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ELR ELRP
ELR
ELR / ELRP - ELB Group Limited - Unaudited Group Interim Report for the six
months ended 31 December 2006 and dividend declaration
ELB GROUP LIMITED (ELB)
Incorporated in the Republic of South Africa
Registration number 1930/002553/06
Share codes: ELR & ELRP
ISIN: ZAE000035101 & ZAE000035333
UNAUDITED GROUP INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 06 31 Dec 05 30 June 06
R000 R000 R000
Continuing operations
Sales revenue 389 643 268 119 590 717
Net operating costs excluding (355 387) (250 978) (552 117)
depreciation
Operating profit before depreciation 34 256 17 141 38 600
and abnormal items
Depreciation (1 679) (1 080) (2 433)
Operating profit before abnormal items 32 577 16 061 36 167
Abnormal items as detailed below - (1 038) (1 873)
Profit from operations 32 577 15 023 34 294
Interest received 5 732 3 449 6 525
Interest paid (3 512) (2 276) (4 557)
Profit before tax 34 797 16 196 36 262
Income tax expense (11 597) (5 212) (11 896)
Profit from continuing operations 23 200 10 984 24 366
Discontinued operations
Loss from discontinued operations (18 407) (3 988) (22 487)
Profit for the period 4 793 6 996 1 879
Attributable to:
Ordinary shareholders of ELB Group
Limited
Continuing operations 19 482 11 086 24 358
Discontinued operations (18 407) (3 988) (22 487)
1 075 7 098 1 871
Minority interest
Continuing operations 3 718 (102) 8
4 793 6 996 1 879
ABNORMAL ITEMS (continuing operations)
Operating items
Relocation of operations - (925) (931)
Interest on revised tax assessments of - (113) (92)
subsidiary
- (1 038) (1 023)
Capital item
Restructure of ELB operations - - (850)
incorporating the introduction of BEE
partners
Total abnormal items: expense - (1 038) (1 873)
LOSS FROM DISCONTINUED OPERATIONS
ELB Timbers
Loss from operations (2 407) (3 988) (12 822)
Capital items
Impairment of assets (12 000) - (6 389)
Impairment of assets - reduction in - - 983
deferred tax liability
Impairment of deferred rent expense - - (3 259)
Retrenchment costs (4 000) - (700)
Other discontinuance costs - - (300)
Loss from discontinued operations (18 407) (3 988) (22 487)
GROUP BALANCE SHEET
Unaudited Unaudited Audited
31 Dec 06 31 Dec 05 30 Jun 06
R000 R000 R000
ASSETS
Non current assets 33 518 53 500 37 118
Property, plant and equipment 27 140 41 935 29 687
Deferred rent expense - 3 459 -
Deferred tax assets 6 378 8 106 7 431
Current assets 452 088 322 036 486 766
Inventories and construction contracts 237 401 193 364 231 382
in progress
Receivables and other current assets 76 758 44 339 98 127
Income tax recoverable 320 1 067 382
Non current assets of discontinued 5 756 - 5 337
operations held for sale
Cash and cash equivalents 131 853 83 266 151 538
Total assets 485 606 375 536 523 884
EQUITY AND LIABILITIES
Attributable to ordinary shareholders 161 393 163 930 162 061
of ELB
Share capital 25 192 25 192 25 192
Treasury shares (23 840) (23 325) (24 098)
Reserves (10 595) (16 803) (11 315)
Retained earnings 170 636 178 866 172 282
Preference shares 8 8 8
Total equity attributable to equity 161 401 163 938 162 069
holders of ELB
Minority interest 4 510 105 665
Total equity 165 911 164 043 162 734
Non current liabilities 8 994 12 483 9 613
Interest bearing borrowings 8 994 11 432 9 613
Deferred tax liabilities - 1 051 -
Current liabilities 310 701 199 010 351 537
Non interest bearing payables and 200 516 160 884 246 851
other current liabilities
Interest bearing creditors 99 262 34 329 94 954
Income tax payable 8 323 3 797 7 904
Liabilities associated with non 2 600 - 1 828
current assets of discontinued
operations held for sale
Total equity and liabilities 485 606 375 536 523 884
Ordinary shares in issue (000`s) 33 860 33 860 33 860
Deduct: Treasury shares in issue 6 648 6 494 6 708
(000`s)
Ordinary shares in issue on which net 27 212 27 366 27 152
asset value per share is calculated
Net asset value per share (cents) 593 599 597
Capital commitments
At 31 December 2006 there were no capital commitments (31 December 2005 - R36
000, 30 June 2006 - R649 000).
Contingent liabilities
ELB Engineering Services operates in the engineering contracting business and
is exposed to the risks associated with engineering contracts. These risks
are managed on the basis of limited liability. All known liabilities of the
Group have been accrued and the directors were not aware of any contingent
liabilities requiring possible additional accruals.
GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
31 Dec 06 31 Dec 05 30 June 06
R000 R000 R000
Cash (outflow)/inflow from operating (11 839) (13 149) 58 801
activities before dividends paid
Dividends paid (2 721) (1 368) (2 725)
Cash (outflow)/inflow from operating (14 560) (14 517) 56 076
activities
Cash outflow from investment (5 630) (8 131) (10 860)
activities
Cash inflow from financing activities 505 2 448 2 856
(Decrease)/increase in cash and cash (19 685) (20 200) 48 072
equivalents
Cash and cash equivalents at the 151 538 103 466 103 466
beginning of the period
Cash and cash equivalents at the end 131 853 83 266 151 538
of the period
RECONCILIATION OF GROUP HEADLINE EARNINGS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 06 31 Dec 05 30 June 06
R000 R000 R000
Profit attributable to ordinary 1 075 7 098 1 871
shareholders per the income statement
Deduct: Capital items as below: (15 758) 128 (10 208)
Capital items detailed in the income
statement:
Continuing operations
Restructure of ELB operations - - (850)
incorporating the introduction of BEE
partners
Discontinued operations
Impairment of assets (12 000) - (6 389)
Impairment of assets - - 983
- reduction in deferred tax liability
Impairment of deferred rent expense - - (3 259)
Retrenchment costs (4 000) - (700)
Other discontinuance costs - - (300)
Profit on disposal of plant and
equipment
Included in operating profit of 190 181 375
continuing operations before abnormal
items
Included in operating loss of 128 - 41
discontinued operations
Income tax effect (56) (53) (109)
Minority interest (20) - -
Headline earnings 16 833 6 970 12 079
Attributable to:
Continuing operations 19 368 10 958 24 942
Discontinued operations (2 535) (3 988) (12 863)
16 833 6 970 12 079
Weighted average number of shares 27 170 27 356 27 315
(excluding treasury shares) on which
basic earnings per share are based
(000`s)
Headline earnings of continuing
operations, per ordinary share (cents)
- basic and diluted 71,3 40,1 91,3
Headline earnings per ordinary share
(cents)
- basic and diluted 62,0 25,5 44,2
Earnings per ordinary share (cents)
- basic and diluted 4,0 25,9 6,8
Dividends declared in respect of the 10 5 15
current period, per ordinary share
(cents)
SEGMENT ANALYSIS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Dec 06 31 Dec 05 30 June 06
R000 R000 R000
SEGMENT REVENUE
Continuing operations
ELB Engineering 389 643 268 119 590 717
Discontinued operations
ELB Timbers 44 841 50 444 102 964
Total 434 484 318 563 693 681
SEGMENT RESULTS
Headline earnings/(loss)
Continuing operations
ELB Engineering 20 638 12 674 27 751
ELB Group overheads borne by the (1 270) (678) (1 786)
holding company
Continuing operations before items 19 368 11 996 25 965
listed below
ELB Engineering - (1 038) (1 023)
Abnormal operating items:
Relocation of operation - (925) (931)
Interest on revised tax assessments of - (113) (92)
subsidiary
Total continuing operations 19 368 10 958 24 942
Discontinued operations
ELB Timbers (2 535) (3 988) (12 863)
Headline earnings 16 833 6 970 12 079
Capital items
Continuing operations 114 128 (584)
Discontinued operations (15 872) - (9 624)
Profit attributable to ordinary 1 075 7 098 1 871
shareholders
GROUP STATEMENT OF CHANGES IN EQUITY
ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF ELB
Share Treasury Reserves Retained Total
capital shares R000 earnings R000
R000 R000 R000
Balance at 30 June 2005 25 192 (23 366) (13 721) 173 136 161 241
Foreign currency 2 406 2 406
translation adjustments for
foreign operations
Profit for the year 1 871 1 871
Total recognised income and - - 2 406 1 871 4 277
expense for the year
Ordinary dividends paid (2 725) (2 725)
The ELB Participants Share
Trust
Additional shares acquired (1 006) (1 006)
Share incentive trusts
Paid up shares released by 274 274
the trusts
Acquisition of 15% interest
in ELB Engineering Limited
by the ELB Educational
Trust for Historically
Disadvantaged South
Africans
Total changes for the year - (732) 2 406 (854) 820
Balance at 30 June 2006 25 192 (24 098) (11 315) 172 282 162 061
Foreign currency 720 720
translation adjustments for
foreign operations net of
deferred tax
Profit for the period 1 075 1 075
Total recognised income and - - 720 1 075 1 795
expense for the period
Ordinary dividends paid (2 721) (2 721)
ELB Share Incentive Trust
Paid up shares released by
the Trust
258 258
Total changes for the - 258 720 (1 646) (668)
period
Balance at 31 December 2006 25 192 (23 840) 170 636 161 393
(10595)
Balance at 30 June 2005 25 192 (23 366) (13 721) 173 136 161 241
Foreign currency (3 082) (3 082)
translation adjustments for
foreign operations
Profit/(loss) for the 7 098 7 098
period
Total recognised income and - - (3 082) 7 098 4 016
expense for the period
Ordinary dividends paid (1 368) (1 368)
Share incentive trusts
Paid up shares released by 41 41
the trusts
Total changes for the - 41 (3 082) 5 730 2 689
period
Balance at 31 December 2005 25 192 (23 325) 178 866 163 930
(16803)
GROUP STATEMENT OF CHANGES IN EQUITY CONTINUED:
Preference Minority Unaudited
shares R000 interest Total equity
R000 R000
Balance at 30 June 2005 8 207 161 456
Foreign currency translation 2 406
adjustments for foreign
operations
Profit for the year 8 1 879
Total recognised income and - 8 4 285
expense for the year
Ordinary dividends paid (2 725)
The ELB Participants Share Trust
Additional shares acquired (1 006)
Share incentive trusts
Paid up shares released by the 274
trusts
Acquisition of 15% interest in 450 450
ELB Engineering Limited by the
ELB Educational Trust for
Historically Disadvantaged South
Africans
Total changes for the year - 458 1 278
Balance at 30 June 2006 8 665 162 734
Foreign currency translation 127 847
adjustments for foreign
operations net of deferred tax
Profit for the period 3 718 4 793
Total recognised income and - 3 845 5 640
expense for the period
Ordinary dividends paid (2 721)
ELB Share Incentive Trust
Paid up shares released by the
Trust
Total changes for the period - 3 845 3 177
Balance at 31 December 2006 8 4 510 165 911
Balance at 30 June 2005 8 207 161 456
Foreign currency translation (3 082)
adjustments for foreign
operations
Profit/(loss) for the period (102) 6 996
Total recognised income and - (102) 3 914
expense for the period
Ordinary dividends paid (1 368)
Share incentive trusts
Paid up shares released by the 41
trusts
Total changes for the period - (102) 2 587
Balance at 31 December 2005 8 105 164 043
COMMENTS
INTRODUCTION
ELB is an investment holding company with two investments namely ELB
Engineering and ELB Timbers.
FINANCIAL RESULTS
The results for the six months to 31 December 2006 reflect headline earnings
from continuing operations of R19,4 million (2005 - R11,0 million)
representing an increase of 76,7 per cent.
ELB Engineering traded satisfactorily for the period reporting a profit after
tax of R24,5 million (2005 - R11,7 million). Turnover for the period was
R389,6 million (2005 - R268,1 million). The ELB Equipment division had a good
six months exceeding budget as did Ditch Witch in Australia. ELB Engineering
Services is now an established business and trading profitably.
ELB Timbers is dependent on purchasing logs on the open market in order to
manufacture veneer to be used in the production of plywood and furniture
components. With a further increase in the price of logs anticipated for the
coming year of approximately 30 per cent, or 130 per cent over the last three
years, ELB Timbers has not been able to secure logs at low enough prices to
be able to trade profitably. As a result it has been decided to discontinue
operations and realise the assets of the business. The trading loss for the
six months was R2,4 million (2005 - loss R4,0 million). Provisions of R16,0
million have been made to cover shut down costs.
PROSPECTS
The global resources and power industry sectors continue to offer numerous
opportunities and therefore ELB Engineering is expected to have a
satisfactory second six months. Provided exchange rates and interest rates
remain stable, ELB is well positioned to achieve its objective of growing
earnings from continuing operations as compared to the previous year.
DIRECTORATE
During the period Messrs Guy Smith and John Hall having reached mandatory
retirement age retired as directors of ELB. Their committed service and
outstanding contribution over the years is much appreciated.
DIVIDENDS
An interim dividend of 10 cents (2005 - 5 cents) per ordinary share has been
declared.
ACCOUNTING POLICIES
The unaudited interim financial statements have been prepared in accordance
with International Accounting Standard (IAS) 34, Interim Financial Reporting.
Accounting policies accord with International Financial Reporting Standards
(IFRS), and are consistent with those applied in the financial year ended 30
June 2006. The interim financial statements also comply with the South
African Companies Act 1973, as amended.
Comparative amounts in the group income statement, the reconciliation of
group headline earnings and the segment analysis have been reallocated
between continuing and discontinued operations.
On behalf of the Board
AG Fletcher Boksburg
Chairman 16 March 2007
DIVIDENDS
Shareholders are referred to the dividend announcement published on the
Securities Exchange News Service (SENS) on 15 March 2007. Details are
republished below for information.
The directors have declared the following interim dividends for the six month
period ended 31 December 2006.
PREFERENCE DIVIDEND NUMBER 112
An interim dividend at the rate of 6% per annum has been declared on the 6%
fixed cumulative redeemable preference shares of R2 each, equivalent to 6
cents per share.
ORDINARY DIVIDEND NUMBER 118
An interim dividend of 10 cents per share has been declared on the ordinary
shares.
The salient dates in respect of both dividends are:
Date of declaration Thursday, 15 March 2007
Last day to trade cum dividend Friday, 13 April 2007
Shares commence trading ex dividend Monday, 16 April 2007
Record date Friday, 20 April 2007
Date of payment Monday, 23 April 2007
Share certificates may not be dematerialised or rematerialised between
Monday, 16 April 2007, and Friday, 20 April 2007, both dates inclusive.
By order of the Board
DG Jones Boksburg
Secretary 15 March 2007
REGISTERED OFFICE
ELB Equipment,
14 Atlas Road,
Anderbolt,
Boksburg,
1459
SHARE TRANSFER SECRETARIES
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street,
Johannesburg, 2001
(PO Box 61051,
Marshalltown, 2107)
SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)
1 Merchant Place,
Cnr Fredman Drive &
Rivonia Road,
Sandton, 2196
DIRECTORS
AG Fletcher (chairman), PJ Blunden (chief executive - ELB Equipment), T de
Bruyn,* Dr JP Herselman,* Dr SJ Meijers (chief executive - ELB Engineering
Services), MV Ramollo,
*Non executive
Date: 16/03/2007 13:03:59 Produced by the JSE SENS Department.
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