Heavy-duty equipment multinational Barloworld says it will unbundle and separately list Zeda, the group’s integrated vehicle mobility solutions provider.

Zeda trades under the Avis and Budget brands in South Africa, as well as ten other sub-Saharan African countries.

The unbundling will be implemented by way of listing 189-million ordinary Zeda shares on the main board of the JSE, effective December 13, as well as a pro rata distribution in specie of such JSE-listed Zeda distribution shares for no consideration to holders of Barloworld ordinary shares entitled to receive this distribution on December 19.

Moreover, the unbundling will be implemented on the basis that Barloworld ordinary shareholders recorded on the Barloworld share register at 17:00 on December 15 will receive one Zeda distribution share for every one Barloworld ordinary share held.

Barloworld explains the pro rata distribution in specie of the Zeda distribution shares will be paid from sources other than 'contributed tax capital' as contemplated in the Income Tax Act and shall accordingly constitute a 'dividend' for purposes of the Income Tax Act.

RATIONALE
Barloworld is actively pivoting its portfolio towards defensive, relatively asset-light and cash generative industrial sectors, based on a business-to-business operating model.

To this end, Barloworld has divested several businesses identified as noncore to its strategic ambition.

The board believes that, to separate the business of Zeda through an unbundling will enable Zeda to execute on its own strategy and allow it to operate in a more focused and efficient manner, unshackled by the umbrella of Barloworld’s capital allocation framework.

Additionally, the Barloworld board says Zeda will benefit from a fully dedicated executive management team and its own dedicated board of directors.

It is expected that the unbundling of Zeda will position it as a distinct sub-Saharan Africa-focused integrated mobility solutions providers and provide enhanced governance, cost of capital and ability to drive a market-leading return profile.

For Barloworld, the unbundling marks the completion of its noncore divestiture programme, allows the group to focus on its consumer industries and industrial equipment pillars, and delivers deleveraging of the balance sheet.

FINANCIAL RESULTS
Barloworld has posted an increase of 48.2% in headline earnings a share to R17.71 for the year ended September 30, from R11.95 (restated) in the prior financial year.

Basic earnings per share (EPS) amounted to R10.51 in the reporting year, compared with basic EPS of R13.90 (restated) posted in the prior year.

The group’s operating profit from core trading activities increased by 12.8% in the year under review to R3.7-billion, from R3.2-billion in the prior year.

Barloworld has declared an ordinary final dividend of 295c apiece for the second half of the year, bringing the total dividend to 460c apiece, and a special dividend of 550c apiece.

This compares with total ordinary and special dividends of 437c and R13.50 declared in the prior year, respectively.

CEO Dominic Sewala says the group delivered improved results despite some key challenges in the prevailing operating environment,

He anticipates headwinds in the short term resulting from the effects of high inflation; however, the Equipment Southern Africa business is well positioned to achieve sustainable growth in the long term, driven by the need for infrastructure development and increased mining activity to support the energy transition to zero-carbon emissions.

Barloworld says it continues to manage exposures and risks to its Equipment Eurasia business including a strong focus on addressing the needs of employees through a very uncertain and challenging period, while remaining agile and adaptable to ensure compliance with an ever-changing regulatory environment.

Sewala confirms the company has started with cost-reducing measures and right-sizing working capital, in line with some expected revenue reductions.

At Ingrain, the latest maize production estimate suggest that there will be sufficient crops to meet domestic demand.

Although this should be enough to support domestic requirements, the higher international maize prices which are sustained by the ongoing war between Russia and Ukraine and fluctuating local currency are expected to support higher local maize prices going forward.