To view the PDF file, sign up for a MySharenet subscription.

ELB GROUP LIMITED - Group Summarised Provisional Results for the year ended 30 June 2019

Release Date: 17/09/2019 17:15
Code(s): ELR     PDF:  
 
Wrap Text
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
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story