Director's report
NATURE OF BUSINESS
Barloworld Limited (“Barloworld” or “Company”) is a registered holding Company for a Group that is a distributor of leading international brands providing integrated rental, fleet management, product support and logistics solutions. Barloworld comprises businesses that fit the strategic profile above, meet strict performance criteria and demonstrate good growth potential. Barloworld maintains a primary listing on the main board of the JSE Limited. The Company also has secondary listings on the London and Namibia stock exchanges. The core divisions of the Group comprise: Equipment (earthmoving and power systems); Automotive (car rental, motor retail, fleet services, used vehicles and disposal solutions); Logistics (logistics management and supply chain optimisation); and Corporate Office (Group headquarters and treasury in Johannesburg, the treasury in Maidenhead (United Kingdom) and a captive insurance company in the Isle of Man).
FINANCIAL RESULTS
The following commentary reflects results from continuing operations. Revenue of R49.7 billion (2019: 60.2 billion) was down 17% from the prior year. Operating profit for the Group was down 54.0% to R1.8 billion (2019: R3.9 billion). Total Headline Loss Per Share of 270 was 1 370 cents below the Total Headline Earnings Per Share of 1 100 in the prior year. Net cash outflow before financing activities was R552 million compared to the inflow of R2 billion in the prior year.
SHARE CAPITAL
The authorised share capital as at 30 September 2020: 400 000 000 ordinary par value shares of R0.05 each. 500 000,6% cumulative preference shares of R2 each. The issued share capital as at 30 September 2020: 201 025 646 ordinary par value shares of R0.05 each. 375 000,6% cumulative preference shares of R2 each. At the general meeting held on 14 February 2019, the Groups' B-BBEE transaction Khula Sizwe was approved. During the year, 6 578 121 shares were issued to the Barloworld Empowerment Foundation. During the year, 18 245 058 shares were repurchased and cancelled as part of the Group's formal buy-back programme.
MAJOR SHAREHOLDERS
Shareholders holding beneficially, directly or indirectly, in excess of 3% of the issued share capital of the Company at 30 September 2020 is detailed in the Integrated Report
DIVIDENDS
Barloworld has met its solvency and liquidity obligations and given the current market conditions the board has taken the important precautionary measure not to declare a final dividend payment for the year ended 30 September 2020.
CHANGES IN DIRECTORATE AND EXECUTIVE MANAGEMENT
Advocate Dumisa Ntsebeza SC, who was appointed to the board in May 1999 and as chairman of the board in June 2007, retired as a director and an independent chairman of Barloworld immediately after the Annual General Meeting held on 12 February 2020. Mrs. Neo Dongwana, who joined the board in May 2012, succeeded Advocate Dumisa Ntsebeza SC as the chairperson of the board with effect from 13 February 2020. The board wishes to thank the chairman, as well as the executive- and non-executive directors for their valuable contribution to the Company. The board welcomes the new chairperson.
COMPANY SECRETARY AND REGISTERED OFFICE
The Company secretary is Ms Andiswa Ndoni and her business address and that of the registered office appear on the inside back cover.
AUDITORS
Ernst & Young (EY), in a shared audit arrangement with SizweNtsalubaGobodo-Grant Thornton (SNG-GT) were appointed as auditors for the Company and its significant subsidiaries for financial year 2020.
At the AGM, shareholders were requested to appoint Ernst & Young as the registered independent external auditors of Barloworld Limited for the 2020 financial year and to confirm Mr S Sithebe, as the lead independent external auditor. The shareholders approved the request.
ACQUISITIONS AND DISPOSALS
Effective 1 September 2020, Barloworld Mongolia Limited, an indirect wholly-owned subsidiary of Barloworld Limited, was awarded the Caterpillar distribution rights for Mongolia and acquired 100% of Wagner Asia Equipment LLC and a 49% share in SGMS LLC.
Our Caterpillar business in Mongolia is engaged in the business of selling and distributing construction and mining equipment, aftermarket and technology solutions as well as rental solutions under the Caterpillar brand. This will enhance the expansion of the Barloworld Group in the mineral rich Eurasia region.
GOING CONCERN
The directors consider that the Group entities and Company have adequate resources to continue operating for the foreseeable future and that it is therefore appropriate to adopt the going-concern basis in preparing the consolidated and separate financial statements. The directors have satisfied themselves that the Group entities and Company are in a sound financial position and that they have access to sufficient borrowing facilities to meet foreseeable cash requirements.
EVENTS AFTER THE REPORTING PERIOD
Barloworld entered into a Sale and Purchase Agreement ("SPA") with Tongaat Hulett Limited ("THL") on 28 February 2020 to acquire the Tongaat Hulett Starch business. The transaction was completed on 31 October 2020, being the transaction effective date. This purchase is done through Barloworld's wholly-owned subsidiary, KLL Group (Pty) Limited, which will hold the shares in Ingrain SA (Pty) Limited ("Ingrain").
Barloworld acquired Ingrain, being a different business to its existing business portfolio, to balance out the seasonality of its existing business to deliver a consistent return to shareholders.
The impact of COVID-19 has been considered up to 30 September 2020. Subsequent to year-end there have been no significant changes in the COVID-19 restrictions impacting our businesses and thus no subsequent events related to the COVID-19 crisis have occurred.
To the knowledge of the directors no further material events have occurred between the reporting date and the date of approval of these financial statements that would affect the ability of the users of the financial statements to make proper evaluations and decisions.