B/WORLD AR Front 36989
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OUR BUSINESS PHILOSOPHY The Barloworld group will comprise businesses that fit a common strategic profile, meet strict performance criteria and demonstrate good growth prospects STRATEGIC PROFILE The future Barloworld organisation will incorporate the following defining characteristics and competencies: • Provision of flexible, value adding, integrated customer solutions in the following business segments: – Earthmoving and power systems (equipment) – Vehicle usage (automotive) – Materials handling (handling) – Logistics management and supply chain optimisation (logistics) • Representation of leading global brands A distributor of leading supported by Barloworld service excellence international brands • Effective management of long-term providing integrated relationships with global principals and customers rental, fleet management, • Ability to develop and grow businesses product support and in multiple geographies including logistics solutions challenging territories with high growth prospects • Ability to leverage core competencies, systems and best practices across chosen business segments • Commitment to lead in empowerment and transformation ANNUAL REPORT 2007 CONTENTS VISION Barloworld today is a focused 1 Financial highlights 2 Company structure To be a recognised global market 3 Barloworld today leader in the provision of integrated multinational corporation with 4 Operational highlights 5 Global footprint solutions in distribution, rental, fleet 6 Strategic framework management, product support and revenues exceeding R43 billion. 8 Chairman’s review 14 Chief executive’s report logistics to customers in our chosen 20 Finance director’s review business segments. It comprises operations with a Review of operations 26 Equipment common strategic profile that 40 Automotive CODE OF ETHICS 50 Handling 60 Logistics • Obey the law collectively meet exacting 68 Corporate and other • Respect others Non-core operations • Be fair performance standards. 70 Coatings • Be honest 74 Cement 76 Scientific • Protect the environment Barloworld is driven by the 78 Corporate governance 80 Board of directors maxim of creating sustainable 105 Sustainability report 142 Value added statement 144 Pro forma results for restructured value for all its stakeholders. Barloworld 146 Limited assurance report on pro forma financial information The group offers its global Annual financial statements 148 Directors’ responsibilities and approval customer base integrated 148 Certificate by secretary 149 Report of the independent auditors 150 Directors’ report business solutions backed by 152 Accounting policies 163 Definitions of financial terms 168 Consolidated seven-year summary 176 Consolidated summary in leading international brands. other currencies 178 Consolidated balance sheet 179 Consolidated income statement 180 Consolidated cash flow statement 183 Consolidated statement of recognised income and expense 184 Notes to the consolidated annual financial statements 256 Company financial statements 256 Company balance sheet 256 Company income statement 257 Company cash flow statement 258 Company statement of recognised income and expense 259 Notes to the company annual financial statements 269 GRI index 277 Letter from the chairman 278 Questions form for annual general meeting 279 Shareholders’ diary 280 Notice of annual general meeting notice 283 Proxy form 284 Notes to the form of proxy IBC Corporate information FINANCIAL HIGHLIGHTS Revenue from continuing operations up 23% to R43 238 million Trading profit up 33% Operating profit from continuing operations up 24% to R2 741 million financial Headline earnings per share highlights – from continuing operations up 13% – from continuing operations up 21% (excluding STC on special dividend) Strategic actions completed ahead of schedule Significant shareholder value unlocked – Special dividend of R1 billion (R5 per share) paid – R19,3 billion distribution of PPC shares to shareholders Total shareholder return in 2007 at 79% OPERATING MARGIN – continuing operations (%) 7 6 5 4 3 2 1 0 01 02 03 04 05 06 07 HEADLINE EARNINGS PER SHARE – continuing operations (cents) 800 700 600 500 400 300 200 100 0 01 02 03 04 05 06 07 GEOGRAPHICAL ANALYSIS (%) 100 90 80 70 60 50 40 30 20 10 Southern Africa 0 Rest of world 06 07 0607 06 07 Revenue Operating profit Net operating assets 2007 Annual Report | Barloworld Limited | 1 COMPANY STRUCTURE (Prior to restructuring) 100% 100% 100% 100% Equipment Motor Industrial distribution Logistics 100% 71.7% 100% 100% Coatings Cement Scientific Steel Tube 2| Barloworld Limited | 2007 Annual Report COMPANY STRUCTURE (Post restructuring) 100% 100% 100% 100% Equipment Automotive Handling Logistics ...refer to ...refer to ...refer to ...refer to page 26 for page 40 for page 52 for page 60 for operational operational operational operational review review review review Motor division name changed to automotive with effect from 1 October 2007. Industrial distribution division name changed to handling with effect from 1 November 2007. BARLOWORLD TODAY CORE BUSINESSES DESCRIPTION OF BUSINESS Barloworld Equipment celebrated 80 years in partnership with Caterpillar in 2007. We supply Caterpillar equipment and support to customers in 11 countries in southern Africa Equipment (South Africa, Namibia, Botswana, Angola, Zambia, Zimbabwe, Malawi, Mozambique, the DRC, Lesotho and Swaziland) and in Siberia, Spain and Portugal, Andorra, Sao Tomé and Principé. Complementary brands also represented by the equipment division include, among others, MaK (Spain) and Perkins engines (both Caterpillar subsidiaries), Mitsubishi lift trucks (Portugal), rotary blasthole drilling equipment from Atlas Copco, and Metso mobile crushing and screening plants (southern Africa). Barloworld Equipment provides customers in mining, construction, marine, electrical power generation and other industries with integrated solutions that include new, used and rental equipment options, linked to equipment management plans designed to improve productivity and lower operating costs. Facilities throughout the division’s territories offer world-class customer support, and in-house skills development produces focused and dedicated staff. Barloworld Automotive provides a range of integrated motor vehicle usage solutions through the successful operation of complementary business units. Automotive Motor retail operates leading motor vehicle franchise dealerships in South Africa representing passenger, light, medium and heavy commercial brands. Also included are coachwork repair centres, motor vehicle finance, insurance and related products and services. In Botswana and Australia passenger and light commercial brands are represented and motor vehicle finance, insurance and related products and services are provided. Botswana and South Africa operations also represent tractor brands. We are the sole importer and distributor of Subaru vehicles in southern Africa. Car rental operates Avis short-term car rental throughout southern Africa, and Avis and Budget short-term car rental in Denmark, Norway and Sweden. Fleet services provides long-term rental and value-added services to operators of passenger and commercial vehicles in South Africa, Botswana, Mozambique, Namibia, Lesotho and Swaziland under the Avis brand. Barloworld Handling is the world’s largest independent Hyster lift truck dealer offering our customers a full range of lift trucks and warehouse/handling equipment in the south-east Handling United States of America, United Kingdom, including Northern Ireland, the Netherlands, Belgium and South Africa. We have represented the market-leading Hyster brand for 78 years and have leveraged the strength of the brand by leading the market in the introduction of innovative solutions for our manufacturing and distribution industry customers’ materials handling needs. From 1 October 2007 the division will include the group’s agriculture business distributing the Massey Ferguson, Claas and Geringhoff brands in South Africa. Formed by the combination of logistics operations in PPC and Barloworld Automotive during 2002, Barloworld Logistics has grown into one of the leading logistics and supply chain management businesses in southern Africa with complementary operations in Iberia, the Logistics United Kingdom, United States of America and United Arab Emirates. The division has a staff complement of 1 700 and approximately R5 billion annual logistics activity under management. The combined effects of globalisation and technology have made the logistics industry one of the most exciting and dynamic industries. Technology has enabled the integration of previously independent logistics functions leading to increased productivity and the concept of managing a chain of interrelated logistics activities, ie supply chain management. Whilst Barloworld Logistics offers traditional logistics services such as transportation, warehousing and freight forwarding, we create unique value for our clients through a more holistic approach to supply chain management and skilful integration of the various logistics components in a typical supply chain. The ultimate benefit for our clients is that we help them deliver better service to their customers at lower cost. NON-CORE BUSINESSES* Coatings . refer to page 70 for operational review Cement . refer to page 74 for operational review Scientific . refer to page 76 for operational review Steel tube (sold effective November 2006) * These have been or are in the process of being unbundled from the group or sold. 2007