Wrap Text
Reviewed interim report for the six months ended 30 June 2013
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
Bell Equipment Limited
reviewed interim report
for the six months ended 30 June 2013
Condensed consolidated statement of financial position
as at 30 June 2013 Reviewed Reviewed Audited
30 June 30 June 31 December
R'000 2013 2012 2012
ASSETS
Non-current assets 790 480 735 392 767 448
Property, plant and equipment 580 834 526 770 547 889
Intangible assets 133 793 101 111 118 151
Investments 504
Interest-bearing long-term receivables 2 839 8 902 13 467
Deferred taxation 72 510 98 609 87 941
Current assets 3 778 988 3 117 200 2 721 879
Inventory 2 550 278 2 033 898 1 817 759
Trade and other receivables and prepayments 1 049 402 959 842 669 065
Current portion of interest-bearing long-term receivables 33 464 31 728 38 189
Other financial assets 2 190 1 389 3 213
Taxation 15 403 8 527 4 832
Cash resources 128 251 81 816 188 821
Total assets 4 569 468 3 852 592 3 489 327
EQUITY AND LIABILITIES
Capital and reserves 2 297 002 1 931 552 2 073 559
Stated capital (note 5) 229 343 228 749 228 749
Non-distributable reserves 340 036 146 690 197 050
Retained earnings 1 667 268 1 507 088 1 596 095
Attributable to owners of Bell Equipment Limited 2 236 647 1 882 527 2 021 894
Non-controlling interest 60 355 49 025 51 665
Non-current liabilities 277 807 386 951 276 307
Interest-bearing liabilities 102 701 208 390 118 181
Repurchase obligations and deferred leasing income 48 892 71 614 57 098
Deferred warranty income 78 531 71 883 61 340
Long-term provisions and lease escalation 45 516 35 064 39 688
Deferred taxation 2 167
Current liabilities 1 994 659 1 534 089 1 139 461
Trade and other payables 1 216 973 967 080 738 445
Current portion of interest-bearing liabilities 161 568 34 559 116 670
Current portion of repurchase obligations and
deferred leasing income 53 646 40 761 48 066
Current portion of deferred warranty income 17 443 23 113 40 138
Current portion of provisions and lease escalation 42 455 58 972 43 852
Other financial liabilities 1 074 1 435
Taxation 36 500 28 857 17 541
Short-term interest-bearing debt 465 000 380 747 133 314
Total equity and liabilities 4 569 468 3 852 592 3 489 327
Number of shares in issue ('000) 95 031 94 974 94 974
Net asset value per share (cents) 2 417 2 034 2 183
Condensed consolidated statement of profit or loss
for the six months ended 30 June 2013 Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
R'000 2013 2012 2012
Revenue 3 018 963 2 901 405 5 670 188
Cost of sales (2 256 173) (2 262 873) (4 410 050)
Gross profit 762 790 638 532 1 260 138
Other operating income 63 026 52 473 111 866
Expenses (606 928) (467 175) (1 007 130)
Profit from operating activities (note 2) 218 888 223 830 364 874
Net interest paid (note 3) (13 219) (29 861) (41 522)
Profit before taxation 205 669 193 969 323 352
Taxation (48 578) (42 698) (80 434)
Profit for the period 157 091 151 271 242 918
Profit for the period attributable to:
Owners of Bell Equipment Limited 148 401 135 803 224 810
Non-controlling interest 8 690 15 468 18 108
Earnings per share (basic) (note 4) (cents) 156 143 237
Earnings per share (diluted) (note 4) (cents) 153 141 232
Condensed consolidated statement of profit or loss and other
comprehensive income
for the six months ended 30 June 2013
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
R'000 2013 2012 2012
Profit for the period 157 091 151 271 242 918
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising during the period 140 225 159 47 653
Exchange differences on translating foreign operations 135 554 494 45 595
Exchange differences on foreign reserves 4 671 (335) 2 058
Other comprehensive income for the period 140 225 159 47 653
Total comprehensive income for the period 297 316 151 430 290 571
Total comprehensive income attributable to:
Owners of Bell Equipment Limited 288 626 135 962 272 463
Non-controlling interest 8 690 15 468 18 108
Condensed consolidated statement of cash flows
for the six months ended 30 June 2013 Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
R'000 2013 2012 2012
Cash operating profit before working capital changes 401 005 311 692 533 043
Cash utilised in working capital (626 202) (265 372) (2 141)
Cash (utilised in) generated from operations (225 197) 46 320 530 902
Net interest paid (13 219) (29 861) (41 522)
Taxation paid (23 375) (50 680) (89 645)
Net cash (utilised in) generated from operating activities (261 791) (34 221) 399 735
Net cash utilised in investing activities (82 673) (79 597) (172 869)
Net cash utilised in financing activities (47 792) (25 691) (11 937)
Net cash (outflow) inflow (392 256) (139 509) 214 929
Net cash (short-term interest-bearing debt) at beginning of the
period/year 55 507 (159 422) (159 422)
Net (short-term interest-bearing debt) cash at end of the
period/year (336 749) (298 931) 55 507
Comprising:
Cash resources 128 251 81 816 188 821
Short-term interest-bearing debt (465 000) (380 747) (133 314)
Net (short-term interest-bearing debt) cash at end of the period/year (336 749) (298 931) 55 507
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2013 Attributable to owners of Bell Equipment Limited
Non-distributable Non-controlling Total capital
R'000 Stated capital reserves Retained earnings Total interest and reserves
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
Recognition of share-based payments 2 866 2 866 2 866
Total comprehensive income for the period 47 494 89 007 136 501 2 640 139 141
Balance at 31 December 2012 audited 228 749 197 050 1 596 095 2 021 894 51 665 2 073 559
Share options exercised 594 594 594
Recognition of share-based payments 2 661 2 661 2 661
Total comprehensive income for the period 140 225 148 401 288 626 8 690 297 316
Adjustment to non-controlling interest put valuation (39 137) (39 137) (39 137)
Increase in statutory reserves of foreign subsidiaries 100 (100)
Dividend paid (37 991) (37 991) (37 991)
Balance at 30 June 2013 reviewed 229 343 340 036 1 667 268 2 236 647 60 355 2 297 002
Abbreviated notes to the reviewed interim report
for the six months ended 30 June 2013
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 2012, which complied with International Financial Reporting Standards, except for the adoption of new and revised
standards and interpretations.
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 2013. 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,
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the disclosure requirements of the JSE Limited's
Listing Requirements and the 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 2013 2012 2012
2. PROFIT FROM OPERATING ACTIVITIES
Profit from operating activities is arrived at after taking into account:
Income
Currency exchange gains 93 080 116 658 239 544
Decrease in warranty provision 7 895
Deferred warranty income 16 179 17 868 37 393
Import duty rebates 19 833 8 861 23 451
Royalties 1 488 1 293 2 397
Net surplus on disposal of property, plant and equipment and intangible assets 720 175 403
Expenditure
Amortisation of intangible assets 9 258 9 395 19 295
Auditors' remuneration audit and other services 5 253 4 763 8 684
Currency exchange losses 131 058 116 727 243 720
Depreciation of property, plant and equipment 53 470 57 122 115 443
Increase in warranty provision 884 5 199
Operating lease charges
Equipment and motor vehicles 20 498 13 236 28 804
Land and buildings 39 455 34 123 71 529
Research expenses (excluding staff costs) 13 795 15 229 23 738
Staff costs 598 954 462 871 964 363
3. NET INTEREST PAID
Interest paid 17 105 32 674 53 669
Interest received (3 886) (2 813) (12 147)
Net interest paid 13 219 29 861 41 522
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) 148 401 135 803 224 810
Weighted average number of ordinary shares in issue during the period ('000) 95 006 94 961 94 968
Earnings per share (basic) (cents) 156 143 237
Diluted earnings per share is arrived at as follows:
Profit for the period attributable to owners of Bell Equipment Limited (R'000) 148 401 135 803 224 810
Fully converted weighted average number of shares ('000) 96 971 96 407 96 756
Earnings per share (diluted) (cents) 153 141 232
Headline earnings per share is arrived at as follows:
Profit for the period attributable to owners of Bell Equipment Limited (R'000) 148 401 135 803 224 810
Net surplus on disposal of property, plant and equipment and intangible assets (R'000) (720) (175) (403)
Taxation effect of net surplus on disposal of property, plant and equipment
and intangible assets (R'000) 202 49 113
Headline earnings (R'000) 147 883 135 677 224 520
Weighted average number of ordinary shares in issue during the period ('000) 95 006 94 961 94 968
Headline earnings per share (basic) (cents) 156 143 236
Diluted headline earnings per share is arrived at as follows:
Headline earnings calculated above (R'000) 147 883 135 677 224 520
Fully converted weighted average number of shares ('000) 96 971 96 407 96 756
Headline earnings per share (diluted) (cents) 153 141 232
5. STATED CAPITAL
Authorised
100 000 000 (June 2012: 100 000 000) ordinary shares of no par value
Issued
95 030 660 (June 2012: 94 974 000) ordinary shares of no par value 229 343 228 749 228 749
The increase in issued share capital relates to 56 660 share options exercised
at an average share price of R10,48 per share.
6. CAPITAL EXPENDITURE COMMITMENTS
Contracted 7 333 15 658 27 136
Authorised, but not contracted 65 083 73 809 94 072
Total capital expenditure commitments 72 416 89 467 121 208
Operating
Revenue profit (loss) Assets Liabilities
7. ABBREVIATED SEGMENTAL ANALYSIS R'000 R'000 R'000 R'000
June 2013
South African sales operation 1 381 359 54 704 929 597 725 716
South African manufacturing and logistics operation 2 162 565 122 996 2 921 058 1 566 889
European operation 543 764 22 198 1 125 156 929 419
Rest of Africa and other international operations 958 666 112 764 1 082 471 890 146
North American operation 107 955 (7 670) 68 867 38 958
All other operations (6 157) 978 326 151 019
Inter-segmental eliminations (2 135 346) (79 947) (2 536 007) (2 029 681)
Total reviewed 3 018 963 218 888 4 569 468 2 272 466
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
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 audited 5 670 188 364 874 3 489 327 1 415 768
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2013 2012 2012
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 2 114 2 069
In the event of repurchase, it is estimated that these units would
presently realise 8 005 3 389
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 period end the amount due by customers to financial institutions for
which the group is liable totalled 51 724 63 604 64 454
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 55 941 63 104 98 433
(4 217) 500 (33 979)
Less: provision for non-recovery 500 500 500
Net contingent liability
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 has been
guaranteed by the group.
In the event of a residual value shortfall, the group would be exposed to an
amount of 9 168 9 872 10 886
Less: provision for residual value risk 1 269 1 154
Net contingent liability 7 899 9 872 9 732
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 36 394 78 079 146 862
Purchases 395 935 198 477 346 716
Amounts owing to 153 290 100 918 85 263
Amounts owing by 4 977 19 002 21 290
10. FINANCIAL INSTRUMENTS
Categories of financial instruments included in the statement of financial position:
- Loans and receivables at amortised cost comprising interest-bearing long-term receivables, trade and other receivables and cash
resources. The directors consider that the carrying amount of loans and receivables at amortised cost approximates their fair value.
- Financial liabilities at amortised cost comprising interest-bearing liabilities, trade and other payables and short-term interest-
bearing debt. The directors consider that the carrying amount of financial liabilities at amortised cost approximates their fair value.
- Financial assets and liabilities carried at fair value through profit or loss include forward foreign exchange contracts and fair value is
determined based on a Level 2 fair value measurement. Level 2 fair value measurements are those derived from inputs other than
quoted prices.
- Available-for-sale financial asset comprising an unlisted equity investment at cost for which a reliable fair value could not be
determined.
11. INDEPENDENT AUDITORS' REPORT
The condensed interim financial information for the half-year ended 30 June 2013 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.
12. SUBSEQUENT EVENTS
With the exception of the put valuation referred to in the Chairman's and Chief Executive Officer's review, no fact or circumstance material
to the appreciation of this interim report has occurred between 30 June 2013 and the date of this report.
Chairman's and Chief Executive Officer's review
INTRODUCTION
We report on Bell Equipment's performance for the first six months of 2013 in tough market conditions
and where gains as a result of exchange rate volatility have compensated for a reduction in demand,
particularly from the resources sector.
ECONOMIC OVERVIEW
The company has responded well to the economic reality of generally lower market demand from most
sectors, but our factories have had to run at near full capacity for a four month period to fill the supply line
to our new North American distributors. The second half will see lower production rates in line with current
equipment demands and the normalisation of working capital as a result of reduced work in progress and
inventories.
FINANCIAL RESULTS
The profitability of R157,1 million for the first half of 2013 is marginally up on the R151,3 million profit
after tax earned for the first half of 2012. Sales for the six month period totalled R3,02 billion and are up
approximately 4% on the corresponding period last year. Sales volumes were 9,8% down but the impact
of the weaker Rand has had a positive impact on margins earned.
Gearing has increased from 9% at year-end, to 26% at the end of June due to the increased production
rate over the period end and should normalise through the second half as orders are fulfilled.
OPERATIONS REVIEW
Continued uncertainty in our traditional global mining and construction markets is expected to prevail
through to year-end and we have taken appropriate action to respond to the situation. New products and
markets will also offset some of the expected shortfall.
Both the Richards Bay and German factories have transitioned smoothly to the production of our next
generation E-Series range of small Articulated Dump Trucks and initial reports from the field indicate that
the efficiency and other product improvements have been well received by our customers.
Bell continues to work very closely with the South African government in support of various employment
initiatives and is well positioned with a full line of machinery and trucks to take advantage of the planned
infrastructure developments in the years ahead.
During the period under review, the minority empowerment shareholder in Bell Equipment Sales South
Africa Limited, gave notice of its intention to dispose of its 22,5% shareholding in terms of a put option.
The exercise price is still to be finalised but the likely impact of the exercise price has been reflected in
the results above. It is expected that the transaction will be concluded by no later than 31 October 2013.
It is the group's intention to replace the minority empowerment shareholder with another empowerment
partner.
Michael Mun-Gavin Gary Bell
Chairman Chief Executive Officer
6 August 2013
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),
L Goosen, JR Barton*, B Harie*, TO Tsukudu*, DJJ Vlok* * Independent non-executive director
Alternate directors: AR McDuling
Company Secretary: P van der Sandt
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)
Release date: 8 August 2013
Date: 08/08/2013 01:12:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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