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")

Interim results for the six months ended 31 March 2014

About Barloworld

Barloworld is a distributor of leading international brands providing integrated rental, fleet management, product support and logistics solutions. The core divisions of the group comprise Equipment and Handling (earthmoving, power systems, materials handling and agriculture), Automotive and Logistics (car rental, motor retail, fleet services, used vehicles and disposal solutions, logistics management and supply chain optimisation). We offer flexible, value adding, 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, Mazda, Mercedes-Benz, Toyota, Volkswagen, Massey Ferguson and others.

Barloworld has a proven track record of long-term relationships with global principals and customers. We have an ability to develop and grow businesses in multiple geographies including challenging territories with high growth prospects. One of our core competencies is an ability to leverage systems and best practices across our chosen business segments. As an organisation we are committed to sustainable development and playing a leading role in empowerment and transformation. The company was founded in 1902 and currently has operations in 24 countries around the world with approximately 70% of just over 19 100 employees in South Africa.

Corporate information

Registered office and business address

Barloworld Limited, 180 Katherine Street, PO Box 782248, Sandton, 2146, South Africa

Tel +27 11 445 1000

Email invest@barloworld.com

Directors

Non-executive: DB Ntsebeza (Chairman), NP Dongwana, NO Edozien^, AGK Hamilton*, A Landia~,

SS Mkhabela, B Ngonyama, SS Ntsaluba, SB Pfeiffer•

Executive: CB Thomson (Chief Executive), PJ Blackbeard, PJ Bulterman, M Laubscher, DM Sewela,

OI Shongwe, DG Wilson

^Nigerian*British ~German •American

Group company secretary

Lerato Manaka

Enquiries: Barloworld Limited: Lethiwe Motloung

Tel +27 11 445 1000

Email invest@barloworld.com

College Hill: Amelia Soares

Tel +27 11 447 3030

Email amelia.soares@collegehill.co.za

For background information visit www.barloworld.com

Salient features

Ø Revenue up 5% to R29.9 billion 

Ø Operating profit up 18% to R1 639 million 

Ø Motor retail Australia disposal for R1.3 billion

Ø HEPS up 10% to 336 cents

Ø Interim dividend per share up 10% to 106 cents

Ø Basic EPS of 494 cents up 71%

Clive Thomson, CE of Barloworld, said:

The group delivered a sound performance in the first half with operating profits up 18% and headline earnings per share increasing by 10%.

Our Equipment business in southern Africa delivered a good overall result despite the ongoing challenges in the mining sector. Revenues were bolstered by a strong performance from the Extended Mining Product Range (EMPR) and continued aftermarket growth. In Russia our business held up relatively well despite slowing economic growth and political uncertainty arising from the Ukraine crisis.

The Automotive and Logistics division traded strongly with all business units performing well ahead of the prior year. Our Australian motor retail operations were disposed in the period for R1.3 billion realising a profit of R370 million. This continues our strategic objective to redeploy capital into those businesses earning the highest financial returns.

Overall the group is expected to produce a solid result for the full year and is well placed to benefit once the global mining cycle moves into a recovery phase.

19 May 2014

Chairman and Chief Executive's report

Overview

Revenue from continuing operations to March of R29.9 billion was 5% up on 2013 while operating profit of R1 639 million was R255 million (18%) ahead of last year. This resulted in an improved operating margin of 5.5% (1H'13: 4.8%) for the six months.

The group generated total headline earnings per share (HEPS) of 336 cents (including 20 cents from discontinued operations) which exceeded the prior year by 10%.

Our Australian motor retail interests were disposed of in two separate transactions for a total of R1.3 billion and are disclosed as discontinued operations in the results for the period, with comparatives restated accordingly.

HEPS from continuing operations of 316 cents exceeded the restated continuing HEPS for 2013 of 291 cents per share by 9%.

A dividend of 106 cents per share was declared compared to 96 cents last year, an increase of 10%.

Operational review

Equipment and Handling

Equipment southern Africa

As reported in our outlook at the end of last year, mining in southern Africa remains challenging with the major mining companies continuing to cut or defer capital expenditure. However, we continue to service the large existing population of Caterpillar equipment which has led to ongoing growth in our aftermarket revenues.

We have seen some improvement in our construction business in South Africa particularly with the mid-tier contractors although the projects are of smaller scale and shorter duration.

The division generated revenue to March of R9.6 billion compared to R9 billion in the prior year. The bulk of the increase came from the extended mining product range (EMPR) which increased current year revenue by R391 million (27%) driven by deliveries to Swakop Uranium in Namibia and First Quantum Minerals (FQM) in Zambia, together with a rise in after-sales revenues.

Operating profit to March of R768 million exceeded the prior year by R114 million (17%) with an improved operating margin of 8% compared to 7.2% last year.

The firm order book at March stood at R2.8 billion which was below the September reported level of R3.5 billion following the commencement of deliveries to the Swakop Uranium and FQM Kulumbila projects. Contract mining activity has however increased of late with a number of projects awaiting confirmation.

Income from associates for the first half increased by 51%.

Equipment Iberia

While there are signs of an improvement in the overall economy in Iberia, the construction industry is not yet showing signs of recovery. Year to date revenue of R2 277 million (€152 million) was well down on the previous year of R2 464 million (€215 million) which included the two large package deals to EPSA and Victorino Alonso.

The business generated an operating loss of R32 million (€2 million) compared to a loss of R5 million (€0.4 million) last year. The result was impacted by reduced volumes, increased fixed costs as prior year salary decreases were reinstated and a reduction in the number of service technicians earning revenue on projects outside Iberia.

The March firm order book of €42 million is down on the prior year €49 million with power representing 81% of this book.

Equipment Russia

The deteriorating situation in Ukraine continues to take its toll on the Russian economy with the rouble weakening in the period and the outlook for economic growth continuing to decline.

The limited economic sanctions announced by both the United States and the European Union while impacting certain designated individuals and entities in Russia have thus far not had any significant direct impact on our business, our customers, or the banking and financial sector in Russia.

Our operations have however been negatively impacted by lower activity in the mining sector as a result of reduced commodity prices and curtailment of spend on mine expansions and new projects.

Revenue to March of R1 929 million ($183.7 million) was 11.8% below the prior year driven by lower mining sales into Siberia and the Russian Far East.

Operating profit for the first half of R156 million ($14.7 million) compares to R157 million ($17.8 million) in 2013.

The firm order book at March of $36.5 million is down on the September 2013 book of $40.4 million however there remain a number of projects under discussion which have the potential to benefit revenues in the second half.

Handling

Revenue to March of R947 million was well down on last year which included The Netherlands and Belgium businesses. The Handling Belgium business was sold in May 2013, while the disposal of the Netherlands business was concluded in December.

Handling SA revenue was slightly below last year with slower new and rental sales, while Agriculture SA revenue of R432 million was 7% up.Operating profit to March of R31 million compares to R36 million profit in 2013 which included profits from Belgium and The Netherlands.

Automotive and Logistics

The division successfully exited the Australian motor retail operations with the sale of the Ferntree Gully dealership in November 2013 and the sale of the remainder of the business effective 31 March 2014. Total disposal proceeds of R1.3 billion were generated and the majority of this was received after the half year end on 1 April 2014. A profit on disposal of R370 million was recorded on the combined transactions. The segment has consequently been reflected as discontinued in the period with the prior year restated on a comparable basis.

The Automotive and Logistics division generated revenue of R15.1 billion from continuing operations for the six months to March which is R1.6 billion (11%) up on last year's comparable revenue of R13.6 billion. All the business units have shown good revenue growth in the current year.

Operating profit to March of R775 million (excluding motor retail Australia) exceeded the previous year by R159 million (26%) with the divisional operating margin improving to 5.1% (1H'13: 4.5%).

Including Australia the division produced an operating profit of R861 million for the six months to March, up 29% on the prior period.

Car rental

Revenue for the six months to March of R2.1 billion exceeded the prior period by R134 million (7%) due to improvements in rental days of 11% and revenue per day of 2%. Fleet utilisation for the period reached 76% with volume increases in most segments.

Operating profit to March of R220 million was 35% up on the prior period with the operating margin showing a pleasing improvement from 8.2% in 1H'13 to 10.3% in the current year.

Motor retail

Motor Retail SA increased revenue by R1.1 billion (14%) to R9.3 billion mainly through a strong new vehicle sales performance in the Mercedes-Benz franchise and a positive growth in aftermarket.

Year to date operating profit of R235 million was 17% (R34 million) up on last year due to improved finance and insurance and aftermarket profitability.

South African consumer confidence levels remain low due to high levels of indebtedness and increased energy and transport costs exacerbated by a slowdown in bank lending to households. Based on the tepid growth prospects for the SA economy the motor industry is projecting a flat year for vehicle sales but in our view this is more likely to be slightly negative. Industry vehicle sales to March show a 3.4% decline on last year.

The newly acquired Toyota dealership in Kuruman has been successfully integrated from 10 March 2014.

Fleet services

Fleet services maintained its strong momentum and generated revenue of R1.5 billion which was 18% ahead of the previous period. Year to date operating profit of R264 million was up by 27% on 2013.

Logistics

Year to date March revenue of R2.2 billion exceeded the prior period by 3%. Operating profit to March of R56 million was 27% ahead of the prior period with the transport business producing the bulk of the profit. This was despite the impact of ongoing strike action in the platinum industry.

Supply Chain Management profitability was down due to lower gain shares on certain contracts as well as lower Barloworld Equipment volumes.

The international businesses generated slightly increased losses in the first half with Sea Air volumes well down due to a contract loss.

Funding

Group net debt increased by R3.6 billion from September 2013 to R11.2 billion at March 2014. This was at a similar level to March 2013. The bulk of the increase was driven by the seasonal increase in working capital which is expected to significantly reduce in the second half of this year.

The final proceeds on the disposal of the Australian motor retail interests of approximately R1.2 billion were received on 1 April 2014 which will further reduce net debt levels by year end.

Human resources, diversity and sustainable development

Tragically motor vehicle accidents resulted in one work-related fatality in the reporting period and another two subsequently. Steps have been taken to incorporate appropriate prevention measures in our ongoing safety awareness programmes.

The implementation of our renewed Employee Value Proposition enhances our position to attract, develop and retain the people and leadership required to implement our strategic objectives.

Our group-wide focus on diversity and inclusion resulted in the group retaining its broad-based black economic empowerment (B-BBEE) level 2 rating and our major South African business units achieving a level 2 or 3. We remain committed to being industry leaders in empowerment by aligning our transformation and B-BBEE strategy to the revised codes.

Expanding Logistics' road transportation activities following acquisitions made last year contributed to increasing group energy consumption and greenhouse gas emissions by 55% and 41% respectively. This in turn adversely impacts the achievement of our related aspirational targets.

Changes in directorate

Hixonia Nyasulu retired by rotation from the board at the annual general meeting on 29 January 2014. We would like to thank her for her contribution over the past seven years.

Dr Alexander Landia joined the board as a non-executive director on 1 October 2013.

With effect from 19 March 2014 Ngozichukwuka (Ngozi) Edozien was appointed a non-executive director of the company and Dominic Sewela, Chief Executive of Barloworld Equipment southern Africa, was appointed as an executive director of the company.

Isaac Shongwe, currently Executive Director: Human Resources, Strategy and Sustainability, having served the group for more than nine years will relinquish his executive management responsibilities effective 31 May 2014. Mr Shongwe wishes to devote more time to his social and leadership activities including the African Leadership Initiative (ALI) which he founded in 2003. He has agreed to remain on the board of Barloworld Limited as a non-executive director effective 1 June 2014.

Outlook

The global economic recovery now appears to be led by the US and EU while China and the emerging market economies show signs of slowing.

The South African economy continues to suffer from the impact of the prolonged strike in the platinum sector which is diminishing growth prospects. Furthermore, high inflation levels would appear to make further interest rate hikes inevitable.

Equipment southern Africa traditionally generates a stronger second half performance which will include deliveries in respect of the major EMPR projects in this period. Aftermarket revenues are expected to generate continued growth.

While current economic indicators for Spain are turning positive we have yet to see this translate into improved machine industry sales. As a result, we are looking at taking further steps to reduce our cost base and position the business for future profitability.

The outlook for Equipment Russia is dependent on no further escalation in tensions between Russia, Ukraine, the EU and the United States.

Trading conditions for Power in southern Africa and Russia will remain muted while Iberia has a solid order book mainly in marine engines which will ensure growth on the prior year.

The order books for the Handling and Agriculture businesses in southern Africa are up which should add impetus for the balance of the year.

We expect the Automotive businesses to show continued growth while the Logistics business should deliver a stronger performance in the second half.

Overall the group is expected to produce a solid result for the full year and is well placed to benefit once the global mining cycle moves into a recovery phase.

Group financial review

The results for the year ended 30 September 2013 have been restated to reflect changes in accounting policies as well as discontinued operations resulting from the disposal of our Australian motor retail business. The group applied IAS 19 revised (employee benefits) and IFRS 10 (consolidated financial statements), resulting in a restatement of the prior year results on a comparable basis.

Revenue for the six months increased by R1.3 billion (5%) to R29.9 billion mainly due to increased revenues in Equipment southern Africa in the extended mining product range (EMPR) and Automotive and Logistics (R1 558 million), offset by lower revenues in Equipment Russia and Iberia. The weaker rand increased revenue by R919 million.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 17% to R2 800 million while operating profit rose by 18% to R1 639 million on the comparable restated number for last year. The increase in the company's share price since September 2013 resulted in a R43.8 million charge for the six months (1H'13: R5 million) in respect of the cash-settled Share Appreciation Rights previously awarded to employees.

In Equipment southern Africa, operating profit increased by 17% despite weaker demand in the mining sector, largely due to a strong contribution from EMPR. Losses in Equipment Iberia increased from R5 million last year to R32 million, as construction and public works activity remained subdued despite the improving economic conditions in Spain. Operating profit in Equipment Russia was in line with last year in rand terms but declined by 18% in dollar terms due to the current slump in mining.

The Automotive and Logistics division continuing operations recorded substantially improved profits of R775 million, up by 26% owing to increased earnings in all business segments.

Financial instrument costs were significantly up on the prior year and mainly relate to the forward points on forward exchange contracts expensed in Equipment SA.

Net finance costs of R525 million are R37 million higher than last year owing to the increased cost of debt and some increase in average net debt in the first half.

The exceptional charge of R49 million includes the impairment of goodwill in the logistics sea air transport business in Germany and the Middle East, offset by profits from foreign currency translation reserves realised from disposals of offshore businesses in automotive, handling and logistics.

Taxation increased by R41 million to R345 million. The effective taxation rate excluding prior year adjustments and exceptional items was 34.5% (1H'13: 34.4%). This was impacted by unrelieved losses in Spain and deferred tax charges arising out of exchange rate movements in foreign operations.

Income from associates of R95 million was R31 million higher than last year and arose mainly from the equipment joint ventures which continued to perform strongly.

Minorities share of profit increased by R37 million to R86 million due to higher levels of profitability in the Mercedes-Benz joint venture and Barloworld Transport Solutions operations.

Headline earnings per share (HEPS) including discontinued operations increased by 10% to 336 cents (1H'13: 304 cents) on the comparable restated earnings from last year, while HEPS from continuing operations increased by 9% to 316 cents (1H'13: 291 cents). Basic earnings per share (EPS) including discontinued operations is 71% higher than the restated basic EPS of 289 cents in the prior period due to the exceptional profit generated on the disposal of the Australian motor retail operations.

Cash flow and debt

Improved activity levels resulted in increased investment in working capital of R3 234 million (1H'13: R2 405 million). Equipment SA increased working capital by R2 373 million and Automotive and Logistics by R399 million.

Total interest-bearing debt at 31 March 2014 of R13 008 million represents a debt to equity ratio of 79% (September 2013: 65%). 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 2018 and R827 million in 2020. In addition a R700 million bank term facility was extended for a further five years. The funds raised were utilised to fund short-term working capital requirements and to improve the maturity profile of group debt.

At March short-term debt represents 37% of total debt. In South Africa, short-term debt includes commercial paper totalling R1.5 billion (September 2013: R1.2 billion). This market has remained liquid and we expect to maintain our participation.

Cash balances of R1.8 billion are available to meet short-term commitments. In addition unutilised banking facilities at March amounted to R5.5 billion.

Net interest-bearing debt at 31 March 2014 of R11 198 million represented an increase of R3 640 million on September 2013 and a net debt to equity ratio of 68% (September 2013: 48%).

Total assets employed by the group increased by R2 450 million in the six months to R43 057 million mainly due to increased working capital, with the weaker rand adding R752 million.

Going forward

Based on forecast deliveries in the second half in Equipment southern Africa and Russia, we are forecasting a significant reduction in working capital and gearing by year end. In addition the receipt of the final proceeds from the disposal of Motor Retail Australia received in April will further favourably impact net debt levels.

DG Wilson

Finance director

Operational reviews

Equipment southern Africa achieved a good result, with revenue increasing by 7% to R9.6 billion in the six months to March 2014, despite the challenges faced in the mining environment. This increase was attributed to growth in EMPR sales, high revenues in parts and service and a strong performance by the rental business in South Africa. Operating profit grew by 17% to R768 million due to operational efficiencies and a concerted focus on cost management.

The outlook for the infrastructure and construction industry is positive. We expect the slow growth in the mining sector to continue due to subdued commodity demand from China. Our Firm Order Book is at R2.8 billion, lower than R3.5 billion at September 2013, due to improved machine delivery lead times from Caterpillar and significant EMPR machine deliveries to Swakop Uranium, FQM and De Beers (Venetia mine) in the past six months.

In Equipment Russia revenue was under pressure due to the continuing decline in mining sales and lower commodity prices have delayed investments in greenfield projects. Operating margin benefited from favourable sales mix with the increase in aftermarket sales which traditionally have higher margins. EMPR aftermarket trading was in line with expectation.

Equipment Iberia revenue to March was down 29% in euro terms with two package deals in the prior financial year not replicated and margins were negatively affected by lower service activity. Power Systems has continued to act as a buffer against the weak construction equipment market.

In the Handling operations, the market for forklift trucks in South Africa has reduced from last year. Trading in the Agriculture business started slowly but has picked up appreciably in the last two months. Operating profit in South Africa grew modestly, with an improved sales mix and favourable currency variances more than offsetting lower volumes. Sales in Russia were adversely affected by a late winter and political uncertainty. The prior period included the Handling Belgium and Netherlands businesses which have now been sold.

The division delivered another record result in difficult markets. These results exclude the Australian motor retail operations which were sold, effective 31 March 2014. The operating margin improved to 5.1% from 4.5% in the prior period. The division continued to generate strong operating cash flows which have been reinvested into profitable growth opportunities across all business units. Operating profit improved by 26% off a growth in revenue of 11%.

Avis Rent a Car southern Africa delivered an excellent result, improving operating profit by 35%. The business further improved fleet utilisation, grew rental day volumes and market share, and increased revenue per rental day. Used vehicle profits which were maintained at the high levels of the previous year, supported the result.

The southern African motor retail operations delivered a pleasing result, growing operating profit by 17% while margins were maintained in line with the prior period. Overall vehicle sales volumes were in line with market and the result was supported by improved aftermarket volumes and a solid finance and insurance contribution. The acquisition of Leach Toyota in Kuruman was effective 10 March 2014.

Avis Fleet Services produced a very good result, improving operating profit by 27%. The business maintained the level of 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 Solutions 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. Overall volumes and margins remain under pressure in the international businesses.

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 operating loss has reduced mainly owing to lower charges and accruals for long-term incentives and reduced operating expenditure. In Europe the higher operating loss is mainly due to the impact of currency depreciation.

Dividend declaration 

Dividend number 171

Notice is hereby given that interim dividend number 171 of 106 cents (gross) per ordinary share in respect of the six months ended 31 March 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 are no Secondary Tax on Companies (STC) credits utilised;

• Barloworld has 231 291 819 ordinary shares in issue;

• The Gross local dividend amount is 106 cents per ordinary share;

• The net dividend amount is 90.10 cents per share.

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

Share certificates may not be dematerialised or rematerialised between Monday, 09 June 2014 and Friday, 13 June 2014, both days inclusive.

On behalf of the board

LP Manaka

Group company 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