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Bell Equipment Ltd - Audited Results For The Year Ended 31 December 2004
BELL EQUIPMENT LTD
(Incorporated in the Republic of South Africa)
Registration number 1968/013656/06
(Share code: BEL ISIN: ZAE000028304)
("Bell")
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004
CONSOLIDATED BALANCE SHEET
At At
31 December 31 December
R"000 2004 2003
ASSETS
Non-current assets 263 726 227 768
Property, plant and equipment 202 464 154 819
Investments and long-term receivables 57 553 56 389
Deferred taxation 3 709 16 560
Current assets 1 328 002 1 170 959
Inventory 1 056 828 855 791
Trade and other receivables 213 139 191 518
Current portion of long-term receivables 11 264 20 167
Prepayments 6 881 39 724
Taxation 26 809 15
Cash resources 13 081 63 744
TOTAL ASSETS 1 591 728 1 398 727
EQUITY AND LIABILITIES
Capital and reserves 700 118 711 257
Stated capital (Note 5) 224 414 224 352
Non-distributable reserves 34 874 34 883
Retained earnings 440 830 452 022
Non-current liabilities 48 037 29 293
Interest-bearing 6 669 8 612
Non-interest-bearing 34 431 -
Provisions 6 937 20 681
Current liabilities 843 573 658 177
Trade and other payables 390 989 291 291
Current portion of interest-bearing liabilities 3 684 4 538
Current portion of non-interest-bearing liabilities 14 617 -
Current portion of provisions 48 734 56 849
Taxation - 3 490
Short-term interest-bearing debt 385 549 302 009
TOTAL EQUITY AND LIABILITIES 1 591 728 1 398 727
Number of shares in issue ("000) 94 246 94 224
Net asset value per share (cents) 743 755
CONSOLIDATED INCOME STATEMENT
For year ended
31 December 31 December
R"000 2004 2003
Revenue 2 526 488 2 778 279
Cost of sales 2 053 943 2 173 237
Gross profit 472 545 605 042
Other operating income 84 228 66 940
Distribution costs (429 821) (411 995)
Administration expenses (57 135) (59 847)
Other operating expenses (44 466) (47 431)
Profit from operating activities 25 351 152 709
Net finance costs (Note 2) (31 428) (76 001)
(Loss) profit before taxation (Note 3) (6 077) 76 708
Taxation (5 356) (40 054)
Net (loss) profit for the year (11 433) 36 654
(Loss) earnings per share (basic)(cents) (Note 4) (12) 39
(Loss) earnings per share (diluted)(cents) (Note 4) (12) 39
Headline (loss) earnings per share
(basic)(cents) (Note 4) (13) 39
Headline (loss) earnings per share
(diluted)(cents) (Note 4) (13) 39
Proposed dividend per share (cents) - -
ABBREVIATED CASH FLOW STATEMENT
For year ended
31 December 31 December
R"000 2004 2003
Cash operating profit before working capital changes 11 622 187 237
Cash invested in working capital (85 034) (95 356)
Cash (applied to) generated from operations (73 412) 91 881
Net finance costs paid (31 428) (80 492)
Taxation paid (28 984) (62 599)
Net cash flow applied to operating activities (133 824) (51 210)
Dividend paid - (14 131)
Invested in property, plant, equipment, investments
and long-term receivables (46 692) (75 612)
Net cash outflow (180 516) (140 953)
Proceeds from shares issued 62 44
Net increase in borrowings 180 454 140 909
Cash funding requirement 180 516 140 953
STATEMENT OF CHANGES IN EQUITY
For year ended
31 December 31 December
R"000 2004 2003
Equity at the beginning of the year 711 257 717 688
Changes in share capital 62 44
Issue of share capital 62 44
Changes in non-distributable reserves (9) (30 427)
Surplus on revaluation of properties 19 287 -
Deferred taxation on revaluation of properties (5 786) -
Realisation of revaluation reserve on depreciation
of buildings (241) (240)
Increase in legal reserves of foreign subsidiaries - 687
Decrease in foreign currency translation reserve of
foreign subsidiaries (11 934) (31 082)
Exchange difference on foreign reserves (1 335) 208
Changes in retained earnings (11 192) 23 952
Effect of adoption of AC133:
Adjustment to opening retained earnings in respect
of fair value of embedded forward exchange
derivatives in purchases and sales contracts - 829
Net (loss) profit for the year (11 433) 36 654
Transfer from foreign currency translation reserve
on liquidation of foreign subsidiary - 1 047
Transfer from revaluation reserve on depreciation
of buildings 241 240
Transfer to legal reserves of foreign subsidiaries - (687)
Dividend - (14 131)
Equity at the end of the year 700 118 711 257
ABBREVIATED NOTES TO AUDITED RESULTS
For year ended
31 December 31 December
R"000 2004 2003
1. ACCOUNTING POLICIES
The accounting policies of the group comply with South African Statements of
Generally Accepted Accounting Practice and are consistent with those applied for
the previous year.
2. NET FINANCE COSTS
Net interest paid 24 003 21 233
Net currency exchange losses 7 425 59 259
Net finance costs paid 31 428 80 492
Effect of adoption of AC133:
transitional provision -
currency exchange gains - (4 491)
Net finance costs 31 428 76 001
3. (LOSS) PROFIT BEFORE TAXATION
(Loss) profit before taxation is arrived at after
taking into account:
Income
Import duty rebates 38 197 26 872
Surplus on disposal of property, plant and equipment 454 -
Expenditure
Auditors" remuneration 3 795 3 080
Depreciation of property, plant and equipment 26 364 24 162
Loss on disposal of property, plant and equipment - 54
Operating lease charges
- equipment and motor vehicles 11 497 10 313
- properties 16 188 12 935
(Decrease) increase in warranty provision (30 042) 38 736
Research and development expenses 27 548 53 069
Staff costs 337 856 351 007
4. (LOSS) EARNINGS PER SHARE
The calculation of (loss) earnings per share is based on (loss) 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 94,236,555 (2003: 94,219,203). On a diluted basis, the fully converted
weighted average number of shares is 94,616,206 (2003: 94,631,949).
Headline earnings is arrived at after excluding the net surplus (loss) on
disposal of property, plant and equipment as reflected in note 3.
5. STATED CAPITAL
Authorised
100 000 000 (2003:100 000 000) ordinary shares
of no par value - -
Issued
94 246 400 (2003:94 224 100) ordinary shares
of no par value 224 414 224 352
6. CAPITAL EXPENDITURE COMMITMENTS
Contracted 488 497
Authorised, but not contracted 18 286 24 197
Total capital expenditure commitments 18 774 24 694
7. SEGMENTAL ANALYSIS
Operating
profit
Revenue (loss) Assets Liabilities
2004
South Africa 1 244 794 (24 460) 1 052 858 651 240
Rest of world 1 281 694 49 811 538 870 240 370
Total 2 526 488 25 351 1 591 728 891 610
2003
South Africa 1 516 070 80 503 1 053 819 560 996
Rest of world 1 262 209 72 206 344 908 126 474
Total 2 778 279 152 709 1 398 727 687 470
8. CONTINGENT LIABILITIES
8.1 The repurchase of units sold to customers and
financial institutions has been guaranteed
by the group for an amount of 248 713 277 056
In the event of repurchase, it is estimated that
these units would presently realise 242 699 280 814
6 014 (3 758)
Less: provision for residual value risk (4 669) -
Net contingent liability (asset) 1 345 (3 758)
The provision for residual value risk is based
on the assessment of the probability of return
of the units.
8.2 The group has assisted customers with the financing of equipment purchased
through a financing venture with Wesbank, a division of FirstRand Bank Limited.
In respect of a certain category of this financing provided and in the event
of default by customers, the group is at risk for the full balance due to
Wesbank by the customers.
At year end the amount due by customers to Wesbank
in respect of these transactions totalled 133 202 142 942
In the event of default, the units financed
would be recovered and it is estimated that
they would presently realise (94 645) (148 898)
38 557 (5 956)
Less: provision for non-recovery (18 248) -
Net contingent liability (asset) 20 309 (5 956)
To the extent that both customers are in arrears
with Wesbank and there is a shortfall between the
estimated realisation values of units and the
balance due by the customers to Wesbank, a provision
for the full shortfall is made.
8.3 The residual values of certain equipment sold
to financial institutions has been guaranteed
by the group.
In the event of a residual value shortfall, the
group would be exposed to an amount of 8 564 3 800
8.4 Certain trade receivables have been discounted
with financial institutions for an amount of 1 467 20 028
These transactions are with recourse to the group.
In the event of default, certain units could be
recovered and it is estimated that these units
would presently realise 1 467 21 091
9. EXCHANGE RATES 2004 2003
Weighted Year Weighted Year
The following major rates of average end average end
exchange were used:
Euro: United States $ 1,25 1,36 1,14 1,26
SA Rand: United States $ 6,37 5,63 7,40 6,62
British GBP: United States $ 1,84 1,93 1,65 1,78
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.
CHAIRMAN"S STATEMENT
Bell Equipment proudly celebrated its 50th year of existence in 2004 however the
financial results for the year are very disappointing with the strong Rand once
again affecting sales and margins. Whilst unit volumes were up by 3%, revenue
dropped by 9% in line with lower export proceeds and heavy competition from
local importers taking advantage of the strong Rand. Exports as a percentage of
total sales were 51%, up from the previous year and export volumes increased by
11%. All exports, other than those to the United States are now transacted in
Euros.
An amendment to our policy regarding the management of foreign currency
transactions resulted in currency losses of R7,4 million which is a considerable
improvement on the R54,8 million expense in 2003. Overall net finance costs for
the year dropped by R44,6 million to R31,4 million. Operating profit for the
year was R25,4 million as compared with R152,7 million in the previous year. The
main factor for the decline was a drop of R132,5 million in gross profit from
the previous year. Overheads were under tight control and despite the increase
in volumes our overheads of R531,4 million are only 2% higher than the previous
year.
The single most disappointing feature for the year was the R246,8 million
increase in inventory since 30 June 2004. This was caused by the logistics and
global supply chain linkages and a 30% increase in the production rate at our
German assembly plant and was the exclusive cause of the negative cash flow of
R180,5 million for the year and the resultant increase in interest costs.
Until the group is restored to profitability and positive cash flow the
Directors have suspended the payment of dividends.
Bell and our major strategic alliance partner, John Deere, have announced plans
for Deere to manufacture our Articulated Dump Trucks in North America under a
royalty agreement. This will improve our results by eliminating unprofitable
sales which were made in terms of a dollar based pricing agreement that was
entered into when conventional wisdom indicated a weakening Rand. At the same
time the spare capacity in our Richards Bay factory will be taken up by the
local manufacture of certain Deere designed Front End Loaders and Tractor Loader
Backhoes for which Bell will pay Deere a royalty.
Management will continue to focus on quality, costs and working capital
management in the coming year and the Board is confident that efficiencies in
these areas will restore the group to profitability.
HOWARD J BUTTERY
Group Chairman
16 March 2005
Directors: *CD Anderson (USA), GW Bell (Group Chief Executive), HJ Buttery
(Group Chairman), JP Du Toit, GP Harris, *PJC Horne, *DJJ Vlok, *JW Kloet (USA),
*SCM Nyembezi, DL Smythe, *TO Tsukudu (*Non Executive Diretors)
Alternate Directors: PA Bell, PC Bell, MA Campbell, *DM Gage (USA), DB Rhind
Company Secretary: DP Mahony
Sponsor
Investec Bank Limited
Registered Office Transfer Secretaries
13 - 19 Carbonode Cell Computershare Investor Services 2004 (Pty) Limited
Alton 70 Marshall Street
Richards Bay Johannesburg
Date: 16/03/2005 05:15:16 PM Supplied by www.sharenet.co.za
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