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Barloworld Limited

Barloworld Limited. Reviewed interim results for the six months ended 31 March 2004. Barloworld is an international industrial brand management company. 24 000 people ........... in 33 countries providing business solutions

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Barloworld Limited

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  1. BarloworldLimited Reviewed interim results for the six months ended 31 March 2004

  2. Barloworld is an international industrial brand management company 24 000 people ........... in 33 countries providing business solutions through leading industrial brands, supported by service, relationships and attention to detail to make our customers’ businesses excel

  3. In November 2003 we said: “The company is in great shape and we look forward to making further progress in 2004.”

  4. H1 04 results: rand highlights Rand revenues down 2% Operating margins increase to 6.8% SA 65% of segmental profits (2003: 41%) Operating cash flows up 48% HEPS up 77% to 374 cents * See P5 of announcement for definition of Segment Result

  5. Revenue up 8% in constant currency terms * For this constant currency analysis H1 03 numbers in all regions except South Africa and Rest of Africa have been restated at the equivalent exchange rate used to translate the H1 04 numbers.

  6. Constant currency segment results up 49% * See P5 of announcement for definition of Segment Result. For this constant currency analysis H1 03 numbers in all regions except South Africa and Rest of Africa have been restated at the equivalent exchange rate used to translate the H1 04 numbers.

  7. Operational highlights • Equipment: Spain powers on • Industrial Distribution: US sales grow strongly with market • Motor: restructuring in full swing • Cement and Lime: efficiency improvements take full advantage of record cement demand • Coatings: margin growth especially in South Africa • Scientific: turnaround at Melles Griot

  8. Acquisitive growth • Adding more of what we have • Avis Southern Africa (34.7% to 100%) • PPC shares (67.4% to 70.1%) • Adding territory • Texarkana Truck Center (US, Freightliner) • Geveke Intern Transport BV (Netherlands, Handling) • Expanding business solutions • ZA Trans (South Africa, Logistics)

  9. Disposals and restructuring for value • During the year: • Three motor dealerships in manufacturer rationalisation/BEE • Henry Cooke paper business • Melles Griot Ely facility • Still to be finalised: • SA Equipment Leasing Book to WesBank • 75% of Afripack to BEE consortium

  10. Financial review Clive Thomson Finance Director

  11. H1 04: Income statement – key issues

  12. Strong rand impacts profit translation Impact of translation of offshore profits on HEPS estimated at 16 cents

  13. Comparative impact of financial instrument adjustments * Realised component for H1 04 = R15 million

  14. 10.57 Fair value adjustments= (R313m) 7.89 Rand appreciation = 25% H1 03: 25% rand appreciation v US$ drives negative fair value adjustments

  15. Fair value adjustments= (R57m) 6.96 6.29 Rand appreciation = 9% H1 04: less appreciation and greater volatility

  16. Taxation rate analysis

  17. Exceptional items

  18. Balance sheet: March 31 2004 reflects 100% consolidation of Avis • Total assets employed up R5 089m • Avis acquisition and goodwill arising • Borrowings up R4 084m • R2 028m interest bearing debt in Avis • R1 085m cash portion of Avis acquisition • Balance primarily other acquisitions and leasing/rental growth • Gearing targets reviewed post Avis transaction

  19. Segmentation for gearing analysis Gearing Segmentation Trading manufacturing / dealership operations Leasing long-term leasing solutions including pure asset finance and long-term rentals with maintenance (+ Avis Fleet Services) Car Rental short-term hire of vehicles (+ Avis Rent A Car)

  20. Revised gearing targets and actuals post Avis acquisition * R1 085 million acquisition debt allocated between Fleet services and Rent A Car in proportion to equity • Group target depends on asset mix between the three segments • Sale of Equipment Finance book projected to reduce group ratio by 13 percentage points

  21. Interest cover significantly improved

  22. Cash flow highlights • Strong cash generated from operations of R1 472m (2003: R994m) • Dividends paid R596m (2003: R711m) • Net cash applied to investing activities of R2 255 m (2003: R1 305m): • Cash element of Avis acquisition (R1 085 m) • Lease receivables/rental assets investment R623m (2003: R981m) • PPC shares (R189m) • Proceeds on disposals R184m • 31 March 04 cash & cash equivalents R1 637m (2003: R1 547m)

  23. Operations review Tony Phillips CEO

  24. Equipment: Spain maintains and market share grows in Africa • Spain continues high plateau • Portugal turnaround • Siberia profitable • SA market share gains • SA leasing book being sold into Smart Partnership * See P5 of announcement for definition of Segment Result. For this constant currency analysis H1 03 numbers in all regions except South Africa have been restated at the equivalent exchange rate used to translate the H1 04 numbers.

  25. Equipment: southern African market positive

  26. Equipment: order book still strong * For this constant currency analysis H1 03 numbers in Europe have been restated at the equivalent exchange rate used to translate the H1 04 numbers.

  27. Industrial Distribution: accelerating • Europe • Revenues rise due to Geveke acquisition • Strong order book • US • Lift truck vols match H1 03 and order book strong • Freightliner vols treble • US$2.9m write off in leasing book * See P5 of announcement for definition of Segment Result. For this constant currency analysis H1 03 numbers in all regions except South Africa have been restated at the equivalent exchange rate used to translate the H1 04 numbers.

  28. Industrial Distribution: lift truck order book strong NB – growth cannot be projected into a volume forecast as these are “spot” numbers

  29. Industrial Distribution: Freightliner order book still growing NB – growth cannot be projected into a volume forecast as these are “spot” numbers

  30. Motor: business in transition • SA • Good performance from smaller business • Australia • Demand up • Results affected by facility rebuild • Rest of Africa • Corrective action on under performance • Associates • 100% Avis assets reflected but only 35% of income * See P5 of announcement for definition of Segment Result. For this constant currency analysis H1 03 numbers in all regions except South Africa and Rest of Africa have been restated at the equivalent exchange rate used to translate the H1 04 numbers.

  31. Motor: SA motor demand up 13.9% year on year but only 7.7% from 2002

  32. Motor: Avis H1 04 key performance indicators • Rent A Car Southern Africa • Market share maintained at ± 40% • Rental days up 3% to 1.79m • Fleet of 12 455 vehicles (2003: 12 804) • Rent A Car Scandinavia • Total rental days up 10% to 0.61m • Fleet of 4 880 vehicles (2003: 4 565) • Fleet Services Southern Africa • Vehicles on balance sheet 14 995 (14 577) • Vehicles under maintenance contracts 16 950 (11 859)

  33. Cement and Lime: impressive performance • Strong domestic cement demand (+15%) and further efficiency improvements • Zimbabwe de-consolidated • Lime demand lower * See P5 of announcement for definition of Segment Result.

  34. Cement and Lime: SA cementitious demand stronger than anticipated

  35. Coatings: good result • Efficiency improvements in all territories • SA • Strong decorative demand • Rest of Africa • matched H1 03 • Australia • buoyant market * See P5 of announcement for definition of Segment Result. For this constant currency analysis H1 03 numbers in all regions except South Africa and Rest of Africa have been restated at the equivalent exchange rate used to translate the H1 04 numbers.

  36. Scientific: on track for solid H2 turnaround • Europe • Weak Q1 Laboratory demand recovers in Q2 • Restructuring costs • Melles Griot Ely sold • US • Laser and optics market upturn • Benefits flow from restructuring * See P5 of announcement for definition of Segment Result. For this constant currency analysis H1 03 numbers in all regions have been restated at the equivalent exchange rate used to translate the H1 04 numbers.

  37. Steel Tube: set for H2 recovery • Depressed projects demand • Mining • Exporters • Low export margins • Signs of a domestic upturn * See P5 of announcement for definition of Segment Result.

  38. Corporate Operations and Other • South Africa • Gain on fair value adjustments • Good progress in Logistics business development • Europe • ₤3m charge for UK pension fund deficits * See P5 of announcement for definition of Segment Result. For this constant currency analysis H1 03 numbers in all regions except South Africa and Rest of Africa have been restated at the equivalent exchange rate used to translate the H1 04 numbers.

  39. Short term - excellent prospects for FY 04: VBM will enhance benefit of better markets

  40. VBM-driven “quality of business” improvements ongoing Shareholders Community Customers Employees Medium-term: VBM foundation to structured value creation growth strategy Add complementary brands 2x4x4 Expand existing and new business solutions and Smart Partnerships More of the same in new geographies

  41. “The outlook for the full year is excellent.” www.barloworld.com

  42. IAS39/21 group impact

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