BARLOWORLD COVER 24415 22/11/01 9:58 AM Page 1 Barloworld Limited annual report 2001 an annual report about durability 20712101 1901 1931 1951 1971 1991 2011 2031 » » » » » 2001 Barloworld Limited annual report www.barloworld.com Andorra, Angola, Australia, Belgium, Botswana, Bulgaria, Canada, Cape Verde, Denmark, France, Germany, Guinea Bissau, Italy, Japan, Lesotho, Malawi, Mozambique, Namibia, Netherlands, Portugal, Russia, Saó Tome and Principé, Singapore, South Africa, Spain, Swaziland, Sweden, USA, United Kingdom, Zambia, Zimbabwe BARLOWORLD inside COVER 22/11/01 10:06 AM Page 1 copy to Shareholders’ diary come Financial year-end 30 September Annual general meeting January REPORTS AND PROFIT STATEMENTS Published: • Half-yearly interim report May • Preliminary report for the year November • Annual report November DIVIDENDS Declared: Paid: • 6% cumulative preference shares March April September October • Ordinary shares – interim May July – final November January • 7% convertible bond interest September one hundred years of doing things differently ........................... contents 2Highlights of 2001 4 Company profile 6 Ethics and the environment 7 The board of directors 8 Chairman’s review 12 Report of the CEO 16 Understanding value based management 17 Segmental overview 18 Operations review 34 Barloworld in the community 35 Corporate governance 40 Global management 42 Value added statement 43 Stock market information 44 Contents for financial statements 104 Notice of shareholders’ meeting 106 Corporate information Inside back cover Shareholders’ diary For more information on our company and our brands, contact Barloworld Corporate Communication. Telephone +27 11 445 1202 Fax +27 11 445 1550 E-mail [email protected]. GRAPHICOR 24415 Achieving durability in business through long-term value creation 1901 1902 1903 1904 1905 1906 our enduring 1907 1908 ..........global....................... company 1909 1910 We are an international industrial brand management company 1911 Our goal is to create value through leadership 1912 in every market in which we operate 1913 1914 1915 1916 1917 1918 1919 1920 Barloworld Limited annual report 2001 1 1923 1924 1925 1926 1927 1928 2001: Another1929 1930 year of progress1931 1932 2001 2000 % 2001 2000 % Rand Rand change US$ 1933US$ change Revenue (millions) 27 945 22 457 24 3 499 31934 380 4 Operating profit (millions) 1 487 1 155 29 186 174 7 Earnings per ordinary share from continuing 1935 operations excluding exceptional items (cents) (Fully diluted) 443,6 369,9 20 55,5 193655,7 – Headline earnings per share (cents) 499,0 383,7 30 62,5 193757,8 8 Dividends per ordinary share (cents) 220,0 180,0 22 27 27 Net asset value per share including investments 1938 at market value (cents) 4 700 4 081 15 522 561 Total assets (millions) 21 946 16 738 31 2 436 21939 302 Total borrowings to total shareholder funds – gross excluding leasing operations (%) 31,1 12,6 31,1 194012,6 Real cash flow return on investment (%) 8,3 6,7 8,3 19416,7 1942 1943 1944 Revenue Operating profit Earnings per share (excluding exceptional items) 30 000 1 600 500 450 ........... 1 400 25 000 400 1 200 350 20 000 1 000 300 15 000 800 250 Cents Rand million Rand million 200 600 10 000 150 400 100 5 000 200 50 0 0 0 99 00 01 99 00 01 99 00 01 2 Barloworld Limited annual report 2001 We continue our expansion strategy by building our brands and extending our geographic footprint Strong profit growth continues The figures on the facing page confirm that we have continued to defy sluggish trading conditions to produce a strong financial performance. Returns meet targeted cost of capital hurdle Two years ago we set ourselves the target of achieving a cash flow return on investment equal to a real cost of capital hurdle rate of 8% by September 2001. We have done it. Our success has been built on a relentless focus on Value Based Management throughout the company which is changing our business practices in countless numbers of ways, from macro strategic planning processes to micro outsourcing of non-strategic support services. R1 billion (US$109 million) invested in acquisitions We have continued our strategy to expand our geographic Barloworld is one of only four footprint and the brands we represent by making acquisitions. South African companies selected These acquisitions include: a Freightliner dealership in the south- for the prestigious Dow Jones east United States; four laboratory businesses in the United Global Sustainability Index in 2002. Visit www.sustainability- Kingdom and motor dealerships in Australia and South Africa. indexes.com. Since 30 September 2001 we have also launched a new business segment, Barloworld Logistics and, through listed subsidiary PPC, acquired the leading cement producer in Zimbabwe. Firm action taken on underperforming businesses We continue to restructure to ensure we deliver world-class performance and profitability. Major projects have included a significant rationalisation of our steel tube business and exiting unprofitable coatings joint ventures. Building a powerful Barloworld brand The rollout of the Barloworld brand into every business unit has been under way for one year and is on track for completion in 2002. The benefits of the new brand and the development of an integrated Barloworld are already being seen within the company and externally. Barloworld Limited annual report 2001 3 . .................. This is Barloworld Capital Equipment Industrial Distribution Motor Cement & Lime (4 664 employees) (3 319 employees) (4 730 employees) (2 870 employees) Caterpillar Hyster Audi, BMW, Chrysler, Ford, PPC* We are amongst the world’s leading Lift trucks Fiat, Holden, Isuzu, Kia, Caterpillar dealers. We are also one of the Where longest standing, having originally been We are the world’s largest independent lift Land Rover, Lexus, Mazda, South Africa, Botswana, Zimbabwe appointed a dealer in southern Africa in truck dealer offering our customers a full Mercedes, Mitsubishi, Nissan, operating primarily within domestic range of lift trucks and related 1927. Caterpillar is the world’s leading brand Subaru, Toyota, Volvo, markets with some exports in earthmoving machines, power systems and warehouse/handling equipment. We have related equipment. Caterpillar Inc. produces represented the market leading Hyster Volkswagen PPC Cement brand since 1929 and have leveraged the Surebuild, Suremix, Unicem over 200 different products in 19 categories We are a leading provider of compre- strength of the brand by leading the Cementitious products, ready-mix and ranging for example from 191 ton operating hensive transport solutions representing the weight wheel loaders to 4,5 ton compact market in the introduction of innovative aggregates, total solutions to customers materials world’s leading passenger, light, medium versions, and from power plants which can and heavy commercial vehicle brands. Customers provide electricity for whole towns to handling needs. Construction companies, retail DIY/builders portable generator sets. Where Where merchants and concrete product Dealerships in South Africa (56), Botswana Where South-east United States, United Kingdom manufacturers Dealer for Andorra, Angola, Botswana, and Belgium and Namibia. Fleet management, panel Bulgaria, Central Siberia, Guinea Bissau, shops and short-term truck hire. PPC Lime Customers Metallurgical grade lime, limestone, burnt Lesotho, Malawi, Mozambique, Namibia, Subaru distributor for southern Africa. Portugal, Principé Sao Tome, South Africa, Manufacturing and distribution industries dolomite and related products. Spain, Swaziland, Zambia and Zimbabwe. Freightliner Five dealerships in Melbourne, Australia Customers Customers Trucks Customers The pyro-metallurgical industries, mining Mining, construction, marine and electrical Where Corporate and private sector clients and water treatment industries power generation industries 12 dealer locations in Arkansas, Tennessee Avis Southern Africa Afripack Hyster and Mississippi, USA (26% investment) Paper and polyethelene sacks Lift trucks Customers Vehicle rental, fleet management and Customers Where Transport and distribution industries financial services Cement and food product manufacturers Dealer for southern Africa Ditch Witch * On 15 October Portland Holdings Customers Trenching equipment Manufacturing and distribution industries in Zimbabwe was acquired for the issue Where of cash and PPC shares, and the group’s Perkins Georgia, USA holding in PPC reduces to 63,4% from Diesel engines 68% at 30 September 2001. Where Customers Distributor for southern Africa Reticulation industries: telecommunications, power and water Customers Power generation in transport and Lamson agricultural industries Vacuum conveyance systems and floor maintenance equipment Ingersoll Rand Rotary blasthole mining drills Where UK-based manufacture of products Where for world markets. Dealer for southern Africa Customers Customers Open-cast mines Money and document conveyance markets, especially in the financial services sector Dezzi Articulated dump trucks Where Dealer for southern Africa Customers Mining and construction industries Bitelli Vibratory compactors Where Dealer for southern Africa Customers Civil construction companies Other brands Circon – power systems in southern Africa Flemingo – compressed air product rentals in southern Africa Mak – engines in Spain and Portugal Mitsubishi – lift truck dealer for Portugal 4 Barloworld Limited annual report 2001 ............................................................................................