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Unaudited group interim report and interim cash dividend declaration for the six months ended 31 December 2014
ELB GROUP LIMITED
('ELB', 'the Company' or 'the Group')
Incorporated in the Republic of South Africa
Registration number 1930/002553/06
Share code: ELR ISIN: ZAE000035101
UNAUDITED GROUP INTERIM REPORT and interim cash dividend declaration
for the six months ended 31 December 2014
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 gravity separation 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.
Over the past year the Group has embarked on a number of
strategies for which returns are typically realised after two to
three years. These strategies are all in line with the core
expertise of the Group and will enhance its ability to service its
markets via horizontal or vertical diversification.
ELB Equipment has signed a 50/50 joint venture agreement
with Belaz mining trucks. Belaz is one of the leaders in the world
of large ore haulage trucks. This enables the Group to offer its
customers trucks of a size up to 400 tonnes.
In order to de-risk the execution model of ELB Engineering
Services, it was decided a few years ago to establish ELB
Construction, enabling all the ELB projects to be erected by an
in-house company. This has been a notable success from a
safety, speed of reaction, commercial and quality point of view.
ELB Construction has the ability to erect projects from as small
as R5 million to as large as R3 billion.
In line with this de-risking model, the Group also acquired B&W
Instrumentation and Electrical Limited, in May 2014. The
company has made a very satisfactory turnaround from a cash
management and profitability point of view and is adding
material value to the bottom line of ELB.
ELB has agreed a cooperation agreement with KC Cottrell, a world
leader in environmental technology for the last forty years.
This agreement will enable ELB to offer a full range of air cleaning
solutions, including baghouses, electrostatic precipitators and
desulphurisation systems for large power station projects, allowing
the Company to provide the necessary environmental solutions for both
refurbishment and new capital projects.
FINANCIAL RESULTS
Consistent with prior periods there is no correlation between
sales and profit due to the nature of the project related business.
The 14% increase in sales for the period from R1 144 million in
2013 to R1 301 million in 2014 primarily reflects the higher activity
level across the range of products and services offered by ELB's
engineering and equipment African operations.
Profit before tax increased by 22% from R60 million to R73
million while headline earnings increased by 22% from R32
million to R39 million. The weighted average number of shares in
issue increased by 9% with the result that the increase in
headline earnings per share was tempered to 13% from 121.5
cents per share to 136.8 cents per share. Attributable compre-
hensive income however decreased from R40 million to R35
million primarily due to foreign currency translation losses in
2014 compared to foreign currency translation gains in 2013.
The ELB Group will from time to time experience volatility in
headline earnings particularly during periods of significant
exchange rate fluctuations. These fluctuations give rise to
unrealised foreign 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 16% from 2 402
cents per share at 31 December 2013 to 2 794 cents per share
at 31 December 2014, but the increase was only 2% for the six
months under review, largely as a result of the Rand having
strengthened against the Australian dollar giving rise to translation
losses on consolidation of the Australian business.
OPERATIONS
Equipment Africa
Equipment sales of R411 million for the period were 16% higher
than the December 2013 half year of R355 million, at improved
gross margins. Profit before tax increased from R20 million to
R39 million for the comparative period, part of which can be
attributed to the unrealised foreign currency exchange gains in
this period against unrealised foreign currency exchange losses
in the 2013 period.
Engineering Services Africa
Engineering Services has been predominantly focussed on the
iron ore, coal and power sectors over the past period. The
company is at present constructing the world's longest
conveyor, handling coal for Sasol.
The project work on hand remains at a satisfactory level with on-
going projects in South Africa, Mozambique, Zambia, Namibia,
Botswana, Angola, Congo, DRC, Liberia, Indonesia, Gabon and
Israel.
Sales for the period increased by 19% from R634 million in 2013
to R752 million in 2014. Profit before tax for the period increased
by 51% from R35 million in 2013 to R53 million in 2014.
Australasia
Ditch Witch has traded at slightly lower levels for the period
across both the Ditch Witch and Komptech ranges of
equipment, due to the current poor trading conditions being
experienced in Australasia.
Sales for the period decreased by 4% from R155 million in 2013
to R149 million in 2014. The result for the period deteriorated
from a profit before tax of R11 million in 2013 to a loss before tax
of R9 million in 2014, which includes a material unrealised
foreign currency exchange loss.
CASH FLOW
Cash flow management remains a high priority for the Group.
ELB works closely with bankers, suppliers and customers to
ensure it continues to retain a strong balance sheet at all times.
PROSPECTS
The global cooling of commodity prices and demand has had an
effect on the pipeline for greenfield projects. This has led ELB to
focus on efficiency driven projects and ELB continues to be well
positioned to take advantage of a number of these potential
opportunities currently being considered in Africa.
BOARD OF DIRECTORS
There were no changes to the board of directors during the
period. Mr Johan van Zyl joined the Board as an independent
non-executive director on 19 March 2015.
DIVIDEND
It has been decided to declare an interim dividend of 30 cents
(2013 - 28 cents) per ordinary share which is an increase of 7%.
BASIS OF PREPARATION AND ACCOUNTING
POLICIES
The unaudited condensed consolidated interim financial
statements are prepared in accordance with and contains the
information required by International Financial Reporting
Standard IAS 34: Interim Financial Reporting, the SAICA
Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Reporting Pronouncements
as issued by 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 statements are in terms of International Financial
Reporting Standards and are consistent with those applied in
the previous annual financial statements.
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 19 March 2015
GROUP STATEMENT OF PROFIT OR LOSS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 14 31 Dec 13 30 June 14
R000 R000 R000
Sales 1 301 414 1 143 856 2 349 282
Operating costs excluding depreciation and amortisation
of non financial assets (1 214 504) (1 079 304) (2 165 799)
Operating profit before depreciation and amortisation
of non financial assets 86 910 64 552 183 483
Depreciation and amortisation of non financial assets (16 652) (8 509) (20 590)
Profit from operations 70 258 56 043 162 893
Finance income 8 710 7 294 26 088
Finance costs (6 463) (3 687) (10 380)
Profit before income tax 72 505 59 650 178 601
Income tax expense (24 016) (18 335) (47 816)
Profit for the period 48 489 41 315 130 785
Profit for the period attributable to:
Ordinary shareholders of ELB 39 268 31 776 102 379
Non controlling interests in consolidated entities 9 221 9 539 28 406
48 489 41 315 130 785
CALCULATION OF GROUP HEADLINE EARNINGS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 14 31 Dec 13 30 June 14
R000 R000 R000
Profit attributable to ordinary shareholders
of ELB from the statement of profit or loss 39 268 31 776 102 379
Deduct: Items excluded from headline earnings
as detailed below: 175 42 268
Profit on disposal of plant and equipment 295 68 485
Income tax effect on profit on disposal (78) (19) (139)
Non controlling interests in profit on disposal (42) (7) (78)
Headline earnings 39 093 31 734 102 111
Weighted average number of ordinary shares
(excluding treasury shares) on which basic
earnings per ordinary share are based (000's) 28 581 26 110 26 723
Earnings per ordinary share (cents)
- basic 137,4 121,7 383,1
- diluted 135,8 120,6 378,9
Headline earnings per ordinary share (cents)
- basic 136,8 121,5 382,1
- diluted 135,2 120,5 378,0
Dividends declared for the period per ordinary share (cents) 30 28 95
GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 14 31 Dec 13 30 June 14
R000 R000 R000
Profit for the period from the statement of profit or loss 48 489 41 315 130 785
Other comprehensive income (5 672) 10 607 11 189
Items that will not be reclassified to profit or loss
Foreign currency translation reserve adjustments
attributable to non controlling interests (990) 1 270 3 051
Foreign currency translation adjustments to foreign
non controlling interests (1 207) 874 2 609
Pension fund employer surplus account remeasurements 197 3 101 (12 648)
Aeroplane revaluation surplus adjustment 726 (42) 531
Income tax effect of items that will not be reclassified
to profit or loss (37) (996) 2 938
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve adjustments
attributable to ordinary shareholders of ELB (5 611) 7 192 17 284
Income tax effect of foreign currency translation reserve
adjustments attributable to ordinary shareholders of ELB 1 250 (792) (2 576)
Total comprehensive income for the period 42 817 51 922 141 974
Total comprehensive income for the period
attributable to:
Ordinary shareholders of ELB 35 495 40 384 108 306
Non controlling interests in consolidated entities 7 322 11 538 33 668
42 817 51 922 141 974
GROUP BALANCE SHEET
Unaudited Unaudited Audited
31 Dec 14 31 Dec 13 30 June 14
R000 R000 R000
ASSETS
Non current assets 311 993 228 886 315 685
Property, plant and equipment 181 687 150 392 180 948
Goodwill and intangible assets 20 940 - 24 041
Pension fund employer surplus account 41 497 53 746 39 850
Non current loans receivable 1 007 5 537 933
Deferred income tax assets 66 862 19 211 69 913
Current assets 1 480 631 1 537 076 1 687 283
Inventories, and construction contract work not yet billed 746 489 687 148 804 163
Receivables and other current assets 347 279 266 635 430 960
Cash and cash equivalents 386 863 583 293 452 160
Total assets 1 792 624 1 765 962 2 002 968
EQUITY AND LIABILITIES
Equity attributable to ordinary shareholders of ELB 799 492 637 659 779 312
Issued capital 107 702 25 192 107 702
Treasury shares (37 396) (36 622) (37 986)
Reserves 61 986 30 428 65 990
Retained earnings 667 200 618 661 643 606
Non controlling interests in consolidated entities 140 794 120 146 133 868
Total equity 940 286 757 805 913 180
Non current liabilities 42 100 52 604 46 971
Interest bearing borrowings 23 265 27 965 24 722
Provision for trade back commitments 2 847 2 701 2 861
Deferred income tax liabilities 15 988 21 938 19 388
Current liabilities 810 238 955 553 1 042 817
Non interest bearing payables, other current liabilities
and current provision 636 615 772 097 783 314
Interest bearing payables 149 414 183 456 230 135
Bank overdrafts 24 209 - 29 368
Total liabilities 852 338 1 008 157 1 089 788
Total equity and liabilities 1 792 624 1 765 962 2 002 968
Ordinary shares in issue (000's) 35 824 33 860 35 824
Deduct: Treasury shares in issue (000's) 7 209 7 312 7 254
Ordinary shares in issue on which net asset
value per ordinary share is calculated 28 615 26 548 28 570
Net asset value per ordinary share (cents) 2 794 2 402 2 728
GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 14 31 Dec 13 30 June 14
R000 R000 R000
Cash (outflow)/inflow from operating activities
before dividends and distributions paid (26 131) 122 263 13 960
Dividends and distributions paid (16 327) (20 875) (33 271)
Cash (outflow)/inflow from operating activities (42 458) 101 388 (19 311)
Cash outflow from investment activities (16 183) (10 654) (28 932)
Cash (outflow)/inflow from financing activities (941) 8 579 7 170
Cash (outflow)/inflow for the period (59 582) 99 313 (41 073)
Effect of exchange rate movements on cash balances (556) 13 474 16 944
(Decrease)/increase in cash and cash equivalents (60 138) 112 787 (24 129)
Cash and cash equivalents at the beginning of the period 422 792 470 506 470 506
Cash and cash equivalents of business combination
at acquisition - - (23 585)
Cash and cash equivalents at the end of the period 362 654 583 293 422 792
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to ordinary shareholders of ELB
Non controlling
interests in
Issued Treasury Retained consolidated Total
capital shares Reserves earnings Total entities equity
R000 R000 R000 R000 R000 R000 R000
Audited
Balance at 30 June 2013 25 192 (48 565) 51 770 572 692 601 089 113 526 714 615
Total comprehensive income for the year 15 033 93 273 108 306 33 668 141 974
Profit for the year 102 379 102 379 28 406 130 785
Other comprehensive income 15 033 (9 106) 5 927 5 262 11 189
Ordinary dividends paid (23 373) (23 373) (5 402) (28 775)
Distributions by a consolidated Group entity to non controlling interests in the entity (4 496) (4 496)
Equity settled share options expense 201 201 35 236
Transfer from share options reserve to retained earnings for share options
which have lapsed or become fully paid (4 555) 4 555 - - -
Item restored to the foreign currency translation reserve from retained earnings 3 541 (3 541) - - -
Treasury shares paid up and released to participants 10 579 10 579 41 10 620
Ordinary shares issued 82 510 82 510 82 510
Non controlling interest recognised (3 504) (3 504)
Balance at 30 June 2014 107 702 (37 986) 65 990 643 606 779 312 133 868 913 180
Unaudited
Total comprehensive income for the six months (3 915) 39 410 35 495 7 322 42 817
Profit for the six months 39 268 39 268 9 221 48 489
Other comprehensive income (3 915) 142 (3 773) (1 899) (5 672)
Ordinary dividends paid (15 927) (15 927) (400) (16 327)
Equity settled share options expense 22 22 4 26
Transfer from share options reserve to retained earnings for share options
which have become fully paid (111) 111 - - -
Treasury shares paid up and released to participants 590 590 590
Balance at 31 December 2014 107 702 (37 396) 61 986 667 200 799 492 140 794 940 286
Unaudited
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)
Equity settled share options expense 170 170 30 200
Transfer from share options reserve to retained earnings for share options
which have become fully paid (3 898) 3 898 - - -
Redundant items in the foreign currency translation reserve transferre
to retained earnings (23 990) 23 990 - - -
Treasury shares paid up and released to participants 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
SEGMENT INFORMATION
Engineering
Equipment Services
Total Africa Africa Australasia Other
R000 R000 R000 R000 R000
Unaudited
Six months ended 31 December 2014
Sales
External to the Group 1 301 414 400 169 751 752 149 487 6
Inter segment 10 501 10 493 - - 8
Inter segment elimination (10 501) - - - (10 501)
1 301 414 410 662 751 752 149 487 (10 487)
Profit/(loss) before tax 72 505 38 672 52 778 (9 401) (9 544)
Profit/(loss) for the six months 48 489 27 647 36 289 (7 571) (7 876)
Profit/(loss) attributable to ordinary
shareholders of ELB 39 268 24 252 25 977 (5 396) (5 565)
Assets 1 792 624 738 015 690 714 329 653 34 242
Liabilities 852 338 351 062 417 714 103 731 (20 169)
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)
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)
Audited
Year ended 30 June 2014
Sales
External to the Group 2 349 282 658 928 1 344 335 346 010 9
Inter segment 732 713 - - 19
Inter segment elimination (732) - - - (732)
2 349 282 659 641 1 344 335 346 010 (704)
Profit before tax 178 601 45 780 123 114 26 224 (16 517)
Profit for the year 130 785 32 817 92 088 20 682 (14 802)
Profit attributable to ordinary
shareholders of ELB 102 379 28 092 71 792 14 320 (11 825)
Assets 2 002 968 775 958 851 467 378 511 (2 968)
Liabilities 1 089 788 402 532 593 010 132 825 (38 579)
NOTES
Capital expenditure commitments
At 31 December 2014 there were capital expenditure commitments of R69 000 for office equipment.
At 31 December 2013 there were no capital expenditure commitments. At 30 June 2014 capital expenditure
commitments totalled R5 million.
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 R8 000 at 31 December 2014 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.
INTERIM CASH DIVIDEND DECLARATION
ORDINARY DIVIDEND NUMBER 134
The directors have declared an interim cash dividend of 30 cents per share on the Company's ordinary shares for
the six months ended 31 December 2014. 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 registration number is: 1930/002553/06
- ELB Group Limited's income tax reference number is: 9275151711
- the gross dividend is 30 cents per ordinary share for ordinary shareholders exempt from the dividend tax
- the net dividend is 25.5 cents per ordinary share for ordinary shareholders liable to pay the dividend tax
- ELB Group Limited has 35 824 527 ordinary shares in issue, of which 7 209 483 were treasury
shares at 31 December 2014
The salient dates in respect of the dividend are:
Last day to trade cum dividend Friday, 17 April 2015
Shares commence trading ex dividend Monday, 20 April 2015
Record date Friday, 24 April 2015
Date of payment Tuesday, 28 April 2015
Shares may not be dematerialised or rematerialised between Monday, 20 April 2015, and Friday, 24 April 2015, both
dates inclusive.
By order of the Board
Elbex Proprietary Limited Boksburg
Company secretary 19 March 2015
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,* JC van Zyl.* *Non executive
REGISTERED OFFICE
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
POSTAL ADDRESS: PO Box 565, Boksburg, 1460
WEBSITE: www.elb.co.za TELEPHONE: +27 11 306 0700
RELEASE DATE: The unaudited group interim report was released on 20 March 2015.
Date: 20/03/2015 07:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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