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| 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 Apr 2019 to Apr 2024
TIDMBWO
RNS Number : 0504F
Barloworld Limited
15 May 2017
Barloworld Limited
Reviewed interim results for the six months to 31 March 2017
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 and Power (earthmoving equipment and power systems), Automotive and Logistics (car rental, motor retail, fleet services, used vehicles and disposal solutions, logistics management and supply chain optimisation). 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, General Motors, Jaguar Land Rover, Mazda, Mercedes-Benz, Toyota, Volkswagen, Hyster, Massey Ferguson and others.
Barloworld has a proven track record of long-term relationships with global principals and customers. We have an 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 78% of just over 20 000 employees in South Africa.
Corporate information
Barloworld Limited
Hot Features
Premium
(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
+27 11 445 1000
invest@barloworld.com
Directors
Non-executive: DB Ntsebeza (Chairman), NP Dongwana, FNO Edozien^, H Hickey, M 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 Motloung
+27 11 445 1000
invest@barloworld.com
Instinctif
Hartwell Tshuma
+27 11 447 3030
hartwell.tshuma@instinctif.com
Sponsor
JP Morgan Equities South Africa (Pty) Ltd
For background information visit www.barloworld.com
Salient features
Revenue up 2% to R32.5 billion
Operating profit up 5% to R1 849 million
Cash generated from operations of R929 million
(1H'16: R1 771 million)
Headline earnings per share up 9% to 365 cents
Interim dividend per share up 9% to 125 cents
Dominic Sewela, CE of Barloworld Limited, said:
"The group produced a pleasing overall result in challenging trading conditions. The Automotive division achieved a record result in a tough vehicle market with all segments showing positive growth. Logistics performance was below prior year due to the weakening trading conditions.
Equipment Russia outperformed expectations, while activity levels in Iberia remain disappointing. Equipment southern Africa produced an improved operating result despite the slowdown in mining demand. This was underpinned by good aftermarket activity. Income
from our Bartrac joint venture in the Katanga province of the Democratic Republic of Congo, was well up on the prior year.
The outlook for global economic growth remains positive and this is reflected in the increased demand for commodities and improved commodity prices. Some recovery in sub-Saharan Africa growth is expected, notwithstanding the downside risks due to lower oil prices and possible further credit-rating downgrades for South Africa. A strategic review process has been completed outlining our focus on fixing and addressing underperforming businesses, optimising the existing portfolio and pursuing targeted high growth opportunities."
15 May 2017
Chairman and chief executive's report
Overview
The global economy continues to show improvement boosted by strong growth in Asia. Despite weak first quarter growth, the US economy is still expected to expand by close to 2% in the current year. The US Federal Reserve has shown confidence in the recovery of the US economy and is likely to push for further interest increases during the course of the year. The anti-globalisation and protectionist rhetoric of the Trump administration has however fuelled fears of increased barriers to free global trade.
The South African economy has been adversely affected by the fall out following the cabinet reshuffle announced by President Zuma on 30 March. The full impact of the resultant sovereign ratings downgrade by S&P and Fitch is likely to be felt. Business and consumer confidence levels have been shaken which is likely to negatively affect both investment as well as consumer spending going forward. The South African economy grew by 0.3% in 2016 and the outlook for growth in 2017, while clouded by recent events, is now forecast to be of the order of 0.7%.
Group revenue for the six months to March 2017 grew by 2% to R32.5 billion while operating profit increased by R93 million (5.3%) to R1 849 million.
Headline earnings per share increased by 30 cents (9%) to 365 cents per share favourably impacted by a strong operating performance and reduced losses from associates.
An interim dividend of 125 cents per share (1H'16: 115 cents) has been declared.
Operational review
Equipment and Handling
Equipment southern Africa
Revenue to March of R8.2 billion is R1 billion (11%) below last year mainly as a result of reduced mining activity particularly outside of South Africa. The stronger Rand negatively impacted revenue during the period by R185 million.
Operating profit to March of R713 million is up by R12 million (1.7%) with South Africa trading ahead of last year and the other African territories all trading behind the prior year. The operating margin for the period improved from 7.6% to 8.7% mainly as a result of the increased aftersales mix which represented 61% of total revenue compared to 54% last year.
Bartrac, our joint venture in the Katanga province of the DRC, produced a profit of R41 million in the period compared to a loss of R27 million last year. The Glencore Katanga mine which suspended mining during the course of last year has now mobilised a part of their fleet to gear up for the new processing plant which is expected to come on stream in the fourth quarter of 2017. This has necessitated placing additional technicians on site to achieve the required service levels for the mine.
While our profitability in Angola has improved compared to last year, the current oil price has not resolved the hard currency shortage prevailing in that country. We continued to curtail our trading operations during the period but have once again generated cash resulting in increased cash on hand at the end of March.
Equipment Iberia
Activity levels in both Spain and Portugal remain disappointing. Revenue to March of EUR133 million was EUR5.6 million (4.1%) down on last year.
The operating profit to date of EUR591 000 (R8 million) was well down on the EUR1 389 000 generated last year (R23 million).
Our associate Energyst produced a significant loss during the period arising from the loss of a major contract in Argentina.
Equipment Russia
The Russian economy continues to fight its way out of the two-year recession with the Central Bank of Russia cutting interest rates to stimulate growth. Any further weakening of the oil price is, however, seen as a risk to this recovery.
Equipment Russia produced a strong performance in the first six months with revenue of US$167.5 million (R2 267 million) 6% up on the US$157.9 million (R2 347 million) of last year. The increase was driven by stronger mining machine sales as well as improved parts demand. The stronger Rand shaved R232 million off revenue for the period.
Operating profit to March of US$19.4 million is 24% (US$3.7 million) ahead of last year. In Rand terms operating profit of R262 million showed a 12% improvement on last year.
Handling
The joint venture (JV) with BayWa AG was finalised at the end of February with net proceeds of R301 million received in respect of the transaction. The results of the new JV renamed BHBW (SA) have therefore been disclosed in associate income from 1 March 2017.
Automotive and Logistics
Automotive
The division generated revenue to March of R16 321 million which was R1 564 million (11%) ahead of last year with all the business segments showing good revenue growth. The operating profit of R863 million was R106 million (14%) up on last year with an improved operating margin of 5.3% compared to 5.1% in 2016.
Car rental
Revenue for the first half of R3 262 million was R411 million (14%) above the comparative period last year. This was driven by a 4.2% increase in billed days, a higher average rate per day of 2.3% and strong revenue growth from used vehicle sales due to a combination of increased units and higher average selling prices. Average fleet utilisation for the period was above 75% in line with the prior year.
Year-to-date operating profit of R297 million showed a R31 million (12%) improvement on last year mainly due to the excellent used vehicle result.
Avis Fleet
Revenue for the six months increased by 4.7% to R1 688 million. Operating profit of R292 million was R32 million (12.3%) up on last year aided by improved used vehicle profitability.
Motor Trading
Revenue increased by R1 078 million (11%) to R11 371 million and was positively impacted by the acquisitions of the two Union Motors Mercedes-Benz dealerships by NMI-DSM and the Salvage Management and Disposals business in 2016. Revenue for the first six months was negatively impacted by lower new vehicle sales on the back of a 7.1% decline in the South African dealer market.
Operating profit to March of R274 million was R43 million (19%) ahead of last year mainly as a result of the acquisitions completed last year.
In October 2016, we acquired the balance of the shares (49%) in the N4 Jaguar Land Rover business with the related property.
Logistics
Revenue to March of R3 199 million exceeded the prior year by R561 million (21%) mainly due to the KLL and Aspen acquisitions in January 2016 as well as the full impact of the additional contracts added within Supply Chain and Transport during 2016.
Year-to-date operating profit of R51 million was R11 million below last year due to tougher trading conditions in the period as well as costs related to the finalisation of the Supply Chain software disposal.
Strategic review
The group completed a comprehensive strategic review and a new strategy was presented and approved by the board in March 2017.
The group's future ambitions are supported through achieving top quartile shareholder returns; driving profitable growth across all businesses; institutionalising a high-performance culture; and continuing to make a world of difference to our stakeholders. Key initiatives include fixing and addressing underperforming businesses; optimising the existing portfolio; and pursuing targeted high-growth opportunities.
Human resources, diversity and sustainable development
Tragically there were two work-related fatalities in March 2017. Our condolences go out to the bereaved families. Support has been extended to both families in terms of counselling and financial assistance. We have heightened our focus on safety across the group and appropriate measures have been incorporated in ongoing safety programmes.
The focus remains on coaching and mentoring programmes aimed at ensuring we have the leadership capability, talent and skills to realise our strategic targets, and to ensure that the profile of our workforce reflects the societies in which we operate. In addition, our attraction and retention strategies are aimed at an "inclusive workforce" where every employee believes they come to work with a sense of purpose and leave with a sense of achievement.
A wide range of diversity and inclusion initiatives which include partnering with emerging suppliers are under way. We are engaging with our principals to advance their localisation activities, which would support emerging localisation and industrialisation programmes in South Africa. The partnership with the South African Department of Trade and Industry has resulted in the launch of the Barloworld Siyakhula Incubation Hub in March 2017, which supports 63 small and medium enterprises to date that have created some 830 new jobs. Our activities remain centred around enhancing our diversity profile and resulting competitiveness.
We are monitoring progress against our various sustainable development objectives and in support of our renewable energy goal, additional solar photovoltaic capacity is being installed.
Changes in directorate and executive management
At the annual general meeting held on 8 February 2017 the following director changes took place:
-- Independent non-executive director, Mr Steven Pfeiffer, retired having reached the retirement age for non-executive directors of 70 years.
-- Mr Clive Thomson retired as an executive director of the board, member of sub-committees and chief executive of the Barloworld group as part of a structured succession plan.
-- Mr Dominic Sewela succeeded Mr Thomson as chief executive for the Barloworld group.
-- Mr Peter Bulterman also retired as an executive director of the board in terms of a planned process to reduce the number of executives represented on the board. Mr Bulterman remains in the employ of the company as the chief executive of the Equipment division.
Ms Hester Hickey and Messrs Peter Schmid and Michael Lynch-Bell were appointed as independent non-executive directors of the Barloworld Limited board with effect from 1 April 2017 in line with a structured board nomination process.
Mr John Blackbeard retired from the company and the board of Barloworld Limited and its sub-committees at the end of April 2017 following the disposal of the Handling and Agriculture South Africa businesses into a 50:50 JV with BayWa AG.
Ms Babalwa Ngonyana resigned from the Barloworld Limited board with effect from 11 May 2017 due to increased external executive commitments.
Mr Kamogelo Mmutlana was appointed chief executive of the Barloworld Logistics division with effect from 1 March, following Mr Steve Ford's resignation at the end of February 2017.
The board wishes to thank the non-executive and executive directors that has departed for their valuable service to the board and Barloworld over the years.
Funding
Group net debt at the end of March of R9 085 million increased by R1 069 million from September 2016. This was R1 983 million down on March 2016. The net cash outflow for the period of R857 million was mainly due to increased working capital of R362 million and an investment of R773 million in the Avis fleet leasing and Equipment rental fleet.
In line with previous years, we believe that we will be able to reverse the working capital utilisation in the second half to ensure that the group is cash positive for the year.
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 2017. The Equipment southern Africa firm order book at March 2017 has increased to R1.9 billion compared to the R1.3 billion at September 2016 on the back of improved demand in mining and construction.
The Equipment Russia firm order book at March stood at US$53 million compared to US$21 million at September 2016. This order book would, however, increase to US$173 million with the inclusion of the US$120 million Polyus Gold mining truck order finalised after period end. The pipeline of major projects in Siberia and the Russian Far East currently being negotiated provide an exciting outlook for mining activity in our territory.
The Equipment Iberia firm order book at March of EUR44 million was well up on the September level of EUR26 million. The order book for new machines has improved significantly from last year and now represents approximately 49% of the total firm orders with Power Systems representing 51%. While industry machines sales are projected to rise sharply during the year, the increase is weighted towards smaller construction equipment.
New vehicle sales in South Africa are expected to remain under pressure impacted by declining consumer and business confidence. Consequently we do not expect dealer new vehicle volumes to show growth this year. In response to that we are taking steps to improve the returns and sustainability of our Motor Retail dealerships.
In Car Rental we are forecasting continued growth in the foreign in-bound segment and a continued strong contribution from the sales of used vehicles.
In Avis Fleet the financed fleet has increased slightly through organic growth as well as the addition of a number of smaller fleets. The renewals of certain existing longstanding contracts have been delayed and are now only likely to impact our next financial year.
The Logistics business is a good indicator of the state of the economy and with the current uncertainty for the South African economy we have noted some signs of slowing in both the Supply Chain as well as the Transport businesses. We nonetheless continue to forecast an improvement in the traditionally stronger second half.
The outlook for global economic growth remains positive and this is reflected in the increased demand for commodities and improved commodity prices. Some recovery in sub-Saharan Africa growth is expected, notwithstanding the downside risks due to lower oil prices and possible further credit-rating downgrades for South Africa. While we have seen some pick up in mining machine demand in southern Africa, it is still too early to call a sustained upturn in the mining cycle. We do, however, believe that the major mining groups are approaching a significant decision point where they will need to either invest in replacement capital expenditure or incur operating expenditure for rebuilds of existing machine fleets.
A strategic review process has been completed outlining our focus on fixing and addressing underperforming businesses, optimising the existing portfolio and pursuing targeted high-growth opportunities.
DB Ntsebeza DM Sewela Chairman Group chief executive
Group financial review
Revenue for the first six months increased by R585 million (2%) to R32.5 billion with the bulk of the improvement in Automotive and Logistics which showed increases of R1.6 billion (11%) and R0.5 billion (21%) respectively. Revenue in Equipment Russia was up by 6% in Dollar terms while Equipment Iberia was down in Euro terms. Rand revenues for both regions were negatively impacted by the stronger Rand exchange rate. In Equipment southern Africa revenue decreased by R1 billion (11%) as a result of reduced mining activity and a stronger Rand. The stronger Rand reduced total revenue by R0.7 billion.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) was up by 7.6% to R3 205 million with depreciation and amortisation up by 11% as a result of new acquisitions and increases in the leasing and rental fleets.
Operating profit rose by 5.3% to R1 849 million with the operating margin up slightly to 5.7%. In Equipment southern Africa, operating profit was up by 1.7%, driven largely by a higher mix of aftersales. In Equipment Russia operating profit in Dollar terms was 24% ahead of the prior period, due to higher mining equipment demand as well as increased parts sales. Equipment Iberia operating profit was down on the comparative period.
Automotive produced a strong result with operating profit up 14% to R863 million in a tough trading environment with all business units showing an improvement on the prior period. Logistics generated an operating profit of R51 million which was R11 million down on the prior period.
The net negative fair value adjustments on financial instruments of R123 million (1H'16: R55 million) mainly comprise the cost of forward points on foreign exchange contracts and currency losses on bank balances in Equipment southern Africa, as well as losses on unhedged transactions in Handling South Africa. The prior year benefited from currency gains in Equipment southern Africa.
Finance costs increased by R15 million to R680 million. This is mainly due to higher interest rates in South Africa.
Losses from non-operating and capital items of R38 million mainly relates to the disposal costs of the Handling business and the impairment of an intangible asset in Logistics off-set by profit on sale of property in Automotive.
The taxation charge reduced by R12 million to R306 million while the effective taxation rate for the period (excluding prior year taxation and taxation on non-operating and capital items) increased slightly to 27.9% (1H'16: 27.7%).
The loss from associates of R7 million compared favourably to a loss of R41 million last year. The improvement is largely driven by the Bartrac joint venture in the Katanga province of the DRC which recorded a profit of R41 million in the first half compared to a loss in the prior year of R27 million. This was offset by the increased loss in Energyst our European associate to R50 million (of which R19 million relates to goodwill impairment).
Headline earnings per share (HEPS) was up by 9% to 365 cents per share compared to the 335 cents in the prior period.
Basic earnings per share (EPS) of 337 cents is 9% lower than the 368 cents in the prior period mainly due to the losses from non-operating and capital items in the current year.
Cash flow
Cash generated from operations of R929 million was down on the R1 771 million generated in the prior period, due to the increased net investment in fleet leasing assets and equipment rental fleet. Working capital increased by R362 million which was in line with the prior period. Equipment southern Africa reduced working capital by R561 million, while Automotive and Logistics showed an absorption of R895 million in the period.
Net cash used in the investment activities of R105 million was favourably impacted by the proceeds of R301 million received from the sale of assets of the Handling SA businesses into a joint venture company with BayWa AG. The net cash outflow before financing activities for the year of R857 million was R844 million higher than the R13 million outflow last year.
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 R2.0 billion (4%) to R48 billion compared to September 2016. This was driven by an increase in fleet leasing and Equipment rental fleet, while the stronger Rand reduced total assets by R578 million.
Total interest-bearing debt at 31 March 2017 increased by R1.3 billion to R12.3 billion (September 2016: R11 billion) while cash and cash equivalents increased by R0.2 billion to R3.2 billion. Net interest-bearing debt at 31 March 2017 of R9 billion was R1.1 billion up on the R8 billion at September 2016.
Debt
In April 2017, the BAW13 bond for R450 million matured and was repaid utilising existing facilities.
A bond auction planned for 6 April 2017 was postponed due to the uncertainty in the market, following the cabinet reshuffle and the sovereign ratings downgrade.
At the subsequent auction held on 4 May 2017, a three-year unsecured bond totalling R582 million (BAW25) was issued. While there are sufficient unutilised long-term borrowing facilities to cover upcoming maturities for the balance of the year, the group is in the process of finalising additional committed facilities to maintain its liquidity position.
South African short-term debt at March includes commercial paper totalling R597 million (September 2016: R807 million). While this market has remained active, liquidity and spreads have been negatively impacted by interest rate uncertainty. We expect to maintain our participation in this market to the extent permitted by overall liquidity in the market.
Cash and cash equivalents at March of R3.2 billion included US$51.5 million (R689 million) held in Angola of which US$47.5 million was denominated in Kwanza and the rest in US Dollar. The cash held in Kwanza has increased from the US$37.5 million (R516 million) held at September 2016.
At the end of March, the group had unutilised borrowing facilities of R7.6 billion, of which R6.5 billion was committed. The group's ratio of long-term to short-term debt was 66:34 (September 2016: 76:24). This position has improved subsequent to the issuance of BAW25 in May 2017 and the finalisation of the new facilities.
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 Aa3.za and P-1.za assigned by Moody's Investors Services, remains valid until June 2017. The outlook on the ratings is stable.
The group total debt to equity ratio at 31 March 2017 was 63% (September 2016: 56%), while group net debt to equity was 47% (September 2016: 41%).
Gearing in the three segments remain in line with group target ranges:
Group Group
Debt to equity (%) Trading Leasing Car Rental total debt net debt
--------------------------- ------- --------- ---------- ----------- ---------
Target range 30 - 50 600 - 800 200 - 300
Ratio at 31 March 2017 32 604 279 63 47
Ratio at 31 March 2016 38 662 248 64 53
Ratio at 30 September 2016 29 720 216 56 41
--------------------------- ------- --------- ---------- ----------- ---------
Accounting policies
The condensed consolidated interim 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 period except for the reclassification of the interest-bearing floorplan facilities reported in 2016.
Consistent with this change reported in the 2016 annual financial statements, Barloworld's comparative results for the six months ended to 31 March 2016 have been restated to reflect changes in disclosure of the interest-bearing floorplan liabilities.
Dividend
An interim dividend totalling 125 cents per share was declared in respect of the half year's earnings (2016: 115 cents). All issued shares are entitled to receive dividends. The interim dividend declared is covered 2.9 times by headline earnings (2016: 2.9 times).
Going forward
The group remains committed to improving returns. This is particularly relevant in our Equipment businesses in southern Africa and Iberia as well as Logistics which are generating below target returns. The group will also focus on generating positive free cash flow in 2017 through strict control of working capital and capital expenditure in the second half. We will also proactively take steps for the early refinancing of debt that is maturing within the next 18 months.
DG Wilson
Finance director
Operational reviews
Equipment and Handling
Revenue Operating profit /(loss) Net operating assets
Year Year
Six months ended ended Six months ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 30 Sept
2017 2016 2016 2017 2016 2016 2017 2016
Rm Rm Rm Rm Rm Rm Rm Rm
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Audited
------------------------ --------- --------- -------- --------- --------- -------- ----------- ---------
Equipment 12 409 13 833 27 857 984 960 2 239 14 905 15 642
--------- --------- -------- --------- --------- -------- ----------- ---------
- Southern Africa 8 214 9 238 18 547 713 701 1 585 10 126 10 546
- Europe 1 928 2 248 4 473 8 25 55 2 320 2 694
- Russia 2 267 2 347 4 837 262 234 599 2 459 2 402
--------- --------- -------- --------- --------- -------- ----------- ---------
Handling 603 719 1 505 2 3 25 547 910
------------------------ --------- --------- -------- --------- --------- -------- ----------- ---------
13 012 14 552 29 362 986 963 2 264 15 452 16 552
------------------------ --------- --------- -------- --------- --------- -------- ----------- --------- Share of associate loss (7) (39) (22) ------------------------ --------- --------- -------- --------- --------- -------- ----------- ---------
While Equipment southern Africa had a decline of 11% in revenue, operating profit for the same period was up in comparison to the same period last year. Operating margin for the first six months to March improved from 7.6% in 2016 to 8.7% in 2017. The continued focus on business improvement and cost reduction initiatives as well as the increase in aftersales mix contributed to the improvement in the operating margin. The associate in the Katanga province of the DRC delivered an operating profit of R41 million, against a loss of R27 million in 2016. Overall, returns improved when compared to the same period last year.
Equipment Iberia operated in an improving macroeconomic environment with new machine industry growth; however, this remains concentrated in the small equipment segment. Revenue was 4% down compared to the prior period in Euro terms driven by lower prime product revenues, while aftermarket revenues grew and overall margins were maintained. The division generated EUR9.9 million in cash for the period compared to a EUR12.5 million utilisation in the prior period. Operating profits of EUR0.6 million were down against the prior period. Energyst negatively impacted the associate line due to the loss of a major contract in Argentina and the business is currently undergoing restructuring to concentrate on their European operations.
Equipment Russia revenues and operating profit grew by 6% and 24% respectively in US Dollar terms. Operating margin benefited from a favourable sales mix with the increase in aftermarket sales which traditionally have higher margins. Net assets remained well controlled resulting in healthy returns and positive cash flow generation. Significant growth in customer firm orders was driven by a number of mining deal closures predominantly driven by gold and base metals mining, coupled with coal recovery.
The disposal of Handling and Agriculture SA into a joint venture with BayWa came into effect on 1 March 2017 and now trades under the name BHBW SA. Trading in agriculture is up on last year as the drought appears to have ended and South Africa seems set to produce a bumper maize crop. Net operating assets include certain retained receivables and some inventory that will be turned to cash during the balance of the year.
Automotive and Logistics
Revenue Operating profit /(loss) Net operating assets
Year Year
Six months ended ended Six months ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 30 Sept
2017 2016 2016 2017 2016 2016 2017 2016
Rm Rm Rm Rm Rm Rm Rm Rm
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Audited
------------------------- --------- --------- -------- --------- --------- -------- ----------- ---------
Automotive 16 321 14 757 31 427 863 757 1 654 10 142 8 686
--------- --------- -------- --------- --------- -------- ----------- ---------
- Car Rental 3 262 2 851 5 967 297 266 536 3 687 2 534
- Avis Fleet 1 688 1 613 3 641 292 260 560 3 764 3 786
- Motor Trading 11 371 10 293 21 819 274 231 558 2 691 2 366
--------- --------- -------- --------- --------- -------- ----------- ---------
Logistics 3 199 2 638 5 756 51 62 223 2 783 2 472
--------- --------- -------- --------- --------- -------- ----------- ---------
- Southern Africa 3 108 2 509 5 527 56 66 226 2 668 2 348
- Europe and Middle East 91 129 229 (4) (4) (3) 115 124
--------- --------- -------- --------- --------- -------- ----------- ---------
19 520 17 395 37 183 914 819 1 877 12 925 11 158
------------------------- --------- --------- -------- --------- --------- -------- ----------- ---------
Share of associate loss (2) (4)
------------------------- --------- --------- -------- --------- --------- -------- ----------- ---------
The Automotive division delivered another record result for the first six months of the financial year, continuing to prove resilient in challenging market conditions. Divisional operating profit improved by 14% off revenue growth of 11%, while achieving an overall operating margin of 5.3% (1H'16: 5.1%). The division continues to focus on generating strong operational cash flows, costs and asset management to improve returns.
Car Rental delivered a solid result, further improving operating profit by 12% off a revenue growth of 14% and achieving an operating margin of 9.1% (1H'16: 9.3%). The business grew rental day volumes, increased revenue per rental day, successfully managed fleet utilisation at 75% and maintained market leadership in a competitive environment. Avis Car Sales continued to earn good returns on the sale of ex-rental vehicles.
Avis Fleet delivered a strong result, increasing operating profit by 12% off a revenue growth of 4.7% and achieving an operating margin of 17.3% (1H'16: 16.1%). The business returned to positive financed fleet growth of 1.0%. Fleet under management declined on the back of a weaker new vehicle market. Improved profit contribution from used vehicles supported the overall results.
The Motor Trading operations delivered a pleasing result given the tough trading conditions and declining new vehicle market. Operating profit increased by 19% off a revenue growth of 11%, improving overall operating margin to 2.4% (1H'16: 2.2%). This result was supported by the recent acquisitions and improved aftersales performance.
Despite revenue being up by 21% to R3.2 billion on last year, the Logistics division's results were negatively impacted by tougher trading conditions in the period as well as costs related to the finalisation of the Supply Chain software disposal. Operating profit is down 17% to R51 million in comparison to March 2016. A traditionally stronger second half is expected. However, the impact of the recent downgrade on the trading environment is being closely monitored.
Corporate
Revenue Operating (loss)/(profit) Net operating assets/(liabilities)
Year Year
Six months ended ended Six months ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 30 Sept
2017 2016 2016 2017 2016 2016 2017 2016
Rm Rm Rm Rm Rm Rm Rm Rm
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Audited
---------------- ---------- ---------- -------- --------- --------- -------- ---------------- ----------------
- Southern Africa 2 (13) 10 48 657 578
- Europe (38) (36) (54) (2 747) (2 908)
---------------------------------------- -------- --------- --------- -------- ---------------- ----------------
2 (51) (26) (6) (2 090) (2 330)
-------------------------------------- -------- --------- --------- -------- ---------------- ----------------
Share of associate income 1
---------------------------------------- -------- --------- --------- -------- ---------------- ----------------
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 has shown a higher operating loss compared to the previous comparative period largely as a result of once-off charges relating to group strategic projects and higher employment costs resulting from the group leadership transition. In Europe the higher operating loss is due mainly to increased operating costs.
DIVID DECLARATION
Dividend number 177
Notice is hereby given that final dividend number 177 of 125 cents (gross) per ordinary share in respect of the six months ended 31 March 2017 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 125 cents per ordinary share; -- The net dividend amount is 100 cents per share.
In compliance with the requirements of Strate and the JSE Limited, the following dates are applicable:
-- Last day to trade cum dividend Tuesday, 6 June 2017
-- Shares trade ex dividend Wednesday, 7 June 2017
-- Record date Friday, 9 June 2017
-- Payment date Monday, 12 June 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 7 June 2017 and Friday, 9 June 2017, both days inclusive.
On behalf of the board
LP Manaka
Group company secretary
Directors
Non-executive: DB Ntsebeza (Chairman), NP Dongwana, FNO Edozien^, H Hickey, M Lynch-Bell*, SS Mkhabela, 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 30 Sept
2017 2016 2016
Reviewed Reviewed Audited
Notes Rm Rm Rm
---------------------------------------------------- ----- --------- --------- ----------
Revenue 32 532 31 947 66 547
---------------------------------------------------- ----- --------- --------- ----------
Operating profit before items listed below (EBITDA) 3 205 2 978 6 674
Depreciation (1 286) (1 167) (2 426)
Amortisation of intangible assets (70) (55) (113)
---------------------------------------------------- ----- --------- --------- ----------
Operating profit 3 1 849 1 756 4 135
Fair value adjustments on financial instruments (123) (55) (209)
Finance costs (680) (665) (1 346)
Income from investments 71 51 113
---------------------------------------------------- ----- --------- --------- ----------
Profit before non-operating and capital items 1 117 1 087 2 693
Non-operating and capital items 4 (38) 85 120
---------------------------------------------------- ----- --------- --------- ----------
Profit before taxation 1 079 1 172 2 813
Taxation 5 (306) (318) (809)
---------------------------------------------------- ----- --------- --------- ----------
Profit after taxation 773 854 2 004
Loss from associates and joint ventures (7) (41) (25)
---------------------------------------------------- ----- --------- --------- ----------
Net profit for the period 765 813 1 979
Net profit attributable to:
Owners of Barloworld Limited 710 781 1 883
Non-controlling interests in subsidiaries 55 32 96
---------------------------------------------------- ----- --------- --------- ----------
765 813 1 979
---------------------------------------------------- ----- --------- --------- ----------
Earnings per share^ (cents)
- basic 336,6 368,4 890,5
- diluted 334,7 368,2 888,2
---------------------------------------------------- ----- --------- --------- ----------
^ Refer note 2 for details of headline earnings per share calculation.
Condensed consolidated statement of comprehensive income
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2017 2016 2016
Reviewed Reviewed Audited
Rm Rm Rm
----------------------------------------------------------------------- --------- --------- ----------
Profit for the period 765 813 1 979
Items that may be reclassified subsequently to profit or loss: (323) 479 (550)
--------- --------- ----------
Exchange (loss)/gain on translation of foreign operations (366) 567 (377)
Translation reserves realised on the liquidation and disposal of foreign
joint ventures and
subsidiaries (83)
Gain/(loss) on cash flow hedges 59 (122) (121)
Deferred taxation on cash flow hedges (16) 34 31
--------- --------- ----------
Items that will not be reclassified to profit or loss: (28) (39) (1 134)
--------- --------- ----------
Actuarial losses on post-retirement benefit obligations (1 343)
Taxation effect (28) (39) 209
--------- --------- ----------
Other comprehensive (loss)/income for the period (351) 440 (1 684)
-------------------------------------------------------------------------- --------- --------- ----------
Total comprehensive income for the period 414 1 253 295
-------------------------------------------------------------------------- --------- --------- ----------
Total comprehensive income attributable to:
Owners of Barloworld Limited 359 1 221 199
Non-controlling interests in subsidiaries 55 32 96
-------------------------------------------------------------------------- --------- --------- ----------
414 1 253 295
----------------------------------------------------------------------- --------- --------- ----------
Condensed consolidated statement of financial position
31 Mar
31 Mar 2016 30 Sept
2017 Reviewed 2016
Reviewed Restated Audited
Notes Rm Rm Rm
----------------------------------------------------------------------- ----- --------- --------- --------
ASSETS
Non-current assets 20 174 19 987 20 179
--------- --------- --------
Property, plant and equipment 13 852 13 946 13 806
Goodwill 2 003 1 901 2 015
Intangible assets 1 678 1 647 1 713
Investment in associates and joint ventures 6 1 178 980 923
Finance lease receivables 164 117 147
Long-term financial assets 7 363 625 448
Deferred taxation assets 936 771 1 127
--------- --------- --------
Current assets 27 774 29 776 25 015
--------- --------- --------
Vehicle rental fleet 3 572 3 172 2 789
Inventories 10 287 13 961 10 317
Trade and other receivables 10 600 10 257 8 826
Taxation 85 68 55
Cash and cash equivalents 13 3 230 2 318 3 028
--------- --------- --------
Assets classified as held for sale 8 27 828
----------------------------------------------------------------------- ----- --------- --------- --------
Total assets 47 975 49 763 46 022
----------------------------------------------------------------------- ----- --------- --------- --------
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 441 441 441
Other reserves 4 804 6 275 5 134
Retained income 13 549 13 619 13 367
----------------------------------------------------------------------- ----- --------- --------- --------
Interest of shareholders of Barloworld Limited 18 794 20 335 18 942
Non-controlling interest 716 617 737
----------------------------------------------------------------------- ----- --------- --------- --------
Interest of all shareholders 19 510 20 952 19 679
Non-current liabilities 12 043 12 592 12 446
--------- --------- --------
Interest-bearing 8 133 9 726 8 379
Deferred taxation liabilities 628 567 703
Provisions 135 139 111
Other non-current liabilities 3 147 2 160 3 253
--------- --------- --------
Current liabilities 16 422 16 219 13 830
--------- --------- --------
Trade and other payables 11 223 11 525 10 054
Provisions 930 918 931
Taxation 87 116 180
Amounts due to bankers and short-term loans 4 182 3 660 2 665
--------- --------- --------
Liabilities directly associated with assets classified as held for sale 8 67
----------------------------------------------------------------------- ----- --------- --------- --------
Total equity and liabilities 47 975 49 763 46 022
----------------------------------------------------------------------- ----- --------- --------- --------
Condensed consolidated statement of changes in equity
Attribu-
Share table to Interest
capital Barloworld Non- of all
and Other Retained Limited controlling share-
premium reserves income shareholders interest holders
Rm Rm Rm Rm Rm Rm
--------------------------------------------- -------- --------- -------- ------------- ------------ --------
Balance at 1 October 2015 (audited) 282 5 793 13 351 19 426 616 20 042
Total comprehensive income for the period 479 742 1 221 32 1 253
Other reserve movements 3 15 18 (21) (3)
Dividends (489) (489) (10) (499)
Shares issued 159 159 159
---------------------------------------------- -------- --------- -------- ------------- ------------ --------
Balance at 31 March 2016 (reviewed) 441 6 275 13 619 20 335 617 20 952
---------------------------------------------- -------- --------- -------- ------------- ------------ --------
Total comprehensive (loss)/ income for the
period (1 029) 7 (1 022) 64 (958)
Other reserve movements (112) (15) (127) 21 (106)
Acquisition of subsidiary 96 96
Other changes in minority shareholders'
interest and minority loans (55) (55)
Dividends (244) (244) (6) (250)
---------------------------------------------- -------- --------- -------- ------------- ------------ --------
Balance at 30 September 2016 (audited) 441 5 134 13 367 18 942 737 19 679
---------------------------------------------- -------- --------- -------- ------------- ------------ --------
Total 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 2017 (reviewed) 441 4 804 13 549 18 794 716 19 510
---------------------------------------------- -------- --------- -------- ------------- ------------ --------
Condensed consolidated statement of cash flows
Six months ended Year ended
31 Mar
31 Mar 2016 30 Sept
2017 Reviewed 2016
Reviewed Restated Audited
Notes Rm Rm Rm
--------------------------------------------------------------------- ----- --------- --------- ----------
Cash flow from operating activities
Operating cash flows before movements in working capital 3 262 2 899 7 161
Movement in working capital (362) (351) 2 119
--------------------------------------------------------------------- ----- --------- --------- ----------
Cash generated from operations before investment in rental fleets 2 900 2 548 9 280
Fleet leasing and Equipment rental fleet (773) 228 (506)
--------- --------- ----------
Additions (1 614) (1 071) (2 580)
Proceeds on disposal 841 1 299 2 074
--------- --------- ----------
Vehicles rental fleet (1 198) (1 005) (947)
--------- --------- ----------
Additions (2 938) (2 263) (3 798)
Proceeds on disposal 1 740 1 258 2 851
--------- --------- ----------
Cash generated from operations 929 1 771 7 827
Realised fair value adjustments on financial instruments (172) 50 (105)
Finance costs and investment income (600) (591) (1 202)
Taxation paid (395) (291) (805)
--------------------------------------------------------------------- ----- --------- --------- ----------
Cash (outflow)/inflow from operations (238) 939 5 715
Dividends paid (including non-controlling interest) (514) (499) (772)
--------------------------------------------------------------------- ----- --------- --------- ----------
Net cash (applied to)/retained from operating activities (752) 440 4 943
Net cash used in investing activities (105) (453) (1 436)
--------- --------- ----------
Acquisition of subsidiaries, investments and intangibles 11 (51) (506) (1 057)
Proceeds on disposal of subsidiaries, investments, intangibles and
loans repaid 12 301 316 258
Net investment in leasing receivables (48) 4 9
Acquisition of property, plant and equipment (368) (453) (980)
Proceeds on disposal of property, plant and equipment 60 186 334
--------- --------- ----------
Net cash (outflow)/inflow before financing activities (857) (13) 3 507
Net cash from/(used in) financing activities 1 122 (116) (2 753)
--------- --------- ----------
Shares repurchased for equity-settled share-based payment (95)
Shares issued net of share buyback 125 (162)
Shares issued 286
Purchase of non-controlling interest (22) (136) (142)
Non-controlling interest loan and equity movements (69) 64 24
Net increase/(decrease) in interest-bearing liabilities 1 213 (169) (2 664)
--------- --------- ----------
Net increase/(decrease) in cash and cash equivalents 265 (129) 754
Cash and cash equivalents at beginning of period 3 028 2 372 2 372
Effect of foreign exchange rate movements (63) 61 (112)
Effect of cash balances held for sale 14 14
--------------------------------------------------------------------- ----- --------- --------- ----------
Cash and cash equivalents at end of period 3 230 2 318 3 028
--------------------------------------------------------------------- ----- --------- --------- ----------
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, except for the restatement as detailed in note 17.
This report was prepared under the supervision of SY Moodley (group general manager: finance)
BCom CA(SA), ACMA.
--- ---------------------------------------------------------------------------------------------------------
Six months Year ended
31 Mar 31 March 30 Sept
2017 2016 2016
Reviewed Reviewed Audited
Rm Rm Rm
--------------------------------------------------------------------- --------- --------- ----------
2. RECONCILIATION OF NET PROFIT TO HEADLINE EARNINGS
Net profit attributable to Barloworld Limited shareholders 710 781 1 883
----------------------------------------------------------------------- --------- --------- ----------
Adjusted for the following:
Loss/(profit) on disposal of subsidiaries and investments
(IFRS 10) 42 (15) (168)
Profit on disposal of properties and other assets (IAS 16) (15) (70) (10)
Loss on sale of plant and equipment excluding rental assets
(IAS 16) 8
Impairment of goodwill (IFRS 3) 15
Reversal of impairment of investments in associates and joint ventures
(IAS 28) 37
Impairment of plant and equipment (IAS 16) and intangibles
(IAS 38) and other assets 11 6
Taxation effects of remeasurements 10 7 10
Associate and non-controlling interest in remeasurements 12 (1)
----------------------------------------------------------------------- --------- --------- ----------
Headline earnings 770 710 1 772
----------------------------------------------------------------------- --------- --------- ----------
Weighted average number of ordinary shares in issue during the period
(000)
- basic 210 995 211 934 211 425
- diluted 212 138 212 093 211 973
Headline earnings per share (cents)
- basic 364.9 335.0 838.1
- diluted 363.0 334.8 836.0
----------------------------------------------------------------------- --------- --------- ----------
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2017 2016 2016
Reviewed Reviewed Audited
Rm Rm Rm
--- --------------------------------------------------------------------- --------- --------- ----------
3. OPERATING PROFIT
Included in operating profit
Cost of sales (including allocation of depreciation) 24 608 25 077 51 345
Loss/(profit) on disposal of other plant, equipment and rental assets 43 (34) 69
Amortisation of intangible assets in terms of IFRS 3 Business
Combinations 13 3 22
----------------------------------------------------------------------- --------- --------- ----------
4. NON-OPERATING AND CAPITAL ITEMS
(Loss)/profit on disposal of investments and subsidiaries (42) 15 168
Impairment of goodwill (15)
Reversal of impairment of investments in associates and joint ventures (37)
Profit on disposal of properties and other assets 15 70 10
Impairment of plant and equipment, intangibles and other assets (11) (6)
----------------------------------------------------------------------- --------- --------- ----------
Gross non-operating and capital items (loss)/profit (38) 85 120
Taxation charge on non-operating and capital items (10) (7) (10)
Non-controlling interest on non-operating and capital items 1
Non-operating and capital items included in associate income (12)
----------------------------------------------------------------------- --------- --------- ----------
Net non-operating and capital items (loss)/profit (60) 79 110
----------------------------------------------------------------------- --------- --------- ----------
5. TAXATION
Taxation per income statement (306) (318) (809)
--------- --------- ----------
Prior year taxation 14 (10) (62)
Taxation on non-operating and capital items (10) (7) (10)
Attributable to a change in the rate of income tax 1 7 5
Taxation on profit before prior year taxation,
non-operating and capital items and rate change (312) (308) (742)
--------- --------- ----------
Effective taxation rate excluding non-operating and capital items,
prior year taxation (%) 27.9 27.7 28.9
----------------------------------------------------------------------- --------- --------- ----------
The interim taxation charges for the IAS 12 par 41 adjustments have been calculated by applying
an estimated average annual effective tax rate for March 2017. A significant factor in estimating
the annual effective tax rates for various countries are the exchange rates which have been
based on management's best estimate.
-------------------------------------------------------------------------------------------------------------
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2017 2016 2016
Book value Book value Book value
Rm Rm Rm
--- ---------------------------------------------------------------- ----------- ----------- -----------
6. INVESTMENT IN ASSOCIATES AND JOINT VENTURES
Joint ventures 979 655 646
Unlisted associates 199 325 277
------------------------------------------------------------------ ----------- ----------- -----------
1 178 980 923
-------------------------------------------------------------------- ----------- ----------- -----------
7. LONG-TERM FINANCIAL ASSETS
Unlisted investments 49 49 44
Other long-term financial assets 96 57 102
Unlisted debt instruments* 218 519 302
------------------------------------------------------------------ ----------- ----------- -----------
363 625 448
-------------------------------------------------------------------- ----------- ----------- -----------
* The long-term element of the investment in Angolan USD linked
government bonds.
--- ---------------------------------------------------------------- ----------- ----------- -----------
8. ASSETS CLASSIFIED AS HELD FOR SALE
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 27 152
Intangibles 2
Inventories 650
Trade and other receivables 24
------------------------------------------------------------------ ----------- ----------- -----------
Assets of disposal group held for sale 27 828
Trade and other payables (67)
------------------------------------------------------------------ ----------- ----------- -----------
Total liabilities associated with assets classified as held for
sale (67)
------------------------------------------------------------------ ----------- ----------- -----------
Net assets classified as held for sale 27 761
------------------------------------------------------------------ ----------- ----------- -----------
Per business segment:
Handling 746
Logistics 27 15
------------------------------------------------------------------ ----------- ----------- -----------
Total group 27 761
------------------------------------------------------------------ ----------- ----------- -----------
The assets classified as held for sale relate to assets within Barloworld Logistics' Transport
division.
Six months ended Year ended
31 Mar
31 Mar 2016 30 Sept
2017 Reviewed 2016
Reviewed Restated Audited
Rm Rm Rm
--- --------------------------------------------------------------------- --------- --------- ----------
9. FINANCIAL INSTRUMENTS
Carrying value of financial instruments by class:
Financial assets:
Trade receivables
- Industry 6 300 6 455 5 654
- Government 465 365 423
- Consumers 908 881 540
Other loans and receivables and cash balances 5 102 4 622 4 899
Finance lease receivables 317 404 379
Derivatives (including items designated as effective hedging
instruments)
- Forward exchange contracts 2 2
Other financial assets at fair value 114 49 33
----------------------------------------------------------------------- --------- --------- ----------
Total carrying value of financial assets 13 208 12 776 11 930
----------------------------------------------------------------------- --------- --------- ----------
Financial liabilities:
Trade payables
- Principals 3 689 4 025 2 603
- Other suppliers 3 169 2 958 5 684
Other non-interest-bearing payables 313 154 369
Derivatives (including items designated as effective hedging
instruments)
- Forward exchange contracts 1 106 46
Interest-bearing debt measured at amortised cost 14 995 15 898 10 085
----------------------------------------------------------------------- --------- --------- ----------
Total carrying value of financial liabilities 22 167 23 141 18 787
----------------------------------------------------------------------- --------- --------- ----------
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 March 2017
Level 1 Level 2 Level 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
---------------------------------------------------------------- --------- ------- ------- ----------
31 March 2016
Level 1 Level 2 Level 3 Total
----------------------------------------------------------- --------- ------- ------- ----------
Financial assets at fair value through profit or loss
Financial assets designated at fair value through profit or loss 44 44
Available-for-sale financial assets
Shares 5 5
---------------------------------------------------------------- --------- ------- ------- ----------
Total 49 49
---------------------------------------------------------------- --------- ------- ------- ----------
Financial liabilities at fair value through profit or loss
Derivatives 35 35
Derivative assets designated as effective hedging instruments 71 71
---------------------------------------------------------------- --------- ------- ------- ----------
Total 106 106
---------------------------------------------------------------- --------- ------- ------- ----------
30 September 2016
Level 1 Level 2 Level 3 Total
----------------------------------------------------------- --------- ------- ------- ----------
Financial assets at fair value through profit or loss
Financial assets designated at fair value through profit or loss 28 28
Available-for-sale financial assets
Shares 5 5
Derivative assets designated as effective hedging instruments 2 2
---------------------------------------------------------------- --------- ------- ------- ----------
Total 2 33 35
---------------------------------------------------------------- --------- ------- ------- ----------
Financial liabilities at fair value through profit or loss
Financial liabilities designated at fair value through profit or
loss 2 2
Derivatives 91 91
---------------------------------------------------------------- --------- ------- ------- ----------
Total 93 93
---------------------------------------------------------------- --------- ------- ------- ----------
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2017 2016 2016
Reviewed Reviewed Audited
Rm Rm Rm
---- ----------------------------------------------------------- --------- ---------------- ----------
10. DIVIDS DECLARED
Ordinary shares
Final dividend No 176 paid on 16 January 2017: 230 cents per
share (2016: No 174 - 230 cents
per share) 489 489 488
Interim dividend No 175 paid on 13 June 2016: 115 cents per
share 245
---------------------------------------------------------------- --------- ---------------- ----------
Paid to Barloworld Limited shareholders 489 489 733
Paid to non-controlling interest 25 10 16
---------------------------------------------------------------- --------- ---------------- ----------
514 499 749
---------------------------------------------------------------- --------- ---------------- ----------
11. ACQUISITION OF SUBSIDIARIES, INVESTMENTS AND INTANGIBLES
Inventories acquired (131) (154)
Receivables acquired (139) (183)
Payables, taxation and deferred taxation acquired 277 457
Borrowings net of cash 101 (34)
Property, plant and equipment and non-controlling interest (150) (239)
---------------------------------------------------------------- --------- ---------------- ----------
Total net assets acquired (42) (153)
Goodwill arising on acquisition (144) (290)
Intangibles arising on acquisition in terms of IFRS 3 Business
Combinations (93) (196)
---------------------------------------------------------------- --------- ---------------- ----------
Total purchase consideration (279) (639)
Non-cash consideration 25
Deemed disposal of associate at fair value on obtaining control 21
---------------------------------------------------------------- --------- ---------------- ----------
Net cash cost of subsidiaries acquired (254) (618)
Cash acquired 28 142
Investments and intangibles acquired (51) (280) (581)
---------------------------------------------------------------- --------- ---------------- ----------
Cash amounts paid to acquire subsidiaries, investments and
intangibles (51) (506) (1 057)
---------------------------------------------------------------- --------- ---------------- ----------
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2017 2016 2016
Reviewed Reviewed Audited
Rm Rm Rm
---- -------------------------------------------------------------------- --------- --------- ----------
12. PROCEEDS ON DISPOSAL OF SUBSIDIARIES, INVESTMENTS, INTANGIBLES AND
LOANS REPAID
Inventories disposed 492 39 39
Receivables disposed 20 22 22
Payables, taxation and deferred taxation balances disposed (55) (47) (46)
Borrowings net of cash 9 9
Property, plant and equipment, non-current assets, goodwill and
intangibles 145 146 146
---------------------------------------------------------------------- --------- --------- ----------
Net assets disposed 602 169 170
Receivable from subsidiary disposed (25) (22)
Less: Non-cash translation reserves realised on disposal of foreign
subsidiaries 1
Investment in joint venture (301)
Profit on disposal 122 117
---------------------------------------------------------------------- --------- --------- ----------
Net cash proceeds on disposal of subsidiaries 301 265 266
Bank balances and cash in subsidiaries disposed of (9) (9)
Proceeds on disposal of investments and intangibles 59 1
---------------------------------------------------------------------- --------- --------- ----------
Cash proceeds on disposal of subsidiaries, investments, intangibles
and loans repaid 301 316 258
---------------------------------------------------------------------- --------- --------- ----------
The net cash proceeds on disposal arises from the sale of the assets
of the Agriculture SA
and Handling SA business into a joint venture company with BayWa AG.
---- -------------------------------------------------------------------- --------- --------- ----------
13. CASH AND CASH EQUIVALENTS
Cash balances not available for use due to reserving and foreign
exchange restrictions 874 662 580
This includes US$47.5 million (R635 million) of Angolan Kwanza cash
on hand (Sept 2016: US$37.5
million, R520 million).
---- -------------------------------------------------------------------- --------- --------- ----------
14. COMMITMENTS
Capital commitments to be incurred 1 537 1 988 2 231
--------- --------- ----------
Contracted - Property, plant and equipment 425 680 392
Contracted - Vehicle rental fleet 777 902 1 196
Approved but not yet contracted 335 406 643
--------- --------- ----------
Operating lease commitments 2 936 3 499 3 316
Capital expenditure will be financed by funds generated by the
business, existing cash resources
and borrowing facilities available to the group.
---------------------------------------------------------------------- --------- --------- ----------
Six months ended Year ended
31 Mar 31 Mar 30 Sept
2017 2016 2016
Reviewed Reviewed Audited
Rm Rm Rm
---- -------------------------------------------------------------------- --------- --------- ----------
15. CONTINGENT LIABILITIES
Performance guarantees given to customers, other guarantees and claims 1 123 1 344 1 017
Buyback and repurchase commitments not reflected on the statement of
financial position 111 61 98
The Group has received a statement of objection from the Dutch Competition Authorities in
respect of a subsidiary disposed of in 2013, setting out their provisional findings on an
industry-wide investigation for the period ended 2010. At this stage the outcome of these
proceedings cannot be predicted with any certainty. Management is, however, giving the matter
its full attention and has, in conjunction with legal advisers, submitted written and verbal
responses to the objection.
-------------------------------------------------------------------------------------------------------------
16. RELATED PARTY TRANSACTIONS
There has been no significant change 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 accounting standards
The group will be adopting the Disclosure Initiative - Amendments to IAS 1 (December 2014)
in the current year and this will impact disclosure in the consolidated financial statements
for September 2017.
Floorplan
In line with the change in accounting policy on floorplan effected in September 2016, the
group reclassified the interest-bearing floorplan liability from amounts due to bankers and
short-term loans to trade and other payables in March 2016. Motor Trading has a number of
floorplan facilities which are arranged by the vehicle manufacturers to finance dealer inventory
purchases. These short-term credit lines are initially interest free and only become interest-bearing
after a certain specified period. This treatment is in line with the disclosure of other automotive
companies.
The impact of the change in accounting policy on the comparative amounts is as follows:
March 2016
Previously
stated Restatement Restated
Rm Rm Rm
------------------------------------------------------------------- ---------- ----------- --------
Consolidated statement of financial position
Amounts due to bankers and short term loans 4 505 (845) 3 660
Trade and other payables 10 680 845 11 525
--------------------------------------------------------------------- ---------- ----------- --------
Current liabilities 15 185 15 185
--------------------------------------------------------------------- ---------- ----------- --------
Consolidated statement of cash flows
Cash flows from operating activities
Movement in working capital (895) 544 (351)
--------------------------------------------------------------------- ---------- ----------- --------
Cash (applied to)/retained from operating activities (104) 544 440
--------------------------------------------------------------------- ---------- ----------- --------
Cash flows from financing activities
Net increase/(decrease) in short-term interest-bearing liabilities 375 (544) (169)
--------------------------------------------------------------------- ---------- ----------- --------
Net cash from/(used in) financing activities 428 (544) (116)
--------------------------------------------------------------------- ---------- ----------- --------
18. EVENTS AFTER THE REPORTING PERIOD
There have been no significant events to report after the reporting period.
-------------------------------------------------------------------------------------------------------------
19. AUDITOR'S REVIEW
These condensed consolidated interim financial statements for the period ended 31 March 2017
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.
-------------------------------------------------------------------------------------------------------------
20. OPERATING SEGMENTS
Revenue Operating profit/(loss)
Six months Year Six months Year
ended ended ended ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept
2017 2016 2016 2017 2016 2016
Reviewed Reviewed Audited Reviewed Reviewed Audited
Rm Rm Rm Rm Rm Rm
---- ------------------------------ ----------- ----------- ---------- ---------- ---------- ---------
Equipment and Handling 13 012 14 552 29 362 986 963 2 264
Automotive and Logistics 19 520 17 395 37 183 914 819 1 877
Corporate 2 (51) (26) (6)
----------------------------------- ----------- ----------- ---------- ---------- ---------- ---------
Total 32 532 31 947 66 547 1 849 1 756 4 135
----------------------------------- ----------- ----------- ---------- ---------- ---------- ---------
Southern Africa 28 247 27 218 57 002 1 630 1 548 3 551
Europe 4 285 4 729 9 545 219 208 584
----------------------------------- ----------- ----------- ---------- ---------- ---------- ---------
Total 32 532 31 947 66 547 1 849 1 756 4 135
----------------------------------- ----------- ----------- ---------- ---------- ---------- ---------
* The net operating assets/(liabilities) include assets/liabilities classified as held for
sale.
20. OPERATING SEGMENTS continued
Segment result: Operating Net operating
Fair value adjustments on profit/(loss) including fair assets/
financial instruments value adjustments Operating margin (liabilities)*
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 31 Mar 30 Sept
2017 2016 2016 2017 2016 2016 2017 2016 2016 2017 2016
Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Audited
Rm Rm Rm Rm Rm Rm % % % Rm Rm
------------ -------- -------- ----------- -------- -------- ------------- -------- -------- -------- -------- -------
Equipment
and
Handling (113) (54) (201) 873 909 2 064 7.6 6.6 7.7 15 452 16 552
Automotive
and
Logistics (2) (2) (7) 912 817 1 870 4.7 4.7 5.0 12 925 11 158
Corporate (8) 1 (1) (59) (25) (8) (2 090) (2 330)
------------ ---- -------- -------- ----------- -------- -------- ------------- -------- -------- -------- -------- -------
Total (123) (55) (209) 1 726 1 701 3 926 5.7 5.5 6.2 26 287 25 380
------------ ---- -------- -------- ----------- -------- -------- ------------- -------- -------- -------- -------- -------
Southern
Africa (110) (57) (209) 1 520 1 491 3 342 5.8 5.7 6.2 24 152 23 059
Europe (13) 2 206 210 584 5.1 4.4 6.1 2 135 2 321
------------ ---- -------- -------- ----------- -------- -------- ------------- -------- -------- -------- -------- -------
Total (123) (55) (209) 1 726 1 701 3 926 5.7 5.5 6.2 26 287 25 380
------------ ---- -------- -------- ----------- -------- -------- ------------- -------- -------- -------- -------- -------
Salient features
Six months ended Year ended
31 Mar
31 Mar 2016 30 Sept
2017 Restated 2016
Reviewed Reviewed Audited
---------------------------------------------------------------------- --------- --------- ----------
Financial
Headline earnings per share (cents) 364.9 335.0 838.1
Dividends per share (cents) 125 115 345
Operating margin (%) 5.7 5.5 6.2
Net asset turn (times) 2.1 1.9 2.1
EBITDA/interest paid (cover) 4.7 4.5 5.0
Net debt/equity (%) 46.6 52.8 40.7
Group return on net operating assets (RONOA) (%) 15.0 12.0 15.9
Group return on ordinary shareholders' funds (%) 8.0 7.1 9.2
Net asset value per share including investments at fair value (cents) 8 837 9 561 8 997
Number of ordinary shares in issue (000) 212 693 212 693 212 693
------------------------------------------------------------------------ --------- --------- ----------
Non-financial#
Non-renewable energy consumption (GJ)* 1 608 948 1 461 150 3 117 091
Greenhouse gas emissions (tCO2e)* 140 702 129 216 272 961
Water withdrawals (municipal sources) (ML) 350 423 788
Number of employees 20 100 20 335 20 786
Lost-time injury frequency rate (LTIFR) 0.90 0.91 0.83
Work-related fatalities 2 0 1
------------------------------------------------------------------------ --------- --------- ----------
dti^ B-BBEE rating (level)+ 3 2 3
------------------------------------------------------------------------ --------- --------- ----------
# Deloitte & Touche have issued an unmodified limited assurance report on the non-financial
salient features for the year ended 30 September 2016, in accordance with International Standard
3000 (Revised) on Assurance Engagements Other Than Audits or Reviews of Historical Financial
Information. The 31 March 2017 and 31 March 2016 non-financial salient features have not been
reviewed and reported on by the auditors.
* Based on updated energy (GJ) and emission (tCO2e) conversion factors.
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. The September 2016 and March 2017 ratings are based
on the revised Codes of Good Practice.
Closing rate Average rate
Six months ended Year ended Six months ended Year ended
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept
2017 2016 2016 2017 2016 2016
Exchange rates (Rand) Reviewed Reviewed Audited Reviewed Reviewed Audited
---------------------- --------- --------- ---------- --------- --------- ----------
United States Dollar 13.41 14.71 13.75 13.56 14.94 14.75
Euro 14.34 16.76 15.45 14.57 16.29 16.32
British Sterling 16.77 21.14 17.86 16.91 21.91 20.99
---------------------- --------- --------- ---------- --------- --------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMGMKKZLGNZM
(END) Dow Jones Newswires
May 15, 2017 02:00 ET (06:00 GMT)
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