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ESR - Esor Limited - Audited consolidated annual results for the year ended 29

Release Date: 21/05/2008 07:30:02      Code(s): ESR
ESR - Esor Limited - Audited consolidated annual results for the year ended 29  
February 2008                                                                   
ESOR LIMITED                                                                    
(Registration number 1994/000732/06)                                            
Incorporated in the Republic of South Africa                                    
(Share Code: ESR & ISIN Code: ZAE000078408)                                     
("Esor or "the company")                                                        
AUDITED CONSOLIDATED ANNUAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2008         
HIGHLIGHTS                                                                      
Revenue up 249%                                                                 
EBITDA up 243%                                                                  
Headline earnings up 240%                                                       
NAV per share up 46%                                                            
NTAV per share up 83%                                                           
Condensed Consolidated Balance Sheet                                            

                                       2008        2007                         
                                       R`000       R`000                        
                                                                                
ASSETS                                                                          
Non-current assets                      359 947     238 579                     
Property, plant and equipment           262 741     139 861                     
Intangible assets                       94 529      94 529                      
Deferred taxation                       2 677       4 189                       
                                                                                
Current assets                          398 524     226 817                     
Inventories                             7 224       6 877                       
Taxation                                3 527       5 743                       
Trade and other receivables             271 914     161 549                     
Cash at bank and on hand                115 859     52 648                      
                                                                                
Total assets                            758 471     465 396                     
                                                                                
EQUITY AND LIABILITIES                                                          
Share capital and reserves              389 664     240 020                     
Share capital and premium               213 587     175 352                     
Equity compensation reserve             2 361       658                         
Foreign currency translation reserve    6 683       41                          
Post retirement benefit reserve         4           (681)                       
Accumulated profits                     167 029     64 650                      
                                                                                
Non-current liabilities                 107 323     71 724                      
Secured borrowings                      85 169      43 915                      
Post retirement benefits                8 106       10 507                      
Deferred taxation                       14 048      17 302                      
                                                                                
Current liabilities                     261 484     153 652                     
Current portion of secured borrowings   21 304      7 939                       
Taxation                                26 781      3 047                       
Provisions                              15 559      21 400                      
Trade and other payables                197 840     121 266                     

Total equity and liabilities            758 471     465 396                     
                                                                                
Number of ordinary shares in issue      247 904     243 371                     
Weighted average number of ordinary     224 560     150 771                     
shares                                                                          
Diluted weighted average number of      228 677     153 466                     
shares                                                                          
Net asset value per share (cents)       160.3       109.8                       
Net tangible asset value per share      121.4       66.5                        
(cents)                                                                         
Condensed Consolidated Income Statement                                         

                                       2008        2007                         
                                       R`000       R`000                        
                                                                                
Revenue                                 1 017 480   291 392                     
Cost of sales                           (745 546)   (209 465)                   
Gross profit                            271 934     81 927                      
Other operating income                  1 651       1 133                       
Operating expenses                      (90 087)    (29 600)                    
Profit before interest, depreciation    183 498     53 460                      
& taxation                                                                      
Depreciation                            (30 391)    (8 654)                     
Profit before interest and taxation     153 107     44 806                      
Interest paid                           (28 171)    (15 245)                    
Interest received                       32 883      17 420                      
Profit before taxation                  157 819     46 981                      
Taxation                                (41 817)    (12 899)                    
Profit for the year                     116 002     34 082                      
Headline earnings reconciliation:                                               
Basic earnings                          116 002     34 082                      
Profit on disposal of property, plant   (760)       (184)                       
and equipment                                                                   
Loss on disposal of property, plant     46          -                           
and equipment                                                                   
Headline earnings                       115 288     33 898                      
                                                                                
Earnings per share                                                              
Basic earnings per share                51.7 cents  22.6 cents                  
Diluted earnings per share              50.7 cents  22.2 cents                  
Headline earnings per share             51.3 cents  22.5 cents                  
Dividends per share                     20.0 cents  6.0 cents                   
Statement of Recognised Income and Expenses                                     

                                       2008     2007                            
                                       R`000    R`000                           
                                                                                
Defined benefit  plan actuarial gain    685      (681)                          
/ (loss)                                                                        
Shares issued                           8 670    137 900                        
Share issue expenses                    (435)    (10 613)                       
Share based payments                    1 703    42 351                         
Derecognition of special purpose        30 667   -                              
entity                                                                          
Dividends paid                          (14 290) -                              
Foreign currency translation            6 642    41                             
differences for foreign  operations                                             
Income and expenses recognised          33 642   168 998                        
directly to equity                                                              
Profit for the year                     116 002  34 082                         
Total recognised income and expenses    149 644  203 080                        
for the year                                                                    
                                                                                
Condensed Consolidated Cash Flow Statement                                      
                                                                                
                                       2008        2007                         
                                       R`000       R`000                        

Cash flows from operating activities    119 066     32 877                      
Cash receipts from customers            909 365     258 833                     
Cash paid to suppliers and employees    (759 138)   (216 904)                   
Cash generated from operations          150 227     41 929                      
Dividends paid                          (14 290)    -                           
Interest received                       10 805      3 007                       
Interest paid                           (8 669)     (1 720)                     
Taxation paid                           (19 007)    (10 339)                    
                                                                                
Cash flows from investing activities    (146 399)   (146 638)                   
Acquisition of property, plant and      (147 470)   (41 263)                    
equipment                                                                       
Proceeds on disposal of property,       1 071       409                         
plant and equipment.                                                            
Brand name acquired                     -           (94 529)                    
Acquisition of subsidiary               -           (11 255)                    
                                                                                
Cash flows from financing activities    90 544      153 773                     
Decrease in unsecured loans             -           (4 419)                     
Increase in secured borrowings          54 619      30 905                      
Share issue net of issue expenses       38 235      127 287                     
Post retirement benefit                 (2 310)     -                           
                                                                                
Net increase in cash and cash           63 211      40 012                      
equivalents                                                                     
Net cash and cash equivalents at        52 648      12 636                      
beginning of year                                                               
Cash and cash equivalents at end of     115 859     52 648                      
year                                                                            
                                                                                
Segmental report                                                                
Southern   Other    Consolidate                     
                            Africa     regions  d                               
                            2008       2008     2008                            
                            R`000      R`000    R`000                           
Revenue                                                                         
   External sales           848 273    169 207  1 017 480                       
   Total revenue            848 273    169 207  1 017 480                       
                                                                                
Result                                                                          
  Segment result            114 484    38 623   153 107                         
                                                                                
                                                                                
Interest expense         (19 596)   (8 575)  (28 171)                        
   Interest income          14 608     18 275   32 883                          
   Income taxes             (27 058)   (14 759) (41 817)                        
Profit                       82 438     33 564   116 002                        

Other information                                                               
   Segment assets           628 708    129 763  758 471                         
Consolidated total assets    628 708    129 763  758 471                        

   Segment liabilities      341 762    27 045   368 807                         
Consolidated total           341 762    27 045   368 807                        
liabilities                                                                     

Capital expenditure          127 331    20 139   147 470                        
Depreciation                 14 559     15 832   30 391                         
Commentary                                                                      
Introduction                                                                    
The directors of Esor are proud to present the annual financial results for the 
year ended 29 February 2008 ("the year"), which reflect a record performance for
the group. The year saw Esor`s organic growth double across all disciplines and 
in all regions of operation.  In addition the annual results reflect the        
inclusion for the full twelve months of Franki Africa (Pty) Limited ("Franki"), 
acquired in November 2006, which performed equally well to boost top and bottom 
line.                                                                           
The group is firmly aligned to infrastructure spend including Government`s      
approximately R590 billion public investment programme to be deployed over the  
next five years.                                                                
The two underlying companies, Esor and Franki, provide specialist civil         
engineering and geotechnical services encompassing field investigation, design, 
testing capabilities, piling, pipe jacking, soil improvement and lateral        
support.                                                                        
Review of Operations                                                            
Thriving market conditions continued to drive demand for Esor`s services.       
Margins in the second half of the year were to an extent impacted by unusually  
high rainfall in Gauteng prior to and following the month closure for `Builders 
holidays`, affecting the year`s final quarter.  However management`s commitment 
to strict cost control with focus on optimising operational efficiencies and an 
aggressive plant renewal policy, resulted in consistent operating margins       
overall year-on-year.                                                           
Gautrain has been a major contributor to the group`s growth - of the R420       
million worth of projects secured, R170 million worth of work was completed     
during the year. Esor also completed piling projects for Airports Company South 
Africa (ACSA) at the new King Shaka and Cape Town International Airports and    
contracts for piling, pedestrian culvert jacking and lateral support at OR Tambo
International Airport. Work on the stadia for the 2010 World Cup has also been  
completed, specifically at Athlone Stadium in Cape Town, Moses Mabhida Stadium  
in Durban and Port Elizabeth Stadium.                                           
The group further entrenched its presence in Africa building on Franki`s        
existing foothold in oil-rich Angola. Contracts for piling, lateral support and 
marine works projects were completed during the year.                           
CAPEX and Plant Replacement Policy                                              
During the year the group invested R147,5 million in the purchase of capital    
equipment, compared to R41,3 million in the previous year.                      
Skills Shortage                                                                 
Esor strives to be the employer of choice in the industry.  In light of the     
current industry-wide skills shortage, the group`s staff retention record       
reflects its achievement of this objective and is a strong competitive          
advantage.  Esor has a solid base of young semi-skilled and skilled employees,  
which reflected a net gain of employees for the year.  The group is             
well-positioned to address the skills shortage having some time ago identified  
candidates to advance to management level positions using in-house training     
facilities and external suppliers.  Esor`s philosophy of empowerment, assigning 
responsibility and engendering a sense of ownership of the business, is a major 
contributing factor to the strength and depth of the skills pool.               
Black Economic Empowerment                                                      
Esor remains strongly committed to BEE and is constantly striving to increase   
black ownership of the group. Esor has recently been rated as a "Level 6"       
contributor in terms of the Department of Trade and Industry`s BBBEE Codes of   
Good Practice.                                                                  
74% of Esor`s workforce is black and emphasis is placed on training suitable    
candidates to accelerate promotion to management level. In addition, three non- 
executive directors on the company`s board are black.                           
Through the Esor Broad Based Share Ownership Scheme, implemented in 2006, all   
permanent staff below executive management level hold an aggregate 7.56% stake  
in the company.                                                                 
Financial Results                                                               
Group revenue increased to R1 billion from R291 million in the previous year.   
Earnings before interest, taxation, depreciation, and amortisation (EBITDA)     
increased by 243% to R183 million from R53 million. Headline earnings rose 240% 
to R115 million equating to 51,3 cents per share (HEPS). Net asset value per    
share increased by 46% from 109,8 cents per share to 160,3 cents per share and  
net tangible asset value per share rose by 83% from 66,5 cents per share to     
121,4 cents per share, based on the number of shares in issue at year-end.      
Basis of preparation                                                            
The audited consolidated financial statements for the year ended 29 February    
2008 have been prepared in compliance with International Financial Reporting    
Standards (IFRS) IAS 34 and the South African Companies Act, 1973.  The         
accounting policies and methods of measurement and recognition applied in       
preparation of these audited condensed consolidated financial statements are    
consistent with those applied in the group`s most recent audited annual         
financial statements for the previous year ended 28 February 2007.              
Audit Opinion                                                                   
These condensed consolidated financial results for the year have been audited by
the company`s auditors, RSM Betty & Dickson (Durban). Their unmodified audit    
report on the consolidated annual financial statements is available for         
inspection at the registered office of the company.                             
Prospects                                                                       
Prospects for the upcoming year look positive with 60% of the order book for the
year to February 2009 in hand, and key projects targeted and identified to      
achieve the balance. The Gautrain is expected to continue as a strong growth    
driver and further, is stimulating major development within the radius of its   
stations` use areas, which will dramatically alter the urban landscape and      
further boost the construction industry beyond 2010. A plethora of new          
developments is in the pipeline including high-rise office towers, hotel        
developments and various retail and commercial building projects.               
As a major participant in Government`s infrastructure spend, Eskom`s commitment 
to energy development and private sector investment, Esor is well-positioned to 
withstand the current economic downturn. The directors believe that a period of 
consolidation may follow which will be to the long-term benefit of the industry.
As the group is cash positive and major capex spend has already been incurred,  
the impact on Esor of rising interest rates will be mitigated to a large extent.
In addition the impact on Esor of exchange rate fluctuations is mitigated by    
forward cover on contracts.                                                     
The directors further believe that ongoing penetration into Africa offers good  
growth prospects and Esor plans to leverage Franki`s established base in sub-   
Saharan Africa to this end.                                                     
The Franki acquisition has proved incredibly successful with the group          
leveraging the synergistic benefits in areas such as plant, marketing, resources
and human resources. Further acquisitions that could present similar benefits   
for the group in complementary fields, or which could assist Esor in            
diversifying, will be considered in the year ahead.                             
Dividend Policy                                                                 
In line with policy Esor has declared a final dividend of 20,0 cents per share  
for the year, amounting to R49,6 million in total.                              
Relevant dates are as follows:                                                  
                                                                                
Last day to trade cum dividend          Friday, 6 June 2008                     
Commence trading ex dividend            Monday, 9 June 2008                     
Record date                             Friday, 13 June 2008                    
Dividend payable                        Tuesday, 17 June 2008                   
Share certificates may not be dematerialised or rematerialised                  
between Monday 9 June 2008 and Friday 13 June 2008, both dates                  
inclusive.                                                                      
Appreciation                                                                    
Esor recognises the key role our staff plays in the success of the group and we 
thank them unconditionally. We also thank our business partners, advisors,      
suppliers, clients and most importantly our shareholders for their ongoing      
support and faith in the group.                                                 
On behalf of the board.                                                         
Bernard Krone                           Mauro Trevisani                         
Chief Executive Officer                 Financial Director                      
21 May 2008                                                                     
DIRECTORS                                                                       
DM Thompson (Chairman)^, B Krone (Chief Executive Officer), ML Trevisani        
(Financial Director) **, ML Barber, AM Field*, E Dube^, JM Hlongwane^, RP       
McLintock, FA Sonn ^ (Alternate: JC van Reenen)^, W van Houten                  
* British ** Italian ^ non-executive                                            
GROUP SECRETARY                                                                 
ID Stephen 130 Aberdare Drive, Phoenix Industrial Park, Durban, 4051            
P.O. Box 40096, Red Hill, 4071                                                  
TRANSFER SECRETARIES                                                            
Computershare Investor Services (Proprietary) Limited                           
Ground Floor, 70 Marshal Street, Johannesburg, 2001                             
PO Box 61051, Marshalltown, 2107                                                
DESIGNATED ADVISORS                                                             
Exchange Sponsors (Proprietary) Limited                                         
INVESTOR RELATIONS                                                              
Envisage Investor & Corporate Relations                                         
Date: 21/05/2008 07:30:01 Supplied by www.sharenet.co.za                     
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