A N N U A L R E P O R T

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E L B G R O U P

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Chairman's statement 2

Corporate governance 4

Board of directors 6

Eight year review 7

Financial highlights 8

Annual financial statements

Directors' resonsibility for financial reporting 9

Certificate by the company secretary 9

Independent auditor’s report 10

Directors' report 11

Accounting policies 13

Income statements 18

Balance sheets 19

Statements of changes in equity 20

Cash flow statements 22

Notes to the annual financial statements 23

Subsidiaries and joint venture 56

Analysis of ordinary shareholders 57

Directors' interests in ordinary shares 57

Analysis of transactions in ordinary shares 58

Shareholders' diary 58

Administration 59

Notice of annual general meeting 60

Proxy form Insert

Notes to the proxy form Insert

Contents

1

ELB is an investment holding company owning 85 per cent ofELB Engineering Limited (ELB Engineering).

The remaining 15 per cent is owned by a Trust established byELB to assist in the education of historically disadvantagedSouth Africans specifically in the areas of maths and science.

The ELB Engineering Group currently comprises ELBEquipment, Ditch Witch Australia and ELB Engineering Services.

ELB ENGINEERING GROUP

ELB EQUIPMENT has a number of locally designed and manu-factured products and represents internationally renowned man-ufacturers whose products are designed to meet industrialisedfirst-world standards. Operating in three specialised divisions,each with responsibility for specific products, it provides astreamlined and professional service that can offer the industrya wide selection of products.

Construction Equipment

● Ditch Witch Trenching & Directional Drilling Equipment● MST Backhoe Loaders● Mitsubishi Motor Graders● Simesa Compaction Equipment **

Earthmoving Equipment

● Furukawa Wheel Loaders● Kawasaki Wheel Loaders● Sumitomo Tracked Excavators

Mining / Quarrying Equipment

● Allu-SM Screener-Crusher Buckets● Furukawa Drill Rigs● Furukawa Hydraulic Breakers● Taurus Heavy Duty Rotary Barrel Screens **● ELB Static & Mobile Conveyors **● Pegson Mobile & Static Crushing Plants● Oresizer Vertical Shaft Impact Crushers **● Powerscreen Mobile & Static Screens● Simesa Underground Equipment **

** Designed and manufactured by ELB Equipment

In order to service its customer base effectively, ELB Equipmentbased in Boksburg has branches in Cape Town, Durban,Kimberley and Wolmaransstad as well as a well-establisheddealer network throughout South Africa and other SouthernAfrican states. In addition to offering parts and field service

round-the-clock, a large centralised and fully equipped refurbish-ing facility is available for rebuilding and refurbishing of ELBEquipment products.

DITCH WITCH AUSTRALIA is an importer and distributor ofUnderground and Utility Construction Equipment.

Product Lines include

● Ditch Witch Trenching and Directional Drilling Equipment● Stanley Hydraulic Packs and Tools● Trenchmaster Mini Trencher● Bedmaster Bed Defining Machine● McLaughlin Case Boring Equipment, Augers and Cutter

Heads● Vacuum Excavation Equipment● Belle Concrete and Mortar Mixers and Compaction

Equipment● Soltau Microtunnelling Systems● Wirth Horizontal Directional Drilling Equipment

Markets served in Australia are gas, water, sewage, electricity,communications, the Defence Force and airports and dockauthorities.

Ditch Witch Australia distributes direct through sales and serviceoffices in Sydney, Melbourne, Adelaide, Perth and Brisbane.

ELB ENGINEERING SERVICES has made solid advances sinceits inception early in 2005 over the past year. The businessfocuses on the supply of a total engineered solution to the min-ing, industrial and power sectors based on its own in housecapability as well as technology agreements with world classproduct and know how companies.

Bulk Materials Handling

Augmenting the in house expertise base, ELB EngineeringServices has an exclusive license with FAM, Germany. Thecapability encompasses the supply of turn key packages fromrun of mine tip to ship loading including all conveyor options,stockyard equipment and simulation modelling.

KONECRANES, a world leader in the supply of port handlingequipment is serviced via a technology agreement with ELBEngineering Services for the large part of Africa.

KONECRANES not only provides the engineering of itsequipment to ELB Engineering Services but further providesan ongoing service and maintenance ability, with over 250 000cranes under its control globally.

Chairman’s statement

2

Pneumatic Conveying

ELB Engineering Service’s capability for the supply of most typesof pneumatic conveying is supported by the world class technol-ogy from Claudius Peters. Claudius Peters provides the vastmajority of equipment required for the grinding, handling, cool-ing, mixing, storing and out loading in the Cement, Lime, Ash andGypsum industry.

Coal Beneficiation

ELB Engineering Services provides the materials handling inputsinto the Sedgman coal beneficiation plants. Sedgman is a worldrenowned provider of total solutions from project assessment tooperations, in the field of coal handling and process plants.

DISCONTINUED OPERATIONS

ELB Timbers segment had to be discontinued during the period.The price and availability of suitable logs became such that thisbusiness was no longer considered viable. The shut down is pro-ceeding according to plan.

FINANCIAL RESULTS

The ELB Group saw sales from continuing operations increasefrom R591 million in 2006 to R900 million in 2007 and headlineearnings from continuing operations increase from R24,9 millionin 2006 to R49,3 million in 2007.

These results reflect excellent work done by all concerned toensure ELB shares in the growth opportunities currently avail-able in our sector.

PROSPECTS

The ELB Engineering Group is well positioned to benefit fromboth the ongoing infrastructure spend in Southern Africa andAustralia as well as the increase in capacities and efficienciesbeing implemented by the global resources and power industrysectors. This will be enhanced by the continued growth anddevelopment of our know how and skills base.

DIVIDENDS

The final dividend has been increased from 10 cents in 2006 to20 cents in 2007 reflecting the Board’s confidence in theprospects for the ELB Group going forward.

The total dividend for the year is therefore 30 cents per shareversus 15 cents per share for the 2006 financial year.

CONCLUSION

I would like to thank all those who have contributed to the muchimproved performance of ELB over the past year.

Each year offers its own challenges which will need dedicationand commitment from all those involved.

A G Fletcher19 October 2007

Chairman’s statement(continued)

3

4

The Group is committed to the highest standards of businessintegrity, ethical values and professionalism in all its activities.As an essential part of this commitment the board endorses theprinciples embodied in the King II Report on CorporateGovernance and has materially complied with the King Codethroughout the accounting period under review save for guide-lines regarding the composition of the board of directors asindicated below. The key principles underpinning the gover-nance of the Group are set out in this statement.

BOARD OF DIRECTORS

The Group has a unitary board structure. In line with best prac-tice and to meet the Listings Requirements of the JSE, theroles of the chairman and the senior executive directors havebeen separated. The board is chaired by Mr Anthony Fletcher,whilst the executive management of the operations conductedby the Group is the responsibility of the chief executive officersof the operating subsidiaries. This ensures a balance of author-ity and precludes any one director from exercising unfetteredpowers of decision-making.

At the date of this report, the board of directors comprised sixmembers of whom two are independent non-executive directorswhilst the remaining four members are executive directors. Theimbalance between the number of independent non-executivedirectors and executive directors arose as a result of the manda-tory retirement of Messrs JC Hall and RGH Smith in November2006. The nominations committee is reviewing the situation.

Meetings are held at least five times a year, appropriately timedto review quarterly results and the budget for the forthcomingyear. The agenda includes, as necessary, strategic considera-tions; identification, measurement and management of risk;acquisitions of significance; investment policy and areas ofconcern. Additional board meetings may be convened as andwhen necessary.

The board has established a number of committees in whichthe non-executive directors play an active role and which oper-ate within the defined terms of reference laid down by theboard. All committees are chaired by an independent non-executive director save for the remuneration and nominationscommittee which is chaired by Mr AG Fletcher. All committeeshave met their responsibilities during the year in compliancewith their terms of reference.

THE AUDIT COMMITTEE

The audit committee operates in terms of a mandate from theboard to review the financial statements, the appropriatenessof the Group's accounting and disclosure policies, compliancewith International Financial Reporting Standards and the effec-tiveness of internal controls.

In keeping with this policy, KPMG Inc (KPMG) has been appoint-ed as external auditor whilst BDO Spencer Steward Services (Pty)Ltd (BDO) has been appointed to fulfil the role of internal auditor.Expert advice on non-audit issues is normally obtained from otherthird party professionals save where the use of either KPMG orBDO is deemed more appropriate and no conflict with the respec-tive external and internal audit roles is evident.

The members of the audit committee are the independent direc-

tors, Mr T de Bruyn (chairman) and Dr JP Herselman, and anexecutive director in the person of the chairman of the board, MrAG Fletcher. Both the external auditors and the internal auditorshave unrestricted access to this committee and attend meetingswhenever necessary to report on their findings and to discussaccounting; auditing; risk identification, measurement and mitiga-tion; internal control and financial reporting matters. Executivedirectors responsible for the sub-groups and members of the man-agement teams are invited to attend such meetings whenevertheir presence is considered necessary.

THE REMUNERATION AND NOMINATIONS COMMITTEE

The members of this committee are Messrs AG Fletcher, T deBruyn and Dr JP Herselman. It determines the remuneration strat-egy of the Group and, more specifically, the remuneration of thenon-executive and executive directors and of those executivesand managers who report directly to the chief executive officers ofthe operating subsidiaries. The committee also approves propos-als in respect of certain incentive arrangements.

The remuneration and nominations committee is also responsi-ble for the assessment and nomination of potential new direc-tors. The committee does not have full authority to appoint suchdirectors as such authority vests in the board of directors.Following the appointment of new directors to the board, aninduction programme, which includes visits to the Group'sbusinesses and meetings with senior management, isarranged. All directors are subject to retirement and re-electionby shareholders every three years. In addition, all directors aresubject to election by shareholders at the first opportunity aftertheir initial appointment.

RISK MANAGEMENT

Operational and financial risk management is the responsibility ofthe boards of directors of the Company and of its subsidiaries.Where appropriate, risk management procedures and related con-trols have been implemented and are reported on regularly atboard and management meetings. Further explanation regardingthe identification and management of risk is reflected below underthe heading 'The internal audit function'.

INTERNAL CONTROL

Internal control systems for financial reporting and the safe-guarding of assets have been implemented. These systemsare designed to provide reasonable assurance to managementand the board of directors that Group assets are safeguardedand reliable information is provided in the financial statements.

THE INTERNAL AUDIT FUNCTION

The internal audit function is outsourced to BDO. During thecourse of the June 2007 financial year, the Group continued itsinternal audit programme which integrates the identification andranking of risks inherent in the different operations with an evalua-tion of the systems and internal controls employed in the opera-tions. This process assists in the mitigation of major risks within theGroup, wherever possible. These integrated risk identification andinternal control audits are conducted on a systematic basis toensure adequate coverage of business units and the reports aresubmitted to management and the audit committee.

Corporate governance

NAME BOARD AUDIT COMMITTEE Remuneration& nominations

2006 2007 2006 2007 2006

July Sept Nov Feb Mar May July Sept Nov Mar May Nov

AG Fletcher √ √ √ √ √ √ √ √ √ √ √ √

PJ Blunden √ √ √ x √ √ √ N/A N/A N/A N/A N/A

T de Bruyn x x √ √ √ √ √ N/A N/A √ √ √

JC Hall* √ √ √ N/A N/A N/A N/A √ √ N/A N/A N/A

JP Herselman x √ x √ x √ √ N/A N/A √ √ √

SJ Meijers √ √ √ √ √ √ √ N/A N/A N/A N/A N/A

MV Ramollo √ √ x √ √ √ √ N/A N/A N/A N/A N/A

RGH Smith* √ √ x N/A N/A N/A N/A √ √ N/A N/A N/A

DIRECTORATE 1 JULY 2006 - 31 JULY 2007 : ATTENDANCE OF MEETINGS

Corporate governance

5

The initial exercise has been completed in the equipment sub-group, ELB Equipment Limited, and in respect of the GroupTreasury and Salary Payroll services. Follow up exercises areconducted on a regular basis.

As an alternative to the introduction of the integrated approachto the timber sub-group, ELB Timber Holdings (Proprietary)Limited (“Timbers”), whose activities are subject to discontinu-ation, closure or possible disposal, the internal auditors inves-tigate specific areas of risk identified by Timbers management.

Consideration will be given to applying this risk based methodol-ogy within ELB Engineering Services (Proprietary) Limited duringthe new financial year as the activities of this relatively newCompany have gained sufficient momentum to warrant the intro-duction of the integrated approach by the internal auditors.

Notwithstanding the implementation of this internal auditmethodology, all Group operations continue to identify, assessand monitor the risks to which their businesses are exposed.

The results of reports received and tabled to date are consid-ered to be satisfactory. Where deficiencies have been identi-fied, corrective action has been taken and follow up reviewsare performed.

HEALTH AND SAFETY

The board of directors and management at all levels regularlyassess and address health and safety in accordance withGroup procedures and the relevant legislation.

CODE OF ETHICS

A Code of Ethics, requiring all employees of the Group to main-tain the highest ethical standards in their dealings with eachother and other stakeholders, in line with the relevant recom-mendations of the King ll Report, has been published and dis-tributed throughout the Group.

COMPANY SECRETARY

All directors have access to the advice and services of theCompany secretary, who is responsible to the board for ensuringcompliance with procedures and applicable statutes and regula-tions. All the directors have full and timely access to all informa-tion that may be relevant to the proper discharge of their dutiesand obligations, thus enabling the board to function effectively.

INSIDER TRADING

The Company has closed periods prohibiting trade in ELBshares by directors and staff before the announcement of inter-im and year-end results and during any period where theCompany is trading under cautionary announcements or wherethey have knowledge of price sensitive information.

All share dealings of directors require the prior approval of thechairman, and the Company secretary retains a record of allsuch share dealings and approvals.

COMMUNICATION TO STAKEHOLDERS

ELB is proactive in the distribution of information to relevantparties through the JSE SENS communications system, print-ed and electronic media releases and the statutory publicationof its financial results.

The board encourages all stakeholders to attend the shareholders'meetings as this is the ideal opportunity to voice their opinions.

DISCLOSURE

The annual report deals fully with disclosures pertaining to theannual financial statements, auditors' responsibilities, account-ing records, internal control, risk management, accounting poli-cies, adherence to accounting standards, going concern issuesand adherence to codes of governance and the JSE ListingsRequirements.

N/A – not applicable

* Mr JC Hall and Mr RGH Smith retired on 20 November 2006.

EXECUTIVE

Anthony Garth Fletcher (55)†‡

BCom, CA(SA)

Appointed chairman of the board in May 2006.Appointed to the board in 1996.Served as chairman from 1998-2003.

Peter John Blunden (52)

BCom

Chief executive - ELB Equipment.

Appointed to the board in 2002.Joined the Group in 1978.

Dr Stephen John Meijers (46)

PhD (Mech Eng), BSc (Mech Eng), MAP (Wits),SEP (Wits/Harvard)

Chief executive - ELB Engineering Services.Appointed to the board in May 2006.

Mollo Victor Ramollo (52)

BSc (Elec Eng)

Appointed to the board in 2003.

Board of directors

6

NON EXECUTIVE

Theunis de Bruyn (39)†‡*

BCom, CA(SA)

Appointed to the board in 2005.

Dr John Paul Herselman (64)†‡*

Dr Ing, Dipl Ing, BSc (Chem Eng)

Appointed to the board in 1986.

†Member of Audit Committee

‡ Member of Remuneration and Nominations Committee.

* Independent

FINANCIAL INFORMATION2007 2006 2005 2004 2003 2002 2001 2000

R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000 Sales revenue 983 361 693 681 574 627 580 332 554 685 2 382 126 2 937 537 1 779 575 Operating costs excluding

depreciation,amortisation and abnormal items (915 304) (663 333) (556 770) (548 841) (526 128) (2 345 845) (2 845 959) (1 747 564)

Operating profit before depreciation,amortisation and abnormal items 68 057 30 348 17 857 31 491 28 557 36 281 91 578 32 011

Depreciation and amortisation (4 476) (6 495) (7 051) (8 112) (14 684) (35 486) (36 568) (32 804)Operating profit / (loss) before

abnormal items 63 581 23 853 10 806 23 379 13 873 795 55 010 ( 793)Abnormal items (note 3) (3 824) (12 829) 3 631 – 3 159 64 448 (2 143) (24 206)Operating profit / (loss) 59 757 11 024 14 437 23 379 17 032 65 243 52 867 (24 999)Interest received and other

financial income 12 198 6 571 8 163 9 465 15 717 29 022 20 200 27 806 Interest paid (5 687) (4 940) (3 487) (5 352) (7 071) (9 179) (9 192) (14 571)Translation adjustments of

foreign treasury cash – – – – (26 248) 27 553 14 539 6 546 Income / (loss) from associates – – – – – 1 039 (6 960) 1 028 Profit / (loss) before tax 66 268 12 655 19 113 27 492 (570) 113 678 71 454 (4 190)Income tax (expense) / credit (27 618) (10 776) (3 983) (13 480) (3 451) (50 811) (14 438) 13 871 Profit / (loss) for the year 38 650 1 879 15 130 14 012 (4 021) 62 867 57 016 9 681 Attributable to:Ordinary shareholders of ELB 30 386 1 871 14 486 11 855 4 400 72 023 40 978 3 880 Preference shareholders of ELB – – - - – – 1 1 Minority interest 8 264 8 644 2 157 (8 421) (9 156) 16 037 5 800

38 650 1 879 15 130 14 012 (4 021) 62 867 57 016 9 681 Headline earnings / (loss) 34 031 12 079 7 558 11 782 (1 494) 11 029 40 806 3 552 Dividends paid 5 455 2 725 6 829 8 507 7 220 19 058 9 959 16 795 Special dividend – – – – – 184 560 – –

OTHER STATISTICS2007 2006 2005 2004 2003 2002 2001 2000

Shares in issue at the year end (excluding treasury shares) 27 406 133 27 151 554 27 354 649 27 300 534 28 889 889 30 760 000 30 256 984 29 868 884

Net asset value per share (cents) 704 597 589 546 509 536 970 881 Headline earnings / (loss)

per share (cents) 124.9 44.2 27.6 42.1 (5.2) 36.4 135.9 12.3 Interim and final dividends

for the year per share (cents) 30 15 10 30 30 45 50 25 Special dividend per share (cents) – – – – – 600 – – Dividend cover (times)

(excluding special dividend) (based on headline earnings) 4.2 2.9 2.8 1.4 (0.2) 0.8 2.7 0.5

NOTES1 The financial information in this review includes both continuing and discontinued operations.2 Amounts and numbers for the years 2004 to 2007 are in accordance with IFRS. 2003 and earlier years are in accordance with South

African GAAP.3 ELB McWade was sold with effect from 30 September 2004 (2005 financial year) and Bataman Project Holdings Limited (Batepro)

with effect from 31 December 2001 (2002 financial year). The results of those operations ae included to their dates of disposal. Profitson disposal are included in abnormal items.

4 2003 and later years include the effect of consolidating the share trusts.5 Translation adjustments have been taken directly to the foreign currency translation reserve from the 2004 financial year onwards.

Previously they were taken through the income statement.6 The amounts for dividends paid are the dividends declared and paid during the year.

Eight year review

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Financial highlights

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The directors of ELB Group Limited are responsible for the preparation and presentation of the annual financial statements of theCompany and the Group and the other related information included in the annual report.

In order for the board to discharge its responsibilities, management has developed and continues to maintain a system of internal control.The board has ultimate responsibility for the system of internal control and reviews its operations, primarily through the audit committeeand various other risk monitoring committees.

The internal controls include a risk based system of internal accounting and administrative controls designed to provide reasonable butnot absolute assurance that assets are safeguarded and that transactions are executed and recorded in accordance with generallyaccepted accounting practices and the Group’s policies and procedures. These controls are implemented by trained, skilled personnelwith an appropriate segregation of duties, and are monitored by management. The controls include a comprehensive budgeting andreporting system operating within strict deadlines and an appropriate control framework.

As part of the system of internal control, the Group internal audit function conducts operational, financial and specific audits and coordi-nates audit coverage with the external auditors. The external auditors are responsible for reporting on the annual financial statements.

The annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and in the mannerrequired by the Companies Act of South Africa. The annual financial statements are based on appropriate accounting policies consistentlyapplied and supported by reasonable and prudent judgements, assumptions and estimates.

The directors have reviewed the Group’s budget and cash flow projections for the period to 30 June 2008. Considering these projections,as well as the current financial position and borrowing facilities, the directors believe it appropriate to continue to adopt the going concernbasis in preparing the annual financial statements.

The annual financial statements for the year ended 30 June 2007 as set out on pages 11 to 56 have been approved by the board ofdirectors and are signed on its behalf by:

AG Fletcher T de BruynChairman Director

Boksburg19 October 2007

Directors’ responsibility for financial reporting

9

I, the undersigned, DG Jones, hereby certify that to the best of my knowledge and belief, arrived at after due and careful enquiry, for theyear ended 30 June 2007, the Company has lodged with the Registrar of Companies all returns as are required of a public company interms of the South African Companies Act of 1973, as amended, and that all such returns are true, correct and up to date, and that alllegal requirements have been fulfilled.

DG JonesCompany secretary

Boksburg19 October 2007

Certificate by the company secretary

To the members of ELB Group Limited

We have audited the group annual financial statements and annual financial statements of ELB Group Limited, which comprise thebalance sheets at 30 June 2007, the income statements, the statements of changes in equity and cash flow statements for the year thenended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes,and the directors’ report as set out on pages 11 to 56.

Directors’ responsibility for the financial statements

The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance withInternational Financial Reporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes:designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that arefree from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance withInternational Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Theprocedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of ELBGroup Limited at 30 June 2007, and its consolidated and separate financial performance and consolidated and separate cash flows forthe year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act ofSouth Africa.

KPMG IncRegistered auditor

Per AD RobertsChartered accountant (SA)Registered auditorDirector

Parktown19 October 2007

Independent auditor’s report

10

To the shareholders

Your directors submit the financial statements for the Companyand the Group for the year ended 30 June 2007 with theirreport on the results and operations.

NATURE OF THE BUSINESS

The Company operates as an investment holding companyderiving most of its distributable income from dividends. Themajor investment at the end of June 2007 is in ELBEngineering Limited (ELB Engineering) which supplies equip-ment and technical solutions through two sub-groups, ELBEquipment Holdings Limited (ELB Equipment Holdings) andELB Engineering Services (Proprietary) Limited (ELBEngineering Services). ELB Equipment Holdings continues toadminister the Group treasury.

RESTRUCTURING AND INCLUSION OF AN

EMPOWERMENT PARTNER

Shareholder approval was given on 16 May 2006 regarding therestructuring of the Group which included the creation of theELB Educational Trust for Historically Disadvantaged SouthAfricans (the ELB Educational Trust). The Master of theSupreme Court has since confirmed the appointment of theinitial trustees of the ELB Educational Trust as nominated bythe Company, namely Messrs AG Fletcher, TJ Matsau andMV Ramollo.

The presentation of the results for the current year is based onthe restructuring being effective from the commencement of thefinancial period, namely 1 July 2006.

DISCONTINUED OPERATIONS

The company announced on 18 May 2006 that, with regard tocertain operations in the ELB Timbers fold, it had decided torationalise production at the furniture components plant inWhite River and discontinue production at the Ultrabord boardplant at Malelane. ELB Timbers would continue to produceveneer and plywood at its plants in Lydenburg and White Riveras well as certain furniture components and packaging solu-tions at its plant in Krugersdorp.

The company subsequently announced on 15 March 2007 thatELB Timbers is dependant on purchasing logs on the openmarket in order to manufacture veneer to be used in the pro-duction of plywood and furniture components. With a furtherincrease in the price of logs anticipated for the coming year ofapproximately 30 per cent, or 130 per cent over the last threeyears, ELB Timbers had not been able to secure logs at lowenough prices to be able to trade profitably. As a result it wasdecided to discontinue operations and realise the assets of the

business in an orderly manner. This process continues into thenew financial year.

The headline loss attributable to ELB Timbers amounted toR15,3 million (2006 – R12,9 million)

ELB ENGINEERING

ELB owns 85% of the ordinary share capital as well as 100% ofthe cumulative convertible redeemable preference shares issuedby ELB Engineering. The South African equipment operationshoused in the division ELB Equipment Limited had another par-ticularly successful year and reported profits in excess of thosebudgeted. The Ditch Witch Australia joint venture operations, inwhich ELB Equipment Holdings has an 84.2% interest, producedexcellent results in the light of favourable trading conditions,considerably ahead of budget. ELB Engineering Services inwhich ELB Engineering has a 79% interest made great strides inbuilding its team, securing a healthy order book and completingthe hand over of its first projects during the financial year underreview.

Headline earnings attributable to ELB Engineering amounted toR49,0 million (2006 - R26,7 million).

ACCOUNTING POLICIES

The annual report has been prepared in accordance with theSouth African Companies Act and complies with InternationalFinancial Reporting Standards (IFRS). The same accountingpolicies outlined in the 2006 Annual Report apply to thisReport.

GENERAL

The Group continues to support the principles of good corpo-rate governance contained in the first King Report and the sub-sequent King II Report. Further details are provided in theCorporate Governance statement on pages 4 and 5 of this report.The operating entities within the Group have complied with therequirements of the Employment Equity Act and the SkillsDevelopment Act.

DIVIDENDS

An interim dividend of 10 cents (2006 – 5 cents) per ordinaryshare was paid on 23 April 2007 and a final dividend in respectof the year of 20 cents (2006 – 10 cents) per ordinary sharewas declared on 20 September 2007 and is payable on 22October 2007.

Dividends in respect of the 6 per cent fixed cumulative prefer-ence shares were declared simultaneously with the interim andfinal ordinary dividends referred to above.

Directors’ report

11

SHARE CAPITAL

Details of the authorised and issued share capital at 30 June2007 are set out in notes 31 and 32 to the financial statements.There was no change in either the authorised ordinary sharecapital or the authorised preference share capital during theyear. The issued preference share capital remained at the levelof 3 800 6% fixed cumulative preference shares at the end ofJune 2006, as no redemption of such shares by the Companyoccurred on the open market during the year under review.Similarly, the issued ordinary share capital of 33 860 000 sharesat 30 June 2006 remained unchanged at the end of June 2007.

ELB shares held by the Group’s share trusts and incentiveshares not as yet paid for by participants, are regarded asshares under the control of the trusts and are eliminated onconsolidation as treasury shares.

DIRECTORATE

The names as well as a brief history of the directors of theCompany appear on page 6 whilst the name of the Companysecretary in office at the date of this report, and the Company’sbusiness and postal addresses appear on page 59.

The following appointments, resignations and retirementsoccurred during the financial period under review and until thedate of this report.

RetirementsJC Hall 20 November 2006RGH Smith 20 November 2006

In terms of the Company’s Articles of Association, the followingdirectors retire at the forthcoming Annual General Meeting and,being eligible, are available for re-election: Messrs AG Fletcherand MV Ramollo.

Details of directors’ remuneration and options in respect ofordinary shares in the Company are contained in note 8 to theannual financial statements. Details of directors’ interests inthe ordinary shares of the Company are provided on page 57.

Directors’ report(continued)

12

ELB Group Limited (the Company) is a company domiciled inSouth Africa. The consolidated annual financial statements ofthe Company for the year ended 30 June 2007 comprise theCompany and its subsidiaries and joint venture, togetherreferred to as the Group.

The annual financial statements were authorised for issue bythe directors on 19 October 2007.

Compliance

The annual financial statements have been prepared in accor-dance with International Financial Reporting Standards (IFRS)and the requirements of the South African Companies Act

Preparation

The annual financial statements are presented in South AfricanRands, rounded to the nearest thousand. They are prepared onthe historical cost basis, modified by restatement of certainfinancial instruments to fair value. The accounting policies setout below have been applied consistently to all periods pre-sented in these annual financial statements and have alsobeen consistently applied by all Group entities. When anaccounting policy changes, comparative figures are restated inaccordance with the new policy, where applicable.

The preparation of the annual financial statements in accor-dance with IFRS requires management to make judgements,estimates and assumptions that affect the application ofaccounting policies and reported amounts of assets andliabilities and income and expense. The estimates andunderlying assumptions are based on historical experienceand various other factors that are believed to be reasonableunder the circumstances. Actual results may differ ultimatelyfrom these estimates. The estimates and assumptions arereviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimate isrevised if the revision affects only that period, or in the periodof the revision and future periods if the revision affects bothcurrent and future periods.

Accounting policies involving a higher degree of complexityand where assumptions and estimates are significant to thefinancial statements are useful life, residual value andimpairment of property, plant and equipment, the recognitionof deferred tax assets and construction contracts. Furtherinformation is given in the accounting policies relating to theseareas.

There are no key assumptions concerning the future and otherkey sources of estimation uncertainty at the balance sheet datethat management has assessed as having a significant risk ofcausing material adjustment to the carrying amounts of assetsand liabilities in the next financial year.

Prior year errors

Where an error relating to a prior year is sufficiently material so asto distort the presentation of the results or the financial position,then such error will be reflected as a prior year correction in thestatement of changes in equity, and the comparatives will berestated.

Consolidation

Basis

The annual financial statements show the financial position andresults of the Company and the consolidated financial positionand results of the Group. Intra group balances and unrealisedprofits and losses and income and expenses arising from intragroup transactions are eliminated in preparing the Group con-solidated financial statements. Unrealised gains arising fromtransactions with joint ventures are eliminated to the extent ofthe Group’s interest against the investment in these entities.Unrealised losses on transactions with joint ventures are elim-inated in the same way as unrealised gains, but only to theextent that there is no evidence of impairment.

Subsidiaries

Subsidiaries are entities controlled by the Company. Controlexists when the Company has the power, directly or indirectly,to govern the financial and operating policies of an entity so asto obtain benefits from its activities. In assessing control,potential voting rights that presently are exercisable or con-vertible are taken into account. The financial statements of sub-sidiaries are included in the consolidated financial statementsfrom the date that control commences until the date that con-trol ceases.

Joint ventures

Joint ventures are entities over which the Group exercises jointcontrol in terms of a contractual agreement. Joint ventures areproportionately consolidated, whereby the Group’s share of thejoint venture’s assets, liabilities, income, expenses and cashflows are combined with similar items on a line-by-line basis inthe Group’s financial statements from the date that joint controlcommences until the date that joint control ceases.

Share trusts

For purposes of the Group financial statements, ordinaryshares in the Company under the control of the Group’s sharetrusts are classified as treasury shares and reduce the numberof ordinary shares in issue. The dividends on the treasuryshares reduce the amounts of the ordinary dividends paid andincrease the operating expenses. Ordinary shares under thecontrol of the share trusts are included as a deduction fromissued ordinary share capital in the Group’s financial state-ments.

Foreign currency translation

Transactions in foreign currencies are translated at the rates ofexchange ruling at the dates of the transactions. Gains andlosses on settlement, arising from fluctuations in exchangerates, are recognised in profit or loss. Monetary assets and lia-bilities denominated in foreign currencies at the end of thereporting period are translated to South African Rands at therates ruling at that date. Gains or losses on translation arerecognised in profit or loss. Non monetary assets and liabili-ties that are measured in terms of historical cost in a foreigncurrency are translated using the exchange rate at the date ofthe transaction.

Accounting policies

13

All foreign entities have different functional currencies to thepresentation currency. The results and financial position of theforeign entities have been included after translating the incomestatements at the weighted average rates of exchange for theappropriate period, and the balance sheets at the rates ofexchange ruling at the balance sheet date. The gains and loss-es on translation are taken directly to the foreign currency trans-lation reserve through the Group statement of changes in equity.

Revenue

Sales revenue

Sales revenue comprises the fair value of the considerationreceived or receivable for the sale of goods, revenue recognisedon construction contracts and for other services rendered in thecourse of the Group’s activities. Sales revenue excludes valueadded tax (VAT), goods and services tax (GST) and rebates anddiscounts. Sales within the Group are eliminated. Revenue fromthe sale of goods is recognised when the significant risks andrewards of ownership have transferred to the buyer. Revenue forservices rendered is recognised as services are rendered.Revenue is not recognised when it cannot be measured reliablyor where there are significant uncertainties regarding the recov-ery of the consideration due, associated costs or the possiblereturn of goods, or continuing management involvement with thegoods delivered or services rendered.

The recognition of revenue on construction contracts isdetailed in the accounting policy note regarding that activity.

Interest received

Interest received is recognised on a time proportion basis usingthe effective interest rate method.

Dividends received

Dividends are recognised when the right to receive payment isestablished, with the exception of dividends on preferenceshare investments which are recognised on a time proportionbasis, using the effective interest rate method, in the period towhich they relate.

Employee benefits

Employee benefits expense

All short term employee benefit expenses such as salaries,bonuses, allowances, leave pay entitlement and medical aidand other contributions are recognised in profit or loss duringthe period in which the employees render the related services.Termination costs are recognised in full when the commitmentto the termination plan is made. Shares under the control of theshare trusts in the Group are classified as treasury shares andthe dividends thereon are included in employee benefitsexpense.

Retirement benefits

The Group provides a defined benefit (now closed to newentrants) and defined contribution retirement funds for the benefit

of employees, the assets of which are held in separate funds.The Group’s contributions to the funds are recognised as anexpense in the period in which they arise. The Group appliesthe corridor method to recognise in profit or loss actuarial gainsand losses over the expected average remaining lives ofemployees in the plan. The defined benefit fund is in surplusand there has been no need to recognise costs other thancontributions.

Share based payment transactions

The fair value of share options granted to Group employees isrecognised as an employee benefits expense with a corre-sponding increase in equity. The fair value is measured at grantdate and expensed over the period during which the employeebecomes unconditionally entitled to the equity instruments. Thefair value of the instruments granted is measured using gener-ally accepted valuation techniques, taking into account theterms and conditions upon which the instruments are granted.The amount recognised as an expense is adjusted to reflect theactual number of share options that vest. This accounting poli-cy has been applied to all equity instruments granted after 7November 2002 that had not yet vested at 1 July 2003.

Leases

A distinction is made between finance leases which effectivelytransfer from the lessor to the lessee all the risks and rewardsof ownership of the underlying asset, without transferring legalownership, and operating leases under which the lessor effec-tively retains substantially all the risks and rewards.

Where assets are acquired under finance leases the asset iscapitalised at the beginning of the lease term at its cash costequivalent. A corresponding liability to the lessor is also raisedand each lease payment is allocated beween the reduction ofthe liability and interest expense.

Expenses under operating leases are recognised in the incomestatement on a straight line basis over the term of the lease.

Interest paid

Interest paid comprises interest paid on borrowings calculatedon the principal outstanding and using the effective interestrate method.

Abnormal items

Abnormal items are items of income and expense whose size,nature or incidence is relevant to explain the performance ofthe Group.

Capital items included in abnormal items are items of income andexpense relating to transactions of a capital nature. Such itemswould include disposal of property, impairments of property, plantand equipment, impairments of intangible assets and long terminvestments, as well as restructure and closure expenses.

Accounting policies(continued)

14

Non current assets held for sale and discontinued operations

Non current assets (or disposal groups comprising assets andliabilities) that are expected to be recovered primarily throughsale rather than through continuing use are classified as heldfor sale. Immediately before classification as held for sale, theassets (or components of a disposal group) are remeasured inaccordance with the Group’s accounting policies. Then, on ini-tial classification as held for sale, non current assets and dis-posal groups are recognised at the lower of carrying amountand fair value less costs to sell. Impairment losses on initialclassification as held for sale are included in profit or loss, evenwhen there is a revaluation. The same applies to gains andlosses on subsequent remeasurement. Gains are not recog-nised in excess of any cumulative impairment loss.

A discontinued operation is a component of the Group’s busi-ness that represents a separate major line of business or geo-graphical area of operations. Classification as a discontinuedoperation occurs upon the earlier of disposal or when the oper-ation meets the criteria to be classified as held for sale.Discontinued operations are separately recognised in theannual financial statements once management has made acommitment to discontinue the operation without a realisticpossibility of withdrawal.

Headline earnings

Headline earnings comprise the profit attributable to ordinaryshareholders after adjusting for material income and expenseitems of a capital nature, which are included in abnormal items;and also after adjusting for profits and losses on the discontin-uance or disposal of discontinued operations and on the dis-posal of plant and equipment.

Taxation

Tax on the profit or loss for the period comprises current anddeferred tax. Tax is recognised in the income statement exceptto the extent that it relates to items recognised directly in equi-ty. Current tax comprises tax payable calculated on the basis ofthe expected taxable income for the period, using the tax ratesapplicable for that period, and any adjustments of tax payablefor previous years. When an adjustment in respect of a previ-ous year arises from an error and is sufficiently material so asto misrepresent the results for the period, then such error willbe treated in accordance with the accounting policy on prioryear errors, described above.

Deferred tax is determined at current tax rates using the liabil-ity method. Deferred tax is recognised on taxable anddeductible temporary differences, unutilised secondary tax oncompanies (STC) credits and tax losses carried forward.Temporary differences are differences between the carryingamounts of assets and liabilities for financial reporting purpos-es and their tax bases. The effect on deferred tax of anychanges in tax rates is recognised in profit or loss, exceptwhere it relates to items previously charged or credited direct-ly to equity. A deferred tax asset is recognised to the extent thatit is probable that future taxable income will be availableagainst which the unused tax losses carried forward anddeductible temporary differences can be utilised. Deferred taxassets are reduced to the extent that it is no longer probablethat the related tax benefit will be realised.

Deferred tax assets and deferred tax liabilities are offset whenthere is a legally enforceable right of offset and where thedeferred tax relates to the same fiscal authority.

Dividends

Dividends declared to equity holders are included in the state-ment of changes in equity in the period in which they aredeclared. STC expenses and STC credits are recognised inprofit or loss in the period in which the dividends are declared.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumu-lated depreciation and accumulated impairment losses.

Property, plant and equipment, including capitalised leasedassets, are depreciated at rates intended to write them off on astraight line basis over their useful lives to their residual values,which is usually twenty years for property, five years for plantand equipment and three years for computer equipment. Landhas an indefinite useful life and is not depreciated.

Goodwill

All business combinations are accounted for by applying thepurchase method. Goodwill represents amounts arising onacquisition of subsidiaries. The excess of the cost of subsidiarycompanies and the fair value of the net identifiable assets (theirfair net asset value) at acquisition is capitalised as goodwill inthe consolidated annual financial statements and is stated atcost less accumulated impairment losses. Goodwill is allocatedto cash generating units and is not amortised but is testedannually for impairment.

The Group carried no goodwill at the dates of the current andcomparative balance sheets.

Intangible assets

Research costs are written off as incurred.

Intangible assets are stated at cost less accumulated amorti-sation and accumulated impairment losses. Capitalised intan-gible assets are amortised to their residual values on a straightline basis over their useful lives, which are relatively short andusually five years.

The carrying amount of each intangible asset is reviewed ateach reporting date and impairment losses are recognisedwhere necessary.

The Group carried no intangible assets at the dates of the cur-rent and comparative balance sheets.

Borrowing costs

Borrowing costs that are directly attributable to qualifyingassets are capitalised up to the date that the assets are sub-stantially ready for their intended use. Qualifying assets arethose that necessarily take an extended period of time to pre-pare for their intended use.

All other borrowing costs are recognised as interest paid inprofit or loss in the period in which they are incurred.

Accounting policies(continued)

15

Impairment of assets

The carrying amounts of the Group’s assets, other than inven-tories, trade and other receivables and deferred tax assets,which are separately assessed and provided against wherenecessary, are reviewed at each balance sheet date to deter-mine whether there is any indication of impairment. If any suchindication exists, the recoverable amount of the asset isestimated in order to determine the extent of any impairmentloss. The recoverable amount is the higher of the asset’s fairvalue less expenses to sell the asset, or the asset’s value inuse. Value in use is estimated taking into account future cashflows, forecast market conditions and the expected life of theasset. Such cash flows are discounted using pre tax discountrates that reflect current market assessments of the time valueof money and the risks associated with the specific asset. Foran asset that does not generate largely independent cashflows, the recoverable amount is determined for the cash gen-erating unit to which the asset belongs.

Impairment losses are recognised whenever the carryingamount of an asset or its cash generating unit exceeds itsrecoverable amount. Impairment losses are recognised in profitor loss.

An impairment loss in respect of goodwill is not reversed. For otherassets, an impairment loss is reversed if there has been a changein the estimates used to determine the recoverable amount andthere is an indication that the impairment loss may no longer exist.An impairment loss is reversed only to the extent that the asset’scarrying amount does not exceed the carrying amount that wouldhave been determined, net of depreciation or amortisation, if noimpairment loss had been recognised.

Interest in subsidiaries

The Company’s interest in subsidiaries comprises equityinvestments in the subsidiaries and loans to the subsidiaries.These are carried at cost less impairments. Impairments areassessed with reference to the net equity and projected prof-itability of subsidiaries.

Construction contracts

Revenue from fixed price construction contracts is recognisedfor each contract on the stage of completion method, basedgenerally on the ratio of costs incurred to date to total estimat-ed costs, or on completed manhours to date to estimated totalmanhours, or on the proportion of physical progress to date tothe completed contract. All possible contingencies requiringadditional costs or manhours, or which impede physicalprogress, are reviewed in determining the stage of completion.In management’s judgement and from historical experiencecontracts which are not yet 30% complete are considered to becontracts where the outcome cannot be estimated with reason-able assurance, and revenue on these contracts is recognisedonly to the extent of contract costs incurred to date that areconsidered to be recoverable.

Revenue from cost plus construction contracts is recognisedfor the services rendered to date in terms of the contracts.Terms and conditions negotiated with clients vary from oneconstruction contract to another. These terms and conditionsinfluence contract pricing and are inextricably interwoven withcontract profitability.

When it is probable that total contract costs will exceed totalcontract revenue the expected loss is recognised immediatelyfor all such contracts.

Construction contracts in progress represent costs incurred onconstruction contracts plus profits recognised that have not yetbeen included in billings to clients.

Construction contract liabilities comprise billings to clients inadvance of the stage of completion and provisions for estimatedcosts relevant to the stage of completion. Charges from suppliersfor goods delivered or services rendered to date on contracts,where these are not yet settled, and any additional accruals relat-ed thereto, are carried separately as trade payables.

Inventories

Inventories are valued at the lower of cost, determined on thefirst-in-first-out (fifo) method or weighted average cost basis,and net realisable value. Production overheads are included inthe cost of work in progress and manufactured finished goods.

Financial instruments

Financial instruments are recognised initially at fair value plustransaction costs. Financial instruments at fair value throughprofit or loss are recognised initially at fair value. Subsequentto initial recognition these instruments are measured as statedbelow.

Financial assets

Financial assets are recognised when the entity becomes aparty to the contractual provisions of the financial asset. Suchassets consist of cash and cash equivalents, a contractual rightto receive cash or another financial asset, or a contractual rightto exchange financial instruments with another entity on poten-tially favourable terms.

Other investments

Investments held for trading are classified as current assetsand are stated at fair value, with any resultant gain or lossrecognised in profit or loss.

Other investments held by the Group are stated at fair value, withany resultant gain or loss being recognised in profit or loss. Whenthese investments are disposed of the difference between theamount realised and the last fair value carrying amount is recog-nised as a gain or loss in profit or loss. Where these investmentsare interest bearing, interest calculated using the effective interestrate method is recognised in profit or loss.

Accounting policies(continued)

16

Loans and receivables

Loans and receivables are non derivative financial assets withfixed or determinable payments that are not quoted in an activemarket and are stated at amortised cost using the effectiveinterest rate method, less impairments. Impairments are equalto the difference between initial carrying amounts and estimat-ed recoverable amounts. Impairments are established whenthere is evidence that amounts will not be realised in accor-dance with the original terms of the receivables. Impairmentsand impairment reversals are recognised in profit or loss.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and termand call deposits, and are recognised at fair value. Fair valueadjustments are recognised in profit or loss.

Short term borrowings and bank overdrafts form an integralpart of the Group’s cash management and are included as acomponent of cash and cash equivalents for the purpose of thestatement of cash flows.

Financial liabilities

Financial liabilities are recognised when the entity becomes aparty to the contractual provisions of the instrument. Financialliabilities consist of the obligations to deliver cash or anotherfinancial asset or to exchange financial instruments with anoth-er entity on potentially unfavourable terms. Financial liabilities,other than derivative instruments, are measured at amortisedcost using the effective interest rate method.

Derivative instruments

The Group uses derivative financial instruments to manage itsexposure to foreign currency exchange price risks arising fromoperating activities. The Group does not hold or issue deriva-tive instruments for dealing purposes.

Derivative instruments used during the period comprise for-ward foreign exchange contracts (FECs) and are measured atfair value. Fair value adjustments are recognised in profit orloss. Fair value is determined by comparing the contractual for-ward rate to the current forward rate of an equivalent FEC withthe same maturity date.

Offset

Financial assets and financial liabilities are offset and the netamount reported in the balance sheet only when the Group hasa legally enforceable right to set off the recognised amounts,and intends to settle on a net basis, or to realise the asset andsettle the liability simultaneously.

Provisions

A provision is recognised in the balance sheet when the Grouphas a present legal or constructive obligation as a result of pastevents, and it is probable that an outflow of economic benefitswill be required to settle the obligation, and a reliable estimatecan be made of the obligation. If the effect is material, a provi-sion is determined by discounting the expected future cash flowsat a pre tax rate that reflects current market assessments of thetime value of money and the risks specific to the obligation.

Restructuring

A provision for restructuring is recognised when the Group hasapproved a detailed and formal restructuring plan, and therestructuring has either commenced or has been announcedpublicly. Future operating expenses are not provided for.

Onerous contracts

A provision for onerous contacts is recognised when theexpected benefits to be derived by the Group from a contractare lower than the unavoidable cost of meeting the obligationsunder the contract.

Segment reporting

A segment is a distinguishable component of the Group that isengaged in providing products or services which are subject torisks and returns that are different from those of other seg-ments. The basis of segment reporting is representative of theinternal structure used for management reporting.

Segment results include revenue and expenses directly attrib-utable to a segment whether from external transactions or fromtransactions with other Group segments.

Segment assets and liabilities comprise those operating assetsand liabilities that are directly attributable to the segment orthat can be allocated to the segment on a reasonable basis.

Accounting policies(continued)

17

Group Company2007 2006 2007 2006

Note R 000 R 000 R 000 R 000

Continuing operationsSales revenue 1 899 650 590 717 708 734

Operating costs excluding depreciation andabnormal items 2 (817 512) (552 077) (1 159) (617)

Operating profit / (loss) before depreciationand abnormal items 82 138 38 640 (451) 117

Depreciation 18 (3 499) (2 433) – –

Operating profit / (loss) before abnormal items 78 639 36 207 (451) 117

Abnormal items 9 – (1 781) – 80 504

Operating profit / (loss) 78 639 34 426 (451) 80 621

Interest received and other financial income 10 12 100 6 525 2 449 – Interest paid (5 404) (4 689) (29) (40)Preference dividends received from subsidiary 7 200 –

Profit before tax 85 335 36 262 9 169 80 581

Income tax expense 11 (27 618) (11 896) (792) (423)

Profit from continuing operations 57 717 24 366 8 377 80 158

Discontinued operationsLoss from discontinued operations 12 (19 067) (22 487) (19 067) (31 318)

Profit / (loss) for the year 38 650 1 879 (10 690) 48 840

Attributable to:Ordinary shareholders of ELB Group Limited

Continuing operations 43.1 49 453 24 358 8 377 80 158 Discontinued operations 12 (19 067) (22 487) (19 067) (31 318)

30 386 1 871 (10 690) 48 840

Minority interestContinuing operations 8 264 8

38 650 1 879 (10 690) 48 840

Earnings per ordinary share (cents)

Basic and diluted earnings per share 15 111.5 6.8

Basic and diluted earnings per share from continuing operations 15 181.5 89.2

Details of headline earnings and headline earnings per share are included in notes 14 and 15.

Details of dividends declared and paid on the ordinary sharesare included in note 16.

Income statementsfor the year ended 30 June 2007

18

Group Company 2007 2006 2007 2006

Note R 000 R 000 R 000 R 000

ASSETS

Non current assetsProperty, plant and equipment 18 26 662 29 687 – – Interest in subsidiaries 19 144 046 160 113 Long term receivables 21 – – 23 067 23 858 Deferred tax assets 24.1 8 012 7 431 – –

34 674 37 118 167 113 183 971

Current assetsConstruction contracts in progress 25 20 649 923 – – Inventories 26 189 449 230 459 – – Trade and other receivables 27 56 968 77 650 153 240 Other current financial assets 28 39 16 269 – – Income tax recoverable 62 382 – 278 Other current assets 29 9 202 4 208 2 113 Assets of discontinued operations held for disposal 30 31 522 5 337 Cash and cash equivalents 209 176 151 538 113 101

517 067 486 766 268 732

Total assets 551 741 523 884 167 381 184 703

EQUITY AND LIABILITIES

Attributable to ordinary shareholders of the CompanyIssued capital 31.3 25 192 25 192 25 192 25 192 Treasury shares 31.3 (23 215) (24 098)Reserves 33 (6 208) (11 315) 250 250 Retained earnings 197 213 172 282 140 725 158 187

192 982 162 061 166 167 183 629 Preference shares 32 8 8 8 8

Total equity attributable to equity holders of the Company 192 990 162 069 166 175 183 637

Minority interest 9 830 665

Total equity 202 820 162 734 166 175 183 637

Non current liabilitiesInterest bearing borrowings 34 5 768 9 613 – – Deferred tax liabilities 24.2 1 433 – – –

7 201 9 613 – –

Current liabilitiesConstruction contract liabilities 25 15 433 30 017 – – Trade and other payables - non interest bearing 35 173 865 187 750 530 532 Trade and other payables - interest bearing 36 90 142 94 954 – – Other current financial liabilities 37 2 211 – – – Income tax payable 18 478 7 904 576 – Other current liabilities 38 30 198 29 084 100 534 Liabilities of discontinued operations held for disposal 30 11 393 1 828

341 720 351 537 1 206 1 066

Total equity and liabilities 551 741 523 884 167 381 184 703

Balance sheetsat 30 June 2007

19

Attributable to ordinary shareholders of the CompanyPref-

Issued Treasury Retained erence Minority TotalNote capital shares Reserves earnings Total shares interest equity

R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000 GroupBalance at 30 June 2005 25 192 (23 366) (13 721) 173 136 161 241 8 207 161 456

Foreign currency translation adjustments for foreign operations 2 406 2 406 2 406

Profit for the year 1 871 1 871 8 1 879

Total recognised income and expense for the year – – 2 406 1 871 4 277 – 8 4 285

Ordinary dividends paid 16 (2 725) (2 725) (2 725)Shares acquired by the ELB

Participants Share Trust (1 006) (1 006) (1 006)Shares paid up by participants

and released by theshare incentive trusts 274 274 274

Acquisition of 15% interest in ELB Engineering Limitedby the ELB Educational Trust for Historically Disadvantaged South Africans 450 450

Total changes for the year – (732) 2 406 (854) 820 – 458 1 278

Balance at 30 June 2006 25 192 (24 098) (11 315) 172 282 162 061 8 665 162 734

Foreign currency translation adjustments for foreign operations 5 107 5 107 901 6 008

Profit for the year 30 386 30 386 8 264 38 650

Total recognised income and expense for the year – – 5 107 30 386 35 493 – 9 165 44 658

Ordinary dividends paid 16 (5 455) (5 455) (5 455)Shares paid up by participants

and released by the ELB Share Incentive Trust 883 883 883

Total changes for the year – 883 5 107 24 931 30 921 – 9 165 40 086

Balance at 30 June 2007 25 192 (23 215) (6 208) 197 213 192 982 8 9 830 202 820

Statements of changes of equityfor the year ended 30 June 2007

20

Attributable to ordinary shareholders Pref-

Issued Retained erence Total Note capital Reserves earnings Total shares equity

R 000 R 000 R 000 R 000 R 000 R 000

CompanyBalance at 30 June 2005 25 192 250 112 733 138 175 8 138 183

Profit for the year 48 840 48 840 48 840

Total recognised income and expense for the year – – 48 840 48 840 – 48 840

Ordinary dividends paid 16 (3 386) (3 386) (3 386)

Total changes for the year – – 45 454 45 454 – 45 454

Balance at 30 June 2006 25 192 250 158 187 183 629 8 183 637

Loss for the year (10 690) (10 690) (10 690)

Total recognised income and expense for the year – – (10 690) (10 690) – (10 690)

Ordinary dividends paid 16 (6 772) (6 772) (6 772)

Total changes for the year – – (17 462) (17 462) – (17 462)

Balance at 30 June 2007 25 192 250 140 725 166 167 8 166 175

Statements of changes of equityfor the year ended 30 June 2007 (continued)

21

Group Company 2007 2006 2007 2006

Note R 000 R 000 R 000 R 000

Continuing operationsCash flows from operating activitiesOperating profit / (loss) before depreciation

and abnormal items 82 138 38 640 (451) 117 Non cash adjustments 40.1 (440) (345) – – Interest received and other financial income 12 100 6 525 2 449 – Interest paid (5 404) (4 689) (29) (40)Preference dividends received from subsidiary 7 200 – Abnormal items

Relocation of operations 9 – (931) – – Establishment of the ELB Educational Trust for

Historically Disadvantaged South AfricansDonation to the Trust 40.8 – (3 000) – (3 000)Expenses 40.8 – (400) – (400)

Changes in working capital 40.2 (1 170) 52 888 (238) (4)Income tax (paid) / recovered 40.3 (15 634) (6 086) 62 (492)Foreign currency translation adjustments forforeign operations 6 008 2 406

Cash inflow / (outflow) from operating activities before dividends paid 77 598 85 008 8 993 (3 819)

Dividends paidOrdinary shareholders 40.4 (5 455) (2 725) (6 772) (3 386)

Cash inflow / (outflow) from operating activities 72 143 82 283 2 221 (7 205)

Cash flows from investment activitiesAdditions to property 18 (2 746) (5 674) – – Replacement of plant and equipment 40.5 (3 902) (3 551) – – Transfer of ELB Equipment Holdings Limited to

ELB Engineering LimitedSurplus on transfer of equity investment 40.8 – 108 691

Investment in equity of ELB Engineering Limited 40.9 – (90 002)Increase in amounts owing by subsidiaries 19 (3 000) (9 794)

Cash (outflow) / inflow from investment activities (6 648) (9 225) (3 000) 8 895

Cash flows from financing activitiesDecrease / (increase) in non current amounts

of the loans to the share trusts 21 – – 791 (1 684)(Decrease) / increase in non current borrowings (3 189) 2 068 – – Increase / (decrease) in funding by ordinary shareholders 40.6 883 (732) – – Increase in funding by minority interest 40.7 – 3 000

Cash (outflow) / inflow from financing activities (2 306) 4 336 791 (1 684)

Cash inflow from continuing operations 63 189 77 394 12 6

Discontinued operationsCash outflow from discontinued operations 40.10 (5 551) (29 322) – –

Increase in cash and cash equivalents 57 638 48 072 12 6 Cash and cash equivalents at the beginning of the year 151 538 103 466 101 95

Cash and cash equivalents at the end of the year 209 176 151 538 113 101

Reconciliation to the balance sheetCurrent assets - cash and cash equivalents 209 176 151 538 113 101

Cash flow statementsfor the year ended 30 June 2007

22

Group Company2007 2006 2007 2006

R 000 R 000 R 000 R 000

1 Sales revenueContinuing operationsSale of goods 719 240 536 746 – –Revenue recognised on construction contracts 179 758 52 919 – –Services – external 652 1 052 – –

– inter company 708 734

899 650 590 717 708 734 2 Operating costs

Continuing operationsOperating costs comprise:Cost of sales 739 646 492 596 – – Other operating costs 77 866 59 481 1 159 617

817 512 552 077 1 159 617

2007 2006Discon- Discon-

Continuing tinued Continuing tinued operations operations Total operations operations Total

Note R 000 R 000 R 000 R 000 R 000 R 000

GroupOperating costs include the following

items of expense / (income):Inventories recognised as an expense 563 958 79 961 643 919 419 362 157 080 576 442 Research and development expenditure – – – – 3 3 Profit on disposal of plant and equipment (202) (60) (262) (375) (41) (416)Auditors remuneration – annual audit 1 575 10 1 585 662 212 874

– other services 367 – 367 170 – 170 Administration and technical services - external 9 029 415 9 444 3 368 547 3 915 Deferred rent expense for the year 3 – – – – 400 400

Net operating lease expenses – premises 5 311 570 5 881 3 572 1 214 4 786 – equipment and vehicles 124 9 133 61 55 116

There are no contingent rents payable under any operating leases

Future minimum lease expenses at 30 June 2007 under non cancellable operating leases comprise:

Payments under lease agreements:Not later than one year 5 078 1 717 6 795 3 395 2 170 5 565 Later than one year and not later

than five years 7 204 1 355 8 559 1 206 3 310 4 516 Later than five years – – – – – –

Minimum future sub lease receipts – (60) (60) (685) (3 461) (4 146)Straight line adjustments (302) – (302) (118) – (118)

There are no significant leasing arrangements

Receivables adjustments 4 3 529 1 896 5 425 1 574 446 2 020 Foreign currency exchange adjustments

(excluding foreign currency translation adjustments for foreign operations) 5 (97) (11) (108) 270 – 270

JSE listed securities market value adjustments (13) – (13) (28) – (28)

Employee benefits expense (including retirement fund contributions) 6 78 848 28 435 107 283 58 654 32 753 91 407

Number of employees at the end of the financial year 295 183 478 275 793 1 068

Notes to the annual financial statementsfor the year ended 30 June 2007

23

2007 2006 R 000 R 000

2 Operating costs (continued)

Company

Other operating costs include the followingitems of expense / (income):

Auditors remuneration – annual audit 21 17 – other services – 19

Administration and technical services – external 32 381 – inter company – 110

Decrease in impairment of loan to the ELB Share IncentiveTrust (this item is eliminated in the Group consolidation) (2) (568)

Employee benefits expense – short term benefits 384 338 – indirect benefits 4 3

Number of employees at the end of the financial year 2 4

3 Deferred rent expense

Group

Discontinued operationsThe deferred rent expense represented the balance of an expense incurred at thecommencement of an operating lease over premises occupied by a subsidiary, nowclassified as a discontinued operation. Until the time of discontinuance the expense wasbeing written off on a straight line basis over the ten year period of the lease. The balanceof the expense was fully impaired at 30 June 2006.

The write off of the deferred rent expense is not included in the amounts separatelydisclosed for operating lease expenses in note 2. .

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

24

2007 2006 Discon- Discon-

Continuing tinued Continuing tinued operations operations Total operations operations Total

R 000 R 000 R 000 R 000 R 000 R 000

4 Receivables adjustments – expense / (income)

GroupAmounts written off 1 272 367 1 639 835 91 926 Increase in impairments 2 257 1 529 3 786 739 355 1 094

Expense 3 529 1 896 5 425 1 574 446 2 020

5 Foreign currency exchange adjustments – (gain) / loss

GroupAccounts receivable (120) (11) (131) – – – Accounts payable and foreign currency

exchange contracts (FECs) 23 – 23 270 – 270

(Gain) / loss (97) (11) (108) 270 – 270

Foreign currency exchange adjustments on bank deposits is reported in note 10. .

6 Employee benefits expenseGroupShort term benefits 73 122 23 067 96 189 54 088 30 010 84 098 Post employment benefits

Retirement fund contributions (refer also to note 7) 4 669 1 245 5 914 3 910 1 302 5 212

Other 2 – 2 3 – 3 Termination benefits – 3 824 3 824 46 739 785

Total direct benefits 77 793 28 136 105 929 58 047 32 051 90 098 Indirect benefits 1 055 299 1 354 607 702 1 309

Total employee benefits expense 78 848 28 435 107 283 58 654 32 753 91 407

7 Post employment benefitsRetirementThe Group provides retirement benefits for all its permanent employees. Local group companies contribute to adefined benefit pension fund, a defined contribution pension fund and a defined contribution provident fund, all ofwhich are are subject to the South African Pensions Fund Act of 1956 as amended. Certain local employees arerequired by legislation to contribute to industrial schemes, to which group companies also contribute. Foreigngroup companies contribute to retirement funds registered in their countries of operation.

The funds are administered independently of the Group. The local defined benefit pension fund is actuariallyvalued every three years. The last actuarial valuation was performed in January 2004. The actuaries also performa valuation at each year end in terms of the requirements of IAS 19. At the last valuation in June 2007 the fundwas in a sound financial position.

In respect of the local defined benefit pension fund, which is in a positive funded status, no assets have been recognised by theCompany or its subsidiaries. The disclosure given overleaf of the funded status is for accounting purposes only, and does not necessarily indicate any assets available to the Company or its subsidiaries.

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

25

7 Post employment benefits (continued)Retirement Group

2007 2006 2005R 000 R 000 R 000

Valuation of the defined benefit pension fundFair value of fund assets (see below) 137 645 111 489 95 602 Deduct: Present value of funded obligation (see below) 129 172 88 527 84 858Surplus 8 473 22 962 10 744

Fair value of fund assetsFair value at the beginning of the year 111 489 95 602 87 026 Contributions 213 269 333 Expected return 9 077 7 663 8 126 Benefit payments (9 607) (11 169) (11 864)Expected fair value at the end of the year 111 172 92 365 83 621 Actuarial gain 26 473 19 124 11 981 Actual fair value at the end of the year 137 645 111 489 95 602 Present value of funded obligationPresent value at the beginning of the year 88 527 84 858 86 764 Service cost 267 302 399 Interest cost 6 709 6 354 8 103 Benefit payments (9 607) (11 169) (11 864)Expected present value at the end of the year 85 896 80 345 83 402 Actuarial loss 43 276 8 182 1 456 Actual present value at the end of the year 129 172 88 527 84 858 Fund amendments – – –Actual return on fund assets 35 550 26 787 20 107

28,9% 23,7% 17,6%

The South African Pension Funds Act of 1956 as amended precludes the Group from accessing the surplus and accordingly it has not beenrecognised in the Group balance sheet.

The defined benefit pension fund consists of pensioner members and asmall number of employee members. This fund is closed to new entrants.

Since the defined benefit pension fund is in surplus there has been noneed to recognise any costs other than contributions.

Principal actuarial assumptions used in the valuationsDiscount rate 8% 8% 8% Expected return on plan assets 8,5% 8,5% 8,5%

Consideration has been given to the rate of return currently being earnedand the rates of return expected to be available for reinvestment overthe future period until maturity of the pension benefits.

Future salary increases 6% 6% 6% Future pension increases 3,75% 3,75% 3,75%

Employer contributions recognised in the income statementR 000 R 000 R 000

Contributions by group companies on behalf of members:Defined benefit funds 189 177 173 Defined contribution funds 5 725 5 035 4 483

5 914 5 212 4 656

The contributions are the Group contributions on behalf of employees to all the funds described above of which the employees aremembers. These contributions are included in employee benefits expense disclosed in note 6. Contributions by group companies onbehalf of members to defined benefit funds in the financial year ending on 30 June 2008 is expected to be approximately R198 000.

MedicalThe Group pays a subsidy of R25 000 per annum in respect of three retired members of the ELB Group Limited Pension Fund. The subsidy, over the life expectancy of the three members, has been fully accrued in the balance sheet. Apart from this subsidy, the Group carries no obligations in respect of post employment medical expenses.

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

26

8 Directors remunerationSalaries Retirement Medical Dividends Imputed

and directors fund aid on treasury interest Total Total fees (a) Allowances contributions contributions shares (b) (c) 2007 2006 R 000 R 000 R 000 R 000 R 000 R 000 R 000 R 000

Executive directorsPJ Blunden (a) 1 235 192 195 42 145 30 1 839 1 685 AG Fletcher 1 803 139 – 51 87 – 2 080 1 909 Dr SJ Meijers (d) 1 160 200 128 31 88 3 1 610 172 MV Ramollo 353 32 39 – – – 424 316

4 551 563 362 124 320 33 5 953 4 082

Non executive directorsWGL Bateman (e) – – – – – – – 272 T de Bruyn (f) 75 – – – – – 75 35 JC Hall (g) 113 – – – – – 113 114 Dr JP Herselman 75 – – – – – 75 70 RGH Smith (g) 120 – – – – – 120 121

383 – – – – – 383 612

Total 4 934 563 362 124 320 33 6 336 4 694

Paid by the Company 383 340 Paid by subsidiaries 5 953 4 354

6 336 4 694

(a) The salary of Mr PJ Blunden includes a performance bonus of R300 000 awarded to him during the year.

(b) Dividends on treasury shares comprise participation in ELB dividends through the ELB Participants Share Trust, anddividends on shares allocated but not yet paid for in the ELB Share Incentive Trust.

(c) Imputed interest is on the unpaid balances of interest free loans granted by the ELB Share Incentive Trust in respect ofincentive shares allocated to participants. These amounts are not recorded as expenses of the Company or the Group.

(d) Dr SJ Meijers, the chief executive of ELB Engineering Services (Pty) Limited, was appointed to the board on 16 May 2006.

(e) Mr WGL Bateman, after 46 years of service to the Group, retired on 16 May 2006.

(f) Mr T de Bruyn was appointed to the board on 15 July 2005.

(g) Mr JC Hall and Mr RGH Smith retired from the board on 20 November 2006.

Directors do not have service contracts. All executive directors have employment contracts and receive monthlyremuneration. In cases of resignation or retirement a period of notice would be agreed between the director andmanagement, which, in normal circumstances, could be expected to be between six and twelve months.

Directors share optionsNo share options were held by directors at 30 June 2007 and 30 June 2006.

Key management personnelAll key management personnel in the Group are directors of the Company, and therefore no additional disclosure to thatgiven above for directors is applicable.

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

27

Group Company2007 2006 2007 2006

R 000 R 000 R 000 R 000

9 Abnormal itemsContinuing operationsOperating itemRelocation of operation – (931) – –

Capital itemRestructure of ELB operations incorporating the introduction

of black economic empowerment (BEE) partners – (850) – 80 504

Abnormal items: (expense) / income – (1 781) – 80 504

10 Interest received and other financial incomeContinuing operationsInterest received – external 12 093 6 484 90 –

– inter company 2 359 –Foreign currency exchange gain on bank deposits 7 41 – –

12 100 6 525 2 449 –

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

28

Group Company2007 2006 2007 2006

R 000 R 000 R 000 R 000

11 Income tax (expense) / creditContinuing operationsSouth African income tax

Current yearNormal tax payable (20 026) (10 505) (695) – Secondary tax on companies (STC) (1 328) (423) (423) (423)Penalties (2) – Capital gains tax (CGT) (4) (1) – – Deferred tax (2 069) 1 538 – –

Previous yearsPayable tax 20 (102) 326 – Deferred tax (35) – – –

Foreign income taxCurrent year

Payable tax (5 188) (874) – – Deferred tax 997 (1 798) – –

Previous yearsPayable tax – 269 Deferred tax 17 – – –

(27 618) (11 896) (792) (423)

Total payable tax (26 528) (11 636) (792) (423)Total deferred tax (1 090) (260) – –

(27 618) (11 896) (792) (423)

The total deferred tax for the year is accountedfor as follows:

Increase / (decrease) in deferred tax assets 343 (260) – –Increase in deferred tax liabilities (1 433) – – –

(1 090) (260) – –

Refer also to note 24.

Reconciliation of the rate of taxation % % % % Income tax as a percentage of profit or loss before tax 32.4 32.8 8.6 0.5 (Increase) / decrease in tax rate arising from:

Secondary tax on companies (STC) (1.6) (1.2) (4.6) (0.5)Prior year adjustments – South African payable tax – (0.3) 3.6 –

– foreign payable tax – 0.7 – – Other non taxable income, non deductible expenses,

incentives and foreign tax differentials (1.3) (3.0) 21.4 29.0 Tax losses, not raised as deferred tax assets, created

or utilised (0.5) – – –

Standard tax rate 29.0 29.0 29.0 29.0

At 30 June 2007 subsidiaries in continuing operations had estimated tax losses to be carried forward amounting toR3 015 000 (2006 - R64 000), of which R 50 000 (2006 - R53 000) had not been recognised in deferred tax assets or liabilities.

A secondary tax on companies (STC) credit of R477 000 (2006 - nil) was available at the year end for set off against STC on future dividends of the Company. The STC credit is included in the deferred tax assets of the Group.

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

29

ELB Timbers 2007 2006

Note R 000 R 000

12 Loss from discontinued operationsGroupSales revenueSale of goods 83 711 102 964 Operating costs excluding depreciation and abnormal item

Cost of sales (79 965) (83 589)Other operating costs (17 827) (27 667)

(97 792) (111 256)

Operating loss before depreciation and abnormal item (14 081) (8 292)Depreciation

(977) (4 062)

Operating loss before abnormal item (15 058) (12 354)Abnormal item

Relocation of operation – (400)

Operating loss (15 058) (12 754)Interest received 128 65 Interest paid (313) (270)

(185) (205)

Loss before tax (15 243) (12 959)South African income tax

Current yearDeferred tax liability reduction – 137

Loss for the year (15 243) (12 822)Items consequent upon the discontinuance

Impairment of plant and equipment – (6 389)Impairment of deferred rent expense 3 – (3 259)Retrenchment and other discontinuance costs (3 824) (1 000)

(3 824) (10 648)Deferred tax liability reduction – 983

(3 824) (9 665)

Loss from discontinued operations (19 067) (22 487)

Attributable to:Ordinary shareholders of ELB Group Limited (19 067) (22 487)Determination of headline loss of discontinued operationsLoss of discontinued operations attributable to ordinary

shareholders of ELB Group Limited as above (19 067) (22 487)Deduct: Capital items:Profit on disposal of plant and equipment 60 41 Items consequent upon the discontinuance as above (3 824) (9 665)

(3 764) (9 624)

Headline loss of discontinued operations attributable toordinary shareholders of ELB Group Limited (15 303) (12 863)

At 30 June 2007 the discontinued operations had estimated tax losses of R73 683 000(2006 - R 58 617 000). The tax losses have not been recognised in deferred tax assets.

Company

Increase in impairment of loan to ELB Timber Holdings (Pty) Limited (19 067) (31 318) (this item is eliminated in the Group consolidation)

Refer also to page 56.

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

30

Group 2007 2006

R 000 R 000

13 Taxed profits and losses of subsidiariesThe interest of the Company for the year ended 30 June 2007 in the aggregate after taxprofits of subsidiaries amounted to R51 317 000 (2006 - R24 660 000) and in theaggregate losses to R21 258 000 (2006 - R22 487 000). The losses comprise lossesof continuing operations amounting to R2 191 000 (2006 - nil) and losses of discontinuedoperations amounting to R19 067 000 (2006 - R22 487 000).

14 Headline earningsDetermination of headline earningsProfit attributable to ordinary shareholders of ELB Group Limited per the income statement 30 386 1 871 Deduct: Capital items included therein:

Continuing operations:Profit on disposal of plant and equipment:

Included in operating profit before abnormal items 202 375 Abnormal capital item per note 9 :

Restructure of ELB operations incorporating the introduction of BEE partners – (850)Income tax effect of capital items (61) (109)Minority interest in capital items (22) –

Discontinued operations (refer also to note 12) :Profit on disposal of plant and equipment 60 41 Impairment of plant and equipment – (6 389)Impairment of plant and equipment - reduction of deferred tax liability – 983 Impairment of deferred rent expense – (3 259)Retrenchment and other discontinuance costs (3 824) (1 000)

(3 645) (10 208)

Headline earnings 34 031 12 079 Deduct: Headline loss of discontinued operations per note 12. (15 303) (12 863)

Headline earnings of continuing operations 49 334 24 942

Refer also to note 43.1

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

31

Group2007 2006

15 Earnings per ordinary share

Weighted average number of ordinary shares in issue during the year

Issued ordinary shares at the beginning of the year 33 860 000 33 860 000 Effect of treasury shares under the control of the trusts (6 613 786) (6 544 915)

Weighted average number of ordinary shares in issue during the year 27 246 214 27 315 085

There was no dilution in the current or the previous year inrespect of unexercised share options.

Cents Cents Earnings per share attributable to ordinary shareholdersof the Company

Earnings per share calculated on the profit for the yearattributable to ordinary shareholders of ELB Group Limitedof R30 386 000 (2006 - R1 871 000).Refer to the income statement.Basic and diluted 111.5 6.8

Earnings per share from continuing operations, attributableto ordinary shareholders of the Company

Earnings per share from continuing operations, calculated onthe profit of continuing operations attributable to ordinaryshareholders of ELB Group Limited, of R49 453 000 (2006 - R24 358 000).Refer to the income statement and to note 43.1.Basic and diluted 181.5 89.2

Headline earnings per share

Headline earnings per share calculated on headline earnings ofR34 031 000 (2006 - R12 079 000).Refer to note 14.Basic and diluted 124.9 44.2

Headline earnings per share from continuing operations

Headline earnings per share from continuing operations,calculated on earnings of R49 334 000 (2006 - R24 942 000)Refer to note 14.Basic and diluted 181.1 91.3

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

32

16 Dividends paid on ordinary sharesPrevious Previous Previous Current year final year interim year year

dividend - dividend - final interim Cents per number of number of dividend dividend Total

share shares shares R 000 R 000 R 000

Year ended 30 June 2006

Previous year final dividend 5 33 860 000 1 693 1 693 Current year interim dividend 5 33 860 000 1 693 1 693

Dividends paid disclosed by the Company 10 33 860 000 33 860 000 1 693 1 693 3 386

Dividends on treasury shares included in operating costs as employee benefits expense (6 506 351) (6 708 426) (325) (336) (661)

Dividends paid disclosed by the Group 27 353 649 27 151 574 1 368 1 357 2 725

Year ended 30 June 2007

Final dividend in respect of the previous year's earnings paid 23 October 2006 10 33 860 000 3 386 3 386

Interim dividend in respect of the current year's earnings paid 23 April 2007 10 33 860 000 3 386 3 386

Dividends paid disclosed by the Company 20 33 860 000 33 860 000 3 386 3 386 6 772

Dividends on treasury shares included in operating costs as employee benefits expense (6 673 146) (6 495 746) (667) (650) (1 317)

Dividends paid disclosed by the Group 27 186 854 27 364 254 2 719 2 736 5 455

A final dividend of 20 cents per share, amounting to R6 772 000 on the total 33 860 000 shares in issue at the date of declaration, in respect of the current year's earnings, was declared on 20 September 2007 and is payable on 22 October 2007(2006 - 10 cents per share on 33 860 000 shares amounting to R3 386 000). Secondary tax on companies (STC) of R846 500 (2006 - R423 250) will be payable on the dividend, against which an STC credit of R477 000 (2006 - nil) is available in respect of dividends paid by a subsidiary. Neither the final dividend nor the tax thereon has been accrued by the Company in theseannual financial statements. The STC credit avaiable is included in the the deferred tax assets of the Group.

Together with the interim dividend of 10 (2006 - 5) cents per share the total dividends in respect of the current financial year amountto 30 (2006 - 15) cents per share.

17 Dividends on 6% preference shares

The dividends for the year on the 6% preference shares of R2 each amounted to R456 (2006 - R456).

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

33

18 Property, plant and equipmentGroup Capitalised

Plant, leased equipment equipment

and and Property vehicles vehicles Total

R 000 R 000 R 000 R 000

2006Carrying amount at the beginning of the year 13 961 22 062 609 36 632 Reallocations (46) 61 (15) –Additions 5 674 5 160 473 11 307 Depreciation – continuing operations (521) (1 912) – (2 433)

– operations discontinued in 2007 (69) (2 540) (145) (2 754)– operations discontinued in 2006 – (1 222) (86) (1 308)

Impairments – operations discontinued in 2006 – (6 389) – (6 389)Disposals – (161) – (161)Assets of operations discontinued in 2006 reclassified for

separate disclosure (665) (4 507) (165) (5 337)Foreign currency translation adjustments – 130 – 130 Carrying amount at the end of the year 18 334 10 682 671 29 687

Cost 19 771 38 871 863 59 505 Accumulated depreciation (1 437) (25 189) (192) (26 818)Accumulated impairment – (3 000) – (3 000)Carrying amount as above 18 334 10 682 671 29 687

2007Carrying amount at the beginning of the year 18 334 10 682 671 29 687Additions 2 746 4 495 68 7 309Depreciation – continuing operations (706) (2 793) – (3 499)

– operations discontinued during the year,to date of discontinuance – (109) (111) (220)

Disposals – (351) – (351)Assets of discontinued operations reclassified for

separate disclosure (1 291) (4 697) (628) (6 616)Foreign currency translation adjustments – 352 – 352Carrying amount at the end of the year 19 083 7 579 – 26 662

Cost 20 336 20 609 – 40 945 Accumulated depreciation (1 253) (13 030) – (14 283)Carrying amount as above 19 083 7 579 – 26 662

Details of properties owned by the group are recorded in a register which is available for inspection at the registered address of the Company. The approximate cost of land included in the carrying amount of property at 30 June 2007 is R2 944 000 (2006 - R2 671 000).

Capital commitmentsAuthorised

Contracted but not yet or contracted Total Total

ordered or ordered 2007 2006

R 000 R 000 R 000 R 000 Purchase of additional property and improvements thereto 7 830 2 200 10 030 –Building additions to existing property – 3 500 3 500 –Vehicles 850 – 850 612 Accounting software 211 277 488 –Office furniture – – – 25 Computers – – – 12

8 891 5 977 14 868 649

A mortgage bond facility has been arranged to finance the purchase of the additional property and improvements thereto, and thebuilding additions to existing property. The vehicles and accounting software will be financed from existing cash resources.

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

34

Company 2007 2006

R 000 R 000

19 Interest in subsidiaries

Shares at costOrdinary shares 2 2 Preference shares 90 000 90 000

90 002 90 002

Receivable from subsidiaries 130 429 127 429 Impairment (76 385) (57 318)

Carrying amount 54 044 70 111

Total carrying amount 144 046 160 113 Details are given on page 56.

Group 2007 2006

R 000 R 000

20 Joint venture

The Company's 85% held subsidiary, ELB Engineering Limited, has an 84,21053% (2006 - 84,21053%) interest in the Ditch Witch Australia Pty Limited joint venture.

84,21053% proportionate share of joint venture operations included in the Group annual financial statements

Sales revenue 114 439 85 234 Profit before tax 13 347 8 910

Property, plant and equipment 3 246 2 601 Current assets 61 613 46 403

Total assets 64 859 49 004

Long term liabilities 821 929 Current liabilities 26 940 20 702

Total liabilities 27 761 21 631

Cash inflow / (outflow):Operations 15 344 8 916 Distributions paid (6 515) (6 171)Investment activities (453) (966)Financing activities 1 197 524

9 573 2 303

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

35

Company 2007 2006

R 000 R 000

21 Long term receivablesELB Participants Share Trust (refer to note 22) 20 748 20 748 ELB Share Incentive Trust (refer to note 23) 2 467 3 350

Gross amounts 23 215 24 098 Impairment of the ELB Share Incentive Trust (1) (3)

23 214 24 095 Current portion of the ELB Share Incentive Trust included in current receivables (147) (237)

23 067 23 858

The underlying securities of the loans to the two Trusts are ordinary shares in the Company, which are under thecontrol of the Trusts. In the Group annual financial statements these shares are treasury shares and are deductedfrom the issued ordinary share capital. Refer to note 31.

There are no other long term receivables in the Company or the Group.

22 ELB Participants Share TrustThe Trust was established to enable employees and salaried directors (the participants) to acquire a beneficialinterest in the dividends of the Group, thereby ensuring that the Group continues to have the benefit of an identityof interest between its shareholders and its management.

An interest free loan of R20 747 963 has been made to the Trust which enabled the Trust to acquire 5 870 650ordinary shares in the Company to achieve the purpose outlined above.

23 ELB Share Incentive TrustThe Trust was established to enable certain executive directors and staff to acquire shares in the Company. The loan to the Trust is interest free, and the loans granted by the Trust to executive directors and staff are correspondingly also interest free. The trustees of the share incentive scheme may not release shares until they are paid for in full.

Number of shares 2007 2006

23.1 ELB Share Incentive TrustScheme share participationsShares held at the beginning of the year 837 796 805 684 Shares paid for in full during the year (254 579) (71 200)Shares transferred from the Batecor Share Incentive Trust – 103 312

Shares held at the end of the year 583 217 837 796

Scheme option participationsOptions held by participants at the beginning of the year at an exercise price

of 300 cents per share 12 500 12 500 No change during the year – –

Options held by participants at the end of the year 12 500 12 500

23.2 Batecor Share Incentive TrustThe assets and liabilities of this Trust were transferred at book value to theELB Share Incentive Trust at 30 June 2006. The loan to the Trust, previouslycarried by the Company's indirect subsidiary, ELB Equipment Holdings Limited, was acquired by ELB Group Limited at 30 June 2006 at its impaired value.Scheme share participationsShares held at the beginning of the year – 113 312 Shares paid for in full during the year – (10 000)Shares transferred to the ELB Share Incentive Trust – (103 312)

Shares held at the end of the year – –

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

36

Group 2007 2006

Note R 000 R 000

24 Deferred tax

Tax rates used in the determination of deferred tax assets and deferred tax liabilities are:

South African income tax – 29%South African secondary tax on companies (STC) – 12,5%Australian income tax – 30%

24.1 Deferred tax assets

Temporary differencesPlant and equipment (86) (30)Inventories 2 061 1 452 Receivables and other current assets 905 191 Construction contract liabilities – 1 787 Leave pay accrued 1 321 1 174 Warranties and other current liabilities 3 334 2 845

Secondary tax on companies (STC) credit 477 –Tax losses carried forward – 12

8 012 7 431

Movement for the year

Balance at the beginning of the year 7 431 7 721 Income statement credit / (expense) in

respect of continuing operations 11 343 (260)Foreign currency translation adjustments 238 (30)

Balance at the end of the year 8 012 7 431

24.2 Deferred tax liabilities

Temporary differencesProperty 931 –Client retentions on construction contracts 1 926 Prepaid expenses 180 –Construction contract liabilities (557) –Leave pay accrued (187) –

Tax losses carried forward (860) –

1 433 –

Movement for the yearBalance at the beginning of year – –Income statement expense in respect of

continuing operations 11 1 433 –

Balance at the end of the year 1 433 –

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

37

Group Company 2007 2006 2007 2006

R 000 R 000 R 000 R 000

25 Construction contracts

Construction contract liabilities

The amount shown separately under current liabilities in the balance sheet comprises:

Liabilities relevant to billings to date 1 554 1 763 – –Advance receipts from clients 13 879 28 254 – –

15 433 30 017 – –

Construction contracts additional information

Revenue recognised for the year on construction contracts,as disclosed in note 1 179 758 52 919 – –

At 30 June 2007, for construction contracts not yet complete,the aggregate amount of costs incurred and recognisedprofits, less recognised losses, amounted to 228 212 57 646 – –

Costs incurred on construction contracts plus profitsrecognised and not yet included in billings to clients atthe year end, recorded separately under current assetsin the balance sheet as construction contracts inprogress, totalled 20 649 923 – –

Amount receivable from construction contract clients at theat the year end, as disclosed in note 27 36 113 39 612 – –

Retentions held by clients at the year end and included in theamount receivable from construction contract clients 6 641 2 641 – –

26 Inventories

Merchandise and components 39 403 48 290 – –Work in progress 7 388 3 733 – –Finished goods 142 658 178 436 – –

189 449 230 459 – –

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

38

Group Company 2007 2006 2007 2006

R 000 R 000 R 000 R 000

27 Trade and other receivables

Amounts receivable from construction contract clients 36 113 39 612 – – Impairment of construction contract receivables (2 347) – Other trade receivables 24 268 40 679 – – Impairment of other trade receivables (2 959) (3 889) – –Other current receivables 2 503 2 505 – 1 Impairment of other current receivables (610) (1 257) – –Share trusts 153 239

56 968 77 650 153 240

28 Other current financial assets

Foreign currency exchange contracts (FECs) marked to market by comparing with year end contract values for FECs with similar maturity dates – 16 241 – –

Security listed on the JSE Limited securities exchange valuedat the last cash sale price of the day at the year end 39 28 – –

39 16 269 – –

29 Other current assets

Taxes recoverable (excluding income tax) 7 359 3 292 2 29 Interest receivable on income tax and other tax prepayments 4 91 – 84 Prepaid expenses 1 810 755 – –Other 29 70 – –

9 202 4 208 2 113

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

39

Group 2007 2006

R 000 R 000

30 Discontinued operations held for disposal

ELB Timbers segment

The Malelane board plant of the ELB Timbers segment operations wasdiscontinued with effect from 30 June 2006. The remainder of the ELBTimbers segment operations were discontinued with effect from31 December 2006. A suspensive agreement for the disposal of theELB Timbers operations either partially or as an entity was in existenceat 30 June 2007. The agreement has now lapsed and other avenuescontinue to be explored for the disposal, either piecemeal or as a unit.

Assets of discontinued operations held for disposal

Non current assetsProperty, plant and equipment 10 259 5 337

Current assets

Inventories 5 529 –Trade receivables 12 950 –Other current receivables 575 –Other current assets 112 –Cash and cash equivalents 2 097 –

21 263 –

Total assets 31 522 5 337

Liabilities of discontinued operations held for disposal

Non current liabilitiesInterest bearing borrowings

Mortgage bond 1 523 1 582 Finance lease and credit instalment agreements 635 246

2 158 1 828 Current liabilities

Trade payables 3 598 –Current portion of interest bearing borrowings 302 –Other current financial liabilities 2 009 –Other current liabilities 3 326 –

9 235 –

Total liabilities 11 393 1 828

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

40

Group Company 2007 2006 2007 2006

R 000 R 000 R 000 R 000

31 Ordinary share capital and premium31.1 Authorised ordinary share capital

50 000 000 ordinary shares of 4 cents each 2 000 2 000 2 000 2 000

Group Company2007 2006 2007 2006

Number Number Number Number

31.2 Number of ordinary shares in issueNumber of shares in issue at the beginning of the year 27 151 554 27 354 649 33 860 000 33 860 000 Shares acquired by the ELB Participants Share Trust – (284 295)Incentive scheme shares paid up by participants and

released by the share incentive trusts 254 579 81 200

Number of shares in issue at the end of the year 27 406 133 27 151 554 33 860 000 33 860 000

Group Company2007 2006 2007 2006

R 000 R 000 R 000 R 000 31.3 Issued ordinary shares and premium

33 860 000 (2006 – 33 860 000) shares of 4 cents each 1 354 1 354 1 354 1 354 Share premium account 23 838 23 838 23 838 23 838

25 192 25 192 25 192 25 192

Treasury shares

Shares under the control of:ELB Participants Share Trust (20 748) (20 748)ELB Share Incentive Trust (2 467) (3 350)

(23 215) (24 098)

Issued ordinary shares and premium 1 977 1 094 25 192 25 192

In terms of the ELB Share Incentive Trust scheme, the directors may direct the trustees to offer shares or grant options in respect of shares to specified employees. The maximum number of shares which may be issued or transferred or options that may be granted is limited to 3 500 000 shares.

At 30 June 2007 1 260 135 (2006 – 1 243 535) shares were available for issue. The increase during the year of 16 600 shares available comprised the net of 19 900 shares issued to parcipants, which reduced the number available, and 36 500 shares surrendered by participants,which increased the number available. Shares surrendered by participants are taken into stock by the Trust, and issues to participants are firstly made from the stock account before additional shares are issued by the Company.

Refer also to note 23.

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

41

Group Company 2007 2006 2007 2006

R 000 R 000 R 000 R 000

32 Preference sharesAuthorised150 000 (2006 - 150 000) 6% fixed cumulative

redeemable preference shares of 200 cents each 300 300 300 300

Issued3 800 (2006 - 3 800) 6% fixed cumulative redeemable

preference shares of 200 cents each 8 8 8 8

The preference shares are redeemable by purchase on theopen market out of a redemption reserve set aside by theappropriation of earnings of the Company which wouldotherwise have been available for distribution as dividends tothe ordinary shareholders. Refer also to note 33.

33 ReservesCapital redemption reserves 742 742 242 242 Reserve for redemption of preference shares

(refer to note 32) 8 8 8 8 Foreign currency translation reserve (6 958) (12 065) – –

(6 208) (11 315) 250 250

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

42

Group Company2007 2006 2007 2006

R 000 R 000 R 000 R 000

34 Non current liabilitiesInterest bearing borrowingsMortgage bond secured over property with a carrying amount

of R15 906 000 (2006 - R16 543 000) 5 526 8 660 – – Finance lease and credit instalment agreements

secured over vehicles with carrying amountstotalling R1 889 000 (2006 - R2 356 000) 1 548 2 162 – –

7 074 10 822 – – Current portion included in interest bearing current payables (1 306) (1 209) – –

Non current portion 5 768 9 613 – –

The interest rates, terms and maturity profiles of the interestbearing borrowings are indicated in note 42.3.

35 Trade and other payables - non interest bearingTrade payables 122 136 146 238 – –Other payables 51 729 41 512 530 532

173 865 187 750 530 532

36 Trade and other payables - interest bearingInterest bearing trade payables 88 836 93 745 – –Current portion of interest bearing non current borrowings

per note 34. 1 306 1 209 – –

90 142 94 954 – –

The interest rates, terms and maturity profiles of the interestbearing payables are indicated in note 42.3.

37 Other current financial liabilitiesForeign currency exchange contracts (FECs) marked to market by

comparing with year end contract values for FECs with similar maturity dates 2 211 – – –

38 Other current liabilitiesTaxes payable (excluding income tax) 1 702 4 411 100 534 Amounts payable under employee benefit plans 15 367 11 376 – –Insurance premiums and claims excess accrued 453 935 – –Other accruals 12 676 12 362 – –

30 198 29 084 100 534

39 Contingent liabilitiesThe Company's indirect subsidiary, ELB Engineering Services (Pty) Limited, operates in the engineering contractingbusiness and is exposed to the risks associated with engineering contracts. These risks are managed on the basis oflimited liability.

All known liabilities of the Group have been accrued. All claims raised against the group are reviewed by the auditcommittee and the board and where necessary appropriate accruals are made. The directors were not aware of any othercontingent liabilities requiring disclosure.

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

43

Group Company2007 2006 2007 2006

Note R 000 R 000 R 000 R 000

40 Notes to the cash flow statements

40.1 Non cash adjustments

Continuing operationsProfit on disposal of plant and equipment 2 (202) (375) – –Foreign currency translation adjustments to

deferred tax assets 24.1 (238) 30 – –

(440) (345) – –

40.2 Changes in working capital

Increase in construction contracts in progress (19 726) (810) – –Decrease / (increase) in inventories 41 010 (36 172) – –Decrease / (increase) in trade and other

receivables 20 682 (38 558) 87 (62)Decrease / (increase) in other current financial

assets 16 230 (16 269) – – (Increase) / decrease in other current assets (4 994) 4 979 111 (10)Increase in assets of discontinued operations

held for disposal (20 266) – – – (Decrease)/ increase in construction contract

liabilities (14 584) 28 968 – – (Decrease) / increase in trade and other

payables - non interest bearing (13 885) 34 740 (2) 20 (Decrease) / increase in trade and other

payables - interest bearing (4 812) 54 051 – – Increase / (decrease) in other financial liabilities 2 211 (922) – – Increase / (decrease) in other current liabilities 1 114 4 384 (434) 48 Increase in liabilities of discontinued operations

held for disposal 9 565 1 828 – –

12 545 36 219 (238) (4)

Attributable to:Continuing operations (1 170) 52 888 (238) (4)Discontinued operations

Working capital 15 812 (16 669)Cash included in assets held for disposal (2 097) –

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

44

Group Company2007 2006 2007 2006

Note R 000 R 000 R 000 R 000

40 Notes to the cash flow statements (continued)

40.3 Income tax paid

Balances at the beginning of the yearIncome tax recoverable 382 991 278 209 Income tax payable (7 904) (2 963) – –

PayableContinuing operations 11 (26 528) (11 636) (792) (423)

Balances at the end of the yearIncome tax recoverable (62) (382) – (278)Income tax payable 18 478 7 904 576 –

(15 634) (6 086) 62 (492)

Attributable to - continuing operations (15 634) (6 086) 62 (492)

40.4 Dividends paid to ordinary shareholders

Dividends declared and paid in the yearFinal for the previous year (2 719) (1 368) (3 386) (1 693)Interim for the current year (2 736) (1 357) (3 386) (1 693)

(5 455) (2 725) (6 772) (3 386)

40.5 Replacement of plant and equipment

Purchases at cost 18 (4 563) (5 633) – – Proceeds on disposals 553 577 – – Foreign currency translation adjustments 18 (352) (130) – –

(4 362) (5 186) – –

Attributable to – continuing operations (3 902) (3 551) – – – discontinued operations to

date of discontinuance (460) (1 635)

40.6 Funding by ordinary shareholders

Per the statement of changes in equity:Shares acquired by the ELB Participants

Share Trust – (1 006)Shares paid up by participants and released

by the share incentive trusts 883 274

883 (732)

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

45

Group Company 2007 2006 2007 2006

R 000 R 000 R 000 R 000

40 Notes to the cash flow statements (continued)

40.7 Funding by minority interest

Subscription by the ELB Educational Trust for HistoricallyDisadvantaged South Africans for 15% of the issuedordinary shares in ELB Engineering Limited, being300 shares of R1 each at a premium of R9 999 pershare; equal to 300 shares at R10 000 per share – 3 000

40.8 Transfer of ELB Equipment Holdings Limited toELB Engineering Limited as part of the restructureof the ELB Group

Cost of equity investment – 24 787 Surplus on transfer (see below) – 83 904

Proceeds on transfer – 108 691

Surplus on restructure of ELB operations incorporatingthe introduction of black economic empowerment (BEE)partners (refer to note 9) – 80 504

Expenses included in the surplus above:Donation to the ELB Educational Trust for HDSA – 3 000 Expenses in establishing the Trust – 400

Surplus on transfer of ELB Equipment Holdings Limited – 83 904

40.9 Investment in ELB Engineering Limited

Ordinary shares – (2)Preference shares – (90 000)

– (90 002)

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

46

Group 2007 2006

Note R 000 R 000

40 Notes to the cash flow statements (continued)

40.10 Cash flow of discontinued operations

Cash flow from operating activities

Operating loss before depreciation and abnormal item 12 (14 081) (8 292)Non cash adjustments

Deferred rent expense for the year 3 – 400 Profit on sale of plant and equipment 2 (60) (41)

Abnormal itemRelocation of operation 12 – (400)

Item consequent upon the discontinuanceRetrenchment and other discontinuance costs 12 (3 824) (1 000)

Interest received 12 128 65 Interest paid 12 (313) (270)Changes in working capital 40.2 15 812 (16 669)

Cash outflow from operating activities (2 338) (26 207)

Cash outflow from investment activitiesReplacement of plant and equipment 40.5 (460) (1 635)

Cash flow from financing activities

Increase / (decrease) in long term borrowingsInter company 3 913 28 277 External (656) (1 480)

Cash inflow from financing activities 3 257 26 797

Cash inflow / (outflow) 459 (1 045)Cash and cash equivalents at the beginning of the year 1 638 2 683

Cash and cash equivalents at the end of the year 2 097 1 638 Cash and cash equivalents included in assets of

discontinued operations held for disposal 40.2 (2 097) –

Included in Group cash and cash equivalentsat the end of the year – 1 638

Group cash flow effect

Cash inflow / (outflow) as above 459 (1 045)Cash and cash equivalents included in assets of

discontinued operations held for disposal (2 097) –Reverse inter company financing as above (3 913) (28 277)

Cash outflow from discontinued operations (5 551) (29 322)

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

47

41 Related party transactions

Related party relationships exist between group companies. All buying and selling transactionsare concluded at arm's length and are eliminated upon consolidation.

Inter company current accounts do not bear interest. Short and long term inter company loansbear interest at market rates. The loan by ELB Group Limited (ELB) to its wholly ownedsubsidiary, ELB Timber Holdings (Pty) Limited (ELB Timbers), is interest free. ELB Timbershas not been profitable and its operations have been discontinued.

A suspensive agreement between ELB and executives of ELB Timbers for the disposal of theELB Timbers operations either partially or as an entity was entered into on 1 January 2007 andwas still in existence at 30 June 2007. The agreement has now lapsed.

Directors remuneration is reported in note 8.

Material transactions of ELB with its subsidiaries are:Management and administration services rendered - reported in note 1.Loans to subsidiaries – reported on page 56.

42 Financial risk management42.1 Foreign currency management

Unless the customer has accepted the currency risk, all imports into South Africa ofequipment relating to specific customer orders are covered by forward foreign currency exchange contracts (FECs). Equipment imports, not yet paid for, are covered by FECs as soon as customer orders are obtained except, as before, where the customer is carrying the currency risk. When currency exchange rates are considered to be particularly favourable, management may cover by FEC certain equipment imports not yet paid for and not yet subject to customer orders.

Significant other trading transactions are usually covered by FECs.

At 30 June 2007 the Group had the following uncovered foreign currency denominatedamounts in the balance sheets of its South African operations

2007 2006 R 000 R 000

Current assetsTrade receivables

United States Dollars – 866

Current liabilitiesTrade payables – non interest bearing

United States Dollars 1 131 493 Euros 1 118 3 852 Japanese Yen 3 453 15 562 British Pounds 3 799 27 143 Australian Dollars – 514 Singapore Dollars 83 55

Trade payables - interest bearingJapanese Yen 2 538 6 772 British Pounds 22 094 16 457

34 216 70 848

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

48

42 Financial risk management (continued)

42.1 Foreign currency management (continued)

FECs of South African operations at 30 June 2007 are summarised below.

FEC FEC foreign amounts Rand amounts

2007 2006 2007 2006 000 000 R 000 R 000

Trade imports – specificEuros 20 – 191 –Japanese Yen 900 023 750 746 56 062 42 466 British Pounds 3 676 5 208 52 147 59 975 Australian Dollars 35 – 211 –

108 611 102 441

Trade imports – generalUnited States Dollars 120 – 904 –Euros 307 67 3 006 647 Japanese Yen 134 599 116 049 8 373 6 509 British Pounds 1 040 305 14 708 3 610

26 991 10 766

Total trade imports 135 602 113 207

Trade exports – specificUnited States Dollars 147 – 1 116 –

Trade exports – generalUnited States Dollars 120 – 913 –

Total trade exports 2 029 –

The differences between FEC contract values and fair values at 30 June 2007 have been accrued as FEC assets in current financial assets or FEC liabilities in current financial liabilities in respect of net gain adjustments or net loss adjustments respectively in the operating units. The gains and losses are taken through operating costs in the income statement.

Approximate foreign currency exchange rates at 30 June 2007 were:

2007 2006

Number of South African Rands to one:United States Dollar 7.04275 7.13760 Euro 9.52430 9.15836 British Pound 14.14647 13.10661 Australian Dollar 5.98149 5.29397 Singapore Dollar 4.60199 4.49842

Number of Japanese Yen to one South African Rand 17.489 16.075

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

49

42 Financial risk management (continued)42.2 Interest rate management

Interest rate risk is moderate and is mitigated by the substantial surplus of funds within the Group, and by arrangement with financial institutions for borrowing facilities to be available at market rates in the cases of short term cash shortages.

Surplus funds are placed with 'A' grade financial institutions and in money market securities.

The Group makes use of the cash management system provided by its major local banker, whereby a major portion of theGroup's local bank balances and overdrafts are pooled each day, with the bank charging or crediting interest on the net balance. This facility affords a considerable advantage in controlling interest charged and received.

The Company's articles of association restrict the amount that the Group may borrow on the authority of the directors. At 30 June 2007 the maximum permissible Group borrowings amounted to R202,8 million (2006 - R162,7 million).

42.3 Liquidity riskThe Group manages liquidity risk by compiling and monitoring cash flow forecasts and by arranging with financial institutionsfor borrowing facilities to be available. The risk is reduced by the substantial cash and cash equivalents carried by the Group.The profile of the Group's interest bearing financial liabilities is summarised below.

Mortgage bondThe mortgage bond with a carrying amount of R5 526 000 at 30 June 2007 (2006 - R8 660 000) is with a registered SouthAfrican bank, and is secured over property with a carrying amount at the year end of R15 906 000 (2006 - R16 543 000). The mortgage bond is repayable in monthly amounts of R126 000 with a final date of repayment on 30 September 2010. The interest rate at 30 June 2007 on the mortgage bond was 12% per annum (2006 - 10% per annum).

The estimated portion of the principal that will be repaid by 30 June 2008 is R579 000 (30 June 2007 - R633 000), resulting inan estimated non current portion of the bond of R4 947 000 (2006 - R8 027 000).

Finance lease and credit instalment agreementsFinance lease and credit instalment agreements with a carrying amount of R1 548 000 at 30 June 2007(2006 - R1 335 000) are with Australian financial institutions, and are secured over vehicles with a carrying amount of R1 889 000 at the year end (2006 - R1 685 000). The agreements bear interest at rates ranging between 6,99% per annumand 7,95% per annum (2006 - 6,99% and 7,90% per annum), with a weighted average rate of 7,61% per annum (2006 - 7,47% per annum).

Further information is given below.R 000

Repayments not later than one year 821 Repayments later than one year but not later than five years 861

Total repayments 1 682 Future finance charges included in repayments (134)

Carrying amount at 30 June 2007 1 548 Principal to be repaid by 30 June 2008 (727)

Non current portion 821

Trade payables – interest bearingUse is made of extended credit facilities offered by foreign suppliers. The carrying amount of R88 836 000 at 30 June 2007(2006 - R93 745 000) is repayable in monthly amounts from July 2007 with final payments due in December 2007. The interest rates range between 4% per anum and 10% per annum (2006 - 3,67% and 12% per annum), with a weighted average rate of7,90% per annum (2006 - R8,09% per annum). The interest rates compare favourably with those for borrowings in South Africa.

42.4 Credit riskThe Group has a large and diverse number of clients and customers comprising its customer base, dispersed acrossdifferent industries, including customers in Africa and Australia. There is no significant exposure to any individualcustomer or client. Accordingly the Group has no significant concentration of credit risk.

42.5 Fair valuesThe carrying amounts of all financial assets and financial liabilities in the balance sheets approximate to their fair value.

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

50

43 Segment information43.1 Primary segments

The group is structured into two segments.

Continuing operationsELB Engineering supplies equipment and technical solutions and administers the Group treasury.

Discontinued operationsELB Timbers manufactures and supplies peeled and sliced veneers, plywood products, furniturecomponents and specialised packaging solutions. The ELB Timbers operations have been discontinued.

Certain Group income and expenses are non segmental and are not credited or charged to the segments.ELB

ELB Group EliminateEngin- ELB non seg- intereering Timbers mental company TotalR 000 R 000 R 000 R 000 R 000

Segment revenue and segment resultsfor the year ended 30 June 2007Segment revenue – external 899 650 83 711 – – 983 361

Operating costs excluding depreciation and abnormal items:

Cost of sales (739 646) (79 965) – – (819 611)Other operating costs (76 086) (17 827) (1,780) – (95 693)

(815 732) (97 792) (1 780) – (915 304)

Operating profit / (loss) before depreciation and abnormal items 83 918 (14 081) (1 780) – 68 057

Depreciation (3 499) ( 977) – – (4 476)Operating profit / (loss) before abnormal item 80 419 (15 058) (1 780) – 63 581 Abnormal item as detailed below – (3 824) – – (3 824)Operating profit / (loss) 80 419 (18 882) (1,780) – 59 757Interest received and other financial income 12 006 128 2,449 (2 385) 12 198Interest paid (7 734) ( 313) (25) 2 385 (5 687)Segment results 84 691 (19 067) 644 – 66 268 Income tax expense (27 301) – (317) – (27 618)Profit / (loss) for the year 57 390 (19 067) 327 – 38 650

Attributable to:Ordinary shareholders of ELB Group Limited 49 126 (19 067) 327 – 30 386 Minority interest 8 264 – – – 8 264

57 390 (19 067) 327 – 38 650

Determination of headline earningsProfit / (loss) attributable to ordinary

shareholders of ELB Group Limited as above 49 126 (19 067) 327 – 30 386Deduct: Capital items included in attributable

profit / (loss) as below 119 (3 764) – – (3 645)Headline earnings / (loss) 49 007 (15 303) 327 – 34 031

Abnormal itemRetrenchment and other discontinuance costs – (3 824) – – (3 824)

Capital items included in attributable profitRetrenchment and other discontinuance costs – (3 824) – – (3 824)Profit on disposal of plant and equipment 202 60 – – 262Income tax effect of capital items (61) –- – – (61)Minority interest in capital items (22) – – – (22)

119 (3 764) – – (3 645)

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

51

43 Segment information (continued)43.1 Primary segments (continued)

ELB ELB Group Eliminate

Engin- ELB non seg- intereering Timbers mental company Total R 000 R 000 R 000 R 000 R 000

Segment revenue and segment resultsfor the year ended 30 June 2006Segment revenue - external 590 717 102 964 – – 693 681

Operating costs excluding depreciation andabnormal items:

Cost of sales (492 596) (83 589) – (576 185)Other operating costs (58 158) (27 667) (1 323) (87 148)

(550 754) (111 256) (1 323) – (663 333)

Operating profit / (loss) before depreciation and abnormal items 39 963 (8 292) (1 323) – 30 348

Depreciation (2 433) (4 062) – – (6 495)

Operating profit / (loss) before abnormal items 37 530 (12 354) (1 323) – 23 853 Abnormal items as detailed below (931) (11 048) (850) – (12 829)

Operating profit / (loss) 36 599 (23 402) (2 173) – 11 024 Interest received and other financial income 6 525 65 – (19) 6 571 Interest paid (4 649) (270) (40) 19 (4 940)

Segment results 38 475 (23 607) (2 213) – 12 655 Income tax (expense) / credit (11 473) 1 120 (423) – (10 776)

Profit / (loss) for the year 27 002 (22 487) (2 636) – 1 879

Attributable to:Ordinary shareholders of ELB Group Limited 26 994 (22 487) (2 636) – 1 871 Minority interest 8 – – – 8

27 002 (22 487) (2 636) – 1 879

Determination of headline earningsProfit / (loss) attributable to ordinary shareholders

of ELB Group Limited as above 26 994 (22 487) (2 636) – 1 871 Deduct: Capital items included in attributable profit /

(loss) as below 266 (9 624) (850) – (10 208)

Headline earnings / (loss) 26 728 (12 863) (1 786) – 12 079

Abnormal itemsRelocation of operations (931) (400) – – (1 331)Impairment of plant and equipment – (6 389) – – (6 389)Impairment of deferred rent expense _ (3 259) – – (3 259) Retrenchment and other discontinuance costs _ (1 000) – – (1 000)Restructure of ELB operations – – (850) – (850)

(931) (11 048) (850) – (12 829)

Capital items included in attributable profitImpairment of plant and equipment – (6 389) – – (6 389)Impairment of plant and equipment - reduction of

deferred tax liability – 983 – – 983Impairment of deferred rent expense – (3 259) – – (3 259)Retrenchment and other discontinuance costs – (1 000) – – (1 000)Restructure of ELB operations – – (850) – ( 850)Profit on disposal of plant and equipment 375 41 – – 416 Income tax effect of capital items (109) – – – ( 109)

266 (9 624) (850) – (10 208)

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

52

43 Segment information (continued)43.1 Primary segments (continued)

Segment assets and liabilitiesELB

ELB Group Eliminate Engin- ELB non- inter eering Timbers segmental company TotalR 000 R 000 R 000 R 000 R 000

30 June 2007

Non current assets 26 662 – 8 012 – 34 674Current assets

Assets of discontinued operations held for disposal – 31 522 – – 31 522

Other current assets 485 359 – 186 – 485 545

Total assets 512 021 31 522 8 198 – 551 741

Minority interest 9 830 – – – 9 830

Non current liabilitiesExternal 5 768 – 1 433 – 7 201Inter company 33 915 96 514 – (130 429) –

Current liabilitiesLiabilities of discontinued operations

held for disposal – 11 393 – – 11 393Other current liabilities 311 186 – 19 141 – 330 327

Total liabilities 350 869 107 907 20 574 (130 429) 348 921

30 June 2006

Non current assets 23 311 6 376 7 431 – 37 118 Current assets

Non current assets of discontinued operation held for disposal – 5 337 – – 5 337

Other current assets 439 641 41 189 836 (237) 481 429

Total assets 462 952 52 902 8 267 (237) 523 884

Minority interest 665 – – – 665

Non current liabilities 43 785 93 257 – (127 429) 9 613 Current liabilities

Non current liabilities of discontinued operation held for disposal – 1 734 – – 1 734

Other current liabilities 325 581 15 229 8 993 – 349 803

Total liabilities 369 366 110 220 8 993 (127 429) 361 150

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

53

43 Segment information (continued)43.2 Geographic segments

2007 2006 R 000 R 000

Segment revenue – externalSouth Africa

Continuing operations 785 211 505 483 Discontinued operations 83 711 102 964

International 114 439 85 234

983 361 693 681

Non current assetsSouth Africa

Continuing operations 23 416 20 710 Discontinued operations – 6 376

International 3 246 2 601

26 662 29 687

Current assetsSouth Africa

Continuing operations 399 146 376 739 Discontinued operations 31 522 46 526

International 86 213 62 902

516 881 486 167

Segment assets 543 543 515 854 Deferred tax assets 8 012 7 431 Income tax recoverable 62 382Other non segment assets 124 217

Total Group assets 551 741 523 884

Capital expenditure during the yearSouth Africa

Continuing operations 6 201 8 259 Discontinued operations to date of

discontinuance 460 1 635 International 453 966

7 114 10 860

Non current liabilitiesSouth Africa

Continuing operations 4 947 8 027 Discontinued operations – 656

International 821 930

5 768 9 613

Current liabilitiesSouth Africa

Continuing operations 283 667 304 359 Discontinued operations 11 393 16 963

International 27 519 21 222

322 579 342 544

Segment liabilities 328 347 352 157 Deferred tax liabilities 1 433 – Income tax payable 18 478 7 904Other non segment liabilities 663 1 089

Total Group liabilities 348 921 361 150

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

54

44 Accounting standards, amendments and interpretations in issue but not yet effectiveCertain new standards and amendments and interpretations to existing standards have beenpublished that are manadatory for the Group's accounting periods beginning on or after1 November 2006, or later periods, but which the Group has not early adopted. These standardswill not have a material effect on the Group's financial results, financial position and cash flowswhen implemented. The standards are listed below.

IFRIC 10 - Interim financial reporting and impairmentEffective from 1 November 2006

IFRS 7 - Financial instruments: disclosures, and a complimentary amendment to IAS 1 -Presentation of financial statements: capital disclosuresEffective from 1 January 2007

IFRIC 11 - IFRS 2 - Group and treasury share transactionsEffective from 1 March 2007

IFRIC 12 - Service concession arrangementsEffective fom 1 January 2008This standard is not relevant to the Group's operations

IFRIC 13 - Customer loyalty programmesEffective from 1 January 2008This standard is not relevant to the Group's operations

IFRIC 14 - The limit on a defined benefit asset, minimum funding requirements and their interactionEffective from 1 January 2008

Amendment to IAS 23 - Borrowing costsEffective from 1 January 2009

IFRS 8 - Operating segmentsEffective from 1 January 2009

45 Special resolution of indirect subsidiary

Elbcon (Pty) Limited

Name changed from ELB Underground Equipment (Pty) LimitedChange to objects clause in memorandum of association

Notes to the annual financial statementsfor the year ended 30 June 2007 (continued)

55

Details of holding company's interest Issued

ordinary Effective interest Equity investment Indebtedness Currency capital

2007 2006 2007 2006 2007 2006 NAME 000's % % R 000 R 000 R 000 R 000

Local direct interest (subsidiaries)ELB Engineering Limited ZAR 2 85 85 90 002 90 002 33 915 34 828 ELB Timber Holdings (Pty) Limited ZAR – 100 100 – – 96 514 92 601

Local indirect interest(principal operating subsidiaries only)

Batmon Nominees (Pty) Limited ZAR 1 85 85 BEP (Pty) Limited ZAR – 85 85 BRI Pipelines (Pty) Limited ZAR – 85 85 Elbcon (Pty) Limited ZAR – 85 85 ELB Capital Investments (Pty) Limited ZAR – 85 85 ELB Engineering Services (Pty) Limited ZAR – 67 67 ELB Equipment Holdings Limited ZAR 30 000 85 85 ELB Equipment Limited ZAR – 85 85 Elbex (Pty) Limited ZAR – 85 85 ELB Investments (Pty) Limited ZAR – 85 85 ELB Timber Products (Pty) Limited ZAR 13 070 100 100 ELB Ultrabord (Pty) Limited ZAR 2 500 100 100 Equipment Industrial Supplies (Pty) Limited ZAR – 63 63 Plycraft (Pty) Limited ZAR – 100 100 Veneercraft (Pty) Limited ZAR – 100 100

Foreign indirect interest(only principal operating subsidiaries and the joint venture)

Bel Finance Limited USD 4 85 85Ditch Witch Australia Pty Limited

(joint venture) AUD – 72 72Elbquip Holdings Pty Limited AUD 3 000 85 85 Metquip Pty Limited AUD 2 650 85 85

Carrying amounts before impairment 90 002 90 002 130 429 127 429 Impairment of loan to ELB Timber Holdings (Pty) Limited – – (76 385) (57 318)

Carrying amounts after impairment 90 002 90 002 54 044 70 111

The equity investment of ELB Group Limited in ELB Engineering Limited comprises R1 700 in the issued ordinary shares of ELBEngineering Limited, being 85% thereof, and R90 000 000 in the issued preference shares, being 100% thereof. The minority 15% interest in the issued ordinary shares of ELB Engineering Limited is held by the ELB Educational Trust for Historically DisadvantagedSouth Africans.

The equity investment of ELB Group Limited in ELB Timber Holdings (Pty) Limited is an amount R100 in the issued ordinary shares ofELB Timber Holdings (Pty) Limited. The investment has been fully impaired.

The amount of R33 915 000 (2006 - R34 828 000) owing by ELB Engineering Limited to ELB Group Limited bears interest at market rates.

The amount of R96 514 000 (2006 - R92 601 000) owing by ELB Timber Holdings (Pty) Limited (ELB Timbers) to ELB Group Limited (ELB)is a long term loan and is interest free. The loan has been subordinated by ELB for the benefit of the other creditors of ELB Timbers.

The currencies listed above are:AUD – Australian Dollars, USD - United States Dollars, ZAR - South African Rands

All the subsidiaries and the joint venture have 30 June financial year ends.

Subsidiaries and joint venture

56

Number of Number % of sharesshareholders of shares issued

Public shareholders 720 22 762 503 67.2 Non public shareholders 12 4 643 630 13.7 Holders of treasury shares 2 6 453 867 19.1

734 33 860 000 100.0

Directors (direct and indirect holdings) 6 4 643 630 13.7 ELB share trusts 2 6 453 867 19.1

Major shareholders

ELB Participants Share Trust 5 870 650 17.3 Blandford Estates 4 294 612 12.7 Rand Merchant Bank 3 288 878 9.7 Golden Hind Fund 2 905 879 8.6 Standard Bank 1 408 425 4.2

Analysis of ordinary shareholdersat 30 June 2007

Directors’ interests in ordinary shares

57

Beneficial holdings at 30 June 2007 Beneficial holdings at 30 June 2006 Name Total Direct Indirect Total Direct Indirect

PJ Blunden 180 118 180 118 – 180 118 30 118 150 000 T de Bruyn 100 100 – 100 100 –AG Fletcher 4 294 712 100 4 294 612 4 294 712 100 4 294 612 JC Hall * * * 20 000 – 20 000 Dr JP Herselman 158 600 - 158 600 158 600 – 158 600 Dr SJ Meijers 10 000 100 9 900 100 100 –MV Ramollo 100 100 - 100 100 –RGH Smith * * * 100 100 -

4 643 630 180 518 4 463 112 4 653 830 30 618 4 623 212

* Mr Hall and Mr Smith retired from the board on 20 November 2006.

No non beneficial shares were held by any director in the current or the previous financial year.

No change occurred in directors' interests between 30 June 2007 and 30 September 2007.

Listed on the JSE in 1951

Closing price at 30 June 2007 1 750 cents

Highest closing price in the year 1 750 cents

Lowest closing price in the year 610 cents

Total number of shares traded 12 252 385

Total value of shares traded R140 636 845

Number of shares traded as a percentage of total shares issued 36,2 %

Analysis of transactions in ordinary sharesfor the year ended 30 June 2007

Shareholders diary

58

Financial year end 30 June Annual general meeting November

Financial reportsInterim report for the half year March Provisional report for the year September Annual report October

Dividends Declared PaidOrdinary dividends

Interim March April Final September October

6% fixed cumulative redeemable preference sharesSix months ending 31 December March April Six months ending 30 June September October

ELB Group LimitedIncorporated in the Republic of South AfricaRegistration number: 1930/002553/06

Ordinary shares

Share code: ELRISIN: ZAE000035101

Preference shares

Share code: ELRPISIN: ZAE000035333

Company secretary

DG JonesHDipTax, MBA, CA(SA), FCIS

Registered office

ELB Equipment14 Atlas RoadAnderboltBoksburg1459

Postal address

PO Box 565Boksburg1460

Telephone

011 772 1400

Fax

011 772 1401

Administration

59

Share transfer secretaries

Computershare Investor Services 2004 (Pty) Limited Registration number: 2004/003647/07 70 Marshall Street Johannesburg 2001 PO Box 61051 Marshalltown 2107

Independent auditor

KPMG Inc KPMG Crescent 85 Empire Road Parktown Johannesburg 2193 Private Bag 9 Parkview 2122

Banker

First National Bank (a division of FirstRand Bank Limited) 4 First Place Bank City corner Simmonds and Pritchard Streets Johannesburg 2001

Sponsor

Rand Merchant Bank (a division of FirstRand Bank Limited) 1 Merchant Place corner Fredman Drive and Rivonia Road Sandton 2196

Notice is hereby given that the seventy seventh AnnualGeneral Meeting of shareholders of ELB Group Limited (theCompany) will be held in the Board Room, ELB Group Limited,1st Floor, 55 Sixth Street, Hyde Park, Sandton, on Monday19 November 2007 at noon for the following purposes:

1. ORDINARY BUSINESS1.1 To consider the annual financial statements of the

Company for the year ended 30 June 2007 togetherwith the reports of the directors and auditors containedtherein.

1.2 To elect a director in place of Mr AG Fletcher whoretires in accordance with the Company’s Articles ofAssociation, but, being eligible, offers himself for re-election.

1.3 To elect a director in place of Mr MV Ramollo whoretires in accordance with the Company’s Articles ofAssociation, but, being eligible, offers himself for re-election.

Biographical details of all directors of the Company areset out on page 6.

1.4 To ratify the directors’ fees and bonuses.

1.5 To transact any other business that may be transactedat an annual general meeting.

2. SPECIAL BUSINESS

Shareholders will be asked to consider and, if deemed fit,pass the following resolution with or without amendments:

Ordinary Resolution:Authority to place 5% of the authorised shares under thecontrol of the directors for the purposes of the Company’sShare Incentive Scheme

"Resolved that 5% of the authorised shares in the capital ofthe Company be hereby placed under the control of thedirectors as a general authority in terms of section 221(2) ofthe South African Companies Act number 61 of 1973, asamended ("the Companies Act"), and that the directors arehereby authorised to allot and issue shares in the Companyupon such terms and conditions as determined by the rulesof the Company’s Share Incentive Scheme, subject to theprovisions of the Companies Act, the Articles of Associationof the Company and the Listings Requirements of the JSELimited ("JSE").

Voting and proxies

Shareholders of the Company who have not dematerialisedtheir shares in the Company (shares), or who have demate-rialised their shares with "own name" registration, are enti-tled to attend and vote at the meeting and are entitled toappoint a proxy or proxies to attend, speak and vote in theirstead at the meeting. The person so appointed need not bea shareholder. Proxy forms must be forwarded, to reach theregistered office of the Company, or the transfer secretaries,Computershare Investor Services 2004 (Proprietary)Limited, at the address given below no later than noon onThursday, 15 November 2007.

On a show of hands, every shareholder of the Company presentin person or represented by proxy shall have one vote only. Ona poll, every shareholder of the Company shall have one vote forevery share held in the Company by such shareholder.

Shareholders who have dematerialised their shares, other thanthose shareholders who have dematerialised their shares with"own name" registration, should contact their CSDP or broker inthe manner and time stipulated in their agreements in order tofurnish them with their voting instructions and to obtain thenecessary authority to attend the meeting should such share-holder wish to do so.

By order of the BoardDG JonesCompany SecretaryBoksburg 1459

Computershare Investor Services2004 (Proprietary) Limited70 Marshall StreetJohannesburg 2001PO Box 61051Marshalltown 2107Johannesburg

19 October 2007

Notice of annual general meeting

60

ELB GROUP LIMITED(Incorporated in the Republic of South Africa)

Registration No. 1930/002553/06ISIN : ZAE000035101 Share Code ELR

("the Company")

For completion by shareholders who have not dematerialsed their shares or who have dematerialised their shares butwith "own name" registration.

Proxy form

For use by certificated shareholders and "own name registered" dematerialised shareholders, at the general meeting of the company tobe held at noon on Monday, 19 November 2007, at 1st Floor, 55 Sixth Road, Hyde Park, Sandton.

Dematerialised shareholders (other than "own name registered" dematerialised shareholders) who wish to attend the annual generalmeeting should obtain from their CSDP or broker the necessary authorisation to attend the annual general meeting or advise their CSDPor broker as to what action they wish to take in respect of voting at the annual general meeting.

FORM OF PROXY FOR THE SEVENTY SEVENTH ANNUAL GENERAL MEETING OF ELB GROUP LIMITED

I/We (please print) ...........................................................................................................................................................................................

of address (please print) ..................................................................................................................................................................................

being the holder/s of ................................................................................................................... shares in the Company, do hereby appoint

1. .......................................................................................................................................................................................... or failing him/her

2. .......................................................................................................................................................................................... or failing him/her

3. the chairman of the meeting

as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purposes of consideringand, if deemed fit, for the passing, with or without modification, the resolutions to be proposed thereat and at any adjournment thereof,and to vote for and/or against such resolutions and/or abstain from voting in respect of the shares registered in my/our name(s), in accor-dance with the following (see note 3):

In Favour Against Abstain

1. Approval of annual financial statements

2. Election of director Mr AG Fletcher

3. Election of director Mr MV Ramollo

4. Approval of director’s emoluments

5. Other Business

Ordinary resolution

Authority to place 5% of the authorised shares under the control of the directors for the purposes of the Company’s share incentive scheme.

Signed at ................................................................................................................. on ...................................................................... 2007

Signature (see note 5) ....................................................................................................................................................................................

Assisted by me where applicable (see note 8) ...............................................................................................................................................

Please read the notes on the reverse side hereof.

1. A form of proxy is only to be completed by those sharehold-ers who hold shares in certificated form or are recorded onsub-register electronic form in "own name". All other benefi-cial owners who have dematerialised their shares through aCentral Securities Depository Participant ("CSDP") or brokerand wish to attend the meeting must provide the CSDP orbroker with their voting instructions in terms of the relevantcustody agreement entered into between them and theCSDP or broker.

2. A shareholder may insert the name of a proxy or the namesof two alternative proxies of his/her choice in the spaces pro-vided, with or without deleting "the chairman of the meeting",but any such deletion must be initialed by the shareholder.The person whose name is first on this form of proxy andwho is present at the meeting will be entitled to act as proxyto the exclusion of those whose names follow.

3. Please insert an "X" in the relevant spaces indicating howyou wish your votes to be cast. However, if you wish to castyour votes in respect of a lesser number of shares than youown in the Company, insert the number of shares held inrespect of which you wish to vote. Failure to comply with theabove will be deemed to authorise the proxy to vote orabstain from voting at the meeting as he/she deems fit inrespect of all the shareholders’ votes exercisable thereat. Ashareholder or his/her proxy is not obliged to use all thevotes exercisable by the shareholder or by his/her proxy, butthe total of the votes cast in respect of which abstention isrecorded may not exceed the total of the votes exercisableby the shareholder or by his/her proxy.

4. The form of proxy appointing a proxy must reach the regis-tered office of the Company or the transfer secretaries,Computershare Investor Services 2004 (Proprietary)Limited, 70 Marshall Street Johannesburg, 2001(PO Box 61051, Marshalltown, 2107 Johannesburg) by no later than noon on Thursday 15 November 2007.

5. The completion and lodging of this form of proxy will not pre-clude the relevant shareholder from attending the meetingand speaking and voting in person thereat to the exclusion ofany proxy appointed in terms hereof.

6. Documentary evidence establishing the authority of a personsigning this form of proxy in a representative capacity mustbe attached to this form of proxy, unless recorded by theCompany or waived by the chairman of the meeting.

7. Any alteration or correction made to this form of proxy mustbe initialed by the signatory/ies.

8. A minor must be assisted by his/her parents or guardianunless the relevant documents establishing his/her capacityare produced or have been registered by the Company.

9. The chairman of the meeting may accept any form of proxywhich is completed, other than in accordance with thesenotes, if the chairman is satisfied as to the manner in whichthe shareholder wishes to vote.

Notes to the form of proxy

E L B G R O U P L I M I T E DELB House, 55 Sixth Road, Hyde Park, Johannesburg, 2196

PO Box 413149, Craighall, 2024Tel +27 11 772 1400Fax +27 11 772 1401

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