8 May 2014 15:00
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Share code: BAW)
(JSE ISIN: ZAE000026639)
(Share code: BAWP)
(JSE ISIN: ZAE000026647)
(Bond issuer code: BIBAW)
("Barloworld" or "the Company")
TRADING STATEMENT
Trading summary for 6 months ended 31 March 2014:
The group has continued its solid performance in the first six months to 31 March 2014 with headline earnings per share (HEPS) including discontinued operations expected to be 8% to 12% higher than the comparable restated HEPS of 304 cents in the prior period (as set out below). HEPS from continuing operations are expected to be 7% to 11% higher than the comparable restated HEPS from continuing operations of 291 cents (as set out below).
Equipment southern Africa delivered a strong overall result for the first half despite the ongoing slowdown in the mining sector. Higher than planned activity in the Extended Mining Product Range (EMPR) and growth in aftermarket revenues contributed positively to the results.
Trading in Equipment Russia was under pressure due to ongoing project deferments in the mining sector and slower economic growth exacerbated by uncertainty resulting from the Ukraine crisis.
Construction activity in Equipment Iberia remains subdued notwithstanding early signs of improving economic conditions in Spain.
The Automotive and Logistics division has traded strongly with all business units performing well ahead of the prior period. At 31 March 2014 the group disposed of the remainder of its motor retail operations in Australia. The exit of these operations resulted in an exceptional profit of R370 million including the realisation of foreign currency translation reserves.
Basic earnings per share (EPS) including discontinued operations are expected to be 60% to 80% higher than the restated Basic EPS of 289 cents (as set out below) in the prior period due to the exceptional profit generated on the disposal of the Australian motor retail operations. Basic EPS from continuing operations are expected to be 6% to 8% higher than last year's comparable restated Basic EPS of 275 cents (as set out below).
Changes in Accounting Policies and Discontinued Operations:
Barloworld's results for the half year ended 31 March 2013 and year ended 30 September 2013 have been restated to reflect changes in accounting policies as well as the disclosure of the Australian motor retail interests as discontinued operations.
Changes in accounting policy resulting from applying IAS19 (revised) (employee benefits) and IFRS10 (consolidated financial statements), resulted in a restatement of prior year results on a comparable basis.
The revised IAS19 standard requires the recognition in earnings of a net interest expense on the pension fund deficit. In addition, administration expenses (excluding investment expenses) are also recognised in earnings. For the year ended September 2013 the recognition of the administration expenses in earnings and the restatement of income recognised on plan assets reduced operating profit by R64 million (March 2013: R24 million). Net finance costs increased by R30 million (March 2013: R19 million) with a net after tax profit reduction of R83 million (March 2013: R34 million). This represents a 39 cents (March 2013: 17 cents) reduction in headline earnings per share.
In terms of IFRS10, certain cell captives are now disclosed as investments in terms of IAS 39 and no longer consolidated. While this impacts group operating income there is no impact on headline earnings.
Following the disposal of the group's motor retail interests in Australia, the results have been disclosed as discontinued operations and comparatives restated on a comparable basis. The restated basic earnings per share from continuing operations for the six months ended 31 March 2013 is 275 cents per share and the restated basic headline earnings per share from continuing operations is 291 cents per share.
The tables below summarise the impact of the restatement on Basic and Headline EPS:
Impact of restatements | |||
Cents per share | Six months ended 31-Mar-13 Reviewed | Year ended 30-Sep-13 Audited | |
Basic EPS previously reported | 305.3 | 801.9 | |
IAS 19 Employee benefits | -16.6 | -38.9 | |
Basic EPS restated | 288.7 | 763 | |
Discontinued operations - Australia | -13.4 | -23.1 | |
Basic Continuing EPS restated | 275.3 | 739.9 |
Cents per share | Six months ended 31-Mar-13 Reviewed | Year ended 30-Sep-13 Audited | |
Basic HEPS previously reported | 320.9 | 859.7 | |
IAS 19 Employee benefits | -16.6 | -38.9 | |
Basic HEPS restated | 304.3 | 820.8 | |
Discontinued operations - Australia | -13.3 | -41.2 | |
Basic Continuing HEPS restated | 291.0 | 779.6 |
Funding:
Net debt increased in the first half as a result of the seasonal increase in working capital but is expected to reduce significantly in the second half of the year. On 1 April 2014 the final proceeds from the disposal of the Australian motor retail business were received which will further reduce group net debt in the second half.
Barloworld Limited expects to announce its results for the six months to 31 March 2014 on 19 May 2014.
This financial information on which the trading statement has been based has not been reviewed or reported on by Barloworld's auditors.
Sandton Sponsor:
08 May 2014 J.P. Morgan Equities South Africa (Pty) Ltd.
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
E-mail invest@barloworld.com
College Hill: Amelia Soares, Tel +27 11 447 3030
E-mail amelia.soares@collegehill.co.za