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Unaudited group interim report and interim cash dividend declaration for the six months ended 31 December 2013
ELB GROUP LIMITED
('ELB', 'the Company' or 'the Group')
Incorporated in the Republic of South Africa
Registration number 1930/002553/06
Share codes: ELR ISIN: ZAE000035101
UNAUDITED GROUP INTERIM REPORT AND INTERIM CASH DIVIDEND DECLARATION
for the six months ended 31 December 2013
COMMENTS
INTRODUCTION
ELB Group's 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 modular
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
Consistent with prior periods there is no correlation
between turnover and profit due to the nature of a project
related business.
The 50,3% increase in turnover for the period from
R760,9 million in 2012 to R1 143,9 million in 2013
primarily reflects the higher activity level and revenue
recognition across the range of products and services
offered by ELB's engineering operations.
In the current period the rate of turnover increase
exceeds the rate of profit increase due to invoiced
advance down payments on projects.
Profit before tax increased by 7,9% from R55,3 million to
R59,7 million while attributable profit
for the period increased by 0,8% from R31,5 million to
R31,8 million. Headline earnings for the period increased
by 1,3% from R31,3 million to R31,7 million. The
reduction in headline earnings per share from 123,7 cents
per share to 121,5 cents per share is largely due to the
increase in the weighted average number of shares as a
result of 918 500 shares released from treasury shares.
The ELB Group will from time to time experience volatility
in headline earnings particularly during periods of signif-
icant exchange rate fluctuations. These fluctuations give
rise to unrealised currency exchange profits or losses
which experience has shown usually reverse or are
recovered in the eventual sale price of the relevant
equipment.
The net asset value per share increased by 14,6%
from 2 096 cents per share at 31 December 2012 to 2 402
cents per share at 31 December 2013.
OPERATIONS
Equipment Africa
Equipment revenue during the period was higher than
expected however gross margins were marginally lower.
Turnover for the period increased by 5,3% from R337,6
million in 2012 to R355,4 million in 2013. Profit for the
period decreased by 6,3% from R15,3 million in 2012 to
R14,4 million in 2013.
This decrease in profit is largely attributable to the
exchange rate loss on translation being significantly more
than the prior period.
Engineering Africa
The project work on hand remains at a satisfactory level
with on-going projects in South Africa, Mozambique,
Zambia, Namibia, Botswana, Angola, Sierra Leone,
Congo and the DRC.
Turnover for the period increased by 143,9% from R259,9
million in 2012 to R633,8 million in 2013. Profit for the
period increased by 34,0% from R18,2 million in 2012 to
R24,4 million in 2013.
Australasia
Ditch Witch has traded at slightly lower levels for the
period across both the Ditch Witch and Komptech ranges
of equipment.
Turnover for the period decreased by 5,1% from R163,5
million in 2012 to R155,1 million in 2013. Profit for the
period decreased by 21,2% from R11.7 million in 2012 to
R9,2 million in 2013.
CASH FLOW
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
ELB continues to be well positioned to take advantage of
a number of potential projects currently being considered
in Africa.
BOARD OF DIRECTORS
Mr Michael Easter joined the Board as Group Financial
Director on 1 July 2013. There have been no other
changes to the board of directors during the period.
DIVIDEND
It has been decided to declare an interim dividend of 28
cents (2012 – 25 cents) per ordinary share which is an
increase of 12%.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The unaudited condensed consolidated interim financial
statements are prepared in accordance with International
Financial Reporting Standard, IAS 34: Interim Financial
Reporting, the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and
Financial Pronouncements as issued by the Financial
Reporting Standards Council and the requirements of the
Companies Act of South Africa. The accounting policies
applied in the preparation of these interim financial state-
ments are in terms of International Financial Reporting
Standards and are consistent with those applied in the
previous annual financial statements.
The 31 December 2012 comparatives have been restated
as a result of adopting the revised IAS 19: Employee
Benefits, for the financial year ended 30 June 2013, as
detailed in the 30 June 2013 Integrated Annual Report.
Apart from this change the accounting policies are
consistent with those applied in the financial year ended
30 June 2013.
On behalf of the Board
Dr Stephen Meijers
Chief Executive Officer
ELB Group and ELB Engineering Services
Peter Blunden
Chief Executive Officer - ELB Equipment
Michael Easter
Group Financial Director - ELB Group
Boksburg 13 March 2014
GROUP BALANCE SHEET
Restated
Unaudited Unaudited Audited
31 Dec 13 31 Dec 12 30 June 13
R000 R000 R000
ASSETS
Non current assets 228 886 216 953 217 717
Property, plant and equipment 150 392 142 606 146 730
Pension fund employer surplus account 53 746 44 971 49 078
Non current loans receivable 5 537 1 408 3 748
Deferred income tax assets 19 211 27 968 18 161
Current assets 1 537 076 1 243 078 1 407 293
Inventories, and construction contract work not yet billed 687 148 542 134 623 798
Receivables and other current assets 266 635 273 470 312 989
Cash and cash equivalents 583 293 427 474 470 506
Total assets 1 765 962 1 460 031 1 625 010
EQUITY AND LIABILITIES
Equity attributable to ordinary shareholders of ELB 637 659 531 467 601 089
Issued capital 25 192 25 192 25 192
Treasury shares (36 622) (52 142) (48 565)
Reserves 30 428 45 736 51 770
Retained earnings 618 661 512 681 572 692
Preference shares – 8 –
Total equity attributable to equity holders of ELB 637 659 531 475 601 089
Non controlling interests in consolidated entities 120 146 98 654 113 526
Total equity 757 805 630 129 714 615
Non current liabilities 52 604 41 710 58 596
Interest bearing borrowings 27 965 23 741 29 726
Provision for trade back commitments 2 701 2 307 2 670
Deferred income tax liabilities 21 938 15 662 26 200
Current liabilities 955 553 788 192 851 799
Non interest bearing payables, other current liabilities
and current provision 772 097 633 340 672 893
Interest bearing payables 183 456 154 852 178 906
Total equity and liabilities 1 765 962 1 460 031 1 625 010
Ordinary shares in issue (000's) 33 860 33 860 33 860
Deduct: Treasury shares in issue (000's) 7 312 8 504 8 231
Ordinary shares in issue on which net asset
value per ordinary share is calculated 26 548 25 356 25 629
Net asset value per ordinary share (cents) 2 402 2 096 2 345
GROUP STATEMENT OF PROFIT OR LOSS
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 13 31 Dec 12 30 June 13
R000 R000 R000
Sales 1 143 856 760 906 1 984 597
Operating costs excluding depreciation and revaluation
of property, plant and equipment (1 079 304) (702 246) (1 813 048)
Operating profit before depreciation and revaluation
of property, plant and equipment 64 552 58 660 171 549
Depreciation and revaluation of property, plant and equipment (8 509) (6 856) (14 212)
Profit from operations 56 043 51 804 157 337
Finance income 7 294 8 790 17 303
Finance expenses (3 687) (5 311) (11 275)
Profit before income tax 59 650 55 283 163 365
Income tax expense (18 335) (15 129) (45 412)
Profit for the period 41 315 40 154 117 953
Profit for the period attributable to:
Ordinary shareholders of ELB 31 776 31 519 95 255
Non controlling interests in consolidated entities 9 539 8 635 22 698
41 315 40 154 117 953
CALCULATION OF GROUP HEADLINE EARNINGS
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 13 31 Dec 12 30 June 13
R000 R000 R000
Profit attributable to ordinary shareholders
of ELB from the statement of profit or loss 31 776 31 519 95 255
Deduct: Items excluded from headline earnings
as detailed below: 42 184 233
Profit on disposal of plant and equipment 68 315 405
Income tax effect of items excluded from headline earnings (19) (86) (110)
Non controlling interests in items excluded from
headline earnings (7) (45) (62)
Headline earnings 31 734 31 335 95 022
Weighted average number of ordinary shares
(excluding treasury shares) on which basic
earnings per ordinary share are based (000's) 26 110 25 330 25 396
Earnings per ordinary share (cents)
– basic 121,7 124,4 375,1
– diluted 120,6 121,3 365,2
Headline earnings per ordinary share (cents)
– basic 121,5 123,7 374,2
– diluted 120,5 120,6 364,3
Dividends declared for the period per ordinary share (cents) 28 25 85
GROUP STATEMENT OF COMPREHENSIVE INCOME
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 13 31 Dec 12 30 June 13
R000 R000 R000
Profit for the period from the statement of profit or loss 41 315 40 154 117 953
Other comprehensive income 10 607 10 483 19 691
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve adjustments
attributable to ordinary shareholders of ELB 7 192 7 130 13 143
Income tax effect of foreign currency translation
reserve adjustments attributable to ordinary
shareholders of ELB (792) (1 062) (1 592)
Items that will not be reclassified to profit or loss
Foreign currency translation reserve adjustments
attributable to non controlling interests 1 270 1 258 2 320
Foreign currency translation adjustments to foreign
non controlling interests 874 949 1 476
Pension fund employer surplus account remeasurements 3 101 3 564 6 024
Aeroplane revaluation surplus adjustment (42) (236) 401
Income tax effect of items that will not be reclassified
to profit or loss (996) (1 120) (2 081)
Total comprehensive income for the period 51 922 50 637 137 644
Total comprehensive income for the period
attributable to:
Ordinary shareholders of ELB 40 384 40 008 111 388
Non controlling interests in consolidated entities 11 538 10 629 26 256
51 922 50 637 137 644
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to ordinary shareholders of ELB
Non controlling
interests in Unaudited
Issued Treasury Retained Preference consolidated Total
capital shares Reserves earnings Total shares entities equity
R000 R000 R000 R000 R000 R000 R000 R000
Balance at 30 June 2012 25 192 (52 684) 37 077 494 015 503 600 8 87 940 591 548
Total comprehensive income for the year 11 796 99 592 111 388 26 256 137 644
Profit for the year 95 255 95 255 22 698 117 953
Other comprehensive income 11 796 4 337 16 133 3 558 19 691
Ordinary dividends paid (19 528) (19 528) (861) (20 389)
Non controlling interest in distributions by a consolidated group entity (75) (75)
Increase in share options reserve 1 510 1 510 266 1 776
Transfer from share options reserve to retained earnings for share options
exercised and fully paid, and for share options lapsed through attrition (949) 949 – – –
Redundant items in the foreign currency translation reserve
transferred to retained earnings 2 336 (2 336) – – –
Decrease in the carrying amount of treasury shares held by group entities 4 119 4 119 4 119
Preference shares redeemed for cash (8) (8)
Balance at 30 June 2013 25 192 (48 565) 51 770 572 692 601 089 – 113 526 714 615
Total comprehensive income for the six months 6 376 34 008 40 384 11 538 51 922
Profit for the six months 31 776 31 776 9 539 41 315
Other comprehensive income 6 376 2 232 8 608 1 999 10 607
Ordinary dividends paid (15 927) (15 927) (4 948) (20 875)
Increase in share options reserve 170 170 30 200
Transfer from share options reserve to retained earnings for share options
exercised and fully paid (3 898) 3 898 – – –
Redundant items in the foreign currency reserve transferred to retained earnings (23 990) 23 990 – – –
Decrease in the carrying amount of treasury shares held by group entities 11 943 11 943 11 943
Balance at 31 December 2013 25 192 (36 622) 30 428 618 661 637 659 – 120 146 757 805
Restated
Balance at 30 June 2012 25 192 (52 684) 37 077 494 015 503 600 8 87 940 591 548
Total comprehensive income for the six months 5 923 34 085 40 008 10 629 50 637
Profit for the six months 31 519 31 519 8 635 40 154
Other comprehensive income 5 923 2 566 8 489 1 994 10 483
Ordinary dividends paid (13 167) (13 167) (13 167)
Increase in share options reserve 484 484 85 569
Transfer from share options reserve to retained earnings for share options
exercised and fully paid (84) 84 – – –
Redundant items in the foreign currency reserve transferred to retained earnings 2 336 (2 336) – – –
Decrease in the carrying amount of treasury shares held by group entities 542 542 542
Balance at 31 December 2012 25 192 (52 142) 45 736 512 681 531 467 8 98 654 630 129
GROUP CASH FLOW STATEMENT
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 13 31 Dec 12 30 June 13
R000 R000 R000
Cash inflow/(outflow) from operating activities
before dividends and distributions paid 122 263 (57 440) (15 154)
Dividends and distributions paid (20 875) (13 167) (20 464)
Cash inflow/(outflow) from operating activities 101 388 (70 607) (35 618)
Cash outflow from investment activities (10 654) (8 569) (17 111)
Cash inflow from financing activities 8 579 11 561 18 666
Cash inflow/(outflow) for the period 99 313 (67 615) (34 063)
Foreign currency exchange and translation adjustments
to cash and cash equivalents 13 474 5 699 15 179
Increase/(decrease) in cash and cash equivalents 112 787 (61 916) (18 884)
Cash and cash equivalents at the beginning of the period 470 506 489 390 489 390
Cash and cash equivalents at the end of the period 583 293 427 474 470 506
Reconciliation to the balance sheet
Current assets – cash and cash equivalents 583 293 427 474 470 506
NOTES
Capital expenditure commitments
At 31 December 2013 there were no capital expenditure commitments (31 December 2012 - R13 000,
30 June 2012 - nil).
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 R24 000 at 31 December 2013 is
carried in respect of the guarantee.
The ELB Engineering Services Group 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 and
appropriate insurance.
All known liabilities of the Group at the balance sheet date have been accrued.
Contingent obligation
There is a contingent obligation to issue 1 964 527 ELB ordinary shares in exchange for all the ordinary shares
of B&W Instrumentation and Electrical Limited (B&W) in accordance with the ELB circular to ELB share-
holders dated 13 February 2014.
SEGMENT INFORMATION
Equipment Engineering
Total Africa Africa Australasia Other
R000 R000 R000 R000 R000
Unaudited
Six months ended 31 December 2013
Sales
External to the Group 1 143 856 354 936 633 778 155 136 6
Inter segment 500 493 – – 7
Inter segment elimination (500) – – – (500)
As reported in profit or loss 1 143 856 355 429 633 778 155 136 (487)
Profit before tax 59 650 20 099 35 314 11 422 (7 185)
Profit for the six months 41 315 14 367 24 382 9 236 (6 670)
Profit attributable to ordinary
shareholders of ELB 31 776 12 668 17 591 6 399 (4 882)
Assets 1 765 962 742 491 684 520 318 256 20 695
Liabilities 1 008 157 387 539 529 304 93 904 (2 590)
Restated
Unaudited
Six months ended 31 December 2012
Sales
External to the Group 760 906 337 550 259 873 163 483 –
Inter segment 3 – – – 3
Inter segment elimination (3) – – – (3)
As reported in profit or loss 760 906 337 550 259 873 163 483 –
Profit before tax 55 283 21 656 24 966 14 595 (5 934)
Profit for the six months 40 154 15 340 18 195 11 723 (5 104)
Profit attributable to ordinary
shareholders of ELB 31 519 13 039 13 812 8 051 (3 383)
Assets 1 460 031 679 161 495 564 276 013 9 293
Liabilities 829 902 357 107 398 920 80 789 (6 914)
Audited
Year ended 30 June 2013
Sales
External to the Group 1 984 597 732 550 889 093 362 942 12
Inter segment 28 990 28 990 – – –
Inter segment elimination (28 990) – – – (28 990)
As reported in profit or loss 1 984 597 761 540 889 093 362 942 (28 978)
Profit before tax 163 365 71 050 77 063 26 317 (11 065)
Profit for the year 117 953 51 022 55 315 20 791 (9 175)
Profit attributable to ordinary
shareholders of ELB 95 255 43 369 43 503 14 297 (5 914)
Assets 1 625 010 773 757 533 801 329 083 (11 631)
Liabilities 910 395 415 730 399 105 117 502 (21 942)
INTERIM CASH DIVIDEND DECLARATION
ORDINARY DIVIDEND NUMBER 132
The directors have declared an interim cash dividend of 28 cents per share on the Company's ordinary
shares for the six months ended 31 December 2013. The following additional information is given in respect
of the dividend.
- the dividend has been declared out of income reserves
- the South African dividend tax rate is 15%
- there are no secondary tax on companies (STC) credits utilised
- ELB Group Limited's income tax reference number is: 9275151711
- the gross dividend is 28 cents per ordinary share for ordinary shareholders exempt from the dividend tax
- the net dividend is 23,8 cents per ordinary share for ordinary shareholders liable to pay the dividend tax
- ELB Group Limited has 33 860 000 ordinary shares in issue, of which 7 312 031 were treasury
shares at 31 December 2013
The salient dates in respect of the dividend are:
Last day to trade cum dividend Friday, 4 April 2014
Shares commence trading ex dividend Monday, 7 April 2014
Record date Friday, 11 April 2014
Date of payment Monday, 14 April 2014
Shares may not be dematerialised or rematerialised between Monday, 7 April 2014, and Friday, 11 April 2014, both
dates inclusive.
By order of the Board
Elbex Proprietary Limited Boksburg
Company secretary 13 March 2014
Preparation of the unaudited group interim report
The preparation of the unaudited group interim report was supervised by the group financial director,
Michael Easter CA(SA).
DIRECTORS
AG Fletcher (chairman), Dr SJ Meijers (group chief executive and chief executive - ELB Engineering Services),
PJ Blunden (chief executive - ELB Equipment) MC Easter (financial director), T de Bruyn,* Dr JP Herselman,*
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
RELEASE DATE: The unaudited group interim report was released on 14 March 2014.
Date: 14/03/2014 01:39:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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