Wrap Text
Audited Results and cash dividend declaration
for the year ended 31 December 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
Audited Results and cash dividend declaration
for the year ended 31 December 2012
BELL financial highlights
Revenue up 12%
NET ASSET VALUE PER SHARE UP 17%
NET CASH INFLOW R215 MILLION
Condensed consolidated statement of financial position
as at 31 December 2012
Audited Audited
R'000 2012 2011
ASSETS
Non-current assets 767 448 735 704
Property, plant and equipment 547 889 529 037
Intangible assets 118 151 82 969
Interest-bearing long-term receivables 13 467 10 534
Deferred taxation 87 941 113 164
Current assets 2 721 879 3 134 505
Inventory 1 817 759 2 060 829
Trade and other receivables 650 556 882 170
Current portion of interest-bearing long-term receivables 38 189 44 447
Prepayments 18 509 16 676
Other financial assets 3 213 4 479
Taxation 4 832 3 508
Cash resources 188 821 122 396
Total assets 3 489 327 3 870 209
EQUITY AND LIABILITIES
Capital and reserves 2 073 559 1 777 536
Stated capital (note 5) 228 749 228 605
Non-distributable reserves 197 050 144 089
Retained earnings 1 596 095 1 371 285
Attributable to owners of Bell Equipment Limited 2 021 894 1 743 979
Non-controlling interest 51 665 33 557
Non-current liabilities 276 307 398 090
Interest-bearing liabilities 118 181 225 025
Repurchase obligations and deferred leasing income 57 098 79 582
Deferred warranty income 61 340 61 521
Long-term provisions and lease escalation 39 688 31 962
Current liabilities 1 139 461 1 694 583
Trade and other payables 738 445 1 210 210
Current portion of interest-bearing liabilities 116 670 21 845
Current portion of repurchase obligations and deferred leasing income 48 066 54 717
Current portion of deferred warranty income 40 138 24 178
Current portion of provisions and lease escalation 43 852 51 902
Other financial liabilities 1 435 1 820
Taxation 17 541 48 093
Short-term interest-bearing debt 133 314 281 818
Total equity and liabilities 3 489 327 3 870 209
Number of shares in issue ('000) 94 974 94 958
Net asset value per share (cents) 2 183 1 872
Condensed consolidated income statement
for the year ended 31 December 2012
Audited Audited
R'000 2012 2011
Revenue 5 670 188 5 070 784
Cost of sales (4 410 050) (3 871 958)
Gross profit 1 260 138 1 198 826
Other operating income 111 866 142 715
Expenses (1 007 130) (905 901)
Profit from operating activities (note 2) 364 874 435 640
Net interest paid (note 3) (41 522) (33 506)
Profit before taxation 323 352 402 134
Taxation (80 434) (105 249)
Profit for the year 242 918 296 885
Profit for the year attributable to:
Owners of Bell Equipment Limited 224 810 275 782
Non-controlling interest 18 108 21 103
Earnings per share (basic) (note 4) (cents) 237 290
Earnings per share (diluted) (note 4) (cents) 232 290
Condensed consolidated statement of comprehensive income
for the year ended 31 December 2012
Audited Audited
R'000 2012 2011
Profit for the year 242 918 296 885
Other comprehensive income
Exchange differences arising during the year 47 653 57 436
Exchange differences on translating foreign operations 45 595 56 950
Reclassification to profit or loss of foreign currency
translation reserve on discontinued operations (4 036)
Exchange differences on foreign reserves 2 058 4 522
Other comprehensive income for the year 47 653 57 436
Total comprehensive income for the year 290 571 354 321
Total comprehensive income attributable to:
Owners of Bell Equipment Limited 272 463 333 218
Non-controlling interest 18 108 21 103
Condensed consolidated statement of cash flows
for the year ended 31 December 2012
Audited Audited
R'000 2012 2011
Cash generated from operations before working capital changes 533 043 603 325
Cash utilised in working capital (2 141) (628 331)
Cash generated from (utilised in) operations 530 902 (25 006)
Net interest paid (41 522) (33 506)
Taxation paid (89 645) (45 386)
Net cash generated from (utilised in) operating activities 399 735 (103 898)
Net cash flow utilised in investing activities (172 869) (147 389)
Net cash flow (utilised in) generated from financing activities (11 937) 150 133
Net cash inflow (outflow) 214 929 (101 154)
Net short-term interest-bearing debt at beginning of the year (159 422) (58 268)
Net cash (short-term interest-bearing debt) at end of the year 55 507 (159 422)
Comprising:
Cash resources 188 821 122 396
Short-term interest-bearing debt (133 314) (281 818)
Net cash (short-term interest-bearing debt) at end of the year 55 507 (159 422)
Consolidated statement of changes in equity
for the year ended 31 December 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 228 605 90 488 1 087 162 1 406 255 12 454 1 418 709
Recognition of share-based payments 4 506 4 506 4 506
Total comprehensive income for the year 57 436 275 782 333 218 21 103 354 321
Realisation of revaluation reserve on depreciation of buildings (2 808) 2 808
Deferred taxation on realisation of revaluation reserve on depreciation of buildings 786 (786)
Reversal of prior year transfer of debit foreign currency translation reserve to retained earnings (6 319) 6 319
Balance at 31 December 2011 228 605 144 089 1 371 285 1 743 979 33 557 1 777 536
Recognition of share-based payments 5 308 5 308 5 308
Total comprehensive income for the year 47 653 224 810 272 463 18 108 290 571
Share options exercised 144 144 144
Balance at 31 December 2012 228 749 197 050 1 596 095 2 021 894 51 665 2 073 559
Abbreviated notes to the audited consolidated results
for the year ended 31 December 2012
1. ACCOUNTING POLICIES
The financial statements from which these results are summarised have been prepared in accordance with International Financial
Reporting Standards (IFRS) and the policies and methods of computation are consistent with those applied to the previous year, 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 year 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 financial statements and in this abridged report.
The financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties and financial
instruments. The condensed financial information has been prepared in accordance with the framework concepts and the measurement
and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council and the
information as required by IAS 34 Interim Financial Reporting and the requirements of the Companies Act of South Africa. The preparation
of this abridged report was supervised by the Group Financial Director, KJ van Haght CA(SA).
31 December 31 December
R'000 2012 2011
2. PROFIT FROM OPERATING ACTIVITIES
Profit from operating activities is arrived at after taking into account:
Income
Currency exchange gains 239 544 177 440
Deferred warranty income 37 393 47 598
Decrease in warranty provision 7 895
Import duty rebates 23 451 44 385
Royalties 2 397 7 996
Net surplus on disposal of property, plant and equipment and intangible assets 403 1 202
Expenditure
Amortisation of intangible assets 19 295 15 636
Auditors' remuneration audit and other services 8 684 8 537
Currency exchange losses 243 720 163 515
Depreciation of property, plant and equipment 115 443 105 069
Increase in warranty provision 9 929
Operating lease charges 100 333 85 639
Research expenses (excluding staff costs) 23 738 28 328
Staff costs 964 363 892 986
3. NET INTEREST PAID
Interest paid 53 669 44 940
Interest received (12 147) (11 434)
Net interest paid 41 522 33 506
4. EARNINGS PER SHARE
Basic earnings per share is arrived at as follows:
Profit for the year attributable to owners of Bell Equipment Limited (R'000) 224 810 275 782
Weighted average number of ordinary shares in issue ('000) 94 968 94 958
Earnings per share (basic) (cents) 237 290
Diluted earnings per share is arrived at as follows:
Profit for the year attributable to owners of Bell Equipment Limited (R'000) 224 810 275 782
Fully converted weighted average number of shares ('000) 96 756 95 154
Earnings per share (diluted) (cents) 232 290
Headline earnings per share is arrived at as follows:
Profit for the year attributable to owners of Bell Equipment Limited (R'000) 224 810 275 782
Net surplus on disposal of property, plant and equipment and intangible assets (R'000) (403) (1 202)
Taxation effect of net surplus on disposal of property, plant and equipment
and intangible assets (R'000) 113 337
Reclassification to profit or loss of foreign currency translation reserve
on discontinued operations (R'000) (4 036)
Headline earnings (R'000) 224 520 270 881
Weighted average number of ordinary shares in issue ('000) 94 968 94 958
Headline earnings per share (basic) (cents) 236 285
Diluted headline earnings per share is arrived at as follows:
Headline earnings calculated above (R'000) 224 520 270 881
Fully converted weighted average number of shares ('000) 96 756 95 154
Headline earnings per share (diluted) (cents) 232 285
5. STATED CAPITAL
Authorised
100 000 000 (2011: 100 000 000) ordinary shares of no par value
Issued
94 974 000 (2011: 94 958 000) ordinary shares of no par value 228 749 228 605
6. CAPITAL EXPENDITURE COMMITMENTS
Contracted 27 136 13 924
Authorised, but not contracted 94 072 175 223
Total capital expenditure commitments 121 208 189 147
Operating
Revenue profit (loss) Assets Liabilities
7. ABBREVIATED SEGMENTAL ANALYSIS R'000 R'000 R'000 R'000
December 2012
South African sales operation 2 500 670 110 678 745 507 571 075
South African manufacturing and logistics operation 3 446 384 65 589 1 792 122 564 411
European operation 1 057 318 53 495 785 104 622 196
Rest of Africa and other international operations 1 376 178 179 501 824 362 680 281
All other operations (2 268) 832 069 55 903
Inter-segmental eliminations (2 710 362) (42 121) (1 489 837) (1 078 098)
Total 5 670 188 364 874 3 489 327 1 415 768
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 5 070 784 435 640 3 870 209 2 092 673
31 December 31 December
R'000 2012 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 2 069 1 158
In the event of repurchase, it is estimated that these units would presently realise 3 389 1 850
Net contingent liability
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, as well as
through Sunlyn Rentals (Proprietary) Limited, W Ferguson Investments CC, ABSA Bank
Limited and Standard Bank of South Africa Limited.
In respect of the different categories of financing provided by these financial
institutions, the group is liable for the full balance due to these financial institutions by
default customers with regard to Bell-backed deals and a portion of the balance with
regard to Bell-shared risk deals.
At year-end the amount due by customers to financial institutions for which the
group is liable totalled 64 454 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 98 433 59 525
(33 979) 7 512
Less: provision for non-recovery 500 500
Net contingent liability 7 012
Where customers are in arrears with these financial institutions and there is a shortfall
between the estimated realisation values of units and the balances due by the
customers to these financial institutions, 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 have been
guaranteed by the group.
In the event of a residual value shortfall, the group would be exposed to an amount of 10 886 10 316
Less: provision for residual value risk 1 154
Net contingent liability 9 732 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. INDEPENDENT AUDITORS' REPORT
The auditors, Deloitte & Touche, have issued their opinion on the group's financial statements for the year ended
31 December 2012. The audit was conducted in accordance with International Standards on Auditing. They have issued an
unmodified audit opinion. These summarised financial statements have been derived from the group financial statements and are
consistent in all material respects, with the group financial statements. A copy of their audit 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.
10. SUBSEQUENT EVENTS
No fact or circumstance material to the appreciation of this report has occurred between 31 December 2012 and the date of
this report.
Chairman's and Chief Executive Officer's review
We are pleased to report on the group's 2012 financial year.
Financial
In some respects, 2012 proved to be a mixed year for Bell Equipment. The group has recorded profit after tax amounting to
R243 million which compares with the R297 million in the prior year. Of the current year's profits, R225 million is attributable
to shareholders of Bell. This translates into earnings per share for the year under review of 237 cents ( 2011: 290 cents).
The drop in profitability can be attributed to three major factors. Whilst sales increased by almost 12% the overall gross profit
margins fell by approximately 6,1% in comparison with the previous year, giving rise to a modest growth in gross profit in
Rand terms of 5,1%. This deterioration was directly as a result of greater competition in a declining market place following the
economic turmoil both locally and abroad, particularly in the second half of the year. The improved gross profit in Rand terms
was more than offset by an increase in overheads of 11,1%. The third contributor was a reduction in other operating income of
R31 million. This stemmed largely from a reduction in import duty rebates relating to the Motor Industry Development Programme
and also a reduction in extended warranty income recognised. A particularly pleasing aspect of the past year's results is the
significant improvement in working capital management. Both inventories and trade receivables are well down on the previous
year and this has contributed to a positive cash flow for the year under review of R215 million. In the light of the group's stronger
statement of financial position it has been proposed that a dividend of 40 cents per share be paid to shareholders.
As in the prior year, the Rand was weaker against the major currencies at year end than it was on average during the year.
The translation of the results of the foreign operations into SA Rands therefore resulted in an increase in the foreign currency
translation reserve of R46 million (2011: R57 million). This resulted in Bell's total comprehensive income for the year amounting
to R291 million (2011: R354 million).The group's capital and reserves have increased to approximately R2,1 billion with net
asset value having risen to R21,83 per share (2011: R18,72).
In a geographic context, the Africa region continues to contribute the lion's share of Bell's business and for 2012 these
constituted approximately 73% of group sales.
Sustainability
As mentioned in our report last year, after taking a hard look at our existing structures and strategies following the economic
meltdown in 2008/9, The group identified a number of operational improvements which needed to be made. Many of these
have been implemented and are bearing fruit. Others require a process and will only start showing their due rewards in time to
come. One example of these operational improvements has been the successful conversion of certain critical IT systems to the
SAP platform. The benefits of this implementation are already evident.
Bell Equipment remains a market leader in the majority of its product range. Management's ongoing commitment to excellence
through its research and development programmes and its service to customers should ensure that the group maintains its
pre-eminent position in the markets which it serves.
Operational issues
The tailing off in demand for mining-related products in the latter half of the year has resulted in reduced throughput in the
group's production facilities which in turn resulted in an under recovery of fixed overheads during that period. Fortunately,
improved forecasting and management of the group's resources limited the potential impact of the slowdown. Further
capacity exists at each of Bell's plants and it is hoped that increased utilisation will return during the course of the year ahead.
Management has been active securing new markets for the group's products and this is starting to show in the order book
which is currently in a healthy position. Management has also been seeking out new sources of supply for the products required
in our production processes with a view to achieving cost savings and reducing supply lead times.
Like most local manufacturers operating in international markets, Bell Equipment has not been immune to the challenges of
rapidly increasing costs of doing business in South Africa. The rising costs of labour, electricity and fuel impact heavily on Bell's
competitiveness. Fortunately however this is mitigated to some extent by the recent depreciation of our currency.
Greater attention is also being given to health and safety issues in the workplace. Although it has always been an important
issue within the group, greater focus was placed on this issue by the Risk and Sustainability Committee and the Board itself.
A good relationship exists with the vast majority of personnel employed by Bell Equipment and the Unions which represent the
scheduled staff, something that is critical from an operational point of view.
Stakeholders will recall that changes to the commercial relationship between the group and John Deere ("Deere") were taking
place following the planned launch by Deere of its own range of articulated dump trucks ("ADTs"). This progressed during the
year under review with two major changes occurring. The first was the resignation of the Deere representative directors from the
Bell Equipment Board in order to overcome the conflict of interest issues which had arisen and the second was the termination
of the ADT agreement which in turn meant the end of certain exclusivity provisions. This has facilitated Bell's entry into certain
strategic markets such as Canada, the United States and South America but also meant that Deere will be free to sell its new
ADTs and other products worldwide. Notwithstanding these changes, both Deere and Bell Equipment have expressed their
intention to remain committed as partners in other areas. In this regard, it is anticipated that Bell's role as Deere's dealer of
construction and forestry equipment in South Africa and a number of other countries in sub-Saharan Africa will continue.
Stakeholder engagement
Bell Equipment continues to engage with the relevant private and governmental stakeholder's of the group at various levels.
As South Africa's leading earth moving, construction, mining and materials handling equipment provider, we remain extremely
supportive of all initiatives to bolster our economy and improve prospects for the creation of employment in our industry, and in
particular, for the communities surrounding our Richards Bay factory. In this context, we are fully supportive of, and encouraged
by, the government's plans to expand production in the value-added sectors where high employment and growth multipliers
are present. South Africa desperately needs to stimulate employment and the manufacturing sector is one of the areas where
this can best be achieved. We look forward to ongoing interaction with government as we seek to find ways in which we can
profitably develop the local supply base and increase employment.
Outlook
Bell Equipment has a growing order book which bodes well for the first half of 2013. There are clearly obstacles in the face of
the Eurozone turnaround but it appears that many economies are showing signs of growth. Certainly, within South Africa, the
projected increase in infrastructure spend should have a positive impact upon Bell, particularly as its range of quality products
fits well into the needs of the National Development Plan.
Cash dividend declaration
Notice is hereby given that the directors have declared an annual gross cash dividend of 40 cents (34 cents net of dividend
withholding tax) per ordinary share for the year ended 31 December 2012.
The dividend has been declared from income reserves and no secondary tax on companies' credits have been used.
A dividend withholding tax of 15% will be applicable to all shareholders who are not exempt.
The issued share capital at the declaration date is 94 974 000 ordinary shares. The tax reference number of the company is 9022169206P.
The salient dates for the dividend will be as follows:
Last day of trade to receive a dividend Friday, 5 April 2013
Shares commence trading "ex" dividend Monday, 8 April 2013
Record date Friday, 12 April 2013
Payment date Monday, 15 April 2013
Share certificates may not be dematerialised or rematerialised between Monday, 8 April 2013 and Friday, 12 April 2013, both days inclusive.
Michael Mun-Gavin Gary Bell
Chairman Chief Executive Officer
14 March 2013
Directors: MA Mun-Gavin* (Chairman), GW Bell (Group Chief Executive), KJ van Haght (Group Financial Director),
L Goosen, JR Barton*, B Harie*, TO Tsukudu*, DJJ Vlok*
Alternate directors: AR McDuling
* Independent non-executive director
Resignations: K Manning (4 October 2012); DM Gage (4 October 2012); RM Buchignani (4 October 2012);
TA Averkamp (4 October 2012); GP Harris (4 October 2012).
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
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