BWO.L Regulatory News (BWO)

Barloworld Limited

(Incorporated in the Republic of South Africa)

(Registration number 1918/000095/06)

(Income Tax Registration number 9000/051/71/5)

(Share code: BAW)

(JSE ISIN: ZAE000026639)

(Share code: BAWP)

(JSE ISIN: ZAE000026647)

(Bond issuer code: BIBAW)

("Barloworld" or "the company")

Year-end results for the 12 months to 30 September 2014

Salient features

Revenue up 4% to R62.1 billion

Operating profit up 16% to R3 830 million

Basic earnings per share increased 33% to 1 012 cents

Headline earnings per share from continuing operations up 10% to 857 cents

Total dividend per share increased 10% to 320 cents

Australian motor retail operations disposal for R1.3 billion

Clive Thomson, CE of Barloworld, said: 

"The group delivered a solid performance for the year with operating profits up 16% and headline earnings per share from continuing operations up 10%.

Our Equipment business in southern Africa performed well notwithstanding weak commodity prices and reduced capital expenditure in the mining sector. The construction sector in Spain remained depressed and necessitated a further restructuring of our operations, while our Russian business delivered a pleasing result notwithstanding the uncertainties emanating from the Ukraine crisis.

The Automotive and Logistics division traded strongly due to improved operating efficiency and disciplined cost control.

While a number of geopolitical risks and economic uncertainties exist globally, our focus will remain on executing our strategy, driving operational efficiencies and maintaining strong cash flows. We expect to continue to make good progress into 2015 and are well placed to benefit once the infrastructure and mining cycles move into a recovery phase across our key geographies."

17 November 2014

Chairman and Chief Executive's report

Overview

Against a backdrop of challenging economic conditions and geopolitical uncertainty, the group produced a solid result for our 2014 financial year.

Revenue from continuing operations increased by 4% to R62.1 billion while operating profit increased by 16% to R3 830 million. This reflects improvements in operating efficiencies and disciplined cost control as the operating margin increased from 5.6% to 6.2%.

Headline earnings per share from continuing operations increased by 10% to 857 cents compared to the restated 780 cents in 2013. The dividend for the year of 320 cents is 10% higher (2013: 291 cents).

The group's return on net operating assets of 18.8% was slightly up on the prior year notwithstanding the costs incurred on restructuring the Iberian equipment business.

Strategic developments

A number of niche acquisitions were made in our Automotive business including Leach Toyota and Hino in Kuruman and 51% of the Jaguar Land Rover dealership in Witbank. Post year end we concluded the acquisition of a fleet services business in Tanzania which establishes a presence in East Africa to complement the West African presence we are building in Ghana.

Our motor retail business in Australia was disposed of for R1.3 billion generating a profit of R374 million. This will facilitate the redeployment of capital over time into businesses generating higher financial returns.

Within Logistics we made an acquisition in an extra heavy abnormal transport business which has synergies with our equipment operations. We also diversified the Barloworld Transport business into the sugar cane sector and organically established and secured the necessary skills to grow in the mobile crane segment. Our loss making Far East logistics airfreight business was disposed of in November 2013.

In our Equipment division, the Bucyrus acquisitions (extended mining product range) previously concluded in southern Africa and Russia are being successfully integrated into our Caterpillar mining equipment operations. These transactions are performing well ahead of our acquisition projections.

We sold our materials handling business in Holland in December 2013 which concluded the disposals of our international Handling operations. In September 2014 we acquired the AGCO agricultural equipment dealership in Zambia as part of our Africa growth strategy.

Operational review

Equipment and Handling

Equipment southern Africa

The business increased revenue by R1.8 billion (9.3%) to R20.9 billion and delivered a good increase in operating profitability despite the ongoing slowdown in the mining sector. Higher than planned activity in the extended mining product range (EMPR) growth in aftermarket revenues and rand weakness contributed positively to the result.

The deferral of new mining capex was counteracted by growth in our parts and service business as existing equipment fleets are maintained. Aftermarket revenues grew by close to 17% in the year and now represent approximately 43% of total revenue.

Operating profit for the year of R1 968 million was 17.3% ahead of last year with the EMPR business exceeding expectations. The operating margin of 9.4% was up on the prior year 8.8% and highlights the strength of the business model in a difficult trading environment.

Income from joint ventures increased by 23.7% to R223 million.

Equipment Russia

The business delivered a pleasing result despite the difficult business environment and uncertainty caused by the Ukraine crisis that persisted for most of the year.

Revenue for the year of $382.7 million was $115 million (23%) down on the prior year mainly due to the slowdown in mining sales. The power business held up well aided by strong rental demand. Parts and service revenues grew by 7.6% in the year with EMPR growing particularly strongly. After sales represented 46% of total revenue compared to 33% last year.

Operating profit of R429 million ($40 million) was generated which was slightly below the prior year in USD terms. However, the rand operating margin of 10.7% was well up on the 8.8% achieved in 2013 due to the higher aftermarket mix, good cost control and supply chain efficiencies.

Equipment Iberia

The recovery in the Spanish economy has not yet impacted fixed investment expenditure and consequently the local construction industry remains in limbo.

Revenue for the year of €290 million was €76.6 million (21%) below last year which had included various large package deals. While machine industry unit sales have started to show some signs of recovery in 2014 this has largely been in the smaller general construction and tele handler markets which have had a limited impact on our revenues.

Operating losses from normal trading of €3.6 million were incurred in the second half compared to the €2 million loss in the first half. These losses stem mainly from the earthmoving business in Spain while the power business remained profitable. This has unfortunately meant that we have had to take further steps to adjust the overhead structure of the businesses in line with current activity levels.

In September agreement was reached with the trade unions for a further reduction in the Spanish workforce. Total restructuring costs expensed in the period amount to €6.2 million and are expected to generate €7.4 million savings in the year ahead.

Handling

The business recorded revenue of R1.9 billion for the year which was R0.6 billion down on last year following the disposals of the Handling businesses in Holland and Belgium. Increased activity levels were achieved in Agriculture SA and Mozambique.

Operating profit of R55 million was slightly higher than the previous year which included certain businesses now disposed. The Agriculture business in Russia was impacted by difficult trading conditions.

Automotive and Logistics

The division delivered a strong performance generating revenue of R31.1 billion which was R2.3 billion (8.1%) up on the last year excluding the results of the Motor Retail Australia businesses disposed of which are disclosed as discontinued operations.

Operating profit for 2014 of R1 644 million showed an increase of R322 million (24%) over last year. The operating margin for the division increased from 4.6% to 5.3% in the current year.

Motor Retail southern Africa

The South African vehicle industry remains under pressure as a result of increasing interest rates, lower economic growth and above inflation new vehicle price increases following a sharp decline in the value of the rand. The domestic vehicle market is projected to decline by 1% to 3% in calendar 2014.

In these difficult trading conditions our motor retail business produced a strong performance increasing revenue by R1.7 billion (9.8%) to R19.2 billion. The growth came from increased used retail sales and strongly improved parts sales. Operating profit of R542 million was R121 million (29%) up on last year with the operating margin increasing from 2.4% to 2.8% for the year. We have also selectively increased our dealership footprint with new dealerships in the Northern Cape and Mpumalanga.

Car Rental

Avis Rent a Car increased revenue by 11% to R4.5 billion supported by a 9.9% growth in rental days and a 2.7% increase in revenue per day.

The operating profit for the year of R421 million was 33% ahead of the R317 million in the prior year with operating margin increasing from 7.8% to 9.3%. Average fleet utilisation of 76% was slightly ahead of the 75% achieved in 2013.

Avis Fleet Services

Revenue increased by 6.6% to R3.1 billion. The financed fleet was maintained at similar levels, the managed maintenance fleet grew by 16% while the total fleet under management was up 11%.

Operating profit for the year of R559 million, R75 million (16%) ahead of 2013, was also assisted by an improved contribution from used vehicle sales. Operating margin for the division increased to 18.1% from 16.7% last year.

Logistics

The business generated revenue of R4.4 billion for the year which was similar to last year. The transport business has made great strides since the acquisition of Manline in 2013.

Operating profit of R122 million, net of the R20 million Ellerines receivable provision, was 22% ahead of last year driven by the transport business. The supply chain management profitability was adversely impacted by the provisioning required for the Ellerines contract following that customer's business rescue proceedings in early August. In addition, a provision of R76 million was made for the impairment of intangibles and other assets related to the contract. Full provision has thus been made in respect of this exposure.

The freight management and services loss for the year resulted from weak volumes in Spain and a reduction in Sea Air volumes in the Middle East following the loss of a significant customer in January 2014. Steps have been taken to replace the lost volumes.

Sustainable development

Underscoring our commitment to sustainability, we are constituents of the Dow Jones Sustainability Emerging Markets Index and the Global Compact 100 Index, one of only a few South African companies to have achieved this recognition.

Stakeholder engagement continues to underpin sustainable value creation activities across our operations.

Providing a safe and healthy work environment is a key focus. It was therefore disappointing that our Lost-Time Injury Frequency Rate (LTIFR) increased and tragically, there were three work-related fatalities due to motor vehicle accidents during the year. We extend our condolences to the families of the deceased and continue to foster a culture of safety and awareness in the group to prevent accidents and injuries in future.

The majority of our operations have performed ahead of our aspirational group target of a 12% efficiency improvement for non-renewable energy consumption and greenhouse gas emissions (scope 1 and 2) set for the end of this financial year off a 2009 baseline. However, our overall group target was not achieved due mainly to a number of investments made in the logistics road transport business which has higher energy and emissions intensities compared to our other businesses. Nonetheless this target played a major role in focusing our efforts on energy efficiency with significant benefits for the organisation.

Human resources, diversity and empowerment

We continue to focus on people management and ensuring the required leadership and talent pipeline is in place. Workforce diversity remains a key focus area across the group and in South Africa.

The group has a dti B-BBEE level 2 rating. As part of our focus on enterprise and supplier development we initiated supplier development workshops across our South African operations aimed at broadening the diversity of our supply base.

The B-BBEE transaction entered into in September 2008 matures in September 2015. We have embarked on a process to address the future of the credit sale structure which includes six Strategic Black Partners (SBPs) and three Community Service Groups (CSGs).

Changes in directorate and executive management

Ms Hixonia Nyasulu retired by rotation from the board at the annual general meeting on 29 January 2014 having served on the board for seven years. Ms Ngozichukwuka (Ngozi) Edozien was appointed as an independent non-executive director of the company effective 19 March 2014.

Mr Isaac Shongwe, previously Executive director: Human resources, strategy and sustainability, having served the group for more than nine years, relinquished his executive management responsibilities effective 1 June 2014 and became a non-executive director of the company from that date.

Mr Dominic Sewela, Chief executive officer of Barloworld Equipment southern Africa, was appointed as an executive director of the company with effect from 19 March 2014.

Mr Sibani Mngomezulu was appointed as Group executive: Human resources, strategy and sustainability effective 1 June 2014.

Outlook

The slowdown in the Chinese economy continues to impact commodity demand with a consequent reduction in commodity prices.

While the Equipment southern Africa firm order book at September 2014 of R1.9 billion is well down on the R3.5 billion at September 2013, there are a number of potential projects underway which should support our mining businesses into 2015 and aftermarket revenues are expected to continue to grow. The order book reduction is also reflective of the shortening lead times for machine orders placed on Caterpillar; currently around 20 weeks for mining equipment.

We also expect the long-term rental business to continue to underpin demand as contract miners in particular take advantage of this model to fund their capex requirements. Customer demand for rental machines is not included in the order book.

The outlook for construction in southern Africa remains positive with a number of projects in Angola, Namibia and Mozambique. The South African construction sector remains subdued with some activity at local government and municipal levels for small and medium sized contractors, however, infrastructure projects in the remainder of southern Africa still create significant opportunities. We will further intensify the focus on cost management in view of the prevailing uncertainty in the market.

In Spain the outlook for improved economic growth in 2015 has been reduced by weakening external demand particularly from other European markets. The government is expected to bring the budget deficit down to the 3% of GDP target in 2017 which could mean continued restrictions in public works spending in the short term.

The Equipment Iberia firm order book at September 2014 of €33 million was mainly related to Power (78%) which continues to generate strong activity in the marine, electric power and industrial segments. The workforce restructure at the end of 2014 is expected to reduce the division's overhead structure by approximately €7.4 million in the coming year.

In addition to the worldwide slowdown in commodity demand the Russian economy has weakened following the imposition of sanctions by the US and EU, the collapse in the oil price and the related sharp decline in the value of the rouble. The current view is that the Russian economy is unlikely to show positive growth in 2015.

The Equipment Russia firm order book of $14 million is well down on the prior year. However, there remains a number of major projects currently under discussion for both Caterpillar legacy and EMPR products. In addition there are orders of $17 million carried forward from the EMPR acquisition for delivery in 2015.

The focus on the Global Power business continues to gain traction. The marine market in Spain remains strong and we have gained some inroads in the South African market with the recent Transnet tug order. The electric power market has been under pressure in both Iberia and southern Africa although we did secure a large order in Mozambique in October 2014 and some significant opportunities are in the pipeline.

Despite current lower order books the medium-term outlook appears brighter for the Agriculture businesses in South Africa and Mozambique, particularly in the high technology Equipment segment.

The South African vehicle industry is expected to remain subdued in 2015 with consumers under pressure and increasing vehicle price inflation. However we anticipate some resilience in the premium brands, while we should further benefit from the contribution of the newly acquired dealerships for the full year.

Car rental days should continue to grow positively and benefit from a further improvement in revenue per day. Our fleet services business will continue to generate organic growth in revenue and profitability based on the existing customer base. The National department of Transport contract is expected to be adjudicated before this calendar year end.

The logistics growth outlook for 2015 is positive. The transport business will benefit from the organic capital deployed and acquisitions finalised during the year. The international Logistics businesses are expected to improve in 2015 as a result of new contracts that have been secured and various actions taken.

While a number of geopolitical risks and economic uncertainties exist globally, our focus will remain on executing our strategy, driving operational efficiencies and maintaining strong cash flows. We expect to continue to make progress into 2015 and are well placed to benefit once the infrastructure and mining cycles move into a recovery phase across our key geographies.

DB Ntsebeza CB Thomson

Chairman Chief Executive

Group financial review

Revenue for the year increased by 4% to R62.1 billion, mainly due to increased revenues in Equipment southern Africa (R1.8 billion) in particular the extended mining product range (EMPR) and Automotive and Logistics (R2.3 billion), offset by reduced revenue in Equipment Russia, Iberia and Handling. The weakening rand increased revenue for the year by R2 billion.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 14% to R6 170 million with depreciation and amortisation increasing by 13%.

Operating profit rose by 16% to R3 830 million with the operating margin increasing to 6.2%. The strong operating results generated in Equipment southern Africa (R1 968 million) and Russia (R429 million) made up for the operating loss of R168 million (€11.7 million) incurred in Equipment Iberia which included restructure costs of R88 million (€6.2 million).

The Automotive and Logistics division produced another strong performance with all business units performing well, increasing operating profit by 24% to R1 644 million. This was after making provision for the exposure arising from the Ellerines Holdings business rescue.

The total negative fair value adjustments on financial instruments of R156 million (2013: R47 million) mainly relate to the cost of forward points on foreign exchange contracts in Equipment southern Africa and Handling South Africa.

Finance costs increased by R117 million to R1 117 million. The increase is mainly due to higher average debt levels, arising from increased average working capital levels for the year, increased fleet leasing and rental fleets and capex relating to investment in the logistics business, further impacted by higher short-term interest rates. We remitted £60 million of the proceeds on sale of the Australian operations back to South Africa at the end of September in order to reduce local borrowing costs in the coming year.

Exceptional items of R66 million (net charge) mainly comprise the impairments of goodwill in the logistics sea air transport business (R208 million), and intangible assets and other assets in the logistics supply chain management business related to the Ellerines contract (R76 million). This was offset by profits from foreign currency translation reserves of R97 million realised on disposals of offshore businesses in handling and logistics, profits on disposal of investments (R64 million), and a profit on sale of property of R77 million.

Taxation charge for the year was R837 million. This included further impairment of the Spanish deferred tax asset of €3 million (R42 million). The effective taxation rate (excluding prior year taxation and taxation on exceptional items) was 34.1% (2013: 31.8%). The effective rate was negatively impacted by the unrelieved tax losses in Equipment Iberia and deferred tax arising on exchange movements in foreign subsidiaries.

Income from associates and joint ventures increased by 17% to R217 million (2013: R185 million) again driven by a strong performance from Equipment joint ventures.

The non-controlling interest in the current year's earnings includes dividends of R44 million paid to participants of the BEE transaction with the balance relating to the minorities in our NMI/DSM and Transport subsidiaries.

Headline earnings per share (HEPS) from continuing operations increased by 10% to 857 cents (2013: 780 cents) and total HEPS (including discontinued operations) increased by 8% to 883 cents (2013: 821 cents). Basic earnings per share (EPS) (including discontinued operations) of 1 012 cents is 33% higher than the prior year due to the exceptional profit of R374 million generated on the disposal of the Australian Motor Retail operations.

The group's results for the year ended 30 September 2013 have been restated to reflect the changes in accounting policies as well as discontinued operations resulting from the disposal of our Australian motor retail business. The group applied the revised IAS19 (employee benefits) and IFRS 10 (consolidated financial statements) resulting in restatement of prior year results on a comparable basis.

Cash flow

Cash generated from operations decreased to R3.0 billion (2013: R4.3 billion generated). Activity levels in the second half resulted in an increase in working capital for the year of R470 million (2013: R539 million decrease) which includes a funding payment to the UK defined benefit pension scheme of £15.2 million (R0.3 billion). The increased investment in fleet leasing assets was mainly due to the increased Equipment SA long-term rental fleet.

Net cash applied in the net investment of property, plant and equipment together with subsidiaries and intangibles of R1.4 billion was largely offset by the proceeds on disposal of motor retail Australia of R1.3 billion. This contributed to a net inflow of funds for the year of R145 million compared to an inflow of R660 million last year which represented a significant improvement on the cash outflow of R3.9 billion reported at the interim.

Financial position and debt

Total assets employed in the group increased by R3.4 billion to R44 billion. The increase was driven by the weaker rand (R1.3 billion) and an increase in rental and leasing assets, as well as the acquisition of property, plant and equipment during the year.

Total interest-bearing debt at 30 September 2014 increased to R11.3 billion (2013: R10.3 billion) while cash and cash equivalents increased to R4.2 billion (2013: R2.7 billion). Net debt reduced in the second half as a result of the seasonal decrease in working capital, and was positively impacted by the receipt of the proceeds from the sale of Motor Retail Australia. Net interest-bearing debt at 30 September 2014 of R7.2 billion was R404 million down on the prior year of R7.6 billion.

Debt 

In December the company issued three senior unsecured notes totalling R1 541 million under the South African Domestic Medium Term Note programme. R714 million matures in 2019 financial year and R827 million in 2021 financial year. In addition a R700 million bank term facility was extended for a further five years. During the second half the group concluded a five-year revolving bank credit facility of R1 billion, while Barloworld Transport finalised banking facilities of R561 million. The funds raised have been utilised to fund short-term working capital requirements and to improve the maturity profile of group debt.

In South Africa, short-term debt includes commercial paper totalling R1.0 billion (September 2013: R1.2 billion). While this market has remained liquid, spreads have been negatively impacted by interest rate uncertainty. We expect to maintain our participation in this market.

Cash balances of R4.2 billion are available to meet short-term commitments. The group has short-term borrowings at 30 September 2014 of R4 395 million, committed unutilised borrowing facilities of R6 102 million and further uncommitted facilities of R2 280 million.

Fitch Ratings downgraded the company's long term credit rating to A+(zaf) (Stable Outlook) following the annual credit review in February 2014. While this had a marginal impact on the cost of short-term commercial paper funding, we have not experienced any impact on our cost of long-term borrowings.

The group debt to equity ratio at 30 September 2014 was 64.7% (September 2013: 64.0%), while group net debt to equity was 40.9% (September 2013: 47.5%).

Going forward

The group return on net operating assets increased from 18% in 2013 to 18.8% in the current year driven by the strong operating performances in Equipment southern Africa and the Automotive and Logistics division. The group continues to deploy capital into higher returning businesses, which together with a projected return to profitability in Equipment Iberia, should further contribute to improved returns in 2015.

DG Wilson

Finance director

Operational reviews

Equipment southern Africa delivered a solid performance in the year ending September 2014, despite the tough economic environment characterised by volatile commodity prices globally and labour unrest in South Africa. Revenue increased by 9.3% to R20.9 billion. Factors that have led to the slowdown in growth in the mining sector in southern Africa will continue to have a negative impact on the mining industry in 2015; with the recovery only expected from the second half of 2015 onwards.

Operating profit for the period improved by 17.3% to R1 968 million driven mainly by stronger machine, parts and MARC performance. This was underpinned by strong rental activity, driving growth in the active machine population and consequently the aftersales business.

EMPR produced a strong performance driven by deliveries to Swakop Uranium in Namibia, FQM in Zambia, Moolmans and Kolomela, and continues to contribute at a higher level than anticipated at acquisition. Joint venture income grew by 23.7% over last year.

Slow economic growth in China had an unfavourable impact on commodity prices and demand, with the tough environment resulting in capex reduction by mining customers. The lower firm orders of R1.9 billion compared to R3.5 billion in 2013 is reflective of the challenging industry climate but is also likely to underpin strong aftersales and rental activity. Shorter lead times on machinery enhance our ability to deliver orders faster than in the past, resulting in a shorter turnaround on order to delivery.

Equipment Russia produced a pleasing result under challenging conditions. Operating profit of R429 million ($40 million) for the year was supported by a strong aftermarket performance combined with tight cost controls in both CAT Legacy as well as the EMPR business segment. The mining downturn continued throughout 2014, with recovery anticipated to commence during 2016. The impact of a weak mining segment has been exacerbated by uncertainties created by the Ukrainian crisis.

Equipment Iberia operated amidst a continuing depressed construction sector. Revenue of R4 134 billion was down from last year as the large package deals delivered in 2013 were not repeated. The operating loss of R168 million to September included restructuring costs of R88.5 million. Macroeconomic indicators have, however, started showing a slow recovery of the regions´ economy but the construction sector continues to lag.

While power systems activity in both Spain and Portugal was down on the prior year, there are better prospects for the year ahead as evidenced by a steadily improving order book.

The restructuring of the Handling division was completed in December 2013 with the sale of The Netherlands Handling business. The remaining forklift operation in South Africa grew profits, with increased aftersales activity more than compensating for a weak new equipment market. The SEM business saw solid growth in Russia but faced increased competition in SA. The South African agricultural operation enjoyed record sales, though a decline in maize prices and a credit squeeze impacted sentiment and demand towards the end of the year. Mozambique doubled sales and moved into profit. Russia grew share in a depressed market, but volume shortfalls and higher stock impairment charges led to increased losses. The newly acquired Zambian agriculture business started trading in September and overall growth prospects in Agriculture remain encouraging.

The division produced an exceptional result in difficult markets. These results exclude the Australian motor retail operations which were sold, effective 31 March 2014. The continued focus on improving margins and returns across the division has resulted in operating profit improving by 24% off a growth in revenue of 8.1%. Operating margin improved to 5.3% from 4.6% in the prior year. The division generated strong operating cash flows, which have been reinvested into leasing and rental assets, and growing the logistics business in southern Africa.

Avis Rent a Car southern Africa delivered an excellent result, improving operating profit by 33%. The business further improved fleet utilisation, grew rental day volumes and market share, and increased revenue per rental day. Used vehicle profits which were marginally better than the high levels achieved in the previous year, supported the result.

The southern African motor retail operations delivered a very good result, growing operating profit by 29% while the operating margin improved to 2.8% (FY13 2.4%). Overall vehicle sales volumes were ahead of market and the result was supported by improved after-sales volumes. The acquisition of Leach Toyota and Hino in Kuruman was effective 10 March 2014 and Jaguar Land Rover N4 Witbank was effective 1 July 2014.

Avis Fleet Services produced a pleasing result, further improving operating profit by 16% and improved the operating margin to 18.1% (FY13: 16.7%) The business maintained the financed fleet and benefited from further growth in the non-financed fleets and a strong used vehicle profit contribution.

The logistics business has seen further improvements on the back of focused management actions in southern Africa. Barloworld Transport has seen strong growth which supported the result, while the supply chain management business in southern Africa remains stable and is well positioned for growth. Certain niche acquisitions and fleet investments made towards the end of the year will only fully benefit operating profit in the year ahead. Unfortunately R20 million was provided against operating profit as a result of the Ellerines Holdings business rescue. Overall volumes and margins remain under pressure in the international businesses. The loss-making Far East airfreight business was exited on 1 November 2013 and further action is being taken to restore profitability in the remaining international operations. Currency weakness negatively impacted the net operating assets on translation.

Associates, including our Soweto motor retail and Sizwe BEE joint ventures, remain in the early stages of development.

Corporate primarily comprises the operations of the headquarters and treasury in Johannesburg, the treasury in Maidenhead, United Kingdom, and the captive insurance company. In southern Africa the corporate operating loss has reduced mainly owing to lower charges and accruals for long-term incentives linked to the Barloworld share price. In Europe the higher operating loss is mainly due to the loss in the group's insurance cell captive as a result of higher claims during the year. The net operating assets (and liabilities) for corporate includes the UK pension fund deficit which has increased in the current year and has been affected on translation by the depreciation of the rand.

Dividend declaration

Dividend number 172

Notice is hereby given that final dividend number 172 of 214 cents (gross) per ordinary share in respect of the year ended 30 September 2014 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);

- There is no Secondary Tax on Companies (STC) credits utilised;

- Barloworld has 231 291 819 ordinary shares in issue;

- The Gross local dividend amount is 214 cents per ordinary share;

- The net dividend amount is 181.9 cents per share.

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

- Dividend declared Monday, 17 November 2014

- Last day to trade cum dividend Friday , 16 January 2015

- Shares trade ex-dividend Monday, 19 January 2015

- Record date Friday, 23 January 2015

- Payment date Monday, 26 January 2015

Share certificates may not be dematerialised or rematerialised between Monday, 12 January 2015 and Friday, 16 January 2015, both days inclusive.

On behalf of the board

LP Manaka

Group company secretary

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