Wrap Text
Preliminary audited results for the year ended 31 December 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
PRELIMINARY AUDITED RESULTS
for the year ended 31 December 2013
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2013
Audited Audited
R'000 2013 2012
ASSETS
Non-current assets 957 032 767 448
Property, plant and equipment 691 631 547 889
Intangible assets 149 217 118 151
Investments 563 –
Interest-bearing long-term receivables 18 297 13 467
Deferred taxation 97 324 87 941
Current assets 3 799 301 2 721 879
Inventory 2 784 840 1 817 759
Trade and other receivables 851 871 650 556
Current portion of interest-bearing long-term receivables 21 059 38 189
Prepayments 22 947 18 509
Other financial assets 578 3 213
Taxation 11 679 4 832
Cash resources 106 327 188 821
Total assets 4 756 333 3 489 327
EQUITY AND LIABILITIES
Capital and reserves 2 488 661 2 073 559
Stated capital (note 5) 230 534 228 749
Non-distributable reserves 485 145 197 050
Retained earnings 1 766 067 1 596 095
Attributable to owners of Bell Equipment Limited 2 481 746 2 021 894
Non-controlling interest 6 915 51 665
Non-current liabilities 247 690 276 307
Interest-bearing liabilities 113 271 118 181
Repurchase obligations and deferred leasing income 17 871 57 098
Deferred warranty income 52 596 61 340
Long-term provisions and lease escalation 40 382 39 688
Deferred taxation 23 570 –
Current liabilities 2 019 982 1 139 461
Trade and other payables 1 193 013 738 445
Current portion of interest-bearing liabilities 52 337 116 670
Current portion of repurchase obligations and deferred leasing income 59 489 48 066
Current portion of deferred warranty income 48 483 40 138
Current portion of provisions and lease escalation 59 148 43 852
Other financial liabilities 4 937 1 435
Taxation 35 301 17 541
Short-term interest-bearing debt 567 274 133 314
Total equity and liabilities 4 756 333 3 489 327
Number of shares in issue ('000) 95 144 94 974
Net asset value per share (cents) 2 616 2 183
SUMMARISED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 31 December 2013
Audited Audited
R'000 2013 2012
Revenue 6 319 104 5 670 188
Cost of sales (4 890 116) (4 410 050)
Gross profit 1 428 988 1 260 138
Other operating income 144 847 111 866
Expenses (1 233 760) (1 007 130)
Profit from operating activities (note 2) 340 075 364 874
Net interest paid (note 3) (34 699) (41 522)
Profit before taxation 305 376 323 352
Taxation (99 623) (80 434)
Profit for the year 205 753 242 918
Profit for the year attributable to:
– Owners of Bell Equipment Limited 183 007 224 810
– Non-controlling interest 22 746 18 108
Earnings per share (basic) (note 4) (cents) 193 237
Earnings per share (diluted) (note 4) (cents) 189 232
SUMMARISED CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 31 December 2013
Audited Audited
R'000 2013 2012
Profit for the year 205 753 242 918
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising during the year 252 300 47 653
Exchange differences on translating foreign operations 244 106 45 595
Exchange differences on foreign reserves 8 194 2 058
Items that may not be reclassified subsequently to profit or loss: 26 304 –
Surplus arising on revaluation of properties 37 616 –
Taxation relating to surplus arising on revaluation of properties (11 312) –
Other comprehensive income for the year, net of taxation 278 604 47 653
Total comprehensive income for the year 484 357 290 571
Total comprehensive income attributable to:
– Owners of Bell Equipment Limited 461 611 272 463
– Non-controlling interest 22 746 18 108
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2013
Audited Audited
R'000 2013 2012
Cash generated from operations before working capital changes 684 923 533 043
Cash utilised in working capital (694 480) (2 141)
Cash (utilised in) generated from operations (9 557) 530 902
Net interest paid (34 699) (41 522)
Taxation paid (90 925) (89 645)
Net cash (utilised in) generated from operating activities (135 181) 399 735
Net cash utilised in investing activities (237 108) (172 869)
Net cash utilised in financing activities (144 165) (11 937)
Net cash (outflow) inflow (516 454) 214 929
Net cash (short-term interest-bearing debt) at beginning of the year 55 507 (159 422)
Net (short-term interest-bearing debt) cash at end of the year (460 947) 55 507
Comprising:
Short-term interest-bearing debt (567 274) (133 314)
Cash resources 106 327 188 821
Net (short-term interest-bearing debt) cash at end of the year (460 947) 55 507
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2013 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 2011 228 605 144 089 1 371 285 1 743 979 33 557 1 777 536
Total comprehensive income for the year – 47 653 224 810 272 463 18 108 290 571
Recognition of share-based payments – 5 308 – 5 308 – 5 308
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
Total comprehensive income for the year – 278 604 183 007 461 611 22 746 484 357
Recognition of share-based payments – 4 704 – 4 704 – 4 704
Share options exercised 1 785 – – 1 785 – 1 785
Dividends paid – – (37 991) (37 991) – (37 991)
Transactions with non-controlling interest – – 29 743 29 743 (67 496) (37 753)
Increase in statutory reserves of foreign subsidiaries – 4 787 (4 787) – – –
Balance at 31 December 2013 230 534 485 145 1 766 067 2 481 746 6 915 2 488 661
ABBREVIATED NOTES TO THE PRELIMINARY AUDITED CONSOLIDATED RESULTS for the year ended 31 December 2013
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 adoption of new and revised standards and interpretations.
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 2013. Except for certain additional
disclosures and presentation, 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 preliminary report.
The financial statements have been prepared on the historical cost basis, except for the revaluation of properties and
financial instruments. The summarised financial information is prepared in accordance with the requirements of the
JSE Limited's Listings Requirements for preliminary reports and the requirements of the Companies Act in South Africa.
The Listings Requirements require preliminary reports to be 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. The preparation of this preliminary report was supervised by the Group Financial Director, KJ van Haght CA(SA).
31 December 31 December
R'000 2013 2012
2. PROFIT FROM OPERATING ACTIVITIES
Profit from operating activities is arrived at after taking into account:
Income
Currency exchange gains 181 880 239 544
Deferred warranty income 37 006 37 393
Decrease in warranty provision – 7 895
Import duty rebates 51 310 23 451
Royalties 2 641 2 397
Net surplus on disposal of property, plant and equipment and
intangible assets 998 403
Expenditure
Amortisation of intangible assets 19 604 19 295
Auditors' remuneration – audit and other services 10 399 8 684
Currency exchange losses 269 826 243 720
Depreciation of property, plant and equipment 107 839 115 443
Increase in warranty provision 8 060 –
Operating lease charges 122 539 100 333
Research expenses (excluding staff costs) 28 016 23 738
Staff costs 1 222 422 964 363
3. NET INTEREST PAID
Interest paid 42 047 53 669
Interest received (7 348) (12 147)
Net interest paid 34 699 41 522
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) 183 007 224 810
Weighted average number of ordinary shares in issue ('000) 95 062 94 968
Earnings per share (basic) (cents) 193 237
Diluted earnings per share is arrived at as follows:
Profit for the year attributable to owners of Bell Equipment Limited (R'000) 183 007 224 810
Fully converted weighted average number of shares ('000) 96 933 96 756
Earnings per share (diluted) (cents) 189 232
Headline earnings per share is arrived at as follows:
Profit for the year attributable to owners of Bell Equipment Limited (R'000) 183 007 224 810
Net surplus on disposal of property, plant and equipment and
intangible assets (R'000) (998) (403)
Taxation effect of net surplus on disposal of property, plant and
equipment and intangible assets (R'000) 279 113
Headline earnings (R'000) 182 288 224 520
Weighted average number of ordinary shares in issue ('000) 95 062 94 968
Headline earnings per share (basic) (cents) 192 236
Diluted headline earnings per share is arrived at as follows:
Headline earnings calculated above (R'000) 182 288 224 520
Fully converted weighted average number of shares ('000) 96 933 96 756
Headline earnings per share (diluted) (cents) 188 232
5. STATED CAPITAL
Authorised
100 000 000 (2012: 100 000 000) ordinary shares of no par value
Issued
95 144 385 (2012: 94 974 000) ordinary shares of no par value 230 534 228 749
6. CAPITAL EXPENDITURE COMMITMENTS
Contracted 68 472 27 136
Authorised, but not contracted 147 079 94 072
Total capital expenditure commitments 215 551 121 208
Operating
Revenue profit (loss) Assets Liabilities
7. ABBREVIATED SEGMENTAL ANALYSIS R'000 R'000 R'000 R'000
December 2013
South African sales operation 2 826 034 94 234 878 142 677 524
South African manufacturing and
logistics operation 4 391 050 206 850 2 809 933 1 394 737
European operation 1 564 810 48 348 1 279 303 1 053 743
Rest of Africa and other international
operations 1 867 623 96 086 1 144 502 988 200
North American operation 337 176 (18 940) 177 094 141 351
All other operations – 8 447 1 143 113 145 743
Inter-segmental eliminations (4 667 589) (94 950) (2 675 754) (2 133 626)
Total 6 319 104 340 075 4 756 333 2 267 672
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
31 December 31 December
R'000 2013 2012
8. CONTINGENT LIABILITIES
8.1 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 carries certain credit risks.
The group is liable for all credit risk and therefore the full balance due to WesBank by default customers with
regard to Bell-backed deals and a portion of the credit risk and a portion of the balance due to WesBank by
default customers with regard to Bell-shared risk deals. In terms of the Bell-shared risk deals the group's
exposure is calculated as a percentage of the net selling price of the equipment.
At year-end the group's credit risk exposure to WesBank under Bell-backed deals for which the group carries
all the credit risk totalled 110 356 53 712
At year-end the group's credit risk exposure to WesBank under Bell-shared risk deals for which the group
carries a portion of the credit risk totalled 3 765 4 692
In the event of default, the equipment financed would be recovered and it is estimated that they would
presently realise the following towards the above liabilities 158 624 90 998
(44 503) (32 594)
Less: provision for non-recovery – 500
Net contingent liability – –
The group has entered into similar shared risk arrangements with various other institutions. These arrangements
are first-loss undertakings and the group's exposure remains fixed until the capital is repaid.
At year-end the group's credit risk exposure to these financial institutions totalled 18 400 6 050
In the event of default, the equipment financed would be recovered and it is estimated that they would
presently realise the following towards the above liability 21 870 7 435
Net contingent liability – –
Total credit risk exposure to WesBank and other financial institutions 132 521 64 454
Total estimated realisation values of equipment towards the above 180 494 98 433
(47 973) (33 979)
Less: provision for non-recovery – 500
Total net contingent liability – –
Where customers are in arrears with these financial institutions and there is a shortfall between the estimated
realisation values of equipment and the balances due by the customers to these financial institutions, an
assessment of any additional security is done and a provision for any residual credit risk is made on a deal-
by-deal basis.
8.2 The repurchase of equipment sold to customers and financial institutions has been guaranteed by
the group for an amount of 2 224 2 069
In the event of repurchase, it is estimated that the equipment would presently realise 6 234 3 389
Net contingent liability – –
This relates to sales transactions with buy-back obligations where the probability of return of the equipment by
the customer at the end of the buy-back period has been assessed as remote and revenue has been recognised
upfront. A provision for residual value risk is recognised subsequent to initial recognition of the sale on a deal-
by-deal basis, to the extent that the assessed market value of the equipment is less than the cost of meeting
the buy-back obligation.
8.3 The residual values of certain equipment sold to financial institutions have been guaranteed by the group.
The group's exposure is limited to the difference between the group's guaranteed amount and the financial
institution's predetermined estimate.
In the event of a residual value shortfall on this equipment, the group would be exposed to a maximum amount of 16 418 3 921
Less: provision for residual value risk (1 458) –
Net contingent liability 14 960 3 921
In certain other transactions the group has paid cash collateral as security for the residual value risk. This cash
collateral is recognised as retention deposits under interest-bearing long-term receivables. In the event of a
residual value shortfall on this equipment, the group would be exposed to a maximum amount equal to the
cash collateral of 5 638 8 119
Less: impairment of retention deposits (668) (1 154)
Net retention deposits and net contingent liability 4 970 6 965
Total net contingent liability 19 930 10 886
This relates to sales transactions to financial institutions which lease the equipment to customers for an agreed lease term. In certain cases, the group
has a remarketing agreement with the institution for the disposal of the equipment returned after the lease term, but in all instances the group's risk is
limited to the residual value risk described above.
The provision for residual value risk and the impairment of the retention deposits are based on an assessment of the market value of the equipment.
9. INDEPENDENT AUDITORS' REPORT
These summary consolidated financial statements for the year ended 31 December 2013 have been audited by Deloitte & Touche, who expressed an
unmodified opinion thereon.The auditor also expressed an unmodified opinion on the annual financial statements from which these summary consolidated
financial statements were derived.
A copy of the auditor's report on the summary consolidated financial statements and of the auditor's report on the consolidated annual financial statements are
available for inspection at the company's registered office, together with the financial statements identified in the respective auditor's report.
The auditor's report does not necessarily report on all of the information contained in this announcement. Shareholders are therefore advised that in order to
obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's report together with the accompanying financial
information from the issuer's registered office.
10. SUBSEQUENT EVENTS
No fact or circumstance material to the appreciation of this report has occurred between 31 December 2013 and the date of this report.
COMMENTARY
Financial overview
As with the previous year, 2013 proved to be a mixed year for Bell. The
group recorded profit after tax amounting to R206 million for the year under
review, a reduction of 15% in comparison with the prior year, and earnings
per share amounted to 193 cents (2012: 237 cents). Of these consolidated
profits, R183 million is attributable to shareholders of Bell. On the other
hand, total comprehensive income attributable to shareholders of Bell rose to
R462 million compared with R272 million in the prior year. The improvement
in the comprehensive income over the current year's profit after tax and
the previous year's comprehensive income has arisen largely as a result of
sizeable exchange differences on the translation of foreign operations and the
surplus on revaluation of properties. The net outcome of these results saw
shareholders wealth (capital and reserves) rise by 20% from R2,07 billion
(2 183 cents per share) to R2,49 billion (2 616 cents per share).
The current year's profit after tax is particularly disappointing as sales
increased by 11,4% and overall gross profit in Rand terms improved by
13,4% in comparison with the previous year. Unfortunately this improvement
in gross profit was more than offset by increased expenses stemming largely
from an increased salary and wage bill, under recovery of fixed overheads
and currency losses in the second half of the year. Shareholders will recall
that the group had achieved a profit after tax of R157 million at the half year
stage, which means that the second half of the year saw a profit after tax of only
R49 million.
The above-mentioned fall in profit is largely the result of the continuing
weakness and unpredictability of the resource-based economy and closer to
home, the weakening of our currency and the protracted strikes and labour
unrest at many of South Africa's mines. This has caused disruption to mining
production, which in turn has resulted in orders for equipment not being
fulfilled. Whilst management has responded by curtailing production, there is
always a time lag and this has caused a significant increase in stockholding.
After a particularly pleasing improvement in working capital management
in the previous year, much of this has been undone in the year under
review. Both inventories and trade receivables, but particularly the former,
are significantly up on the previous year. These, together with the outlay
required to buy back the empowerment shareholding in one of the group's
subsidiaries (R120 million) and the strategic once-off forward purchase of
components and machines (R69 million), have resulted in a negative cash
flow for the year under review of R516 million. Notwithstanding this, it does
need to be stressed that gearing is still well within acceptable norms and
stands at only 25%.
At the end of the last financial year the directors of the company decided
to commence what was hoped to be the payment of a regular pattern of
dividends. Regrettably, with the rapid decline in profit in the second half of
the year and the significant cash outflow for the year under review, it has
been decided not to declare a dividend at this time.
Sustainability
Bell maintains a market leading position in the majority of its product range
in Africa. 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.
The recently launched E-series range of trucks has been well accepted by our
customers and together with the expansion of our range to include a larger
60 ton capacity truck, we maintain our lead as innovators in the market.
Significant investments continue in upgrading our Customer Service Centres
and new facilities in Middelburg (Mpumalanga) and Mbombela (Nelspruit)
have been opened, with our Customer Service Centre in Kitwe, Zambia
scheduled to open in 2014. Management and the board continually monitor
economic activity both locally and abroad and endeavour to be proactive in
positioning the group for expected changes in demand for its products. This
is not an easy task, as has been evidenced by the deterioration in working
capital management for the year under review, but it remains a key aspect of
our concern for sustainability within the group.
It is widely accepted that the African continent is likely to experience
significant economic growth over the next decade or two. If this transpires,
considerable infrastructural investment will be necessary. Bell is well-
positioned to benefit from such growth, being the only significant African
"yellow metal" manufacturer currently in existence on the continent.
Closer to home, the implementation of the National Development Plan should
enhance civil and construction activity, both of which are positive for Bell.
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. 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 continues to be active in trying to secure new markets for the
group's products and 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.
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. We continue to maintain good relationships
with the vast majority of personnel employed by Bell and the Unions that
represent the scheduled staff, something that is critical from an operational
point of view.
Transformation
We continue to engage with government 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.
As mentioned above, Bell's strategic empowerment partner in its subsidiary,
Bell Equipment Sales South Africa Limited, decided to exercise its right to put
its shares back to the group during the latter part of 2013. This has left the
group without any significant empowerment shareholder and plans are being
considered with a view to resolving this issue.
Cautionary announcement
We draw stakeholders' attention to the fact that the company has issued a
cautionary announcement to shareholders indicating that certain discussions
are taking place which, if successfully concluded, may have an impact on
the market price of Bell's shares. Shareholders are, accordingly, advised to
exercise caution when trading in the company's shares, pending further
announcements in this regard.
Outlook
The start to the year ahead has been modest and unless conditions improve
significantly, it is difficult to be too optimistic about the prospects for the
year ahead. There are clearly obstacles in the Eurozone, with the current
political upheaval in Eastern Europe detracting from any confidence in
economic growth for that region. Within South Africa, the projected increase
in infrastructure spend should have a positive impact upon Bell, but its timing
is uncertain, particularly with the forthcoming elections likely to take our
political leaders' eyes off the economic ball.
Michael Mun-Gavin Gary Bell
Chairman Chief Executive Officer 13 March 2014
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
Resignations: AR McDuling (30 August 2013)
Company Secretary: P van der Sandt
Registered office: 13 – 19 Carbonode Cell Road, Alton, Richards Bay, 3900
Transfer secretaries: Link Market Services South Africa Proprietary
Limited, PO Box 4844, Johannesburg, 2000
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
Release date: 14 March 2014
www.bellequipment.com
Date: 14/03/2014 03:30:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
