| Tue 29 Jul 2008, 17:37 | | ELR - ELB Group Limited - Related party disposal by ELB of the shares and loan |
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ELR ELRP
ELR
ELR - ELB Group Limited - Related party disposal by ELB of the shares and loan
account of ELB Timber Products (PROPRIETARY) Limited ("ETP")
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")
Further to the ELB Group Limited announcement released on SENS earlier today,
please see below the revised announcement.
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. The ELB Timbers Group had been unable to secure long term
supply contracts for logs at prices low enough to justify continuing with
the segment into the future at its previous capacity.
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 transferred to ELB certain immovable
properties constituting the Lydenburg factory ("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 and has no effect on the ELB
consolidated results.
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 for a cash consideration of
R 7,0 million.
Boksburg
29 July 2008
Independent Expert
QuestCo Sponsors (Pty) Ltd
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 29/07/2008 17:37:02 Produced by the JSE SENS Department.
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