Notes to the consolidated statement of cash flows

Notes to the consolidated statement of cash flows

for the year ended 30 September

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            2015
Rm		       2014
Rm		 2013
Rm		   

A.

Cash generated from operations is calculated as follows:

               
   Profit before taxation – continuing operations        2 355        2 530  2 215    
   Profit before taxation – discontinued operation                 78  84    
   Adjustments for:                         
   Depreciation        2 355        2 208  1 960    
   Amortisation of intangible assets        129        142  136    
   Loss on disposal of plant and equipment and intangibles        42        26  6    
   Profit on disposal of properties and aircraft        (35)       (77) (12)   
   Loss/(profit) on disposal of subsidiaries and investments        4        (161)      
   Dividends received        (28)       (41) (50)   
   Interest received        (67)       (39) (28)   
   Finance costs        1 252        1 125  1 022    
   Fair value adjustments on financial instruments        192        159  54    
   Net impairment of assets and investments        37        302  94    
   IFRS 2 charge        331        104  184    
   Non-cash movement in provisions and valuation allowances        461        (64) 224    
   Other non-cash flow items        66        10  35    
   Operating cash flows before movements in working capital        7 094        6 302  5 924    
      Continuing operations        7 094        6 242  5 760    
      Discontinued operation                 60  164    
   (Increase)/decrease in working capital        (3 429)       (470) 539    
      (Increase)/decrease in inventories        (1 558)       (251) 17    
      Increase in receivables        (393)       (350) (176)   
      (Decrease)/increase in payables        (1 478)       131  698    
                             
   Cash generated from operations before investment in leasing and rental fleets        3 665        5 832  6 463    

B.

Net investment in leasing and rental fleets:

                
   Fleet leasing and equipment rental fleet        (1 847)       (2 143) (1 636)   
      Additions        (4 029)       (3 957) (3 362)   
      Proceeds on disposal        2 182        1 814  1 726    
   Vehicles rental fleet        (754)       (736) (572)   
      Additions        (3 276)       (2 795) (2 335)   
      Proceeds on disposal        2 522        2 059  1 763    
                             
   Net investment in leasing and rental fleets        (2 601)       (2 879) (2 208)   

C.

Taxation paid is reconciled to the amounts disclosed in the income statement as follows:

                
   Amounts unpaid less overpaid at beginning of year        (38)       (178) (210)   
   Per the income statement (excluding deferred taxation) – continuing operations        (680)       (788) (737)   
   Taxation expense (excluding deferred taxation) – discontinued operation                 (13) (38)   
   Adjustments in respect of subsidiaries acquired and sold including translation adjustments        (10)       (6) (14)   
   Amounts unpaid less overpaid at end of year        (42)       38  178    
   Cash amounts paid        (770)       (947) (821)   

D.

Acquisition of subsidiaries, investments and intangibles:

                
   Inventories acquired        (21)       (63) (218)   
   Receivables acquired        (41)       (5) (113)   
   Payables, taxation and deferred taxation acquired        61        36  138    
   Borrowings net of cash        62        30  353    
   Property, plant and equipment, non-current assets, goodwill and non-controlling interest        (97)       (100) (488)   
   Total net assets acquired        (36)       (101) (328)   
   Goodwill arising on acquisitions        (92)       (38) (37)   
   Intangibles arising on acquisition in terms of IFRS 3 Business Combinations        (34)       (42) (132)   
   Total purchase consideration        (162)       (181) (497)   
   Deemed disposal of associate at fair value on obtaining control        20                
   Net cash cost of subsidiaries acquired        (142)       (181) (497)   
   Bank balances and cash in subsidiaries acquired        6                
   Investment and intangible assets acquired        (505)       (142) (278)   
   Cash amounts paid to acquire subsidiaries, investments and intangibles        (641)       (323) (775)   
 

The goodwill of R92 million arising from the acquisitions consists largely of the synergies and economies of scale expected from integrating these operations into the existing business. None of the goodwill recognised is expected to be deductible for income tax purposes.

During the current financial year the following acquisitions were included in the total above:

Re Ethical Engineering (Pty) Limited

On 14 December 2012, Barloworld Logistics (Pty) Limited acquired 25.1% shareholding in Cyndara 96 (Pty) Limited. Effective 1 April 2015, Barloworld Logistics (Pty) Limited acquired the remaining 74.9% shareholding of the renamed, Re Ethical Engineering (Pty) Limited (“Re’’), resulting in 100% ownership of the entity. The company has subsequently been rebranded SmartMatta. The primary reason for gaining control of Re Ethical Engineering (Pty) Limited, was to provide an integrated solution and line of services to our customer base.

General Motors Ferndale

Barloworld South Africa (Pty) Limited acquired the net assets of General Motors Ferndale effective 1 December 2014. The primary reason for the acquisition was to expand the Motor Retail footprint.

Tronix

Zeda Car Leasing (Pty) Limited acquired the net assets of Tronix effective 1 February 2015. The primary reason for the acquisition was to enhance our fleet management systems through telematics.

Tanzuk Limited

Avis Southern Africa (Pty) Limited acquired a 100% shareholding in Tanzuk Limited, a fleet leasing business in Tanzania, effective 4 November 2014 for US$3.3 million. The primary reason for the acquisition was the expansion of the leasing operations into East Africa.

The group included revenue of R261 million and net profit after tax of R1 million, in relation to the above acquisitions. It estimated that if these acquisitions had been part of the group since the beginning of the financial year, they would have added R401 million to revenue and a net loss after tax of R4 million.

Toyota/Volkswagen Postmasburg

Subsequent to year end, Automotive Northern Cape acquired the net assets of the Toyota and Volkswagen dealerships in Postmasburg for R28 million, effective 31 October 2015.
            2015
Rm		       2014
Rm		 2013
Rm		   

E.

Proceeds on disposal of subsidiaries, investments and intangibles:

                
   Inventories disposed        147        826  90    
   Receivables disposed        71        160  182    
   Payables, taxation and deferred taxation balances disposed and settled        (55)       (384) (159)   
   Borrowings net of cash        (1)       (180) (56)   
   Property, plant and equipment, non-current assets, goodwill and intangibles        16        878  48    
   Net assets disposed        179        1 301  105    
   Less: Non-cash translation reserves realised on disposal of foreign subsidiaries        (127)       (413) (14)   
   Profit on disposal        10        456  14    
   Net cash proceeds on disposal of subsidiaries        62        1 343  105    
   Bank balances and cash in subsidiaries disposed        (2)       (44)      
   Proceeds on disposal of investments and intangibles        1        17       
   Cash proceeds on disposal of subsidiaries, investments and intangibles        61        1 316  105    
  The net cash proceeds on disposal of subsidiaries of R62 million relates to the disposal of Barloworld Logistics Spain operations in June 2015, Barloworld Logistics’ SAT Sea Air Transport GmbH operations in July 2015 as well as by Barloworld Handling’s Russian agriculture business in September 2015.