BWO.L Regulatory News (BWO)

Barloworld Limited

Reviewed interim results for the six months ended 31 March 2018

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 equipment and power systems), Automotive (car rental, motor retail, fleet services, used vehicles and disposal solutions) and Logistics (logistics management, supply chain optimisation and waste management). We offer flexible, value adding, innovative business solutions to our customers backed by leading global brands. The brands we represent on behalf of our principals include Caterpillar, Avis, Budget, Audi, BMW, Ford, Jaguar Land Rover, Mazda, Mercedes-Benz, Toyota, Volkswagen and others.

Barloworld has a proven track record of long-term relationships with global principals and customers. We have the 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 over 20 countries around the world with 83% of just over 18 000 employees in South Africa.

Corporate information

Barloworld Limited

(Incorporated in the Republic of South Africa)

(Registration number 1918/000095/06)

(Income tax registration number 9000/051/71/5)

(JSE share code: BAW) (JSE ISIN: ZAE000026639)

(Share code: BAWP) (JSE ISIN: ZAE000026647)

(Namibian Stock Exchange share code: BWL)("Barloworld" or "the company")

Registered office and business address

Barloworld Limited, 180 Katherine Street

PO Box 782248, Sandton, 2146, South Africa

Tel: +27 11 445 1000Email: invest@barloworld.com

Directors

Non-executive: DB Ntsebeza (Chairman), NP Dongwana,

FNO Edozien^, HH Hickey, NP Mnxasana, MD Lynch-Bell*,

SS Mkhabela, SS Ntsaluba, P Schmid, OI Shongwe

Executive: DM Sewela (Chief Executive), DG Wilson

^Nigerian *UK

Group company secretary

Lerato Manaka

Enquiries

Barloworld Limited: Lethiwe Hlatshwayo

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

Brunswick: Iris Sibanda, Tel: +27 (11) 502 7421

E-mail: isibanda@brunswick.co.za

Sponsor

J.P. Morgan Equities South Africa (Pty) Ltd

Salient features

· Disposal of Equipment Iberia progressing according to plan

· Logistics turnaround: improved positive returns

· Group return on invested capital at 11.0% (1H'17: 9.2%)

· Operating profit (from continuing operations) up 6% to R2.0 billion (1H'17: R1. 8 billion)

· Total headline earnings per share up 32% to 481 cents (1H'17: 365 cents)

· Return on equity (from continuing operations) at 9.7%(1H'17: 9.0%)

· Interim dividend per share of 145 cents up 16%(1H'17: 125 cents)

· Headline earnings per share (from continuing operations) up 14% to 457 cents (1H'17: 400 cents)

Dominic Sewela, CE of Barloworld, said:

"The group produced a much improved result for the six months ended 31 March 2018 despite challenging trading conditions in some areas. We continue to drive focus on addressing underperformance across the business and in line with that, on 25 April 2018 we announced the disposal of the Equipment Iberia business which is expected to be concluded by 2 July 2018 with the sale price representing a premium to net asset value.

We continue to evaluate high return opportunities aligned to our capability in emerging markets and steady progress is being made on reviewing potential growth areas for the group with active searches in both the local and targeted international markets."

21 May 2018

Chief executive's report

Economic overview

Despite a weaker first quarter, the global economy remains on track to show solid growth for 2018 in both developed as well as emerging markets. Increased geopolitical risks following military actions in Syria together with the current wave of protectionism could however negatively impact this recovery.

The outlook for the South African economy has improved since the appointment of President Ramaphosa as evidenced by rising confidence levels. GDP growth of up to 2.0% is currently forecast for 2018. The decision by Moody's to retain South Africa's investment grade ratings has further reduced the risks of the negative economic consequences that a downgrade would have precipitated.

For the six months ended 31 March 2018, the group produced headline earnings per share (HEPS) from continuing operations of 457 cents per share which was 57 cents per share (14.3%) up on the 400 cents last year.

Total HEPS (including discontinued operations) of 481 cents per share showed 116 cents or 32% improvement on the 365 cents earned in the prior year.

An interim dividend of 145 cents per share was declared (1H'17: 125 cents).

Operational review

Health and Safety

Tragically, there were two work-related fatalities in the period (Equipment Russia, December 2017; and Automotive, March 2018). Our condolences go out to the bereaved families and friends; and Barloworld continues to support the families at this time. Investigations into both incidents were conducted and management continues to enhance safety awareness and practices with the aim of strengthening safety in the workplace.

Equipment

Equipment southern Africa

Equipment southern Africa delivered good operating performance in the first half of FY2018 driven by positive global commodity price movements and a pick-up in mining activity.

Revenue to March of R8 670 million increased by R456 million (5.6%) compared to the prior year driven by higher mining machine sales in South Africa, Mozambique and Zambia.

Operating profit to date of R734 million was R21 million (2.9%) ahead of last year while the operating margin decreased to 8.5% (1H'17: 8.7%) due to the increase in mining machines in the sales mix and a stronger Rand.

Income from associates and joint ventures which mainly relates to Bartrac, our joint venture in the Katanga province of the DRC, increased by R72 million to R107 million supported by increased mining activity in that region.

Equipment Russia

Equipment Russia has continued to benefit from greenfield and brownfield mining projects, as well as a recovery in commodity prices, particularly in the coal sector, and produced record US$ revenue and operating profit for the first six months of FY2018. Revenue for the six months to Marchof US$296.5 million was US$129 million (77%) ahead of last year supported by strong growth in both prime product as well as aftermarket sales.

Mining unit sales in the first half increased by US$112 million and included a number of unit deliveries to Polyus Gold and NordGold.

Operating profit to March of US$25.0 million exceeded the prior year by US$5 million (26%). The operating margin of 8.2% was below the prior year due to the increase in machines in the overall sales mix.

Automotive and Logistics

Automotive

The Automotive division produced solid results despite challenging market conditions. Revenue for the six months of R15.4 billion was 5.8% below last year as a result of the BMW and GM dealership closures and disposals during the course of last year.

Operating profit to date of R883 million was R20 million (2.3%) up on last year. The operating margin of 5.7% was well ahead of the 5.3% achieved last year.

Car Rental

Revenue to March of R3.4 billion increased by R137 million (4.2%) compared to 2017. The business managed to increase both billed days and average rate per day. Operating profit of R301 million showed a 1.3% improvement on last year.

Fleet utilisation for the period of 76% was in line with the prior year.

Fleet Services

Revenue of R1.7 billion was 2.3% ahead of last year and operating profit increased by R16 million to R308 million (5.5%) mainly as a result of higher used vehicle sales.

Motor Trading

Revenue for the first six months of R10.2 billion decreased by R1.1 billion (9.9%) compared to the prior year mainly as a result of the closures and disposals last year. Both new and used vehicle sales were down on the prior year with all premium brands under pressure.

Operating profit to March of R274 million was in line with last year with operating margin improving from 2.4% to 2.7%.

In February we acquired the remaining 48.1% shares in Salvage Management and Disposal.

Logistics

In Logistics the turnaround initiatives implemented towards the end of 2017 are bearing fruit with operating profits, operating margins and overall return metrics all significantly up on the FY2017 first half results.

Year to date revenue of R2 989 million decreased by 6.6% compared to the prior year. This is mainly due to the combination of a subdued economy driving less than optimal activity levels within contracts as well as a rationalised customer portfolio. Revenue in the Transport segment was 8.3% up on 2017.

Operating profit of R99 million was significantly ahead of the R51 million generated last year. The operational and overhead cost savings initiatives initiated in 2017 more than offset the R12.5 million restructure costs incurred in the period.

The disposal of the Middle East business is progressing.

Directorate

In line with a structured board nomination process for Barloworld Limited, Ms Nomavuso Mnxasana was appointed as an independent non-executive director with effect from 6 October 2017.

We would like to congratulate Ms Sibongile Mkhabela who was awarded the National Order of Luthuli in silver in recognition of her contribution to the well-being of children, social justice and her role in the 1976 youth uprising.

Funding

Net debt increased by R3.8 billion from September 2017 to R9.6 billion in March 2018, mainly as a result of the absorption of working capital in Equipment southern Africa and Automotive. The build-up of inventories underpins the forecast increase in mining unit deliveries in the second half. Net debt levels are therefore expected to decrease by September 2018 as a result of reduced working capital and the initial proceeds on the disposal of Equipment Iberia of approximately R2.1 billion.

Human Capital, Diversity and Sustainable Development

Our group headcount shows a decrease compared to last year. This is in line with our strategy, and bears witness to the 'fix and optimise' projects carried out during the period under review.

From a Diversity and Inclusion perspective, indications are that we are moving in the right direction, even as we admit that we still have some way to go to achieve our bold targets.

Progress on photovoltaic installations during the period contributed towards our sustainability objectives, which include a renewable energy target.

Corporate Strategy

The group continues to work on all four areas identified in the Corporate Strategy.

Fix - The disposal of Equipment Iberia is on track for completion before the end of the financial year. Legal agreements were signed on 24 April 2018 and the transaction should close on 2 July 2018. Approval from the Spanish and Portuguese Competition Authorities and the approval from the group's off-shore funders are conditions precedent to closing.

The turnaround within the Logistics business is delivering in line with expectations. The exit of the Middle East Logistics operations is progressing and the expectation is to sell this business within the next 12 months. All options remain under consideration as we assess the performance and fit of the individual parts of the South African business.

Optimise - Equipment Southern Africa is implementing an operational transformation programme that will ensure that the business is value creating throughout the cycle, while Motor Retail continues to look closely at costs and dealership portfolio while actively considering both acquisitions and selected disposals. The group is currently evaluating various opportunities to optimise its capital allocation.

Grow - Steady progress is being made on reviewing opportunities for the group with active searches in both the local and targeted international markets.

Active Shareholder Model - The rollout of the new approach, Managing for Value, centred on careful management of the group's resources is going well. The process will better inform choices around strategic alternatives; resource allocation; strategic planning and budgeting; and execution and monitoring. Good progress has been made on the disposal of Barlow Park with a 1 April 2019 scheduled handover of the vacated site.

Outlook

Recent Caterpillar Inc. results indicate an improvement in global mining aftermarket and rebuild activity and they currently project the number of mining trucks produced in their factories to double in 2018. The Equipment southern Africa firm order book at March 2018 has increased to R1.9 billion compared to the R1.3 billion at September 2017 on the back of improved demand in mining and construction.

The improving global economy and current favourable commodity prices have resulted in improved mining output in our region. This has increased demand from both mining companies and contract miners for replacement machines and to a lesser extent machines for expansion projects. Higher machine utilisation levels in turn are driving strong after sales demand. The Mining Charter is currently under review and it is hoped that broad consensus can be achieved to ensure the long-term sustainability of South Africa's mining industry and to unlock new mining projects.

Despite the recent surge in oil prices, the outlook for Angola remains clouded by the slump in oil production. The availability of US Dollars remains a challenge to normal business operations in that country.

In the DRC the new Mining Code signed into law on 10 March 2018 is likely to impact new mining projects following the removal of the stability clause which had provided some regulatory certainty to mining investors in that country.

Equipment southern Africa firm orders at March of R2.9 billion were in line with the September 17 book (including the Mota Engil transaction) with approximately R2.2 billion relating to mining and contract mining machines.

The Russian economy is forecast to grow by close to 2% in 2018 supported by higher prevailing oil prices.

The tightening of US sanctions against Russia in early April has increased the risk of doing business in Russia. These new sanctions added seven high profile Russian businessmen and their companies to the Office of Foreign Assets Control sanctions list. These sanctions could in particular impact the Russian aluminium producer Rusal.

The Russian firm order book at the end of March of US$132.1 million included mining orders of US$100 million scheduled for delivery in the next six months. Total major projects currently under discussion stood at US$187 million and we remain positive about achieving a strong second half.

Car rental industry volumes will remain subdued with positive growth expected from the inbound tourism segment.

The Avis Fleet financed fleet reduced following the non-renewal of the SANParks and ADT contracts during the period. On the plus side we were the preferred bidder for the City of Johannesburg specialised vehicle fleet. While a number of existing government contracts have been extended for the near term, the future of these contracts remain uncertain pending the finalisation of the new tender processes.

NAAMSA is currently forecasting an increase in new vehicle sales of around 3% for the 2018 calendar year. Despite the improved confidence levels in the South African economy we still expect trading for the rest of the year to remain challenging particularly for the premium segment. The strategic projects, focused on optimising our dealer network and aligning the costs and structures within our Motor Retail business, will continue to be progressed in order to ensure sustainable returns of Motor Trading.

Logistics achieved the milestone target for the first six months. The target operating profit for the second half is substantially higher but based on current progress we believe it is achievable. While Logistics ROIC is unlikely to exceed our cost of capital by the end of September, the year on year increase in economic profit generated this year will be significant to the group.

Dominic Sewela

Chief executive

As announced on 25 April 2018, the group's disposal of the Equipment Iberia operations is expected to close by 2 July 2018. In compliance with IFRS 5, and as presented at the year-ended 30 September 2017, the results of the Equipment Iberia operations for the six months ended 31 March 2018 have been reported separately as a discontinued operation, and assets and liabilities held for sale at the interim period end date. The following commentary regarding the first six months trends is against restated comparatives to reflect the results of the group's continuing operations unless specifically stated.

FINANCIAL PERFORMANCE FROM CONTINUING OPERATIONS FOR THE SIX MONTHS ENDED 31 MARCH 2018

Revenue for the first six months grew by 1% to R30.9 billion (H1'17: R30.6 billion) primarily on the back of improved performance in Equipment Russia and Equipment southern Africa. Revenue in Equipment Russia hit record first six month levels and was up by over 77% in dollar terms to US$297 million (H1'17: US$167 million) driven by continued strong mining activity levels in the region. Equipment southern Africa's revenue growth of 5.6% to R8.7 billion (H1'17: R8.2 billion) was also ahead of the prior year and is reflective of positive global commodity price movements together with increased activity levels in the mining sector. Revenues for both regions in Rand terms were negatively impacted by the stronger Rand exchange rate, which reduced total revenue by R365 million. Year on year Automotive revenues were down by 5.8% to R15.4 billion (H1'17: R16.3 billion) affected by the prior year closure and disposal of a number of our BMW and General Motors dealerships. Logistics revenues were slightly behind that of the prior year at R3.0 billion (H1'17: R3.2 billion) resulting from tough market conditions and the loss of a KLL contract in the latter part of last year.

The group generated an operating profit from continuing operations of R1 954 million which was R113 million (6.1%) up on last year. The operating profit margin of 6.3% held strong against the 6.6% achieved at September 2017 and was primarily impacted by stronger mining machine sales mix contributions in both Equipment southern Africa and Equipment Russia. In spite of challenging market conditions, margins in the Automotive division have improved across all business units. In Logistics, the turnaround in operating profit from R51 million in the prior period to R99 million in the first half of 2018 is mainly as a result of cost reductions and other business optimisation initiatives.

The net negative fair value adjustments on financial instruments of R127 million (1H'17: R123 million) mainly comprise the cost of forward points on foreign exchange contracts and net losses on foreign currency denominated monetary assets and liabilities in Equipment southern Africa.

Finance costs decreased by R91 million to R583 million mainly due to lower interest rates and lower average borrowings in South Africa.

Losses from non-operating and capital items of R14 million relate to impairments of certain assets within Logistics offset by gains on asset sales in the Corporate division.

The taxation charge increased by R145 million to R406 million and the effective taxation rate for the period (excluding prior year taxation and taxation on non-operating and capital items) increased to 31.0% (1H'17: 23.9%) as a result of local currencies strengthening against the US Dollar functional currency of the offshore operations. In particular, the Group's taxation charge was negatively impacted by local currency gains made on US$ linked Angolan Bonds.

The Bartrac Equipment joint venture in the Katanga province of the DRC has benefited from improved copper and cobalt prices and was the primary contributor to the increased profits from associates to R113 million (H1' 17: R43 million). The BHBW joint venture in Agriculture and Handling contributed income of R11 million for the period.

The discontinued operation of Equipment Iberia has benefited from cost reductions initiated in the prior year recording profits of R57 million against losses of R93 million recognised in the prior period. Growth in new machine sales and a marginal increase in aftersales revenue was offset by continuing losses in the associate Energyst.

Profits were up by 16.7% to R1 001 million and were well ahead of the prior period R858 million. This growth was reflected in the 14% increase in headline earnings per share (HEPS) to 457c against a prior period HEPS of 400c. Total HEPS increased by 116 cents (32%) to 481 cents per share compared to 365 cents per share last year.

Cash flow

The group utilised R3.1 billion of working capital in the first half mainly as a result of increased inventory of R1.8 million. The impact of Caterpillar lead times and the anticipated uptick in the mining cycle both in southern Africa and in Russia has necessitated investment in working capital in the period. Additionally, wins and contract extensions in our vehicle fleet leasing business, together with increased demand for leased mining machines, have required investment in the rental and leasing fleets of R1.1 billion. Consequently, cash utilised in operations of R1.4 billion was significantly down on the R929 million generated in the prior period.

Net cash used in investment activities of R482 million included an additional investment in Angolan US$ linked government bonds of R188 million (US$16 million) using Kwanza cash on hand as a hedge against currency devaluation. The total investment in Angolan US$ linked government bonds at March was US$82 million (September 2017: US$66 million). The net cash outflow before financing activities and dividends for the period of R3.0 billion was R2.7 billion lower than the R343 million utilised in the first half of 2017.

In line with previous years we expect to reduce our working capital utilisation in the second half to ensure that we are cash positive for the full year.

Financial position

Total assets employed in the group increased by R1.0 billion (2.2%) to R47.4 billion compared to September 2017 of R46.3 billion. This was driven by increased working capital and an increase in fleet leasing and Equipment rental fleet. Consistent with the year ended September 2017 net assets held for sale of R2.3 billion (September 2017: R2.5 billion) comprise Equipment Iberia and the Logistics Middle East business. The stronger Rand reduced total assets by R1.7 billion.

Total interest-bearing debt at 31 March 2018 increased by R2.0 billion to R11.7 billion (September 2017: R9.7 billion) while cash and cash equivalents decreased by R1.7 billion to R2.2 billion (September 2017: R3.9 billion). Net interest-bearing debt at 31 March 2018 of R9.6 billion was R504 million up on the prior year (March 2017: R9.1 billion) and R3.8 billion up on the September 2017 position of R5.8 billion.

Debt

In October 2017 bonds (BAW3 and BAW8) totalling R425 million were repaid using existing facilities. In February 2018, BAW29, a five-year bond for R400 million was issued in anticipation of bonds maturing in the latter part of the 2018 calendar year.

South African short-term debt at March 2018 includes commercial paper (CP) totalling R650 million (September 2017: R643 million). Our continued participation in the CP market is dependent on overall liquidity and on competitive pricing.

Cash and cash equivalents at March of R2.2 billion included US$12 million (September 2017: US$35 million) held in Angola of which US$9 million (September 2017: US$30 million) was denominated in Kwanzas and is considered restricted cash.

At the end of March the group had unutilised borrowing facilities of R8.1 billion, of which R7.1 billion was committed. The group's ratio of long-term to short-term debt was 62:38 (September 2017: 79:21).

On 27 March 2018 Moody's raised Barloworld's Global Scale outlook from negative to stable following the change of outlook on the Baa3 sovereign rating of South Africa and on 2 May 2018 Moody's affirmed the long-term and short-term issuer Global Scale Rating of Baa3 and P-3 and long-term and short-term issuer National Scale Rating of Aa1.za and P-1.

The group total debt to equity ratio at 31 March 2018 was 59% (September 2017: 46%), while group net debt to equity was 48% (September 2017: 28%).

Gearing in the three segments remains in line with, or better than, the group target ranges:

OUTLOOK FOR THE YEAR END

With the disposal of the Equipment Iberia operations expected to be concluded by 2 July 2018, management is focused on exploring various strategic opportunities for the deployment of the capital released in this transaction. Capital allocation and returns in the existing businesses remain at the forefront of management's agenda.

ROIC (rolling 12 month basis) improved to 11.0% against a prior year of 9.2% (1H'17) on the back of management's efforts to improve returns amidst tough trading conditions. In appreciating movement in the half year ROIC the cyclical nature of the businesses needs to be considered with the full year positive impact of numerous initiatives in the group expected to shift ROIC even closer towards the 13% hurdle rate by year end.

The build-up of working capital to March 2018 has negatively impacted cash generation of the group. However, in line with cyclical and historical trends, we expect working capital to be released into cash in the second half of the year. Similarly, the recent investments in fleet and rental assets are reflective of growth in these markets and will begin to contribute to returns in future reporting periods.

DG Wilson

Finance director

Operational reviews

In Equipment southern Africa revenue increased by 5.6% to R8.7 billion in the period, on the back of improved trading conditions in the South African mining sector. Contract mining equipment sales and rental hire both grew by 20% compared to the same period last year. Operating profit increased by 2.9% to R734 million, while operating margin reduced to 8.5% (1H'17: 8.7%). The business continues to focus on business improvement and cost reduction initiatives.

Construction unit sales declined by 15%, on a relatively flat industry with no major infrastructure investment. The aftermarket business remained stable, supported by 4% growth in parts sales in line with increased mining equipment utilisation. Revenue from our rest of Africa operations grew by 9% despite low activities in Angola and Botswana. Attributable profit contribution increased by 139% to R103 million, mainly as a result of the contribution from our DRC joint venture on the back of rallying copper and cobalt prices.

Equipment Russia revenues and operating profit grew by 77% and 27% respectively in US Dollar terms. Operating margin was negatively influenced by the sales mix which included a significant proportion of mining related equipment deliveries at lower margins. It is pleasing to note that aftermarket business remained robust in the period under review across the dealer territory. Net assets remained well controlled resulting in exceptional returns and a marginally positive cash flow despite the seasonal increase in inventories. Demand in the mining segment remains strong with coal and gold being the prevalent commodities.

Revenue in Handling is mainly related to activity in Mozambique where a small operating loss was incurred. Further operating losses were incurred in respect of the close out of the South African handling and agriculture operations. BHBW, our Agriculture and Handling associate in South Africa, generated associate income of R11 million in the period.

The Automotive division delivered another record result in a challenging trading environment, increasing operating profit by 2.3% off a revenue decline of 5.8%. Revenue was impacted by dealer network restructuring in BMW and General Motors during the 2017 financial year as well as the change of revenue recognition regarding the agency model in the Motor Trading business. On a comparable basis revenue increased by 2.3% compared to prior year. The division increased operating margin to 5.7% (1H'17: 5.3%), delivered a ROIC of 11.6% (1H'17: 11.9%) and improved free cash flow on prior year. The ROIC is expected to improve in the second half as invested capital reduces.

Car Rental delivered a pleasing result increasing revenue by 4.2% to R3.4 billion and generated operating profit of R301 million, up 1.3% on prior year. Operating margin was negatively impacted by lower used vehicle margins as a result of lower new vehicle price increases. On the upside, the business managed to contain fleet costs and vehicle damage expenses below inflation. The business increased both rental days and rate per day. Fleet utilisation was maintained at 76%.

Avis Fleet delivered a good result increasing revenue by 2.3% to R1.7 billion and operating profit by 5.5% to R308 million. Operating margin increased to 17.9% (1H'18: 17.3%) complemented by strong used vehicle profit contribution driven by increased units and margins. The business was awarded the City of Johannesburg contract for specialised vehicles, subject to contract finalisation. The business continues to focus on addressing underperforming businesses with specific focus on African territories.

Motor Trading delivered a credible result in a tough trading environment. Operating profit remained flat against a revenue decline of 9.9%. Revenue was impacted by the dealer network restructuring and revenue recognition in line with the agency model. On a comparable basis, revenue increased by 1.8% on prior year. New vehicle unit sales were below the 1.2% dealer market industry growth, predominantly driven by declining volumes in the premium segment. The business increased operating margin to 2.7% (1H'17: 2.4%), delivered a ROIC above the group target of 13% and generated positive free cash flow. The remaining minority shareholding in Salvage Management and Disposals (SMD) was acquired, effective 19 February 2018.

Logistics revenue to March of R2 989 million was R210 million (6.6%) down on last year mainly due to lower trading in Supply Chain Management and a rationalised customer base. Transport, however, increased revenue by R100 million (8.3%) due to contract retention and expansion. Year to date operating profit of R99 million was R48 million (94%) above the prior year. The significant increase in profitability was mainly driven by the implementation of the turnaround strategy that the business embarked on in early October 2017. The operating and organisational model was simplified and optimised. Multiple initiatives to reduce costs, including procurement savings, contributed to the improved results.

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

Southern Africa incurred higher operating losses compared to last year mainly due to corporate activity costs. Costs in the UK were adversely impacted by a weaker Rand.

DIVIDEND DECLARATION

Dividend number 179

Notice is hereby given that interim dividend number 179 of 145 cents (gross) per ordinary share in respect of the six months ended 31 March 2018 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 20% (twenty per centum);

• Barloworld has 212 692 583 ordinary shares in issue;

• The gross local dividend amount is 145 cents per ordinary share;

• The net dividend amount is 116 cents per share.

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

Share certificates may not be dematerialised or rematerialised between Wednesday, 6 June 2018 and Friday, 8 June 2018, both days inclusive.

On behalf of the board

LP Manaka

Group company secretary

Directors

Non-executive: DB Ntsebeza (Chairman), NP Dongwana, FNO Edozien^, HH Hickey, MD Lynch-Bell*, SS Mkhabela, NP Mnxasana, SS Ntsaluba,

P Schmid, OI Shongwe

Executive: DM Sewela (Chief Executive), DG Wilson

^Nigerian *UK

Notes to the condensed consolidated financial statements