| Tue 29 Jul 2008, 15:08 | | ELR/ELRP - ELB Group Limited - Related Party Disposal |
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ELR ELRP
ELR
ELR/ELRP - ELB Group Limited - Related Party Disposal
ELB Group Limited
Incorporated in the Republic of South Africa
Registration number: 1930/002553/06
Share codes: ELR and ELRP
ISIN: ZAE000035101 and ZAE000035333
(ELB)
RELATED PARTY DISPOSAL BY ELB OF THE SHARES AND LOAN ACCOUNT OF ELB TIMBER
PRODUCTS (PROPRIETARY) LIMITED (ETP)
1. Introduction
ELB has entered into an agreement with Craig Douglas Stanton, a related party as
defined in Section 10 of the JSE Limited (JSE) Listings Requirements, to dispose
of the shares and loan account of ETP with effect from 31 May 2008 (the
transaction).
2. Nature of business of ETP
The business of ETP comprises the following divisions which are based in White
River, Mpumalanga:
Veneercraft, which produces rotary peeled veneer as well as plywood; and
Clipbox, which produces a range of re-usable collapsible packaging that uses
spring steel clips as connectors.
3. Rationale for the transaction
As was disclosed in the annual report for the year ended 30 June 2007, the board
of directors of ELB resolved to dispose of the business of the ELB Timbers Group
due to the inability to secure logs at low enough prices to be able to trade
profitably.
4. Purchase consideration
The purchase price in respect of the transaction amounts to R 6,0 million (the
purchase price) and will be settled in six equal half-yearly instalments over a
three year period commencing on 1 April 2009. Interest will accrue initially on
the purchase price and thereafter on the balance of the purchase price at 6% per
annum compounded monthly from 31 December 2008.
ELB has no specific purpose or intention as regards the sale proceeds, and
present indications are that the proceeds will, on receipt, be included in ELB`s
call and term deposits with its bankers.
5. Conditions precedent to the transaction
The transaction is unconditional.
6. Unaudited pro forma financial effects
The table below sets out the unaudited pro forma financial effects of the
transaction on ELB based on the unaudited results for the six months ended
31 December 2007. The unaudited pro forma financial effects are presented for
illustrative purposes only and because of their nature may not give a fair
reflection of ELB`s financial position, changes in equity or results of
operations after the transaction has been implemented. The unaudited pro forma
financial effects are the responsibility of the directors of ELB.
Before 1 After 2,3,4 % Change
Published Pro forma
Earnings per ordinary 89,8 78,1 (13,0)
share (cents)
Headline earnings per 83,3 83,3 -
ordinary share (cents)
Net asset value per 772 760 (1,6)
ordinary share (cents)
Net tangible asset value 772 760 (1.6)
per ordinary share (cents)
Weighted average number of 27 438 27 438 -
ordinary shares in issue
(000`s)
Number of ordinary shares 27 494 27 494 -
in issue (000`s)
Notes:
1. The "Before" financial information has been extracted without adjustment
from the published unaudited results of ELB for the six months ended 31
December 2007.
2. Earnings per ordinary share and headline earnings per ordinary share
have been adjusted on the following assumptions:
a. the transaction was effective 1 July 2007;
b. elimination of the income and expenses relating to ETP for the
period 1 July 2007 to 31 December 2007; and
c. interest charged in unwinding the deferred purchase consideration
amounting to
R 3,2 million, after discounting the deferred purchase
consideration to its fair value in terms of IFRS 3 - Business
combinations.
3. Net asset value per ordinary share and net tangible asset value per
ordinary share have been adjusted on the following assumptions:
a. the transaction was effective 31 December 2007;
b. elimination of assets amounting to R 14,4 million and liabilities
amounting to
R 39,2 million;
c. raising the deferred purchase consideration at fair value amounting
to R 4,5 million in terms of IFRS 3 - Business combinations; and
d. raising the interest charged in unwinding the deferred purchase
consideration amounting to R 3,2 million in terms of IFRS 3 -
Business combinations.
4. Prior to the transaction, ETP disposed of certain immovable properties
constituting the Lydenburg factory to ELB for a purchase consideration
of R 10 426 000 (the factory disposal), which resulted in a reduction
of ETP`s inter company loan. The factory disposal has been taken into
account for purposes of the unaudited pro forma financial effects set
out above.
7. Small related party transaction
As Craig Douglas Stanton is a director of ETP, the disposal constitutes a small
related party transaction in terms of Section 10.7 of the JSE Listings
Requirements and accordingly, a fairness opinion confirming that the transaction
is fair to ELB shareholders is required. The board of directors of ELB has been
advised by QuestCo Sponsors (Proprietary) Limited that the terms and conditions
of the transaction are fair to ELB shareholders and their report is available
for inspection at the registered office of ELB for a period of 28 days from this
announcement.
ADDITIONAL INFORMATION REGARDING DISCONTINUED OPERATIONS
The transaction detailed in this announcement concludes the disposal of the ELB
Timbers Group, being the discontinued operations reported in the annual report
at 30 June 2007 and the interim report at 31 December 2007. The other operation
of the ELB Timbers Group, the ELB Ultrabord plant at Malelane, was sold at the
end of February 2008.
Boksburg
29 July 2008
Independent Expert
QuestCo Sponsors (Pty) Ltd
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 29/07/2008 15:08:01 Produced by the JSE SENS Department.
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