BWO.L Regulatory News (BWO)

Barloworld Limited

("Barloworld " or the "Group")

Interim results for the six months ended 31 March 2011

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 and power systems), Automotive and Logistics (car rental, motor retail, fleet services, used vehicles and disposal solutions, logistics management and supply chain optimisation) and Handling (materials handling and agriculture). We offer flexible, value adding, integrated business solutions to our customers backed by leading global brands. The brands we represent on behalf of our principals include Caterpillar, Hyster, Avis, Audi, BMW, Ford, General Motors, 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 empowerment and transformation.

The company was founded in 1902 and currently has operations in 38 countries around the world with approximately 60% of our eighteen thousand employees in South Africa.

Directors

Non-executive: DB Ntsebeza (Chairman), SAM Baqwa, AGK Hamilton*, S Mkhabela, MJN Njeke, SS Ntsaluba,

TH Nyasulu, G Rodriguez de Castro de los Rios†, SB Pfeiffer•

Executive: CB Thomson (Chief Executive), PJ Blackbeard, PJ Bulterman, M Laubscher, OI Shongwe, DG Wilson

*British •American †Spanish

Enquiries: Barloworld Limited: Jacey de Gidts

Tel +27 11 445 1000

E-mail invest@barloworld.com

College Hill: Jacques de Bie, Tel +27 11 447 3030

E-mail Jacques.deBie@collegehill.co.za

For background information visit www.barloworld.com

Salient features

• Revenue up 17%to R23.6 billion

• Operating profit up 44% to R854 million

• HEPS from continuing operations up 255% to 144.3 cents

• Russian Caterpillar dealership acquisition performs ahead of expectation

• Final cash received from Scandinavian car rental disposal

• Order books continue to increase across most businesses

• Interim dividend of 50 cents per share up 150% (H1'10: 20 cents)

Clive Thomson, CEO of Barloworld, said:

"The group produced strong growth in operating profit and earnings during the period. With order books continuing to increase across most businesses, we anticipate a strong second half of the financial year with earnings expected to be significantly up on both the first half of 2011 and the second half of last year. As the recovery gains momentum in most of our key market segments, particularly mining, our focus has shifted to driving profitable growth and enhancing the overall level of financial returns across our businesses. Our financial position remains strong and we are well placed to take advantage of a number of exciting growth opportunities in the year ahead."

17 May 2011

Chairman and Chief Executive's Report

Operational review

Trading results for the first six months continued to show improvement driven mainly by strong mining demand on the back of strengthening commodity prices. Revenue for the half year increased by 17% to R23.6 billion with operating profit increasing by 44% to R854 million.

Headline earnings per share from continuing operations of 144.3 cents was 255% above the 40.7 cents earned in the first half of 2010. The interim dividend of 50 cents per share was 150% up.

Equipment southern Africa

The division generated revenue of R5.3 billion which was R1.7 billion (45%) up on the prior year. This improvement came mainly from increased mining and contract mining demand in South Africa, Mozambique, Zambia, Botswana and Namibia. Activity levels in Angola remained subdued.

Operating profit to March of R478 million was R200 million (72%) ahead of the prior year. The operating margin of 9% benefited from the strong increase in after sales business in the total sales mix.

As expected the division utilised cash of R533 million in the first six months mainly driven by increased working capital. Factory lead times are now back to levels last seen at the peak of the commodity cycle in 2008 with dealers endeavouring to secure build slots for mining units going forward into 2012 and 2013.

Equipment Europe

The Iberian equipment businesses continued to trade under extremely difficult market conditions. The Spanish government's austerity measures aimed at reducing the budget deficit continue to adversely impact gross fixed investment with the construction sector remaining depressed.

Revenue achieved of €176.9 million (R1.7 billion) was 5% below the prior year in euro terms and 13% down in Rand terms. The division generated an operating loss of R70 million (€7.9 million) which was similar to the R74 million loss at this stage last year. However, this result included a restructuring charge of R56 million (€6.1 million) to realign the cost base with the reduced activity levels compared to R29 million (€2.7 million) in 2010. We believe the business is now appropriately structured to trade profitably in the second half.

Iberia produced a cash inflow in the period due to rental fleet reductions, despite some increase in working capital.

Equipment Russia

Revenue of $173.7 million (R1.2 billion) was achieved which was $102 million (142%) up on the prior year. Mining benefited from the delivery of a package to Polus Gold, the bulk of which took place in the first half. The growing machine population generated increased after sales business with parts revenues growing by 35% in the period under review. The operating profit of $11.3 million (R78 million) is well up on the prior year profit of $3.1 million (R23.3 million) while the operating margin of 6.5% shows the benefits of a maturing Caterpillar business model. Last year, our 50% share in the Russian business was included in income from associates.

Russia generated cash of $12.2 million (R88 million) mainly due to reduced working capital, excluding the cash outflow of $52 million (R361 million) to increase the investment in Russia to a 100% holding.

Automotive and logistics

The logistics business was integrated into the automotive division effective 1 May 2011.The newly combined division generated revenue of R13.1 billion which was 6.2% ahead of the prior year. Operating profit of R393 million (excludes finance costs in fleet services which was previously reflected in cost of sales and is now disclosed in finance costs) was R58 million (13%) below the prior year mainly owing to lower car rental profits.

Car rental southern Africa's revenue was flat despite the reduced fleet size and no increase in rental days. Rate per day reduced by 4% compared to the prior year while utilisation of 75% was slightly ahead. Operating profit of R106 million was below the prior year which had benefited from significant gains on the disposal of used vehicles.

Motor retail southern Africa produced a steady result on the back of improved industry new vehicle sales. Motor retail Australia generated a stronger operating performance on reduced revenue.

Avis Fleet Services continued to perform well with growth in fleets under management, despite the low interest rate environment impacting interest margins.

Logistics generated a loss of R9 million compared to a loss of R3 million in 2010. In southern Africa, the supply chain management business continued to experience lower volumes in the building and construction industry and operating profit was down. The international freight management and services business has encountered margin pressure in the sea air business notwithstanding improved volumes.

Handling

The division generated a pleasing turnaround with increased revenue of £198.6 million (R2.2 billion) compared to £178.5 million (R2.1 billion) in 2010.

The operating profit was R27 million compared to a loss of R12 million last year. The UK, South Africa, Belgium and Holland handling businesses all traded profitably, while the US business incurred a small loss at the operating level albeit there was an almost 50% improvement over the previous year. Our agriculture business in South Africa generated a higher operating profit on flat revenue following an improvement in the tractor market and increased parts sales, while a small loss was incurred on the start up of the agriculture business in Siberia.

Corporate activity

The purchase of the remaining 50% share in the Russian Caterpillar dealership for $52 million (R361 million) was finalised following the achievement of all conditions precedent and trading has been ahead of expectation to date.

The disposal of car rental Scandinavia was successfully concluded with the receipt of the final balance owing of R174 million by mid-December 2010.

The sale of the logistics African and Asian non-corporate trader businesses was completed on 28 February 2011. Following this we took a decision effective 1 May 2011 to integrate our automotive and logistics divisions. We aim to realise synergies, extract cost savings, develop a broader integrated customer offering, and create the scale necessary to execute our growth strategies for the logistics business.

Martin Laubscher, currently CEO of the automotive division will take on expanded responsibility for the combined operations. Isaac Shongwe will take over group responsibility for Strategy, Innovation and Solutions development along with Sustainability and Stakeholder engagement, reporting directly to the CEO, Clive Thomson.

The transaction between Caterpillar Inc and Bucyrus International appears to be on track to close by midyear. Once this happens we will be in a position to progress discussions on the future distribution of the Bucyrus product range in our territories. It is still too early to estimate with any accuracy how this could affect our future cash flows and profitability.

Empowerment, transformation and sustainability

We are pleased to report that the group was recognised as the most empowered company in the general industrial sector in the recent FM BEE Top Empowered Companies Survey for the second year running and improved its overall ranking to position number 18. All Barloworld SA businesses achieved independently audited Level 2 or Level 3 BBBEE ratings for 2010.

Sustainable development remains central to the group's long-term value creation objectives. Initiatives in this regard continue to be pursued including an aspirational target of a 12% non-renewable energy and greenhouse gas (GHG) emissions efficiency improvement by end 2014 off a 2009 baseline year, a focus on water consumption, stakeholder engagement, pursuing emerging sustainable business opportunities and cost savings, and providing customers with competitive solutions. These aspects are incorporated into the group's strategic planning process and entrenched through an integrated management approach addressing economic, environmental and social aspects. Good progress is being made in respect of these initiatives and the group is on-track to realise its targets and related cost savings.

Outlook

While the world economy continues on its path of recovery, it is clear that this recovery is taking place at a much faster pace in the emerging economies compared to the developed economies.

Equipment southern Africa has experienced a rapid recovery in the mining and contract mining markets and, notwithstanding muted construction and infrastructure demand, our customer order book is now back to record levels. The principal challenge is ensuring sufficient machine availability to meet increasing demand. Nonetheless we are expecting strong second half revenues and profitability.

The austerity measures in Spain mean that we are unlikely to see any significant change in activity levels in the short term. However, we should see a return to profitability in the second half due to the actions taken to reduce the cost base. We have recently been awarded two large package deals with important Spanish customers for $156 million and $235 million respectively. The majority of the units will deliver into our 2012 and 2013 financial years and should further underpin our recent market share gains.

The Russian order book remains strong and we expect another good result in the second half. We continue to expand our dealership footprint to ensure that we achieve our market share objectives and this bodes well for long-term growth in revenues and profitability.

The automotive and logistics division should continue to benefit from the recovery in industry vehicle sales. The impact of the earthquake and resultant tsunami on Japanese vehicle and component manufacturers would appear to be significant and it is likely to negatively impact the results of our automotive business units.

Our car rental business will focus on cost reductions to ensure that we recover margins in an extremely competitive market. Our fleet services business will continue to produce good results and we await the outcome of some significant contract adjudications which could materially impact both cash flow and profitability. The logistics business will focus on recovering profitability.

The handling division will further capitalise on the recovery now evident in most of their geographies. Order books and short-term hire utilisation rates have improved strongly.

We anticipate a strong second half of the financial year with earnings expected to be significantly up on both the first half of 2011 and the second half of last year. As the recovery gains momentum in most of our key market segments, particularly mining, our focus has shifted to driving profitable growth and enhancing the overall level of financial returns across our businesses. Our financial position remains strong and we are well placed to take advantage of a number of exciting growth opportunities in the year ahead.

DB Ntsebeza CB Thomson

Chairman Chief Executive Officer

Group Financial Review

The consolidated income statement has been restated to disclose interest paid in the leasing businesses in net finance costs. These charges were previously included in cost of sales. The effect of the change has been to increase operating profit and net finance costs by R71 million (1H'10: R67 million) with no impact on profit after tax.

Revenue from continuing operations increased by 17% to R23.6 billion. The bulk of the increase was in our equipment southern Africa business owing to improved trading conditions in the mining sector and the consolidation of the Russian business following the acquisition of the remaining 50% in October 2010.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 14% to R1 729 million while operating profit rose by 44% to R854 million. Operating profit in equipment southern Africa improved by R200 million (72%) to R478 million. Equipment Russia contributed R78 million after recognising an amortisation charge of R9 million on intangibles arising from the acquisition. Car rental experienced declining margins due to lower used vehicle disposal profits, reduced rental rates and flat rental days. As a result the combined automotive and logistics division recorded lower profits of R393 million (1H'10: R451 million). The increase in the company's share price since September 2010 has resulted in an increased charge for the six months of R64 million in respect of the provision required for cash-settled Share Appreciation Rights previously awarded to employees.

The volatile rand generated losses arising from marking to market foreign currency contracts on unhedged transactions in equipment southern Africa and the South African agriculture business within the handling division.

Net finance costs decreased by R38 million (10%) to R338 million but now include leasing interest of R71 million (1H'10: R67 million) previously disclosed as cost of sales.

Exceptional gains of R62 million mainly comprise the impact of writing up the existing 50% interest in the equipment Russia business in terms of IFRS 3 Business Combinations.

Taxation, before Secondary Tax on Companies (STC), increased by 147% to R143 million. The effective taxation rate (excluding STC, prior year taxation and taxation on exceptional items) was 33% (1H'10: 35%).

Income from associates improved to a profit of R34 million from a loss of R10 million in the prior period mainly due to a substantially increased contribution from the equipment joint venture in the DRC.

Headline earnings per share (HEPS) from continuing operations increased by 255% to 144.3 cents (1H'10: 40.7 cents).

Cash flow and borrowings

Improved activity in the mining sector has led to increased investment in working capital in equipment southern Africa. This, coupled with the acquisition of 50% of equipment Russia (R361 million) and increased working capital in automotive, has led to an outflow of funds in the period of R1 285 million. The final balance of R174 million owing from the disposal of the Scandinavian car rental business last year was received by December 2010.

Total interest bearing borrowings at 31 March 2011 of R7 633 million represent a group debt-to-equity ratio of 69% (September 2010: 64%). Short-term borrowings represent 39% of total debt. Included in short-term borrowings is R1 270 million outstanding in respect of the company's corporate bond (BAW1) which is due for repayment in July 2011. Plans are advanced to refinance the bulk of this amount in the South African debt capital market ahead of the July maturity date.

Net interest bearing borrowings at 31 March 2011 totalled R6 449 million (September 2010: R5 049 million). This represents a net debt-to-equity ratio of 58% (September 2010: 47%).

Gearing in the three segments are as follows:

The company's credit rating of A+ was re-affirmed by Fitch Ratings in February 2011 and the outlook was upgraded from Negative to Stable.

Total assets employed by the group increased by R1 696 million to R27 386 million. The consolidation of equipment Russia contributed R1 104 million of this increase.

Going forward

We believe that our financial position is strong and that we are well placed to fund the growth strategies of the divisions. The acquisition of the remaining 50% of the equipment business in Russia subsequent to year end was funded utilising cash on hand in our offshore business. We have substantial committed, unutilised borrowing facilities at our disposal.

We continue to focus on improving our returns by maintaining strict discipline over the allocation of capital and releasing capital from underperforming businesses. This, in addition to the improved profitability, will greatly improve our return on shareholders' funds in the current year.

DG Wilson

Finance director

Operational Reviews

A pleasing performance from Equipment southern Africa reflected the recovery in commodities prices, with significantly improved revenue and profits. Strong unit sales volumes together with good parts and service revenue in the earthmoving business resulted in a 45% improvement in revenue and a 72% improvement in operating profit over 2010. South Africa delivered 49% of trading profit, with significant contributions also from Zambia, Botswana, Namibia and Mozambique. The positive signs of a turnaround in Angola are manifested in an improved result and work has started on our new flagship facility in Luanda.

Mining volumes continue to increase and we expect to deliver more mining machines in 2011 than at peak in 2008, with unprecedented demand for smaller off highway trucks due to an upsurge in contract mining activity.

We have received a letter of intent from the contract mining consortium for the Cut 8 Phase 2 support equipment at Debswana's Jwaneng diamond mine in Botswana. Similar confirmation has been received from Vale for 10 Cat 797 trucks, the largest mechanical drive trucks in the world and the first in Africa, for the Moatize coal mine in Mozambique. Work has started on our new R220 million component repair centre (CRC) in Boksburg to support the rapidly expanding mining fleets throughout southern Africa.

The construction sector remained slow, but the South African Federation of Civil Engineering Contractors (SAFCEC) believes a turning point has been reached. Increased confidence in the future is underpinned by the extensive need for infrastructure development.

Barloworld Power is well prepared to provide standby power to the mining, industrial and commercial sectors and renewed focus has been placed on providing the skills in our coastal facilities to meet the growing demands of the marine, oil and gas sectors. The power station under construction for Nampower is scheduled for completion in May 2011.

Attraction, retention and development of skills remains critical to successful growth throughout our business and we are gearing up to significantly increase our learner intakes by introducing double shifts at our Technical Academy in Isando and are investigating increasing the size of the Academy.

The Iberian operations continue to feel the effects of a difficult trading environment and the operating profits have also been impacted by restructuring costs of R56 million (2010: R29 million). The construction industry remains one of the poorest performing sectors as government gross fixed investment is firmly entrenched in negative territory. Our attention remains on cost control, asset efficiency and increasing regional market share by maintaining clear customer focus. To this end we have recently concluded two very significant equipment sale deals to large Spanish customers, one operating in the mining sector and the other being a contractor working on projects largely outside of Iberia. While these do not have material impacts in the current financial year, they will create revenue and profit streams into 2012 and 2013.

Power Systems in Iberia is also experiencing difficult trading conditions, however the marine market has shown some signs of improved activity. We have also recently concluded a significant deal in Spain´s emerging greenhouse market, which will provide us with an important reference site for future expansion into co-generation.

The Russian business produced excellent results in the first half of the financial year driven by increased mining and aftermarket activity and the delivery of the bulk of the Polus Gold order. The Siberian, Russian Far East and Power divisions all contributed to the growth in revenues and the second half is expected to remain strong. People development remains a key focus area for the future growth. The Novosibirsk component rebuild centre is on track for opening in July 2011.

The automotive business units produced a credible result in a difficult trading environment. An operating margin of 3.6% was achieved. These businesses generated positive operating cash flow while the increased investment into rental and leasing fleets was in line with activity levels.

Avis Rent a Car southern Africa faced difficult trading conditions. While the business improved its high fleet utilisation, it was negatively impacted by lower rate per day and stagnant rental day volumes in an aggressive trading environment. In the prior period the business benefited from extraordinary used vehicle profits which have now normalised.

The southern African motor retail operations delivered a satisfactory result in a mixed market. This was supported by increased new vehicle sales and a strong finance and insurance contribution, but trading in the aftersales environment was marginally lower than the prior period. The Australian operations reported an improved result by focusing on margins and an improved aftersales contribution.

Our fleet services business produced a good result in the current low interest rate environment. Selective financed fleet growth was complemented by strong growth in the fleet under maintenance.

The logistics business was integrated into the automotive division on 1 May 2011. Results in the southern African logistics operations were slightly below last year. Volumes in our supply chain management business were negatively impacted by declines in the construction segment. Higher freight management and services volumes in the South African freight forwarding business partially offset the reduction in profitability.

The financial performance of the international logistics businesses has stabilised due to further rationalisation and cost control. The African and Asian non-corporate trader businesses were exited effective 28 February 2011.

Associates include our Phakisaworld and Sizwe BEE joint ventures which performed in line with expectation.

The division returned to profitability, with all businesses showing improvement over last year. The market for new forklift trucks grew strongly across all our territories and end-March orders on hand were up by 25% compared to last year end. Used sales were hampered by a shortage of stock, but overall margins continued to show growth. Short-term rental utilisation continued to improve and, after three years of contraction, additional investment was made into the rental fleets.

The UK and Belgium operations both moved back into profit, and the US operations reported a significantly reduced loss. Profits in the Netherlands grew strongly albeit from a low base. Market shares improved in the Netherlands and in the US.

Profits in the South African operations rose as markets and margins recovered. Agricultural sentiment improved but dealer credit shortages and restricted supplies of small tractors constrained performance. The new agricultural operations in Mozambique and Siberia both incurred start up costs in line with expectations and future prospects remain bright. The SEM activity in South Africa showed strong growth and further geographic expansion is being planned.

The division continued to exercise tight control over the asset base, and improved working capital days from 69 last March to 51 days this year.

The global project to upgrade and instal best practice business systems and processes has gone live in the US, UK and Belgium, with South Africa to follow. This will underwrite improved service to our customers and higher profits due to improved efficiency and effectiveness.

With strong orders in hand, the outlook for the second half is for a continuing improvement in profitability.

Corporate comprises mainly the activities of the corporate offices, including the treasuries, in South Africa and the United Kingdom. In southern Africa the operating loss has increased, due to higher provisions required for share appreciation rights awarded to staff, following the recent rise in the company's share price.

Dividend declaration 

Dividend declaration for the six months ended 31 March 2011

Dividend Number 165

Notice is hereby given that the following dividend has been declared in respect of the six months ended 31 March 2011.

Number 165 (interim dividend) of 50 cents per ordinary share.

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

Dividend declared Tuesday, 17 May 2011

Last day to trade cum dividend Friday, 3 June 2011

Shares trade ex dividend Monday, 6 June 2011

Record date Friday, 10 June 2011

Payment date Monday, 13 June 2011

Share certificates may not be dematerialised or rematerialised between Monday, 6 June 2011 and Friday, 10 June 2011, both days inclusive.

On behalf of the board

B Ngwenya

Secretary

Condensed consolidated income statement

Condensed consolidated statement of comprehensive income

Condensed consolidated statement of financial position

Condensed consolidated statement of changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated financial statements