electric motor rewinding and it manufactures and repairs transformers, electric switch gear, panels and pumps and the company offers an all round on site repair or replacement partnership with the end user. The Wegezi group operates from a 6 000 m2 facility and has a total staff compliment of 200.

Most divisions in BMG experienced a decline in demand for product. Management focussed on margin preservation, cost control and reduction of working capital. These efforts paid off handsomely and BMG produced a very respectable profit performance, which combined with excellent working capital management enabled it to generate R370 million in cash during the year.

BMG continued to invest in staff training and development, product development and expansion, with its World Class Production Efficiency program gaining momentum. The division is well positioned to grow as markets return to normal.

Capital Equipment Division (CED)

CED, being the more cyclical of the Group operations, experienced large declines in volumes in the markets in which it operates. Notwithstanding, CED managed to limit its decline in revenue to R1 750 million, a reduction of 22,4% compared to last year. Acquisitions accounted for 8,2% of turnover. Exceptional margin management and cost control resulted in this segment’s profit declining by only 12,8% to R123 million. Good control of working capital resulted in an excellent return on working capital being achieved by CED.

The construction equipment divisions suffered the most in CED. Demand for product in this sector has declined dramatically in the face of the recent recession and has been compounded by the completion
of the 2010 Soccer World Cup and government

infrastructure projects. Although it suffered losses during the year, CSE managed to cut costs and restructure its operations sufficiently to ensure that it returned to profitability by year-end. In contrast to this, Doosan SA managed to remain profitable during the year, and increased its market share in excavators by 17,6% and loaders by 14,6%.

Criterion Equipment, which was acquired on 1 June 2009, has been restructured and is operating profitably. It did not contribute meaningfully to segment profits in CED during the year under review,
but helped to absorb some of the overheads in the construction equipment divisions. It is expected to make a significant contribution to CED profits in the coming year.

The agricultural equipment divisions experienced challenging conditions, with total market sales of tractors for the period under review declining by 33% from 8 045 units to 5 406 units. Despite this, the agricultural machinery divisions improved market shares in key sectors and through tight margin and cost management, produced the bulk of CED’s segment profits. The major influencing factors which affected the agricultural machinery markets were low grain prices and a strong Rand. Although volumes declined in both Northmec and New Holland SA, both operations enjoyed good demand for spare parts, which helped to offset the effect of reduced unit sales.

Other Operations

Although not yet a significant contributor to the group, Tiletoria managed to increase its revenue, a very credible achievement under difficult trading conditions in the building industry. Operating income
also increased. Tiletoria is in the process of relocating its Durban branch to bigger premises and intends opening an outlet in Gauteng in the coming year.

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