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Esor Limited - Interim results for the period 31 August 2006

Release Date: 28/11/2006 10:21:01      Code(s): ESR
Esor Limited - Interim results for the period 31 August 2006                    
Esor Limited                                                                    
(Incorporated in the Republic of South Africa)                                  
(Registration Number: 1994/000732/06)                                           
Share Code: ESR                                                                 
ISIN Code: ZAE000078408                                                         
             INTERIM RESULTS FOR THE PERIOD ENDED 31 AUGUST 2006                
HIGHLIGHTS                                                                      
Headline Earnings up 33%                                                        
HEPS up 13%                                                                     
NTAV up 115%                                                                    
Cash balance of R35 million                                                     
Acquisition of Franki Africa successfully concluded                             
Consolidated balance sheet                                                      
                                         31             31  28 February         
August(Revie  August(Review    (Audited)         
                                   wed)2006        ed)2005         2006         
                                      R"000          R"000        R"000         
Assets                                                                          
Property, plant and equipment        26 994          9 989       20 463         
Investment property                       -             56            -         
Investments                               -             12            -         
Current assets                       71 620         42 860       40 723         
Total assets                         98 614         52 917       61 186         
Equity and liabilities                                                          
Capital and reserves                 64 031         24 834       36 940         
Non-current liabilities               7 101          5 229        4 797         
Current liabilities                  27 482         22 854       19 449         
Total equity and liabilities         98 614         52 917       61 186         
Number of shares in issue       120 000 000     100 000 00  100 000 000         
Net asset value per share             53.36          24.83        36.94         
(cents)                                                                         
Tangible net asset value per          53.36          24.83        36.94         
share (cents)                                                                   
Consolidated income statement                                                   
6 months ended                  Year ended       
                             31 August    31 August  Change   28 February       
                            (Reviewed)   (Reviewed)       %     (Audited)       
                                  2006         2005                  2006       
R"000        R"000                 R"000       
Revenue                         76 858       77 687     (1)       125 393       
Gross profit                    17 791       14 117      26        26 622       
Other income                       184          146                 1 057       
Operating costs                (3 892)      (3 366)               (7 061)       
Earnings before                 14 083       10 897                20 618       
interest, tax,                                                                  
depreciation and                                                                
amortisation                                                                    
Depreciation                     (994)        (704)               (2 650)       
Profit before interest          13 089       10 193                17 968       
and taxation                                                                    
Interest paid                    (267)        (191)                 (489)       
Interest received                1 319          432                   982       
Profit before taxation          14 141       10 434                18 461       
Taxation                       (4 118)      (2 830)               (5 122)       
Profit for the period           10 023        7 604      32        13 339       
Reconciliation of                                                               
headline earnings                                                               
Profit attributable to          10 023        7 604                13 339       
ordinary shareholders                                                           
Adjusted for profit on            (28)        (100)                 (653)       
disposal of property,                                                           
plant and equipment                                                             
Headline earnings                9 995        7 504      33        12 686       
attributable to ordinary                                                        
shareholders                                                                    
Weighted average number    118 478 261  100 000 000            99 992 667       
of shares in issue (1)                                                          
Basic earnings per share          8.46         7.61      11          13.3       
(cents)                                                                         
Headline earnings per             8.44         7.51      13          12.7       
share (cents)                                                                   
Dividends per share                  -            -                     -       
(cents)                                                                         
Note:                                                                           
1)   The reviewed weighted number of shares in issue is also used for the       
     comparative figures in order to reflect a more meaningful comparative      
     by taking into account the effect of the capital restructurings            
     undertook during the listing in March 2006 on the earnings per share       
calculations.                                                              
Statement of changes in equity                                                  
                               Share        Share Accumulated       Total       
                             capital      premium      profit       R"000       
R"000        R"000       R"000                   
Balance at 1 March 2005            1            -      17 229      17 230       
Share Issue                        -        6 854           -       6 854       
Share issue expenses               -        (483)           -       (483)       
Capitalisation issue              99         (99)           -           -       
Profit for the year                -            -      13 339      13 339       
Balance at 28 February           100        6 272      30 568      36 940       
2006                                                                            
Shares issued                     23       22 977           -      23 000       
Treasury shares                  (3)      (2 997)           -     (3 000)       
Share issue expenses               -      (2 932)           -     (2 932)       
Profit for the period              -            -      10 023      10 023       
Balance at 31 August             120       23 320      40 591      64 031       
2006                                                                            
Consolidated cash flow statement                                                
                                6 months ended        Year ended                
31 August   31 August  28 February                
                             (Reviewed)  (Reviewed)    (Audited)                
                                   2006        2005         2006                
                                  R"000       R"000        R"000                
Cash flows from operating        11 774         449        4 779                
activities                                                                      
Cash receipts from               68 712      69 597      120 827                
customers                                                                       
Cash paid to suppliers and     (53 825)    (68 452)    (114 131)                
employees                                                                       
Cash generated from              14 887       1 144        6 696                
operations                                                                      
Interest received                 1 319         432          982                
Interest paid                     (267)       (191)        (489)                
Taxation paid                   (4 165)       (936)      (2 409)                
Cash flows from investing       (7 497)       (380)        (807)                
activities                                                                      
Acquisition of property,        (7 567)       (733)      (2 229)                
plant and equipment                                                             
Proceeds on disposal of              70         114          572                
property plant and                                                              
equipment                                                                       
Proceeds on disposal of               -           -          850                
investment property                                                             
Change in associated                  -         239            -                
company loans                                                                   
Cash flows from financing        18 305       (514)        1 880                
activities                                                                      
Net movement in borrowings      (1 695)       (514)        1 878                
Shares issued                    20 000           -            -                
Cash flows for the period        22 582       (445)        5 853                
Cash and Cash equivalents        12 636       6 783        6 783                
at beginning of period                                                          
Cash and Cash equivalents        35 218       6 338       12 636                
at end of period                                                                
INTRODUCTION                                                                    
The directors are pleased to present the maiden interim financial results of    
the company for the six months ended 31 August 2006 ("the interim period").     
The results reflect Esor"s continuing profitability in an active period that    
saw the company announce the acquisition of Franki Africa (Pty) Limited         
(`Franki") on 23 August 2006.                                                   
After conclusion of the interim period and further to the announcement dated    
23 November 2006 the Franki acquisition has become unconditional, at the        
same time boosting Esor"s black ownership and directorship ahead of the         
construction sector"s charter requirements and expanding its services           
offering and footprint. As a result Esor has upwardly revised its revenue       
forecasts for the 12 months to 28 February 2007as set out in the pre-listing    
prospectus. The group is forecasting revenue of R254,5 million compared to      
R130,2 million and earnings and headline earnings per share of 14,64 cents      
per share respectively compared to 12,48 cents per share..                      
Franki operates throughout South Africa, sub-Saharan Africa and the Indian      
Ocean Islands providing specialist geotechnical services including              
laboratory testing, piling, underpinning and soil improvement, as well as a     
full range of services for the marine construction market. The company          
employs 600 people in Johannesburg, Cape Town and Durban, of which around       
80% are HDIs.                                                                   
REVIEW OF OPERATIONS                                                            
Notwithstanding the unduly late award of certain key contracts due to a slow    
rate of government spend which caused a slower than anticipated start to the    
new financial year, Esor"s strategic focus on high-value projects has driven    
a significant increase in the company"s profit margins. Profitability for       
the interim period therefore increased significantly from the previous          
corresponding interim period despite a static revenue line.                     
BLACK ECONOMIC EMPOWERMENT ("BEE")                                              
Following the conclusion of the Franki acquisition, a BEE consortium            
comprising private investors and the Esor-Franki staff forum has agreed to      
subscribe for 54% of the new shares in the company issued on completion of      
the acquisition, which will translate into an aggregate 26% black               
shareholding in the company.                                                    
FINANCIAL RESULTS                                                               
While revenue generation remained constant at R77 million, profit for the       
period increased 33% from R7,6 million to R10,0 million.  This translated       
into headline earnings per share (HEPS) of 8,46 cents up by 12,7% from          
7,51%.  The group saw an increase in its cash holdings to R35 million, with     
a resultant increase in net tangible asset value per share of 118,2 %.          
During the period the group purchased capital equipment to the value of R7,6    
million.                                                                        
PROSPECTS                                                                       
Prospects remain optimistic to February 2007 and beyond.  This optimism is      
underpinned by the recent award of R80 million worth of contracts for the       
Gautrain project coupled with, for instance, a R35 million remediation          
contract in Durban for the extraction of sub-surface heavy metal pollutants     
and a R5,5 million pedestrian culvert and pipejacking project on the multi-     
storey parkade at OR Tambo International Airport.  The anticipated imminent     
award of piling contracts for three of the 2010 World Cup stadia and related    
building, as well as Kwa-Zulu Natal expansion projects, further offer Esor      
opportunity for growth.                                                         
Esor has to date secured R180 million of new contracts for its order book,      
of which R110 million will be carried into the 2008 financial year.  The        
inclusion of Franki in the group has added an approximate R250 million          
pipeline of secured work, of which approximately R150 million worth of          
contracts are in hand for 2008.                                                 
DIVIDEND POLICY                                                                 
No interim dividend has been declared. However, following the Franki            
acquisition, Esor has adopted an annual dividend policy of 40% of after tax     
profits from the effective date of the Franki acquisition.                      
BASIS OF PREPARATION                                                            
The interim results have been prepared in accordance with IAS 34 (Interim       
Financial Reporting). The accounting policies applied in preparing these        
interim financial statements are consistent with those applied in the prior     
interim period and at previous year-end and are in accordance with              
International Financial Reporting Standards.                                    
This announcement has been prepared in accordance with the Listings             
Requirements of the JSE Limited.                                                
CHANGES TO THE BOARD OF DIRECTORS                                               
Subsequent to the interim period, at the general meeting convened on 23         
November 2006 the following changes to the board of directors were approved:    
     *    IG Jefferiss resigned with immediate effect;                          
*    RP McLintock was appointed as an executive director and               
     *    W van Houten was appointed as an executive director.                  
APPRECIATION                                                                    
We thank our loyal staff, the majority of whom have remained with the group     
for more than 15 years, for their commitment and hard work which contributed    
to Esor"s achievement of its milestone listing on AltX .   We also thank our    
business partners, advisors and suppliers, and most importantly our             
shareholders, for their ongoing support and faith in the group.                 
By order of the Board                                                           
28 November 2006                                                                
Bernard Krone                        Mauro L Trevisani                          
Chief Executive Officer              Financial Director                         
CORPORATE INFORMATION                                                           
Non executive directors:             I G Jefferiss                              
                                     D M Thompson                               
Executive directors:                 M L Barber                                 
A M Field                                  
                                     B Krone                                    
                                     M L Trevisani                              
Registration number:                 1994/000732/06                             
Registered address:                  130 Aberdare Drive                         
                                     Phoenix Industrial Park                    
                                     Durban                                     
                                     4051                                       
Postal address:                      P.O. Box 40096                             
                                     Red Hill                                   
                                     4071                                       
Company secretary:                   M L Trevisani                              
Telephone:                           031 507 1051                               
Facsimile:                           031 507 5709                               
Transfer secretaries:                Computershare Investor Services 2004       
                                     (Pty) Limited                              
Designated Adviser:                  Exchange Sponsors (Pty) Limited            
Warning: The listing of ordinary shares in the company is on ALTx.              
Investors are advised of the risks of investing in a company listed on ALTx.    
Investors are advised that the JSE does not guarantee the viability or the      
success of a company listed on ALTx.  In terms of the Listings Requirements,    
the company is obliged to appoint and retain a Designated Adviser, which is     
required to, inter alia, attend all board meetings held by the company to       
ensure that all the Listings Requirements and applicable regulations are        
complied with, approve the Financial Director of the company and guide the      
company in a competent, professional and impartial manner.  If the company      
fails to retain a Designated Adviser, it must make arrangements to appoint a    
new Designated Adviser within 10 business days, failing which the company       
faces suspension of trading of its securities.  If a Designated Adviser is      
not appointed within 30 days of its suspension, the company faces the           
termination of its listing without the prospect of an appropriate offer to      
minority shareholders.                                                          
Date: 28/11/2006 10:21:11 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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