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BELL EQUIPMENT LIMITED - Unaudited interim report for the period ended 30 June 2015

Release Date: 11/08/2015 14:22
Code(s): BEL     PDF:  
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Unaudited interim report for the period ended 30 June 2015

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 REPORT FOR THE PERIOD ENDED 30 JUNE 2015

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION                        Unaudited       Reviewed         Audited
as at 30 June 2015                                                              30 June        30 June     31 December
R'000                                                                              2015           2014            2014
ASSETS                                                                                                                
Non-current assets                                                            1 045 783        992 666       1 011 357
Property, plant and equipment                                                   706 028        679 081         672 106
Intangible assets                                                               217 689        168 230         203 078
Investments                                                                         530            566             548
Interest-bearing long-term receivables                                           33 495         32 423          45 357
Deferred taxation                                                                88 041        112 366          90 268
Current assets                                                                3 790 123      3 737 307       3 483 147
Inventory                                                                     2 662 181      2 460 832       2 403 437
Trade and other receivables and prepayments                                     991 728      1 049 706         753 984
Current portion of interest-bearing long-term receivables                        36 944         24 854          42 519
Other financial assets                                                            3 207          2 835           2 071
Non-current assets held for sale                                                 11 550              -          11 850
Taxation                                                                         18 363         12 279          10 331
Cash resources                                                                   66 150        186 801         258 955
TOTAL ASSETS                                                                  4 835 906      4 729 973       4 494 504
EQUITY AND LIABILITIES 
Capital and reserves                                                          2 626 110      2 561 116       2 536 331
Stated capital (Note 5)                                                         230 567        230 567         230 567
Non-distributable reserves                                                      455 011        497 249         466 669
Retained earnings                                                             1 932 430      1 824 690       1 831 459
Attributable to owners of Bell Equipment Limited                              2 618 008      2 552 506       2 528 695
Non-controlling interest                                                          8 102          8 610           7 636
Non-current liabilities                                                         281 420        236 677         214 273
Interest-bearing liabilities                                                    137 916        100 399          87 161
Repurchase obligations and deferred leasing income                                    -         12 772               -
Deferred warranty income                                                         68 185         51 544          65 616
Long-term provisions and lease escalation                                        43 137         44 098          44 813
Deferred taxation                                                                32 182         27 864          16 683
Current liabilities                                                           1 928 376      1 932 180       1 743 900
Trade and other payables                                                      1 181 151      1 319 482       1 376 773
Current portion of interest-bearing liabilities                                  72 242         50 678          40 304
Current portion of repurchase obligations and                                                                         
deferred leasing income                                                          20 583         57 677          34 980
Current portion of deferred warranty income                                      61 362         60 400          59 079
Current portion of provisions and lease escalation                               50 506         63 199          65 941
Other financial liabilities                                                       3 952          3 474           4 404
Taxation                                                                         34 950         39 647          28 640
Short-term interest-bearing debt                                                503 630        337 623         133 779
TOTAL EQUITY AND LIABILITIES                                                  4 835 906      4 729 973       4 494 504
Number of shares in issue ('000)                                                 95 147         95 147          95 147
Net asset value per share (cents)                                                 2 760          2 692           2 666


CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS                            Unaudited       Reviewed         Audited
for the period ended 30 June 2015                                            six months     six months   twelve months
                                                                                  ended          ended           ended
                                                                                30 June        30 June     31 December
R'000                                                                              2015           2014            2014
Revenue                                                                       2 898 009      3 438 650       6 608 545
Cost of sales                                                               (2 199 741)    (2 648 855)     (5 067 408)
Gross profit                                                                    698 268        789 795       1 541 137
Other operating income                                                           90 610         78 505         148 597
Expenses                                                                      (621 527)      (735 952)     (1 504 643)
Profit from operating activities (Note 2)                                       167 351        132 348         185 091
Net interest paid (Note 3)                                                     (25 699)       (37 583)        (54 818)
Profit before taxation                                                          141 652         94 765         130 273
Taxation                                                                       (40 676)       (34 447)        (63 853)
Profit for the period/year                                                      100 976         60 318          66 420
Profit for the period/year attributable to:                                                                           
- Owners of Bell Equipment Limited                                              100 510         58 623          63 452
- Non-controlling interest                                                          466          1 695           2 968
Earnings per share (basic)(cents) (Note 4)                                          106             62              67
Earnings per share (diluted)(cents) (Note 4)                                        106             61              66


CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND                                                                
OTHER COMPREHENSIVE INCOME                                                    Unaudited       Reviewed         Audited
for the period ended 30 June 2015                                            six months     six months   twelve months
                                                                                  ended          ended           ended
                                                                                30 June        30 June     31 December
R'000                                                                              2015           2014            2014
Profit for the period/year                                                      100 976         60 318          66 420
Other comprehensive (loss) income                                                                                     
Items that may be reclassified subsequently to profit or loss:                                                        
Exchange differences arising during the period/year                            (12 125)         10 726        (21 915)
Exchange differences on translating foreign operations                         (11 385)         10 607         (5 715)
Exchange differences on foreign reserves                                          (740)            119           (711)
Reclassification to profit or loss of foreign currency translation reserve                                            
on deregistered operations                                                            -              -        (15 489)
Other comprehensive (loss) income for the period/year, net of taxation         (12 125)         10 726        (21 915)
Total comprehensive income for the period/year                                   88 851         71 044          44 505
Total comprehensive income attributable to:                                                                           
- Owners of Bell Equipment Limited                                               88 385         69 349          41 537
- Non-controlling interest                                                          466          1 695           2 968


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS                                                Reviewed                
for the period ended 30 June 2015                                             Unaudited     six months         Audited                  
                                                                             six months          ended   twelve months
                                                                                  ended       Restated           ended        
                                                                                30 June        30 June     31 December
R'000                                                                              2015           2014            2014
Cash operating profit before working capital changes (Note 6)                   214 760        248 327         368 119
Cash (utilised in) generated from working capital (Note 6)                    (773 563)        233 406         571 458
Cash (utilised in) generated from operations                                  (558 803)        481 733         939 577
Net interest paid                                                              (25 699)       (37 583)        (54 818)
Taxation paid                                                                  (26 949)       (41 373)        (77 043)
Net cash (utilised in) generated from operating activities                    (611 451)        402 777         807 716
Net cash utilised in investing activities (Note 6)                             (34 013)       (78 134)       (183 600)
Net cash generated from (utilised in) financing activities                       82 808       (14 518)        (37 993)
Net cash (outflow) inflow                                                     (562 656)        310 125         586 123
Net cash (short-term interest-bearing debt) at beginning of the period/year     125 176      (460 947)       (460 947)
Net (short-term interest-bearing debt) cash at end of the period/year         (437 480)      (150 822)         125 176
Comprising:                                                                                                           
Cash resources                                                                   66 150        186 801         258 955
Short-term interest-bearing debt                                              (503 630)      (337 623)       (133 779)
Net (short-term interest-bearing debt) cash at end of the period/year         (437 480)      (150 822)         125 176


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2015                                   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 2013 - audited                           230 534         485 145      1 766 067       2 481 746            6 915     2 488 661
Share options exercised                                              33               -              -              33                -            33
Recognition of share-based payments                                   -           1 378              -           1 378                -         1 378
Total comprehensive income for the period                             -          10 726         58 623          69 349            1 695        71 044
Balance at 30 June 2014 - reviewed                              230 567         497 249      1 824 690       2 552 506            8 610     2 561 116
Recognition of share-based payments                                   -           1 754              -           1 754                -         1 754
Total comprehensive (loss) income for the period                      -        (32 641)          4 829        (27 812)            1 273      (26 539)
Transactions with non-controlling interest                            -               -          2 247           2 247          (2 247)             -
Increase in statutory reserves of foreign subsidiaries                -             307          (307)               -                -             -
Balance at 31 December 2014 - audited                           230 567         466 669      1 831 459       2 528 695            7 636     2 536 331
Recognition of share-based payments                                   -             928              -             928                -           928
Total comprehensive (loss) income for the period                      -        (12 125)        100 510          88 385              466        88 851
Decrease in statutory reserves of foreign subsidiaries                -           (461)            461               -                -             -
Balance at 30 June 2015 - unaudited                             230 567         455 011      1 932 430       2 618 008            8 102     2 626 110


ABBREVIATED NOTES TO UNAUDITED INTERIM REPORT                                                 
for the period ended 30 June 2015                                                                                  Unaudited   Reviewed       Audited
                                                                                                                  six months six months twelve months
                                                                                                                       ended      ended         ended
                                                                                                                     30 June    30 June   31 December
R'000                                                                                                                   2015       2014          2014
             
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 change in functional currency 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 2015. 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 functional currency of the group's operation in Mozambique
  changed from Meticais to United States Dollar (US Dollar). The operation's primary
  economic environment is significantly influenced by the US Dollar. A significant portion of
  sales and the cost of goods and services has been indexed against the US Dollar.

  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 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, 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                                                                                            117 158     94 089       195 831
  Decrease in warranty provision                                                                                      17 964          -             -
  Deferred warranty income                                                                                            25 350     18 899        41 500
  Import duty rebates                                                                                                 30 190     23 741        42 706
  Reclassification to profit or loss of foreign currency translation reserve on deregistered operations                    -          -        15 489
  Royalties                                                                                                            2 139      2 216         4 647
  Net surplus on disposal of property, plant and equipment and intangible assets                                       5 766        692         1 485
  Expenditure                                                                                                                                        
  Amortisation of intangible assets                                                                                    8 833     12 755        25 280
  Auditors' remuneration - audit and other services                                                                    5 324      5 697        10 214
  Currency exchange losses                                                                                            92 173     96 042       186 976
  Depreciation of property, plant and equipment                                                                       69 770     53 187       114 881
  Increase in provision for doubtful debts                                                                            15 488     33 326        69 887
  Increase in warranty provision                                                                                           -      5 739         6 814
  Operating lease charges                                                                                                                            
  - equipment and motor vehicles                                                                                      19 669     19 754        42 205
  - land and buildings                                                                                                44 241     43 047        86 236
  Research expenses (excluding staff costs)                                                                           13 428     13 607        35 072
  Severance pay                                                                                                       22 573          -        21 378
  Staff costs (including directors' remuneration)                                                                    628 840    626 496     1 234 012

3 NET INTEREST PAID                                                                                                                             
  Interest paid                                                                                                       30 909     41 250        67 722
  Interest received                                                                                                  (5 210)    (3 667)      (12 904)
  Net interest paid                                                                                                   25 699     37 583        54 818
  
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)                                    100 510      58 623        63 452
  Weighted average number of ordinary shares in issue during the period ('000)                                       95 147      95 145        95 146
  Earnings per share (basic) (cents)                                                                                    106          62            67
  Diluted earnings per share is arrived at as follows:                                                                                              
  Profit for the period attributable to owners of Bell Equipment Limited (R'000)                                    100 510      58 623        63 452
  Fully converted weighted average number of shares ('000)                                                           95 147      96 400        95 640
  Earnings per share (diluted) (cents)                                                                                  106          61            66
  Headline earnings per share is arrived at as follows:                                                                                             
  Profit for the period attributable to owners of Bell Equipment Limited (R'000)                                    100 510      58 623        63 452
  Net surplus on disposal of property, plant and equipment and intangible assets (R'000)                            (5 766)       (692)       (1 485)
  Taxation effect of net surplus on disposal of property, plant and equipment and intangible assets (R'000)           1 614         194           416
  Reclassification to profit or loss of foreign currency translation reserve on deregistered operations (R'000)           -           -      (15 489)
  Headline earnings (R'000)                                                                                          96 358      58 125        46 894
  Weighted average number of ordinary shares in issue during the period ('000)                                       95 147      95 145        95 146
  Headline earnings per share (basic) (cents)                                                                           101          61            49
  Diluted headline earnings per share is arrived at as follows:                                                                                      
  Headline earnings calculated above (R'000)                                                                         96 358      58 125        46 894
  Fully converted weighted average number of shares ('000)                                                           95 147      96 400        95 640
  Headline earnings per share (diluted) (cents)                                                                         101          60            49

5 STATED CAPITAL                                                                                                                                  
  Authorised                                                                                                                                      
  100 000 000 (June 2014: 100 000 000) ordinary shares of no par value                                                                            
  Issued                                                                                                                                          
  95 146 885 (June 2014: 95 146 885) ordinary shares of no par value                                                230 567     230 567       230 567

6 RECLASSIFICATION IN STATEMENT OF CASH FLOWS
  Cash generated from working capital in the June 2014 comparative included an amount of
  R33,3 million relating to the movement in the provision for doubtful debts. This non-cash
  movement has been reclassified from cash generated from working capital to cash operating
  profit before working capital changes.

  Net cash utilised in investing activities in the June 2014 comparative included an amount of
  R37,8 million relating to rental asset additions. These additions are working capital in nature
  and accordingly has been reclassified from investing activities to cash generated from
  working capital.

7 CAPITAL EXPENDITURE COMMITMENTS                                                                                                                   
  Contracted                                                                                                          3 232      10 744       21 460
  Authorised, but not contracted                                                                                     36 419      59 240       59 418
  Total capital expenditure commitments                                                                              39 651      69 984       80 878

8 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 2015                                                                                                                                          
  South African sales operation                                                                1 247 877          44 591     1 181 268       854 281 
  South African manufacturing and logistics operation                                          1 889 229          43 507     2 448 233     1 048 779 
  European operation                                                                             919 819          40 800     1 016 512       669 574 
  Rest of Africa and other international operations                                              466 160          35 706       790 491       622 912 
  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         167 351     4 835 906     2 209 796 
  June 2014                                                                                                                                          
  South African sales operation                                                                1 523 559          72 303       982 354       739 385 
  South African manufacturing and logistics operation                                          1 848 575             226     2 813 871     1 437 853 
  European operation                                                                           1 034 577          65 494     1 157 060       890 323 
  Rest of Africa and other international operations                                              697 340        (38 925)     1 108 422       975 469 
  North American operation                                                                       217 796             433        93 869        55 837 
  All other operations                                                                                 -           2 926     1 133 382       115 549 
  Inter-segmental eliminations *                                                             (1 883 197)          29 891   (2 558 985)   (2 045 559) 
  Total - reviewed                                                                             3 438 650         132 348     4 729 973     2 168 857 
  December 2014                                                                                                                                      
  South African sales operation                                                                2 866 868         110 591     1 048 204       763 578 
  South African manufacturing and logistics operation                                          3 757 830         (2 709)     2 684 551     1 307 601 
  European operation                                                                           1 917 207          42 892       907 854       683 686 
  Rest of Africa and other international operations                                            1 540 758           6 537       951 258       825 981 
  North American operation                                                                       374 200        (15 855)        60 719        16 934 
  All other operations                                                                                 -        (36 913)     1 113 956       137 515 
  Inter-segmental eliminations *                                                             (3 848 318)          80 548   (2 272 038)   (1 777 122) 
  Total - audited                                                                              6 608 545         185 091     4 494 504     1 958 173 

  * 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        Reviewed          Audited
                                                                                                         six months      six months    twelve months
                                                                                                              ended           ended            ended
                                                                                                            30 June         30 June      31 December
9 CONTINGENT LIABILITIES                                                                                       2015            2014             2014
  9.1 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                                              169 823         172 344          204 829
      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                                       2 590           6 101              995
      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                         206 317         189 605          243 954
                                                                                                           (33 904)        (11 160)         (38 130)
      Less: Provision for non-recovery                                                                            -           (315)                -
      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                                                                                               20 165          23 660           21 645
      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                            31 029          18 551           25 902
                                                                                                           (10 864)           5 109          (4 257)
      Less: Provision for non-recovery                                                                      (1 188)           (400)          (1 782)
      Net contingent liability                                                                                    -           4 709                -

      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.                                                         
    
  9.2 The repurchase of equipment sold to customers and financial institutions has been                                                         
      guaranteed by the group for an amount of                                                                  853          25 854            4 420
      In the event of repurchase, it is estimated that the equipment would presently                                                                
      realise                                                                                                 3 192          33 089           19 037
      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.                                                                              

  9.3 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                                                                                     8 611          24 741            8 457 
      Less: Provision for residual value risk                                                                 (525)         (1 524)            (670) 
      Net contingent liability                                                                                8 086          23 217            7 787 

      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           4 357            2 867 
      Less: Impairment of retention deposits                                                                (2 008)           (436)                - 
      Net retention deposits and net contingent liability                                                       895           3 921            2 867 

      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.                                                    

10 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                                                                                                   56 987          87 854          185 029 
   - purchases                                                                                              377 131         371 452          611 230 
   - amounts owing to                                                                                       128 351         134 713          153 836 
   - amounts owing by                                                                                        25 375          70 561           34 944 

11 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.                                                      
   - 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.                                                      
   - 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.                                 

12 POST FINANCIAL POSITION EVENTS                                                             
   No fact or circumstance material to the appreciation of this                               
   interim report has occurred between 30 June 2015 and the                                   
   date of this report.                                                                       

COMMENTARY
MARKET OVERVIEW
Bell Equipment Limited has seen a modest improvement in the mid year results relative to 2014 despite
difficulties in a number of our major markets and industries. Favourable exchange rates as well as 
efficiency improvements and a strategy to focus on our Northern Hemisphere construction equipment markets 
have made a positive impact.

Restructuring actions taken in the early part of the year have better aligned our expenses to the current 
lower level of activities encountered in our domestic market and other regions where we have traditionally 
been more reliant on mining related business.

There is no expectation that there will be an improvement in commodity demand in the short term and factory 
production rates have been adjusted accordingly.

FINANCIAL RESULTS
The profit after tax of R101 million and earnings per share of 106 cents for the first half, an increase 
of 67% and 71% respectively on the first half of 2014, is an acceptable improvement under tougher market 
conditions. Revenue for the period was R2,9 billion, down 16% from R3,4 billion in the same period 
last year. The right-sizing and restructuring initiatives undertaken, improved efficiency at the factory 
and foreign currency gains earned during the period were the main reasons for the improvement.

Due to markets being even more depressed than was expected at the start of the year, inventory levels 
have increased by R259 million since the December 2014 year end. This, together with a record sales
month in June 2015 that resulted in high receivables at half year end, contributed to an increase in 
net short-term interest-bearing debt of R563 million from the end of 2014. Receivables normalised in 
July and plans are in place to bring inventory levels back in line with long term targets by year end.

OPERATIONS REVIEW
The decision to combine the control and management of all of our Southern African Sales operations under
a single structure has delivered the necessary efficiencies expected and together with a full line product 
offering is well positioned to participate as and when the anticipated infrastructure activity accelerates.

A substantial investment has been made in upgrading a number of our key Customer Service Centers in the 
region and the contribution from our aftermarket business continues to show steady gains.

Power supply interruptions across our South African operations and our more than one thousand domestic 
suppliers of component parts and services, has been disruptive and has contributed to the increasing 
costs of doing business in this country.

Engineering and research and development activity continues at Richards Bay and the final models of our 
new E-Series range of Articulated Dump Trucks will be introduced shortly. The emphasis in design has been 
to deliver machines offering a lower lifecycle cost and performance improvements.

Tough trading conditions are expected to endure and further initiatives are underway to ensure that our 
cost structures are appropriate and will allow BELL to respond rapidly to any changes in demand.

John Barton                                       Gary Bell
Chairman                                          Chief Executive Officer

6 August 2015

Directors
Non-executive
JR Barton* (Chairman), AJ Bell, B Harie*, TO Tsukudu*, DJJ Vlok*
*Independent
Resignation: MA Mun-Gavin resigned as director on 4 May 2015
Executive
GW Bell (Chief Executive Officer), KJ van Haght (Group Finance
Director), L Goosen

Company Secretary
Highway Corporate Services Proprietary Limited,
14 Hillcrest Office Park, 2 Old Main Road,
Hillcrest, 3610
www.hicorp.co.za

Registered Office
13 - 19 Carbonode Cell Road, Alton, Richards Bay, 3900

Transfer Secretaries
Link Market Services South Africa Proprietary Limited,
19 Ameshoff Street, Johannesburg, 2001

Sponsor
Rand Merchant Bank
(a division of FirstRand Bank Limited)

Release date: 11 August 2015

www.bellequipment.com

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