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ELR/ELRP - ELB Group Limited - Reviewed group provisional report and final
cash dividend declarations for the year ended 30 June 2011
ELB GROUP LIMITED
(`ELB`, `the Company` or `the Group`)
Incorporated in the Republic of South Africa
Registration number: 1930/002553/06
Share codes: ELR & ELRP
ISIN: ZAE000035101 & ZAE000035333
REVIEWED GROUP PROVISIONAL REPORT AND FINAL CASH DIVIDEND DECLARATIONS FOR THE
YEAR ENDED 30 JUNE 2011
COMMENTS
INTRODUCTION
ELB Group`s strategic focus is on being a total solutions provider to the
mining, minerals, power, port, construction and industrial sectors in the
field of materials handling and appropriate process plants. This is achieved
through ELB generated innovation, in-house capability and the supply, with
world class partners, of equipment and technology. The Group operates in
Africa and Australasia.
FINANCIAL RESULTS
The 5,4 percent increase in turnover for the year from R1 241 million in 2010
to R1 309 million in 2011 reflects the improved demand across the full range
of products and services offered by ELB.
The net asset value (NAV) per share attributable to ordinary shareholders
increased by 20,5 percent from 1 286 cents in 2010 to 1 550 cents in 2011.
Headline earnings per share for the year of 271,1 cents per share (2010 -
195,6 cents per share) represents an increase of 38,6 per cent.
There is no consistent correlation between turnover and profit in accounting
periods.
Attracting and retaining key executives remains a high priority for the ELB
Group. To that end some 2,9 million new options were offered to key executives
in terms of a new, recently approved, share option scheme. An abnormal cost is
reported for the year of R8,2 million (2010 - R3,2million) in respect of
options granted. Although this charge had a 33,1 cents per share (2010 - 12,2
cents per share) effect on headline earnings it had no effect on NAV.
OPERATIONS
Africa
During the year the mining sector saw an improvement in activity levels. This
had a positive impact on sales for the year as well as enhancing the prospects
for a number of new, large and significant projects in Africa.
The group has recently launched the M-Range range of modular process equipment
which included process, crushing, screening and conveying equipment for the
mining, quarrying, recycling and industrial sectors. This gives ELB access to
significant markets previously not comprehensively serviced by ELB. The Group
will continue to add suitable technology partners to its portfolio, on an
ongoing basis.
During the year ELB completed a new service centre in Boksburg effectively
doubling its capacity in Boksburg to service the growing base for ELB
equipment in the market. A major new service centre is presently being
developed in Middelburg, to which the Middelburg branch plans to relocate in
the first half of 2012.
This will complete the current upgrade programme of the service centres which
are located in all the major centres in which we operate namely Boksburg,
Durban, Cape Town, Kathu, George, Kimberley, Wolmaranstad, Brits and
Middelburg.
Australasia
The Ditch Witch business recently acquired the right to distribute the
Komptech range of equipment which focuses on treating green waste material.
Komptech has started to contribute positively to Ditch Witch`s bottom line.
With the increase in the size of the business it has become necessary for
Ditch Witch to develop a new head office / service centre on the outskirts of
Sydney which is due for occupation in the first half of 2012. This will enable
Ditch Witch to better service the growing demand for its Ditch Witch and
Komptech range of products.
Ditch Witch has also recently acquired the right to distribute the Ditch Witch
and Komptech range of products in New Zealand and has commenced trading.
Ditch Witch is now well positioned to participate in the roll out in both
Australia and New Zealand of a major programme to run fibre optic cable
throughout both countries.
CASH'FLOW
Cash flow for the year was strongly positive and cash flow management remains
a high priority for the Group.
ELB works closely with bankers, suppliers and customers to ensure we continue
to retain a strong balance sheet at all times.
PROSPECTS
Notwithstanding the unusually high level of volatility and economic
uncertainty that hangs over the world at present ELB is experiencing
acceptable levels of activity both in Africa and Australasia and ELB is
currently in negotiations for a number of large projects in Africa. The
outcome of these negotiations will be known during the coming year.
SOCIAL RESPONSIBILITY
ELB`s empowerment partner is the ELB Educational Trust established to promote
the education of historically disadvantaged South Africans in engineering
disciplines. To this end bursaries have been awarded to students at various
South African universities.
ELB has also made substantial donations to the St Vincent School for the Deaf,
the Masibambane College in Orange Farm, the John Wesley Community Centre in
Benoni and the Ligbron Academy of Technology. These institutions have been
identified as worthy of ELB`s support and which will further assist the
historically disadvantaged in our community.
BOARD OF DIRECTORS
Mr Ian Thomson joined the ELB board as an independent director on 28 September
2010, and has been appointed chairman of the audit committee.
Mr Graham Jones joined the board on 17 May 2011 as group financial director.
Up to this time the function of financial director was performed by the
chairman of the board, Mr Anthony Fletcher, in addition to his duties as
chairman.
DIVIDENDS
ELB will retain its current conservative approach to dividend distribution
until the service centre upgrades are completed and which are currently being
funded largely from internal cash flow. Thereafter consideration will be given
to reducing the dividend cover.
It has been decided to declare a final dividend of 40 cents (2010 - 30 cents)
per ordinary share.
The total dividend for the year is therefore 55 cents per share versus 42
cents per share for the 2010 financial year, representing an increase of 31
per cent.
ACCOUNTING POLICIES
The reviewed provisional financial statements have been prepared in accordance
with International Accounting Standard (IAS) 34: Interim Financial Reporting.
Accounting policies accord with International Financial Reporting Standards
(IFRS) and are consistent with those applied in the financial year ended 30
June 2010. There were no new or revised standards, effective for the first
time in the reporting period, which had an effect on the accounting policies
or reporting of the Group.
The provisional financial statements also comply with the South African
Companies Act.
REVIEW BY THE INDEPENDENT AUDITOR
KPMG Inc, the Company`s independent auditor, has reviewed the provisional
financial statements contained in this provisional report and has expressed an
unmodified conclusion on the provisional financial statements. The review
report is available for inspection at the Company`s registered office.
On behalf of the Board
Boksburg
20 September 2011
GROUP BALANCE SHEET
Reviewed Audited
30 Jun 11 30 Jun 10
R 000 R 000
ASSETS
Non current assets 126 631 80 033
Property, plant and equipment 100 695 62 158
Non current loan receivable 4 922 3 951
Deferred income tax assets 21 014 13 924
Current assets 1 144 780 875 153
Inventories and construction contract work 399 702 312 028
not yet billed
Receivables and other current assets 147 508 202 075
Income tax refundable 5 158 8 905
Cash and cash equivalents 592 412 352 145
Total assets 1 271 411 955 186
EQUITY AND LIABILITIES
Equity attributable to ordinary shareholders 388 394 318 334
of ELB
Issued capital 25 192 25 192
Treasury shares (56 129) (55 123)
Reserves 18 501 13 580
Retained earnings 400 830 334 685
Preference shares 8 8
Total equity attributable to equity holders 388 402 318 342
of ELB
Non controlling interests in subsidiaries 48 726 35 738
Total equity 437 128 354 080
Non current liabilities 27 188 21 582
Interest bearing borrowings 20 588 10 543
Provision for trade back commitments 5 144 10 097
Deferred income tax liabilities 1 456 942
Current liabilities 807 095 579 524
Non interest bearing payables and other 640 984 479 911
current liabilities
Interest bearing payables 162 603 99 075
Income tax payable 3 508 538
Total equity and liabilities 1 271 411 955 186
Ordinary shares in issue (000`s) 33 860 33 860
Deduct: Treasury shares in issue (000`s) 8 801 9 114
Ordinary shares in issue on which net asset 25 059 24 746
value per ordinary share is calculated
Net asset value per ordinary share (cents) 1 550 1 286
GROUP INCOME STATEMENT
Reviewed Audited
Year Year
ended ended
30 Jun 11 30 Jun 10
R 000 R 000
Sales 1 308 804 1 241 323
Operating costs excluding depreciation and (1 195 789) (1 154 235)
fair value adjustments to property, plant and
equipment
Operating profit before depreciation and fair 113 015 87 088
value adjustments to property, plant and
equipment
Depreciation and fair value adjustments to (6 402) (4 837)
property, plant and equipment
Profit from operations before abnormal item 106 613 82 251
Abnormal item
Equity settled share options expense (8 212) (3 178)
Profit from operations 98 401 79 073
Profit on realisation of non current assets - 3 609
held for sale
Finance income 25 267 11 894
Finance expenses (6 272) (5 162)
Profit before income tax 117 396 89 414
Income tax expense (39 317) (26 974)
Profit for the year 78 079 62 440
Profit for the year attributable to:
Ordinary shareholders of ELB 67 202 54 789
Non controlling interests in subsidiaries 10 877 7 651
78 079 62 440
CALCULATION OF GROUP HEADLINE EARNINGS
Reviewed Audited
Year Year
ended ended
30 Jun 11 30 Jun 10
R 000 R 000
Profit attributable to ordinary shareholders 67 202 54 789
of ELB from the income statement
Deduct: Items excluded from headline earnings (148) 3 747
as detailed below:
Plant and equipment:
Items included in profit from operations:
Profit on disposal 269 225
Fair value adjustment (504) -
Profit on realisation of non current assets - 3 609
held for sale
Income tax effect of items excluded from 61 (63)
headline earnings
Non controlling interest in items excluded 26 (24)
from headline earnings
Headline earnings 67 350 51 042
Weighted average number of ordinary shares 24 845 26 101
(excluding treasury shares) on which basic
earnings per ordinary share are based (000`s)
Earnings per ordinary share (cents)
- basic 270.5 209.9
- diluted 267.3 209.9
Headline earnings per ordinary share (cents)
- basic 271.1 195.6
- diluted 267.9 195.6
Dividends declared for the year per ordinary 55 42
share (cents)
GROUP STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
Year Year
ended ended
30 Jun 11 30 Jun 10
R 000 R 000
Profit for the year from the income statement 78 079 62 440
Other comprehensive income 9 497 2 330
Foreign currency translation adjustments for
foreign operations
Gross 9 497 2 330
Income tax effect - -
Total comprehensive income for the year 87 576 64 770
Total comprehensive income for the year
attributable to:
Ordinary shareholders of ELB 75 274 56 769
Non controlling interests in subsidiaries 12 302 8 001
87 576 64 770
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to ordinary shareholders of ELB
Issued Treasury Retained
capital shares Reserves earnings Total
R 000 R 000 R 000 R 000 R 000
Balance at 30 June 25 192 (31 161) 902 296 263 291 196
2009
Total comprehensive 1 980 54 789 56 769
income for the year
Profit for the year 54 789 54 789
Other comprehensive
income
Foreign currency
translation
adjustments for
foreign entities
Adjustments 1 980 1 980
Income tax effect - -
Ordinary dividends (8 371) (8 371)
paid
Increase in share 2 702 2 702
options reserve
Redundant items in the 7 996 (7 996) -
foreign currency
translation reserve
transferred to
retained earnings
Increase in the (23 962) (23 962)
carrying amount of
treasury shares held
by group entities
Balance at 30 June 25 192 (55 123) 13 580 334 685 318 334
2010
Total comprehensive 8 072 67 202 75 274
income for the year
Profit for the year 67 202 67 202
Other comprehensive
income
Foreign currency
translation
adjustments for
foreign entities
Adjustments 8 072 8 072
Income tax effect - -
Ordinary dividends (11 188) (11 188)
paid
Increase in share 6 980 6 980
options reserve
Transfer from share (1 048) 1 048 -
options reserve to
retained earnings, for
share options
exercised and fully
paid, and for share
options expired
through attrition
Redundant items in the (9 083) 9 083 -
foreign currency
translation reserve
transferred to
retained earnings
Increase in the (1 006) (1 006)
carrying amount of
treasury shares held
by group entities
Balance at 30 June 25 192 (56 129) 18 501 400 830 388 394
2011
GROUP STATEMENT OF CHANGES IN
EQUITY continued
Attrib
-utable to Non
ordinary controlling
Share- interests
holders in Reviewed
of ELB Preference Subsid- Total
Total shares iaries equity
R 000 R 000 R 000 R 000
Balance at 30 June 291 196 8 27 759 318 963
2009
Total comprehensive 56 769 8 001 64 770
income for the year
Profit for the year 54 789 7 651 62 440
Other comprehensive
income
Foreign currency
translation
adjustments for
foreign entities
Adjustments 1 980 350 2 330
Income tax effect - - -
Ordinary dividends (8 371) (498) (8 869)
paid
Increase in share 2 702 476 3 178
options reserve
Redundant items in the - - -
foreign currency
translation reserve
transferred to
retained earnings
Increase in the (23 962) (23 962)
carrying amount of
treasury shares held
by group entities
Balance at 30 June 318 334 8 35 738 354 080
2010
Total comprehensive 75 274 12 302 87 576
income for the year
Profit for the year 67 202 10 877 78 079
Other comprehensive
income
Foreign currency
translation
adjustments for
foreign entities
Adjustments 8 072 1 425 9 497
Income tax effect - - -
Ordinary dividends (11 188) (546) (11 734)
paid
Increase in share 6 980 1 232 8 212
options reserve
Transfer from share - - -
options reserve to
retained earnings, for
share options
exercised and fully
paid, and for share
options expired
through attrition
Redundant items in the - - -
foreign currency
translation reserve
transferred to
retained earnings
Increase in the (1 006) (1 006)
carrying amount of
treasury shares held
by group entities
Balance at 30 June 388 394 8 48 726 437 128
2011
GROUP CASH FLOW STATEMENT
Reviewed Audited
Year Year
ended ended
30 Jun 11 30 Jun 10
R 000 R 000
Cash inflow from operating activities 288 471 113 483
before dividends paid
Dividends paid (11 734) (8 869)
Cash inflow from operating activities 276 737 104 614
Cash outflow from investment activities (43 670) (27 061)
Cash inflow / (outflow) from financing 7 817 (21 549)
activities
Cash inflow for the year 240 884 56 004
Foreign currency exchange and translation (617) 5 852
adjustments to cash and cash equivalents
Increase in cash and cash equivalents 240 267 61 856
Cash and cash equivalents at the beginning 352 145 290 289
of the year
Cash and cash equivalents at the end of the 592 412 352 145
year
Reconciliation to the balance sheet
Current assets - cash and cash equivalents 592 412 352 145
NOTES
Capital commitments
At 30 June 2011 there were capital commitments of R 9 848 000 (30 June 2010 -
R 10 724 000). The commitments comprise R 9 248 000 additions and improvements
to existing property, and equipment of R 600 000. The commitments for the
additions and improvements to existing property will be funded from a
combination of planned and existing mortgage bond facilities available to the
group as well from the group`s cash and cash equivalents. The equipment will
be financed from the group`s cash and cash equivalents.
Contingent liabilities
A group entity has issued a guarantee of R 830 000 in favour of a raw material
supplier to a company which was previously part of the group and has now been
sold. The guarantee is cancellable by three calendar months notice. A
financial guarantee liability with a carrying amount of R 144 000 at 30 June
2011 is carried in respect of the guarantee.
ELB Engineering Services operates in the engineering contracting business and
is exposed to the risks associated with engineering contracts. These risks are
managed on the basis of limited liability.
All known liabilities of the group at the balance sheet date have been
accrued.
SEGMENT ANALYSIS
Eliminate
African Australasian inter
Total operations operations company
R 000 R 000 R 000 R 000
Reviewed
Year ended 30 June 2011
Sales 1 308 804 1 126 266 182 538 -
Profit for the year 78 079 62 520 15 559 -
Headline earnings 67 350 54 269 13 081 -
Assets 1 271 411 1 082 086 189 325 -
Liabilities 834 283 765 350 68 933 -
Audited
Year ended 30 June 2010
Sales 1 241 323 1 131 657 109 666 -
Profit for the year 62 440 57 667 4 773 -
Headline earnings 51 042 46 985 4 057 -
Assets 955 186 830 115 145 207 (20 136)
Liabilities 601 106 591 507 29 735 (20 136)
FINAL CASH DIVIDEND DECLARATIONS
The directors have declared the following final cash dividends for the year
ended 30 June 2011.
PREFERENCE DIVIDEND NUMBER 121
A final cash dividend has been declared at the rate of 6% per annum for the
second six month period on the 6% fixed cumulative redeemable preference
shares of R2 each, equivalent to 6 cents per preference share.
ORDINARY DIVIDEND NUMBER 127
A final cash dividend of 40 cents per share has been declared on the ordinary
shares.
The salient dates in respect of both dividends are:
Last day to trade cum dividend Friday, 21 October 2011
Shares commence trading ex dividend Monday, 24 October 2011
Record date Friday, 28 October 2011
Date of payment Monday, 31 October 2011
Share certificates may not be dematerialised or rematerialised between Monday,
24 October 2011, and Friday, 28 October 2011, both dates inclusive.
By order of the Board
DG Jones Boksburg
Company secretary 20 September 2011
REGISTERED OFFICE SHARE TRANSFER SPONSOR
SECRETARIES
ELB Equipment Limited Computershare Investor Rand Merchant Bank (a
14 Atlas Road Services (Pty) Ltd division of FirstRand
Anderbolt 70 Marshall Street Bank Limited)
Boksburg Johannesburg 1 Merchant Place
1459 2001 cnr Fredman Drive &
(PO Box 61051, Rivonia Road
Marshalltown, 2107) Sandton
2196
WEBSITE
www.elb.co.za
DIRECTORS
AG Fletcher (chairman), PJ Blunden (chief executive - ELB Equipment),
T de Bruyn*, Dr JP Herselman*, DG Jones (financial director),
Dr SJ Meijers (chief executive - ELB Engineering Services), MV Ramollo,
IAR Thomson*
*Non executive
Date: 21/09/2011 09:34:01 Supplied by www.sharenet.co.za
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