TIDMBWO
RNS Number : 8872W
Barloworld Limited
20 November 2017
BARLOWORLD LIMITED
Preliminary audited year-end results for the 12 months to 30
September 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 (earthmoving equipment and power systems), Automotive and
Logistics (car rental, motor retail, fleet services, used vehicles
and disposal solutions, logistics management, supply chain
optimisation and waste management). We offer flexible, value
adding, innovative business solutions to our customers backed by
leading global brands. 115 years of heritage built on solid
relationships with our principals and customers. 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 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
diversity and inclusion. The company was founded in 1902 and
currently has operations in over 20 countries around the world with
83% of 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^, H Hickey, NP Mnxasana, M Lynch-Bell*, SS Mkhabela, SS
Ntsaluba,
P Schmid, OI Shongwe
Executive: DM Sewela (Chief executive), DG Wilson
^Nigeria *UK
Group company secretary
Lerato Manaka
Enquiries
Barloworld Limited
ethiwe Motloung
Tel +27 11 445 1000
Email: invest@barloworld.com
Instinctif: Hartwell Tshuma Tel +27 11 447 3030
Email: hartwell.tshuma@instinctif.com
Sponsor
J.P. Morgan Equities South Africa (Pty) Ltd
Salient features
Revenue (from continuing operations) maintained at R62.0
billion
Operating profit (from continuing operations) maintained at R4.1
billion
Headline earnings per share (from continuing operations) up 16%
to 975 cents (2016: 841 cents)
Cash inflow before financing activities of R2.6 billion (2016:
R3.5 billion)
Net debt to equity (from continuing operations) at 27.6% (2016:
40.7%)
Return on equity (from continuing operations) at 10.5% (2016:
9.3%)
Total dividend per share of 390 cents up 13% (2016: 345
cents)
Dominic Sewela, CE of Barloworld, said:
"Equipment southern Africa's operating performance has been
resilient in the year following a rebound in mining and
infrastructure demand. Increased activity has generated improved
results in our joint venture in the Katanga province of the
Democratic Republic of Congo (DRC). Strong mining and aftermarket
in Equipment Russia drove the solid performance in that business.
The discontinued Iberian Equipment operation is now held for
sale.
The Automotive division produced pleasing results despite
challenging market conditions with both revenue and operating
profit exceeding 2016 levels. Trading in Logistics was up on last
year due to the full year impact of acquisitions and new contracts
secured in 2016, however, the operating performance was negatively
impacted by the loss of a major customer and once-off costs.
The group is making good progress in implementing its strategy
to fix and optimise existing businesses and has started to realise
the benefits. As a result of strong positive cash generation and
well managed debt levels, we are well placed to capitalise on
acquisitive growth opportunities as they arise. The full benefit of
initiatives progressed in the current year will continue to have a
positive impact into 2018."
20 November 2017
Chairman and chief executive's report
Overview
The latest IMF World Economic Outlook forecasts the global
economy to grow by 3.6% in 2017 with the advanced economies set to
grow by 2.2% and the emerging economies by 4.6%.
The US economy is projecting GDP growth of 2.2% this year and
2.3% in 2018. Productivity growth in the US remains disappointing
and represents a limiting factor to higher growth. The lack of
inflation in the US economy could influence the pace of monetary
tightening by the US Federal Reserve in the coming year.
The South African economy exited the technical recession in the
second quarter of 2017 with the World Bank's outlook for full year
growth now down to 0.6%. However, local business and consumer
confidence levels remain under pressure in the wake of current
political and economic uncertainty.
Against this backdrop, the group posted a pleasing 134 cents
growth in headline earnings per share to 975 cents per share from
continuing operations. This represents a 16% increase on the prior
year of 841 cents per share. Moreover, the group generated a strong
cash inflow before financing activities of R2.6 billion mainly
driven by a R1.5 billion decrease in working capital and lower cash
applied to investing activities. Net debt of R5.8 billion was R2.2
billion down on September 2016 net debt of R8.0 billion.
A total dividend for the year of 390 cents per share was
declared in respect of the current year's earnings (2016: 345
cents).
OPERATIONAL REVIEW
Equipment
Equipment southern Africa
Revenue for the year of R18.3 billion was 1.4% down on the prior
year (R18.5 billion) but in line with the guidance given to the
market in November last year. The stronger rand compared to the
prior year shaved R431 million off revenue for the year.
Approximately 69% of total revenue was generated in South Africa
with aftersales representing 57% of the total sales mix.
We have seen a rebound in mining unit sales following the low
level in 2016. While mining unit sales have improved compared to
last year, the growth has been driven by increased demand for
smaller sized truck units by contract miners.
Operating profit of R1.8 billion is R200 million (13%) up on
last year with the operating margin increasing from 8.5% to
9.8%.
Income from associates, which mainly relates to the Bartrac
joint venture in the Katanga province of the DRC, increased from
R14 million to R94 million with the recommencement of mining
activities at the Glencore Katanga Mine during the current year and
improved commodity prices.
In August, Equipment southern Africa celebrated its 90th
anniversary as a Caterpillar dealer. This coincided with the
official opening of the new Caterpillar/Barloworld parts facility
at Kempton Park which will further improve parts availability to
our customers.
Equipment Russia
Revenue for the year of US$385 million was US$56 million (17.1%)
up on the prior year driven by strong growth in mining unit sales
particularly into opencast gold mining projects. In addition we
have experienced 16% growth in after sales revenue which in the
current year represented 51% of total sales (2016: 51%).
The division generated operating profit of US$43.7 million which
was 6.8% up on the prior year. The operating margin of 11.3% was
down on the 12.4% achieved in 2016 mainly as a result of lower new
machine margins.
Automotive and Logistics
Automotive
Automotive delivered a solid result in tough trading
conditions.
Revenue for the year of R31.6 billion was marginally up on the
prior year while operating profit of R1.7 billion was R93 million
(5.6%) higher than last year.
The total operating margin showed a pleasing increase to 5.5%
from 5.3% in 2016.
Car Rental
Revenue for the year of R6.4 billion was R479 million (8.0%) up
on the prior year's R6.0 billion.
The car rental market grew by 3.6%. The business increased
rental days and rate per day, however, margins were impacted by
higher parts and vehicle prices and increased damage costs. Another
strong used vehicle contribution supported the overall results.
Operating profit of R562 million was 4.9% up on the R536 million
earned last year with an operating margin of 8.7% which was
slightly down on the 9.0% achieved last year.
Fleet utilisation for the year improved by 1% to 76%.
Avis Fleet
Revenue for the year decreased by R71 million (1.9%) to R3.6
billion while operating profit increased by 11% to R621 million.
The current year produced a much improved used vehicle margin
compared to the prior year which was impacted by the disposal of
the defleeted vehicles from the government of Lesotho contract.
Consequently operating margin for the year increased to 17.4%
compared to 15.4% in the prior year.
Motor Trading
For the 2017 financial year, the total new vehicle market
declined by 2.2%. The industry is forecast to grow by close to 1.5%
for the 2017 calendar year.
Revenue for the year decreased by R242 million (1.1%) from R21.8
billion in 2016 to R21.6 billion in the current year impacted by
the disposal of one and closure of four dealerships in the year.
New vehicles sold decreased by 7.4% impacted by a weaker dealer
market, down 4.0%. There was good contribution from aftermarket
revenues.
Operating profit of R564 million for the year was R6 million up
on the prior year assisted by the full year impact of the two Union
Motors dealerships and Salvage Management and Disposal (SMD)
acquisitions made in the prior year.
Margins contracted across certain franchises with the premium
brands affected the most.
Logistics
Revenue for the year of R6.2 billion was R415 million (7.2%)
ahead of last year driven by the acquisitions of KLL and Aspen in
January 2016, as well as the full impact of additional contracts
within Supply Chain Management and Transport won last year.
Year to date operating profit of R101 million was, however, R122
million (54.7%) below the prior year due to the low growth in the
South African economy, difficult trading conditions, the negative
impact of the loss of a major client, as well as the retention
impairments in the close out of the Supply Chain Software disposal
reported in 2016.
On 1 July we acquired the 21.2% minority interest in Barloworld
Transport for a consideration of R141 million. This step has laid
the foundation for further rationalisation of the overhead
structure of the Logistics group.
STRATEGIC REVIEW
Work continues in respect of all four areas identified in the
group strategy.
Fix - The board has taken the decision to continue with the
disposal of Equipment Iberia. The turnaround within the Logistics
business is ongoing and progress on the exit of the Middle East
Logistics operations is advancing well with several offers being
negotiated. All options remain under consideration as we continue
to closely monitor the performance of the business against this
plan.
Optimise - Equipment southern Africa has commenced the roll-out
of the operational transformation project, while Motor Retail has
completed the bulk of the work around the restructuring
contemplated through various dealership closures and further cost
rationalisations.
Grow - Steady progress is being made in assessing opportunities
that offer synergies to the group.
Active shareholder model - The group has adopted an approach of
managing for intrinsic value which focuses on value creation
through the structured assessment of opportunities, a strong focus
on resource allocation (capital, talent and operating costs) and
robust business performance management. The roll-out of this
programme is continuing. Good progress has been made on the project
for the redevelopment of the Barlow Park property with legal
agreements expected to be signed before the end of the 2017
calendar year.
HUMAN CAPITAL, DIVERSITY AND SUSTAINABLE DEVELOPMENT
Despite our ongoing strong focus on safety across the group, we
regrettably had three tragic work-related fatalities during the
year in our Logistics operations in unrelated incidents. We extend
our sincere condolences to the bereaved families to whom we offered
support. We continue to drive awareness of health and safety in the
workplace.
We continue to engage emerging and black-owned professional
service providers to drive diversity in our supply chain and
provide them with access to the broader market.
We have also engaged our various principals to advance the
localisation of some of their products and services. The equity
equivalent investment programme in partnership with the Department
of Trade and Industry recently announced by Caterpillar will assist
in increasing the local content in CAT equipment and assist
Barloworld Equipment's competitiveness by improving their BBBEE
rating.
Sustainability plays a key role in how Barloworld does business.
As a result of the sustainability practices we have adopted over
the years, we are a constituent of the Dow Jones Sustainability
Emerging Markets Index, the FTSE/JSE Responsible Investment Top 30
Index and the FTSE4Good Emerging Index.
CHANGES IN DIRECTORATE AND EXECUTIVE MANAGEMENT
As reported during the course of the 2017 financial year, Messrs
Steven Pfeiffer, Clive Thomson and Peter Bulterman retired as
directors of the board at the annual general meeting held on 8
February 2017. Mr John Blackbeard retired from the board of
Barloworld Limited at the end of April 2017 and Ms Babalwa Ngonyama
resigned from the Barloworld Limited board with effect from 11 May
2017.
In line with a structured board nomination process for the
appointment of non-executive directors of Barloworld Limited, Ms
Hester Hickey and Messrs Peter Schmid and Michael Lynch-Bell were
appointed independent non-executive directors with effect from 1
April 2017 and Ms Nomavuso Mnxasana was appointed with effect from
6 October 2017.
The board wishes to thank the non-executive and executive
directors that have departed for their valuable service and
contribution to the board and Barloworld.
FUNDING
Following the reduction in group net debt of R2.7 billion in
2016, net debt further decreased by R2.3 billion in the current
year from R8.0 billion to R5.8 billion. This was mainly due to
strong cash generation in Equipment southern Africa.
OUTLOOK
The South African economy is projected to grow by 1.1% in 2018.
The markets, however, remain focused on the December 2017 ANC
elective conference, the result of which could impact the sovereign
rating, confidence levels as well as the value of the rand.
The outlook for mining in Equipment southern Africa remains
positive with demand for commodities and related commodity pricing
holding up. We are forecasting mining unit sales and mining after
sales to show continued growth in 2018.
The Equipment firm order book of R1.5 billion is up on the R1.3
billion at September 2016 but down on the R1.9 billion at March
with construction representing 50% of the book.
Equipment southern Africa has embarked on a number of cost
saving measures driven by achieving process efficiencies that will
address weaknesses in the current IT environment, together with
procurement saving initiatives. The project will run into the 2020
financial year and will further improve the operating performance
of the division.
The Russian economy is likely to show growth of just under 2% in
2017 with further growth improvement into 2018 expected. The firm
order book at September of US$203 million is well up on the US$21
million at September 2016. The bulk of these orders (94%) relate to
mining projects and include the machines for the Polyus Gold and
NordGold projects. This together with a number of other potential
mining projects under discussion should ensure strong growth in
machine revenue in the coming year.
In Car Rental we expect to see further growth in the foreign
in-bound segment while the corporate and local leisure markets will
remain subdued.
Avis fleet will continue to benefit from retaining the existing
customer portfolio and gain new business.
The South African motor industry is going through a period of
transition with the exit of General Motors from South Africa and
dealer footprint realignments. In response to these challenges,
Motor Trading has closed one and disposed of another BMW dealership
and closed three of the existing GM dealerships. These actions will
reduce annualised revenue by close to R1.5 billion in 2018 with
marginal impact at the operating level. We expect vehicle sales in
2018 to be in line with the current year and the premium market to
remain challenging.
In early October, Logistics management embarked on a turnaround
strategy aimed at improving performance through operational
efficiency, and to simplify and optimise the operating an
organisational model. This initiative entails multiple initiatives
of cost reduction and procurement savings. Management are further
focused on returning underperforming businesses to required
performance targets.
Logistics have been successful in securing a number of new
contracts in the current year which will underpin further growth in
2018.
The group is making good progress in implementing its strategy
to fix and optimise existing businesses and has started to realise
the benefits. As a result of strong positive cash generation and
well managed debt levels, we are well placed to capitalise on
acquisitive growth opportunities as they arise. The full benefit of
initiatives progressed in the year in review will continue to have
a positive impact into 2018.
DB Ntsebeza DM Sewela
Chairman Chief executive
Group financial review
Following the board's decision to sell the group's Equipment
Iberia operations, the group has in terms of IFRS 5 reported the
results of Equipment Iberia separately as a discontinued operation
and assets and liabilities held for sale in the financial
statements for the year ended 30 September 2017. The following
commentary regarding current year trends is against restated
comparatives to reflect the results from continuing operations
unless specifically stated.
FINANCIAL PERFORMANCE FROM CONTINUING OPERATIONS FOR THE YEARED
30 SEPTEMBER 2017
Revenue for the year of R62.0 billion remained resilient and in
line with the prior year (2016: R62.1 billion) on the back of an
impressive performance in Equipment Russia while our Logistics
business was boosted by the full year impact of contracts and
acquisitions in the prior year. Equipment Russia benefited from
strong mining unit and after sales demand, generating revenue
growth of 17.1% in US dollar terms. Demand for mining equipment in
southern Africa showed some improvement as commodity prices held
up. Automotive revenues were marginally up by 0.5% notwithstanding
the sale and closure of a number of BMW and General Motor
dealerships in Motor Trading. With approximately 20% of the group's
revenue generated outside of South Africa the stronger rand
negatively impacted revenues by R1.1 billion.
Earnings before interest, taxation, depreciation and
amortisation (EBITDA) of R6.7 billion improved by 3.2% while
operating profit and the operating margin remained consistent with
the prior year at R4.1 billion and 6.6% respectively. Key to this
achievement amidst tough trading conditions was the high level of
after sales in both Equipment southern Africa and Russia, and the
continued profitability from the sale of used vehicles in
Automotive.
Operating profit in Equipment southern Africa was up 13% on the
prior year with Equipment Russia increasing by 6.8% in US dollar
terms. Automotive produced another record result increasing
operating profits by 5.6% to R1.8 billion. Avis Fleet produced a
strong performance increasing their operating margin to 17.4%
(2016: 15.4%). In Logistics, the loss of a key customer,
restructuring and other costs associated with implementing a
turnaround strategy have negatively impacted operating margins in
this business with operating profit falling to R101 million (2016:
R223 million).
The net negative fair value adjustments on financial instruments
of R209 million (2016: R209 million) mainly represent the cost of
forward points on foreign exchange contracts and translation gains
and losses on foreign currency denominated monetary assets and
liabilities in Equipment southern Africa. During the year, the
strengthening of the rand resulted in exchange losses in respect of
US dollar deposits held.
Finance costs of R1.3 billion are down by R2 million on prior
year due to lower average borrowings despite higher short-term
rates in South Africa.
Losses from non-operating and capital items of R155 million
consist largely of impairments of goodwill, other intangibles and
other assets of R158 million in Automotive and Logistics and losses
on disposal of the Handling business of R46 million. Offsetting
these losses were gains of R63 million recognised by Automotive on
the sale of properties and a dealership.
The taxation charge decreased by R231 million and the effective
tax rate (excluding prior year taxation and non-operating and
capital items) reduced to 23.9% (2016: 27.0%) largely as a result
of local currency fluctuations against the US dollar functional
currency of the offshore operations. In this respect Barloworld's
taxation charge was favourably impacted by movements in the Russian
ruble, Angolan kwanza, and the Mozambican metical against the US
dollar.
The increase in income from associates and joint ventures in the
year is mainly attributable to the profitability of the Equipment
joint venture in the Katanga province of the DRC and follows from
improved copper and cobalt prices and the resumption of mining
activities at the Katanga Mine.
The discontinued Equipment Iberia operations generated losses of
EUR17.7 million (R269 million) in the year which were negatively
impacted by restructuring costs of EUR9.1 million (R137 million)
and an impairment of EUR5.1 million (R78 million) for the
investment and goodwill in the associate Energyst. In addition the
deferred tax asset in Spain was impaired by EUR3.4 million (R52
million) following the change in Spanish legislation regarding the
annual recovery of such losses. The decision to sell this business
is expected to release capital for allocation to new growth
opportunities for the Group.
Overall, profit from continuing operations increased by R76
million (3.9%) to R2.0 billion (2016: R1.9 billion) and HEPS from
continuing operations increased by 16% to 974.5 cents (2016: 840.9
cents). Total HEPS including discontinued operations increased by
5% from 838.1 cents to 883.4 cents, a pleasing result against
challenging trading conditions and illustrative of our ability to
deliver sustainable financial results.
CASH FLOWS
Generating free cash flow is a strategic imperative for the
group. Despite a strong reduction in working capital in the current
year of R1.5 billion (2016: R2.1 billion), cash generated from
operations of R6.0 billion was down on the prior year (2016: R7.8
billion). These cash flows were impacted by increased net
investment in leasing assets and vehicle rental fleet of R2.9
billion (2016: R1.5 billion).
Investing activities of R329 million (2016: R1.4 billion) were
driven by additional investment in Angolan US dollar-linked
government bonds of R201 million (US$15 million) using Kwanza cash
on hand as protection against currency devaluation. The total
investment in Angolan US dollar-linked government bonds at
September was US$66 million (2016: US$51 million). The disposal of
the Handling and Agriculture assets generated proceeds of R301
million.
Net cash flows before financing activities for the year to R2.6
billion were down from R3.5 billion in the prior year but were well
up on our forecasts.
FINANCIAL POSITION
Total assets employed in the group increased by R302 million
driven by investments in leasing assets and vehicle rental fleet
together with the improved cash position of the group. This was
offset by a decrease in inventories. Assets held for sale of R3.3
billion comprise Equipment Iberia and the Logistics Middle East
business.
For the second consecutive year total debt dropped
substantially, reducing by R1.3 billion to R 9.7 billion (2016:
R11.0 billion). Coupled with the increase in cash at the year end,
net debt of R5.8 billion was R2.3 billion down on prior year (2016:
R8.0 billion).
The UK pension scheme deficit decreased from R2.8 billion
(GBP161 million) to R2.2 billion (GBP123 million) due to an
increase in the AA corporate bond yield and changes in demographic
factors which impacted the estimated future pension liability. The
recent interest rate increase by the Bank of England (the first in
10 years) represents a first step in the gradual increase of UK
rates which should have a positive impact in the reduction of the
scheme deficit going forward.
Return on equity from continuing operations increased to 10.5%
from 9.3% last year while return on equity including discontinued
operations increased from 9.2% to 9.5%.
DEBT
In April 2017 the R450 million BAW13 bond matured and was
redeemed through available banking facilities. During May and June
2017 R1 582 million was raised through bond issuances of four three
to five-year floating rate notes under our existing South African
Domestic Medium Term Note programme. The issuance of these notes
effectively refinanced and prefunded the settlement of notes
(totalling R925 million) which matured late September and early
October 2017. Overall debt maturity is well balanced in future
years.
In South Africa, closing short-term debt includes commercial
paper totalling R643 million (September 2016: R807 million). This
market saw a change in investor appetite in the current year with a
shift in liquidity from three-month paper to six-month paper
resulting in higher spreads for this debt instrument. We aim to
maintain our participation in this market but this is dependent on
overall liquidity and relative pricing in the market.
In June 2017, Moody's affirmed the Barloworld long-term and
short-term issuer Global Scale Ratings of Baa3 and P-3, raised the
long-term National Scale Rating to Aa1.za from Aa3.za and affirmed
the short-term National Scale Rating P-1.za. The outlook on the
ratings of Barloworld changed from stable to negative following the
change of outlook on the Baa3 sovereign rating of South Africa.
At September, R7.6 billion (79%) of our total debt of R9.7
billion was long term, which was slightly up on the 76% last year
while R2 billion (21%) is short-term debt.
At year end we had total unutilised facilities of R10.7 billion
(2016: R9.6 billion) of which R8 billion was committed (2016: R7.2
billion).
Net debt to EBITDA of 0.8 times is a strong improvement on the
prior year of 1.2 times and supports our capacity for future
transactions. Net debt to equity has also reduced to 27.6% from
40.7% in the prior year with 94% of our year-end net debt in the
leasing and car rental business segments.
Car Group Group
Total debt to equity (%) Trading Leasing Rental debt net debt
--------------------------- ------- --------- --------- ----- ---------
Target range 30 - 50 600 - 800 200 - 300
------- --------- --------- ----- ---------
Ratio at 30 September 2017 21 560 203 46 28
------- --------- --------- ----- ---------
Ratio at 30 September 2016 29 720 216 56 41
----------------------------- ------- --------- --------- ----- ---------
DIVIDS
Barloworld's dividend policy is to pay dividends within an
annual headline earnings per share (HEPS) cover range of 2.5 - 3.0
times. On the back of the results of the year dividends totalling
390 cents per share have been declared, representing cover of 2.5
times.
2018 OUTLOOK
We remain committed to optimising the returns of our existing
businesses with specific focus on the turnaround of Logistics and
gaining cost efficiencies across the group. With the recovery of
global mining, we expect to see higher returns across our Equipment
businesses in the year ahead. The local automotive industry is
facing a number of challenges yet we remain positive that our
integrated model can withstand these pressures. Generating free
cash flows remains an imperative together with ensuring that the
group's assets generate a return on invested capital above our
stated target weighted average cost of capital target of 13%. We
continue to explore options to rationalise the group's asset base
and unlock capital to take advantage of future high growth
opportunities.
DG Wilson
Finance director
Operational reviews
EQUIPMENT
Operating
Revenue profit/(loss) Net operating assets
Year ended 30 September Year ended 30 September Year ended 30 September
------------------------------- ------------------------- ------------------------- -------------------------
Restated* Restated*
2017 2016 2017 2016 2017 2016
Rm Rm Rm Rm Rm Rm
------------------------------- ----------- ------------ ---------- ------------- ------------ -----------
Equipment 23 428 23 384 2 367 2 191 15 091 15 642
----------- ------------ ---------- ------------- ------------ -----------
- Southern Africa 18 287 18 547 1 785 1 585 10 106 10 546
- Europe 7 2 441 2 694
- Russia 5 141 4 837 582 599 2 544 2 402
----------- ------------ ---------- ------------- ------------ -----------
Handling 765 1 505 (5) 25 443 910
--------------------------------- ----------- ------------ ---------- ------------- ------------ -----------
24 193 24 889 2 362 2 216 15 534 16 552
------------------------------- ----------- ------------ ---------- ------------- ------------ -----------
Share of associate income 97 6
--------------------------------- ----------- ------------ ---------- ------------- ------------ -----------
* Restated to classify Equipment Iberia as discontinued operation. Refer to note 6.
BWE southern Africa produced a pleasing result for the 2017
financial year. Revenue of R18.3 billion was R260 million down on
last year in rand terms, however, operating profits increased by
13% to R1.8 billion, with significant improvement in operating
margins.
A recovery in commodity prices saw improvement in trading
activities in South Africa, driven largely by mining activities in
Middelburg and the Northern Cape regions. Operating profit improved
in Angola, while performance from the remaining African operations
remained in line with the previous year. Revenue in Construction
and Contract mining activities grew by 5% with our rental and used
business growing significantly at 28.5%, in response to improved
market conditions. The aftermarket business remained strong,
contributing 57% of total revenue.
Attributable profit contribution from our joint venture in the
Katanga province of the DRC increased to R97 million from R13
million in 2016 on the back of improved copper and cobalt
prices.
In addition, our drive to improve efficiency in our operations,
delivered a step change in cost containment and improved
performance. Return on equity increased from 9.1% to 15.2% with
strong net cash generation of R1 363 million mainly as a result of
working capital reduction. Our inventory optimisation programme
delivered an improvement in inventory turns from previous 2.5 to
3.2 times.
Although the global economic outlook is improving, policy and
political uncertainty continues to restrict growth in southern
African economies. BWE will continue to drive operational
efficiencies through operational transformation and a new operating
model.
In Russia, revenue for the year of R5 141 million showed a R304
million (6.3%) increase over the prior year driven by improved
mining machine demand into the opencast gold mining segment and a
rebound of the coal mining segment. The aftermarket business has
also demonstrated strong growth.
While operating profit of R582 million was R17 million down on
last year in rand terms due to the strengthening of the rand during
the year, it was up 6.8% in US dollar terms. Operating margin
decreased from 12.4% to 11.3% primarily due to lower margins on new
machine deliveries. Russia produced excellent returns and again
generated positive cash flows in 2017.
AUTOMOTIVE AND LOGISTICS
Operating
Revenue profit/(loss) Net operating assets
Year ended 30 September Year ended 30 September Year ended 30 September
------------------------ ------------------------- ------------------------- -------------------------
2017 2016 2017 2016 2017 2016
Rm Rm Rm Rm Rm Rm
------------------------ ------------ ----------- ------------ ----------- ------------ -----------
Automotive 31 593 31 427 1 747 1 654 8 675 8 686
------------ ----------- ------------ ----------- ------------ -----------
- Car Rental 6 446 5 967 562 536 2 750 2 534
- Avis Fleet 3 570 3 641 621 560 3 687 3 786
- Motor Trading 21 577 21 819 564 558 2 238 2 366
------------ ----------- ------------ ----------- ------------ -----------
Logistics 6 171 5 756 101 223 2 082 2 472
------------ ----------- ------------ ----------- ------------ -----------
- Southern Africa 6 011 5 527 102 226 1 970 2 348
-
Europe and Middle East 160 229 (1) (3) 112 124
------------ ----------- ------------ ----------- ------------ -----------
37 764 37 183 1 848 1 877 10 757 11 158
------------------------ ------------ ----------- ------------ ----------- ------------ -----------
Share of associate loss (4) (4)
-------------------------- ------------ ----------- ------------ ----------- ------------ -----------
The Automotive division delivered another record result with
operating profit up 5.6% on prior year off a revenue growth of
0.5%. Revenue was impacted by dealer network restructuring with the
sale of one BMW dealership and closure of one BMW and three GM
dealerships. On a comparable basis, excluding the closure and
disposal of dealerships, revenue increased by 2.3% on prior year.
This year's result was impacted by a weaker new vehicle market,
depressed consumer confidence, price increases and dealer network
restructuring in the Motor Trading business. On the upside, the
business benefited from cost alignment initiatives and strong used
vehicle profit contribution. The business increased operating
margin to 5.5% (2016: 5.3%). The division continues to deliver a
ROE and ROIC above the group hurdle rates and generated positive
cash flow.
Car Rental delivered a pleasing result increasing revenue by
8.0% to R6.4 billion and generated an operating profit of R562
million, up 4.9% on prior year. Operating margin declined from 9.0%
to 8.7%, impacted by higher vehicle damage expenses and increased
vehicle and parts prices. Lower than planned rate per day increases
were achieved due to highly competitive pricing in the market. The
result is underpinned by increased rental days and strong used
vehicle contribution. Optimal fleet utilisation remains a key focus
with the business achieving a 76% utilisation rate.
Avis Fleet delivered a strong result increasing operating profit
by 11% to R621 million against a 1.9% revenue decline on prior
year. Higher used vehicle volumes in the prior year driven by the
disposal of the defleeted government of Lesotho vehicles,
contributed to the decline in revenue. Operating margin increased
from 15.4% in prior year to 17.4% supported by improved used
vehicle profits and major contracts performing well. African
countries are still impacted by challenging macro-economic
environments. Turnaround strategies have been implemented to
address underperforming businesses.
Motor Trading delivered a credible result in a tough trading
environment and a declining new vehicle dealer market which was
down by 4.0%. Revenue declined by 1.1% but operating profit
increased by 1.1%, maintaining an operating margin of 2.6%. Revenue
was impacted by the dealer network restructuring, and on a
comparable basis revenue increased by 1.3% on prior year. Returns
and margins were further impacted by double digit declines in the
premium segment due to increasing vehicle pricing. Improved
aftersales performance and cost alignment initiatives favourably,
impacted the overall returns. The business continues to benefit
from acquisitions made in the previous financial year.
In Logistics while revenue was up by 7.2%, operating profit was
down 54.7% on last year. The results were negatively impacted by
the loss of an anchor client as well as lack of desired integration
efficiencies coupled with high network cost and increased cost of
doing business within the KLL acquisition. An asset refinancing
transaction was concluded within the Transport business resulting
in an overall reduction in net operating assets.
The Freight Management and Services segment continues to show a
pleasing operating profit performance within southern Africa. The
Middle East business continues to face challenging trading
conditions as a result of both market conditions and loss of major
clients, therefore disposal options within this region are being
reviewed. Barloworld Logistics Africa concluded a minority buyout
during the period under review and now owns 100% of Barloworld
Transport providing for better integration efficiencies into the
new financial year.
CORPORATE
Operating
Revenue profit/(loss) Net operating assets/ (liabilities)
Year ended 30 September Year ended 30 September Year ended 30 September
------------------- ------------------------- ------------------------- -------------------------------------
2017 2016 2017 2016 2017 2016
Rm Rm Rm Rm Rm Rm
------------------- ------------ ----------- ------------- ---------- ------------------ -----------------
Southern Africa 2 2 (56) 48 553 578
Europe (72) (54) (2 262) (2 908)
--------------------- ------------ ----------- ------------- ---------- ------------------ -----------------
2 2 (128) (6) (1 709) (2 330)
------------------- ------------ ----------- ------------- ---------- ------------------ -----------------
Share of associate
loss 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 incurred higher operating losses compared to
the previous comparative period largely as a result of once-off
charges relating to group strategic projects and higher employment
costs as a result of the group leadership transition. In Europe,
claim losses incurred in BIL, our captive insurance company, led to
increased operating costs.
In line with the strategic direction which includes a more
activist role of the centre, the group has introduced Strategy and
M&A, Talent Management and Project Management capabilities to
the corporate office with focus on driving the value-maximising
allocation of both human and financial capital.
DIVID DECLARATION
Dividend number 177
Notice is hereby given that final dividend number 178 of 265
cents (gross) per ordinary share in respect of the 12 months ended
30 September 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 265 cents per ordinary
share;
-- The net dividend amount is 212 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, 9 January 2018
-- Shares trade ex-dividend Wednesday, 10 January 2018
-- Record date Friday, 12 January 2018
-- Payment date Monday, 15 January 2018
Share certificates may not be dematerialised or rematerialised
between Wednesday, 10 January 2018 and Friday, 12 January 2018,
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, NP Mnxasana, M Lynch-Bell*, SS Mkhabela, SS
Ntsaluba, P Schmid, OI Shongwe
Executive: DM Sewela (Chief executive), DG Wilson
^Nigerian *UK
Summarised consolidated income statement
for the year ended 30 September
Audited
Restated*
2017 2016 %
Note Rm Rm change
----------------------------------------- ---- ------- --------- -------
CONTINUING OPERATIONS
Revenue 61 959 62 074 (0)
----------------------------------------- ---- ------- --------- -------
Operating profit before items
listed below (EBITDA) 6 694 6 486
Depreciation (2 468) (2 294)
Amortisation of intangible assets (144) (105)
----------------------------------------- ---- ------- --------- -------
Operating profit 4 082 4 087 (0)
Fair value adjustments on financial
instruments (209) (209)
Finance costs (1 329) (1 331)
Income from investments 109 111
----------------------------------------- ---- ------- --------- -------
Profit before non-operating and
capital items 2 653 2 658 (0)
Non-operating and capital items 3 (155) 85
----------------------------------------- ---- ------- --------- -------
Profit before taxation 2 498 2 743
Taxation (565) (796)
----------------------------------------- ---- ------- --------- -------
Profit after taxation 1 933 1 947 (1)
Income from associates and joint
ventures 93 3
----------------------------------------- ---- ------- --------- -------
Profit for the year from continuing
operations 2 026 1 950 4
----------------------------------------- ---- ------- --------- -------
DISCONTINUED OPERATION
(Loss)/profit from discontinued
operation 6 (269) 29
----------------------------------------- ---- ------- --------- -------
Profit for the year 1 757 1 979
Net profit attributable to:
Owners of Barloworld Limited 1 643 1 883 (13)
Non-controlling interest in subsidiaries 114 96
----------------------------------------- ---- ------- --------- -------
1 757 1 979
----------------------------------------- ---- ------- --------- -------
Earnings per share from group
(cents)
- basic 779.6 890.5
- diluted 774.7 888.2
Earnings per share from continuing
operations (cents)
- basic 907.2 876.8
- diluted 901.5 874.5
(Loss)/earning per share from
discontinued operation (cents)
- basic (127.6) 13.7
- diluted (126.8) 13.7
----------------------------------------- ---- ------- --------- -------
* Restated to classify Equipment Iberia as discontinued
operation. Refer to note 6.
Summarised consolidated statement of comprehensive income
for the year ended 30 September
Audited
2017 2016
Rm Rm
------------------------------------------------ ------ -------
Profit for the year 1 757 1 979
Items that may be reclassified subsequently
to profit or loss: 75 (550)
------ -------
Exchange gains/(loss) on translation
of foreign operations 8 (377)
Translation reserves realised on disposal
of foreign joint venture and subsidiaries (83)
Gain/(loss) on cash flow hedges 89 (121)
Deferred taxation on cash flow hedges (22) 31
------ -------
Items that will not be reclassified to
profit or loss: 535 (1 134)
------ -------
Actuarial gains/(losses) on post-retirement
benefit obligations 678 (1 343)
Taxation effect of net actuarial (losses)/gains (143) 209
------ -------
Other comprehensive income/(loss) for
the year, net of taxation 610 (1 684)
-------------------------------------------------- ------ -------
Total comprehensive income for the year 2 367 295
Total comprehensive income attributable
to:
Owners of Barloworld Limited 2 253 199
Non-controlling interest in subsidiaries 114 96
-------------------------------------------------- ------ -------
2 367 295
------------------------------------------------ ------ -------
Summarised consolidated statement of financial position
at 30 September
Audited
2017 2016
Note Rm Rm
--------------------------------------- ---- ------- -------
ASSETS
Non-current assets 18 613 20 179
Property, plant and equipment 12 659 13 806
Goodwill 1 932 2 015
Intangible assets 1 602 1 713
Investment in associates and joint
ventures 1 093 923
Finance lease receivables 240 147
Long-term financial assets 404 448
Deferred taxation assets 683 1 127
Current assets 24 368 25 015
Vehicle rental fleet 3 222 2 789
Inventories 8 457 10 317
Trade and other receivables 8 676 8 826
Taxation 88 55
Cash and cash equivalents 3 925 3 028
Assets classified as held for sale 6 3 343 828
--------------------------------------- ---- ------- -------
Total assets 46 324 46 022
--------------------------------------- ---- ------- -------
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 441 441
Other reserves 5 144 5 134
Retained income 14 690 13 367
--------------------------------------- ---- ------- -------
Interest of shareholders of Barloworld
Limited 20 275 18 942
Non-controlling interest 602 737
--------------------------------------- ---- ------- -------
Interest of all shareholders 20 877 19 679
Non-current liabilities 10 852 12 446
------- -------
Interest-bearing 7 623 8 379
Deferred taxation liabilities 538 703
Provisions 19 111
Other non-current liabilities 2 672 3 253
------- -------
Current liabilities 13 798 13 830
------- -------
Trade and other payables 10 697 10 054
Provisions 929 931
Taxation 117 180
Amounts due to bankers and short-term
loans 2 055 2 665
------- -------
Liabilities directly associated with
assets classified as held for sale 6 797 67
--------------------------------------- ---- ------- -------
Total equity and liabilities 46 324 46 022
--------------------------------------- ---- ------- -------
Summarised consolidated statement of changes in equity
at 30 September
Attribu-
table
to
Share Barloworld Interest
capital Limited Non- of all
and Other Retained share- controlling share-
premium reserves income holders interest holders
Audited Rm Rm Rm Rm Rm Rm
----------------------------- -------- --------- -------- ----------- ------------ --------
13 19 20
Balance at 1 October 2015 282 5 793 351 426 616 042
Total comprehensive income
for the year (550) 749 199 96 295
Transactions with owners,
recorded directly in equity
Other reserve movements (109) (109) (109)
Acquisition of subsidiary 96 96
Other changes in minority
shareholders interest and
minority loans (55) (55)
Dividends (733) (733) (16) (749)
Share buy-back during the
year (127) (127) (127)
Share issue during the
year 286 286 286
------------------------------- -------- --------- -------- ----------- ------------ --------
Balance at 30 September 13 18 19
2016 441 5 134 367 942 737 679
------------------------------- -------- --------- -------- ----------- ------------ --------
Total comprehensive income
for the year 75 2 178 2 253 114 2 367
Transactions with owners,
recorded directly in equity
Other reserve movements (154) 32 (122) (122)
Other changes in minority
shareholders interest and
minority loans 89 (132) (43) (201) (244)
Dividends (755) (755) (48) (803)
------------------------------- -------- --------- -------- ----------- ------------ --------
Balance at 30 September 14 20 20
2017 441 5 144 690 275 602 877
------------------------------- -------- --------- -------- ----------- ------------ --------
Summarised consolidated statement of cash flows
for the year ended 30 September
Audited
2017 2016
Note Rm Rm
--------------------------------------------- ---- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Operating cash flows before movements
in working capital 7 307 7 161
Movement in working capital 1 539 2 119
Cash generated from operations before
investment in leasing and rental fleets 8 846 9 280
Fleet leasing and equipment rental fleet (1 661) (506)
------- -------
Additions (3 550) (2 580)
Proceeds on disposal 1 889 2 074
------- -------
Vehicles rental fleet (1 220) (947)
------- -------
Additions (4 373) (3 798)
Proceeds on disposal 3 153 2 851
------- -------
Cash generated from operations 5 965 7 827
Finance costs (1 338) (1 346)
Realised fair value adjustments on financial
instruments (270) (105)
Dividends received from investments,
associates and joint ventures 13 31
Interest received 108 113
Taxation paid (744) (805)
--------------------------------------------- ---- ------- -------
Cash inflow from operations 3 734 5 715
Dividends paid (including non-controlling
interest) (803) (772)
--------------------------------------------- ---- ------- -------
Cash retained from operating activities 2 931 4 943
--------------------------------------------- ---- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries, investments
and intangibles 4 (393) (1 057)
Proceeds on disposal of subsidiaries,
investments and intangibles 5 379 258
Movements in investments in leasing
receivables (134) 9
Acquisition of other property, plant
and equipment (774) (980)
------- -------
Replacement capital expenditure (315) (459)
Expansion capital expenditure (458) (521)
------- -------
Proceeds on disposal of property, plant
and equipment 593 334
--------------------------------------------- ---- ------- -------
Net cash used in investing activities (329) (1 436)
--------------------------------------------- ---- ------- -------
Net cash inflow before financing activities 2 602 3 507
--------------------------------------------- ---- ------- -------
Summarised consolidated statement of cash flows continued
for the year ended 30 September
Audited
2017 2016
Rm Rm
------------------------------------------ ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Shares repurchased for equity-settled
share-based payment (154) (95)
Share buy-back (162)
Share issue 286
Purchase of non-controlling interest (201) (142)
Non-controlling interest loan and equity
movements 4 24
Proceeds from long-term borrowings 4 260 2 500
Repayment of long-term borrowings (5 005) (3 311)
Movement in short-term interest-bearing
liabilities (546) (1 853)
--------------------------------------------- ------- -------
Net cash from financing activities (1 642) (2 753)
--------------------------------------------- ------- -------
Net increase in cash and cash equivalents 960 754
Cash and cash equivalents at beginning
of year 3 028 2 372
Effect of foreign exchange rate movement
on cash balance 39 (112)
Effect of cash balances classified as
held for sale (102) 14
--------------------------------------------- ------- -------
Cash and cash equivalents at end of year 3 925 3 028
--------------------------------------------- ------- -------
Cash balances not available for use due
to reserving restrictions 444 580
--------------------------------------------- ------- -------
Summarised notes to the consolidated financial statements
for the year ended 30 September
1. Basis of preparation
The summarised consolidated financial statements
are prepared in accordance with the requirements
of the JSE Limited Listings Requirements (Listings
Requirements) for preliminary reports, and the requirements
of the Companies Act applicable to the summarised
financial statements. The Listings Requirements require
preliminary reports to be prepared in accordance
with the framework concepts and the measurement and
recognition requirements of International Financial
Reporting Standards (IFRS), the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee
and Financial Pronouncements as issued by the Financial
Reporting Standards Council, and to also, as a minimum,
contain the information required by IAS 34 Interim
Financial Reporting. The accounting policies applied
in the preparation of the summarised consolidated
financial statements are 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.
Note that in the current year, Equipment Iberia has
been classified as a discontinued operation and assets
and liabilities held for sale. As such, comparatives
have been restated where required by IFRS 5 Non-current
assets held for sale and discontinued operations
as detailed in note 11. This announcement is a summary
of the complete set of financial statements available
for inspection at our registered office. An unmodified
audit opinion was issued on the complete set of the
consolidated financial statements.
This preliminary report and the complete set of the
consolidated financial statements were prepared under
the supervision of RL Pole (Group general manager:
finance) CA(SA).
--- -------------------------------------------------------------------
Audited
Restated
2017 2016*
Rm Rm
--------------------------------------------- -------- --------
2. Reconciliation of net profit to headline
earnings
Net profit attributable to Barloworld
shareholders 1 643 1 883
----------------------------------------------- -------- --------
Adjusted for the following:
Loss/(profit) on disposal of subsidiaries
and investments (IFRS 10) 25 (168)
Profit on disposal of plant, property,
equipment and intangibles excluding
rental assets (IAS 16 and IAS 38) (43) (11)
Impairment of goodwill (IFRS 3) 73 15
Impairment of investments in associates
and joint ventures (IAS 36) 37
Impairment of plant and equipment (IAS
16), intangibles (IAS 38) and other
assets 98 6
Taxation effects of remeasurements (5) 10
Associate and non-controlling interest
in remeasurements 71
----------------------------------------------- -------- --------
Net remeasurements excluded from headline
earnings 219 (111)
----------------------------------------------- -------- --------
Headline earnings 1 862 1 772
----------------------------------------------- -------- --------
Headline earnings from continuing operations 2 053 1 778
Headline loss from discontinued operation (191) (6)
----------------------------------------------- -------- --------
* Restated to classify Equipment Iberia as discontinued
operation. Refer to note 6.
Weighted average number of ordinary
shares in issue during the year (000)
- basic 210 780 211 425
- diluted 212 095 211 973
Headline earnings per share (cents)
- basic 883.4 838.1
- diluted 877.9 836.0
Headline earnings per share from continuing
operations (cents)
- basic 974.5 840.9
- diluted 968.0 838.8
Headline loss per share from discontinued
operation (cents)
- basic (91.1) (2.8)
- diluted (90.1) (2.8)
----------------------------------------------- -------- --------
Audited
2017 2016
Rm Rm
--- ----------------------------------------------- ------ -------
3. Non-operating and capital items
(Loss)/profit on acquisitions and disposal
of investments and subsidiaries (25) 85
Impairment of goodwill (73) (15)
Reversal of impairment of investments 9
Profit on disposal of property and other
assets 41 11
Impairment of property, plant and equipment,
intangibles and other assets (98) (6)
------------------------------------------------- ------ -------
Gross non-operating and capital items (155) 85
Taxation charge on non-operating and
capital items 5 (10)
Non-operating and capital items included
in associate income from continuing
operations 7
------------------------------------------------- ------ -------
Net non-operating and capital items
from continuing operations (143) 75
Net non-operating and capital items
from discontinued operations 35
Non-operating and capital items included
in associate income from discontinued
operations (78)
------------------------------------------------- ------ -------
Non-operating and capital items from
discontinuing operations (78) 35
------------------------------------------------- ------ -------
Net non-operating and capital items
(loss)/profit (221) 110
------------------------------------------------- ------ -------
4. Acquisition of subsidiaries, investments
and intangibles
Inventories acquired (154)
Receivables acquired (183)
Payables, taxation and deferred taxation
acquired 457
Borrowings net of cash (34)
Property, plant and equipment, non-current
assets, goodwill and non-controlling
interest (239)
------------------------------------------------- ------ -------
Total net assets acquired (153)
Goodwill arising on acquisitions (290)
Intangibles arising on acquisition in
terms of IFRS 3 Business Combinations (196)
------------------------------------------------- ------ -------
Total purchase consideration (639)
Deemed disposal of associate at fair
value on obtaining control 21
------------------------------------------------- ------ -------
Net cash cost of subsidiaries acquired (618)
Bank balances and cash in subsidiaries
acquired 142
Investment and intangible assets acquired (393) (581)
------------------------------------------------- ------ -------
Cash amounts paid to acquire subsidiaries,
investments and intangibles (393) (1 057)
------------------------------------------------- ------ -------
* R200 million (US$15 million) of investments acquired
relates to dollar linked Angolan government bonds.
These Kwanza denominated bonds are pegged to the
United States Dollar.
--- ------------------------------------------------------------------
5. Proceeds on disposal of subsidiaries,
investments and intangibles
Inventories disposed 551 39
Receivables disposed 26 22
Payables, taxation and deferred taxation
balances disposed and settled (60) (46)
Borrowings net of cash 9
Property, plant and equipment, non-current
assets, goodwill and intangibles 151 146
------------------------------------------------- ------ -------
Net assets disposed 668 170
Receivable from subsidiary disposed (22)
Less: Non-cash translation reserves
realised on disposal of foreign subsidiaries 1
Investment in joint venture (301)
(Loss)/profit on disposal (9) 117
------------------------------------------------- ------ -------
Net cash proceeds on disposal of subsidiaries 358 266
Bank balances and cash in subsidiaries
disposed (9)
Proceeds on disposal of investments
and intangibles 21 1
------------------------------------------------- ------ -------
Cash proceeds on disposal of subsidiaries,
investments and intangibles 379 258
------------------------------------------------- ------ -------
The net cash proceeds on disposal of subsidiaries
mainly arises from the sale of the assets of the
Agriculture SA and Handling SA business into a joint
venture company with BayWa AG.
--- ------------------------------------------------------------------
Audited
2017 2016
Rm Rm
--- ----------------------------------------------- ------ -------
6. Discontinued operation and assets classified
as held for sale
Following the decision to dispose of
the Equipment Iberia business, this
segment is classified as a discontinued
operation. Management believes the sale
of this business will take place in
the next financial year.
Results from discontinued operation
are as follows:
Revenue 4 076 4 473
------------------------------------------------- ------ -------
Operating profit before items listed
below (EBITDA)^ 58 188
Depreciation (121) (132)
Amortisation of intangible assets (14) (8)
------------------------------------------------- ------ -------
Operating (loss)/profit (77) 48
Finance costs (9) (15)
Income from investments 1 2
(Loss)/profit before non-operating and
capital items (85) 35
Non-operating and capital items 35
------------------------------------------------- ------ -------
(Loss)/profit before taxation (85) 70
Taxation (51) (13)
------------------------------------------------- ------ -------
Net (loss)/profit of after taxation (136) 57
Loss from associates# (133) (28)
------------------------------------------------- ------ -------
(Loss)/profit from discontinued operations
per income statement (269) 29
------------------------------------------------- ------ -------
The cash flows from the discontinued
operation are as follows:
Cash flows from operating activities 381 (26)
Cash flows from investing activities (65) (81)
Cash flows from financing activities (326) 156
The major classes of assets and liabilities
classified as held for sale are as follows:
Property, plant and equipment 1 131 152
Investments 97
Long-term financial assets 9
Deferred tax assets 166
Intangible assets 42 2
Inventories 823 650
Trade and other receivables* 973 24
Cash balances 102
------------------------------------------------- ------ -------
Assets classified as held for sale 3 343 828
------------------------------------------------- ------ -------
Interest-bearing long-term loans (33)
Trade and other payables - short and
long-term** (637) (67)
Deferred tax liability (2)
Provisions (125)
------------------------------------------------- ------ -------
Total liabilities associated with assets
classified as held for sale (797) (67)
------------------------------------------------- ------ -------
Net assets classified as held for sale 2 546 761
------------------------------------------------- ------ -------
Per business segment:
Equipment Iberia 2 424 746
Logistics Middle East 122 15
------------------------------------------------- ------ -------
Total group 2 546 761
------------------------------------------------- ------ -------
^Operating loss in 2017 includes restructuring costs
of R137 million (EUR9.1 million).
#Loss from associates includes an impairment of investment
and goodwill of R78 million (EUR5.1 million).
* Include financial assets of R798 million.
** Include financial liabilities measured at amortised
cost of R369 million.
--- ------------------------------------------------------------------
Audited
2017 2016
Rm Rm
--- ----------------------------------------------- ------ -------
7. Financial instruments
Carrying value of financial instruments
by class:
Financial assets:
Trade receivables
- Industry 5 429 5 654
- Government 438 423
- Consumers 403 540
Other loans and receivables and cash
balances 5 732 4 900
Finance lease receivables 499 379
Derivatives (including items designated
as effective hedging instruments)
- Forward exchange contracts 42 2
Other financial assets at fair value 49 33
------------------------------------------------- ------ -------
Other financial assets at fair value 12 592 11 930
------------------------------------------------- ------ -------
Financial liabilities:
Trade payables
- Principals 3 336 2 603
- Other suppliers 5 234 5 686
Other non interest-bearing payables 435 369
Derivatives (including items designated
as effective hedging instruments)
- Forward exchange contracts 46
- Other derivatives 5
Interest-bearing debt measured at amortised
cost 9 134 10 085
------------------------------------------------- ------ -------
Total carrying value of financial liabilities 18 144 18 789
------------------------------------------------- ------ -------
Financial instruments
7. 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.
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 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
------------------------------------------ --- ------- ------- -------- -----
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
------------------------------------------ --- ------- ------- -------- -----
Audited
2017 2016
Rm Rm
---- ----------------------------------------------------- ------ ------
8. Dividends
Ordinary shares
Final dividend No 176 paid on 16 January
2017: 230 cents per share (2016: no 174
- 230 cents per share) 266 488
Interim dividend No 177 paid on 12 June
2017: 125 cents per share (2016: No 175
- 115 cents per share) 489 245
----------------------------------------------------- ---- ------ ------
755 733
Paid to non-controlling interest 48 16
----------------------------------------------------- ---- ------ ------
803 749
----------------------------------------------------- ---- ------ ------
Dividends per share (cents) 390 345
------ ------
- interim (declared May) 125 115
- final (declared November) 265 230
------ ------
9. Contingent liabilities
Performance guarantees given to customers,
other guarantees and claims
From continuing operations 578 1 017
From discontinued operation 207
----------------------------------------------------- ---- ------ ------
Total group 785 1 017
----------------------------------------------------- ---- ------ ------
Buy-back and repurchase commitments not
reflected on the statement of financial
position
From continuing operations 102 98
From discontinued operation 24
----------------------------------------------------- ---- ------ ------
Total group 126 98
----------------------------------------------------- ---- ------ ------
On 13 October 2017, the Barloworld Equipment
South Africa business (BWE SA) received
notification from the Competition 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.
---- ----------------------------------------------------- ------ ------
10. Commitments
Capital expenditure commitments to be
incurred:
------ ------
Contracted - Property, plant and equipment 566 392
Contracted - Vehicle rental fleet 1 259 1 196
Approved but not yet contracted 168 643
------ ------
Total continuing operations 1 993 2 231
Discontinued operation 24
------------------------------------------------------ ------ ------
Total group 2 017 2 231
------------------------------------------------------ ------ ------
Commitments will be spent substantially in the next
financial year. Capital expenditure will be financed
with funds generated by the business, existing cash
resources and borrowing facilities available to the
group.
---------------------------------------------------------------------------
11. Changes in comparatives
Equipment Iberia has been classified as a discontinued
operation in the current year. Per IFRS 5: Non-current
assets held for sale and discontinued operations,
the income statement comparatives for this business
have been reclassified to discontinued operation.
2016
Previously Discontinued
stated operation Restated
Rm Rm Rm
------------------------------------------ ---------- ------------ --------
CONSOLIDATED INCOME STATEMENT
Revenue 66 547 (4 473) 62 074
------------------------------------------ ---------- ------------ --------
Operating profit before items listed
below (EBITDA) 6 674 (188) 6 486
Depreciation (2 426) 132 (2 294)
Amortisation of intangible assets (113) 8 (105)
------------------------------------------ ---------- ------------ --------
Operating profit 4 135 (48) 4 087
Fair value adjustments on financial
instruments (209) (209)
Finance costs (1 346) 15 (1 331)
Income from investments 113 (2) 111
------------------------------------------ ---------- ------------ --------
Profit before exceptional items 2 693 (35) 2 658
Non-operating and capital items 120 (35) 85
------------------------------------------ ---------- ------------ --------
Profit before taxation 2 813 (70) 2 743
Taxation (809) 13 (796)
------------------------------------------ ---------- ------------ --------
Profit after taxation 2 004 (57) 1 947
Income from associates and joint
ventures (25) 28 3
------------------------------------------ ---------- ------------ --------
Net profit from continuing operations 1 979 (29) 1 950
Discontinued operation
Profit from discontinued operation 29 29
------------------------------------------ ---------- ------------ --------
Net profit for the period 1 979 1 979
------------------------------------------ ---------- ------------ --------
Attributable to:
Owners of Barloworld Limited 1 883 1 883
Non-controlling interest in subsidiaries 96 96
------------------------------------------ ---------- ------------ --------
1 979 1 979
------------------------------------------ ---------- ------------ --------
Earnings per share (cents)
- basic 890.5 890.5
- diluted 888.2 888.2
Earnings per share from continuing
operations (cents)
- basic 890.5 (13.7) 876.8
- diluted 888.2 (13.7) 874.5
Earnings per share from discontinued
operation (cents)
- basic 13.7 13.7
- diluted 13.7 13.7
------------------------------------------ ---------- ------------ --------
12. Related party transactions
There has been no significant change in related party
relationships since the previous year.
Other than in the normal course of business, there
have been no other significant transactions during
the year with associate companies, joint ventures
and other related parties.
--- -------------------------------------------------------------------
13. Audit opinion
Independent auditor's report on summarised financial
statements
To the shareholders of Barloworld Limited
Opinion
The summarised consolidated financial statements
of Barloworld Limited, which comprise the summarised
consolidated statement of financial position as at
30 September 2017, the summarised consolidated income
statement, the summarised consolidated statements
of comprehensive income, changes in equity and cash
flows for the year then ended, and related notes,
are derived from the audited consolidated financial
statements of Barloworld Limited for the year ended
30 September 2017.
In our opinion, the accompanying summarised consolidated
financial statements are consistent, in all material
respects, with the audited consolidated financial
statements of Barloworld Limited, in accordance with
the requirements of the JSE Limited Listings Requirements
for preliminary reports, set out in note 1 to the
summarised consolidated financial statements, and
the requirements of the Companies Act of South Africa
as applicable to summarised financial statements.
Summarised consolidated financial statements
The summarised consolidated financial statements
do not contain all the disclosures required by the
International Financial Reporting Standards and the
requirements of the Companies Act of South Africa
as applicable to annual financial statements. Reading
the summarised consolidated financial statements
and the auditor's report thereon, therefore, is not
a substitute for reading the audited consolidated
financial statements of Barloworld Limited and the
auditor's report thereon.
The audited consolidated financial statements and
our report thereon
We expressed an unmodified audit opinion on the audited
consolidated financial statements in our report dated
17 November 2017. That report also includes the communication
of key audit matters as reported in the auditor's
report of the audited financial statements.
Directors' responsibility for the summarised consolidated
financial statements
The directors are responsible for the preparation
of the summarised consolidated financial statements
in accordance with the requirements of the JSE Limited
Listings Requirements for preliminary reports, set
out in note 1 to the summarised consolidated financial
statements, and the requirements of the Companies
Act of South Africa as applicable to summarised financial
statements, and for such internal control as the
directors determine is necessary to enable the preparation
of the summarised consolidated financial statements
that are free from material misstatement, whether
due to fraud or error.
The Listings Requirements require preliminary reports
to be prepared in accordance with the framework concepts
and the measurement and recognition requirements
of International Financial Reporting Standards (IFRS),
the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting
Standards Council, and to also, as a minimum, contain
the information required by IAS 34, Interim Financial
Reporting.
Auditor's responsibility
Our responsibility is to express an opinion on whether
the summarised consolidated financial statements
are consistent, in all material respects, with the
consolidated audited financial statements based on
our procedures, which were conducted in accordance
with International Standard on Auditing (ISA) 810
(Revised), Engagements to Report on Summarised Financial
Statements.
Deloitte & Touche
Registered auditors
Per: Bongisipho Nyembe
Partner
17 November 2017
Building 1 and 2, Deloitte Place
The Woodlands, Woodlands Drive
Woodmead, Sandton
National Executive: *LL Bam Chief Executive Officer,
*TMM Jordan Deputy Chief Executive Officer, *MJ Jarvis
Chief Operating Officer, *AF Mackie Audit & Assurance,
*N Sing Risk Advisory, *NB Kader Tax, TP Pillay Consulting,
S Gwala BPaaS, *K Black Clients & Industries, *JK
Mazzocco Talent & Transformation, MG Dicks Risk Independence
& Legal, *TJ Brown Chairman of the Board
*Partner and Registered Auditor
A full list of partners and directors is available
on request.
B-BBEE rating: Level 1 contribution in terms of the
DTI Generic Scorecard as per the amended Codes of
Good Practice
Associate of Deloitte Africa, a Member of Deloitte
Touche Tohmatsu Limited
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 the auditor's report together with the accompanying
financial information from the issuer's registered
office.
We have not audited future financial performance
and expectations by management included in the accompanying
summarised consolidated financial statements and
accordingly do not express any opinion thereon.
--- -------------------------------------------------------------------
14. Events after the reporting period
To the knowledge of the directors, no material events
have occurred between the statement of financial
position date and the date of approval of these financial
statements that would affect the ability of the users
of the financial statements to make proper evaluations
and decisions.
--- -------------------------------------------------------------------
15. Operating segments (audited)
Fair value Operating
adjustments profit/(loss) Net operating
Operating on financial including fair assets/
Revenue profit/(loss) instruments value adjustments (liabilities)
Year ended Year ended Year ended Year ended 30 Year ended 30
30 September 30 September 30 September September September
----------- ----------------- ---------------- -------------- -------------------- ----------------
Restated* Restated*
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
----------- ------ --------- ----- --------- ----- ------- ----- ------------- ------- -------
Equipment 24 193 24 889 2 362 2 216 (184) (201) 2 178 2 015 15 534 16 552
Automotive
and
Logistics 37 764 37 183 1 848 1 877 (6) (7) 1 842 1 870 10 757 11 158
Corporate 2 2 (128) (6) (19) (1) (147) (7) (1 709) (2 330)
------------- ------ --------- ----- --------- ----- ------- ----- ------------- ------- -------
Total group 61 959 62 074 4 082 4 087 (209) (209) 3 873 3 878 24 582 25 380
------------- ------ --------- ----- --------- ----- ------- ----- ------------- ------- -------
* Restated to classify Equipment Iberia as discontinued operation. Refer
to note 6.
Salient features
for the year ended 30 September
Audited
--------------------------------------------------------------------------- ---------------------
2017 2016
--------------------------------------------------------------------------- ---------- ---------
Financial
Group headline earnings per share (cents) 883 838
Continuing headline earnings per share (cents) 975 841
Dividend per share (cents) 390 345
Continuing operating margin (%) 6.6 6.6
Continuing net asset turn (times) 2.2 2.0
Continuing EBITDA/interest paid (times) 5.0 4.9
Continuing net debt/equity (%) 27.6 40.7
Group return on net operating assets (RONOA) (%) 18.4 15.9
Continuing return on net operating assets (RONOA) (%) 16.4 15.5
Group return on ordinary shareholders' funds (%) 9.5 9.2
Continuing return on ordinary shareholders' funds (%) 10.5 9.3
Net asset value per share including investments at fair value (cents) 9 533 8 997
Number of ordinary shares in issue, including BBBEE shares (000) 212 693 212 693
----------------------------------------------------------------------------- ---------- ---------
Non-financial*#
Non-renewable energy consumption (GJ) 3 087 269 3 037 034
Greenhouse gas emissions (tCO2e) 270 707 266 769
Water withdrawals (municipal sources) (ML) 674 755
Number of employees 18 085 19 547
Lost-time injury frequency rate (LTIFR) 0.75 0.75
Work-related fatalities 3 1
Corporate social investment (R million) 18 17
----------------------------------------------------------------------------- ---------- ---------
DTI^ BBBEE rating (level)+ 3 3
----------------------------------------------------------------------------- ---------- ---------
* Continuing operations.
# Deloitte & Touche have issued an unmodified limited assurance report on the non-financial
salient features included above,
in accordance with International Standard 3000 (Revised) on Assurance Engagements Other Than
Audits or Reviews of
Historical Financial Information.
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
------------------------------- ------------------- ------------------
Exchange rates (rand) 2017 2016 2017 2016
United States dollar 13.50 13.75 13.39 14.75
Euro 15.96 15.45 14.83 16.32
British sterling 18.12 17.86 17.03 20.99
--------------------------------- --------- -------- -------- --------
Exchange rates used:
Balance sheet - closing rate (rand)
Income statement and cash flow statement - average rate (rand)
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FMMMMVNNGNZM
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