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Notes to the company annual financial statements

for the year ended 30 September

1. Accounting policies          
  Refer to group accounting policies          
             
        Cost Accumulated
depreciation
and impairments		 Net
book
value
       
       
        Rm Rm Rm
2. Property, plant and equipment          
  2009          
  Freehold land and buildings     492 52 440
  Investment property     11 6 5
  Equipment, vehicles and furniture     13 9 4
        516 67 449
  2008          
  Freehold land and buildings     302 45 257
  Investment property     11 6 5
  Equipment, vehicles and furniture     13 8 5
        326 59 267
  2007          
  Freehold land and buildings     150 30 120
  Equipment, vehicles, aircraft and furniture     245 129 116
        395 159 236
  Less: Assets held for sale reflected under current assets     (198) (94) (104)
        197 65 132
  There are no assets encumbered.

The insurable value of the company’s property, plant and equipment as at 30 September 2009 amounted to R564 million (2008: R379 million; 2007: R249 million).This is basedon the cost of  replacement of such assets, except for motor vehicles and certain selected assets, which are included at estimated retail value.
             
    Freehold land
and
buildings		 Investment
properties		 Equipment
and
furniture		 Vehicles Total
   
    Rm Rm Rm Rm Rm
  Movement of property, plant and equipment          
  2009          
  Net balance at 1 October 2008 257 5 5   267
  Additions 190       190
    447 5 5   457
  Depreciation (note 16) (7)   (1)   (8)
  Net balance at 30 September 2009 440 5 4   449
  Balance reflected as property, plant and equipment 440 5 4   449
  2008          
  Net balance at 1 October 2007 121   10 1 132
  Additions 139 5 2   146
    260 5 12 1 278
  Disposals     (3) (1) (4)
  Depreciation (note 16) (3)   (4)   (7)
  Net balance at 30 September 2008 257 5 5 0 267
  Balance reflected as property, plant and equipment 257 5 5 0 267
  Net balance at 1 October 2006   104 15 155 274
  Additions   19 1 1 21
      123 16 156 295
  Disposals     (1) (1) (2)
  Depreciation (note 16)   (2) (5) (13) (20)
  Impairment (note 16)       (37) (37)
  Net balance at 30 September 2007   121 10 105 236
  Less: Assets held for sale reflected under current assets       (104) (104)
  Balance reflected as property, plant and equipment   121 10 1 132
  The register of land and buildings is open for inspection at the registered office of the company.
          Patents  
          trademarks Total
        Capitalised and develop- intangible
        software ment costs assets
        Rm Rm Rm
3. Intangible assets          
  2009          
  Cost          
  At 1 October     7 37 44
  Additions     1   1
  At 30 September     8 37 45
  Accumulated amortisation          
  At 1 October     6 15 21
  Charge for the year (note 16)       2 2
  At 30 September     6 17 23
  Carrying amount          
  At 30 September     2 20 22
  2008          
  Cost          
  At 1 October     6 37 43
  Additions     3   3
  Disposals     (2)   (2)
  At 30 September     7 37 44
  Accumulated amortisation          
  At 1 October     6 13 19
  Charge for the year (note 16)       2 2
  At 30 September     6 15 21
  Carrying amount          
  At 30 September     1 22 23
  2007          
  Cost          
  At 1 October     6 37 43
  At 30 September     6 37 43
  Accumulated amortisation          
  At 1 October     5 11 16
  Charge for the year (note 16)     1 2 3
  At 30 September     6 13 19
  Carrying amount          
  At 30 September     0 24 24
        2009 2008 2007
        Rm Rm Rm
4. Long-term financial assets          
  Interest in subsidiaries          
  Opening balance         10 675
  Prior year adjustment         (1 006)
  Interest in subsidiaries     13 553 8 805 9 669
  Unlisted investments     5 5 5
  Other derivatives     3 27 29
  Barloworld Share Purchase Scheme#         28
        13 561 8 837 9 731
  Interest in subsidiaries          
  Shares as originally stated (group note 37)     530 531 3 319
  Amounts owing by subsidiaries (group note 37)     13 315 8 398 7 733
        13 845 8 929 11 052
  Amounts owing to subsidiaries (group note 37)     (292) (124) (1 383)
        13 553 8 805 9 669
  Fair value of unlisted investments – directors’ valuation     5 5 5
 

# Barloworld Share Purchase Scheme
Loans to executive directors  for the purchaseof shares amounts to R5.2 million(2008: R7.7 million, 2007: R8.6  million).In 2009 and 2008 these loans were granted by Barloworld South Africa (Pty) Limited, a subsidiary of Barloworld Limited. The loans are secured by pledge of the shares and are repayable within 10 years of granting of the option or within nine months of death or immediately on ceasing to be an employee, exceptin the case of retirement. Interest rates vary in accordancewiththe terms and provisions of the trust deed and range from 8% to 12% (2008: 8.85% to 12%, 2007: 4.39% to 10%).
        2009 2008 2007
        Rm Rm Rm
5. Deferred taxation assets          
  Movement of deferred taxation          
  Balance at beginning of year     15 2 99
  Recognised in income statement     48 13 (97)
  Other movements     2    
  Balance at end of the year     65 15 2
  Analysis of deferred taxation by type of temporary difference          
  Capital allowances         (25)
  Provisions      2 15 16
  Effect of tax losses     43   8
  Other temporary differences     20   3
        65 15 2
  Amount of deferred tax recognised in the income statement          
  Capital allowances         4
  Provisions     2   5
  Effect of  tax losses     28 15 (101)
  Other temporary differences     18   (5)
        48 15 (97)
6. Trade and other receivables          
  Other receivables and prepayments     4 42 45
7. Cash and cash equivalents          
  Cash and cash equivalent balances (South African rand)         6
8. Assets classified as held for sale          
  Property, plant and equipment         104
  During 2007 the company decided to sell its two aircrafts and classified them for in the 2008 financial year.      
9. Share capital and premium          
  Authorised share capital          
  500 000 6% non-redeemable cumulative preference shares of R2 each     1 1 1
  300 000 000 ordinary shares of 5 cents each.     15 15 15
        16 16 16
  Issued share capital          
  375 000 6% non-redeemable cumulative preference shares of R2 each (2008: 375 000, 2007: 375 000) 1 1 1
  227 440 494 ordinary shares of 5 cents each (2008: 226 878 609, 2007: 203 843 388) 11 11 10
        12 12 11
  Share premium:     37 28 0
  Balance at beginning of year     28 0 104
  Premium on share issues     11 23 139
 

Premium on non-executive directors trust BEE share issues

       9  
  BEE equity expenses     (2) (3)  
  Premium utilised for payment of distribution         (226)
  Premium utilised for Coatings unbundling       (1)  
  Premium utilised for PPC unbundling         (17)
             
  Total issued share capital and premium     49 40 11
  For further information refer to note 13 in the consolidated financial statements.
        2009 2008 2007
        Rm Rm Rm
10. Interest-bearing liabilities          
  Total South African rand: interest-bearing     3 578 2 775 1 576
  Of this amount R1 553 million represents the issue of a corporate bond in July 2004, which is listed on the South African Bond Exchange under the code BAW1. The bond matures in July 2011 and carries a fixed coupon rate of 10.7% per annum which represents a premium of 112 basis points above the comparable Treasury stock R153 at the time of issue. Fifty percent of the interest was converted to short-term rates through the conclusion of an interest rate swap in 2004. During 2005, a fixed interest rate swap agreement was entered into. Interest is paid at 7.83%. A fair value loss of R26 million (2008: R27 million gain, 2007: R17 million gain) has been recognised in the current year.

Of this liability R1 232 million, is made up of loans obtained from the strategic partners and the community service groups, which form part of the BEE transaction implemented during September 2008. These loans mature in August 2015 and carry a fixed interest rate of 11.78% per annum.

The balance of this liability of R793 million represents the issue of a corporate bond in October 2008 which is listed on the South African Bond Exchange under the code BAW2. The bond matures in October 2015 and carries a fixed coupon rate of 11.67% per annum which represents a premium of 275 basis points above the comparable Treasury stock R157 at the time of issue
      Share   Cash Equity     Total
      capital Re- flow com- Total Total share-
      and valuation hedging pensation other retained holders
      premium reserves reserves reserves reserves income Interest
    Notes Rm Rm Rm Rm Rm Rm Rm
11. Company statement of changes in equity                
  Balance at 30 September 2006   115 3   8 11 5 073 5 199
  Changes in equity recognised during 2007                
  PPC unbundling             (18 879) (18 879)
  Net loss recognised directly in equity             (18 879) (18 879)
  Net profit for the year             22 627 22 627
  Total recognised income and expense for the year             3 748 3 748
  Reclassifications and other reserve movements         4 4   4
  Premium utilised for payment of distribution 9 (226)           (226)
  Premium utilised for PPC unbundling 9 (17)           (17)
  Dividends on ordinary shares             (2 059) (2 059)
  Shares issued in current year 9 139           139
  Balance at 30 September 2007   11 3   12 15 6 762 6 788
  Changes in equity recognised during 2008                
  Coatings unbundling             (2 582) (2 582)
  Net loss recognised directly in equity             (2 582) (2 582)
  Net profit for the year             551 551
  Total recognised income and expense for the year             (2 031) (2 031)
  Other reserve movements       (12) 146 134   134
  Premium utilised for Coatings unbundling 9 (1)           (1)
  BEE equity expenses  9   (3)          
  Dividends on ordinary shares             (614) (614)
  Non-executive directors trust BEE share issues 9    9         9
  Shares issued in current year 9 24           24
  Balance at 30 September 2008   40 3 (12) 158 149 4 117 4 306
  Changes in equity recognised during 2009                
  Net profit for the year             4 540 4 540
  Total recognised income and expense for the year             4 540 4 540
  Other reserve movements       8 3 11   11
  BEE equity expenses  9 (2)           (2)
  Dividends on ordinary shares             (425) (425)
  Shares issued in current year 9 11           11
  Balance at 30 September 2009   49 3 (4) 161 160 8 232 8 441
        2009 2008 2007
        Rm Rm Rm
12. Provisions          
  Non-current     3 8 41
  Current     2 8 17
        5 16 58
      Post-   Share^  
      retirement Other# appreciation  
      benefits provisions rights Total
      Rm Rm Rm Rm
  Balance at 1 October 2007   21 17 20 58
  Net movements   (21) (9) (12) (42)
  Raised   1 21 10 32
  Utilised   (3) (27) (19) (49)
  Transferred to group company   (19) (3) (3) (25)
             
  Balance at 30 September 2008     8 8 16
  Net movements     (6) (5) (11)
  Raised     6   6
  Utilised     (12) (5) (17)
             
  Balance at 30 September 2009     2 3 5
 
# Other provisions
These provisions comprise the following:
 Unvested share options of former employees R1 million (2008: R6 million and 2007: R3 million), directors fees R1 million (2008: R1 million and 2007: nil), severence pay nil, (2008: nil and 2007: R10 million), pension, medical aid nil (2008: nil and 2007: R1 million), retirement gratuities nil (2008: nil and 2007: R1 million), and employee benefits nil (2008 and 2007: R2 million).
 
^ Share appreciation rights
A provision for share appreciation rights arose during 2007 as the group introduced the Barloworld Cash Settled Share Appreciation Right Scheme 2007. The scheme allows executive directors and certain senior employees to earn a long-term incentive amount calculated based on the increase in the Barloworld Limited share price between the grant date and the vesting and exercise of such rights.
 
For more details refer to note 34 on the group financial statements section.
        2009 2008 2007
        Rm Rm Rm
13. Other non-interest bearing liabilities          
  Other payables     1    
  Per category          
  Other liabilities     1    
14. Amounts due to bankers and short-term loans          
  Bank overdrafts and acceptances – South African rand     2 022 2 036 1 526
15. Revenue          
  Rendering of services       133 222
  Rentals received     46 29 62
        46 162 284
  Interest and dividends received are not included in revenue, but reflected as income under operating profit.
16. Operating profit          
  Operating profit is arrived at as follows:          
  Revenue     46 162 284
  Add: Net income     5 090 863 22 768
  Interest from subsidiaries     664 407 299
  Dividend received to unbundle PPC         18 879
  Dividends from subsidiaries     4 455 801 3 934
  Administrative costs     (29) (345) (344)
  Operating profit     5 136 1 025 23 052
  Administrative costs include the following:          
  Depreciation (note 2)     8 7 20
  BEE IFRS 2 charge     3 146  
  Loss on disposal of property, plant, and equipment       2  
  Amortisation of intangible assets (note 3)     2 2 3
  Administration, management and technical fees paid     1 7 12
  Auditors’ remuneration     2 6 5
  Audit fees     2 6 5
  Other fees          
  Staff costs (excluding directors' emoluments)       205  169
  Amounts expensed in respect of retirement benefit plans:          
  Defined-contribution funds       8 13
17. Fair value adjustments on financial assets          
  Financial assets at fair value through profit – held for trading items     (5) 3  
  Ineffectiveness recognised in loss arising from cashflow hedges       (8)  
  Profit on other financial instruments         1
        (5) (5) 1
18. Finance costs          
  Interest paid:          
  Bank     (609) (329) (252)
  Group     7 (95) (99)
        (602) (424) (351)
             
19. Income from investments          
  Interest received on loans       2 2
20. Exceptional items          
  Profit on disposal of subsidiaries and investments         169
  Impairment of fixed assets         (37)
  Exceptional profits         132
21. Taxation          
  Foreign and withholding taxation          
  Current year     (4) (4) (7)
  Deferred taxation          
  Current year     48 15 (55)
  Prior year         (1)
        48 15 (56)
  Secondary taxation on companies          
  Current     (33) (56) (105)
  Deferred       (2) (41)
        (33) (58) (146)
  Taxation attributable to the company     11 (47) (209)
        2009 2008 2007
        % % %
  Reconciliation of rate of taxation:          
  South Africa normal taxation     28.0 28.0 29.0
  Reduction in rate of taxation     (29.2) (53.8) (29.1)
  Exempt income       (0.2) (0.2)
  Adjustment due to inclusion of dividend income     (27.5) (37.5) (28.9)
  Tax on unprovided temporary differences     (1.7) (16.1)  
  Increase in the rate of taxation     1.0 33.7 1.0
  Disallowable charges     0.2 9.7  
  Tax on unprovided temporary differences       13.6 0.4
  Withholding taxation     0.1 0.7  
  Secondary taxation on companies     0.7 9.7 0.6
             
  Taxation as a percentage of profit before taxation     (0.2) 7.9 0.9
        Rm Rm Rm
  Tax  losses and STC credits at the end of the year          
  Taxation losses     (162) (291) (341)
  Unutilised STC credits         (22)
        (162) (291) (363)
  Utilised to reduce deferred taxation or create deferred taxation asset     162 56 22
  Losses on which no deferred taxation assets raised due to uncertainty regarding utilisation       (235) (341)
22. Contingent liabilities          
  Guarantees for loans, overdrafts and liabilities of subsidiaries     6 476 6 171 8 518
  The company has given an indemnity to Freeworld Coatings Limited in respect of environmental claims exceeding AUD$5 million and is for a maximum period of eight years. The claims relate to the coatings Australian business sold to PPG Industries during 2007.

Barloworld has agreed to provide capital as and when Barloworld Siyakhula requires further funding to discharge some or all  of its liabilities limited to R25 million. As at year end, the amount was undrawn.
23. Changes in accounting policy and disclosures          
  During the current year there have been no changes in accounting policies which have impacted the company. Refer to group note 35 for a list of all adoptions and changes in accounting policies as well as standards and interpretations not yet adopted.
24. Financial instruments          
   The company’s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and  payable, bank borrowings, money and capital market borrowings, loans to and from subsidiaries and derivatives. Derivative instruments are used by the company for hedging purposes.
        2009 2008 2007
      Notes Rm Rm Rm
24.1 Summary of the carrying and fair value of financial instruments          
  Carrying value of financial instruments by category:          
  Financial assets:          
  Financial assets at fair value through profit or loss          
  – Held or trading items   4   24 29
  Available-for-sale financial assets   4  5  5 5
  Loans and receivables   4, 6, 7  4 42  
  Derivative assets designed as effective hedging instruments   4 3 3  
  Interest in subsidiaries   4 13 553 8 805 9 669
        13 565 8 879 9 782
  Financial liabilities:          
  Financial liabilities measured at amortised cost      54 51 96
  Interest-bearing loans   10, 14 5 600 4 811 3 102
        5 654 4 862 3 198
  Fair value of financial instruments by category          
  Financial assets:          
  Financial assets at fair value through profit or loss          
  – Held for trading items          
  Available-for-sale financial assets     5 5 5
  Loans and receivables     4 42  
  Derivative assets designed as effective hedging instruments     3 3  
  Interest in subsidiaries     13 553 8 805 9 669
        13 565 8 879 9 782
  Financial liabilities:          
  Financial liabilities measured at amortised cost     54 51 96
  Interest-bearing loans     5 600 4 768 3 070
        5 654 4 819 3 166
  All financial instruments are carried at fair value or amounts that approximate fair value, except for the non-current portion of fixed rate receivables, payables and interest-bearing borrowings which are carried at amortised cost. The carrying amounts for investments, cash, cash equivalents as well as the current portion of receivables, payables and interest-bearing borrowings approximate fair value due to the short-term nature of these instruments. The fair values have been determined using available market information and appropriate valuation methodologies.
 
24.2 Financial risk management          
  a. Capital risk management          
  The risk management is the same as the group note 33.          
  b. Market risk          
  i) Currency risk          
  The company is not exposed to any significant currency risk.          
  ii) Interest rate risk          
  The company manages the exposure to interest rate risk by maintaining a balance between fixed and floating rate borrowings.
The interest rate characteristics of new borrowings and the refinancing of existing borrowings are structured according to expected movements in interest rates. There has been no change in the current year to this approach

The interest profile of total borrowings is as follows:
        2009 2008 2007
        Rm Rm Rm
  Interest rates          
  Loans at fixed rates of interest     3 578 2 775 1 576
  Loans linked to South African money market     2 022 2 036 1 526
        5 600 4 811 3 102
  Interest rate sensitivity analysis
The impact of changes in the interest rates is not significant as interest costs are recovered from other group companies.
 
  iii) Other price risk          
  Barloworld share price          
  The company has a liability to option holders in terms of the Share Appreciation Right Scheme (as per group note 34.2)          
  Barloworld share price sensitivity analysis          
  Impact of a 10% increase in the Baw share price as at 30 September
– charge to profit or loss in respect of the liability		     1    
  Call options have been acquired to hedge against future additional cash flows arising from increases in the Baw share price. The cash flows are expected to occur after the vesting of the rights as per group note 34.2. There has been no change during the current year in the company approach to managing other price risk.

c. Credit risk
The potential area of credit risk is short-term cash investments. It is company policy to deposit short-term cash investments with major banks and financial institutions with strong credit ratings.
        2009 2008 2007
        Rm Rm Rm
  Maximum exposure to credit risk (excl collateral held)          
  Financial assets:          
  Financial assets at fair value through profit or loss          
  – Held for trading items       24 29
  Available-for-sale financial assets     5 5 5
  Loans and receivables     4 42 79
  Derivative assets designed as effective hedging instruments     3 3  
  Interest in subsidiaries     13 553 8 805 9 669
  Other items including financial guarantees     6 476 6 171 8 51
        20 041 15 050 18 300
  d. Liquidity risk
The company manages liquidity risk by monitoring forecast cash flows, maintaining a balance between long- and short-term. There has been no change to this approach in the current year.

Maturity profile of financial liabilities
The maturity profile of the financial instruments is summarised as follows (based on contractual undiscounted cash flows):
        Repayable during the year ending 30 September
      Total owing 2009 2010 2011 to 2014 2015 and onward
  Interest-bearing liabilities   7 153 2 419 2 548 2 186
  Trade payables and other non-interest  bearing liabilities    56  56    
        2009 2008 2007
        Rm Rm Rm
25. Related party transactions          
  With subsidiaries of the company          
  Goods and services sold to      46  154  284
  Dividends and interest – income     5 119 1 208 23 112
  Dividends and interest – expense     (7)  95  99
  Freehold land and buildings purchased from group companies Inter group loans and other amounts due from related parties as at end of year* 13 315 8 398 7 733
  Inter group loans and other amounts due to related parties as  at end of year*  292  124 1 383
26. Post balance sheet events        
  The company has subscribed R650 million for the issue of new ordinary shares in Barloworld South Africa (Pty) Limited on 9 October 2009.
  The following notes are dealt with in the consolidated financial statements:
  – Dividends (group note 28)
– Financial instruments (group note 33)
– Directors’ remuneration and interest (group note 36)
– Barloworld shareholders’ attributable interest in subsidiaries (group note 37).
  * There are no doubtful debt provisions raised in respect of amounts due to/from related parties and no bad debts incurred during the year on these balances.