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ELB - Preliminary Report And Dividend Announcement for the year ended 30 June
ELB GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number 1930/002553/06
Share codes: ELR ELRP
ISIN: ZAE000035101 ZAE000035333
(`ELB`)
PRELIMINARY REPORT AND DIVIDEND ANNOUNCEMENT
for the year ended 30 June 2004
GROUP INCOME STATEMENT
--------------------------------------------------------------
Reviewed Audited
Year Year
ended ended
30 June 04 30 June 03
R000 R000
--------------------------------------------------------------
Sales revenue 580 332 554 685
Net operating costs excluding
depreciation and amortisation (548 648) (526 064)
--------------------------------------------------------------
Operating profit before depreciation,
amortisation and abnormal items 31 684 28 621
Depreciation and amortisation (8 524) (14 673)
--------------------------------------------------------------
Operating profit before abnormal
items 23 160 13 948
Abnormal items as detailed below: net
income - 3 159
--------------------------------------------------------------
Profit from operations 23 160 17 107
Net treasury income 4 113 8 646
Translation loss of foreign treasury
cash (13 622) (26 248)
--------------------------------------------------------------
Profit/(loss) before tax 13 651 (495)
Income tax expense (9 393) (3 451)
Net tax reversal on foreign treasury
reserves 14 071 -
--------------------------------------------------------------
Profit/(loss) after tax 18 329 (3 946)
Minority interest (2 157) 8 421
--------------------------------------------------------------
Net profit 16 172 4 475
--------------------------------------------------------------
ABNORMAL ITEMS
Capital items
Net recovery from discontinued
operation - 4 479
Impairment of plant and equipment not
in use - (1 320)
--------------------------------------------------------------
Net abnormal capital items: - 3 159
net income
--------------------------------------------------------------
RECONCILIATION OF GROUP HEADLINE EARNINGS
--------------------------------------------------------------
Reviewed Audited
Year Year
ended ended
30 June 04 30 June 03
R000 R000
--------------------------------------------------------------
Net profit for the year per the
income statement 16 172 4 475
Deduct: Capital items as below: (361) 5 351
-----------------------
Net abnormal capital items before tax
as detailed in the income statement - 3 159
Capital items included in operating
profit before abnormal items:
Profit on disposal of plant and
equipment 114 306
Goodwill amortisation (543) (543)
Income tax effect of capital items (34) 2 323
Minority interest in capital items 102 106
-----------------------
--------------------------------------------------------------
Headline earnings/(loss) 16 533 (876)
--------------------------------------------------------------
Weighted average number of shares
(excluding treasury shares) on which
basic earnings per share are
based (000`s) 27 974 28 880
Headline earnings/(loss) per ordinary
share (cents)
- basic 59,1 (3,0)
- fully diluted 58,8 (3,0)
Earnings per ordinary share (cents)
- basic 57,8 15,5
- fully diluted 57,5 15,4
Dividends declared for the year per
ordinary share (cents) 30,0 30,0
--------------------------------------------------------------
SEGMENT ANALYSIS
--------------------------------------------------------------
Reviewed Audited
Year Year
ended ended
30 June 04 30 June 03
R000 R000
--------------------------------------------------------------
Sales revenue
Continuing operations
ELB Equipment Holdings 453 253 406 120
ELB McWade Electrical 72 099 73 335
ELB Timber Holdings 54 980 49 361
--------------------------------------------------------------
Total continuing operations 580 332 528 816
Discontinued operations
Safbin Systems - 25 817
Other - 52
--------------------------------------------------------------
Total 580 332 554 685
--------------------------------------------------------------
HEADLINE EARNINGS/(LOSS)
Continuing operations
ELB Equipment Holdings 15 842 23 598
ELB McWade Electrical 8 856 5 121
ELB Timber Holdings (11 548) 964
--------------------------------------------------------------
Continuing operations before
adjustments below 13 150 29 683
ELB Equipment Holdings 4 536 (18 374)
-----------------------
Translation loss of foreign
treasury cash - before tax (13 622) (26 248)
Tax credit on translation loss of
foreign treasury cash 4 087 7 874
Net tax reversal on foreign
treasury reserves 14 071 -
-----------------------
ELB Timber Holdings
Prior year tax adjustment (1 153) -
--------------------------------------------------------------
Total continuing operations 16 533 11 309
Discontinued operations
Safbin Systems - (12 910)
Other - 725
--------------------------------------------------------------
Headline earnings/(loss) 16 533 (876)
Capital items
Continuing operations (361) (222)
Discontinued operations - 5 573
--------------------------------------------------------------
Net profit 16 172 4 475
--------------------------------------------------------------
GROUP BALANCE SHEET
--------------------------------------------------------------
Reviewed Audited
30 June 04 30 June 03
R000 R000
--------------------------------------------------------------
Assets
Non current assets 34 152 30 674
-----------------------
Property, plant and equipment 24 848 18 813
Intangible assets 4 211 5 527
Deferred tax assets 5 093 6 334
-----------------------
Current assets 346 811 387 519
-----------------------
Inventories 164 209 128 603
Debtors and prepayments 54 550 60 246
Cash and cash equivalents 128 052 198 670
--------------------------------------------------------------
Total assets 380 963 418 193
--------------------------------------------------------------
EQUITY AND LIABILITIES
Capital and reserves 149 046 147 124
Issued capital 25 192 10 253
Treasury shares (23 563) (7 927)
Reserves 750 750
Accumulated profit 146 667 144 048
Preference shares 8 8
Minority interest 3 478 1 521
--------------------------------------------------------------
Total equity 152 532 148 653
Non current liabilities 1 686 16 580
Interest bearing borrowings 385 664
Deferred tax liabilities 1 301 15 916
Current liabilities 226 745 252 960
Non interest bearing creditors and
accruals 148 167 186 895
Interest bearing creditors 47 894 46 930
Short term borrowings and bank
overdrafts 30 684 19 135
--------------------------------------------------------------
Total equity and liabilities 380 963 418 193
--------------------------------------------------------------
Ordinary shares in issue (000`s) 33 860 30 860
Deduct: Treasury shares in issue
(000`s) 6 559 1 970
--------------------------------------------------------------
Ordinary shares in issue on which net
asset value per share is calculated 27 301 28 890
--------------------------------------------------------------
Net asset value per share (cents) 546 509
--------------------------------------------------------------
Note
At 30 June 2004 there was a capital commitment of R170 000 (30 June 2003 - R347
000).
--------------------------------------------------------------
GROUP CASH FLOW STATEMENT
--------------------------------------------------------------
Reviewed Audited
Year Year
ended ended
30 June 04 30 June 03
R000 R000
--------------------------------------------------------------
Cash (outflow)/inflow from operating
activities before dividends paid (55 921) 62 824
Dividends paid (8 707) (7 609)
--------------------------------------------------------------
Cash (outflow)/inflow from operating
activities (64 628) 55 215
Cash outflow from investment (11 517) (19 672)
activities
Cash outflow from financing activities (6 022) (8 308)
--------------------------------------------------------------
(Decrease)/increase in net cash and
cash equivalents (82 167) 27 235
Net cash and cash equivalents at the
beginning of the year 179 535 153 981
Bank overdraft less cash of subsidiary
at acquisition - (590)
Net cash of Safbin Systems on
liquidation - (1 091)
--------------------------------------------------------------
Net cash and cash equivalents at the
end of the year 97 368 179 535
GROUP
--------------------------------------------------------------
STATEMENT OF CHANGES IN CAPITAL AND RESERVES
-----------------------------------------------------------------
Reviewed Audited
Accu- Total Total
Issued Treasury mulated 30 June 30 June
capital shares Reserves profit 2004 2003
R000 R000 R000 R000 R000 R000
-----------------------------------------------------------------
Balance at the beginning of the year
As pre-
viously 10 253 - 750 142 530 153 533 164 983
stated
Prior year adjustment
Consolidation
of share incentive trusts
Reallo- (7 927) (7 927) (7 741)
cation of
loan
accounts
Reversal
of im- 1 518 1 518 378
pairments
Dividends on
treasury shares
in the 2003
financial year
Allocated
to net
operating
costs as
employment (480) (480)
expenses
Reduction
in amounts
reflected
As 480 480
dividends
paid
-----------------------------------------------------------------
As 10 253 (7 927) 750 144 048 147 124 157 620
restated
Movement in
issued capital
Shares
issued for 15 000 15 000 -
cash
Shares
issued
under the
share
incentive - - 300
schemes
Listing (61) (61) (1)
fees and
securities
tax
Movement
in
treasury
shares
Loan to (19 742) (19 742) -
the ELB
Partici-
pants
Share
Trust
Decrease/
(increase)
in incentive
share trust
loan accounts 4 106 4 106 (204)
Movement in
accumulated profit
Net profit
for the year 16 172 16 172 4 475
Translation adjustments of
foreign entities (5 046) (5 046) (7 846)
Final dividend
for the (5 778) (5 778) (4 331)
previous year
Interim
dividend for
the current (2 729) (2 729) (2 889)
year
-----------------------------------------------------------------
Balance
at the 25 192 (23 563) 750 146 667 149 046 147 124
end of
the
year
-----------------------------------------------------------------
COMMENTS
INTRODUCTION
ELB is an investment holding company comprising three trading segments namely
ELB Equipment Holdings, ELB McWade Electrical and ELB Timber Holdings.
FINANCIAL RESULTS
The results for the year to 30 June 2004 reflect the ongoing progress being made
to rebuild the ELB Group, with a recorded net profit of R16,2 million (2003 -
R4,5 million) and headline earnings of R16,5 million (2003 - loss R0,9 million).
ELB Equipment Holdings showed headline earnings of R15,8 million (2003 - R23,6
million), before the adjustments detailed in the segment analysis, which was in
line with targets. The reduced level of profitability compared to the previous
year is attributable to lower interest rates and lower profitability associated
with the equipment business.
ELB McWade Electrical made headline earnings of R8,9 million (2003 - R5,1
million), which was also in line with targets. Subsequent to the year end, and
to ensure the necessary level of empowerment, agreement was reached to dispose
of ELB`s 80 per cent share in this business to management for R30 million.
The agreement is subject to shareholder approval at a meeting to be held on 29
September 2004.
ELB Timber Holdings, which reported a headline loss of R11,5 million (2003 -
R1,0 million profit) before a prior year tax adjustment, has been affected by
the strong Rand and start up and commissioning costs. The entire shareholding in
a company renamed ELB Ultrabord (Pty) Limited was acquired during the year for
R5,25 million. Ultrabord is involved in the production of particle board. The
plant has been overhauled and recommissioned and is now producing to the
required specification.
PROSPECTS
ELB Equipment Holdings level of profitability for the coming year will depend on
the current level of activity in the market being maintained.
ELB Timber Holdings remains committed to building a capability to produce and
market higher value products. Although the year ahead is not expected to be
profitable, every effort is being made to reduce the losses.
ACCOUNTING POLICIES
The share trusts in the Group have been consolidated for the first time, giving
rise to treasury shares, and the previous year`s numbers have been restated
accordingly.
Apart from this change, accounting policies are consistent with those applied in
the previous financial year ended 30 June 2003, and comply with the South
African Companies Act and South African Statements of Generally Accepted
Accounting Practice.
DEFERRED TAX ON FOREIGN TREASURY RESERVES
As disclosed in the annual report for the year ended 30 June 2003 and the
interim report for the six months ended 31 December 2003, management deemed it
prudent to continue to accrue in full for the deferred tax liability on the
foreign treasury reserves until legislation regarding the tax exemption of
foreign dividends had been enacted. The legislation is now in force and a net
tax reversal of R14 071 000 in respect of the reserves has been made at 30 June
2004.
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 ordinary dividend has been maintained at 20 cents per share.
On behalf of the Board
WGL Bateman AG Fletcher
Chairman Executive Deputy Chairman
Boksburg
23 September 2004
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DIVIDENDS
-----------------------------------------------------------------
The directors have declared the following final dividends for the year ended 30
June 2004.
-----------------------------------------------------------------
PREFERENCE DIVIDEND NUMBER 107
-----------------------------------------------------------------
A dividend at the rate of 6% per annum on the 6% fixed cumulative redeemable
preference shares of R2 each, equivalent to 6 cents per share.
-----------------------------------------------------------------
ORDINARY DIVIDEND NUMBER 113
-----------------------------------------------------------------
A dividend of 20 cents per share on the ordinary shares.
The salient dates in respect of both dividends are:
-----------------------------------------------------------------
Last day to trade cum dividend Friday, 15 October 2004
Shares commence trading ex dividend Monday, 18 October 2004
Record date Friday, 22 October 2004
Date of payment Monday, 25 October 2004
-----------------------------------------------------------------
Shares may not be dematerialised or rematerialised between Monday, 18 October
2004, and Friday, 22 October 2004, both dates inclusive.
By order of the Board
DG Jones Boksburg
Secretary 28 September 2004
REGISTERED OFFICE
Founders I Building, Bateman Campus, Bartlett Road, Boksburg North, 1459
SHARE TRANSFER SECRETARIES
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
SPONSOR
Rand Merchant Bank Corporate Finance
(A division of FirstRand Bank Limited)
1 Merchant Place, Cnr Fredman Drive & Rivonia Road,
Sandton, 2196
Auditors
KPMG Inc
KPMG Crescent, 85 Empire Road, Parktown, Johannesburg, 2193
Date: 28/09/2004 12:40:37 PM
Produced by the JSE SENS Department
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