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BELL EQUIPMENT LIMITED
(REGISTRATION NUMBER 1968/013656/06)
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2000
CONSOLIDATED INCOME STATEMENT
UNAUDITED AUDITED
6 MONTHS 12 MONTHS
ENDED ENDED
30 JUNE 30 JUNE 31 DECEMBER
R'000 2000 1999 1999
REVENUE 662 992 460 674 1 163 526
COST OF SALES 477 967 364 193 840 670
GROSS INCOME 185 025 96 481 322 856
OTHER OPERATING INCOME 31 107 19 800 52 447
DISTRIBUTION COSTS (100 185) (74 999) (208 238)
ADMINISTRATION COSTS (26 977) (18 026) (49 102)
OTHER OPERATING EXPENSES (14 347) (11 208) (29 055)
OPERATING INCOME
BEFORE FINANCE COSTS 74 623 12 048 88 908
NET FINANCE COSTS (NOTE 2) 6 530 20 925 30 363
PROFIT/(LOSS) BEFORE
TAXATION (NOTE 3) 68 093 (8 877) 58 545
TAXATION 20 776 1 760 12 134
PROFIT/(LOSS)
AFTER TAXATION 47 317 (10 637) 46 411
NUMBER OF SHARES
IN ISSUE - 000 93 383 93 248 93 248
WEIGHTED AVERAGE NUMBER
OF SHARES IN ISSUE - 000 93 300 73 248 83 248
EARNINGS/(LOSS) PER
SHARE (CENTS) (NOTE 4) 50,7 (14,5) 55,8
DIVIDENDS PER
SHARE (CENTS) - - 6
CONSOLIDATED BALANCE SHEET
UNAUDITED AUDITED
AT AT
30 JUNE 30 JUNE 31 DECEMBER
R'000 2000 1999 1999
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT 85 066 26 534 82 485
INVESTMENTS 7 313 16 125 1 393
TOTAL NON-CURRENT ASSETS 92 379 42 659 83 878
CURRENT ASSETS 650 286 556 570 524 281
INVENTORY 453 197 373 104 333 366
TRADE AND OTHER DEBTORS 174 653 134 439 162 911
PREPAYMENTS 7 210 7 341 4 993
CASH RESOURCES 15 226 41 614 22 792
TAXATION - 72 219
TOTAL ASSETS 742 665 599 229 608 159
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
STATED CAPITAL (NOTE 5) 222 117 221 761 221 761
NON-DISTRIBUTABLE RESERVES 36 985 18 947 31 314
RETAINED EARNINGS 191 444 92 674 144 127
TOTAL CAPITAL AND RESERVES 450 546 333 382 397 202
NON-CURRENT LIABILITIES 39 382 32 418 37 392
LONG-TERM BORROWINGS 29 041 32 224 30 717
DEFERRED TAXATION 10 341 194 6 675
CURRENT LIABILITIES 252 737 233 429 173 565
TRADE AND OTHER CREDITORS 198 661 152 382 118 871
CURRENT PORTION OF
LONG-TERM BORROWINGS 735 553 874
PROPOSED DIVIDEND - - 5 595
TAXATION 25 167 2 482 5 350
SHORT-TERM INTEREST
BEARING DEBT 28 174 78 012 42 875
TOTAL EQUITY
AND LIABILITIES 742 665 599 229 608 159
NET ASSET VALUE PER
SHARE - CENTS 482 358 426
ABBREVIATED CASH FLOW STATEMENT
UNAUDITED AUDITED
6 MONTHS 12 MONTHS
ENDED ENDED
30 JUNE 30 JUNE 31 DECEMBER
R'000 2000 1999 1999
OPERATING INCOME BEFORE
WORKING CAPITAL CHANGES 88 060 18 140 97 762
CASH INVESTED IN
WORKING CAPITAL (54 000) 16 338 (3 559)
NET FINANCE COSTS PAID (7 801) (21 984) (32 477)
TAXATION (PAID)/REFUNDED (506) 498 (1 358)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 25 753 12 992 60 368
DIVIDEND PAID (5 595) - -
INVESTED IN PROPERTY, PLANT,
EQUIPMENT AND INVESTMENTS (12 835) (1 117) (32 047)
CASH SURPLUS 7 323 11 875 28 321
PROCEEDS FROM SHARES ISSUED 356 180 120 180 120
NET BORROWINGS REPAID (7 679) (191 995) (208 441)
CASH SURPLUS APPLIED (7 323) (11 875) (28 321)
STATEMENT OF CHANGES IN EQUITY
UNAUDITED AUDITED
6 MONTHS 12 MONTHS
ENDED ENDED
30 JUNE 30 JUNE 31 DECEMBER
R'000 2000 1999 1999
EQUITY AT THE BEGINNING
OF THE PERIOD 397 202 162 117 162 117
CHANGES IN SHARE CAPITAL 356 180 120 180 120
ISSUE OF SHARE CAPITAL 356 180 120 180 120
CHANGES IN NON-
DISTRIBUTABLE RESERVES 5 671 1 782 14 149
SURPLUS ON REVALUATION OF
PROPERTY - - 11 441
DEFERRED TAX ON REVALUATION
OF PROPERTY (3 432) - -
INCREASE IN CURRENCY
TRANSLATION RESERVE 9 052 1 797 2 733
EXCHANGE DIFFERENCES ON
FOREIGN RESERVES 51 (15) (25)
CHANGES IN RETAINED
EARNINGS 47 317 (10 637) 40 816
NET PROFIT/(LOSS) FOR
THE PERIOD 47 317 (10 637) 46 411
DIVIDEND - - (5 595)
EQUITY AT THE END OF
THE PERIOD 450 546 333 382 397 202
NOTES TO INTERIM REPORT
UNAUDITED AUDITED
6 MONTHS 12 MONTHS
ENDED ENDED
30 JUNE 30 JUNE 31 DECEMBER
R'000 2000 1999 1999
1. ACCOUNTING POLICIES
THE SAME ACCOUNTING POLICIES AND
METHODS OF COMPUTATION ARE FOLLOWED IN
THE INTERIM REPORT AS COMPARED WITH THE
ANNUAL FINANCIAL STATEMENTS FOR THE
YEAR ENDED 31 DECEMBER 1999, WITH THE
EXCEPTION OF THE ACCOUNTING POLICY FOR
TAXATION, WHICH HAS BEEN AMENDED TO
CONFORM WITH THE REQUIREMENTS OF
SOUTH AFRICAN STATEMENT OF
GENERALLY ACCEPTED ACCOUNTING PRACTICE
AC102, INCOME TAXES.
2. NET FINANCE COSTS
NET INTEREST PAID 4 088 14 203 18 466
NET CURRENCY EXCHANGE LOSSES 3 713 7 781 14 011
NET FINANCE COSTS PAID 7 801 21 984 32 477
FINANCIAL INSTRUMENT INCOME (1 271) (1 059) (2 114)
NET FINANCE COSTS 6 530 20 925 30 363
3. PROFIT/(LOSS) BEFORE TAXATION
PROFIT/(LOSS) BEFORE TAXATION IS
ARRIVED AT AFTER TAKING INTO ACCOUNT:
INCOME
NET SURPLUS ON DISPOSAL OF PROPERTY,
PLANT AND EQUIPMENT 158 1 334 2 717
EXPENDITURE
DEPRECIATION OF PROPERTY,
PLANT AND EQUIPMENT 4 492 4 310 8 321
OPERATING LEASE CHARGES
- EQUIPMENT AND MOTOR VEHICLES 2 420 5 914 12 319
- PROPERTIES 3 572 5 833 12 541
4. EARNINGS/(LOSS) PER SHARE
THE CALCULATION OF EARNINGS/(LOSS)
PER SHARE IS BASED ON PROFIT/(LOSS)
AFTER TAXATION AND THE WEIGHTED AVERAGE
NUMBER OF ORDINARY SHARES IN ISSUE
DURING THE PERIOD. THE WEIGHTED AVERAGE
NUMBER OF SHARES IN ISSUE FOR THE PERIOD
UNDER REVIEW WAS 93 299 856 (1999:73 248 200).
5. STATED CAPITAL
AUTHORISED
100 000 000 (1999: 100 000 000)
ORDINARY SHARES OF NO PAR VALUE
ISSUED
93 383 100 (1999: 93 248 200)
ORDINARY SHARES OF NO PAR VALUE 222 117 221 761 221 761
6. CAPITAL EXPENDITURE
EXPENDED 7 708 1 117 51 014
AUTHORISED OR COMMITTED 15 240 500 22 981
TOTAL CAPITAL EXPENDITURE 22 948 1 617 73 995
7. CONTINGENT LIABILITIES
AN ACTION HAS BEEN INSTITUTED AGAINST A SUBSIDIARY OF THE COMPANY FOR A
SUBSTANTIAL AMOUNT.
THE ACTION IS BEING DEFENDED AND THE INITIAL VIEW OF THE COMPANY'S LEGAL
ADVISERS IS THAT THE CLAIM HAS NO SUBSTANCE. AFTER CONSIDERATION AND BASED ON
THIS LEGAL ADVICE, THE BOARD IS SATISFIED THAT THE COMPANY WILL NOT SUFFER ANY
MATERIAL LOSS.
CHAIRMAN'S STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2000
IT IS WITH GREAT PLEASURE THAT I AM ABLE TO REPORT ON THE MOST SUCCESSFUL FIRST
SIX MONTHS TRADING RESULTS IN THE GROUP'S HISTORY. OPERATING INCOME IS SIX
TIMES HIGHER THAN THE SAME PERIOD IN THE PREVIOUS YEAR AND EARNINGS WERE 51
CENTS PER SHARE AS OPPOSED TO 56 CENTS FOR THE 12 MONTHS ENDED DECEMBER 1999.
EQUITY WAS FURTHER INCREASED BY R6 MILLION DUE TO A SMALL INCREASE IN CAPITAL
ARISING FROM OPTIONS BEING EXERCISED AND A SUBSTANTIAL CURRENCY GAIN ON FOREIGN
ASSETS AND TRADING, LESS THE DEFERRED TAX ADJUSTMENT FOLLOWING THE ADOPTION OF
AC 102, INCOME TAXES.
THIS IMPROVEMENT IN PROFITABILITY IS DUE TO TWO MAJOR FACTORS - FIRSTLY, A
SUBSTANTIAL DROP IN NET FINANCE COSTS BECAUSE OF LOWER DEBT AND INTEREST RATES.
SECONDLY, A SALES IMPROVEMENT IN THE AFRICAN MARKETS, PARTICULARLY THE SOUTHERN
AFRICAN MINING SECTOR.
THE IMPROVED GROSS MARGINS ENJOYED IN THE SECOND HALF OF THE LAST YEAR
CONTINUED INTO THIS SIX-MONTH PERIOD. INVENTORY AND RECEIVABLE LEVELS ARE ABOVE
THOSE BUDGETED FOR IN A SUCCESSFUL ATTEMPT TO IMPROVE OUR DUE DELIVERY DATES OF
UNITS TO CUSTOMERS. WE EXPECT THIS INCREASE IN WORKING CAPITAL TO REDUCE DURING
THE SECOND SIX MONTH PERIOD. THE FIRST SIX MONTHS' RESULTS WILL NOT BE REPEATED
IN THE NEXT SIX MONTHS DUE TO A REDUCTION IN OUR US AND EUROPEAN MACHINERY
SHIPMENTS AND SALES.
BELL EQUIPMENT PROVIDES SHAREHOLDERS WITH A RAND HEDGE OPPORTUNITY IN TERMS OF
EXPORTS AND FOREIGN ASSETS AS WELL AS THE EFFECT THE RAND HAS ON OUR LOCAL
COMPETITORS, ALMOST ALL OF WHOM IMPORT IN HARD CURRENCY.
FOLLOWING ON PREVIOUS STATEMENTS THAT WE WERE PURSUING ALLIANCES IN THE EAST,
WE WISH TO ADVISE THAT WE HAVE SOLD, WITH EFFECT FROM 1 OCTOBER 2000, THE
ASSETS OF OUR AUSTRALIAN AND SINGAPOREAN SUBSIDIARIES TO THE LOCAL SUBSIDIARIES
OF HITACHI CONSTRUCTION MACHINERY CO LTD OF JAPAN. THIS ALLIANCE, TOGETHER WITH
A PROPOSED BELL MINORITY INVESTMENT IN HITACHI CONSTRUCTION MACHINERY
(AUSTRALIA), WILL PROVIDE US WITH SUBSTANTIALLY INCREASED COVERAGE IN THE ASIAN
REGION.
FURTHERMORE, BELL HAS SIGNED A DISTRIBUTION AND SUPPLY AGREEMENT WITH HITACHI
WHICH COMES INTO EFFECT NEXT MONTH. THE AGREEMENT COVERS THE DISTRIBUTION OF
BELL EQUIPMENT'S ARTICULATED DUMP TRUCKS AND SUGAR AND FORESTRY EQUIPMENT IN
AUSTRALASIA, SOUTH EAST ASIA AND JAPAN. WE WILL ALSO BE EXPLORING WITH HITACHI
WAYS IN WHICH OUR STRATEGIC ALLIANCE CAN BE EXTENDED TO MUTUAL ADVANTAGE. IN
LINE WITH PREVIOUS STATEMENTS BELL CONTINUES TO PURSUE FURTHER STRATEGIC
ALLIANCES IN OTHER REGIONS AND FOR OTHER PRODUCTS.
HOWARD J BUTTERY
29 SEPTEMBER 2000
REVIEW BY INDEPENDENT AUDITORS
THE FINANCIAL INFORMATION SET OUT ABOVE HAS BEEN REVIEWED BUT NOT AUDITED BY
DELOITTE & TOUCHE AND THEIR UNQUALIFIED REPORT IS AVAILABLE AT THE REGISTERED
OFFICE.
DIRECTORS:
HJ BUTTERY (CHAIRMAN), GW BELL (CHIEF EXECUTIVE), PC BELL, MA CAMPBELL, JM
FIELD* (USA), MA GUINN* (USA),
BB BROCK* (USA), DR MW ARNOLD* (USA), PJC HORNE*, DR RD MARCUS*, DJJ VLOK*, TD
KGOBE*
* (NON-EXECUTIVE DIRECTORS)
ALTERNATE DIRECTORS:
PA BELL, DI CAMPBELL, RC CRAWFORD, GP HARRIS, TJ GRAFF (USA), DC MANHART (USA),
JW BLOOM* (USA)
COMPANY SECRETARY:
DP MAHONY, FCIS, FCIBM
29 SEPTEMBER 2000
REGISTERED OFFICE:
13 - 19 CARBONODE CELL, ALTON
RICHARDS BAY, 3900
SHARE TRANSFER SECRETARIES:
MERCANTILE REGISTRARS LIMITED, 11 DIAGONAL STREET, JOHANNESBURG, 2001
SOUTH AFRICA
(REGISTRATION NUMBER 1968/013656/06)
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