Economic performance: EC1 - EC4

  • EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

    Integrated Report 2014:
    Consolidated Annual Financial Statements 2014:

    STATEMENT OF TOTAL VALUE ADDED

    for the year ended 30 September 2014

    A measure of the value created by the group is the amount of value added by its diverse manufacturing, distribution and other activities to the cost of raw materials, products and services purchased. This statement shows the total value created and how it was distributed.

    Number of employees: 19 616

    Revenue per employee: R3.3m down 1%

    Value created per employee: R803 474 up 10%

      2014
    Rm
    % 2013 *
    Rm
    % 2012 *
    Rm
    %  
    Revenue from continuing operations  62 101    59 498    53 415    
    Revenue from discontinued operation  2 783    5 508    5 047    
    Paid to suppliers for products and services
     49 389
       51 019    46 024    
    Value added  15 494    13 987    12 438    
    Income from investments^
      297
        263     247    
    Total value created
     15 791
       14 250    12 686    
    Value distribution              
    Employees (note 1)  9 103 58  8 605 60  7 685 61  
    Capital providers:  1 856 12  1 630 12  1 317 11  
    Finance costs
     1 125
       1 022     874    
    Dividends to Barloworld Limited shareholders
      639
        522     393    
    Dividends to non-controlling interest in subsidiaries
      92
        86     50    
    Government (note 2)  1 103 7   952 7   752 6  
    Communities (Corporate social investment)   17     17     17    
    Reinvested in the group to maintain and develop operations  3 712 23  3 047 21  2 914 23  
    Depreciation
     2 208
       1 960    1 806    
    Retained profit
     1 556
       1 080    1 320    
    Deferred taxation
    (52)
        7   (212)    
     
     15 791
    100  14 250 100  12 686 100  
    Value added ratios              
    Number of employees (30 September)  19 616    19 692    19 238    
    Revenue per employee (Rand)# 3 301 297   3 339 631   3 084 361    
    Value created per employee (Rand)# 803 474   732 083   669 297    
    Corporate social investment – % of profit after taxation, excluding exceptional items 1   1   1    
    Notes:              
    1. Employees              
    Salaries, wages, overtime payments, commissions, bonuses and allowances**  7 673    7 068    6 349    
    Employer contributions +
     1 204
       1 071     930    
    Total continuing operations  8 877    8 140    7 279    
    Discontinued operation
      226
        465     406    
    Total group
     9 103
       8 605    7 685    
    2. Central and local government              
    Current taxation   947     821     580    
    Rates and taxes paid to local authorities   59     54     60    
    Customs duties, import surcharges and excise taxes   49     38     76    
    Skills development levy
      48
        39     36    
     
     1 103
        952     752    
    ^ Includes interest received, dividend income and share of associate companies' and joint ventures' retained profit
    # Based on average number of employees
    ** Represents the gross amounts paid to employees including taxes payable by the employees
    + In respect of pension funds, retirement annuities, provident funds, medical aid and insurance
    * Restated for the treatment of IFRS 10, IAS 19 and discontinued operation – refer to note 34

  • EC2 Financial implications and other risks and opportunities for the organisation's activities due to climate change.

    Integrated Report 2014:

    Barloworld has identified risks and opportunities associated with climate change and financial implications thereof. These, together with the group's responses to the identified risks and opportunities, are disclosed in its responses to the CDPs Climate Change 2014 and the CDPs Water 2014 disclosures which can be viewed at www.barloworld.com. In identifying sustainable development as a strategic focus area, the group acknowledges the significance of such risks and opportunities and includes these in its strategic planning process and operational plans.

    Given Barloworld's reliance on motor vehicles, plant and equipment (currently predominantly fossil fuel based technologies) as a core part of our business, these risks could be significant, potentially contributing to an increased cost base and decreased revenue. There are also opportunities for competitive products and solutions with reduced carbon footprints (For more detail see also EN6, EN7, EN8).
  • EC3 Coverage of the organisation's defined benefit plan obligations.

    Integrated Report 2014:

    Retirement benefit information

    It is the policy of the group to encourage, facilitate and contribute to the provision of retirement benefits for all permanent employees. To this end, the group's permanent employees are usually required to be members of either a pension or provident fund, depending on their preference and local legal requirements.

    Altogether 54% of employees belong to one defined benefit and nine defined contribution retirement funds in which group employment is a prerequisite for membership. Of these, the defined benefit and five defined contribution funds are located outside South Africa and accordingly are not subject to the provisions of the Pension Funds Act of 1956. Altogether 21% of employees belong to defined contribution funds associated with industry or employee organisations.

    Defined contribution plans

    The total cost charged to profit or loss of R564 million (2013: R675 million; 2012: R541 million) represents contributions payable to these schemes by the group at rates specified in the rules of the schemes (note 20).

    Defined benefit plans

    The Group sponsors a funded defined benefit scheme for qualifying employees in the UK.

    The defined benefit scheme is administered by a board of trustees that is legally separated from the entity and the assets are held separately in trust for the benefit of the scheme members. The board of the pension scheme is composed of three employer representatives, two employee representatives and one independent trustee. The trustee board is required by trust and pension law and by its articles of association to act in the interests of the scheme and of all relevant stakeholders in the scheme, i.e., current employees, former employees, retirees, and dependants. The trustee board is responsible for the investment policy with regard to the assets of the scheme.

    The scheme exposes the Company to a number of risks, the most significant of which are:

    Changes in bond yields
    Asset volatility
    Inflation risk
    Effectively managing our long-term relationships with global principals and customers.

    The pension costs relating to the defined benefit scheme are assessed in accordance with the advice of an independent qualified actuary who values the scheme using the projected unit valuation approach under which the current service cost as a percentage of active members' salaries is expected to increase, but in monetary terms a decrease is anticipated as the number of members fall. Contributions made by the UK subsidiary companies to the defined benefit scheme are charged to the profit and loss account so as to spread the cost of the pensions over the employees' expected working lives with the group.

    Amounts recognised in the income statement in respect of defined benefit schemes are as follows:

     
    2014
    Rm
    2013
    Rm
    2012
    Rm
     
    Current service cost 2 2 18  
    Plan administration expenses 24 17 16  
    Change in RPI/CPI statutory index      (131)  
    Net (gain)/loss recognised in profit or loss (note 20) 26 19 (97)  
    Net interest expenses
    63
    39 47  
    Components of defined benefit costs recognised in (profit) or loss
    88
    58 (50)  
    Actual return on plan assets
    646
    356 684  

    The defined benefit scheme's IAS 19 accounting valuation at 30 September 2014 reflected a deficit of R1 901 million (104 million) which represents an increase compared to the deficit in 2013 of R1 309 million (80 million), due to changes in assumptions used to measure the liabilities. The reduced discount rate was partially offset by above expectation return on assets, company recovery plan contribution of R279 million (15.5 million) and a slightly reduced inflation rate. The prior year deficit has been restated (reduced) to reflect the amendments to IAS 19.

    The Trustees carry out a strategic investment review following completion of each triennial valuation to ensure that the assets are managed in a manner appropriate to the nature and duration of the expected future retirement benefits payable under the Scheme. The Trustees and the Company are actively considering mechanisms to reduce risk in the Scheme. During 2013 a bulk annuity was acquired in respect of a category of pensioners, which was structured as a buy-in. This was funded through the sale of government gilts and a special contribution by the company of 3.0 million.

    The defined benefit scheme's assets consist primarily of equity (local and offshore), insurance annuities and corporate bonds. The markets had a good year resulting in very strong returns on assets in both the equity and bond markets.

    A recovery plan was negotiated in 2014 with the trustees resulting in special contributions of 12 million in 2014 and 18 million to be paid in 2015. In addition annual contributions will be increased to 5 million per annum (commencing April 2015) for ten years.

    The total estimated contributions to be paid to the defined benefit scheme during the next financial year amount to 23 million, including contributions made in terms of the recovery plan.


  • EC4 Significant financial assistance received from government.

    No significant financial assistance was received from government. If any, assistance is generally applicable in terms of legislation and across the relevant industries. It is principally in the context of training allowances and reimbursements from government such as Sector Educational Training Authorities (SETAs) in South Africa, training subsidies in Spain and Portugal, or various allowances under taxation legislation.