BWO.L Regulatory News (BWO)

Barloworld Limited

Preliminary audited year-end results for the 12 months to 30 September 2016

About Barloworld

Barloworld is a distributor of leading international brands providing integrated rental, fleet management, product support and logistics solutions. The core divisions of the group comprise Equipment and Handling (earthmoving, power systems, materials handling and agriculture), Automotive and Logistics (car rental, motor retail, fleet services, used vehicles and disposal solutions, logistics management and supply chain optimisation). We offer flexible, value adding, innovative business solutions to our customers backed by leading global brands. The brands we represent on behalf of our principals include Caterpillar, Hyster, Avis, Budget, Audi, BMW, Ford, General Motors, Jaguar Land Rover, Mazda, Mercedes-Benz, Toyota, Volkswagen, Massey Ferguson and others.

Barloworld has a proven track record of long-term relationships with global principals and customers. We have an ability to develop and grow businesses in multiple geographies including challenging territories with high growth prospects. One of our core competencies is an ability to leverage systems and best practices across our chosen business segments. As an organisation we are committed to sustainable development and playing a leading role in diversity and inclusion. The company was founded in 1902 and currently has operations in over 20 countries around the world with 78% of over 20 000 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^, SS Mkhabela, B Ngonyama, SS Ntsaluba, SB Pfeiffer•, OI Shongwe

Executive: CB Thomson (Chief executive), PJ Blackbeard, PJ Bulterman, DM Sewela, DG Wilson ^Nigerian •American

Group company secretary

Lerato Manaka

Enquiries: Barloworld Limited: Lethiwe Motloung

Tel +27 11 445 1000 E-mail: invest@barloworld.com

Instinctif: Morne Reinders, Tel +27 11 447 3030

E-mail morne.reinders@instinctif.com

Salient features

Clive Thomson, CE of Barloworld, said:

"The group's industry and geographic diversity has continued to provide resilience to the overall trading result. Equipment southern Africa was impacted by a fourth consecutive year of declining capital expenditure in the mining sector, however our Russian equipment business produced an excellent performance and Spain was profitable despite the uncertainty created by two inconclusive general election results.

Automotive achieved a record year in a challenging market environment and the recent acquisitions delivered in line with expectations. Operating profit growth in Logistics was robust as a result of contract awards and expansion into new business segments.

All our businesses have a clear strategic focus and strong market positions. As a result of positive cash generation the group's balance sheet is strong and we are well placed to capitalise on organic and acquisitive growth opportunities as they arise. We have the right leadership in place in all of our businesses and expect 2017 to be another year of solid progress for the group."

21 November 2016

Highlights

Chairman and chief executive's report

Overview

The global economy continues to underperform with added risks to growth arising from the results of the Brexit vote in the UK and uncertainties created by the recent US election result. The growth outlook for the South African economy remains muted. Against this background the group produced a solid operating result for the year despite continued weakness in the mining sector.

Revenue for the year of R66.5 billion was 6% ahead of last year while operating profit grew by 4% to R4 135 million.

Profit before non-operating and capital items was up 14% to R2 693 million, however net profit for the year was negatively impacted by the significant decrease in income from associates primarily due to the temporary cessation of mining activity by one of our largest customers in the DRC.

Headline earnings per share (HEPS) of 838 cents showed an increase of 24 cents (3%) over the prior year. If one excludes the impact of the prior year B-BBEE charge, HEPS declined by 9% compared to the adjusted prior year HEPS of 926 cents, mainly as a result of the impact of reduced associate earnings.

Cash generated from operations was very strong at R7 827 million (2015: R1 123 million) primarily as a result of focused working capital management. This resulted in a sharp reduction in net debt levels and a healthy balance sheet position at year end.

A total dividend for the year of 345 cents per share was declared in respect of this year's earnings (2015: 345 cents).

Operational review

Equipment and Handling

Equipment southern Africa

Revenue for the year of R18.5 billion was R1.8 billion (8.7%) down on last year. The slowdown in mining activity and the reluctance of mines to incur both replacement and greenfields capital expenditure resulted in mining unit sales dropping to their lowest level since 2010. While most of our major mining customers have maintained production levels we have seen selective production curtailment in certain regions, including the iron ore mines in Northern Cape, which had some impact on aftersales demand.

Operating profit for the year of R1 585 million is R309 million (16%) below last year. The operating margin declined from 9.3% in 2015 to 8.5% in the current year due to margin pressures and a change in machine sales mix. Restructuring costs of R30.5 million were incurred following actions taken to reduce the cost base principally in Angola. There has been positive cash generation of R3.0 billion compared to cash utilisation of R1.7 billion in 2015, due to improved working capital management and trimming the asset base.

While activity levels in Angola remained steady, the shortage of US dollars in that country has resulted in restrictions in our ability to transact freely in the local currency and we have taken steps to limit our currency exposures.

Our associate in the Katanga province of the DRC generated a profit of R13 million for the year which was R252 million below last year. While we showed a profit in the second half of R40 million, which is an improvement on the loss at March of R27 million, it nonetheless represents a major variance in our earnings for the year. Mining activities at our largest customer remain suspended following the slope failure in early March and copper processing is now only expected to recommence in the second half of calendar 2017 once the new plant has been commissioned.

Equipment Russia

Revenue for the year of R4 837 million showed a R1 458 million (43%) increase over the prior year mainly due to increased mining machine demand into the opencast gold mining segment while total after sales revenue was in line with the prior year.

Operating profit of R599 million was R202 million up on last year with the operating margin increasing from 11.8% to 12.4%. This was a very good result in challenging market conditions and exceeded our expectations.

Equipment Iberia

Activity levels in Spain remained under pressure as a result of extensive delays in forming a government following two inconclusive general election results.

Revenue to September of R4.5 billion was R680 million adrift of last year with activity levels in Portugal 25% below the previous year with reduced export sales to Angola and Mozambique.

Operating profit of R55 million was R16 million (23%) below last year and included restructuring costs of R9.7 million in Portugal.

Handling

Revenue for the year of R1.5 billion was R0.6 billion (26%) below last year which included Metso, Agriculture Russia and SEM. The business saw a fall in the Agriculture South Africa business due to prevailing drought conditions.

The operating profit for the year of R25 million was well up on the R6 million earned last year despite the R12 million restructuring costs incurred in December to lower the cost base.

Post year end we have entered into an agreement to dispose of the assets of our Agriculture and Handling businesses in South Africa into a joint venture company in which we will retain a 50% stake and the balance will be owned by BayWa AG a German listed company and a leader in global agriculture. The net assets of these businesses of R746 million have consequently been classified as held for sale at September 2016.

Automotive and Logistics

Automotive

The Automotive division produced a strong result in very challenging markets. Revenue for the year of R31.4 billion was R2.7 billion (9.5%) up on last year with all the business segments showing growth.

The operating profit of R1 654 million for the year showed an improvement of R125 million (8.2%) over the previous year.

Car Rental

Revenue to September of R6.0 billion is R765 million (15%) up on last year. This is driven by a 5.4% growth in rental revenue per day and a 3.8% increase in rental days. The balance of the increase comes from higher used vehicle sales.

Operating profit for the year of R536 million is R65 million (14%) ahead of last year.

Avis Fleet

Revenue to September of R3.6 billion is R279 million (8.3%) up on last year while operating profit of R560 million is R12 million adrift of last year. The drop in profit is mainly as a result of the non-renewal of the Government of Lesotho contract of 1 200 vehicles at the end of the previous financial year which was partly compensated by new contract awards.

Motor Trading

SA industry vehicles sales for the calendar year to September show a decline of 11% compared to 2015 with new passenger vehicle sales down by 12%.

Our Motor Trading business experienced a 6.4% decline in new unit sales for the year. Year to date revenue of R21.8 billion is R1.7 billion (8.3%) up on last year driven by the acquisitions, double digit new vehicle inflation, stronger used vehicle prices and increased parts activity.

Operating profit to September of R558 million, is R72 million (15%) up on last year.

The acquisition of two Mercedes-Benz dealerships in Mbombela, Mpumalanga and Shelley Beach, KwaZulu-Natal, together with the acquisition in early May of Salvage Management and Disposals, the largest salvage operator in South Africa, have now been integrated and are trading in line with expectations.

Logistics

Revenue for the year of R5.8 billion was R1.2 billion (28%) up on last year.

The Supply Chain Management business grew revenue by R1 billion (43%) mainly impacted by additional new contracts and certain acquisitions. Transport increased revenue by R0.5 billion (21%) also as a result of new contracts and the Aspen Logistics acquisition from January.

Operating profit to September of R223 million was R64 million (40%) above the prior year. The operating profit of the Freight Management and Services segment has shown a significant turnaround from the loss of R4 million incurred last year to a profit of R38 million in the current year, benefiting from the disposals of Logistica Spain and Sea Air Transport at the end of last year.

Human resources, diversity and sustainable development

Despite our lost-time injury frequency rate continuing to improve year on year, tragically there was one work-related fatality during the period. An employee was involved in a fatal motor vehicle collision while returning from a customer's site.

Focus continued on our group sustainability targets, with good progress being made on renewable energy with the 300kW (peak) solar photovoltaic installation at Equipment's Isando site and others planned.

Barloworld was again ranked in the top 20 overall for B-BBEE on the Codes of Good Practice applicable at the time, conducted by an independent survey of the Top 100 JSE Listed Companies; and obtained a dti B-BBEE Level 3 rating under the revised Codes.

During the past year, good progress has been made against our diversity targets with a number of women being appointed into senior positions as well as improvement in South Africa of demographic representation at senior levels.

Barloworld was again included on the Dow Jones Sustainability Emerging Markets Index and also included in the FTSE/JSE Responsible Investment Top 30 Index.

Executive leadership appointments

Mr Dominic Sewela, appointed as deputy chief executive of Barloworld Limited on 1 March 2016 as part of a structured succession plan, was appointed as CEO-designate of the company effective 1 October 2016.

Mr Clive Thomson, who has successfully led the Barloworld group for the past 10 years, will be succeeded as chief executive of Barloworld Limited by Mr Sewela at the next annual general meeting of the company planned for 8 February 2017. Mr Thomson will remain employed by the company in an advisory capacity for a short period thereafter to ensure an effective handover process and seamless leadership transition.

The following senior leadership appointments were also effective 1 October 2016:

· Emmy Leeka succeeded Dominic Sewela as chief executive of Barloworld Equipment southern Africa;

· Quinton McGeer succeeded Viktor Salzmann as chief executive of Barloworld Equipment Iberia following Viktor Salzmann's retirement from his executive responsibilities;

· Gavin Knight succeeded Quinton McGeer as general director of Vostochnaya Technica, our Equipment business in Russia; and

· Hilary Wilton (head of risk) and Chris Wierenga (head of strategy and M&A) were appointed to the group executive committee.

These are all internal appointments of experienced Barloworld executives and the handover process has been seamlessly managed.

Changes in directorate

Independent non-executive director, Dr Alexander Landia, resigned from the Barloworld board with effect from 31 December 2015 due to other business commitments and Mr Gordon Hamilton, having reached retirement age for non-executive directors, retired from the board on 3 February 2016. We thank them for their valuable contribution to the board.

Funding

Net debt decreased by R2.7 billion from R10.7 billion at September 2015 to R8 billion at September 2016 due to strong cash generation particularly in Equipment southern Africa.

Cash generated from operations of R7.8 billion was significantly ahead of the R1.1 billion generated last year driven by a R2.1 billion decrease in working capital (compared to a R3.4 billion absorption last year) and a reduced investment in fleet leasing and equipment rental fleet of R0.5 billion which was R1.3 billion lower than the prior year.

The net cash inflow before financing of R3.5 billion for the year showed a R7 billion improvement on 2015.

In June 2016 Moody's Investors Services initiated their rating of Barloworld with a long-term and short-term issuer Global Scale Rating of Baa3 and P-3 and long-term and short-term issuer National Scale Rating of Aa3.za and P-1.za. Both ratings come with a stable outlook.

Outlook

The firm order book for Equipment southern Africa of R1.3 billion is slightly up on March but down on the R1.7 billion book at September 2015. Commodity prices have shown some recovery of late and certain green-shoots are evident in the mining sector. Aftermarket remains resilient and is expected to show some improvement based on the higher average age of mining equipment fleets. The need for infrastructure development is expected to underpin construction equipment demand.

The Russian economy has now been in recession for close to two years with expectations that it could show improvement in 2017. Following the strong invoicing levels in the last quarter, the Equipment Russia firm order book currently stands at $21 million which is below the September 2015 level of $28 million. The current level of major project tenders remains strong.

In Spain, the Popular Party has finally formed a minority government to guide the Spanish economy out of the political deadlock. The machine industry continues to show growth, however, this is concentrated in low-end building and construction products. The current order book of €26 million remains predominantly in marine Power projects.

The Handling outlook is largely dependent on good rainfall breaking the prevailing drought conditions in southern Africa. BayWa is a leader in global agriculture and the impending joint venture should generate new opportunities to expand the business going forward.

Our Car Rental business will continue to benefit from the dual brand strategy and the growing foreign inbound segment. In this high interest and high vehicle inflation environment focus will be placed on improving rental rates to protect margins. We further anticipate another strong contribution from used vehicle disposals.

Avis Fleet should be stable due to the annuity based nature of the leasing contracts, however, there are certain existing longstanding contracts that come up for renewal during the course of 2017.

The outlook for new vehicle sales in South Africa in 2017 remains weak. Consumers are facing the pressures of high interest rates and continued high new vehicle inflation. Our Motor Trading business will focus on the opportunities presented in used vehicles by the current economic conditions. In addition the new Salvage Management and Disposal Solutions business provides a diverse revenue source independent of new vehicle sales.

In Logistics, business development continues to generate a strong pipeline of exciting new growth opportunities with incremental revenue projected from logistics contracts won in 2016. The growth outlook for all three Logistics segments is therefore positive going into 2017.

All our businesses have a clear strategic focus and strong market positions. As a result of positive cash generation the group's balance sheet is strong and we are well placed to capitalise on organic and acquisitive growth opportunities as they arise. We have the right leadership in place in all of our businesses and expect 2017 to be another year of solid progress for the group.

Group financial review

Revenue for the year increased by R3.8 billion (6.1%) to R66.5 billion with the bulk of the improvement in Automotive and Logistics which showed increases of R2.7 billion (9.5%) and R1.2 billion (28%) respectively. Revenue in Equipment Russia was up by 17.5% in dollar terms while Equipment Iberia was down in euro terms. Rand revenues for both regions benefited from translation gains. In Equipment southern Africa revenue decreased by R1.8 billion (8.7%). This was partially offset by the benefits of the weaker rand in operations outside South Africa. The weaker rand favourably impacted total revenue by R2.7 billion.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) was up by 3% to R6 674 million with depreciation and amortisation up by 2.2%.

Operating profit (excluding the B-BBEE charges) rose by 3.5% to R4 135 million with the operating margin down slightly to 6.2%. In Equipment southern Africa, operating profit was down by 16.3% with reductions in mining capital expenditure and production cutbacks negatively affecting both equipment and aftersales demand. Equipment Russia traded well ahead of the prior year, due to higher mining equipment and aftersales demand. Equipment Iberia operating profit was down on last year.

Automotive produced a record result with operating profit up 8.2% to R1 654 million. A marginal decline in the Avis Fleet business was offset by improved profits in Motor Trading and Car Rental.

Logistics generated an operating profit of R223 million which was 40% ahead of the prior year.

The total net negative fair value adjustments on financial instruments of R209 million (2015: R198 million) mainly relates to the cost of forward points on foreign exchange contracts and translation losses on monetary assets and liabilities in Equipment southern Africa and Handling. This was off-set by some gains on forward cover contracts in Equipment southern Africa.

Finance costs increased by R94 million to R1 346 million. This is mainly due to higher interest rates in South Africa.

Profits from non-operating and capital items of R120 million includes profits on sale of the Logistics Supply Chain software business (R63.4 million), a R15 million profit on sale of the Agriculture Zambia business and a foreign currency release in respect of an offshore subsidiary. This has been partially off-set by the impairments of goodwill in Avis Fleet Tanzania and the investment in Energyst.

The taxation charge increased by R1 million to R809 million while the effective taxation rate for the period (excluding prior year taxation and taxation on non-operating and capital items) was 27.4% (2015: 37.1%). The current year charge was negatively impacted by local tax relating to forex gains in the local currency accounts. The prior year rate was negatively impacted by the IAS 12.41 deferred tax charges arising from the depreciation of the rouble in Equipment Russia, as well as local currency depreciation against the dollar in Angola, Zambia and Mozambique.

Income from associates and joint ventures is significantly down on the prior period reflecting a loss of R25 million for the year compared to income of R287 million last year, mainly attributable to the decline in profits from the equipment associates in the DRC and Europe. This swing of R312 million has materially impacted the net profit and earnings for the year.

Headline earnings per share (HEPS) (excluding the B-BBEE transaction) was down by 9% to 838 cents compared to the 926 cents of last year, mainly as a result of the decrease of 148 cents per share arising from reduced associate earnings.

Basic earnings per share (EPS) of 891 cents is 10.1% higher than last year's comparable of 809 cents.

Cash flow

Cash generated from operations was strong increasing to R7.8 billion from the R1.1 billion generated in 2015. Working capital decreased by R2.1 billion, mainly in Equipment southern Africa and Equipment Russia. This was significantly down on the absorption last year of R3.4 billion. Equipment southern Africa produced a reduction in working capital of R1.7 billion and Equipment Russia a reduction of R0.4 billion.

Cash applied to the investment in property, plant and equipment together with subsidiaries and intangibles of R1 436 million includes net acquisitions in the Automotive and Logistics divisions of R639 million. In addition a further R339 million ($25 million) was invested in Angolan US$ linked bonds as protection against currency devaluation. The total investment in Angolan US$ linked government bonds at September was $51 million. The net cash inflow before financing activities for the year of R3 507 million was R6 971 million better than the R3 464 million outflow at September 2015.

Financial position

Total assets employed in the group reduced by R2.1 billion (4.4%) to R46 billion compared to September 2015. The bulk of the reduction was driven by a reduction in inventories and receivables in Equipment southern Africa and Russia while the weaker rand added R340 million to the total assets. Assets held for sale comprise mainly the assets of the South African Handling and Agriculture businesses which are to be sold into a joint venture.

Total interest-bearing debt at 30 September 2016 dropped strongly by R2.1 billion to R11 billion (September 2015: R13.1 billion) while cash and cash equivalents increased to R3 billion (September 2015: R2.4 billion). Net interest-bearing debt at 30 September 2016 of R8 billion was R2.7 billion down on September 2015 (R10.7 billion).

Debt

In October 2015, the company settled the R750 million BAW2 bond and in February 2016 the R200 million BAW15 bond matured and was settled from available facilities utilising its available banking facilities. In December 2015 the company issued an unsecured seven year bond (BAW22) totalling R253 million, and in January 2016 the company issued a R500 million unlisted note (BAW23U), the proceeds of which were used to redeem the unlisted BAW20U. In September 2016, the company issued a three-year bond (BAW24) totalling R501 million. The proceeds of this was used to settle the R614 million BAW 10 which matured on 30 September 2016. These bonds were issued under our existing South African Domestic Medium Term Note programme.

During the 2016 financial year the group finalised a new three-year revolving credit facility for R700 million and an ever-green facility for R650 million that will continue indefinitely subject to an 18-month notice period to exit the facility.

South African short-term debt includes commercial paper totalling R807 million (September 2015: R861 million). While this market has remained active, liquidity and spreads have been negatively impacted by interest rate uncertainty. We expect to maintain our participation in this market to the extent permitted by overall liquidity in the market.

Cash and cash equivalents at September of R3.0 billion included $37.5 million (R516 million) held in local currency in Angola of which $15.8 million is held in a captive account to support foreign currency allocations and $16.2 million is required to fund local operating expenses.

At September the group had unutilised borrowing facilities of R9.6 billion, of which R7.2 billion was committed. The group's ratio of long-term to short-term debt improved to 76%:24% (September 2015: 68%:32%).

Moody's Investors Services assigned a long-term and short-term issuer Global Scale Rating of Baa3 and P-3 and long-term and short-term issuer National Scale Rating of Aa3.za and P-1.za in June 2016. The outlook on the ratings is stable. The new credit rating implies that any new bonds issued would now qualify as level 2A High Quality Liquid Assets (HQLAs) which should make Barloworld paper more attractive to banks, which are required to hold a certain level of HQLAs to meet their liquidity coverage ratio targets.

The group total debt-to-equity ratio at 30 September 2016 was 56% (September 2015: 67%), while group net debt to equity improved to 41% (September 2015: 55%).

Gearing in the three segments are as follows:

Accounting policies

The annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The basis is consistent with the prior year except for the reclassification of the interest-bearing floor plan facilities provided to motor retail dealerships by the vehicle manufacturers to acquire inventories. The change in disclosure of the interest-bearing floor plan from borrowings to payables reflects the nature of the transactions and is in line with current industry disclosures.

Barloworld's results for the year ended 30 September 2015 were restated to reflect changes in disclosure of the interest-bearing floor plan facilities.

Dividend

Dividends totalling 345 cents per share were declared in respect of this year's earnings (2015: 345 cents). All issued shares are entitled to receive dividends. The dividends declared this year are covered 2.4 times by headline earnings (2015: 2.6 times).

Going forward

The group will continue to work on improving margins while containing its cost base. This is particularly relevant in our Equipment businesses in southern Africa and Iberia which are generating returns below target. The group will further continue to focus on generating positive free cashflow in 2017 and trimming the total asset base to improve returns. We will also proactively take steps for the early refinancing of debt that is maturing within the next 18 months.

DG Wilson

Finance director

Operational reviews

Equipment southern Africa results were impacted by the slowdown in mining and volatility of commodity prices. Revenue declined 8.7%, with operating profits of R1 585 million down 16.3% and an operating margin of 8.5% (2015: 9.3%). Despite the slowdown in the mining sector, firm back orders held up at R1.3 billion. Again, the robustness of the business model was evident, with aftersales contributing 56% to total revenue, up from 50% last year. The number of used machine units sold was 8% up on last year. Cash generation for the year of R3.0 billion was a significant improvement from the cash utilisation of R1.7 billion in 2015; this was due to an improvement in inventory turns and receivables collections.

Russia produced a strong result despite continued contraction in Russian economy and machine industry. Operating profit of R599 million (2015: R397 million) for the year was supported by mining equipment deliveries predominantly to gold mining customers, resilient aftermarket performance and tight cost control. Significant inroads were made into reducing working capital and realising aged inventories. Management is observing an increase in tender activity for both existing and greenfield mining operations, with a number of major projects currently underway.

Iberia continued to operate in a market which saw slowing machine industry growth with the light construction sector continuing to show better growth as compared to the heavy construction and mining sectors. Activity levels were affected by economic and political uncertainty and the order book ended the year lower than the prior year. The business delivered an operating profit of R55 million which included restructuring costs of R9.7 million, mainly in the Portuguese operations.

In Handling severe drought and the slowdown in the mining sector and slow SA economy continued to impact revenue in southern Africa and necessitated a restructuring of the SA business. Overall operating profit of R25 million was well up on the R6 million earned last year following the disposal of the loss-making Agriculture Russia business.

The Automotive division delivered another record result, continuing to prove resilient in challenging markets. The division generated strong operating cash flows and has continued to reinvest into profitable growth opportunities. Divisional operating profit improved by 8.2% off revenue growth of 9.5%, while achieving an overall operating margin of 5.3% (2015: 5.3%).

Car Rental delivered an excellent result, further improving operating profit by 14% off a revenue growth of 14.7% and achieving an operating margin of 9.0% (2015: 9.1%). The business grew rental day volumes, increased revenue per rental day, successfully managed fleet utilisation at 75% and maintained market leadership in a competitive environment. Avis Car Sales continued to earn good returns on the sale of ex-rental vehicles.

Avis Fleet produced a slightly lower result, with operating profit declining by 2.1%. The financed fleet declined by 2.4% mainly due to the non-renewal of the Lesotho government contract, however, the business continues to have high-level customer retention. Reduced fleet terminations negatively impacted the overall used vehicle profit contribution in this business.

The Motor Trading operations delivered a good result given the tough trading conditions and declining new vehicle market. Operating profit increased by 15% off a revenue growth of 8.3%, improving overall operating margin to 2.6% (2015: 2.4%). New vehicle sales volumes declined by 6.4% against a total market decline of 9.5% during the financial year under review. The overall result was supported by an improved used vehicle and aftersales performance. The acquisitions of two Mercedes-Benz dealerships and a majority stake in Salvage Management and Disposal contributed to the result.

Logistics delivered a pleasing result with revenue up 28% and operating profit up 40% on last year driven by the full year financial impact of new contracts and the Smartmatta acquisition, growth in Transport volumes, favourable trading on key Supply Chain Management contracts, record trading within the South Africa freight forwarding business and the favourable impact from the disposal of the loss making SAT Sea Air and Logistics Spain. Operating margins increased to 3.9% (2015: 3.5%). The acquisitions of KLL group and a 51% interest in Aspen Logistics effective 1 January 2016 provide multi-party, multi-temperature warehousing and distribution capabilities.

Corporate Office primarily comprises the operations of the group headquarters and treasury in Johannesburg, the treasury in Maidenhead (United Kingdom) and the captive insurance company.

Southern Africa has shown a higher operating profit compared to the previous comparative period as a result of lower charges and accruals for long-term incentives and reduced operating costs. In Europe the lower operating loss is due mainly to lower operating costs and lower insurance claims in BIL the captive insurance company.

The UK pension scheme deficit increased from R1.9 billion (£93 million) to R2.8 billion (£161 million) primarily as a result of a 1.5% reduction in the AA-Corporate bond yield which significantly impacted the future pension liability. This reduction in the yield resulted from market moves which were further adversely impacted by the Brexit vote in the year.

DIVIDEND DECLARATION

Ordinary dividend number 176

Notice is hereby given that final dividend number 176 of 230 cents (gross) per ordinary share in respect of the year ended 30 September 2016 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 15% (fifteen per centum);

· Barloworld has 212 692 583 ordinary shares in issue;

· The Gross local dividend amount is 230 cents per ordinary share;

· The net dividend amount is 195.5 cents per share.

In compliance with the requirements of Strate and the JSE Limited, the following dates are applicable:

Share certificates may not be dematerialised or rematerialised between Wednesday, 11 January 2017 and Friday, 13 January 2017, both days inclusive.

On behalf of the board

LP Manaka

Group company secretary

Directors

Non-executive: DB Ntsebeza (Chairman), NP Dongwana, FNO Edozien^, SS Mkhabela, B Ngonyama, SS Ntsaluba, SB Pfeiffer•, OI Shongwe

Executive: CB Thomson (Chief executive), PJ Blackbeard, PJ Bulterman, DM Sewela, DG Wilson

^Nigerian •American

Summarised consolidated income statement

for the year ended 30 September

Summarised consolidated statement of comprehensive income

for the year ended 30 September

Summarised consolidated statement of financial position

at 30 September

Summarised consolidated statement of changes in equity

at 30 September

Summarised consolidated statement of cash flows

for the year ended 30 September

Summarised notes to the consolidated financial statements

for the year ended 30 September

Salient features

for the year ended 30 September