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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:
    Group profile and where we operate This is Barloworld - Value added highlights - Value creation This is Barloworld - Statement of total value added This is Barloworld - Performance against key indicators Performance review against strategic focus areas - Sustainable development - Corporate Social Investment Financial returns - Summarised consolidated income statement Financial returns - Summarised notes to the consolidated financial statements - Salient features
    Consolidated Annual Financial Statements:
    Note 1 - Operating and geographical segments Note 19 - Revenue Note 20 - Operating profit Note 25 - Taxation Note 27 - Dividends
    STATEMENT OF TOTAL VALUE ADDED

    for the year ended 30 September 2015

    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: 19 745

    Revenue per employee: R3.1m down 3.47%

    Value created per employee: R790 010 down 1.68 %

      2015
    Rm    		   % 2014
    Rm    		   % 2013
    Rm    		   %  
    Revenue from continuing operations 62 720   62 101   59 498    
    Revenue from discontinued operations     2 783   5 508    
    Paid to suppliers for materials and services 47 554   49 389   51 019    
    Value added 15 166   15 494   13 987    
    Income from investments^ 382   297   263    
    Total value created 15 548   15 791   14 250    
      Value distribution              
    Employees (note 1) 8 955 58 9 103 58 8 605 60  
    Capital providers: 2 259 15 1 856 12 1 630 12  
    Finance costs 1 252   1 125   1 022    
    Dividends to Barloworld Limited shareholders 699   639   522    
    Dividends to non-controlling interest in subsidiaries 109   92   86    
    Strategic black partners and community groups 199            
    Government (note 2) 948 6 1 103 7 952 7  
    Communities (Corporate social investment) 17   17   17    
    Reinvested in the group to maintain and develop operations   3 369   21   3 712   23   3 047  21  
    Depreciation 2 355   2 208   1 960    
    Retained profit 1 142   1 556   1 080    
    Deferred taxation (  128)   (  52)   7    
                   
      15 548 100 15 791 100 14 250 100  
    Value added ratios              
    Number of employees (30 September) 19 745   19 616   19 692    
    Revenue per employee (Rand)# 3 186 911   3 301 297   3 339 631    
    alue created per employee (Rand)# 790 010   803 474   732 083    
    Corporate social investment - % of profit after taxation   1     1     1    
      Notes:              
    1. Employees              
    Salaries, wages, overtime payments, commissions,              
    bonuses and allowances** 7 780   7 673   7 068    
    Employer contributions + 1 175   1 204   1 071    
    Total continuing operations 8 955   8 877   8 140    
    Discontinued operations     226   465    
    Total group 8 955   9 103   8 605    
      2. Central and local government              
    Current taxation 770   947   821    
    Rates and taxes paid to local authorities 63   59   54    
    Customs duties, import surcharges and excise taxes   69     49     38    
    Skills development levy 46   48   39    
      948   1 103   952    
    ^ 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

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

    Integrated Report:
    Managing risk - Barloworld group top risks 2015 Managing risk - Risk heat map Sustainable development - Overview of environmental risk management and responses Sustainable development - Barloworld?s 2015 CDP Climate Change disclosure responses Sustainable development - Barloworld's 2015 CDP Water disclosure responses

    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 2015 and the CDPs Water 2015 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:
    Managing risk - Barloworld group top risks 2015 Managing risk - Risk heat map
    Consolidated Annual Financial Statements:
    Accounting policies - 15. Post employment benefit obligations Note 16 - Other non-current liabilities
    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 51% 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 20.3% 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 R800 million (2014: R677 million; 2013: R675 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:

      2015
    Rm    		 2014
    Rm    		 2013
    Rm
    Current service cost 3 2 2
    Plan administration expenses 17 24 17
    Change in RPI/CPI statutory index      
    Net (gain)/loss recognised in profit or loss (note 20) 20 26 19
    Net interest expenses 66 63 39
    Components of defined benefit costs recognised in (profit) or loss 86 88 58
    Actual return on plan assets 166 646 356

    The defined benefit scheme’s IAS 19 accounting valuation at 30 September 2015 reflected a deficit of R1 943 million (£93 million) which represents a decrease in the Sterling deficit compared to 2014 of R1 901 million (£104 million). The discount rate stayed consistent at 3.9% from 2014 to 2015, however, the asset returns underperformed but was offset by company recovery plan contribution of R318 million (£18 million).

    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 weakened towards the end of the financial year resulting in disappointing returns from the equity markets, strong returns were achieved in the bond markets.


  • 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.