (16) (22)
--------- --------- --------
Items that will not be reclassified
to profit or loss: (28) 535
--------- --------- --------
Actuarial gain on post-retirement
benefit obligations 678
Taxation effect (28) (143)
--------- --------- --------
Other comprehensive (loss)/income
for the period (1 090) (351) 610
-------------------------------------------- --------- --------- --------
Total comprehensive (loss)/income
for the period (32) 414 2 367
-------------------------------------------- --------- --------- --------
Total comprehensive (loss)/income
attributable to:
Owners of Barloworld Limited (83) 359 2 253
Non-controlling interests in subsidiaries 51 55 114
-------------------------------------------- --------- --------- --------
(32) 414 2 367
-------------------------------------------- --------- --------- --------
Condensed consolidated statement of financial position
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Notes Rm Rm Rm
--------------------------------------- ----- --------- --------- ----------
ASSETS
Non-current assets 19 028 20 174 18 613
--------- --------- ----------
Property, plant and equipment 12 931 13 852 12 659
Goodwill 1 902 2 003 1 932
Intangible assets 1 466 1 678 1 602
Investment in associates and
joint ventures 6 1 246 1 178 1 093
Finance lease receivables 226 164 240
Long-term financial assets 7 564 363 404
Deferred taxation assets 693 936 683
--------- --------- ----------
Current assets 25 085 27 774 24 368
--------- --------- ----------
Vehicle rental fleet 3 472 3 572 3 222
Inventories 9 690 10 287 8 457
Trade and other receivables 9 583 10 600 8 676
Taxation 168 85 88
Cash and cash equivalents 13 2 172 3 230 3 925
--------- --------- ----------
Assets classified as held for
sale 8 3 245 27 3 343
--------------------------------------- ----- --------- --------- ----------
Total assets 47 358 47 975 46 324
--------------------------------------- ----- --------- --------- ----------
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 441 441 441
Other reserves 3 858 4 804 5 144
Retained income 15 184 13 549 14 690
--------------------------------------- ----- --------- --------- ----------
Interest of shareholders of Barloworld
Limited 19 483 18 794 20 275
Non-controlling interest 535 716 602
--------------------------------------- ----- --------- --------- ----------
Interest of all shareholders 20 018 19 510 20 877
Non-current liabilities 10 445 12 043 10 852
--------- --------- ----------
Interest-bearing 7 302 8 133 7 623
Deferred taxation liabilities 582 628 538
Provisions 32 135 19
Other non-current liabilities 2 529 3 147 2 672
--------- --------- ----------
Current liabilities 15 988 16 422 13 798
--------- --------- ----------
Trade and other payables 10 560 11 223 10 697
Provisions 844 930 929
Taxation 125 87 117
Amounts due to bankers and short-term
loans 4 459 4 182 2 055
--------- --------- ----------
Liabilities directly associated
with assets classified as held
for sale 8 907 797
--------------------------------------- ----- --------- --------- ----------
Total equity and liabilities 47 358 47 975 46 324
--------------------------------------- ----- --------- --------- ----------
Condensed consolidated statement of changes in equity
Attribu-
table to
Share Barloworld Interest
capital Limited Non- of all
and Other Retained share- controlling share-
premium reserves income holders interest holders
Rm Rm Rm Rm Rm Rm
-------------------------- -------- --------- -------- ----------- ------------ --------
Balance at 1 October 13 19
2016 (audited) 441 5 134 367 18 942 737 679
Total other comprehensive
(loss)/income for the
period (323) 682 359 55 414
Other reserve movements (7) (11) (18) (51) (69)
Dividends (489) (489) (25) (514)
-------------------------- -------- --------- -------- ----------- ------------ --------
Balance at 31 March 13 19
2017 (reviewed) 441 4 804 549 18 794 716 510
-------------------------- -------- --------- -------- ----------- ------------ --------
Total other comprehensive
income for the period 398 1 496 1 894 59 1 953
Other reserve movements (147) 43 (104) 51 (53)
Other changes in minority
shareholders interest
and minority loans 89 (132) (43) (201) (244)
Dividends (266) (266) (23) (289)
-------------------------- -------- --------- -------- ----------- ------------ --------
Balance at 30 September 14 20
2017 (audited) 441 5 144 690 20 275 602 877
-------------------------- -------- --------- -------- ----------- ------------ --------
Total other comprehensive
(loss)/income for the
period (1 090) 1 007 (83) 51 (32)
Other reserve movements (196) 234 38 (1) 37
Other changes in minority
shareholders interest
and minority loans (183) (183) (75) (258)
Dividends (564) (564) (42) (606)
-------------------------- -------- --------- -------- ----------- ------------ --------
Balance at 31 March 15 20
2018 (reviewed) 441 3 858 184 19 483 535 018
-------------------------- -------- --------- -------- ----------- ------------ --------
Condensed consolidated statement of cash flows
Six months Year
ended ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Notes Rm Rm Rm
-------------------------------------------- ----- --------- --------- --------
Cash flow from operating activities
Operating cash flows before movements
in working capital 3 416 3 262 7 307
Movement in working capital (3 075) (362) 1 539
-------------------------------------------- ----- --------- --------- --------
Cash generated from operations
before investment in rental fleets 341 2 900 8 846
Fleet leasing and equipment rental
fleet (1 117) (773) (1 661)
--------- --------- --------
Additions (2 055) (1 614) (3 550)
Proceeds on disposal 938 841 1 889
--------- --------- --------
Vehicles rental fleet (658) (1 198) (1 220)
--------- --------- --------
Additions (2 352) (2 938) (4 373)
Proceeds on disposal 1 694 1 740 3 153
--------- --------- --------
Cash (utilised in)/generated
from operations (1 434) 929 5 965
Realised fair value adjustments
on financial instruments (115) (172) (270)
Finance costs and investment
income (505) (600) (1 217)
Taxation paid (477) (395) (744)
-------------------------------------------- ----- --------- --------- --------
Cash (outflow)/inflow from operations (2 531) (238) 3 734
Dividends paid (including non-controlling
interest) (606) (514) (803)
-------------------------------------------- ----- --------- --------- --------
Net cash (applied to)/retained
from operating activities (3 137) (752) 2 931
Net cash used in investing activities (482) (105) (329)
--------- --------- --------
Acquisition of subsidiaries,
investments and intangibles 11 (282) (51) (393)
Proceeds on disposal of subsidiaries,
investments, intangibles and
loans repaid 12 301 379
Net investment in leasing receivables 77 (47) (134)
Acquisition of property, plant
and equipment (341) (368) (774)
Proceeds on disposal of property,
plant and equipment 64 60 593
--------- --------- --------
Net cash (outflow)/inflow before
financing activities (3 619) (857) 2 602
Net cash from/(used in) financing
activities 2 063 1 122 (1 642)
--------- --------- --------
Shares proceeds/(repurchased)
for equity settled share-based
payment 18 (154)
Purchase of non-controlling interest (257) (22) (201)
Non-controlling interest loan
and equity movements (69) 4
Net increase/(decrease) in interest-bearing
liabilities 2 302 1 213 (1 291)
--------- --------- --------
Net (decrease)/increase in cash
and cash equivalents (1 556) 265 960
Cash and cash equivalents at
beginning of period 3 925 3 028 3 028
Cash and cash equivalents held
for sale at beginning period 102
Effect of foreign exchange rate
movements (130) (63) 39
Effect of cash balances held
for sale (169) (102)
-------------------------------------------- ----- --------- --------- --------
Cash and cash equivalents at
end of period 2 172 3 230 3 925
-------------------------------------------- ----- --------- --------- --------
Notes to the condensed consolidated financial statements
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements
are prepared in accordance with the requirements
of the JSE Limited Listings Requirements for interim
reports, and the requirements of the Companies Act
applicable to financial statements. The JSE Listings
Requirements require interim reports to be prepared
in accordance with IAS 34 Interim Financial Reporting
and the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and the Financial
Pronouncements as issued by the Financial Reporting
Standards Council. The accounting policies applied
in the preparation of the condensed consolidated
interim financial statements were derived in terms
of International Financial Reporting Standards and
are consistent with those accounting policies applied
in the preparation of the previous consolidated financial
statements.
This report was prepared under the supervision of
RL Pole CA(SA) (Group general manager: finance).
--- -----------------------------------------------------------------------------
Six months ended Year ended
31 Mar
31 Mar 2017 30 Sept
2018 Reviewed 2017
Reviewed Restated* Audited
Rm Rm Rm
---------------------------------------- --------- ---------- ----------
2. RECONCILIATION OF NET PROFIT TO
HEADLINE EARNINGS
Net profit attributable to Barloworld
Limited shareholders 1 007 710 1 643
---------------------------------------- --- --------- ---------- ----------
Adjusted for the following:
Loss on disposal of subsidiaries
and investments (IFRS 10) 42 25
Profit on disposal of plant, property,
equipment and other assets excluding
rental assets (IAS 16 and IAS
38) (17) (15) (43)
Impairment of goodwill (IFRS 3) 73
Impairment of plant and equipment
(IAS 16) and intangibles (IAS
38) and other assets 24 11 98
Taxation effects of remeasurements (1) 10 (5)
Associate and non-controlling
interest in remeasurements 1 12 71
---------------------------------------- --- --------- ---------- ----------
Headline earnings 1 014 770 1 862
---------------------------------------- --- --------- ---------- ----------
* Restated to classify Equipment Iberia as discontinued
operation. Refer to note 8.
Six months ended Year ended
31 Mar
31 Mar 2017 30 Sept
2018 Reviewed 2017
Reviewed Restated* Audited
Rm Rm Rm
--- ---------------------------------------- --------- ---------- ----------
2. RECONCILIATION OF NET PROFIT TO
HEADLINE EARNINGS continued
Continuing operations
Profit from continuing operations 1 001 858 2 026
Non-controlling shareholders'
interest in net profit from continuing
operations (51) (55) (114)
------------------------------------------ --------- ---------- ----------
Profit from continuing operations
attributable to Barloworld Limited
shareholders 950 803 1 912
Adjusted for the following:
Loss on disposal of subsidiaries
and investments (IFRS 10) 42 25
Profit on disposal of plant, property,
equipment and other assets excluding
rental assets (IAS 16 and IAS
38) (8) (15) (43)
Impairment of goodwill (IFRS 3) 73
Impairment of plant and equipment
(IAS 16) and intangibles (IAS
38) and other assets 24 11 98
Taxation effect of remeasurements (3) 10 (5)
Associate and non-controlling
interest in remeasurements (7) (7)
------------------------------------------ --------- ---------- ----------
Net remeasurements excluded from
headline earnings from continuing
operations 13 41 141
------------------------------------------ --------- ---------- ----------
Headline earnings 963 844 2 053
------------------------------------------ --------- ---------- ----------
Discontinued operation
Profit/(loss) from discontinued
operation attributable to Barloworld
Limited shareholders 57 (93) (269)
Adjusted for the following:
Profit on disposal of plant, property,
equipment and other assets excluding
rental assets (IAS 16 and IAS
38) (9)
Taxation effect of remeasurements 2
Associate and non-controlling
interest in remeasurements 1 19 78
------------------------------------------ --------- ---------- ----------
Net remeasurements excluded from
headline earnings from discontinued
operation (6) 19 78
------------------------------------------ --------- ---------- ----------
Headline earnings/(loss) 51 (74) (191)
------------------------------------------ --------- ---------- ----------
* Restated to classify Equipment Iberia as discontinued
operation. Refer to note 8.
Six months ended Year ended
31 Mar
31 Mar 2017 30 Sept
2018 Reviewed 2017
Reviewed Restated* Audited
Rm Rm Rm
--- ------------------------------------------ --------- ---------- ----------
2. RECONCILIATION OF NET PROFIT TO
HEADLINE EARNINGS continued
Weighted average number of ordinary
shares in issue during the period
(000)
- basic 210 691 210 995 210 780
- diluted 212 360 212 138 212 095
Headline earnings per share (cents)
- basic 481.3 364.9 883.4
- diluted 477.4 363.0 877.9
Headline earnings per share from
continuing operations (cents)
- basic 457.1 400.0 974.5
- diluted 453.5 397.9 968.0
Headline earnings/(loss) per share
from discontinued operation (cents)
- basic 24.2 (35.1) (91.1)
- diluted 23.9 (34.9) (90.1)
-------------------------------------------- --------- ---------- ----------
3. OPERATING PROFIT
Included in operating profit from
continuing operations are:
Cost of sales (including allocation
of depreciation) 23 649 24 608 47 832
Expenses includes the following:
Loss on disposal of other plant,
equipment and rental assets 37 43 85
Amortisation of intangible assets
in terms of IFRS 3 business combinations 9 13 23
-------------------------------------------- --------- ---------- ----------
* Restated to classify Equipment Iberia as discontinued
operation. Refer to note 8.
Year
Six months ended ended
31 Mar
31 Mar 2017 30 Sept
2018 Reviewed 2017
Reviewed Restated* Audited
Rm Rm Rm
--- ------------------------------------------- --------- ---------- --------
4. NON-OPERATING AND CAPITAL ITEMS
Profit on disposal of property
and other assets 10 15 41
Impairment of property, plant
and equipment, intangibles and
other assets (24) (11) (98)
Loss on acquisitions and disposal
of investments and subsidiaries (42) (25)
Impairment of goodwill (73)
--------------------------------------------- --------- ---------- --------
Gross non-operating and capital
items from continuing operations (14) (38) (155)
Taxation benefit/(charge) on non-operating
and capital items 3 (10) 5
Non-operating and capital items
included in associate income 7 7
--------------------------------------------- --------- ---------- --------
Net non-operating and capital
items from continuing operations (11) (41) (143)
Non-operating and capital items
from discontinued operation 9
Taxation benefit on non-operating
and capital items (2)
Non-operating and capital items
included in associate income from
discontinued operation (1) (19) (78)
--------------------------------------------- --------- ---------- --------
Net non-operating and capital
items (5) (60) (221)
--------------------------------------------- --------- ---------- --------
As per our group accounting policy
the definition of non-operating
and capital items does not include
profit or loss on property, plant
and equipment, intangibles and
investments. These items are adjusted
for in the headline earnings calculation.
--- ------------------------------------------- --------- ---------- --------
5. TAXATION
Taxation per income statement (406) (261) (565)
--------- ---------- --------
Prior year taxation (4) 14 65
Taxation on non-operating and
capital items 3 (10) 5
Attributable to a change in the
rate of income tax 1 25
Taxation on profit before prior
year taxation, non-operating and
capital items and rate change (405) (266) (660)
--------- ---------- --------
Effective taxation rate excluding
non-operating and capital items,
prior year taxation (%) 31.0% 23.9% 23.9%
--------------------------------------------- --------- ---------- --------
* Restated to classify Equipment Iberia as discontinued
operation. Refer to note 8.
Year
Six months ended ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Book Book Book
value value value
Reviewed Reviewed Audited
Rm Rm Rm
--- ----------------------------------- --------- --------- --------
6. INVESTMENT IN ASSOCIATES AND JOINT
VENTURES
Joint ventures 1 196 979 1 044
Unlisted associates 125 199 146
------------------------------------- --------- --------- --------
Total group 1 321 1 178 1 190
Amount classified as held for
sale (75) (97)
------------------------------------- --------- --------- --------
1 246 1 178 1 093
--------------------------------------- --------- --------- --------
7. LONG-TERM FINANCIAL ASSETS
Unlisted and listed investments
at fair value 70 49 64
Other long-term financial assets 51 96 123
Unlisted debt instruments* 443 218 226
------------------------------------- --------- --------- --------
Total group 564 363 413
Amount classified as held for
sale (9)
------------------------------------- --------- --------- --------
564 363 404
--------------------------------------- --------- --------- --------
* The long-term element of the investment in Angolan
US$ linked government bonds was US$37 million.
8. DISCONTINUED OPERATION AND ASSETS CLASSIFIED AS HELD
FOR SALE
Consistent with the year ended 30 September 2017,
Equipment Iberia is classified as held for sale.
Negotiations for the sale of these operations were
concluded on 24 April 2018 and the sale is expected
to be effective before 2 July 2018. Due to the significance
of this geography, this segment has been classified
as a discontinued operation.
Year
Six months ended ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Book Book Book
value value value
Reviewed Reviewed Audited
Rm Rm Rm
--- --------------------------------------- --------- --------- --------
8. DISCONTINUED OPERATION AND ASSETS
CLASSIFIED AS HELD FOR SALE continued
Results from discontinued operation
are as follows:
Revenue 2 277 1 928 4 076
----------------------------------------- --------- --------- --------
Operating profit before items
listed below (EBITDA) 140 71 58
Depreciation (55) (58) (121)
Amortisation of intangible assets (5) (5) (14)
----------------------------------------- --------- --------- --------
Operating profit/(loss)^ 80 8 (77)
Finance costs (2) (6) (9)
Income from investments 1 1
----------------------------------------- --------- --------- --------
Profit/(loss) before non-operating
and capital items 78 3 (85)
Non-operating and capital items 9
----------------------------------------- --------- --------- --------
Profit/(loss) before taxation 87 3 (85)
Taxation (21) (45) (51)
----------------------------------------- --------- --------- --------
Net profit/(loss) after taxation 66 (42) (136)
Loss from associates# (9) (51) (133)
----------------------------------------- --------- --------- --------
Profit/(loss) from discontinued
operation per income statement 57 (93) (269)
----------------------------------------- --------- --------- --------
The cash flows from the discontinued
operation is are follows:
Cash flows from operating activities 53 160 381
Cash flows from investing activities (22) (15) (65)
Cash flows from financing activities 55 (76) (326)
----------------------------------------- --------- --------- --------
^ Operating loss at 30 September 2017 includes restructuring
costs of R137 million (EUR9.1 million).
# Loss from associates at 30 September 2017 includes
an impairment on investment and goodwill of R78 million
(EUR5.1 million).
Year
Six months ended ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Book Book Book
value value value
Reviewed Reviewed Audited
Rm Rm Rm
--- --------------------------------------- --------- --------- --------
8. DISCONTINUED OPERATION AND ASSETS
CLASSIFIED AS HELD FOR SALE continued
The major classes of assets and
liabilities comprising the disposal
group and other assets classified
as held for sale were as follows:
Property, plant and equipment 964 27 1 131
Investments 75 97
Long-term financial assets 9
Deferred tax asset 151 166
Intangible assets 41 42
Inventories 867 823
Trade and other receivables 978 973
Cash balances 169 102
----------------------------------------- --------- --------- --------
Assets classified as held for
sale 3 245 27 3 343
Interest-bearing short and long-term
loans (75) (33)
Trade and other payables - short
and long term (691) (637)
Deferred tax liability (2) (2)
Provisions (139) (125)
----------------------------------------- --------- --------- --------
Total liabilities associated with
assets classified as held for
sale (907) (797)
----------------------------------------- --------- --------- --------
Net assets classified as held
for sale 2 338 27 2 546
----------------------------------------- --------- --------- --------
Per business segment:
Equipment Iberia 2 212 2 424
Logistics 126 27 122
----------------------------------------- --------- --------- --------
Total group 2 338 27 2 546
----------------------------------------- --------- --------- --------
DISCONTINUED OPERATION AND ASSETS CLASSIFIED AS HELD
8. FOR SALE continued
Changes to comparative information
Following the decision to dispose of the Equipment
Iberia business, this segment is classified as a
discontinued operation. In accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued
Operations, the income statement comparatives for
March 2017 of this business have been reclassified
as a discontinued operation.
CONSOLIDATED INCOME STATEMENT
March 2017
Previously Discontinued
reported operation Restated
Reviewed Reviewed Audited
Rm Rm Rm
------------------------------------------ ---------- ------------ --------
Revenue 32 532 1 928 30 604
------------------------------------------ --- ---------- ------------ --------
Operating profit before items
listed below (EBITDA) 3 205 71 3 134
Depreciation (1 286) (58) (1 228)
Amortisation of intangible assets (70) (5) (65)
------------------------------------------ --- ---------- ------------ --------
Operating profit 1 849 8 1 841
Fair value adjustments on financial
instruments (123) (123)
Finance costs (680) (6) (674)
Income from investments 71 1 70
------------------------------------------ --- ---------- ------------ --------
Profit before non-operating and
capital items 1 117 3 1 114
Non-operating and capital items (38) (38)
------------------------------------------ --- ---------- ------------ --------
Profit before taxation 1 079 3 1 076
Taxation (306) (45) (261)
------------------------------------------ --- ---------- ------------ --------
Profit after taxation 773 (42) 815
Loss from associates and joint
ventures (8) (51) 43
------------------------------------------ --- ---------- ------------ --------
Net profit from continuing operations 765 (93) 858
Discontinued operation
Loss from discontinued operation 93 (93)
------------------------------------------ --- ---------- ------------ --------
Net profit for the period 765 765
------------------------------------------ --- ---------- ------------ --------
Attributable to:
Owners of Barloworld Limited 710 710
Non-controlling interest in subsidiaries 55 55
------------------------------------------ --- ---------- ------------ --------
765 765
------------------------------------------ --- ---------- ------------ --------
Earnings per share (cents)
- basic 336.6 336.6
- diluted 334.7 334.7
Earnings per share from continuing
operations (cents)
- basic 336.6 43.9 380.5
- diluted 334.7 43.7 378.4
Earnings per share from discontinued
operation (cents)
- basic (43.9) (43.9)
- diluted (43.7) (43.7)
------------------------------------------ --- ---------- ------------ --------
Year
Six months ended ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Rm Rm Rm
--- ---------------------------------------- --------- --------- --------
9. FINANCIAL INSTRUMENTS
Carrying value of financial instruments
by class:
Financial assets:
Trade receivables
- Industry 6 496 6 300 5 429
- Government 484 465 438
- Consumers 836 908 403
Other loans and receivables and
cash balances 3 197 5 102 5 732
Finance lease receivables 446 317 499
Derivatives (including items designated
as effective hedging instruments)
- Forward exchange contracts 2 42
Other financial assets at fair
value 53 114 49
------------------------------------------ --------- --------- --------
Total carrying value of financial 12
assets 11 512 13 208 592
------------------------------------------ --------- --------- --------
Financial liabilities:
Trade payables
- Principals 4 178 3 689 3 336
- Other suppliers 4 643 3 169 5 234
Other non interest-bearing payables 110 313 435
Derivatives (including items designated
as effective hedging instruments)
- Forward exchange contracts 72 1 5
Interest bearing debt measured
at amortised cost 11 761 14 995 9 134
------------------------------------------ --------- --------- --------
Total carrying value of financial 18
liabilities 20 764 22 167 144
------------------------------------------ --------- --------- --------
9. FINANCIAL INSTRUMENTS continued
Fair value measurements recognised in the statement
of financial position
Level 1 measurements are derived from quoted prices
in active markets. Level 2 and level 3 measurements
are determined using discounted cash flows.
31 Mar 2018
Level Level Level
1 2 3 Total
---------------------------------- ----- ----- ----- -----
Financial assets at fair value
through profit or loss
Financial assets designated
at fair value through profit
or loss 48 48
Available-for-sale financial
assets
Shares 5 5
------------------------------------ ----- ----- ----- -----
Total 53 53
------------------------------------ ----- ----- ----- -----
Financial liabilities at fair
value through profit or loss
Derivative liabilities designated
as effective hedging instruments 72 72
------------------------------------ ----- ----- ----- -----
Total 72 72
------------------------------------ ----- ----- ----- -----
31 Mar 2017
Level Level Level
1 2 3 Total
---------------------------------- ----- ----- ----- -----
Financial assets at fair value
through profit or loss
Financial assets designated
at fair value through profit
or loss 2 42 44
Available-for-sale financial
assets
---------------------------------- ----- ----- ----- -----
Shares 5 5
------------------------------------ ----- ----- ----- -----
Total 2 47 49
Financial liabilities at fair
value through profit or loss
Derivative assets designated
as effective hedging instruments 1 1
------------------------------------ ----- ----- ----- -----
Total 1 1
------------------------------------ ----- ----- ----- -----
30 Sept 2017
Level Level Level
1 2 3 Total
---------------------------------- ----- ----- ----- -----
Financial assets at fair value
through profit or loss
Financial assets designated
at fair value through profit
or loss 49 49
Available-for-sale financial
assets
Shares 5 5
Derivative assets designated
as effective hedging instruments 42 42
------------------------------------ ----- ----- ----- -----
Total 42 54 96
------------------------------------ ----- ----- ----- -----
Financial liabilities at fair
value through profit or loss
Financial liabilities designated
at fair value through profit
or loss 5 5
------------------------------------ ----- ----- ----- -----
Total 5 5
------------------------------------ ----- ----- ----- -----
Year
Six months ended ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Rm Rm Rm
---- ---------------------------------------- --------- --------- --------
10. DIVIDS DECLARED
Ordinary shares
Final dividend No 178 paid on
16 January 2018: 265 cents per
share (2017: No 176 - 230 cents
per share) 564 489 489
Interim dividend No 177 paid
on 12 June 2017: 125 cents per
share 266
------------------------------------------ --------- --------- --------
Paid to Barloworld Limited shareholders 564 489 755
Paid to non-controlling interest 42 25 48
------------------------------------------ --------- --------- --------
606 514 803
--------------------------------------------- --------- --------- --------
11. ACQUISITION OF SUBSIDIARIES,
INVESTMENTS AND INTANGIBLES
Investments and intangibles acquired (282) (51) (393)
------------------------------------------ --------- --------- --------
Cash amounts paid to acquire
subsidiaries, investments and
intangibles (282) (51) (393)
------------------------------------------ --------- --------- --------
During the period R188 million
(US$16 million) was invested
in US$ linked Angolan bonds.
---- ---------------------------------------- --------- --------- --------
12. PROCEEDS ON DISPOSAL OF SUBSIDIARIES,
INVESTMENTS, INTANGIBLES AND
LOANS REPAID:
Inventories disposed 492 551
Receivables disposed 20 26
Payables, taxation and deferred
taxation balances disposed (55) (60)
Property, plant and equipment,
non-current assets, goodwill
and intangibles 145 151
------------------------------------------ --------- --------- --------
Net assets disposed 602 668
Less: Non-cash translation reserves
realised on disposal of foreign
subsidiaries
Investment in joint venture (301) (301)
Profit on disposal (9)
------------------------------------------ --------- --------- --------
Net cash proceeds on disposal
of subsidiaries 301 358
Proceeds on disposal of investments
and intangibles 21
------------------------------------------ --------- --------- --------
Cash proceeds on disposal of
subsidiaries, investments, intangibles
and loans repaid 301 379
------------------------------------------ --------- --------- --------
The net cash proceeds on disposal arises mainly from
the sale of the assets of the Agriculture SA and
Handling SA business into a joint venture company
with BayWa AG.
-------------------------------------------------------------------------------
Year
Six months ended ended
31 Mar 31 Mar 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Rm Rm Rm
---- --------------------------------------- --------- --------- --------
13. CASH AND CASH EQUIVALENTS
Cash balances not available for
use due to reserving and foreign
exchange restrictions 150 874 444
This includes US$9.2 million
(R109 million) of Angolan Kwanza
cash on hand (March 2017: US$47.5
million, R635 million) (Sept
2017: US$29.7 million, R401 million).
---- --------------------------------------- --------- --------- --------
14. COMMITMENTS
Capital commitments to be incurred
Contracted - Property, plant
and equipment 245 369 566
Contracted - Vehicle Rental Fleet 235 777 1 259
Approved but not yet contracted 511 334 168
----------------------------------------- --------- --------- --------
Total continuing operations 991 1 480 1 993
Discontinued operation 18 57 24
----------------------------------------- --------- --------- --------
Total group 1 009 1 537 2 017
----------------------------------------- --------- --------- --------
Operating lease commitments:
Continuing operations 2 790 2 776 2 932
Discontinued operation 106 160 143
----------------------------------------- --------- --------- --------
Total group 2 896 2 936 3 075
----------------------------------------- --------- --------- --------
Capital expenditure will be financed
by funds generated by the business,
existing cash resources and borrowing
facilities available to the group.
---- --------------------------------------- --------- --------- --------
15. CONTINGENT LIABILITIES
Performance guarantees given
to customers, other guarantees
and claims
From continuing operations 517 871 578
From discontinued operation 182 252 207
----------------------------------------- --------- --------- --------
Total group 699 1 123 785
----------------------------------------- --------- --------- --------
Buy-back and repurchase commitments
not reflected on the statement
of financial position
From continuing operations 90 99 102
From discontinued operation 14 12 24
----------------------------------------- --------- --------- --------
Total group 104 111 126
----------------------------------------- --------- --------- --------
On 13 October 2017 the Barloworld Equipment South
Africa business (BWE SA) received notification
from the Competition Commission (the commission)
that it intended referring BWE SA and the members
of the Contractors Plant Hire Association to the
Competition Tribunal in respect of a contravention
of section 4(1)(b)(i) of the South African Competition
Act. Based on preliminary internal investigations,
BWE SA's view is that these allegations are unfounded.
At the date of this report management are not in
a position to conclude on the possible outcome
of this matter, nor can management reliably measure
the potential financial impact at this stage.
------------------------------------------------------------------------------
16. RELATED PARTY TRANSACTIONS
There has been no significant changes in related
party relationships and the nature of related party
transactions since the previous year.
Other than in the normal course of business and
those disclosed in note 11 and note 12 , there
have been no other significant transactions during
the year with associate companies, joint ventures
and other related parties.
------------------------------------------------------------------------------
17. CHANGES IN ACCOUNTING POLICIES
New standards and interpretations adopted
The annual financial statements have been prepared
in accordance with International Financial Reporting
Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). The basis is
consistent with the prior year. No new amended
standards or new interpretations were adopted.
--- -------------------------------------------------------------------
18. EVENTS AFTER THE REPORTING PERIOD
On 24 April 2018 the negotiations for the sale
of the Equipment Iberia operations were concluded
and the board approved the entering into of a sale
and purchase agreement with Tesa S.p.A, a privately
owned Italian group and the current Caterpillar
dealer for Italy.
The sale transaction is expected to be closed
by 2 July 2018. The sale price will be determined
at the closing date using the shareholders' equity
attributable to Barloworld after negotiated asset
impairments and an agreed premium. Part of the
purchase price, EUR10 million (R151 million), is
deferred and payable in equal instalments over
a five-year period. On closing, Tesa will settle
a maximum of EUR142 million (approximately R2.1
billion) in cash. This will subsequently be adjusted
after the true up period. The overall proceeds
of the transaction are estimated to be EUR160 million
(approximately R2,4 billion). The group has also
provided specific warranties and indemnities as
well as a guarantee in respect of its obligations
post-closing.
The price represents a premium to the net asset
value of the business with net assets at 31 March
2018 of EUR152 million.
There have been no further events subsequent to
the reporting period.
--- -------------------------------------------------------------------
19. AUDITOR'S REVIEW
These condensed consolidated interim financial
statements for the period ended 31 March 2018 have
been reviewed by Deloitte & Touche, who expressed
an unmodified review conclusion. A copy of the
auditor's review report is available for inspection
at the company's registered office.
The auditor's report does not necessarily report
on all of the information contained in this announcement/financial
results. Shareholders are therefore advised that
in order to obtain a full understanding of the
nature of the auditor's engagement they should
obtain a copy of that report together with the
accompanying financial information from the issuer's
registered office.
Any forward-looking statements included in this
announcement have not been reviewed or reported
on by the auditors.
--- -------------------------------------------------------------------
OPERATING
20. SEGMENTS
Fair value adjustments
on financial
Revenue Operating profit/(loss) instruments
Six months Year Six months Year Six months Year
ended ended ended ended ended ended
------------- --------------------- -------- --------------------- -------- --------------------- --------
31 Mar 31 Mar 31 Mar
31 Mar 17 30 Sept 31 Mar 17 30 Sept 31 Mar 17 30 Sept
18 Reviewed 17 18 Reviewed 17 18 Reviewed 17
Reviewed Restated* Audited Reviewed Restated* Audited Reviewed Restated* Audited
Rm Rm Rm Rm Rm Rm Rm Rm Rm
12 11 24
Equipment 489 084 193 1 035 978 2 362 (97) (113) (184)
Automotive 18 19 37
and Logistics 361 520 764 982 914 1 848 (9) (2) (6)
Corporate 2 (63) (51) (128) (21) (8) (19)
------------------ --------- ---------- -------- --------- ---------- -------- --------- ---------- --------
30 30 61
Total 850 604 959 1 954 1 841 4 082 (127) (123) (209)
------------------ --------- ---------- -------- --------- ---------- -------- --------- ---------- --------
27 28 56
Southern Africa 028 246 658 1 680 1 630 3 584 (104) (110) (187)
Europe 3 823 2 358 5 301 274 211 498 (23) (13) (22)
------------------ --------- ---------- -------- --------- ---------- -------- --------- ---------- --------
30 30 61
Total 850 604 959 1 954 1 841 4 082 (127) (123) (209)
------------------ --------- ---------- -------- --------- ---------- -------- --------- ---------- --------
* Restated to classify Equipment Iberia as discontinued
operation. Refer to note 8.
Segment result: Operating
profit/(loss) including Operating margin Net operating
fair value adjustments (%) assets/(liabilities)+
Six months Year Six months Year
ended ended ended ended
31 Mar 31 Mar
17 30 Sept 31 Mar 17 30 Sept 30 Sept
31 Mar 18 Reviewed 17 18 Reviewed 17 31 Mar 18 17
Reviewed Restated* Audited Reviewed Restated* Audited Reviewed Audited
Rm Rm Rm Rm Rm Rm Rm Rm
---------------- --------- ---------- -------- --------- ---------- -------- ------------ ----------
Equipment 938 865 2 178 8.3 8.8 9.8 16 538 15 534
Automotive and
Logistics 973 912 1 842 5.3 4.7 4.9 12 207 10 757
Corporate (84) (59) (147) (1 428) (1 709) ---------------- --------- ---------- -------- --------- ---------- -------- ------------ ---------- Total 1 827 1 718 3 873 6.3 6.0 6.6 27 317 24 582 ---------------- --------- ---------- -------- --------- ---------- -------- ------------ ---------- Southern Africa 1 576 1 520 3 397 6.2 5.8 6.3 24 821 21 736 Europe 251 198 476 7.2 8.9 9.4 2 496 2 846 ---------------- --------- ---------- -------- --------- ---------- -------- ------------ ---------- Total 1 827 1 718 3 873 6.3 6.0 6.6 27 317 24 582 ---------------- --------- ---------- -------- --------- ---------- -------- ------------ ---------- * Restated to classify Equipment Iberia as discontinued operation. Refer to note 8. + The net operating assets/(liabilities) includes assets/liabilities classified as held for sale.
Salient features
Six months ended Year ended
31 Mar
31 Mar 2017 30 Sept
2018 Reviewed 2017
Reviewed Restated* Audited
-------------------------------------------- --------- ---------- ----------
Financial
Group headline earnings per share
(cents) 481.3 364.9 883.4
Continuing headline earnings per share
(cents) 457.1 400.0 974.5
Dividends per share (cents) 145 125 390
Continuing operating margin (%) 6.3 6.0 6.6
Continuing net asset turn (times) 2.2 2.0 2.2
Continuing EBITDA/interest paid (times) 5.5 4.6 5.0
Continuing net debt/equity (%) 47.9 46.6 27.6
Group return on net operating assets
(RONOA) (%) 18.0 15.0 18.4
Continuing return on net operating
assets (RONOA) (%) 17.0 15.4 16.4
Return on invested capital (ROIC)
(%) 11.0 9.2 11.2
Group return on ordinary shareholders'
funds (%) 10.2 8.0 9.5
Continuing return on ordinary shareholders'
funds (%) 9.7 9.0 10.5
Net asset value per share including
investments at fair value (cents) 9 160 8 837 9 533
Number of ordinary shares in issue
(000) 212 693 212 693 212 693
-------------------------------------------- --------- ---------- ----------
Restated* Audited
Non-financial
1 562
Non-renewable energy consumption (GJ) 1 469 964 107 3 087 269
Greenhouse gas emissions (tCO(2) e) 129 187 137 108 270 707
Water withdrawals (municipal sources)
(ML) 292 333 674
Number of employees 18 171 18 848 18 085
Lost-time injury frequency rate (LTIFR) 0.80 0.81 0.75
Number of work-related fatalities 2 2 3
-------------------------------------------- --------- ---------- ----------
dti(^) B-BBEE rating (level)(+) 3 3 3
-------------------------------------------- --------- ---------- ----------
* Restated to classify Equipment Iberia as a discontinued
operation. Refer to note 8 (Financial).
<DELTA> Scope 1 and 2.
Lost-time injuries multiplied by 200 000 divided by
total hours worked.
^ Department of Trade and Industry (South Africa).
+ Audited and verified by Empowerdex.
Closing rate Average rate
Six months
ended Year ended Six months ended Year ended
31 Mar 31 Mar
31 Mar 18 17 30 Sept 17 31 Mar 18 17 30 Sept 17
Reviewed Reviewed Audited Reviewed Reviewed Audited
---------------------- --------- --------- ---------- --------- --------- ----------
Exchange rates (Rand)
United States Dollar 11.85 13.41 13.50 12.75 13.56 13.39
Euro 14.57 14.34 15.96 15.34 14.57 14.83
British Sterling 16.62 16.77 18.12 17.42 16.91 17.03
---------------------- --------- --------- ---------- --------- --------- ----------
www.barloworld.com
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR GGUUCAUPRGAR
(END) Dow Jones Newswires
May 21, 2018 02:00 ET (06:00 GMT)
1 Year Barloworld Ld Chart |
1 Month Barloworld Ld Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
