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Group Summarised Provisional Results for the year ended 30 June 2019
ELB GROUP LIMITED
(‘ELB’ or ‘the Company’)
Incorporated in the Republic of South Africa
Registration number: 1930/002553/06
Share code: ELR
ISIN: ZAE000035101
GROUP SUMMARISED PROVISIONAL RESULTS
for the year ended 30 June 2019
• Significant recovery from the loss reported for the interim period ended December 2018
• Revenue decreased to R2 206 million from R3 714 million
• Profit before tax for the year decreased to R41 million from R170 million (restated) (previously
reported R171 million)
• Earnings per share decreased to a loss of 114 cents from a profit of 390 cents (restated)
(previously reported 344 cents)
• Net asset value per share decreased to 1 757 cents from 3 110 cents (restated) (previously
reported (2 754 cents)
ELB is an internationally recognised know-how projects and the weighting of the Gamsberg Zinc
solutions provider and capital equipment supplier project revenue in 2018. There was also a
in the fields of materials handling, mineral marginal decrease in revenue in the Equipment
separation, industrial projects, power solutions segment, with only Australasia increasing
and Industry 4.0. This is achieved through ELB revenue for the year.
generated innovation, in-house capability and the
supply of world-class equipment and technology. Profit before tax for the year decreased to R41
The Company and its subsidiaries (“the Group”) million in 2019 from a profit of R170 million in 2018
operates predominantly in Africa and Australasia. (restated).
The results for the financial year ended 30 June The effective tax rate increased to 176% in 2019
2019 have been impacted by the losses incurred from 35% in 2018 (restated). The effective tax rate
on the Gamsberg Zinc project in the Northern increased as a result of deferred tax assets on
Cape. The Group remains committed to the calculated losses not recognised.
project and every effort is being made to achieve
contractual completeness as soon as possible. Profit for the year attributable to ELB shareholders
decreased to a loss of R32 million in 2019 from a
The Group continues on its strategy to further profit of R110 million in 2018 (restated).
increase its know-how and technology focused
solutions by pursuing exponential technology- Total comprehensive income for the year
focused opportunities and partnerships. These attributable to ELB shareholders decreased to a
include the development and incorporation of new loss of R35 million in 2019 from a profit of R108
technologies into the Group such as the Internet million in 2018 (restated), after taking into account
of Things, camera recognition and other disruptive the translation of the Group’s foreign operations
technologies. This will further allow the Group to and other comprehensive income
provide a broader service offering to its existing remeasurements.
and future clients.
Earnings per share for the year decreased to a
FINANCIAL RESULTS loss of 114 cents in 2019 from earnings per share
of 390 cents in 2018 (restated).
Due to the project nature of the Engineering
Services segment of the Group there is no Headline earnings per share for the year
consistent correlation between revenue and decreased to a loss of 167 cents in 2019 from
profits in reporting periods. headline earnings per share of 386 cents in 2018
(restated).
Revenue for the year declined to R2 206 million in
2019 from R3 714 million in 2018. The decrease The net asset value per share decreased to 1 757
has mainly been in the Engineering Services cents at 30 June 2019 from 3 110 cents at 30 June
segment due to the stage of completion of major 2018 (restated).
During the year, as a result of the rationalisation R91 million in 2019 from R87 million in 2018. The
of the Engineering Services segment, the Group increase in profit before tax in the current year is
disposed of its interest in the B&W due to slight margin improvements, increased
Instrumentation and Electrical Proprietary Limited export sales and the positive impact of the
group ("B&W"), realising a net profit on disposal of strengthening rand in the current year.
R13 million, after the impairment of the B&W
goodwill of R13 million. The market remains in a state of uncertainty, with
directly related demand for construction
The loss before tax attributable to B&W during this equipment in a declining trend, while demand for
reporting period was R131 million, which loss earthmoving and mining equipment and related
resulted in the Group profit before tax being sectors are relatively good considering the current
reduced from R172 million to the reported profit economic conditions. The decline in demand for
before tax of R41 million. construction equipment is partly due to the fact
that Government has still not embarked on any
The adoption of new International Financial major construction projects and private sector
Reporting Standards (“IFRS”), which became construction having declined. Reasonable
effective in the current financial year, has resulted demand from existing mining operations
in changes to accounting policies and disclosures. continues to be experienced, compared to very
The adoption of IFRS 15: Revenue from Contracts low or non-existent demand from new, or
with Customers (“IFRS 15”), has had a expanding, mining operations.
considerable negative impact on the financial
position of the Group in the current financial year, Engineering Services
which has resulted in the reduction of opening
retained earnings by R333 million, from R771 Revenue decreased to R665 million in 2019 from
million to R438 million, in terms of the transitional R2 230 million in 2018. The decrease is primarily
adjustments as required by IFRS 15. due to a greater proportion of revenue on the
Gamsberg Zinc project occurring in 2018, along
The comparative information for the year ended with the stage of completion of other projects and
30 June 2018 has been restated. The Group the impact of the disposal of B&W with effect from
consolidated annual financial statements for the 2 April 2019.
financial year ended 30 June 2017 were selected
for review by the JSE as part of its proactive The Engineering Services component of the
monitoring of annual financial statements segment made a profit before tax of R48 million
process. Following a referral to the Financial for the year.
Reporting Investigation Panel, the JSE concluded
that the Group’s 2017 consolidated annual The B&W component of the segment incurred a
financial statements contained a prior period loss before tax of R131 million for the year.
error, in relation to the accounting treatment of
The ELB Educational Trust for Black South The combined profit before tax for the segment
Africans (“the Trust"). In the JSE’s opinion, the therefore decreased significantly to a loss before
Trust should have been consolidated in the Group tax of R83 million in 2019, from a profit before tax
and a non-controlling interest should not have of R51 million in 2018, primarily as a result of the
been recognised for the Trust's shares in ELB losses incurred on the Gamsberg Zinc project.
Engineering Proprietary Limited, a subsidiary of The other projects in the segment have made a
the Company. The impact of the restatement is positive contribution to the results for the year and
disclosed in the notes to the financial statements. are all on track in terms of budget and schedule.
The construction component in the segment has
The impact on the current year’s results of also made a valuable and positive contribution to
consolidating the Trust and excluding the non- these results.
controlling interest is such that it has the effect of
increasing earnings per share, headline earnings In addition, due to its knowledge and technical
per share and equity attributable to the capability, Engineering Services has been
Company’s shareholders. awarded a number of operational and
maintenance projects at Medupi power station, in
OPERATIONS conjunction with the completion of existing
packages of work.
Equipment
Australasia
Revenue decreased marginally to R927 million in
2019 from R977 million in 2018. Notwithstanding Revenue increased to R622 million in 2019 from
reduced revenue profit before tax increased to R513 million in 2018, while profit before tax
decreased marginally to R36 million in 2019 from initial project outlays. The net cash outflow and
R37 million in 2018. Notwithstanding the impact of decrease in cash for the year is primarily as a
a marginally lower average exchange rate on the result of the increased working capital
translation of the Australasia results, this segment commitments on the Gamsberg Zinc project.
continues to report strong revenue growth and
profitability. The ELB board of directors (“the Board”) believes
that the Group remains a going concern.
CASH FLOW AND GOING CONCERN
PROSPECTS
The Group had a net cash outflow from operating
activities of R126 million, compared to a net cash The Group continues to pursue identified
outflow from operating activities of R70 million in opportunities and to deliver on its strategy.
the prior year (restated), with a decrease in net
cash and cash equivalents to R213 million from DIVIDEND
R319 million at the prior year end (restated). Of
The Board has decided not to declare a dividend
the net cash on hand at 30 June 2019, R70 million
for the year ended 30 June 2019.
is ceded and pledged to a local bank to cover
trading facilities, R52 million is offshore with ELB
subsidiaries and a further amount is cash received
in advance on projects, which is committed to fund
SALIENT FEATURES 2019 2018
Revenue (R’000) 2 206 439 3 714 238
Profit before tax (R’000)* 40 897 169 977
(Loss)/profit attributable to ordinary shareholders of ELB (32 456) 109 656
(R’000)*
Cash outflow from operating activities before dividends (111 400) (46 559)
(R’000)*
Earnings per share (cents)* (114) 390
Headline earning per share (cents)* (167) 386
Net asset value per share (cents)* 1 757 3 110
Cash dividend per share (cents) - 82
*2018 restated.
DIRECTORS
AG Fletcher (chairman), Dr SJ Meijers (group chief executive and chief executive - ELB
Engineering Services), PJ Blunden (chief executive - ELB Equipment), MC Easter (group
financial director), T de Bruyn*, Dr JP Herselman*, B Makhunga*, R Nkabinde*, MV Ramollo,
CJ Smith (alternate), IAR Thomson*, JC van Zyl*.
*Independent non-executive
SHORT-FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the Board of directors of ELB and is a summarised
version of the Group’s full announcement and as such it does not contain full or complete details
pertaining to the Group’s results. Any investment decisions by investors and/or shareholders should be
made after taking into consideration the full announcement. The full announcement has been released
on the Stock Exchange News Service (SENS) on 17 September 2019 and is available for viewing on
the Group’s website (www.elb.co.za) and at
https://senspdf.jse.co.za/documents/2019/jse/isse/elr/FY2019.pdf
The full announcement is available for inspection, at no charge, at the registered office of ELB and the
offices of the sponsor, Questco Corporate Advisory Proprietary Limited, from 09:00 to 16:00 on
business days. Copies of the full announcement can be requested from the registered office by
contacting +27 (0)11 306 0700.
Boksburg
17 September 2019
Sponsor
Questco Corporate Advisory Proprietary Limited
Date: 17/09/2019 05:15:00
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