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Reviewed group provisional report and final cash dividend declarations for the year ended 30 June 2012
ELB GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number 1930/002553/06
Share codes: ELR & ELRP
ISIN: ZAE000035101 & ZAE000035333
(ELB, the Company or the Group)
REVIEWED GROUP PROVISIONAL REPORT AND FINAL CASH DIVIDEND DECLARATIONS FOR
THE YEAR ENDED 30 JUNE 2012
COMMENTS
INTRODUCTION
ELB Groups strategic focus is on being a holistic engineering 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 predominantly in Africa and Australasia.
FINANCIAL RESULTS
The 26 percent increase in turnover for the year from R1 369 million in
2011 to R1 725 million in 2012 reflects the improved demand across the
full range of products and services offered by ELB.
ELBs share of comprehensive income increased by 28,2 percent from R75,3
million in 2011 to R96,5 million in 2012. This largely explains the 21,0
percent increase in net asset value per share attributable to ordinary
shareholders from 1 550 cents in 2011 to 1 876 cents in 2012.
Headline earnings per share for the year of 313,1 cents per share (2011
271,1 cents per share) represents an increase of 15,5 percent.
There is no consistent correlation between turnover and profit in
accounting periods.
OPERATIONS
Africa
Trading conditions in the region remained challenging during the year and
the Group did well to secure a satisfactory level of business.
ELB Equipment
This operation saw turnover increase by 23 percent from R615 million in
2011 to R757 million in 2012 while profit before tax (PBT) decreased 4,2
percent from R74,7 million in 2011 to R71,7 million in 2012. This modest
drop in profits was against the background of a strong Yen putting the
margins on ELBs Yen based products under pressure coupled with tougher
overall trading conditions. Activity levels did however pick up marginally
towards year end.
ELB Engineering Services
This operation has shown exceptional growth in PBT for the year. Although
turnover increased by 27 percent from R538 million in 2011 to R683 million
in 2012, PBT on the other hand increased by 68,5 percent from R38,4
million in 2011 to R64,6 million in 2012. This material increase in PBT is
attributable to a number of projects reaching more advanced stages of
completion, and ELB Construction, a new business unit, producing
satisfactory results in its first year of operation. ELB Engineering
Services has been successful in securing a number of new projects which
has positioned this operation well for the coming 24 to 30 months.
Australasia
The Ditch Witch business has successfully completed and occupied its new
Head Office premises outside Sydney which will enable Ditch Witch to
better service the growing demand for its Ditch Witch and Komptech range
of products.
During the year the New Zealand business unit was established as a
profitable contributor to the Ditch Witch operation.
Turnover increased by 33 percent from R217 million in 2011 to R289 million
in 2012 while PBT increased by 9,4 percent from R24,9 million in 2011 to
R27,2 million in 2012.
Ditch Witch remains well positioned in both Australia and New Zealand to
take advantage of any increase in infrastructure spend in the region.
CASH FLOW
Cash and cash equivalents declined during the year as cash was used in
increasing working capital and in continued capital expenditure,
particularly on property to facilitate the Groups expanding operations.
The cash and cash equivalent balances remained healthy at the year end
after absorbing the utilisation. 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
Activity levels in the various sectors the ELB Group covers remain buoyant
and the Group remains well positioned to take advantage thereof.
SOCIAL RESPONSIBILITY
ELBs empowerment partner is the ELB Educational Trust established to
promote the education of historically disadvantaged South Africans in
engineering disciplines. To this end scholarships have been awarded to
students at various South African universities.
In addition to a number of smaller donations ELB has made substantial
donations to the St Vincent School for the Deaf, the Masibambane College
in Orange Farm, the John Wesley Community Centre in Benoni, the Ligbron
Academy of Technology and the Elvis Blue Music Academy in Zandspruit.
These institutions have been identified as worthy of ELBs support and
which will further assist the historically disadvantaged in our community.
Apart from donations ELB has also made significant contributions towards
small business development of the historically disadvantaged in South
Africa.
BOARD OF DIRECTORS
Mr Cornelius Smith joined the Board as an alternate director on 21 May
2012.
DIVIDENDS
It has been decided to declare a final dividend of 52 cents (2011 40
cents) per ordinary share.
The total dividend for the year is therefore 70 cents per share versus 55
cents per share for the 2011 financial year, representing an increase of
27,3 percent.
ACCOUNTING POLICIES
The Group has early adopted the inter linked suite of International
Financial Reporting Standards:
IFRS 10 Consolidated Financial Statements,
IFRS 11 Joint Arrangements and
IFRS 12 Disclosure of Interests in Other Entities.
The amended and comprehensive definition of control in IFRS 10 has
resulted in the full consolidation of four of the five joint ventures
within the Group with effect from 1 July 2011. These joint ventures were
previously proportionately consolidated. The remaining joint venture has
been classified as a joint operation from 1 July 2011 in accordance with
IFRS 11. The parties to the joint operation have joint ownership of the
assets and joint obligations for the liabilities, of the joint operation.
The line by line consolidation of the joint operation is essentially
similar to proportionate consolidation, the method by which it was
previously consolidated.
The change in accounting policy did not result in any change in ordinary
shareholders equity; or the net asset value per ordinary share; or in the
reported profit attributable to ordinary shareholders. Comparative amounts
for the previous year have been restated.
Apart from this change the accounting policies are consistent with those
applied in the financial year ended 30 June 2011. Accounting policies also
accord with International Financial Reporting Standards (IFRS). The
reviewed condensed provisional financial statements have been prepared in accordance
with International Accounting Standard (IAS)34:Interim Financial
Reporting.
The condensed provisional financial statements also comply with the South African
Companies Act.
REVIEW BY THE INDEPENDENT AUDITOR
KPMG Inc, the Companys independent auditor, has reviewed the condensed 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 Companys
registered office.
On behalf of the Board
Dr Stephen Meijers Peter Blunden
CEO ELB Engineering Services CEO ELB Equipment
Boksburg 18 September 2012
CONDENSED GROUP BALANCE SHEET
Reviewed
Reviewed Restated
30 Jun 12 30 Jun 11
R 000 R 000
ASSETS
Non current assets 169 228 127 718
Property, plant and equipment 140 334 101 741
Non current loan receivable 3 094 4 922
Deferred income tax assets 25 800 21 055
Current assets 1 204 632 1 213 278
Inventories, and construction contract work not
yet billed 545 822 415 953
Receivables and other current assets 167 425 159 393
Income tax refundable 1 995 5 191
Cash and cash equivalents 489 390 632 741
Total assets 1 373 860 1 340 996
EQUITY AND LIABILITIES
Equity attributable to ordinary shareholders of
ELB 474 837 388 394
Issued capital 25 192 25 192
Treasury shares (52 684) (56 129)
Reserves 37 077 18 501
Retained earnings 465 252 400 830
Preference shares 8 8
Total equity attributable to equity holders of
ELB 474 845 388 402
Non controlling interests in consolidated
entities 87 940 61 530
Total equity 562 785 449 932
Non current liabilities 20 509 27 222
Interest bearing borrowings 15 494 20 622
Provision for trade back commitments 3 331 5 144
Deferred income tax liabilities 1 684 1 456
Current liabilities 790 566 863 842
Non interest bearing payables, other current
liabilities and current provision 594 191 697 624
Interest bearing payables 186 964 162 710
Income tax payable 9 411 3 508
Total equity and liabilities 1 373 860 1 340 996
Ordinary shares in issue (000's) 33 860 33 860
Deduct: Treasury shares in issue (000's) 8 544 8 801
Ordinary shares in issue on which net asset
value per ordinary share is calculated 25 316 25 059
Net asset value per ordinary share (cents) 1 876 1 550
GROUP STATEMENT OF PROFIT OR LOSS
Reviewed
Reviewed Restated
Year Year
ended ended
30 Jun 12 30 Jun 11
R 000 R 000
Sales 1 725 479 1 369 366
Operating costs excluding depreciation and fair
value adjustments to property, plant and
equipment (1 581 386) (1 252 530)
Operating profit before depreciation and fair
value adjustments to property, plant and
equipment 144 093 116 836
Depreciation and fair value adjustments to
property, plant and equipment (10 754) (6 669)
Profit from operations before abnormal item 133 339 110 167
Abnormal item
Equity settled share options expense (1 258) (8 212)
Profit from operations 132 081 101 955
Finance income 25 973 25 579
Finance expenses (11 899) (6 334)
Profit before income tax 146 155 121 200
Income tax expense (43 285) (39 330)
Profit for the year 102 870 81 870
Profit for the year attributable to:
Ordinary shareholders of ELB 79 479 67 202
Non controlling interests in consolidated
entities 23 391 14 668
102 870 81 870
CALCULATION OF GROUP HEADLINE EARNINGS
Reviewed
Reviewed Restated
Year Year
ended ended
30 Jun 12 30 Jun 11
R 000 R 000
Profit attributable to ordinary shareholders of
ELB from the statement of profit or loss 79 479 67 202
Deduct: Items excluded from headline earnings
as detailed below: 737 (148)
Plant and equipment:
Profit on disposal 744 314
Fair value adjustment 504 (504)
Income tax effect of items excluded from
headline earnings (343) 48
Non controlling interests in items excluded
from headline earnings (168) (6)
Headline earnings 78 742 67 350
Weighted average number of ordinary shares
(excluding treasury shares) on which basic
earnings per ordinary share are based (000's) 25 150 24 845
Earnings per ordinary share (cents)
- basic 316,0 270,5
- diluted 308,8 267,3
Headline earnings per ordinary share (cents)
- basic 313,1 271,1
- diluted 306,0 267,9
Dividends declared for the year per ordinary
share (cents) 70 55
GROUP STATEMENT OF COMPREHENSIVE INCOME
Reviewed
Reviewed Restated
Year Year
ended ended
30 Jun 12 30 Jun 11
R 000 R 000
Profit for the year from the statement of
profit or loss 102 870 81 870
Other comprehensive income 22 049 10 727
Foreign currency translation reserve 19 498 9 497
adjustments
Foreign currency translation adjustments to
foreign non controlling interests 2 019 1 230
Revaluation surplus 739 -
Income tax effect (207) -
Total comprehensive income for the year 124 919 92 597
Total comprehensive income for the year
attributable to:
Ordinary shareholders of ELB 96 504 75 274
Non controlling interests in consolidated
entities 28 415 17 323
124 919 92 597
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 2010 25 192 (55 123) 13 580 334 685 318 334
Total comprehensive
income for the year 8 072 67 202 75 274
Profit for the year 67 202 67 202
Other comprehensive
income
Foreign currency
translation reserve
adjustments 8 072 8 072
Foreign currency
translation adjustments
to foreign non
controlling interests
Income tax effect - -
Ordinary dividends paid (11 188) (11 188)
Non controlling
interests in
distributions by a
consolidated group
entity
Increase in share
options reserve 6 980 6 980
Transfer from share
options reserve to
retained earnings for
share options exercised
and fully paid, and for
share options lapsed
through attrition (1 048) 1 048 -
Redundant items in the
foreign currency
translation reserve
transferred to retained
earnings (9 083) 9 083 -
Increase in the
carrying amount of (1 006) (1 006)
treasury shares held by
group entities
Balance at 30 June 2011 25 192 (56 129) 18 501 400 830 388 394
Total comprehensive
income for the year 17 025 79 479 96 504
Profit for the year 79 479 79 479
Other comprehensive
income
Foreign currency
translation reserve
adjustments 16 573 16 573
Foreign currency
translation adjustments
to foreign non
controlling interests
Revaluation surplus 628 628
Income tax effect (176) (176)
Ordinary dividends paid (14 575) (14 575)
Non controlling
interests in
distributions by a
consolidated group
entity
Increase in share
options reserve 1 069 1 069
Transfer from share
options reserve to
retained earnings for
share options exercised
and fully paid (533) 533
Redundant items in the
foreign currency
translation reserve
transferred to retained
earnings 1 015 (1 015)
Decrease in the
carrying amount of
treasury shares held by
group entities 3 445 3 445
Capital contributed by
non controlling
interest
Balance at 30 June 2012 25 192 (52 684) 37 077 465 252 474 837
GROUP STATEMENT OF CHANGES IN EQUITY cont.
Attributable Non
to ordinary interests
shareholders in Reviewed
of ELB Preference consolidated Total
Total shares Entities equity
R 000 R 000 R 000 R 000
Balance at 30 June 2010 318 334 8 45 602 363 944
Total comprehensive
income for the year 75 274 17 323 92 597
Profit for the year 67 202 14 668 81 870
Other comprehensive
income
Foreign currency
translation reserve
adjustments 8 072 1 425 9 497
Foreign currency
translation adjustments
to foreign non
controlling interests 1 230 1 230
Income tax effect - - -
Ordinary dividends paid (11 188) (546) (11 734)
Non controlling
interests in
distributions by a
consolidated group
entity (2 081) (2 081)
Increase in share
options reserve 6 980 1 232 8 212
Transfer from share
options reserve to
retained earnings for
share options exercised
and fully paid, and for
share options lapsed
through attrition - - -
Redundant items in the
foreign currency
translation reserve
transferred to retained
earnings - - -
Increase in the
carrying amount of
treasury shares held by
group entities (1 006) (1 006)
Balance at 30 June 2011 388 394 8 61 530 449 932
Total comprehensive
income for the year 96 504 28 415 124 919
Profit for the year 79 479 23 391 102 870
Other comprehensive
income
Foreign currency
translation reserve
adjustments 16 573 2 925 19 498
Foreign currency
translation adjustments
to foreign non
controlling interests
Revaluation surplus 628 111 739
Income tax effect (176) (31) (207)
Ordinary dividends paid (14 575) (2 436) (17 011)
Non controlling (1 233) (1 233)
interests in
distributions by a
consolidated group
entity
Increase in share
options reserve 1 069 189 1 258
Transfer from share
options reserve to
retained earnings for
share options exercised
and fully paid
Redundant items in the
foreign currency
translation reserve
transferred to retained
earnings
Decrease in the
carrying amount of
treasury shares held by
group entities 3 445 3 445
Capital contributed by
non controlling
interest 1 475 1 475
Balance at 30 June 2012 474 837 8 87 940 562 785
CONDENSED GROUP CASH FLOW STATEMENT
Reviewed
Reviewed Restated
Year Year
ended ended
30 Jun 12 30 Jun 11
R 000 R 000
Cash (outflow) / inflow from operating
activities before dividends and distributions
paid (95 921) 328 537
Dividends and distributions paid (18 244) (13 815)
Cash (outflow) / inflow from operating
activities (114 165) 314 722
Cash outflow from investment activities (44 643) (44 149)
Cash (outflow) / inflow from financing
activities (371) 7 758
Cash (outflow) / inflow for the year (159 179) 278 331
Foreign currency exchange and translation
adjustments to cash and cash equivalents 15 828 (232)
(Decrease) / increase in cash and cash
equivalents (143 351) 278 099
Cash and cash equivalents at the beginning of
the year 632 741 354 642
Cash and cash equivalents at the end of the
year 489 390 632 741
Reconciliation to the balance sheet
Current assets - cash and cash equivalents 489 390 632 741
NOTES
Capital expenditure commitments
At 30 June 2012 there were capital expenditure commitments of R12 299 000
(30 June 2011 - R9 848 000) The commitments comprise R9 816 000 for
additions and improvements to existing property, R683 000 for purchases of
equipment and R1 800 000 for the acquisition by an 85% held indirect
subsidiary of the Company, of a 100% interest in a company in the business
of cable reeling and festoon systems.
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 purchases and the acquisition of the new
subsidiary will be financed from the Group's cash and cash equivalents.
Contingent liabilities
A Group entity has issued a guarantee of R830 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 R168 000
at 30 June 2012 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.
CONDENSED SEGMENT INFORMATION
Africa Africa
equip- engin- Austral-
Total ment eering asia Other
R 000 R 000 R 000 R 000 R 000
Reviewed
Year ended 30 June 2012
Sales 1 725 479 756 573 682 747 288 520 (2 361)
Profit for the year 102 870 51 462 46 984 21 004 (16 580)
Profit attributable to
ordinary shareholders
of ELB 79 479 43 743 34 778 14 373 (13 415)
Assets 1 373 860 736 962 424 036 272 634 (59 772)
Liabilities 811 075 412 910 331 463 98 334 (31 632)
Reviewed
Restated
Year ended 30 June 2011
Sales 1 369 366 615 045 537 555 216 763 3
Profit for the year 81 870 53 653 26 651 19 241 (17 675)
Profit attributable to
ordinary shareholders
of ELB 67 202 45 605 22 561 13 225 (14 189)
Assets 1 340 996 650 927 540 660 214 218 (64 809)
Liabilities 891 064 360 776 486 445 81 206 (37 363)
FINAL CASH DIVIDEND DECLARATIONS
The directors have declared the undernoted final cash dividends for the
year ended 30 June 2012. The final dividends are subject to the new South
African dividend tax. The following information is disclosed in respect of
the dividends:
- the dividends have been declared out of income reserves,
- the South African dividend tax rate is 15%,
- there are no secondary tax on companies (STC) credits utilised and
- ELB Group Limited's income tax reference number is: 9275151711.
Additional information is given below.
PREFERENCE DIVIDEND NUMBER 123
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.
- The gross dividend is 6 cents per preference share for preference
shareholders exempt from the dividend tax.
- The net dividend is 5,1 cents per preference share for preference
shareholders liable to pay the dividend tax.
- ELB Group Limited has 3 800 preference shares in issue.
ORDINARY DIVIDEND NUMBER 129
A final cash dividend of 52 cents per share has been declared on the
ordinary shares.
- The gross dividend is 52 cents per ordinary share for ordinary
shareholders exempt from the dividend tax.
- The net dividend is 44,2 cents per ordinary share for ordinary
shareholders liable to pay the dividend tax.
- ELB Group Limited has 33 860 000 ordinary shares in issue, which
includes 8 544 031 treasury shares.
The salient dates in respect of both dividends are:
Last day to trade cum dividend Friday, 19 October 2012
Shares commence trading ex dividend Monday, 22 October 2012
Record date Friday, 26 October 2012
Date of payment Monday, 29 October 2012
Shares may not be dematerialised or rematerialised between Monday, 22
October 2012, and Friday, 26 October 2012, both dates inclusive.
By order of the Board
DG Jones Boksburg
Company secretary 18 September 2012
The preparation of the reviewed group provisional report, excluding the
comments section, was supervised by the group accountant, Ian Glass,
chartered accountant (South Africa).
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, CJ Smith (alternate), IAR Thomson*
*Non executive
REGISTERED OFFICE
ELB Equipment Limited, 14 Atlas Road, Anderbolt, Boksburg, 1459
SHARE TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)
1 Merchant Place, Cnr Fredman Drive & Rivonia Road, Sandton, 2196
Website: www.elb.co.za
Date: 19/09/2012 03:41:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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