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Unaudited interim results for the period ended 30 June 2016 and cash dividend declaration
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
UNAUDITED INTERIM RESULTS FOR THE PERIOD ENDED 30 JUNE 2016 AND CASH DIVIDEND DECLARATION
MARKET OVERVIEW
Bell Equipment Limited has successfully redirected resources across its
global markets to focus activity on the more buoyant construction equipment
sectors. Mining activity has continued to deteriorate across most markets,
particularly across Africa, much in line with lower commodity demand and
pricing.
Miners have delayed capital projects and have sweated their equipment
assets to a point that data indicates that mobile equipment fleets are now the
oldest they have been in more than a dozen years. Clearly any small
movement in commodity prices will trigger strong demand as safety,
productivity and lowest operating costs will drive mining demands.
As from the second half of 2016 both Bell manufacturing plants in South
Africa and Germany will have converted and will only be producing the new
and upgraded range of E-Series Dump Trucks which will match these
market needs.
During the second half of 2016, Bell Equipment Sales SA plans to conclude
a BBBEE transaction to promote gender inclusive economic transformation.
FINANCIAL RESULTS
The first half of 2016 would have shown an improvement in profitability
compared with the first six months of 2015 had it not been for the fraud and
mismanagement uncovered in the group's operation in the Democratic
Republic of the Congo (DRC) in the first quarter of 2016. The group right-
sizing and restructuring initiatives undertaken in early 2015, higher factory
throughput, favourable exchange rates and lower interest costs on well
managed borrowings all contributed to the rest of the business performing
better this year than in the first half of 2015. After the impact of the findings
in the DRC, the group reported a profit after tax of R64 million and earnings
per share of 67 cents for the first half, a decrease of 28% on the restated
results for the first half of 2015 (refer to note 11 of this announcement).
Revenue for the period was R3,1 billion, up 7% from R2,9 billion in the
same period last year.
A forensic investigation in the DRC resulted in the dismissal of the entire
local management team and a number of other employees. Further
investigations were carried out with the assistance of independent legal and
tax professionals to regularise the activities of this operation. Management is
being replaced and order has been restored. Of key focus during this period
has been the continuation of service to our customers in this difficult market.
Global markets have remained depressed throughout the first half of 2016
and the volume outlook remains unchanged. As a result of this production
volumes, working capital levels and group borrowings have remained stable
throughout the period. There was a positive cash flow for the period. The
Board has therefore thought it appropriate to resume the payment of
dividends and has declared an interim dividend of 15 cents per share.
OPERATIONS REVIEW
Having weathered the challenges encountered in the DRC in the first half of
2016, we look forward to renewed focus on the strategic imperatives of
reducing production costs, adding products and services to our distribution
networks in order to equip the business to deliver financially sustainable
results through the business cycle.
We continue to invest in upgrading our distribution infrastructure and will
complete the construction of a new parts distribution facility in Germany in
quarter 1 of 2017. Aftermarket sales are a critical element of the business,
particularly during tough market conditions when customers are delaying the
replacement of machines.
Political and economic instability and the increasing cost of doing business
in South Africa remains a key concern and the group continues to evaluate
the merits of increasing activities at its German facility, in closer proximity
to the higher volume northern hemisphere markets.
We expect the extremely tough trading conditions to continue. We will
continue to take all reasonable steps to best position the company to
withstand these challenges and to continue delivering on our customer
needs.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Unaudited Unaudited
as at 30 June 2016 30 June 30 June 31 December 1 January
R'000 2016 2015 2015 2015
Restated* Restated* Restated*
ASSETS
Non-current assets 910 954 1 063 351 1 032 725 1 011 357
Property, plant and equipment 584 830 706 028 686 608 672 106
Intangible assets 210 149 217 689 213 305 203 078
Investments 636 530 665 548
Interest-bearing long-term receivables 24 468 51 063 35 573 45 357
Deferred taxation 90 871 88 041 96 574 90 268
Current assets 3 763 865 3 814 085 3 855 778 3 483 147
Inventory 2 745 254 2 662 181 2 862 652 2 403 437
Trade and other receivables and prepayments 870 833 991 728 772 316 753 984
Current portion of interest-bearing long-term receivables 63 571 60 906 77 331 42 519
Other financial assets 2 787 3 207 12 783 2 071
Non-current assets held for sale - 11 550 - 11 850
Taxation 19 342 18 363 26 475 10 331
Cash resources 62 078 66 150 104 221 258 955
TOTAL ASSETS 4 674 819 4 877 436 4 888 503 4 494 504
EQUITY AND LIABILITIES
Capital and reserves 2 919 652 2 595 560 2 947 416 2 518 457
Stated capital (Note 5) 230 567 230 567 230 567 230 567
Non-distributable reserves 669 946 452 796 752 269 465 551
Retained earnings 2 011 150 1 904 095 1 957 219 1 814 703
Attributable to owners of Bell Equipment Limited 2 911 663 2 587 458 2 940 055 2 510 821
Non-controlling interest 7 989 8 102 7 361 7 636
Non-current liabilities 278 078 298 988 293 056 214 273
Interest-bearing liabilities 83 314 155 484 117 695 87 161
Repurchase obligations and deferred leasing income 2 587 - 3 820 -
Deferred income 72 689 68 185 66 543 65 616
Long-term provisions and lease escalation 48 091 43 137 51 376 44 813
Deferred taxation 71 397 32 182 53 622 16 683
Current liabilities 1 477 089 1 982 888 1 648 031 1 761 774
Trade and other payables 981 929 1 201 188 1 068 804 1 386 621
Current portion of interest-bearing liabilities 77 185 96 204 90 344 40 304
Current portion of repurchase obligations and
deferred leasing income 1 114 20 583 1 042 34 980
Current portion of deferred income 79 080 61 362 71 774 59 079
Current portion of provisions and lease escalation 58 207 50 506 53 783 65 941
Other financial liabilities 6 846 3 952 20 593 4 404
Taxation 22 373 45 463 37 898 36 666
Short-term interest-bearing debt 250 355 503 630 303 793 133 779
TOTAL EQUITY AND LIABILITIES 4 674 819 4 877 436 4 888 503 4 494 504
Number of shares in issue ('000) 95 147 95 147 95 147 95 147
Net asset value per share (cents) 3 069 2 728 3 098 2 647
* Refer to restatements of prior periods in note 11.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS Unaudited Unaudited Unaudited
for the period ended 30 June 2016 six months six months twelve months
ended ended ended
30 June 30 June 31 December
R'000 2016 2015 2015
Restated* Restated*
Revenue 3 097 762 2 898 009 5 901 431
Cost of sales (2 367 911) (2 199 741) (4 556 343)
Gross profit 729 851 698 268 1 345 088
Other operating income 75 027 90 610 184 523
Expenses (660 057) (630 874) (1 261 195)
Profit from operating activities (Note 2) 144 821 158 004 268 416
Net interest expense (Note 3) (18 763) (27 472) (61 364)
Profit before taxation 126 058 130 532 207 052
Taxation (61 770) (41 135) (65 308)
Profit for the period / year 64 288 89 397 141 744
Profit for the period / year attributable to:
- Owners of Bell Equipment Limited 63 660 88 931 141 169
- Non-controlling interest 628 466 575
Earnings per share (basic)(cents) (Note 4) 67 93 148
Earnings per share (diluted)(cents) (Note 4) 67 93 148
* Refer to restatements of prior periods in note 11.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME Unaudited Unaudited Unaudited
for the period ended 30 June 2016 six months six months twelve months
ended ended ended
30 June 30 June 31 December
R'000 2016 2015 2015
Restated* Restated*
Profit for the period / year 64 288 89 397 141 744
Other comprehensive (loss) income
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising during the period / year (89 781) (13 222) 285 630
Exchange differences on translating foreign operations (87 049) (12 494) 272 161
Exchange differences on foreign reserves (2 732) (728) 13 469
Items that may not be reclassified subsequently to profit or loss: 432 - -
Surplus arising on revaluation of properties 600 - -
Taxation relating to surplus arising on revaluation of properties (168) - -
Other comprehensive (loss) income for the period / year, net of taxation (89 349) (13 222) 285 630
Total comprehensive (loss) income for the period / year (25 061) 76 175 427 374
Total comprehensive (loss) income attributable to:
- Owners of Bell Equipment Limited (25 689) 75 709 426 799
- Non-controlling interest 628 466 575
* Refer to restatements of prior periods in note 11.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited Unaudited Unaudited
for the period ended 30 June 2016 six months six months twelve months
ended ended ended
30 June 30 June 31 December
R'000 2016 2015 2015
Restated* Restated*
Cash operating profit before working capital changes 254 463 204 316 361 045
Cash utilised in working capital (103 502) (805 405) (602 925)
Cash generated from (utilised in) operations 150 961 (601 089) (241 880)
Net interest paid (14 262) (26 971) (54 369)
Taxation paid (45 322) (24 921) (54 141)
Net cash generated from (utilised in) operating activities 91 377 (652 981) (350 390)
Net cash utilised in investing activities (39 435) (34 013) (54 194)
Net cash (utilised in) generated from financing activities (40 647) 124 338 79 836
Net cash inflow (outflow) 11 295 (562 656) (324 748)
Net (short-term interest-bearing debt) cash at beginning of the period / year (199 572) 125 176 125 176
Net short-term interest-bearing debt at end of the period / year (188 277) (437 480) (199 572)
Comprising:
Cash resources 62 078 66 150 104 221
Short-term interest-bearing debt (250 355) (503 630) (303 793)
Net short-term interest-bearing debt at end of the period / year (188 277) (437 480) (199 572)
* Refer to restatements of prior periods in note 11.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2016 Attributable to owners of Bell Equipment Limited
Non- Non- Total
Stated distributable Retained controlling capital and
R'000 capital reserves earnings Total interest reserves
Balance at 31 December 2014 - unaudited (restated)* 230 567 465 551 1 814 703 2 510 821 7 636 2 518 457
Recognition of share-based payments - 928 - 928 - 928
Total comprehensive (loss) income for the period (restated)* - (13 222) 88 931 75 709 466 76 175
Decrease in statutory reserves of foreign subsidiaries - (461) 461 - - -
Balance at 30 June 2015 - unaudited (restated)* 230 567 452 796 1 904 095 2 587 458 8 102 2 595 560
Recognition of share-based payments - 657 - 657 - 657
Total comprehensive income for the period (restated)* - 298 852 52 238 351 090 109 351 199
Transactions with non-controlling interest - - 850 850 (850) -
Decrease in statutory reserves of foreign subsidiaries - (36) 36 - - -
Balance at 31 December 2015 - unaudited (restated)* 230 567 752 269 1 957 219 2 940 055 7 361 2 947 416
Recognition of share-based payments - (2 703) - (2 703) - (2 703)
Total comprehensive (loss) income for the period - (89 349) 63 660 (25 689) 628 (25 061)
Increase in statutory reserves of foreign subsidiaries - 9 729 (9 729) - - -
Balance at 30 June 2016 - unaudited 230 567 669 946 2 011 150 2 911 663 7 989 2 919 652
* Refer to restatements of prior periods in note 11.
ABBREVIATED NOTES TO THE UNAUDITED INTERIM RESULTS
for the period ended 30 June 2016 Unaudited Unaudited Unaudited
six months six months twelve months
ended ended ended
30 June 30 June 31 December
R'000 2016 2015 2015
Restated Restated
1 BASIS OF PREPARATION
The accounting policies applied in the preparation of this interim report are in terms of
International Financial Reporting Standards and are consistent with those applied in the
previous annual financial statements, except for the adoption of new and amended
standards and the prior period adjustments as described below.
In the current period the group has adopted all of the new and amended standards relevant
to its operations and effective for annual reporting periods beginning 1 January 2016. The
adoption of these new and amended standards has not had any significant impact on the
amounts reported in the interim report or the disclosures herein.
In the current period the group reclassified certain revenue transactions and related
receivables balances from the South African manufacturing and logistics operation to the
Rest of Africa operation. The operating segment information for the previous periods has
been restated accordingly. Refer to note 7.
Due to fraud and mismanagement in the group's operation in the Democratic Republic of
the Congo, Bell Equipment (DRC) SPRL, the group's results in prior periods have been
restated. Comparative information has been restated and details of these adjustments are
disclosed in note 11.
The condensed consolidated interim report is prepared in accordance with the
requirements of the JSE Limited's Listings Requirements for interim reports and the
requirements of the Companies Act in South Africa. The Listings Requirements require
interim reports to be prepared in accordance with the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee, the Financial Reporting Pronouncements
as issued by the Financial Reporting Standards Council and IAS 34 - Interim Financial
Reporting . The preparation of this interim report was supervised by the Group Finance
Director, KJ van Haght CA (SA).
2 PROFIT FROM OPERATING ACTIVITIES
Profit from operating activities is arrived at after taking into account:
Income
Currency exchange gains 268 416 117 158 239 526
Decrease in warranty provision - 17 964 21 330
Deferred warranty income 24 730 25 350 51 627
Import duty rebates 22 223 30 190 57 153
Royalties 1 385 2 139 4 447
Net surplus on disposal of non-current assets held for sale - - 7 073
Net surplus on disposal of property, plant and equipment and intangible assets - 5 766 6 041
Expenditure
Amortisation of intangible assets 17 026 8 833 25 374
Amounts written off as uncollectible 10 778 420 11 924
Auditors' remuneration - audit and other services 5 499 5 324 9 683
Currency exchange losses 294 668 92 173 234 940
Depreciation of property, plant and equipment 50 626 69 770 143 304
Increase in provision for doubtful debts 6 437 15 488 6 412
Increase in warranty provision 2 321 - -
Operating lease charges
- equipment and motor vehicles 18 829 19 669 40 609
- land and buildings 45 994 44 881 94 859
Research expenses (excluding staff costs) 16 877 13 428 29 978
Staff costs (including directors' remuneration) 608 306 634 433 1 251 422
3 NET INTEREST EXPENSE
Interest expense 27 100 34 422 77 384
Interest income (8 337) (6 950) (16 020)
Net interest expense 18 763 27 472 61 364
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) 63 660 88 931 141 169
Weighted average number of ordinary shares in issue during the period ('000) 95 147 95 147 95 147
Earnings per share (basic) (cents) 67 93 148
Diluted earnings per share is arrived at as follows:
Profit for the period attributable to owners of Bell Equipment Limited (R'000) 63 660 88 931 141 169
Fully converted weighted average number of shares ('000) * 95 147 95 147 95 147
Earnings per share (diluted) (cents) 67 93 148
* There has been no dilutive effect in the current period as employee
share option exercise prices exceeded the average market price.
Headline earnings per share is arrived at as follows:
Profit for the period attributable to owners of Bell Equipment Limited (R'000) 63 660 88 931 141 169
Net surplus on disposal of property, plant and equipment, intangible assets and
non-current assets held for sale (R'000) - (5 766) (13 114)
Taxation effect of net surplus on disposal of property, plant and equipment, intangible
assets and non-current assets held for sale (R'000) - 1 614 3 672
Headline earnings (R'000) 63 660 84 779 131 727
Weighted average number of ordinary shares in issue during the period ('000) 95 147 95 147 95 147
Headline earnings per share (basic) (cents) 67 89 138
Diluted headline earnings per share is arrived at as follows:
Headline earnings calculated above (R'000) 63 660 84 779 131 727
Fully converted weighted average number of shares ('000) 95 147 95 147 95 147
Headline earnings per share (diluted) (cents) 67 89 138
5 STATED CAPITAL
Authorised
100 000 000 (June 2015: 100 000 000) ordinary shares of no par value
Issued
95 146 885 (June 2015: 95 146 885) ordinary shares of no par value 230 567 230 567 230 567
6 CAPITAL EXPENDITURE COMMITMENTS
Contracted 2 822 3 232 3 827
Authorised, but not contracted 91 759 36 419 46 260
Total capital expenditure commitments 94 581 39 651 50 087
This capital expenditure is to be financed from internal resources and
long-term facilities.
7 ABBREVIATED SEGMENTAL ANALYSIS
Information regarding the group's reportable segments is presented below.
Information reported to the group's chief operating decision maker for purposes of resource
allocation and assessment of segment performance is focused on geographical areas.
Each reportable segment derives its revenues from the sale of goods (machines and parts)
and related services and rental income. The accounting policies of the reportable
segments are the same as the group's accounting policies.
Operating
Revenue profit (loss) Assets Liabilities
R'000 R'000 R'000 R'000
June 2016
South African sales operation 1 318 376 58 459 1 126 871 765 891
South African manufacturing and logistics operation 1 599 064 127 490 2 612 221 1 053 258
European operation 1 238 232 44 617 964 033 539 861
Rest of Africa operation 452 760 (123 175) 699 970 504 061
North American operation 363 047 24 206 302 405 237 543
All other operations - (60 204) 1 215 927 124 686
Inter-segmental eliminations * (1 873 717) 73 428 (2 246 608) (1 470 133)
Total - unaudited 3 097 762 144 821 4 674 819 1 755 167
June 2015
South African sales operation 1 247 877 44 591 1 181 268 854 281
South African manufacturing and logistics operation (restated) ** 1 753 242 43 507 2 418 131 1 048 779
European operation 919 819 40 800 1 016 512 669 574
Rest of Africa operation (restated) ** 602 147 26 359 862 123 694 992
North American operation 244 989 5 257 155 273 103 007
All other operations - (6 319) 1 074 794 135 393
Inter-segmental eliminations * (1 870 065) 3 809 (1 830 665) (1 224 150)
Total - unaudited 2 898 009 158 004 4 877 436 2 281 876
December 2015
South African sales operation 2 435 925 70 112 1 155 685 822 850
South African manufacturing and logistics operation (restated) ** 3 571 649 148 671 2 556 304 1 109 465
European operation 1 806 920 65 273 1 130 113 692 910
Rest of Africa operation (restated) ** 1 127 479 (1 714) 909 980 785 352
North American operation 560 413 301 95 996 29 152
All other operations - (40 360) 1 342 185 153 523
Inter-segmental eliminations * (3 600 955) 26 133 (2 301 760) (1 652 165)
Total - unaudited 5 901 431 268 416 4 888 503 1 941 087
* Inter-segmental eliminations above relate to the following:
i) Revenue - the elimination of intra-group sales transactions, mainly sales
from the South African manufacturing and logistics operation, to the distribution
operations.
ii) Operating profit (loss) - the elimination of profit (loss) on intra-group
transactions, mainly sales transactions from the South African manufacturing
and logistics operation to the distribution operations, where the inventory has
not yet been on-sold by the distribution operations to a third party at period end.
iii) Assets and liabilities - the intra-group transactions result in intra-group
receivables and payables balances and furthermore intra-group loans are in
place between certain group operations. These are eliminated on consolidation.
** In the current period the group reclassified certain revenue transactions and
related receivables balances from the South African manufacturing and logistics
operation to the Rest of Africa operation. Previously revenue from certain customers
in Africa was reported to the group's chief operating decision maker under the South
African manufacturing and logistics operation. This is now reported under the Rest
of Africa operation. The operating segment information for the previous periods has
been restated accordingly. The effect of these reclassifications is presented below.
Refer adjustment (a). This reclassification had no impact on the operating profit
(loss) of the segments.
The segment information for the Rest of Africa operation has been further adjusted
for the prior period restatements as disclosed in note 11. Refer adjustment (b) below.
Operating
Revenue profit (loss) Assets Liabilities
R'000 R'000 R'000 R'000
June 2015
South African manufacturing and logistics operation
As previously reported 1 889 229 43 507 2 448 233 1 048 779
Adjustment (a) (135 987) - (30 102) -
Restated - unaudited 1 753 242 43 507 2 418 131 1 048 779
Rest of Africa operation
As previously reported 466 160 35 706 790 491 622 912
Adjustment (a) 135 987 - 30 102 -
Adjustment (b) - (9 347) 41 530 72 080
Restated - unaudited 602 147 26 359 862 123 694 992
December 2015
South African manufacturing and logistics operation
As previously reported 3 782 318 148 671 2 558 768 1 109 465
Adjustment (a) (210 669) - (2 464) -
Restated - unaudited 3 571 649 148 671 2 556 304 1 109 465
Rest of Africa operation
As previously reported 916 810 21 634 872 073 693 034
Adjustment (a) 210 669 - 2 464 -
Adjustment (b) - (23 348) 35 443 92 318
Restated - unaudited 1 127 479 (1 714) 909 980 785 352
Unaudited Unaudited Unaudited
six months six months twelve months
ended ended ended
30 June 30 June 31 December
8 CONTINGENT LIABILITIES 2016 2015 2015
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. These are considered to be financial guarantee contracts.
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 period end the group's credit risk exposure to WesBank under Bell-backed deals
for which the group carries all the credit risk totalled 196 930 169 823 211 581
At period 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 1 154 2 590 1 997
In the event of default, the equipment financed would be recovered and it is estimated
that on re-sale the equipment would presently realise the following 337 331 206 317 319 208
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. These are considered to be financial
guarantee contracts.
At period end the group's credit risk exposure to these financial institutions
totalled 4 285 20 165 14 566
In the event of default, the equipment financed would be recovered and it is estimated
that on re-sale the equipment would presently realise the following 6 650 31 029 27 839
(2 365) (10 864) (13 273)
Less: provision for non-recovery (2 523) (1 188) (262)
Net contingent liability - - -
Where customers are in arrears with these financial institutions and there is a shortfall
between the estimated realisation values of the 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 418 853 945
In the event of repurchase, it is estimated that the equipment would presently
realise 1 845 3 192 3 404
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 9 981 8 611 28 335
Less: provision for residual value risk - (525) -
Net contingent liability 9 981 8 086 28 335
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 - 2 903 2 072
Less: impairment of retention deposits - (2 008) (2 072)
Net retention deposits and net contingent liability - 895 -
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 retention deposits are based
on an assessment of the market value of the equipment.
9 RELATED PARTY TRANSACTIONS
Information regarding transactions with significant related parties is presented below.
Transactions are carried out on an arms length basis.
Shareholders
John Deere Construction and Forestry Company
- sales 9 208 56 987 106 458
- purchases 210 923 377 131 565 492
- amounts owing to 129 247 128 351 51 961
- amounts owing by 1 265 25 375 25 216
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. (Level 3 fair value measurement)
- 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. (Level 3 fair value measurement)
- 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 and is based on observable forward exchange rates
at period end.
- Available for sale financial asset comprising an unlisted equity investment at cost
for which a reliable fair value could not be determined.
11 PRIOR PERIOD RESTATEMENTS
As a result of fraud and mismanagement of the group's operation in
the Democratic Republic of the Congo which was uncovered in the
current period, the group's results in prior periods have been restated.
This is due to the fact that:
1) A finance lease receivable had been discounted with a financial
institution with recourse to the group and had been derecognised.
The outstanding receivable has been re-instated and the corresponding
liability to the financial institution recognised (adjustment (a)).
2) Employees taxation, corporate income taxation and related penalties
and interest, as well as certain other less significant expenses, had
been understated in prior periods. Accordingly, the group's comparative
information has been restated for these items (adjustment (b)).
As previously
reported Adjustment (a) Adjustment (b) Restated
June 2015 R'000 R'000 R'000 R'000
Statement of financial position
- Interest-bearing long-term receivables 33 495 17 568 - 51 063
- Current portion of interest-bearing long-term receivables 36 944 23 962 - 60 906
Net increase in assets - unaudited 41 530 -
- Non-distributable reserves 455 011 - (2 215) 452 796
- Retained earnings 1 932 430 - (28 335) 1 904 095
- Interest-bearing liabilities 137 916 17 568 - 155 484
- Trade and other payables 1 181 151 - 20 037 1 201 188
- Current portion of interest-bearing liabilities 72 242 23 962 - 96 204
- Taxation liability 34 950 - 10 513 45 463
Net increase in equity and liabilities - unaudited 41 530 -
Statement of profit or loss
- Expenses (621 527) - (9 347) (630 874)
- Interest paid (30 909) (1 740) (1 773) (34 422)
- Interest received 5 210 1 740 - 6 950
- Taxation (40 676) - (459) (41 135)
Net decrease in profit - unaudited - (11 579)
Statement of profit or loss and other comprehensive income
- Exchange differences arising during the period / year (12 125) - (1 097) (13 222)
Statement of cash flows
- Net cash utilised in operating activities (611 451) (41 530) - (652 981)
- Net cash generated from financing activities 82 808 41 530 - 124 338
Earnings per share (basic) 106 - (13) 93
Earnings per share (diluted) 106 - (13) 93
December 2015
Statement of financial position
- Interest-bearing long-term receivables 29 763 5 810 - 35 573
- Trade and other receivables and prepayments 777 903 (2 947) (2 640) 772 316
- Current portion of interest-bearing long-term receivables 41 759 35 572 - 77 331
- Taxation asset 26 827 - (352) 26 475
Net increase (decrease) in assets - unaudited 38 435 (2 992)
- Non-distributable reserves 765 277 - (13 008) 752 269
- Retained earnings 2 001 086 - (43 867) 1 957 219
- Interest-bearing liabilities 111 885 5 810 - 117 695
- Trade and other payables 1 014 921 - 53 883 1 068 804
- Current portion of interest-bearing liabilities 57 719 32 625 - 90 344
Net increase (decrease) in equity and liabilities - unaudited 38 435 (2 992)
Statement of profit or loss
- Cost of sales (4 554 157) - (2 186) (4 556 343)
- Expenses (1 240 033) - (21 162) (1 261 195)
- Interest paid (70 787) (4 134) (2 463) (77 384)
- Interest received 11 886 4 134 - 16 020
- Taxation (64 008) - (1 300) (65 308)
Net decrease in profit - unaudited - (27 111)
Statement of profit or loss and other comprehensive income
- Exchange differences arising during the period / year 297 520 - (11 890) 285 630
Statement of cash flows
- Net cash utilised in operating activities (311 955) (38 435) - (350 390)
- Net cash generated from financing activities 41 401 38 435 - 79 836
Earnings per share (basic) 177 - (29) 148
Earnings per share (diluted) 177 - (29) 148
January 2015
Statement of financial position
- Non-distributable reserves 466 669 - (1 118) 465 551
- Retained earnings 1 831 459 - (16 756) 1 814 703
- Trade and other payables 1 376 773 - 9 848 1 386 621
- Taxation liability 28 640 - 8 026 36 666
Net increase in equity and liabilities - unaudited - -
12 POST FINANCIAL POSITION EVENTS
No fact or circumstance material to the appreciation of this
interim report has occurred between 30 June 2016 and the
date of this report.
13 CASH DIVIDEND DECLARATION
Notice is hereby given that the directors have declared a gross interim
cash dividend of 15 cents per ordinary share for the six-month period
ended 30 June 2016, payable to ordinary shareholders in accordance
with the timetable below.
The interim net dividend is 12.75 cents per share for ordinary
shareholders who are not exempt from dividends tax. The dividend
withholding tax rate is 15 per cent.
The dividend has been declared from income reserves.
The company's income tax reference number is 9022169206.
The issued share capital at the declaration date is 95 146 885
ordinary shares.
The salient dates for the dividend will be as follows:
2016
Last day of trade to receive a dividend Tuesday, 18 October
Shares commence trading "ex" dividend Wednesday, 19 October
Record date Friday, 21 October
Payment date Monday, 24 October
Share certificates may not be dematerialised or rematerialised
between Wednesday, 19 October 2016 and Friday,
21 October 2016, both days inclusive.
By order of the Board
20 September 2016
Directors
Non-executive
JR Barton* (Chairman), AJ Bell, DB Crandon, B Harie*, DH Lawrance*,
TO Tsukudu*, HR van der Merwe*
*Independent
Appointed: DB Crandon was appointed as director
on 1 June 2016.
Retired: DJJ Vlok retired on 5 May 2016
Executive
GW Bell (Group Chief Executive), KJ van Haght (Group Finance
Director), L Goosen (Chief Operating Officer)
Company Secretary
D McIlrath
Registered Office
13 - 19 Carbonode Cell Road, Alton, Richards Bay,
3900
Transfer Secretaries
Link Market Services South Africa Proprietary Ltd,
19 Ameshoff Street, Johannesburg, 2001
Sponsor
Rand Merchant Bank
(a division of FirstRand Bank Limited)
1 Merchant Place, Cnr Fredman Drive and
Rivonia Road, Sandton, 2196
Release date: 22 September 2016
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