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BELL EQUIPMENT LIMITED - Unaudited Interim Results for the Period Ended 30 June 2017 and Cash Dividend Declaration

Release Date: 31/08/2017 14:54
Code(s): BEL     PDF:  
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Unaudited Interim Results for the Period Ended 30 June 2017 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 2017 AND CASH DIVIDEND DECLARATION

Highlights
                                      Unaudited       Unaudited   
                                   30 June 2017    30 June 2016
Revenue - Up 11%                         R3,4bn          R3,1bn
NPAT - Up 86%                           R119,6m          R64,3m
HEPS - Up 78%                              119c             67c
Net cash inflow - Up 1917%              R227,8m          R11,3m
Dividend - Up 33%                           20c             15c

Commentary

Bell Equipment Limited has enjoyed more positive trading conditions from most of its global markets
over the period. Outlook for growth from our mining sector and commodity markets in South Africa,
Australia and Russia is positive with a slow recovery evident.

The UK and USA remain key markets with relatively stable sales given the significant political
changes and resultant uncertainty over the period.

The European market continues to show steady growth and our operations in both France and
Germany have benefited. The investment in our new European Logistics Centre has been completed
and the facility is now fully operational. Significant improvements in customer service levels and a
reduction in operational costs are beginning to flow through.

The E-series range of trucks, and in particular the new concept B60E and B20E LGP units, continue to
garner positive reviews from users around the globe and will in time add additional throughput for
our business.

The stronger Rand in the first half of 2017 has affected turnover and margin in both our domestic
and export sales, while increased costs from essential product upgrades have also proved difficult to
pass on to the market due to significant competitive pressure. These two factors have affected
profitability and are a key focus for management.

In the South African distribution business a successful BBBEE transaction has been completed which
will ensure our participation in all sectors of the economy. An important distribution agreement
with Kobelco from Japan has been concluded, extending our offering of excavators with a broader
and more competitive range of machines. Second half sales should begin to reflect this additional
volume. Further opportunities for complementing product lines have been identified and
programmes are in place to bring these to market and drive our growth plans for Africa and our
Northern Hemisphere markets.

Our traditional mining markets north of the Zambezi continue to underperform as a result of both
internal political issues and poor commodity demand. Restructuring and right-sizing continues in the
Democratic Republic of Congo, Zambia and Zimbabwe while our Mozambique operation has been
sold to an independent dealer which is better positioned for higher efficiency and absorption
through additional product lines.

Bell will continue to invest in both additional products and in distribution opportunities across the
globe. The assessment of current distribution channels, as well as the appointment of focused
dealers in non-represented countries are priorities.

Aftermarket sales and support to our existing customers remains a critical element of the business
and resources are being channelled to ensure that we are best equipped to deliver on this important
aspect of our business.

The group continues with expansion plans for our German factory as well as expansion plans for the
Richards Bay production of a new range of Trucks in association with KAMAZ from Russia. Testing
and evaluation are almost complete for the range of products selected for our African markets and
limited assembly work will begin in 2018 with plans to move to full CKD (knockdown kit) production
early in 2019.

The group has completed a formal search process and in June announced its succession plans for a
new CEO. Leon Goosen, our current COO, was appointed as the CEO designate. The plans allow for
an extended hand-over, ensuring continuity for the business, and a date for the final appointment to
the CEO position will be decided in due course. We take this opportunity to congratulate Leon
on his appointment and we have every confidence that he will lead the business to greater heights in
the years ahead as we roll out our agreed plans.

Tiisetso Tsukudu has announced his retirement as an independent non-executive director from the
Bell board after 13 years of service and the company would like to take this opportunity to thank
him for both his dedication and significant input over the years.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION       Unaudited      Unaudited            Audited
as at 30 June 2017                                             30 June        30 June        31 December
R'000                                                             2017           2016               2016
ASSETS
Non-current assets                                           1 102 314        910 954          1 029 444
Property, plant and equipment                                  767 947        584 830            704 295
Intangible assets                                              215 584        210 149            216 419
Investments                                                        584            636                568
Interest-bearing long-term receivables                          28 736         24 468             16 964
Deferred taxation                                               89 463         90 871             91 198

Current assets                                               3 969 145      3 763 865          3 477 504
Inventory                                                    2 458 719      2 745 254          2 427 921
Trade and other receivables                                  1 127 844        850 324            751 672
Current portion of interest-bearing long-term receivables       48 610         63 571             56 546
Prepayments                                                     62 514         20 509             21 828
Other financial assets                                           1 300          2 787              5 641
Current taxation assets                                          3 664         19 342             29 601
Cash and bank balances                                         266 494         62 078            184 295
TOTAL ASSETS                                                 5 071 459      4 674 819          4 506 948
EQUITY AND LIABILITIES
Capital and reserves                                         2 889 849      2 919 652          2 758 247
Stated capital (Note 5)                                        232 244        230 567            232 139
Non-distributable reserves                                     565 176        669 946            553 298
Retained earnings                                            2 086 332      2 011 150          1 972 810
Attributable to owners of Bell Equipment Limited             2 883 752      2 911 663          2 758 247
Non-controlling interest                                         6 097          7 989                -

Non-current liabilities                                        389 372        278 078            321 787
Interest-bearing liabilities                                   151 107         83 314            103 175
Repurchase obligations and deferred leasing income               1 394          2 587              2 034
Deferred income                                                102 575         72 689             84 083
Long-term provisions and lease escalation                       45 750         48 091             47 781
Deferred taxation                                               88 546         71 397             84 714

Current liabilities                                          1 792 238      1 477 089          1 426 914
Trade and other payables                                     1 183 513        981 929            759 463
Current portion of interest-bearing liabilities                 84 150         77 185             51 268
Current portion of repurchase obligations and
deferred leasing income                                          3 011          1 114                763
Current portion of deferred income                              98 253         79 080             82 903
Current portion of provisions and lease escalation              79 298         58 207             69 562
Other financial liabilities                                      1 143          6 846                952
Current taxation liabilities                                    42 057         22 373             15 615
Bank overdrafts and borrowings on call                         300 813        250 355            446 388
TOTAL EQUITY AND LIABILITIES                                 5 071 459      4 674 819          4 506 948

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS           Unaudited      Unaudited            Audited
for the period ended 30 June 2017                           six months     six months      twelve months
                                                                 ended          ended              ended
                                                               30 June        30 June        31 December
R'000                                                             2017           2016               2016
Revenue                                                      3 446 757      3 097 762          6 002 341
Cost of sales                                              (2 744 277)    (2 367 911)        (4 604 486)
Gross profit                                                   702 480        729 851          1 397 855
Other operating income                                         105 234         75 027            168 448
Expenses                                                     (595 030)      (660 057)        (1 418 055)
Profit from operating activities (Note 2)                      212 684        144 821            148 248
Net interest expense (Note 3)                                 (14 380)       (18 763)           (32 557)
Profit before taxation                                         198 304        126 058            115 691
Taxation                                                      (78 685)       (61 770)           (77 072)
Profit for the period/year                                     119 619         64 288             38 619
Profit for the period/year attributable to:
- Owners of Bell Equipment Limited                             113 522         63 660             37 472
- Non-controlling interest                                       6 097            628              1 147
Earnings per share (basic)(cents) (Note 4)                         119             67                 39
Earnings per share (diluted)(cents) (Note 4)                       119             67                 39

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                        Unaudited     Unaudited          Audited
for the period ended 30 June 2017                                              six months    six months    twelve months
                                                                                    ended         ended            ended
                                                                                  30 June       30 June      31 December
R'000                                                                                2017          2016             2016
Profit for the period/year                                                        119 619        64 288           38 619
    
Other comprehensive income (loss)    
Items that may be reclassified subsequently to profit or loss:    
Exchange differences arising during the period/year                                 9 388      (89 781)        (221 639)
Exchange differences on translating foreign operations                              8 490      (87 049)        (210 970)
Exchange differences on foreign reserves                                              898       (2 732)         (10 669)
    
Items that may not be reclassified subsequently to profit or loss:                      -           432           17 340
Surplus arising on revaluation of properties                                            -           600           24 300
Taxation relating to surplus arising on revaluation of properties                       -         (168)          (6 960)
     
Other comprehensive income (loss) for the period/year, net of taxation              9 388      (89 349)        (204 299)
    
Total comprehensive income (loss) for the period/year                             129 007      (25 061)        (165 680)
    
Total comprehensive income (loss) attributable to:    
- Owners of Bell Equipment Limited                                                122 910      (25 689)        (166 827)
- Non-controlling interest                                                          6 097           628            1 147

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS                                  Unaudited     Unaudited          Audited
for the period ended 30 June 2017                                              six months    six months    twelve months
                                                                                    ended         ended            ended
                                                                                  30 June       30 June      31 December
                                                                                     2017          2016             2016
R'000                                                                                         Restated*
Cash operating profit before working capital changes                              346 369       292 547          406 005
Cash utilised in working capital                                                (101 615)     (141 586)        (208 338)
Cash generated from operations                                                    244 754       150 961          197 667
Net interest paid                                                                (13 434)      (14 262)         (32 377)
Taxation paid                                                                    (21 264)      (45 322)         (76 951)
Net cash generated from operating activities                                      210 056        91 377           88 339
Net cash utilised in investing activities                                        (64 651)      (39 435)        (117 390)
Net cash generated from (utilised in) financing activities                         82 369      (40 647)         (33 470)
Net cash inflow/(outflow)                                                         227 774        11 295         (62 521)
Net bank overdrafts and borrowings on call at beginning of the period/year      (262 093)     (199 572)        (199 572)
Net bank overdrafts and borrowings on call at end of the period/year             (34 319)     (188 277)        (262 093)
Comprising:
Cash and bank balances                                                            266 494        62 078          184 295
Bank overdrafts and borrowings on call                                          (300 813)     (250 355)        (446 388)
Net bank overdrafts and borrowings on call at end of the period/year             (34 319)     (188 277)        (262 093)

* Refer to restatements of prior periods in note 11.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2017                                   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 2015 - audited                              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
    
Total comprehensive (loss) income for the period                         -      (114 950)      (26 188)    (141 138)           519     (140 619)
Transfer between reserves relating to expired share options              -          (517)         3 220        2 703             -         2 703
Decrease in equity-settled employee benefits reserve relating to    
forfeited share options                                                  -          (702)             -        (702)             -         (702)
Share options exercised                                              1 572              -             -        1 572             -         1 572
Decrease in statutory reserves of foreign subsidiaries                   -          (479)           479            -             -             -
Dividends paid                                                           -              -      (14 273)     (14 273)             -      (14 273)
Transactions with non-controlling interest                               -              -       (1 578)      (1 578)       (8 508)      (10 086)
    
Balance at 31 December 2016 - audited                              232 139        553 298     1 972 810    2 758 247             -     2 758 247
    
Recognition of share-based payments                                      -            291             -          291             -           291
BBBEE share-based payment charge                                         -          2 199             -        2 199             -         2 199
Total comprehensive income for the period                                -          9 388       113 522      122 910         6 097       129 007
Share options exercised                                                105              -             -          105             -           105
    
Balance at 30 June 2017 - unaudited                                232 244        565 176     2 086 332    2 883 752         6 097     2 889 849

ABBREVIATED NOTES TO THE UNAUDITED INTERIM RESULTS
for the period ended 30 June 2017                                                                          Unaudited     Unaudited       Audited
                                                                                                          six months    six months twelve months
                                                                                                               ended         ended         ended
                                                                                                             30 June       30 June   31 December
R'000                                                                                                           2017          2016          2016
          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 amended standards and the
            prior period adjustments as described in note 11.

            In the current period the group has adopted all of the amended standards relevant to its
            operations and effective for annual reporting periods beginning 1 January 2017. The adoption
            of these amended standards has not had any significant impact on the amounts reported in the
            interim report or the disclosures herein.

            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 and containing the information required by IAS 34: Interim
            Financial Reporting, as well as the SAICA Financial Reporting Guides as issued by the
            Accounting Practices Committee and Financial Pronouncements as issued by the Financial
            Reporting Standards Council. 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                                                                           90 298       268 416       388 753
            Decrease in provision for doubtful debts                                                           9 581             -         6 728
            Deferred warranty income                                                                          39 245        24 730        50 764
            Import duty rebates                                                                               37 031        22 223        65 020
            Net surplus on disposal of property, plant and equipment and intangible assets                       442             -            26

            Expenditure
            Amortisation of intangible assets                                                                 18 053        17 026        33 229
            Amounts written off as uncollectible                                                              10 995        10 778        33 898
            Auditors' remuneration - audit and other services                                                  3 169         5 499        10 772
            Consulting fees                                                                                   14 044        14 490        33 270
            Currency exchange losses                                                                          89 818       294 668       419 694
            Depreciation of property, plant and equipment                                                     76 632        50 626       110 985
            Impairment loss recognised on rental assets                                                            -             -         8 262
            Increase in provision for doubtful debts                                                               -         6 437             -
            Increase in warranty provision                                                                     9 980         2 321        14 060
            Operating lease charges                                                                           56 873        64 823       127 370
            Research expenses (excluding staff costs)                                                         20 968        16 877        35 501
            BBBEE share-based payment charge                                                                   2 199             -             -
            Severance pay                                                                                      5 926         4 364         9 739
            Staff costs (including directors' remuneration)                                                  598 831       603 942     1 203 963

          3 NET INTEREST EXPENSE
            Interest expense                                                                                  21 917        27 100        48 174
            Interest income                                                                                  (7 537)       (8 337)      (15 617)
            Net interest expense                                                                              14 380        18 763        32 557

          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)                   113 522        63 660        37 472
            Weighted average number of ordinary shares in issue during the period ('000)                      95 307        95 147        95 159
            Earnings per share (basic) (cents)                                                                   119            67            39

            Diluted earnings per share is arrived at as follows:
            Profit for the period attributable to owners of Bell Equipment Limited (R'000)                   113 522        63 660        37 472
            Fully converted weighted average number of shares ('000) *                                        95 479        95 147        95 289
            Earnings per share (diluted) (cents)                                                                 119            67            39

            * The number of shares has been adjusted for the effect of the dilutive potential
            ordinary shares relating to the unexercised options in employee Share Option Scheme 2.

            Headline earnings per share is arrived at as follows:
            Profit for the period attributable to owners of Bell Equipment Limited (R'000)                   113 522        63 660        37 472
            Net surplus on disposal of property, plant and equipment and intangible assets (R'000)             (442)             -          (26)
            Taxation effect of net surplus on disposal of property, plant and equipment and intangible
            assets (R'000)                                                                                       124             -             7
            Impairment loss in respect of property, plant and equipment rental assets (restated**)                 -             -         8 262
            Headline earnings (R'000) (restated**)                                                           113 204        63 660        45 715
            Weighted average number of ordinary shares in issue during the period ('000)                      95 307        95 147        95 159
            Headline earnings per share (basic) (cents) (restated**)                                             119            67            48

            Diluted headline earnings per share is arrived at as follows:
            Headline earnings calculated above (R'000) (restated**)                                          113 204        63 660        45 715
            Fully converted weighted average number of shares ('000)                                          95 479        95 147        95 289
            Headline earnings per share (diluted) (cents) (restated**)                                           119            67            48

            Net asset value per share is arrived at as follows:
            Total capital and reserves (R'000)                                                             2 889 849     2 919 652     2 758 247
            Number of shares in issue ('000)                                                                  95 307        95 147        95 297
            Net asset value per share (cents)                                                                  3 032         3 069         2 894
          
            ** Refer to restatement of December 2016 headline earnings per share in note 11.
          
          5 STATED CAPITAL
            Authorised
            100 000 000 (June 2016: 100 000 000) ordinary shares of no par value
            Issued
            95 306 885 (June 2016: 95 146 885) ordinary shares of no par value                               232 244       230 567       232 139
                  
          6 CAPITAL EXPENDITURE COMMITMENTS
            Contracted                                                                                            14         2 822        13 228
            Authorised, but not contracted                                                                    81 944        91 759        88 508
            Total capital expenditure commitments                                                             81 958        94 581       101 736
          
            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 2017  
            South African sales operation                                                1 523 387         87 155        1 449 502     1 325 434
            South African manufacturing and logistics operation                          1 987 167         66 928        3 501 927     1 856 690
            European operation                                                           1 231 898         56 333        1 161 118       741 213
            Rest of Africa operation                                                       378 863       (46 009)          501 085       455 195
            North American operation                                                       610 884         25 456          181 888       111 961
            All other operations                                                                 -       (26 526)        1 277 479        69 214
            Inter-segmental eliminations *                                             (2 285 442)         49 347      (3 001 540)   (2 378 097)
            Total - unaudited                                                            3 446 757        212 684        5 071 459     2 181 610
            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
            December 2016  
            South African sales operation                                                2 731 470        115 347        1 093 956       699 513
            South African manufacturing and logistics operation                          3 334 624         80 506        2 858 072     1 278 889
            European operation                                                           2 180 950         60 801        1 074 298       694 993
            Rest of Africa operation                                                       799 706      (185 805)          624 312       511 340
            North American operation                                                       665 612         49 810          266 720       198 098
            All other operations                                                                 -      (163 390)        1 117 089       239 591
            Inter-segmental eliminations *                                             (3 710 021)        190 979      (2 527 499)   (1 873 723)
            Total - audited                                                              6 002 341        148 248        4 506 948     1 748 701

            Included in the Rest of Africa operation are past due debtors of R56.6 million (2016: R110,1
            million) relating to a few customers in the group's operation in the Democratic Republic of
            the Congo. These amounts have not been provided against as they are still considered
            recoverable.
        
            * 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.

                                                                                                           Unaudited   Unaudited        Audited
                                                                                                          six months  six months  twelve months
                                                                                                               ended       ended          ended
                                                                                                             30 June     30 June    31 December
          8 CONTINGENT LIABILITIES                                                                              2017        2016           2016
        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                                         140 158     196 930       144 688
            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                                  2 424       1 154         2 682
            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 towards the above liabilities        241 383     337 331       249 936
                                                                                                            (98 801)   (139 247)     (102 566)
            Less: provision for non-recovery                                                                 (2 635)           -             -
            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                                                                                           3 843       4 285        3 146
            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 towards the above liabilities          7 685       6 650        1 413
                                                                                                             (3 842)     (2 365)        1 733
            Less: provision for non-recovery                                                                   (117)     (2 523)      (1 797)
            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                                                              93         418         467
            In the event of repurchase, it is estimated that the equipment would presently
            realise                                                                                              398       1 845       1 860
            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                                                                               22 941       9 981       8 469
            Net contingent liability                                                                          22 941       9 981       8 469
        
            The transactions described in note 8.3 above relate 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  RELATED PARTY TRANSACTIONS
            Information regarding significant transactions with related parties is presented below.
            Transactions are carried out on an arms length basis.
         
            Shareholders
            John Deere Construction and Forestry Company
            - sales                                                                                           10 103       9 208      17 302
            - purchases                                                                                      362 393     210 923     392 769
            - amounts owing to                                                                               170 412     129 247      57 020
            - amounts owing by                                                                                 3 527       1 265       3 664
        
            Enterprises over which directors and shareholders are able to exercise
            significant influence and/or in which directors and shareholders have
            a beneficial interest
            Latin Equipment Group
            - sales                                                                                            2 568       3 531      29 332
        
        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 and bank balances.
            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 bank overdrafts and borrowings on call.
            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  PRIOR PERIOD RESTATEMENTS
         
            (i) Classification error in the group's June 2016 interim statement of cash flows
            During the 2016 year end process it was identified that the movement in the group's provision
            for inventory write-downs was incorrectly classified in the group's June 2016 interim
            cash flow statement. The movement in the provision for inventory write-downs was
            classified as part of the movement in working capital instead of adjusting operating profit
            before working capital changes. This classification error has been corrected and the impact
            on the group's June 2016 interim cash flow statement is as follows:
                                                                                                              As previously
                                                                                                                   reported    Adjustment    Restated
                                                                                                                      R'000         R'000       R'000
            Cash generated from operations before working capital changes                                           254 463        38 084     292 547
            Cash utilised in working capital                                                                      (103 502)      (38 084)   (141 586)
            Cash generated from operations                                                                          150 961             -     150 961
         
            (ii) Restatements relating to the calculation of the December 2016 headline earnings per share
            During the JSE proactive monitoring process it was identified that the impairment loss recognised
            in respect of the group's property, plant and equipment rental assets had not been added back
            in the calculation of headline earnings per share in the December 2016 results.
            This calculation error has been corrected and the impact on the group's December 2016
            headline earnings per share is as follows:
                                                                                                              As previously
                                                                                                                   reported    Adjustment   Restated
                                                                                                                      R'000         R'000      R'000
            Headline earnings per share is arrived at as follows:
            Profit for the year attributable to owners of Bell Equipment Limited                                     37 472             -     37 472
            Net surplus on disposal of property, plant and equipment and intangible assets                             (26)             -       (26)
            Taxation effect of net surplus on disposal of property, plant and equipment and intangible                                  
            assets                                                                                                        7             -          7
            Impairment loss in respect of property, plant and equipment rental assets                                     -         8 262      8 262
            Headline earnings                                                                                        37 453         8 262     45 715
            Weighted average number of ordinary shares in issue during the period ('000)                             95 159        95 159     95 159
            Headline earnings per share (basic) (cents)                                                                  39             9         48
           
        12  POST FINANCIAL POSITION EVENTS
            No fact or circumstance material to the appreciation of this
            interim report has occurred between 30 June 2017 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 20 cents per ordinary share for the six-month period
            ended 30 June 2017 payable to ordinary shareholders in accordance
            with the timetable below. 
         
            The interim net dividend is 16 cents per share for ordinary
            shareholders who are not exempt from dividends tax. The dividend
            withholding tax rate is 20 percent.

            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 95 306 885
            ordinary shares.
         
            The salient dates for the dividend will be as follows:
                                                                                          2017
            Last day of trade to receive a dividend                      Tuesday, 19 September
            Shares commence trading "ex" dividend                      Wednesday, 20 September
            Record date                                                   Friday, 22 September
            Payment date                                                 Tuesday, 26 September
         
            Share certificates may not be dematerialised or rematerialised
            between Wednesday, 20 September 2017 and Friday,
            22 September 2017, both days inclusive.
         
            By order of the board
            29 August 2017

Directors
Non-executive
JR Barton* (Chairman), AJ Bell, B Harie, DH Lawrance*,
HR van der Merwe*, ME Ramathe*, R Naidu*
*Independent
Appointed: R Naidu and ME Ramathe were appointed as directors
on 20 March 2017.
Retired: TO Tsukudu retired on 21 August 2017.
Executive
GW Bell (Group Chief Executive), L Goosen (Chief Executive Designate),
KJ van Haght (Group Finance Director)

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
Investec Bank Ltd
100 Grayston Drive, Sandown, Sandton, 2196

Release date: 31 August 2017

www.bellir.co.za

Date: 31/08/2017 02:54:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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