Bell defiant amid audit warning

Johannesburg - Beleaguered construction and mining equipment supplier Bell Equipment has said the improved commodity market would help it surge back in the second half of its current financial year, which ends on December 31.

Gary Bell, CEO of Bell Equipment, was responding to Fin24.com's questions about a renewed cautionary announcement on Wednesday by the firm's auditor, Deloitte & Touche.

The auditor had issued an "emphasis of matter" - an auditing term expressing concern about solvency of the business - on Bell Equipment's financial results ended December.

"These conditions indicate a material uncertainty which may cast significant doubt on the group's ability to continue as a going concern," said Deloitte & Touche in a note in Bell Equipment's 2009 annual report.

Bell said he had "no doubt" the equipment supplier would continue to operate profitably, and that that he was confident the company had seen the worst of the downturn.

Retrenchments and snipped salaries

Group revenue dropped 50.6% to R2.7bn for the 12 months to end-December 2009. It closed the year with a post tax loss of R271.7m, against a R360.7m profit previously.

In response, the company cut costs including laying off 1 148 employees. Remaining staff took a salary cut of 5% to 50%.

Bell said the company was also relying on external financing from its biggest shareholders, commercial banks, and most recently the trade and industry department and Industrial Development Corporation.

Said Bell: "We are dependent on demand for commodities, especially copper, steel and coal." The company had noted considerable improvement in worldwide commodity markets and expected this to translate into higher demand for mining equipment, he added.

"We are pretty confident that the second half will be considerably better," said Bell.

Commodity prices, including the leading metal indicator, copper, were on an upward trajectory and recently broke through $87nbsp;000 per tonne - the highest level since the financial crisis struck global economies in August 2008.

- Fin24.com