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ELB GROUP LIMITED - Voluntary update in respect of the Strategic Review

Release Date: 28/05/2019 17:39
Code(s): ELR     PDF:  
Wrap Text
Voluntary update in respect of the Strategic Review

Incorporated in the Republic of South Africa
(Registration number 1930/002553/06)
ISIN: ZAE000035101
(“ELB” or “the Company” or “the Group”)


Shareholders are referred to the cautionary announcement and subsequent renewals thereof, the
last of which was dated 30 April 2019, and the withdrawal of the cautionary announcement dated
17 May 2019, in terms of which shareholders were advised, inter alia, that ELB had commenced
a strategic review of the Company, its operations and capital structure, with a view to positioning
it to ensure the sustainability of operational performance and working capital requirements (“the
Strategic Review”).

The Company wishes to provide shareholders with further information as to the reasons for the
cautionary announcement and the subsequent withdrawal thereof.

As the Company indicated in the interim results for the period ended 31 December 2018, released
on SENS on 5 April 2019, the results for the period were dominated, and severely impacted, by
the losses incurred on the Gamsberg Zinc project in the Northern Cape (“the Project”), currently
in the final stages of performance testing by ELB Engineering Services Proprietary Limited
(“Engineering Services”).

The delay in the final performance testing on the Project negatively impacted the timing of the
cashflows, and along with the losses incurred on the Project, the Engineering Services segment
was placed under severe working capital constraints.

The losses incurred on the Project had a negative impact on Group operations and cashflow and
as a consequence the Company was required to undertake the Strategic Review. The Strategic
Review process included the conclusion of a final contract close-out agreement with the Project
client, the conclusion of settlement agreements with all the Project external creditors, the sale of
B&W Instrumentation and Electrical Proprietary Limited (“B&W”) (as announced on SENS on
26 April 2019) and negotiating additional financing facilities with the Group’s existing lenders,
insurers, and other financial institutions.

Following the conclusion of the aforementioned final contract close-out agreement with the Project
client, the conclusion of settlement agreements with all the Project external creditors and the sale
of B&W, the board of directors of ELB is satisfied that the Strategic Review has been completed,
with no further immediate quantifiable changes expected to the Company, its operations or its
capital structure, that are not in the ordinary course of business.

All other projects in the Engineering Services segment continue to perform in line with budget and
expectation and similarly the other segments of the Group continue to perform in line with budget
and expectation.

The information contained in this announcement is the sole responsibility of the board of directors
of ELB and has not been reviewed or reported on by the Company’s auditors.

28 May 2019

Sponsor and Corporate Advisor
Questco Corporate Advisory Proprietary Limited

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