BWO.L Regulatory News (BWO)

14 May 2007 08:18

Barloworld Ld14 May 2007 Barloworld Limited Reviewed interim results for the six months ended 31 March 2007 (Registration number 1918/000095/06) JSE codes: BAW and BAWP ISIN codes: ZAE000026639 and ZAE000026647 Highlights New strategic focus positions Barloworld for the future • Revenues up 30% to R24 324 million • Operating profit increases 25% to R2 157 million • Headline earnings per share up 14% to 467 cents • Headline earnings per share (excluding STC on special dividend) up 30% • Proposed interim distribution up 17% to 175 cents per share • Special dividend of R5 per share paid on 2 April 2007 • Announced strategic actions proceeding according to plan Clive Thomson, CEO of Barloworld, said: "We have embarked on a new course for Barloworld. With the group's future focusas a leading global distribution business, we are in a strong position tocapitalise on favourable trading conditions in each of our chosen businesssegment. We have exciting growth opportunities within our Caterpillar equipmentbusinesses, face a growing market in our southern African Avis car rentaloperations, and have a number of expansion possibilities within our Logisticsdivision. Our motor retail businesses are performing well and we look forward toongoing improvements from streamlining our Hyster materials handling divisionfollowing the impending disposal of the Freightliner operations. The outlook forthe refocused group is very positive and we expect continued growth in all thesebusinesses for the full year." "A number of steps have been taken to unlock shareholder value including thedisposal of underperforming businesses. In this regard, we are pleased to reportgood progress on the strategic actions announced at our annual general meetingon 25 January 2007." 14 May 2007 Enquiries Barloworld Limited: Rowan Goeller Tel +27 11 445 1300, email rowang@barloworld.com College Hill: Nicholas Williams Tel +27 11 447 3030 email nickw@collegehillir.com For background information visit www.barloworld.com Chairman and Chief Executive's report Future direction of the group At the annual general meeting held on 25 January 2007, it was announced thatBarloworld Limited will be repositioned and profiled as a focused distributioncompany with an offering that includes integrated product support as well asrental and logistics solutions. The group will comprise businesses that fit theabove strategic profile, meet strict performance criteria, and demonstrate goodgrowth potential. The board conducted an assessment of the impact of unbundling the Motor divisionand concluded that it is in the best long-term interests of shareholders and thecompany for the division to remain as an integral part of the Barloworld group. Following the implementation of the announced unbundlings and disposals referredto below, the Barloworld group will comprise of the following core divisions: - Equipment (earthmoving and power systems) - Motor (car rental, fleet services and motor retail) - Materials Handling (forklift truck distribution and fleet management) - Logistics (logistics management and supply chain optimisation). Progress on announced strategic actions 1. Unbundlings to unlock shareholder value We announced on 27 March 2007 that Barloworld is at an advanced stage ofpreparing for the Pretoria Portland Cement Company Limited (PPC) unbundling. ThePPC unbundling circular has been finalised and will be posted on Thursday, 17May 2007. A general meeting of shareholders to consider the PPC unbundling willbe held on 8 June 2007. It is further anticipated that the PPC unbundlingtransaction, which is conditional upon shareholder approval at the generalmeeting, will be implemented on 16 July 2007, subject to all regulatoryrequirements being satisfied. An independent non-executive director, Mr Trevor Munday, has been appointed aschairman of a board subcommittee to manage the Coatings division, unbundling.This process is targeted to be concluded by the end of the calendar year. 2. Disposal of businesses Within the Scientific division, the sale of Melles Griot has recently beenconcluded for a consideration above tangible net asset value. The transactionremains subject to certain conditions precedent and is expected to close by theend of June 2007. Advisors have been appointed to assist in the disposal of thelaboratory business and numerous indicative bids have been received. Thetargeted completion date remains the end of the calendar year. Within the Industrial Distribution division, we have sold DitchWitch of Georgiaeffective 27 April 2007. The process to sell the Freightliner operations hascommenced and we have made good progress in the disposal of the VacuumTechnology business. In the Equipment division, a decision has also been takento exit the Finaltair biomass energy joint venture in Spain. Where applicable, impairment provisions have been made to write down goodwill orassets to their estimated recoverable amounts. The sale of the Steel Tube division to a management and BEE consortium wasfinalised in November 2006 as was the sale of the major part of our UK leasingbook. 3. BEE and transformation The process to finalise the details of the group's broad-based Black EconomicEmpowerment (BEE) transaction is on track. Separate transactions are beingplanned for PPC and the Coatings division and the Barloworld transaction willtherefore be implemented shortly after these companies have been unbundled. Strong trading performance for half year Revenue growth of 30% has been positively impacted by favourable tradingconditions in most of the businesses to be retained in the Barloworld group. Operating profit from continuing operations is up 25% driven by strong growth inthe southern African equipment business and a pleasing result in Spain. TheMotor division also performed very well with significant contributions from AvisRent a Car South Africa and a strong turnaround in Motor Retail Australia. Wehave seen continued improvements in our handling business in the UK and ourLogistics division is beginning to make a meaningful contribution to groupprofits. Growth in profits from divisions that will be unbundled - Cement and Coatings -were also good. The Scientific division has performed ahead of the previousperiod despite weak market conditions, due mainly to fixed cost savings. Thisdivision has been disclosed as discontinued due to the impending sales of MellesGriot and the laboratory business. A significant downsizing of the corporate offices is under way. Redundancy costsamounting to R60 million have been provided against operating profit at the halfyear. Estimated annualised savings from these initiatives amount toapproximately R80 million. Headline earnings per share (HEPS) increased by 14% to 467 cents per share. Thiswas negatively impacted by the R125 million secondary taxation on companies(STC) charge provided on the R5 per share special dividend paid on 2 April 2007.Adjusting for this STC charge, HEPS increased by 30%. It is the intention of the board to declare an interim distribution of 175 centsper share (17% up on the prior period) on 8 June 2007. Details of the last dayto trade and the payment date will be published on that date. Directorate Clive Thomson was appointed as Chief Executive Officer (CEO) of BarloworldLimited effective from 18 December 2006. Dumisa Ntsebeza was appointed interim Chairman on 25 January 2007 followingWarren Clewlow reaching the mandatory retirement age. The search committee thatwas tasked to appoint a permanent Chairman is making good progress, and anannouncement in this regard will be made shortly. Isaac Shongwe was appointed as an executive director and CEO of BarloworldLogistics Africa, while Hixonia Nyasulu, Gordon Hamilton, and Trevor Munday wereappointed as non-executive directors effective 26 January 2007. Warren Clewlow, Tony Phillips, Mike Coward and Lester Day retired from theboard. We would like to thank them for their valuable contribution to thecompany over many years. In other executive management moves, John Blackbeard will take over as CEO ofthe Industrial Distribution division on 1 October 2007 when Brandon Diamondreturns to South Africa following the completion of his term. Outlook In southern Africa, growth in the construction and mining sectors is expected toresult in a further increase in activity in the Equipment division. We haveentered into a joint venture in the mineral-rich Katanga province of theDemocratic Republic of Congo, which will provide us with further growthpotential in the southern African region. In the Motor division, increasedinterest rates are impacting the sales of passenger vehicles, although sales ofcommercial vehicles are continuing strongly. We expect sustained growth in thecar rental business. In the fleet services business, we are delivering vehiclesinto new fleet contracts and are in a good position to further grow our fleetunder management. Growth in the Logistics division is expected to continue at arapid pace. In Iberia, we are seeing good demand for equipment in Spain and expectconditions to remain stable for the short to medium term. Conditions inPortugal, however, are expected to remain weak in the short term. Our handling business in Europe is benefiting from the streamlining of theoperating structure. In the US, the materials handling business is expected tocontinue performing well, although slowing economic conditions are evidentthrough lower deliveries and a reduced customer order book. In Australia, we expect further benefit from the investments in our motor retailfacilities and the strategic repositioning of our represented brands. In businesses that will be unbundled, cement sales continue to grow stronglywhile the coatings business in southern Africa is benefiting from strong demandand the contribution from recently acquired businesses. These companies willhave a good future, independent of Barloworld. As a result of the implementation of many of the strategic actions announced,including the PPC unbundling, business disposals and corporate restructuring, aswell as some once-off favourable profit impacts in the second half of last year,the results for the full year will not be directly comparable with the prioryear. However, we expect the underlying operating performance to show goodprogress on 2006. DB Ntsebeza CB Thomson Chairman Chief Executive Officer Group financial review Strong growth in all our major businesses resulted in revenue from continuingoperations increasing by 30% to R24 324 million. Operating profit rose by 25% to R2 157 million, driven by the strong revenuegrowth. Included in operating profit are redundancy and restructuring charges ofR60 million associated with the re-organisation of the corporate offices.Operating profit margin fell slightly from 9,3% to 8,9%. Headline earnings per share of 467 cents (1H '06: 408 cents) is 14% higher thanlast year but was adversely impacted by the additional secondary tax oncompanies (STC) of 62 cents per share relating to the special dividend of R5 pershare paid on 2 April 2007. The charge for fair value adjustments on financial instruments reduced to R12million (1H '06: R69 million) mainly due to the decisions in June 2006 toimplement hedge accounting for Caterpillar machine purchases and in November2006 for Caterpillar spare parts in the southern African equipment business. Theeffect of these decisions is that a net amount of R6 million before tax is nowdeferred in equity. Net finance costs increased by R80 million to R241 million mainly due to higherborrowings resulting from the increased trading activity and higher interestrates. The increase in the second half of last year was R76 million. The exceptional loss of R190 million includes the pre-tax impairments of theinvestment in Finaltair and goodwill relating to the Freightliner dealerships inthe USA. The taxation charge (before STC) of R521 million rose by 20%. The effective taxrate excluding STC, prior year taxation and taxation on exceptional itemsincreased to 31,0% (1H'06: 29,0%). The substantial increase in the STC charge to R276 million (1H'06: R116 million)is mainly due to STC of R125 million provided on the special dividend of R1billion paid on 2 April 2007. In terms of accounting standards the results of the Cement and Coatingsdivisions are included in continuing operations until the date of unbundling.Once the unbundlings have been implemented, the results will be reported asdiscontinued operations for the period up to the unbundling date and for thefull comparative reporting period. The profit from discontinued operations of R28 million (1H '06: R90 millionloss) comprises the results of the Steel Tube division (two months up to date ofdisposal) and the Scientific division (six months). The Steel Tube division was sold with effect from 30 November 2006. TheScientific division has been accounted for as a discontinued operation followingthe decision earlier this year to dispose of its businesses. Cash generated from operations decreased by R85 million to R1 828 million mainlydue to an increase of R1 441 million in net working capital due to higher levelsof activity. This is, in part, a timing issue with strong deliveries anticipatedin the second half of the financial year. Net cash generated from investingactivities of R296 million includes additions to property, plant and equipmentand intangibles of R772 million; a further net investment of R778 million inrental assets and hire vehicles; and proceeds of R1 973 million from thedisposal of subsidiaries, investments, plant and equipment and the sale of theUK handling leasing assets. The group's balance sheet remains strong with total assets employed in thebusiness declining by 5% in the past six months to R33 711 million. Thereduction is mainly due to the disposal of the UK leasing book and the SteelTube division. Assets classified as held for sale of R3 336 million comprise mainly theScientific division (R1 745 million) and Freightliner, DitchWitch and VacuumTechnologies within the Industrial Distribution division (R982 million). Total interest-bearing borrowings of R9 728 million (September 2006:R9 884 million) represent a group debt to equity ratio of 76% (September 2006:73%), while the debt to equity ratio for the Trading businesses is 42%(September 2006: 32%). Capital commitments of R3 002 million include the approved expansion within ourCement division estimated at R1 656 million. DG Wilson Finance Director Operational reviews In the case of the leasing businesses, the operating profit is net of interestpaid. Income from associates, which includes our share of earnings from jointventures, is shown at the profit after taxation level. Net operating assets comprise total assets less non-interest-bearingliabilities. Cash is excluded as well as current and deferred taxation assetsand liabilities. In the case of the leasing businesses, net assets are reducedby interest-bearing liabilities. Comparative numbers have been restated as per note 19. Equipment Operating profit Net including fair operating Revenue value adjustments assets 6 months Year 6 months Year ended ended ended ended 31 Mar 30 Sept 31 Mar 30 Sept 31 Mar 30 SeptR million 2007 2006 2006 2007 2006 2006 2007 2006 - Europe 3 511 2 509 5 415 293 218 474 3 258 3 368- Southern Africa 4 084 2 815 6 212 337 189 645 2 599 2 304 7 595 5 324 11 627 630 407 1 119 5 857 5 672 Share of associate incomeafter taxation 6 10 27 The business in this division arises mainly from our enduring partnership of 80years with Caterpillar Inc. as their dealer in 16 countries. Activity levels in Iberia were well up on the prior period, as constructiondemand in Spain remained at a high level and our public works machine sales werestrong. We have not yet seen any impact from the reported cooling down in theSpanish residential market. Conditions in Portugal, however, continue to beweak. Overall operation margins fell slightly due to a higher mix of newequipment sales relative to product support revenues. The southern African business continues to see accelerated demand for capitalequipment. The construction industry is starting work on major public works andwe have seen rising demand from this sector. The mining industry is investing innew capacity with significant new orders placed for Caterpillar equipment.During the period under review we have entered into a joint venture in themineral-rich Katanga province of the Democratic Republic of Congo, which willprovide us with further growth potential in the southern African region. Associate income includes the results from the Siberian joint venture businessas well as Energyst and Finaltair. Activity levels in Siberia in the mining andresource sectors remain high, and we are continuing to grow both our earthmovingand power systems businesses. All territories recorded high levels of order intake which is a positive signfor equipment deliveries over the next 12 months. At March 2007 there are firmcustomer orders of R6,5 billion (September 2006: R4,8 billion). The order bookplaced on Caterpillar is US$978 million (September 2006: US$906 million). Longer lead times and availability of certain product lines remains a challenge,but we are working closely with Caterpillar to meet our customers' requirements. Industrial Distribution Operating profit/(loss) Net including fair operating Revenue value adjustments assets 6 months Year 6 months Year ended ended ended ended 31 Mar 30 Sept 31 Mar 30 Sept 31 Mar 30 SeptR million 2007 2006 2006 2007 2006 2006 2007 2006 - Europe 1 307 852 1 995 31 (2) 23 845 670- North Africa 2 627 1 929 4 697 49 30 115 1 317 1 180 Trading 3 934 2 781 6 692 80 28 138 2 162 1 850- Europe 78 145 257 - 12 33 121 309- North America 3 49 96 (5) (8) (25) (27) (17) Leasing* 81 194 353 (5) 4 8 94 292 4 015 2 975 7 045 75 32 146 2 256 2 142 *Net operating assets after deducting interest-bearing borrowings In Europe, restructuring benefits have positively affected profitability and thebusiness is well on its way to recovery. The order book has shown healthy growthin the UK. While the US handling business continues to perform well, trading conditions inthe US are slowing which is evident in a reduced order book. The Truck Centerbenefited from the pre-buying generated by the new emission regulations thatcame into force at the beginning of 2007 although as expected orders have nowdropped off sharply. Lower overall freight activity in the US is evident aswell. The leasing business continues to be wound down after the sale of the US booklast year and the majority of the UK lease book during the period under review.The UK Ministry of Defence (MOD) leasing and fleet management contract willcontinue. The sale of the Freightliner and Vacuum Technology businesses are proceedingwell and the DitchWitch business was sold at the end of April 2007. Thesebusinesses constitute R695 million of the trading businesses net operatingassets. Motor Operating profit/(loss) Net including fair operating Revenue value adjustments assets 6 months Year 6 months Year ended ended ended ended 31 Mar 30 Sept 31 Mar 30 Sept 31 Mar 30 SeptR million 2007 2006 2006 2007 2006 2006 2007 2006 - Southern Africa 664 546 1 108 197 134 256 2 715 2 400 - Europe 577 322 805 5 (7) 69 2 260 2 536 Car rental 1 241 868 1 913 202 127 325 4 975 4 936 - Southern Africa 4 916 4 501 9 307 91 87 223 1 185 1 020 - Australia 1 134 759 1 719 23 4 23 721 666 Trading 6 050 5 260 11 026 114 91 246 1 906 1 686 Leasing SouthernAfrica* 364 320 631 34 33 65 319 276 7 655 6 448 13 570 350 251 636 7 200 6 898 Share of associateincome aftertaxation 4 12 27 *Net operating assets after deducting interest-bearing borrowings Our integrated motor vehicle usage solutions strategy has driven our overalloperating margin to 4,6% (1H'06: 3,9%). Avis Rent a Car Southern Africadelivered a good performance as a result of our focus on yield management andimproving efficiencies, together with strong growth in car rental demand. TheScandinavian car rental business posted a small profit, in line with theseasonal earnings pattern where substantially all of the profits are earnedduring the European summer. This business is expected to benefit from ourongoing profitability initiatives and the increased business activity in thenext six months. The southern African motor retail operations performed well, despite higherinterest rates impacting passenger vehicle sales. Commercial vehicle salesremain strong. The Subaru import and distribution business was negativelyimpacted by the weaker Rand compared to the prior period. The Australian resultbenefited from the investments in our dealer facilities and the strategicrepositioning of our represented brands. As a consequence of new contracts secured, our fleet services operationexperienced strong growth in vehicles under management, which will positivelybenefit profitability into the future. Associate income includes our DaimlerChrysler and Phavisworld BEE joint venturesbut now excludes Auric Auto, which was disposed of during the period. Cement Operating profit Net including fair operating Revenue value adjustments assets* 6 months Year 6 months Year ended ended ended ended 31 Mar 30 Sept 31 Mar 30 Sept 31 Mar 30 SeptR million 2007 2006 2006 2007 2006 2006 2007 2006 Southern Africa 2 588 2 183 4 863 983 855 1 905 2 933 2 565 Share of associateincome aftertaxation 4 *Net operating assets include goodwill arising on PPC shares purchased by Barloworld The South African domestic cement market grew by over 12% compared with the sameperiod last year. Increased investment in public-sector infrastructure ismaterialising rapidly and is likely to offset any slowdown in the rate of growthin the residential building sector following the continued rise in interestrates. Operating margins decreased slightly due to the importation and sale of almost200 000 tons of bagged Surebuild cement at little or no margin, significantincreases in diesel and coal energy costs, the higher cost of operating olderless efficient plants and the inability to fully optimise distribution logisticsand factory sourcing at periods of very high demand. The 1,25 million ton Batsweledi (Dwaalboom new kiln) project is progressingaccording to plan and within budget. Orders for the Hercules Pretoria cementmill upgrade and expansion project have been placed, and the project is expectedto be commissioned in the middle of calendar year 2009. Lime volumes and margins improved following the recovery in the world steelmarkets leading to higher profitability compared to the prior period. PPC will be unbundled from Barloworld on 16 July 2007. Coatings Operating profit/(loss) Net including fair operating Revenue value adjustments assets 6 months Year 6 months Year ended ended ended ended 31 Mar 30 Sept 31 Mar 30 Sept 31 Mar 30 Sept R million 2007 2006 2006 2007 2006 2006 2007 2006 Southern Africa 1 158 959 2 019 188 152 338 859 742 Australia and Asia 577 466 952 (10) (17) (55) 292 296 1 735 1 425 2 971 178 135 283 1 151 1 038 Share of associateincome aftertaxation 6 9 18 The coatings business in southern Africa experienced good growth. Theintegration of the recent acquisitions has been successful and these arecontributing well to the result. In Australia, improved average selling pricesand the reduced cost base resulted in an improved performance. A 15% empowerment transaction with Izingwe in respect of Prostart Investments,part of the automotive refinish business, was concluded at the end of theperiod. The division will be unbundling from Barloworld with the targeted completionbefore the end of the calender year 2007. Scientific Operating profit Net including fair operating Revenue value adjustments assets 6 months Year 6 months Year ended ended ended ended 31 Mar 30 Sept 31 Mar 30 Sept 31 Mar 30 SeptR million 2007 2006 2006 2007 2006 2006 2007 2006 Scientific Group 934 748 1 602 74 37 80 1 185 1 259 Continued benefits from the cost reduction initiatives resulted in furtherimprovement in profitability in this division. The sale of Melles Griot has been concluded for a consideration above tangiblenet asset value. The process to dispose of the laboratory business isprogressing well. Numerous initial bids have been received and completion of thesale is expected before the end of the calendar year. Logistics Operating profit Net including fair operating Revenue value adjustments assets 6 months Year 6 months Year ended ended ended ended 31 Mar 30 Sept 31 Mar 30 Sept 31 Mar 30 SeptR million 2007 2006 2006 2007 2006 2006 2007 2006 Southern Africa 520 149 683 24 7 20 525 433 Europe 181 124 280 12 11 27 47 48 701 273 963 36 18 47 572 481 The logistics businesses in South Africa and Spain have been consolidated undera single executive management team and growth prospects remain good. The logistics business in Africa has shown strong organic growth during theperiod under review. A significant entry was made into the FMCG logistics marketwith the conclusion of a long-term contract with a large FMCG distributor/manufacturer. The results further reflect the benefit of the BEE transactionconcluded eighteen months ago with significant contributions to revenue andoperating profit from South African parastatals. In Europe, the Iberian logistics business continues to perform well. We havebeen investing in expanding the logistics offering in the region. Corporate and other Operating (loss)/profit Net including fair operating Revenue value adjustments assets /(liabilities) 6 months Year 6 months Year ended ended ended ended 31 Mar 30 Sept 31 Mar 30 Sept 31 Mar 30 SeptR million 2007 2006 2006 2007 2006 2006 2007 2006 Southern Africa 35 35 52 (71) (28) 21 (580) 491 Europe - - - (36) (10) 131 (624) (667) 35 35 52 (107) (38) 152 (1 204) (176) The operating loss for the period includes costs of R60 million relating to thedownsizing of the corporate offices. The expected annualised saving resultingfrom these initiatives amounts to approximately R80 million. The full year result for 2006 includes once-off favourable benefits of R149million relating to the pension fund curtailment in the UK and a net gain of R36million in SA on the Wattyl hedge net of transaction costs. Net operating liabilities at 31 March 2007 include the provision of R1 015million for the special dividend paid on 2 April 2007 and the UK pension funddeficit amounting to R710 million. Distribution declaration for the six months ended 31 March 2007: Dividend number157. It is the intention of the board to declare an interim distribution of 175 centsper share in respect of the six months ended 31 March 2007 on 8 June 2007.Details of the last day to trade and the payment date will be published on thatdate. On behalf of the board S Mngomezulu Secretary Directors Independent: DB Ntsebeza (Chairman), SAM Baqwa, AGK Hamilton*, MJ Levett, SMkhabela, TS Munday, TH Nyasulu, G Rodriguez de Castro de los Rios***, EPTheron, RC Tomkinson*, SB Pfeiffer** Executive: CB Thomson (Chief Executive), PJ Blackbeard, BP Diamond,JE Gomersall*, AJ Lamprecht, M Laubscher, OI Shongwe, PM Surgey, DG Wilson *British **American ***Spanish Condensed consolidated income statement Six months ended Year ended 31 Mar 31 Mar % 30 Sept 2007 2006 Change 2006** Reviewed Reviewed AuditedR million Notes Restated Continuing operationsRevenue 24 324 18 663 30 41 091Operating profit 3 2 157 1 729 25 4 053Fair value adjustments onfinancial instruments 4 (12) (69) 235Finance costs 5 (401) (242) (596)Income from investments 160 81 270Profit before exceptional items 1 904 1 499 27 3 962Exceptional items 6 (190) 16 116Profit before taxation 1 714 1 515 4 078Taxation 7 (521) (435) (1 186)Secondary taxation on companies 7 (276) (116) (159)Profit after taxation 917 964 2 733Income from associates and joint ventures 20 31 72Net profit from continuing operations 937 995 2 805Discontinued operationsProfit/(loss) from discontinued operations 11 28 (90) (59)Net profit for the period 965 905 2 746Attributable to:Minority shareholders 179 160 389Barloworld Limited shareholders 786 745 2 357 965 905 2 746 Earnings per share* (cents) - basic 389,7 355,8 1 138,9- diluted 384,4 348,6 1 117,1 Earnings per share fromcontinuing operations* (cents) - basic 375,8 398,8 1 167,4- diluted 370,7 390,7 1 145,1 Earnings per share fromdiscontinued operations* (cents) - basic 13,9 (43,0) (28,5)- diluted 13,7 (42,1) (28,0) * Refer note 2 for details of headline earnings per share calculation ** Reclassified for the treatment of the Scientific segment as a discontinued operation - refer note 19. Condensed consolidated balance sheet 31 Mar 31 Mar 30 Sept 2007 2006 2006 Reviewed Reviewed AuditedR million Notes Restated ASSETSNon-current assets 13 755 14 076 14 289Property, plant and equipment 8 242 7 969 8 299Goodwill 2 522 2 573 3 005Intangible assets 305 252 323Investment in associates and joint ventures 9 875 552 749Finance lease receivables 623 1 349 566Long-term financial assets 10 615 613 597Deferred taxation assets 573 768 750Current assets 19 956 15 700 21 365Vehicle rental fleet 3 504 2 764 3 441Inventories 5 368 4 658 5 907Trade and other receivables 6 661 6 000 7 026Taxation 31 37 17Cash and cash equivalents 1 056 1 386 2 134Assets classified as held for sale 11 3 336 855 2 840Total assets 33 711 29 776 35 654 EQUITY AND LIABILITIESCapital and reservesShare capital and premium 441 1 461 327Other reserves 3 117 1 178 3 461Retained income 8 711 8 657 9 881Interest of shareholders of Barloworld Limited 12 269 11 296 13 669 Minority interest 581 567 691Interest of all shareholders 8 12 850 11 863 14 360Non-current liabilities 7 410 7 689 7 920Interest-bearing 4 989 5 453 5 475Deferred taxation liabilities 746 937 870Provisions 472 400 468Other non-interest-bearing 1 203 899 1 107Current liabilities 13 451 10 224 13 374Trade and other payables 5 965 4 855 6 663Provisions 655 531 536Taxation 512 311 705Amounts due to bankers and short-term loans 4 739 4 309 4 409 Shareholders for dividend 1 015 - -Liabilities directly associated withassets classified as held for sale 11 565 218 1 061Total equity and liabilities 33 711 29 776 35 654 Condensed consolidated cash flow statement Six months ended Year ended 31 Mar 31 Mar 30 Sept 2007 2006 2006 Reviewed Reviewed AuditedR million Notes Restated Cash flow from operating activities Operating cash flows before movementsin working capital 3 269 2 739 6 077Increase in working capital (1 441) (826) (10)Cash generated from operations 1 828 1 913 6 067Realised fair value adjustments onfinancial instruments (22) (27) 136Finance costs and investment income (234) (141) (265)Taxation paid (1 006) (651) (1 007)Cash flow from operations 566 1 094 4 931Dividends paid (including minority shareholders) (1 197) (933) (1 295) Net cash from operating activities (631) 161 3 636Net cash generated from/(applied toinvestment activities 296 (1 654) (2 938)Acquisition of subsidiaries and investments 12 (113) (262) (814) Acquisition of property, plant andequipment and intangibles (772) (824) (1 217)Net investment in rental assets 13 (511) (459) (832)Net investment in car hire vehicles 13 (267) (340) (1 260)(Increase)/reduction in instalmentsale and leasing receivables (14) 168 (16)Proceeds on disposal of subsidiaries,investments and property, plant andequipment and sale of leasing assets 1 973 63 1 201Net cash (outflow)/inflow beforefinancing activities (335) (1 493) 698Net cash from financing activities (654) 1 530 (224)Ordinary shares issued 114 64 90Buy-back of shares in company - - (1 160)(Decrease)/Increase in interest-bearing liabilities (768) 1 466 846 Net (decrease)/increase in cashand cash equivalents (989) 37 474Cash and cash equivalents at beginning of period 2 134 1 399 1 399 Effect of foreign exchange rate movements (11) (45) 242 Effect of cash included in assetsclassified as held for sale (78) (5) 19Cash and cash equivalents at end of period 1 056 1 386 2 134 Condensed consolidated statement of recognised income and expense Six months ended Year ended 31 Mar 31 Mar 30 Sept 2007 2006 2006 Reviewed Reviewed AuditedR million Restated Exchange (losses)/gains on translation of foreign operations (228) (326) 1 832 (Loss)/gain on cash flow hedges (160) - 139Taxation on cash flow hedges 45 - (18)Gain on revaluation of available for sale investments - - 18 Deferred tax on revaluation of available for sale investments - - (8) Other reserve movements 1 (1) (71)Net actuarial losses on post-retirement benefit obligations (3) - (55) Net (loss)/income recognised directly in equity (345) (327) 1 837 Profit for the period 965 905 2 746Total recognised income and expense for the year 620 578 4 583 Attributable to: Minority shareholders 176 160 381Barloworld Limited shareholders 444 418 4 202 620 578 4 583 Group salient features Six months ended Year ended 31 Mar 31 Mar 30 Sept 2007 2006 2006 Reviewed Reviewed Audited Restated Number of ordinary shares in issue,net of buyback (000) 203 345 210 206 200 716Net asset value per share includinginvestments at market value (cents) 6 194 5 520 6 973Total liabilities to total shareholders' funds (%) 156,5 143,1 142,2 Total borrowings to total shareholders' funds (%) - Trading segment* 42,4 36,6 31,7- Total group 75,9 82,3 73,3 Interest cover (times) - Trading segment* 7,6 10,6 10,2- Total group 5,3 5,5 5,7 \* Trading segment includes manufacturing and dealership businesses, but excludes leasing and car rental Notes to the condensed consolidated financial statements 1. BASIS OF PREPARATION The condensed interim consolidated financial statements have been prepared inaccordance with International Accounting Standard (IAS) 34 Interim FinancialReporting. The accounting policies and methods of computation used areconsistent with those used for the group's 2006 annual financial statements(which were prepared in accordance with International Financial ReportingStandards) except for the adoption of IFRIC Interpretation 4 Determining Whetheran Arrangement Contains a Lease, the impact of which was not significant. Comparative numbers have been restated as per note 19. Six months ended Year ended 31 Mar 31 Mar % 30 Sept 2007 2006 change 2006 Reviewed Reviewed AuditedR million Restated 2. RECONCILIATION OF NET PROFIT TO HEADLINE EARNINGS Net profit attributable toBarloworld shareholders 786 745 2 357Profit on disposal of properties, investmentsand subsidiaries (3) (20) (140)Impairment of assets 125 5 4Impairment of goodwill 106 - 23(Profit)/loss on sale of plantand equipment excluding rental assets (4) 1 4 Taxation on exceptional items (70) - 19Interest of outside shareholdersin exceptional items 1 - -Impairment loss on disposal ofSteel tube after taxation - 123 156Headline earnings 941 854 2 423Headline earnings fromcontinuing operations 874 821 2 326Headline earnings fromdiscontinued operations 67 33 97 Weighted average numberof ordinary shares in issueduring the period (000) - basic 201 686 209 371 206 959- diluted 204 490 213 732 210 998 Headline earnings per share (cents) - basic 466,5 407,9 14 1 170,8- diluted 460,2 399,5 15 1 148,4 Headline earnings per share fromcontinuing operations (cents) - basic 433,3 392,1 1 123,9- diluted 427,4 384,1 1 102,4 Headline earnings per share fromdiscontinued operations (cents) - basic 33,2 15,8 46,9- diluted 32,8 15,4 46,0 3. OPERATING PROFIT Included in operating profit are: Cost of sales (includingallocation of depreciation) 17 630 13 826 30 226Depreciation 1 015 982 1 930Profit on sale of rental assets 32 26 110Profit/(loss) on sale of otherplant and equipment 4 (1) (2) 4. FAIR VALUE ADJUSTMENTS ON FINANCIAL INSTRUMENTS (Losses)/gains arising from:Forward exchange contracts andother financial instruments (11) (72) 238Translation of foreign currencymonetary items (1) 3 (3) (12) (69) 235 5.FINANCE COSTS Total finance cost (454) (334) (835)Leasing interest classifiedas cost of sales 53 92 239 (401) (242) (596) Six months ended Year ended 31 Mar 31 Mar 30 Sept 2007 2006 2006 Reviewed Reviewed AuditedR million Restated 6. EXCEPTIONAL ITEMS Profit on disposal of properties,investments and subsidiaries 5 16 139Impairment of assets includingshare of associates' impairment losses (195) - (23) Gross exceptional (losses)/profits (190) 16 116Taxation on exceptional items 70 - (20)Interest of minority shareholders (1) - -Net exceptional (losses)/profits- continuing operations (121) 16 96- discontinued operations (net of taxation) (38) - (2) Net exceptional (losses)/profits (159) 16 94 7. TAXATION Taxation per income statement 521 435 1 186Prior year taxation (2) (2) 20Taxation on exceptional items 70 - (20)Taxation on profit before STC,prior year taxation and exceptional items 589 433 1 186 STC on normal dividends paid (151) (116) (159)STC on special dividends (125) - -Secondary taxation on companies (276) (116) (159)Profit before exceptional items 1 904 1 499 3 962Dividends received (3) (5) (16)Profit before exceptional itemsand dividends received 1 901 1 494 3 946 Effective taxation rateexcluding exceptional items, prioryear taxation and dividends received (%) - excluding STC (%) 31,0 29,0 30,1- including STC (%) 45,5 36,7 34,1 8.INTEREST OF ALL SHAREHOLDERS Balance at the beginning of the year 14 360 12 130 12 130Net (loss)/income recogniseddirectly in equity (345) (327) 1 837Net profit for the period 965 905 2 746Reclassifications and otherreserve movements (31) 24 46Purchase of minority shareholdingin subsidiary - - (34)Buy-back of shares - - (1 160)Dividends on ordinary shares (2 213) (933) (1 295)Shares issued in current year 114 64 90Interest of shareholders atthe end of the period 12 850 11 863 14 360 Six months ended Year ended 31 Mar 2007 31 Mar 2006 30 Sept 2006 Market Book Market Book Market Book value/ value value/ value value/ value Direc- Direc- Direc- tors' tors' tors' valu- valu- valu- ation ation ation Reviewed Reviewed AuditedR million Restated 9. INVESTMENT IN ASSOCIATES AND JOINT VENTURES Joint ventures 497 252 351 172 440 198Unlisted associates 294 214 298 169 306 217 791 466 649 341 746 415Loans and advances 409 211 334 875 552 749 10.LONG-TERM FINANCIAL ASSETS Listed investments 10 10 8 8 10 10Unlisted investments 35 35 36 36 37 37Investment in Portland HoldingsLimited 260 260 295 295 291 291 305 305 339 339 338 338Other long-termfinancial assets 310 274 259 615 613 597 Six months ended Year ended 31 Mar 31 Mar 30 Sept 2007 2006 2006 Reviewed Reviewed AuditedR million Restated 11. DISCONTINUED OPERATIONS AND ASSETS CLASSIFIED AS HELD FOR SALE The Scientific segment has beenclassified as a disposal group held for sale. The disposal of Steel Tube wasconcluded on 1 December 2006. Results from discontinuedoperation are as follows: Revenue 1 282 1 544 3 377Operating profit 112 49 175Fair value adjustments onfinancial instruments - 3 (6)Finance costs (12) (7) (34)Income from investments 1 0 6Profit before exceptional items 101 45 141Exceptional items (2) (1) (3)Profit before taxation 99 44 138Taxation (32) (13) (45)Profit after taxation 67 31 93Income from associates and joint ventures - 2 4 Net profit of discontinued operationbefore impairment loss 67 33 97Impairment loss on write-down to fairvalue less costs to sell (39) (163) (185)Taxation on impairment loss - 40 29Impairment loss after taxation (39) (123) (156)Profit/(loss) from discontinuedoperation per income statement 28 (90) (59)The cash flows from the discontinuedoperation are as follows:Cash flows from operating activities 51 51 255Cash flows from investing activities (28) (18) (153)Cash flows from financing activities 20 (49) (113) The major classes of assets andliabilities comprising the disposal group classified as held for saleare as follows: Property, plant and equipmentand intangibles 1 110 229 567Investment in associates - 9 5Inventories 1 122 273 353Trade and other current receivables 842 293 328Deferred tax assets 66 - -Cash and cash equivalents 4 5 27Finance lease receivables - - 1 467Assets of disposal group held for salebefore impairment loss 3 144 809 2 747Impairment loss on write-down tofair value less costs to sell (36) (123) (156)Assets of disposal group held for saleafter impairment loss 3 108 686 2 591Vehicles and equipment removedfrom rental fleets to be sold 228 169 249Assets classified as held for sale 3 336 855 2 840Interest-bearing liabilities (31) - (642)Trade and other payables (534) (218) (419)Total liabilities associated withassets classified as held for sale (565) (218) (1 061)Net assets classified as held for sale 2 771 637 1 779Per business segment: Continuing operations Equipment 28 20 23Industrial distribution 982 18 1 159Motor 172 131 187Cement - - 20Corporate and other 279 - 22Total continuing operations 1 461 169 1 411Discontinued operationsScientific 1 180 - -Steel Tube* 130 468 368Total group 2 771 637 1 779 * The current balance represents property not yet transferred at balance sheet date. 12. ACQUISITION OF SUBSIDIARIES INVESTMENTS AND INTANGIBLES Inventories acquired - 52 57Receivables acquired - 164 226Payables, taxation and deferredtaxation acquired - (184) (230)Borrowings net of cash - (379) (512)Property, plant and equipment,non-current assets, goodwilland minority shareholders - 490 744Net assets acquired - 143 285Goodwill arising on acquisitions - 119 238Net cash cost of subsidiaries acquired - 262 523Investments and intangible acquired 113 - 291Cash amounts paid to acquiresubsidiaries and investments 113 262 814 13. NET INVESTMENT IN RENTAL ASSETS AND CAR HIRE VEHICLES Rental assets 511 459 832Additions 994 719 1 821Proceeds on disposals (483) (260) (989)Car hire vehicles 267 340 1 260Additions 1 720 1 174 3 663Proceeds on disposals (1 453) (834) (2 403) 14. COMMITMENTS Capital commitments to be incurred 3 002 2 364 3 105Contracted 1 404 1 521 2 106Approved but not yet contracted 1 598 843 999Operating lease commitments 1 868 1 579 2 509 15. CONTINGENT LIABILITIES Guarantees, claims and othercontingent liabilities 671 503 622Buyback and repurchase commitments* 1 158 958 1 250Share of buyback and repurchasecommitments of joint ventures - 16 - * The related assets are estimated to have a value at least equal to the repurchase commitments. 16. PORTLAND HOLDINGS LIMITED (PORTHOLD) The results of Porthold, a wholly owned Zimbabwean subsidiary have in terms ofthe exclusions contained in the revised IAS 27 Consolidated and SeparateFinancial Statements, not been consolidated into the group results as at 31March 2007. Significant constraints impacting on the normal operation of Porthold, hasresulted in the board concluding that management does not have the ability toexercise effective control over the business. As a result, the results ofPorthold have continued to be excluded from the group results in the currentperiod. Severe restrictions are placed on our ability to access foreigncurrency and remit funds and as a result the investment continues to beaccounted for on a fair value investment basis with dividends only beingrecognised to the extent they are received. 17. RELATED PARTY TRANSACTIONS There has been no significant change in related party relationships since theprevious year. Other than in the normal course of business, there has been no significanttransactions during the six months with associate companies, joint ventures andother related parties. 18. SUBSEQUENT EVENTS A sale agreement for the disposal of the Melles Griot business has beenconcluded subsequent to 31 March 2007. The business will be sold for a premiumover tangible net asset value. Completion of the deal is subject to certainsuspensive conditions. The sale of the DitchWitch of Georgia business has been concluded and paid forsubsequent to 31 March 2007. The sale price includes a premium over tangible netasset value. These transactions are not expected to have a significant impact on current yearearnings or net asset value. 19. COMPARATIVE INFORMATION Comparative information has been restated for the treatment of the Scientificsegment as a discontinued operation, for the effects of the change in accountingpolicy in terms of IAS 19 Employee Benefits and the requirements of the SouthAfrican Institute of Chartered Accountants Circular 9/2006. Transaction givingrise to adjustment to Revenue/Purchases. The aggregate effect of the above changes on the financial statements for theperiod ended 31 March 2006: Reclassi- fication of Previously discontinued OtherR million stated operation restatements Restated Income statementRevenue 19 462 (748) (51) 18 663Operating profit 1 748 (37) 18 1 729Fair value adjustments onfinancial instruments (69) - - (69)Finance costs (245) 3 - (242)Income from investments 81 - - 81 Profit before exceptional items 1 515 (34) 18 1 499 Exceptional items 20 (4) - 16Profit before taxation 1 535 (38) 18 1 515 Taxation (558) 12 (5) (551)Profit after taxation 977 (26) 13 964Income from associatesand joint ventures 31 - - 31Net profit from continuingoperations 1 008 (26) 13 995Loss from discontinuedoperation (116) 26 - (90)Net profit for the period 892 - 13 905 Attributable to: Minority shareholders 160 - - 160Barloworld Limited shareholders 732 - 13 745 892 - 13 905Earnings per share (cents) - basic 349,6 - 6,2 355,8 Earnings per share (cents) - diluted 342,5 - 6,1 348,6 Balance sheetLong-term financial assets 781 - (168) 613 Deferred taxation assets 527 - 241 768 Inventories 4 686 - (28) 4 658Trade and other receivables 6 045 - (45) 6 000 Assets classified as held for sale 857 - (2) 855 Other reserves 1 239 - (61) 1 178Retained income 9 182 - (525) 8 657Interest of all shareholders 12 449 - (586) 11 863 Other non-interest-bearingliabilities 268 - 631 899 Trade and other payables 4 900 - (45) 4 855 Liabilities directly associatedwith assets classified as held for sale 220 - (2) 218 The aggregate effect of the above changes on the annual financial statements forthe year ended 30 September 2006: Reclassi- fication of Re- Previously discontinued Other classi-R million stated operation restatements fied Income statementRevenue 42 693 (1 602) - 41 091Operating profit 4 133 (80) - 4 053Fair value adjustments onfinancial instruments 235 - - 235Finance costs (605) 9 - (596)Income from investments 273 (3) - 270 Profit before exceptional items 4 036 (74) - 3 962 Exceptional items 120 (4) - 116Profit before taxation 4 156 (78) - 4 078 Taxation (1 370) 25 - (1 345)Profit after taxation 2 786 (53) - 2 733Income from associatesand joint ventures 72 - - 72 Reclassi- fication of Previously discontinued OtherR million stated operation restatements Restated Net profit fromcontinuing operations 2 858 (53) - 2 805Loss fromdiscontinued operation (112) 53 - (59) Net profit 2 746 - - 2 746Attributable to:Minority shareholders 389 - - 389Barloworld Limited shareholders 2 357 - - 2 357 2 746 - - 2 746Earnings per share (cents) - basic 1 138,9 - - 1 138,9 Earnings per share (cents) - diluted 1 117,1 - - 1 117,1 The restatement has not affected the balance sheet as at 30 September 2006. The restatements have not impacted on cash flows. 20. AUDITOR'S REVIEW Deloitte & Touche has reviewed these interim results. The unmodified reviewopinion is available for inspection at the company's registered office. Segmental summary Revenue Operating profit/(loss) Six months Year Six months Year ended ended ended ended 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 2007 2006 2006 2007 2006 2006 Reviewed Reviewed Audited Reviewed Reviewed Audited Restated Restated Equipment 7 595 5 324 11 627 628 445 978Industrial Distribution 4 015 2 975 7 045 75 32 146Motor 7 655 6 448 13 570 352 261 615Cement 2 588 2 183 4 863 987 856 1 903Coatings 1 735 1 425 2 971 183 139 274Logistics 701 273 963 36 18 47Corporate and other 35 35 52 (104) (22) 90 Total continuingoperations 24 324 18 663 41 091 2 157 1 729 4 053Discontinuedoperations - Scientific 934 748 1 602 74 37 80- Steel tube 348 796 1 775 38 12 95 25 606 20 207 44 468 2 269 1 778 4 228 Operating profit/(loss) Fair value adjustments including fair on financial instruments value adjustments Six months Year Six months Year ended ended ended ended 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 2007 2006 2006 2007 2006 2006 Reviewed Reviewed Audited Reviewed Reviewed Audited Restated Restated Equipment 2 (38) 141 630 407 1 119Industrial Distribution - - - 75 32 146Motor (2) (10) 21 350 251 636Cement (4) (1) 2 983 855 1 905Coatings (5) (4) 9 178 135 283Logistics 0 0 0 36 18 47Corporate and other (3) (16) 62 (107) (38) 152Total continuingoperations (12) (69) 235 2 145 1 660 4 288Discontinuedoperations - Scientific - - - 74 37 80- Steel tube - 3 (6) 38 15 89 (12) (66) 229 2 257 1 712 4 457 Net operating assets/(liabilities 31 Mar 30 Sept 2007 2006 Reviewed Audited Equipment 5 857 5 672Industrial Distribution 2 256 2 142Motor 7 200 6 898Cement 2 933 2 565Coatings 1 151 1 038Logistics 572 481Corporate and other (1 204) (176) Total continuingoperations 18 765 18 620 Discontinuedoperations - Scientific 1 185 1 259- Steel tube 130 368 20 080 20 247 Registered office and business address Barloworld Limited 180 Katherine Street PO Box 782248 Sandton 2146, South Africa Ph: +27 11 445 1000 E mail: invest@barloworld.com United Kingdom registrar Lloyds TSB Registrars The Causeway, Worthing West Sussex, BN99 6DA, England Ph: +44 190 350 2541 Transfer secretaries Ultra Registrars (Pty) Limited Physical address: 5th Floor, 11 Diagonal Street Johannesburg 2000, South Africa Postal address: P O Box 4844 Johannesburg 2000, South Africa Ph: +27 11 834 2266 E mail: info@ultrareg.co.za About Barloworld Barloworld is repositioning itself as a focused distribution company with anoffering that includes integrated product support as well as, rental andlogistics solutions. The core divisions of the group comprise Equipment(earthmoving and power systems), Motor (motor retail, car rental and fleetservices), Materials Handling (forklift truck distribution and fleet management)and Logistics (logistics management and supply chain optimisation). We offer flexible, value adding, integrated business solutions to our customersbacked by leading global brands. The brands we represent on behalf of ourprincipals include Caterpillar, Hyster, Avis, Mercedes, Chrysler, BMW, GeneralMotors, Ford, Toyota, Volkswagen, Audi, Nissan, Renault, Volvo and others. Barloworld has a proven track record of effectively managing long-termrelationships with global principals and customers. We have an ability todevelop and grow businesses in multiple geographies including challengingterritories with high growth prospects. One of our core competencies is anability to leverage systems and best practices across our chosen businesssegments. As an organisation, we are committed to play a leading role inempowerment and transformation. The company was founded in 1902 and currently has operations in 31 countriesaround the world with approximately half of our 25 000 people in South Africa. 14 May 2007 Sponsor: J.P.Morgan Equities Limited This information is provided by RNS The company news service from the London Stock Exchange