Wrap Text
Reviewed interim report for the six months ended 30 June 2012
Bell Equipment Limited
("Bell" or "the group" or the "company")
(Incorporated in the Republic of South Africa)
(Share code: BEL)
ISIN: ZAE000028304
Registration number: 1968/013656/06
Reviewed interim report
for the six months ended 30 June 2012
Highlights
- Revenue up 35%
- Operating profit up 40%
- Earnings per share up 31%
Condensed consolidated statement of financial position
as at 30 June 2012 Reviewed Reviewed Audited
30 June 30 June 31 December
R'000 2012 2011 2011
ASSETS
Non-current assets 735 392 734 757 735 704
Property, plant and equipment 526 770 499 998 529 037
Intangible assets 101 111 80 724 82 969
Interest-bearing long-term receivables 8 902 20 199 10 534
Deferred taxation 98 609 133 836 113 164
Current assets 3 117 200 2 448 546 3 134 505
Inventory 2 033 898 1 635 284 2 060 829
Trade and other receivables and prepayments 959 842 695 621 898 846
Current portion of interest-bearing long-term receivables 31 728 36 139 44 447
Other financial assets 1 389 461 4 479
Taxation 8 527 4 045 3 508
Cash resources 81 816 76 996 122 396
Total assets 3 852 592 3 183 303 3 870 209
EQUITY AND LIABILITIES
Capital and reserves 1 931 552 1 561 282 1 777 536
Stated capital (note 5) 228 749 228 605 228 605
Non-distributable reserves 146 690 110 529 144 089
Retained earnings 1 507 088 1 197 821 1 371 285
Attributable to owners of Bell Equipment Limited 1 882 527 1 536 955 1 743 979
Non-controlling interest 49 025 24 327 33 557
Non-current liabilities 386 951 267 677 398 090
Interest-bearing liabilities 208 390 83 041 225 025
Repurchase obligations and deferred leasing income 71 614 89 994 79 582
Deferred warranty income 71 883 70 888 61 521
Long-term provisions and lease escalation 35 064 23 754 31 962
Current liabilities 1 534 089 1 354 344 1 694 583
Trade and other payables 967 080 944 588 1 210 210
Current portion of interest-bearing liabilities 34 559 3 373 21 845
Current portion of repurchase obligations
and deferred leasing income 40 761 62 390 54 717
Current portion of deferred warranty income 23 113 22 785 24 178
Current portion of provisions and lease escalation 58 972 42 796 51 902
Other financial liabilities 278 1 820
Taxation 28 857 23 599 48 093
Short-term interest-bearing debt 380 747 254 535 281 818
Total equity and liabilities 3 852 592 3 183 303 3 870 209
Number of shares in issue ('000) 94 974 94 958 94 958
Net asset value per share (cents) 2 034 1 644 1 872
Condensed consolidated income statement
for the six months ended 30 June 2012 Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
R'000 2012 2011 2011
Revenue 2 901 405 2 141 708 5 070 784
Cost of sales (2 262 873) (1 644 956) (3 871 958)
Gross profit 638 532 496 752 1 198 826
Other operating income 52 473 63 787 142 715
Expenses (467 175) (400 507) (905 901)
Profit from operating activities (note 2) 223 830 160 032 435 640
Net interest paid (note 3) (29 861) (8 902) (33 506)
Profit before taxation 193 969 151 130 402 134
Taxation (42 698) (35 928) (105 249)
Profit for the period 151 271 115 202 296 885
Profit for the period attributable to:
Owners of Bell Equipment Limited 135 803 103 329 275 782
Non-controlling interest 15 468 11 873 21 103
Earnings per share (basic) (note 4) (cents) 143 109 290
Earnings per share (diluted) (note 4) (cents) 141 109 290
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2012 Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
R'000 2012 2011 2011
Profit for the period 151 271 115 202 296 885
Other comprehensive income
Exchange differences arising during the period 159 24 953 57 436
Exchange differences on translating foreign operations 494 25 611 56 950
Reclassification to profit or loss of foreign currency
translation reserve on discontinued operation (3 340) (4 036)
Exchange differences on foreign reserves (335) 2 682 4 522
Other comprehensive income for the period, net of tax 159 24 953 57 436
Total comprehensive income for the period 151 430 140 155 354 321
Total comprehensive income attributable to:
Owners of Bell Equipment Limited 135 962 128 282 333 218
Non-controlling interest 15 468 11 873 21 103
Condensed consolidated statement of cash flows
for the six months ended 30 June 2012 Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
R'000 2012 2011 2011
Cash operating profit before working capital changes 311 692 232 335 603 325
Cash utilised in working capital (265 372) (264 778) (628 331)
Cash generated from (utilised in) operations 46 320 (32 443) (25 006)
Net interest paid (29 861) (8 902) (33 506)
Taxation paid (50 680) (22 552) (45 386)
Net cash utilised in operating activities (34 221) (63 897) (103 898)
Net cash flow utilised in investing activities (79 597) (63 160) (147 389)
Net cash flow (utilised in) generated from financing activities (25 691) 7 786 150 133
Net cash outflow (139 509) (119 271) (101 154)
Net short-term interest-bearing debt at beginning of the period (159 422) (58 268) (58 268)
Net short-term interest-bearing debt at end of the period (298 931) (177 539) (159 422)
Comprising:
Cash resources 81 816 76 996 122 396
Short-term interest-bearing debt (380 747) (254 535) (281 818)
Net short-term interest-bearing debt at end of the period (298 931) (177 539) (159 422)
Consolidated statement of changes in equity
for the six months ended 30 June 2012 Attributable to owners of Bell Equipment Limited
Non-distributable Retained Non-controlling Total capital
R'000 Stated capital reserves earnings Total interest and reserves
Balance at 31 December 2010 audited 228 605 90 488 1 087 162 1 406 255 12 454 1 418 709
Recognition of share-based payments 2 418 2 418 2 418
Total comprehensive income for the period 24 953 103 329 128 282 11 873 140 155
Realisation of revaluation reserve on depreciation of buildings (1 404) 1 404
Deferred taxation on realisation of revaluation reserve on depreciation of buildings 393 (393)
Reversal of prior year transfer of debit foreign currency translation reserve to retained earnings (6 319) 6 319
Balance at 30 June 2011 reviewed 228 605 110 529 1 197 821 1 536 955 24 327 1 561 282
Recognition of share-based payments 2 088 2 088 2 088
Total comprehensive income for the period 32 483 172 453 204 936 9 230 214 166
Realisation of revaluation reserve on depreciation of buildings (1 404) 1 404
Deferred taxation on realisation of revaluation reserve on depreciation of buildings 393 (393)
Balance at 31 December 2011 audited 228 605 144 089 1 371 285 1 743 979 33 557 1 777 536
Share options exercised 144 144 144
Recognition of share-based payments 2 442 2 442 2 442
Total comprehensive income for the period 159 135 803 135 962 15 468 151 430
Balance at 30 June 2012 reviewed 228 749 146 690 1 507 088 1 882 527 49 025 1 931 552
Abbreviated notes to the interim report
for the six months ended 30 June 2012
1. BASIS OF PREPARATION
The accounting policies and methods of computation are consistent with those applied in the financial statements for the year ended
31 December 2011, which complied with International Financial Reporting Standards, except for the treatment of the revaluation reserve
and the adoption of new and revised Standards and Interpretations.
In terms of IAS 16, Property Plant and Equipment, the revaluation surplus included in equity in respect of an item of property, plant and
equipment may be transferred directly to retained earnings when the asset is derecognised. This may involve transferring the whole of the
surplus when the asset is retired or disposed; alternatively, some of the surplus may be transferred as the asset is used by an entity.
The previous treatment was to release a portion of the revaluation surplus over the useful life of the asset. In the current year, management
has elected to rather defer the transfer of the revaluation surplus to retained earnings until such time as the asset is derecognised. This
change in accounting policy did not have a significant impact on the reported results.
In the current period the group has adopted all of the new and revised Standards and Interpretations relevant to its operations and effective
for annual reporting periods beginning 1 January 2012. The adoption of these new and revised Standards and Interpretations has not had
any significant impact on the amounts reported in the interim report or the disclosures herein.
This interim report has been prepared in accordance with the framework concepts and the measurement and recognition criteria of
International Financial Reporting Standards (IFRS) and complies with International Accounting Standard 34 Interim Financial Reporting,
AC 500 Standards as issued by the Accounting Practices Board, the disclosure requirements of the JSE Limited's Listings Requirements
and the requirements of the Companies Act of South Africa. The interim report has been reviewed in compliance with any applicable
requirements of the Companies Act of South Africa. The preparation of this interim report was supervised by the Group Financial Director,
KJ van Haght CA (SA).
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
R'000 2012 2011 2011
2. PROFIT FROM OPERATING ACTIVITIES
Profit from operating activities is arrived at after taking into account:
Income
Currency exchange gains 116 658 47 649 177 440
Decrease in warranty provision 3 006
Deferred warranty income 17 868 21 181 47 598
Import duty rebates 8 861 26 235 44 385
Royalties 1 293 2 240 7 996
Net surplus on disposal of property, plant and equipment and intangible assets 175 119 1 202
Expenditure
Amortisation of intangible assets 9 395 5 778 15 636
Auditors' remuneration audit and other services 4 763 3 739 8 537
Currency exchange losses 116 727 52 556 163 515
Depreciation of property, plant and equipment 57 122 46 337 105 069
Increase in warranty provision 5 199 9 929
Operating lease charges
equipment and motor vehicles 13 236 11 136 22 521
land and buildings 34 123 30 703 63 118
Research expenses (excluding staff costs) 15 229 10 987 28 328
Staff costs 462 871 395 329 892 986
3. NET INTEREST PAID
Interest paid 32 674 14 731 44 940
Interest received (2 813) (5 829) (11 434)
Net interest paid 29 861 8 902 33 506
4. EARNINGS PER SHARE
Basic earnings per share is arrived at as follows:
Profit for the period attributable to owners of Bell Equipment Limited (R'000) 135 803 103 329 275 782
Weighted average number of ordinary shares in issue during the period (000) 94 961 94 958 94 958
Basic earnings per share (cents) 143 109 290
Diluted earnings per share is arrived at as follows:
Profit for the period attributable to owners of Bell Equipment Limited (R'000) 135 803 103 329 275 782
Fully converted weighted average number of shares ('000) 96 407 94 963 95 154
Diluted earnings per share (cents) 141 109 290
Headline earnings per share is arrived at as follows:
Profit for the period attributable to owners of Bell Equipment Limited (R'000) 135 803 103 329 275 782
Net surplus on disposal of property, plant and equipment and intangible assets (R'000) (175) (119) (1 202)
Tax effect of net surplus on disposal of property, plant and equipment
and intangible assets (R'000) 49 33 337
Reclassification to profit or loss of foreign currency translation reserve
on discontinued operation (R'000) (3 340) (4 036)
Headline earnings (R'000) 135 677 99 903 270 881
Weighted average number of ordinary shares in issue during the period ('000) 94 961 94 958 94 958
Headline earnings per share (basic) (cents) 143 105 285
Diluted headline earnings per share is arrived at as follows:
Headline earnings calculated above (R'000) 135 677 99 903 270 881
Fully converted weighted average number of shares ('000) 96 407 94 963 95 154
Headline earnings per share (diluted) (cents) 141 105 285
5. STATED CAPITAL
Authorised
100 000 000 (June 2011: 100 000 000) ordinary shares of no par value
Issued
94 974 000 (June 2011: 94 958 000) ordinary shares of no par value 228 749 228 605 228 605
The increase in issued share capital relates to 16 000 share options exercised at
an average share price of R9,00 per share.
6. CAPITAL EXPENDITURE COMMITMENTS
Contracted 15 658 8 400 13 924
Authorised, but not contracted 73 809 34 415 175 223
Total capital expenditure commitments 89 467 42 815 189 147
7. ABBREVIATED SEGMENTAL ANALYSIS Operating
R'000 Revenue profit (loss) Assets Liabilities
June 2012
South African sales operation 1 429 772 81 715 761 695 596 634
South African manufacturing and logistics operation 1 505 329 26 488 2 483 881 1 371 564
European operation 575 030 28 796 782 510 648 441
Rest of Africa and other international operations 757 485 79 133 627 772 407 008
All other operations (6 491) 704 508 59 262
Inter-segmental eliminations (1 366 211) 14 189 (1 507 774) (1 161 869)
Total reviewed 2 901 405 223 830 3 852 592 1 921 040
June 2011
South African sales operation 1 170 073 57 682 766 584 684 712
South African manufacturing and logistics operation 1 242 502 30 277 2 004 252 812 857
European operation 368 455 7 217 540 749 463 877
Rest of Africa and other international operations 354 635 45 820 385 441 244 621
All other operations 1 854 397 416 34 312
Inter-segmental eliminations (993 957) 17 182 (911 139) (618 358)
Total reviewed 2 141 708 160 032 3 183 303 1 622 021
December 2011
South African sales operation 2 512 464 133 613 815 199 702 143
South African manufacturing and logistics operation 2 947 343 73 222 2 455 027 1 184 581
European operation 847 882 33 227 808 228 701 779
Rest of Africa and other international operations 1 251 577 232 977 594 673 351 906
All other operations 17 276 451 211 52 107
Inter-segmental eliminations (2 488 482) (54 675) (1 254 129) (899 843)
Total audited 5 070 784 435 640 3 870 209 2 092 673
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
R'000 2012 2011 2011
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 3 476 1 158
In the event of repurchase, it is estimated that these units would presently realise 4 870 1 850
Net contingent liability
The guarantees expired during the current period.
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 the different categories of financing provided by WesBank, the group
is liable for the full balance due to WesBank by default customers with regard to
Bell-backed deals and a portion of the balance with regard to Bell-shared risk
deals.
At period end the amount due by customers to WesBank for which the group is
liable totalled 63 604 87 286 67 037
In the event of default, the units financed would be recovered and it is estimated
that they would presently realise the following towards the above liability 63 104 86 452 59 525
500 834 7 512
Less: provision for non-recovery 500 1 600 500
Net contingent liability 7 012
Where customers are in arrears with WesBank and there is a shortfall between
the estimated realisation values of units and the balances due by the customers
to WesBank, an assessment of any additional security is done and a provision for
any 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 9 872 8 843 10 316
Less: provision for residual value risk
Net contingent liability 9 872 8 843 10 316
The above includes deposits held by financial institutions as security for residual
values on units guaranteed by the group. The recoverability of these deposits is
dependent on the units realising the guaranteed residual values at the end of the
guarantee period. The provision for residual value risk is based on the assessment
of the probability of return of the units.
9. RELATED PARTY TRANSACTIONS
Shareholders
John Deere Construction and Forestry Company
sales 78 079 87 643 164 250
purchases 198 477 259 477 463 444
amounts owing to 100 918 111 743 78 060
amounts owing by 19 002 31 447 19 899
10. INDEPENDENT AUDITORS' REPORT
The condensed interim financial information for the half year ended 30 June 2012 has been reviewed by the group's auditors,
Deloitte & Touche. The review was conducted in accordance with ISRE 2410 Review of Interim Financial Information performed
by the Independent Auditor of the Entity'. A copy of their unmodified review report is available for inspection at the company's
registered office. Any reference to future financial performance included in this announcement has not been reviewed or reported
on by the company's auditors.
11. SUBSEQUENT EVENTS
No fact or circumstance material to the appreciation of this interim report has occurred between 30 June 2012 and the date of
this report.
Chairman's and Chief Executive Officer's review
INTRODUCTION
We are pleased to report on Bell's performance for the first six months of the 2012 financial year, particularly
as the group has shown a meaningful improvement in profitability over the corresponding period in the previous
year.
ECONOMIC OVERVIEW
As we write this review all economists' eyes remain focused on the volatility in global economies, especially the
Eurozone and their struggle to address their liquidity problems. In our review this time last year we expressed
the concern that global markets were going to take years rather than months before they emerged from these
troubled times. Little has changed to alter that view. Notwithstanding these difficulties, Bell has benefited
from strong demand for the group's products which support the mining industry. This will be addressed more
comprehensively below.
FINANCIAL RESULTS
The group has recorded first half earnings of R151 million (2011 first half: R115 million) which is equivalent to
143 cents per share (2011: 109 cents per share). The major contributor to this significant improvement in
profitability was an increase in sales of 35%. Countering this was a minor decrease in gross profit margins
and a R21 million increase in net interest paid following a slightly slower start to the year than was anticipated.
On the statement of financial position, the net asset value per share has risen by almost 24% since June 2011 to
2 034 cents. Gearing has risen to 28% (June 2011: 17%) as a result of the additional inventory and receivables
being carried in order to accommodate the increased sales demand. At the time of this review and following solid
positive cash flows since the period end, gearing has returned to 20% which is more in line with the group's
strategic objectives.
OPERATIONS REVIEW
Despite rather lacklustre global economic growth, Bell Equipment has been able to maintain its strong position in
the domestic market and at the same time grown market share in Europe, Australasia and sub-Saharan Africa.
As mentioned earlier, mining sector business has been positive and Bell is well positioned to take advantage of
the substantial infrastructure spend contemplated by the South African government in the years ahead.
Earlier in the year, Bell took the opportunity to reveal its new state-of-the-art Truck range at the Intermat Exhibition
in Paris. These machines will ensure that we maintain our technological advantage in the market and give our
customers the added benefits of higher productivity, greater durability and lower life-time operating costs.
Initiatives aligned to our global strategy will see several new market opportunities open up for us in the next six
to twelve months which should provide greater throughput for both our South African and German factories.
SHAREHOLDER DISCUSSIONS
Stakeholders may recall that we have made mention in our last two reviews, both in June last year and the
Integrated Report issued earlier this year, that the two major shareholders were in discussions over John Deere's
continued ownership of its shares in Bell. These discussions have still not been finalised, however John Deere
have indicated that in view of the imminent launch of their ADT in competition with Bell, they plan to have
their current nominated directors, who are all executives within the Deere Group, resign from the Bell board of
directors. Their replacements have yet to be decided upon.
PROSPECTS
We are confident that the solid first half-year results will continue into the second half of the financial year, unless
there is a major decline in market demand.
Michael Mun-Gavin Gary Bell
Chairman Chief Executive Officer
7 August 2012
Bell Equipment Limited
("Bell" or "the group" or the "company") (Incorporated in the Republic of South Africa) (Share code: BEL)
ISIN: ZAE000028304 Registration number: 1968/013656/06
Directors: MA Mun-Gavin* (Chairman), GW Bell (Group Chief Executive), KJ van Haght (Group Financial Director),
DM Gage (USA)#, L Goosen, K Manning (USA)#, RM Buchignani (USA)#, JR Barton*, B Harie*, TO Tsukudu*, DJJ Vlok*
Alternate directors: TA Averkamp (USA)#, GP Harris, AR McDuling
# Non-executive directors * Independent non-executive directors
Company Secretary: D McIlrath (appointed 1 October 2011 and resigned 16 January 2012);
P van der Sandt (appointed 16 January 2012)
Registered office: 13 19 Carbonode Cell Road, Alton, Richards Bay, 3900
Transfer secretaries: Link Market Services South Africa (Pty) Limited, PO Box 4844, Johannesburg, 2000
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
www.bellequipment.com
13 August 2012
Date: 13/08/2012 12:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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