Bell Equipment construction vehicles. File picture: Mike Dibetsoe
Pretoria - Bell Equipment, the listed manufacturer of heavy equipment for the construction and mining sectors, has sold 30 percent of its shareholding in its wholly-owned subsidiary Bell Equipment Sales South Africa (Bessa) to black entities.

Gary Bell, the chief executive of the company, yesterday also confirmed that the losses from theft, fraud and misrepresentation by its entire management team and several other employees in its operations in the Democratic Republic of Congo increased to R140 million in the year to December.

The group took a R60 million knock in its DRC operations in the six months to June.

Bell said the group still expected further trading losses in its DRC operation in the first half of the year, but argued that they would be relatively small.

“We’ve made a couple of small provisions for some costs that still have to come through. We have got to the bottom of all the issues,” he said.

“We’ve tidied it up almost completely and downsized, taking out 60 percent of the costs.

Read also: Bell expects drop in earnings

"It’s one of the markets [in Africa] showing promise, with the improvement in copper and cobalt prices in the last six to seven months.”

Bell confirmed to Business Report in December that criminal charges had been laid against five senior managers in its DRC operations.

Turning to the group’s BBBEE deal, Bell said that after the group’s year-end its board had approved the sale of 22.5 percent of Bessa to a selected BBBEE partner and a further 7.5percent to a newly formed broad-based trust.

Bell said that after this transaction Bessa would qualify as a 30percent black women-owned entity.

“The transaction has been specifically structured to pursue real transformation.

"At the same time, the objectives of creating a sustainable BEE funding structure that is not reliant on external finance or dividend flow, improving Bessa’s ownership score under the Revised Code of Good Practice and preserving value for the existing Bell shareholders have also been met.

“Importantly for our customers in South Africa, they will be able to claim the benefit of purchasing from a 30 percent black women-owned entity,” he said.

Bell said the company would make a full announcement about the transaction in the next two weeks.

Bell said the group’s financial results for the year to December were dominated by the findings in the DRC and the losses reported by that entity, particularly relating to increased provisions for inventory and taxation.

He said 2016 would be remembered as one of the most challenging years in Bell Equipment’s history.

Apart from the DRC, the group was also negatively impacted by tough trading conditions, the deterioration of mining activity in most markets, particularly in Africa, rand volatility and delivery delays in the North American market.

Profit for the year slumped by 73 percent to R38.6 million from R141.7 million in the previous year.

Headline earnings a share were 72 percent lower at 39c compared with 138c in the prior year.

Revenue increased by almost 2 percent to R6 billion from R5.9 billion. Operating profit dropped by 9 percent to R168.4 million from R184.5 million.

Shares in Bell Equipment traded flat to close at R14 on the JSE.