23 July 2018 05:52:10 AM

ELB Group saw an improvement of 63% in sales

- 2018-03-14 02:54:01 PM

ELB Group Limited

Highlights:

-   Growth in sales and profitability across all group segments
-   Significant progress made on major projects contributing to improvement in sales
-   Sales increased to R1 715 million from R1 054 million
-   Profit for the period increased to R52 million from R46 million
-   Headline earnings per share increased to 158 cents from 142 cents
-   Order book remains resilient in a tough trading environment
-   Interim cash dividend declared of 32 cents per share

FINANCIAL RESULTS

Due to the project nature of the Engineering Services segment of the Group there is no consistent correlation between sales and profits in reporting periods.

Sales for the period improved by 63% to R1 715 million in 2017 from R1 054 million in 2016. The increase has mainly been in the Engineering Services segment due to
the progression of major projects, but there were also significant increases in sales in the Equipment and Australasia segments.

Profit before tax for the period increased by 20% to R80 million in 2017 from a profit of R66 million in 2016.

Profit for the period attributable to ELB shareholders increased to R45 million in 2017 from R41 million in 2016.

Total comprehensive income for the period attributable to ELB shareholders increased to R38 million in 2017 from R24 million in 2016, after taking into account the translation of the Group's foreign operations and other comprehensive income remeasurements.

Headline earnings per share for the period increased by 11% to 158 cents from 142 cents in 2016.

The net asset value per share increased to 2 613 cents from 2 530 cents at 30 June 2017.

OPERATIONS

Equipment

Sales increased to R485 million in 2017 from R410 million in 2016 and profit before tax increased to R47 million in 2017 from R43 million in 2016. The increase in sales is due to improving market demand and increased market penetration, particularly in the heavier mining, earthmoving and crushing and screening equipment. The demand for
some commodities has continued to improve as result of the international economic recovery, driving equipment demand. The increase in profit before tax is due to the
aforementioned increase in sales, along with the positive impact of the strengthening rand.

Engineering Services

Sales increased to R974 million in 2017 from R452 million in 2016. The increase is primarily due to the progress made on major projects. Profit before tax increased marginally to R24 million in 2017 from R23 million in 2016. The profit for the period was impacted by the stage of completion achieved on these major projects, the close
out of successful projects, costs associated with the ongoing delays in the award or commencement of certain new projects, higher finance costs as a result of increased
working capital requirements and foreign exchange gains as a result of the strengthening of the rand.

Australasia

Sales increased to R256 million in 2017 from R191 million in 2016 while profit before tax increased to R16 million in 2017 from a profit before tax of R7 million in 2016. Notwithstanding the impact of a stronger rand on the translation of the Australasia results, this segment has had an exceptionally good period compared to the prior period
owing to the continued recovery of volumes and margins and the growth in the green waste management segment. The successful management of costs has contributed to the profitability of the business in the current period.

CASH FLOW

The Group had a net cash outflow from operating activities of R48 million, compared to a net cash inflow from operating activities of R286 million in the prior period, with
a decrease in net cash and cash equivalents to R363 million from R437 million at the prior year end. The net cash outflow and decrease in cash for the period is primarily as a result of the increased working capital commitments on major projects in progress, which are expected to reverse as project milestones are achieved.

Cash flow management remains a high priority for the Group and ELB works closely with its bankers, suppliers and customers to ensure the Group continues to maintain a
strong balance sheet at all times.

PROSPECTS

The Group continues to target a number of opportunities that if successful should further position the Group favourably for the next twenty-four to thirty-six months. The Group is confident that it can harness the opportunities as they present themselves and deliver on our strategy.

CHANGES TO THE BOARD OF DIRECTORS

With effect from 23 November 2017, Ms Buyisiwe Makhunga and Ms Refilwe Nkabinde were appointed to the Board of directors of ELB as independent non-executive directors.

DIVIDEND

In light of the ongoing tough trading environment, the Board has declared an interim dividend of 32 cents (2016: 32 cents) per ordinary share.

 

 
 

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