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ELB GROUP LIMITED - Reviewed results and dividend announcement
for the year ended 30 June 2003
ELB GROUP LIMITED (ELB)
Incorporated in the Republic of South Africa
(Registration number 1930/002553/06)
Share codes: ELR & ELRP
ISIN: ZAE000035101 & ZAE000035333
Reviewed results and dividend announcement
for the year ended 30 June 2003
Group Income statement
Audited
Reviewed Year ended
Year
ended
30 June 30 June 02
03
R000 R000
Sales revenue 554 685 2 382 126
Net operating costs excluding
depreciation and amortisation (526 742) (2 345 845)
Operating profit before depreciation,
amortisation and abnormal items 27 943 36 281
Depreciation and amortisation (14 673) (35 486)
Operating profit before abnormal 13 270 795
items
Abnormal items: net income 3 159 64 448
Profit from operations 16 429 65 243
Net treasury (expense)/income (17 602) 47 396
Income from associates - 1 039
(Loss)/profit before tax (1 173) 113 678
Income tax expense (3 451) (50 811)
(Loss)/profit after tax (4 624) 62 867
Minority interest 8 421 9 156
Net profit for the year 3 797 72 023
Weighted average number of shares on
which basic earnings per share are 30 783 30 322
based (000"s)
Headline earnings per ordinary share
of continuing operations before after
tax translation adjustment of foreign
treasury cash - basic 94,2 55,7
- fully diluted 93,7 55,0
Headline (loss)/earnings per ordinary
share (cents) - basic (5,0) 36,4
- fully diluted (5,0) 35,9
Earnings per ordinary share (cents) - 12,3 237,5
basic
- fully 12,3 234,2
diluted
Dividends declared for the year per
ordinary share (cents) 30,0 45,0
Special dividend per ordinary share - 600,0
(cents)
ABNORMAL ITEMS
Capital items
Net recovery/(impairment) of interest
in Safbin Systems (Pty) Limited 4 479 (20 867)
Impairment of plant and equipment not (1 320) -
in use
Profit on disposal of interest in
Bateman Project Holdings Limited - 83 793
Other capital items - 32
Net abnormal capital items: income 3 159 62 958
Net abnormal trading items: income - 1 490
Net abnormal items: income 3 159 64 448
RECONCILIATION OF HEADLINE EARNINGS
Net profit for the year as above 3 797 72 023
Deduct: Capital items as below: 5 351 60 994
- capital items before tax as 3 159 62 958
detailed above
- profit/(loss) on disposal of plant
and equipment included in
operating profit before abnormal 306 (3 562)
items
- goodwill amortisation (543) -
- income tax effect of headline
earnings adjustments 2 323 (292)
- minority interest in headline
earnings adjustments 106 1 890
Headline (loss)/earnings (1 554) 11 029
Deduct: Headline loss of discontinued
operations (12 185) (25 157)
After tax translation adjustment of
foreign treasury cash (2003: loss, (18 374) 19 287
2002: gain)
Headline earnings of continuing
operations before after tax
translation adjustment of foreign 29 005 16 899
treasury cash
Group balance sheet
Reviewed Audited
30 June 30 June 02
03
R000 R000
Assets
Non current assets 36 529 79 567
Property, plant and equipment 18 813 66 475
Intangible assets 5 527 244
Non current debtors 5 855 6 259
Deferred tax assets 6 334 6 589
Current assets 388 073 328 657
Other 189 403 155 934
Cash and cash equivalents 198 670 172 723
Total assets 424 602 408 224
EQUITY AND LIABILITIES
Capital and reserves 153 533 164 983
Issued capital 10 253 9 954
Reserves 750 1 843
Accumulated profit 142 530 153 186
Preference shares 8 8
Minority interest 1 521 6 462
Minority long term loans to subsidiary - 53 748
Non current liabilities 16 580 19 047
Interest bearing liabilities 664 1 197
Deferred tax liabilities 15 916 17 850
Current liabilities 252 960 163 976
Non interest bearing 186 895 104 984
Interest bearing - other 46 930 40 250
Short term borrowings and bank 19 135 18 742
overdrafts
Total equity and liabilities 424 602 408 224
Ordinary shares in issue (000"s) 30 860 30 760
Net asset value per share (cents) 498 536
Note
At 30 June 2003 there was a capital commitment of R347 000
(2002: R8 million)
Group cash flow statement
Reviewed Audited
Year Year ended
ended
30 June 30 June 02
03
R000 R000
Cash flows from operating activities
before dividends paid 62 696 678 061
Dividends paid (8 089) (206 329)
Cash inflow from operating activities 54 607 471 732
Cash (outflow)/inflow from investment
activities (19 672) 140 657
Cash (outflow)/inflow before financing
activities (7 700) 43 965
Increase in net cash and cash 27 235 656 354
equivalents
Net cash and cash equivalents at the
beginning of the year 153 981 839 354
Net cash of Bateman Project Holdings
Limited on disposal - (1 341
764)
Net (cash)/borrowings of other
operations on disposal (1 091) 37
Net borrowings of other operations on
acquisition (590) -
Net cash and cash equivalents at the
end of the year 179 535 153 981
GROUP STATEMENT OF CHANGES IN CAPITAL AND RESERVES
Reviewed Audited
Total Total
Issued Accumulated 30 June 30 June
capital Reserves profit 2003 2002
R000 R000 R000 R000 R000
Balance at the
beginning of the 9 954 1 843 153 186 164 983 293 552
year
Movement in issued
capital
Shares issued
under the share
incentive scheme 299 299 2 721
Shares repurchased
in terms of the
share
repurchase - - (690)
programme
Movement between
reserves and
accumulated profit
Property
revaluation
reserve no longer
carried following
the disposal of
the
property (1 093) 1 093 - -
Movement in
accumulated profit
Net profit for the
year 3 797 3 797 72 023
Translation
adjustments (7 846) (7 846) 7 949
Final dividend for
the previous year (4 614) (4 614) (9 992)
Interim dividend
for the current (3 086) (3 086) (9 066)
year
Special dividend - - (184
560)
Premium on
redemption of - (7)
preference shares
Minority equity
adjustments
following
the issue of
shares by - (6 947)
subsidiaries
Balance at the end
of the year 10 253 750 142 530 153 533 164 983
SEGMENT ANALYSIS
Reviewed Audited
Year ended Year ended
30 June 03 30 June 02
R000 R000
Sales revenue
Continuing operations
ELB Equipment 405 965 220 605
ELB McWade 73 335 56 806
ELB Timber Products 49 361 26 861
ELB Treasury/Central 155 338
Total continuing operations 528 816 304 610
Discontinued operations
Safbin Systems (Safbin) 25 817 27 409
Bateman Project Holdings (Batepro) - 2 047 714
Other 52 2 393
Total 554 685 2 382 126
HEADLINE EARNINGS/(LOSS)
Continuing operations
ELB Equipment 24 251 9 214
ELB McWade 5 121 5 250
ELB Timber Products 964 (931)
ELB Treasury/Central - operations (1 331) 3 366
Continuing operations before
translation adjustments 29 005 16 899
ELB Treasury/Central - after tax
translation adjustment of foreign (18 374) 19 287
treasury cash
Total continuing operations 10 631 36 186
Discontinued operations
Safbin (12 910) (19 230)
Batepro - 10 494
STC (secondary tax on companies) on
the special dividend - (16 590)
Other 725 169
Headline (loss)/earnings for the year (1 554) 11 029
Capital items
Continuing operations
Profit on disposal of plant and 306 183
equipment
Goodwill amortisation (543) -
Tax effect of capital items 305 (57)
Minority interest in capital items 106 -
Discontinued operations
Net recovery/(impairment) of interest
in Safbin 4 479 (20 867)
Impairment of plant and equipment not (1 320) -
in use
Loss on disposal of plant and - (3 745)
equipment
Profit on disposal of interest in - 83 793
Batepro
Other capital items - 32
Tax effect of capital items 2 018 (235)
Minority interest in capital items - 1 890
Net profit for the year 3 797 72 023
COMMENTS
INTRODUCTION
ELB is an investment holding company comprising four trading segments, namely
ELB Equipment, ELB McWade Electrical, ELB Timber Products and ELB
Treasury/Central all of which comprise what is referred to as continuing
operations. Discontinued operations comprise Safbin Systems which was wound-up
during the year.
FINANCIAL RESULTS
The results for the twelve months to 30 June 2003 show an increase in headline
earnings from continuing operations and before the after tax translation
adjustment of foreign treasury cash of R12,1 million from R16,9 million in 2002
to R29 million in 2003 for an increase of 71,6%.
ELB Equipment had an exceptionally good year increasing its pre-tax profit from
R13 million in 2002 to R35 million in 2003.
ELB McWade Electrical improved its pre-tax profits from R7,7 million in 2002 to
R9 million in 2003.
ELB Timber Products which is essentially a start-up operation showed a pre-tax
profit of R1,4 million for 2003. The strong Rand contributed to more difficult
trading conditions for this business.
ELB"s Treasury/Central activities for the year include a translation loss of
R18,4 million, after accounting for deferred tax, as a result of the stronger
Rand.
Unfortunately it was decided to wind-up Safbin during the year, resulting in a
headline loss for 2003 of R12,9 million which is included in discontinued
operations.
PROSPECTS
ELB Equipment has budgeted for a reduced contribution for the coming year as it
believes trading conditions with the stronger Rand will not be as buoyant as
they have experienced recently.
ELB McWade Electrical is on the other hand budgeting for an improvement in
profitability for the year ahead.
ELB Timber Products as a start-up operation is focusing on building a capability
to produce and market higher value niche market products and has budgeted to be
profitable for the year ahead.
ELB"s Treasury/Central prospects are linked to the outlook for the Rand as well
as prevailing interest rates.
CHANGES IN DIRECTORATE
In line with good corporate governance Bill Bateman has been appointed Non-
executive Chairman of the Group and Anthony Fletcher, the previous Executive
Chairman, remains on the Board as Executive Deputy Chairman.
Errol Gregor resigned from the ELB Board in November 2002. We would like to
thank Errol for his contribution to ELB.
Mollo Ramollo who is an electrical engineer joined the Board in July 2003.
Dessen Naidoo was appointed an alternate director on 11 March 2003. We welcome
them to the Board and look forward to their meaningful contribution.
EMPOWERMENT
ELB will continue to embrace empowerment and we are sure Mollo Ramollo and
Dessen Naidoo will be of valuable assistance in this regard.
ACCOUNTING POLICIES
Management has decided that certain foreign operations are more appropriately
classified as foreign entities. Accordingly translation adjustments resulting
from the translation of these foreign entities have been reflected in the
statement of changes in capital and reserves rather than in the income statement
as previously practised. The result was to increase the net profit and headline
earnings of the current year by R7,8 million and decrease the comparative net
profit and headline earnings of the previous year by R7,9 million. Comparative
amounts and earnings per share have been amended as necessary. There is no
effect on the reserves of the Group.
The preliminary report has been prepared in accordance with the South African
Companies Act and complies with South African Statements of Generally Accepted
Accounting Practice. Other than the change mentioned in the preceding paragraph,
the same accounting policies outlined in the 2002 annual report apply to this
report.
DEFERRED TAX ON FOREIGN TREASURY RESERVES
In the interim results for the six months ended 31 December 2002 the deferred
tax liability on foreign treasury reserves, accrued at 30 June 2002, was
reversed and taken as an income tax credit in the income statement. This was
done following the announcement by the Minister of Finance in his budget speech
that foreign dividends would no longer attract tax. However the legislation in
this regard has still not been enacted. Management has decided that it is
prudent in the meantime to continue to accrue in full for a deferred tax
liability on such reserves.
REVIEW BY THE INDEPENDENT AUDITORS
The financial information set out in this preliminary report has been reviewed,
but not audited, by KPMG Inc. Their unqualified review report is available for
inspection at the company"s registered office.
DIVIDENDS
The final dividend has been increased to 20 cents per share (2002: 15 cents)
giving a total dividend for the year of 30 cents per share (2002: 45 cents).
On behalf of the Board
WGL Bateman AG Fletcher
Chairman Executive Deputy Chairman
Sandton
29 September 2003
DECLARATION OF DIVIDENDS
PREFERENCE DIVIDEND NO 105
Notice is hereby given that the directors of ELB Group Limited (ELB) have
declared a preference dividend for the year ended 30 June 2003, at the rate of
6% per annum on the 6% fixed cumulative redeemable preference shares of R2 each
equivalent to 6 cents per share. The last day to trade "cum" the dividend will
be Friday, 17 October 2003. The preference shares will commence trading "ex" the
dividend from the commencement of business on Monday, 20 October 2003 and the
record date will be Friday, 24 October 2003. Payment will be made on Monday, 27
October 2003. Preference share certificates may not be dematerialised or
rematerialised from Monday, 20 October 2003 until Friday, 24 October 2003, both
dates inclusive.
ORDINARY DIVIDEND NUMBER 111
The directors of ELB Group Limited (ELB) have declared a dividend, no 111 of 20
cents per share, being the final dividend for the year ended 30 June 2003. The
last day to trade "cum" the dividend will be Friday, 17 October 2003. The
ordinary shares of ELB will commence trading "ex" the dividend from the
commencement of business on Monday, 20 October 2003 and the record date will be
Friday, 24 October 2003. Payment will be made on Monday, 27 October 2003.
Ordinary share certificates may not be dematerialised or rematerialised from
Monday, 20 October 2003 until Friday, 24 October 2003, both dates inclusive.
By order of the Board
DG Jones Boksburg
Secretary 23 September 2003
Share transfer secretaries
Computershare Limited
70 Marshall Street
Johannesburg 2001
(PO Box 1053, Johannesburg 2000)
Sponsor
Rand Merchant Bank Corporate Finance
A division of FirstRand Bank Limited
One Merchant Place
Cnr Fredman Drive & Rivonia Road
Sandown 2196
Sandton
Auditors
KPMG Inc
KPMG Crescent
85 Empire Road
Parktown 2193
Johannesburg
Date: 29/09/2003 05:35:11 PM
Produced by the JSE SENS Department
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