TIDMBWO
RNS Number : 8961G
Barloworld Limited
30 November 2020
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)
(Bond issuer code: BIBAW)
("Barloworld" or "the Company" or "the Group")
SHORT FORM ANNOUNCEMENT
AUDITED BARLOWORLD YEAR RESULTS FOR THE 12 MONTHS
ED ON 30 SEPTEMBER 2020
Salient Features
- Resilient Group performance, under an unprecedented trading
environment impacted by the COVID-19 pandemic;
- Revenue of R49.7 billion, down 17%;
- Operating margin* down from 6.6% to 4.1%;
- Austerity measures implemented to manage COVID-19 impact, 2020
overhead cost containment savings R 402 million;
- Strong Balance sheet, committed funding capacity closing at R15.6 billion;
- The Group Net debt-to-EBITDA#^ ratio is at 0.6 times (2019: 0.2 times);
- Group EBITDA to gross interest paid#^ of 4.7 times (2019: 5.7 times);
- Group return on invested capital^ of 1.0% (2019: 11.9%);
- Group normalised headline (loss)/earnings per share(#) *^ of (30) cents (2019: 1 167** cents);
- Group basic (loss)/earnings per share of (1 236) cents (2019: 1 150 cents);
- Group basic headline (loss)/earnings per share of (268) cents (2019: 1 100 cents);
- Decisive measures in response to ensure the long-term value creation by the Group; and
- Progress made on the strategy with the acquisition of
Equipment Mongolia and Tongaat Hulett Starch (now Ingrain SA).
# excluding IFRS 16 impact; *excluding B-BBEE charges
** amount reported in 2019 includes the fair value adjustment on
the USD deposits in the UK. The adjusted normalised HEPS 2019
number which excludes the USD deposits in the UK is 1 098
cents.
Group Review
The constrained consumer demand that was experienced in 2019
continued during the year under review. The onset of the global
COVID-19 pandemic in our geographies started impacting trading in
March 2020 triggered by trade restrictions, lockdowns and travel
restrictions that resulted in negative knock-on effects on the
trading conditions. The results therefore reflect the challenges
faced by our businesses during the period
Group revenue for the year decreased by 17% to R49.7 billion
(2019: R60.2 billion). Equipment southern Africa's (snA) revenue
declined by 14% against the prior year due to the impact of
COVID-19 but better than our re- forecasts boosted by comparatively
good mining machine sales and resilient aftermarket activity
levels. Despite the COVID-19 pandemic and geopolitical challenges,
Equipment Eurasia's revenue increased by 22% benefiting from strong
levels of mining activity, particularly in the gold sector. The
Automotive revenue (excludes NMI-DSM which is now equity accounted
and includes Avis Fleet that was held for sale in 2019) was down
15% with declines across all business units as COVID-19 and
economic pressures impact discretionary spending coupled with lower
fleet utilisation in the Avis businesses. On a positive note strong
used sales volumes have increased against the prior year and
margins in this segment are being maintained. In Logistics, revenue
declined by 27% against the prior year on the back of the
non-renewal of contracts and the contraction of the Transport and
Supply Chain markets resulting from weaker demand for goods and
services.
IFRS 16: Leases (IFRS 16) was adopted for the first time this
current financial year and the modified retrospective approach was
applied. The comparatives were therefore not restated. The impact
of IFRS 16 on the Group's operating profit was an uplift of R 147
million because we no longer record operating lease charges, but
recognise depreciation.
The operating profit for the Group of R1.8 billion was 54% down
(2019: R3.9 billion), negatively impacted by lower revenues, high
fixed costs and B-BBEE charges (IFRS 2) of R236 million. The
Equipment snA operating profit was down 35% impacted by lower
service labour recoveries, Khula Sizwe charges and once off
retrenchment costs while gross margin remained in line with the
prior year boosted by a stronger aftersales contribution. In USD
terms Equipment Eurasia's operating profit improved by 1.8% with
continued cost containment and sale mix driving the sustained
margin, showing resilience. The operating profit for Automotive was
down by 83% and the Logistics operating profit reduced to a loss of
R153 million against a R38 million profit in the prior year. Cost
savings through staff reductions and lease rationalisation were key
focus areas during the year with benefits expected to be realised
in 2021. Corporate cost containment measures and the reduction of
consulting costs to key projects, were also a focus area.
Group normalised headline earnings per share (HEPS(#) *^),
excluding the impact of IFRS 16,B-BBEE charges and the fair value
adjustments on the USD deposits in the UK, was a (30) cent loss
down on the prior year of 1 167 cents. Including these charges, the
reported HEPS loss was (268) cents. Normalised HEPS*^ was impacted
by all operations performing at levels well below the prior year
due to COVID-19.
A return on invested capital (ROIC^) of 1.0% was generated
compared to 11.9% achieved in 2019 due to a reduction in operating
profit whilst invested capital remained at similar levels to
2019.
Operating segments results for the year ended 30 September 2020
for continuing operations
R million Revenue Operating profit
/(loss)
Sept 2020 Sept 2019 Sept 2020 Sept 2019
-------------- ------------- --------------- ------------
Equipment and Handling 25 132 26 647 2 020 2 559
-------------- ------------- --------------- ------------
Automotive and Logistics 24 549 33 558 136 1 747
-------------- ------------- --------------- ------------
Corporate 2 1 (442) (409)
-------------- ------------- --------------- ------------
Khula Sizwe 83
-------------- ------------- --------------- ------------
Total group 49 683 60 206 1 797 3 897
-------------- ------------- --------------- ------------
Cash preservation, cost containment and cost-saving measures
The austerity measures and cost saving initiatives aimed at
reducing and containing costs to preserve cash already implemented
by the Group yielded savings during this financial year. Most
importantly, the results will greatly impact the 2021 year as
implementation costs had to be borne in 2020. The measures included
a Group-wide remuneration sacrifice plan and retirement fund
payment holiday, implemented on 1 May 2020, retrenchments, the
deferment of non-essential capex, a moratorium on external
appointments, a reduction in operating costs and additional
counter-measures to contain invested capital. These measures have
reduced the 2020 overhead costs by R691 million. The retrenchment
process, an unfortunate and difficult decision for the Group,
included early retirement and cost the Group R289 million. The
process resulted in approximately 2 644 headcount reduction. The
board and management remain committed to the implementation of
prudent measures aimed at reducing and containing costs to preserve
cash while ensuring the medium to long term strength of the
organisation.
Financial position, Gearing and Liquidity
The Group's balance sheet as at 30 September 2020 remained
strong considering the challenging environment. A robust and solid
liquidity position with cash balance of R6.7 billion was maintained
with the net debt position even after taking into account the
Equipment Mongolia acquisition only increasing to R2.6 billion from
R1.1 billion at the end of the prior year. The headroom on
committed facilities remained substantial at R15.6 billion. The
funding capacity of the Group remains healthy as management
continues to focus on actively reviewing and monitoring all
facilities on an ongoing basis and remain confident of the good
liquidity position.
At the end of 30 September 2020, the Group's gearing levels
increased and our financial position was well within our covenants.
It is important to note that, in April 2020, the EBITDA to interest
covenant was renegotiated from 3.5 times to 2.5 times based on an
unpredictable future that was forecasted at the time. The Group not
only met the renegotiated covenant but also remained well within
our old covenant targets even post acquisition of the Equipment
Mongolia. Management interventions during the lockdown period have
sown positive results in managing our assets and liabilities.
Debt covenants September September 2019
2020
EBITDA: Interest Cover >2.5 times 4.7 times 5.7 times
------------------ -----------------
Net Debt:EBITDA <3.0 times 0.6 times 0.2 times
------------------ -----------------
After considering the acquisitions being progressed, we retain
significant headroom within our covenants, with Net Debt to EBITDA
remaining below 1.0 times, target being below 3.0 times.
Dividend
Barloworld has met its solvency and liquidity obligations and
given the current market conditions, the board took the important
precautionary measure not to declare a final dividend payment for
the year ended 30 September 2020 (30 September 2019: 297
cents).
Looking forward
The spread of the COVID-19 pandemic has had a crippling impact
on economies and industries critical to our business performance.
From the airline industry, to tourism, mining and supply chain
sectors, the virus has caused ripple effects that we need to be
fully prepared for and mitigate in the short, medium, and
long-term. It has incontrovertibly been a difficult and tough time
for all, as no business has been left unscathed by this
pandemic.
Notwithstanding the results achieved in the midst of
unprecedented challenges, we expect to begin realizing cost
efficiencies and operational synergies in the short term from the
group-wide implemented austerity measures. In addition, the
implementation of the Barloworld Business System across the Group,
new ways of working, founded on lean principles and continuous
improvement, position us well to continue to show resilience amid
volatile macroeconomic dynamics in the local and global
economies.
Going forward, a strong balance sheet and stable mature business
platforms are key strengths that will help the Group navigate the
challenges. Business confidence in the regions where we operate has
dropped and the Group expects the average consumer to remain under
pressure, while the trading environment will be impacted by the
lower outlook for recovery and growth. The board and management are
focused on cash preservation, lowering operating costs in line with
reduced activity levels and ensuring the business is well
positioned for the recovery. The Group will also continue its
strategic path to improve efficiencies and performance by adapting
and transforming to align with the changing trading environment in
line with our stated goals. The assessment of the long-term
fundamentals of our businesses is a focus area in our ongoing
portfolio review. The divisions will continue to focus on managing
levers under their control, this includes prudent cost containment
and preservation as well as invested capital reduction in the short
to medium term and until the operating environment improves.
Ensuring that the group's assets generate a return on invested
capital above our stated target weighted average cost of capital
target of 13% remains imperative.
The board and management are committed to ensuring that all of
the Group's re-opened operations are managed responsibly and in
compliance with risk mitigating regulations.
^ Certain information presented in this announcement is regarded
as additional performance measures. These measures are not defined
by IFRS, not uniformly defined or used by all entities and may not
be comparable with similar labelled measures and disclosures
provided by other entities. This information has been included to
further illustrate the performance of the business and align with
measures the board and management have selected to monitor
performance against set targets. The definitions of these are
included in the Consolidated Financial statements available on the
website.
30 November 2020
Short form announcement
This short form announcement is the responsibility of the board
of directors of Barloworld and is a summarised version of the full
announcement in respect of the annual financial results for the 12
months ended 30 September 2020 of Barloworld and its subsidiaries
(collectively "the Group") and as such it does not contain full or
complete details pertaining to the Group's results. Any investment
decisions should be made based on the full announcement. The full
announcement can be found on the Group's website
(https://www.barloworld.com/investors/yearend-results-presentations/)
and on the JSE's website at
https://senspdf.jse.co.za/documents/2020/jse/isse/BAWE/ye2020.pdf.
The full announcement is available for inspection, at no charge, at
the registered office of Barloworld Limited (61 Katherine Street,
Sandton, Johannesburg, 2146) from 09:00 to 16:00 on business days.
Copies of the full announcement can be requested from the
registered office by contacting the company secretary on +27 11 445
1000.
The unqualified audit report, containing key audit matters,
together with the annual financial statements are available on the
Group's website at
(https://www.barloworld.com/investors/yearend-results-presentations/).
Registered office and business address
Barloworld Limited, 61 Katherine Street
PO Box 782248, Sandton, 2146, South Africa
Tel +27 11 445 1000
Email invest@barloworld.com
Directors
Non-executive: NP Dongwana (Chairman), FNO Edozien^, HH Hickey,
MD Lynch-Bell*, NP Mnxasana, NV Mokhesi, H Molotsi, SS Ntsaluba, P
Schmid,
Executive: DM Sewela (Group Chief executive), N Lila (Group
Finance Director)
^Nigeria *UK
Group company secretary: Andiswa Ndoni
Enquiries: Barloworld Limited
Tel: +27 11 445 1000
E-mail: bawir@barloworld.com
Sponsor: Nedbank Corporate and Investment Banking, a division of
Nedbank Limited
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR GRBDBLSXDGGG
(END) Dow Jones Newswires
November 30, 2020 02:49 ET (07:49 GMT)
Barloworld Ld (LSE:BWO)
Historical Stock Chart
From Apr 2024 to May 2024
Barloworld Ld (LSE:BWO)
Historical Stock Chart
From May 2023 to May 2024