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Bell Equipment Ltd - Audited Results
Bell Equipment Ltd
(Incorporated in the Republic of South Africa)
(Share code: BEL ISIN: ZAE000028304)
Registration number 1968/013656/06
("BELL" or "the company")
2002 AUDITED RESULTS for the year ended 31 December 2002
* Revenue up 43,9%
* Profit after tax up 29,1%
* Net asset value per share up 8,1%
Consolidated Balance Sheet
At 31 December At 31 December
R"000 2002 2001
ASSETS
Non-current assets 178 027 156 137
Property, plant and equipment 142 284 135 054
Investments and long-term receivables 30 440 21 083
Deferred taxation 5 303 -
Current assets 1 145 056 1 010 308
Inventory 843 994 635 838
Trade and other receivables 253 171 295 478
Current portion of long-term receivables 8 250 14 318
Prepayments 33 714 35 180
Taxation 1 121 1 871
Cash resources 4 806 27 623
TOTAL ASSETS 1 323 083 1 166 445
EQUITY AND LIABILITIES
Capital and reserves 717 688 661 259
Stated capital (Note 5) 224 308 223 355
Non-distributable reserves 65 310 125 518
Retained earnings 428 070 312 386
Non-current liabilities 6 221 37 401
Long-term borrowings 6 221 25 774
Deferred taxation - 11 627
Current liabilities 599 174 467 785
Trade and other payables 430 493 297 027
Current portion of long-term borrowings 2 073 5 811
Warranty provision 38 794 23 308
Taxation 20 796 19 461
Short-term interest bearing debt 107 018 122 178
TOTAL EQUITY AND LIABILITIES 1 323 083 1 166 445
Number of shares in issue ("000) 94 210 93 837
Net asset value per share (cents) 762 705
Consolidated Income Statement
Percentage For year ended
change 31 December 31 December
R"000 2002 2001
Revenue 44 2 386 356 1 658 096
Cost of sales 1 768 707 1 228 425
Gross profit 617 649 429 671
Other operating income 73 202 51 269
Distribution costs (336 378) (220 809)
Administration expenses (82 016) (90 931)
Other operating expenses (41 231) (36 225)
Profit from operating activities 74 231 226 132 975
Net finance costs (Note 2) 56 144 475
Profit before taxation (Note 3) 32 175 082 132 500
Taxation 41 49 481 35 217
Net profit for the year 29 125 601 97 283
Earnings per share (basic) (cents)
(Note 4) 29 134 104
Earnings per share (diluted) (cents)
(Note 4) 29 133 103
Headline earnings per share (basic)
(cents) (Note 4) 28 133 104
Headline earnings per share (diluted)
(cents) (Note 4) 29 132 102
Proposed dividend per share (cents) 50 15 10
Abbreviated Cash Flow Statement
For year ended
31 December 31 December
R"000 2002 2001
Cash operating profit before working
capital changes 211 408 221 226
Cash invested in working capital (30 917) (122 210)
Cash generated from operations 180 491 99 016
Net finance costs paid (57 718) (3 530)
Taxation paid (64 402) (41 268)
Net cash flow from operating activities 58 371 54 218
Dividend paid (9 385) (9 364)
Invested in property, plant, equipment,
Investments and long-term receivables (16 814) (69 195)
Net cash inflow/(outflow) 32 172 (24 341)
Proceeds from shares issued 953 533
Net (repayment of)/increase in borrowings (33 125) 23 808
Cash (surplus applied)/funding requirement (32 172) 24 341
Statement of Changes in Equity
For year ended
31 December 31 December
R"000 2002 2001
Equity at the beginning of the year 661 259 496 689
Change in accounting policy (Note 1) - (1 274)
Restated equity at the beginning of the year 661 259 495 415
Changes in share capital 953 533
Issue of share capital 953 533
Changes in non-distributable reserves (60 208) 77 301
Realisation of revaluation reserve on depreciation
of buildings (241) (241)
Increase in legal reserve of foreign subsidiary 773 150
(Decrease)/Increase in currency translation reserve (63 569) 79 689
Exchange differences on foreign reserves 2 829 (2 297)
Changes in retained earnings 115 684 88 010
Net profit for the year 125 601 97 283
Transfer from revaluation reserve on depreciation
of buildings 241 241
Transfer to legal reserve of foreign subsidiary (773) (150)
Dividend (9 385) (9 364)
Equity at the end of the year 717 688 661 259
Abbreviated Notes to Audited Results
1. ACCOUNTING POLICIES
The accounting policies of the group comply with South African Statements of
Generally Accepted Accounting Practice, and except for the adoption of AC135,
Investment Property, are consistent with those applied for the previous year.
Depreciation is now provided on freehold buildings. Previously, buildings were
not depreciated as they were considered to be investment properties. Comparative
amounts have been restated. The effect of this change is as follows:
31 December 31 December
R"000 2002 2001
Reduction in net profit due to increase in
depreciation expense:
Gross 2 333 2 229
Taxation (663) (633)
Net 1 670 1 596
Restatement of opening retained earnings in
respect of prior year adjustment:
Gross 4 009 1 780
Taxation (1 139) (506)
Effect on equity at the beginning of the year 2 870 1 274
Transfer from revaluation reserve (482) (241)
Net 2 388 1 033
2. NET FINANCE COSTS
Net interest paid 12 947 7 740
Net currency exchange losses/(gains) 44 771 (4 210)
Net finance costs paid 57 718 3 530
Financial instrument income (1 574) (3 055)
Net finance costs 56 144 475
3. PROFIT BEFORE TAXATION
Profit before taxation is arrived at
after taking into account:
Income
Import duty rebates 41 236 23 912
Net surplus on disposal of property,
plant and equipment 320 425
Expenditure
Auditors" remuneration 3 540 2 950
Depreciation of property, plant and equipment 19 904 15 935
Operating lease charges
- equipment and motor vehicles 9 012 7 808
- properties 9 934 8 498
Research and development expenses 38 950 36 869
Staff costs 320 617 259 972
Increase/(decrease) in warranty provision 15 486 (2 099)
4. EARNINGS PER SHARE
The calculation of earnings per share is based on profit
after taxation and the weighted average number of
ordinary shares in issue during the year. The weighted
average number of shares in issue for the year under
review was 93 891 981 (2001: 93 749 879). On a diluted
basis, the fully converted weighted average number of
shares is 94 663 131 (2001: 94 882 229).
Headline earnings is arrived at after taking into account
the net surplus on disposal of property, plant and equipment
as reflected in note 3.
5. STATED CAPITAL
Authorised
100 000 000 (2001: 100 000 000) ordinary shares of
no par value
Issued
94 209 600 (2001: 93 837 000) ordinary shares of
no par value 224 308 223 355
6. CAPITAL EXPENDITURE COMMITMENTS
Contracted 323 -
Authorised, but not contracted 49 925 17 842
Total capital expenditure commitments 50 248 17 842
7. SEGMENTAL ANALYSIS
Geographical segments
The group operates in two principal
geographical areas:
Operating
R"000 Revenue profit Assets Liabilities
2002
South Africa 1 269 027 197 278 995 735 496 880
Rest of world 1 117 329 33 948 327 348 108 515
Total 2 386 356 231 226 1 323 083 605 395
2001
South Africa 927 452 91 788 844 878 291 718
Rest of world 730 644 41 187 321 567 213 468
Total 1 658 096 132 975 1 166 445 505 186
The segment result and assets for 2001 have been adjusted by R23,9 million
and R4,4 million respectively, being certain revenue and related assets arising
from exports which was previously allocated to South Africa and which has now
been reallocated to Rest of world.
8. CONTINGENT LIABILITIES
An action has been instituted against a subsidiary of the company for a
substantial amount. As previously reported, the action is being defended and the
continuing view of the company"s legal advisers is that the company has good
grounds for successfully opposing the claims. After consideration and based on
this legal advice, the Board is satisfied that the company will not suffer any
material loss.
9. EXCHANGE RATES
The following major rates of exchange were used:
2002 2001
Weighted Year Weighted Year
average end average end
Euro: United States $ 0,95 1,05 0,89 0,89
SA Rand: United States $ 10,32 8,58 8,74 12,01
British : United States $ 1,51 1,61 1,43 1,45
10. INDEPENDENT AUDITORS" REPORT
The annual financial statements of the group have been audited by the
company"s auditors, Deloitte & Touche. Their unqualified report is available for
inspection at the registered office of the company.
Commentary on the Results
For the fourth successive year, I am proud to report on record turnover,
profitability and increased shareholder funds.
After tax profits for 2002 are R125,6 million as compared with R97,3 million
in 2001. Shareholders funds have increased from a net asset value of 705 cents
(US$ .59 cents) per share to 762 cents (US$ .89 cents) per share over the twelve
months, an increase of 51% in US Dollar terms, this after paying a 10 cents per
share dividend in April of last year. These results were achieved while there
was a strengthening of the Rand/Dollar rate from R12,01 on 1 January 2002 to
R8,58 at December 2002. This strengthening of 29% had the effect of reducing net
asset value by R85,4 million through devaluation of foreign assets
(R60,8 million) and by marking unutilised forward exchange contracts to market
(R68 million), less the revaluation of debtors, creditors and bank to spot
(R43,4 million). Despite this, shareholders funds showed an increase as reported
above. Managing exports, which this year produced record turnover of US$108,3
million (2001 - US$ 83.6 million) in the current environment of a strong and
somewhat volatile Rand is proving to be a challenge. Euro imports account for
50% of our manufacturing costs which continue to drop as a result of the
Rand/Euro strengthening. The majority of our exports are invoiced in US Dollars
causing our offshore retail selling prices to be under margin pressure as the
Rand strengthens. Increased sales to Europe, invoiced in Euros, to some extent
offsets the adverse impact of the strengthening Rand/US Dollar exchange rate.
The Southern African sales and distribution network increased sales by 36%
from last year despite fierce competition. The South African construction
equipment market continues to be buoyant and we expect this trend to continue
throughout 2003. Market share for the articulated dump trucks in Europe ended at
a credible 17% despite strong competition from long standing European
manufacturers with well established distribution and dealership networks.
Profitability, in Europe however was disappointing and we are looking for a
substantial improvement in cost containment and working capital management in
2003.
Net cash generated from operations in 2002 was R180 million versus R99
million in 2001. After investing and financing activities, net cash of R32
million was available to reduce borrowings compared to a R24 million increase in
borrowings in 2001.
In order to assist further with our working capital issues as well as
allowing for greater flexibility in the Northern Hemisphere markets, Bell
Equipment is establishing an assembly operation in Eisenach - central Germany.
This facility will be supplied with semi-assembled units which will be made
in South Africa to which will be fitted the rest of the componentry that is
sourced from various suppliers in Europe. In cutting out the long shipping
requirement of bringing components all the way to South Africa and then sending
it all the way back again, we estimate that we will be able to free up
approximately R100 million of working capital once the plant is at full
production capacity. The first units are expected to roll off the assembly plant
in October 2003.
In planning the logistics of setting up the new facility in Europe we paid
particular attention to maintaining the level of employment at the existing
factory in Richards Bay. Not a single job will be lost as a result of the
European assembly plant.
The first two months of the current financial year have been profitable and
we are ahead of sales budgets. Providing we see some significant weakening of
the Rand and the South African economy continues to remain strong, 2003 should
again be a record year. All exports below the current Rand to US Dollar exchange
rates only produce a marginal contribution to the group. Our focus for 2003 will
be to continue our programmes to drive cost reduction and manufacturing
efficiency, reduce warranty costs, increase parts sales and to increase unit
sales outside of South Africa to our three alliance partners, Deere, Hitachi and
Liebherr.
H J Buttery
Group Chairman
18 March 2003
DECLARATION OF DIVIDEND
Notice is hereby given that a final dividend of 15 cents per share (2001: 10
cents per share), payable in the currency of the Republic of South Africa will
be paid to shareholders recorded in the register on Friday, 11 April 2003. The
last day to trade cum the dividend is Friday, 4 April 2003. Shares will commence
trading ex dividend on Monday, 7 April 2003. The record date will be Friday, 11
April 2003. Payment will be made on Monday, 14 April 2003. Share certificates
may not be dematerialised or rematerialised between Monday, 7 April 2003 and
Friday, 11 April 2003, both days inclusive.
By order of the Board
D P Mahony
Company Secretary
Bell Equipment Ltd
(Incorporated in the Republic of South Africa)
(Share code: BEL ISIN: ZAE000028304)
Registration number 1968/013656/06
("BELL" or "the company")
Directors: H J Buttery (Group Chairman), G W Bell (Group Chief Executive),
P C Bell, M A Campbell, *P J C Horne, *D J J Vlok, *T D Kgobe,
*P LeRoy (USA), *G P Harris, *J W Kloet (USA), *M O Rysa (Finnish),
(*Non-executive Directors)
Alternate Directors: P A Bell, D I Campbell, D B Rhind, C D Anderson (USA),
MA Guinn (USA)
Company Secretary: D P Mahony
Registered Office Transfer Secretaries
13 - 19 Carbonode Cell Computershare Investor Services Ltd
Alton 70 Marshall Street
Richards Bay Johannesburg
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