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ESOR LIMITED - Abridged Consolidated Results for the Year Ended 28 February 2015 and Notice of Annual General Meeting

Release Date: 28/05/2015 07:15:00      Code(s): ESR       PDF(s):  
Abridged Consolidated Results for the Year Ended 28 February 2015 and Notice of Annual General Meeting

Esor Limited
(Registration number 1994/000732/06)
Incorporated in the Republic of South Africa
JSE Code: ESR
ISIN: ZAE000184669
('Esor' or 'the company' or 'the group')

Abridged consolidated results for the year ended 28 February 2015 and notice of annual general meeting

Highlights
Headline earnings per share from continuing operations up 23%
Loss-making N4 road contract resolved
Restructured Civils operations and Support Services
Established joint venture with Calgro M3 for Diepsloot development
LTIFR improved to 0,37
Two-year order book stable at R1,9 billion
Level 3 B-BBEE rating maintained
Gearing down to 23,6%

Commentary

Introduction
The abridged consolidated financial results for the year to 28 February 2015 ('the year') 
reflect the results of a challenging period with the impact of legacy loss-making contracts 
still reflected in the results. However, all legacy problem contracts have since been 
completed, handed over and resolved.

In accordance with our 'back to basics' approach, the group has been restructured into 
one construction unit with six product areas offering positive prospects, while capitalising 
on Esor's strong brand. The business has been consolidated, including rationalising the 
Civils operations.

Financial results
These results were impacted by the impairment of goodwill of R29,7 million and the fair 
value write down of the contingent consideration from the disposal of the Geotechnical 
business of R35,4 million and the operating loss of R48,3 million reported in the Civils 
division.

Revenue was impacted by the group consolidation initiatives as well as the last effects 
of loss-making contracts, and reduced by 9,1% to R1,45 billion. Earnings improved by 39,9% 
to a loss of R99,9 million and improved by 53,8% against continuing operations from the 
preceding period. This translated to a headline loss per share of 18,8 cents compared to 
a headline loss of 11,3 cents and a headline loss from continuing operations of 24,4 cents 
at February 2014. Gearing was lowered to 23,6% which was better than our target.

Safety
It is regrettable to report a fatality at the Northern Aqueduct project post year-end on 
2 April 2015. Esor extends its condolences to the family. Any loss of life impacts the 
wider Esor family too and steps have been put in place to prevent further such incidents.

During the year Esor improved its Lost Time Injury Frequency Ratio ('LTIFR') to 0,37 
(2014: 0,59). The group continues to focus on leading indicators to ensure accidents 
are prevented and on maintaining its ISO 9001, ISO 14001 and OHSAS 18001 accreditations.

Review of operations
The group continued to operate through three core divisions in the year: Esor Civils, 
Esor Pipelines and Esor Developments, and reports accordingly. The restructuring into 
a focused construction and developments group happened post year-end, effective 
1 March 2015.

Esor Civils remained negatively impacted by macroeconomic conditions. Margins were tight, 
with contracts which were tendered for in a tough environment now being executed in an 
even more challenging landscape.

The Kusile contracts account for 60% of Esor Civils' revenue and approximately one-third 
of group revenue. The division therefore focused on entrenching its strong relationship 
with Eskom, who have proven a reliable debtor. The Kusile terrace underground facilities 
works and the general services piping contracts are currently under way. The crushing 
and bulk earthworks contracts are completed and claims have been finalised. Historical 
claims on the terrace underground facilities contract, related to delays and disruptions,
were finalised in October 2014 and the settlement received in November 2014.

In the second half of the year Esor Civils successfully completed the Bakwena N4 road 
contract, its most challenging loss-making contract. Now handed over, the N4 contract 
incurred a further R56 million loss resulting from late completion, partly due to late 
changes to the scope of works and the impact of the labour unrest at Marikana mine. This 
loss was reported in the interim results.

The division successfully targeted refurbishment projects in the year, securing a contract 
for the conversion of a Johannesburg inner city office block into residences. Other refurb 
contracts currently under way include the upgrade of OR Tambo Duty Free for ACSA, and the 
upgrade of Walter Sisulu square for the Johannesburg Development Agency. In addition, Esor 
grew its footprint in the KwaZulu-Natal RDP housing market with two projects totalling 
1 500 units. The group continues to pursue work in the sizable low-cost housing market.

Esor Pipelines has a solid, substantially full order book notwithstanding some project 
cancellations and delays in the year, and continued to deliver a good performance in an 
increasingly competitive market. The group successfully completed a number of key pipeline 
projects. The division has successfully targeted work for eThekwini at the Western and 
Northern aqueducts, which contracts are progressing well.

On the pipejacking front, Esor was awarded substantial work in the year and remains the 
recognised leader in South Africa. The work, although mostly of a smaller nature, geographically 
covers most of South Africa from Northern, North West, Mpumalanga, KwaZulu-Natal and Gauteng 
provinces.

The pipelines order book comprises various long-term projects such as the Western and Northern 
Aqueducts and new awards such as the Malkerns Canal project in Swaziland, the Lion Park and 
Tshelimnyama pipelines contracts, also in KwaZulu-Natal. Esor continues to drive cross-border 
expansion and has achieved success in Swaziland. However, procuring work in other SADC 
countries is proving tougher, impacting time and costs.

The Esor Developments business is progressing well, with five developments in various phases 
of planning and execution. In the year Esor concluded a joint venture agreement with Calgro M3 
on the Diepsloot East integrated residential development project with our share being up to 
R2 billion. Calgro M3 will be responsible for project development and management, an area we 
need to outsource, with Esor retaining the 'right of first refusal' for the installation of 
all engineering services and construction of 50% of the top structures. Esor's new prospective 
development project in Khayelitsha township in the Western Cape means that the order book value 
remained steady despite a drop in revenue in terms of the Calgro M3 joint venture.

Looking ahead, delays in spending the allocated budget on the Diepsloot project will impact 
revenue in FY16.

CAPEX
Capital expenditure of R20,5 million (2014: R38 million from continuing operations) was incurred 
during the year primarily to expand the capacity of the Pipelines division, which has resulted 
in a relatively new and well-maintained fleet and well-equipped workshops. The plant capacity 
has been rationalised and aligned with our future growth strategy.

Transformation
Esor maintained its Level 3 B-BBEE accreditation in terms the Department of Trade & Industry's 
B-BBEE Codes of Good Practice, and is targeting Level 2 by 2016 (based on the 2009 Construction 
Sector Charter).

The Esor Broad Based Share Ownership Scheme ('EBBSOS') increased its shareholding during the 
year and now holds a 5,32% stake in the company.

The group continues to invest heavily in enterprise development with eight SMMEs currently 
receiving Esor's support.

Prospects
The board anticipates Esor's recovery to continue into the year ahead. Esor has been refocused 
on what the group does well and profitably. The directors are confident that the streamlined 
group is agile and nimble to go to where the work is and structured for profitability with clear 
focus areas and improved synergies between disciplines.

Sanitation has been earmarked as an area of future opportunity following the Minister of Water 
and Sanitation's stated commitment to improved access and better infrastructure, particularly 
in rural areas. Esor, having substantially completed a large sanitation project for the eThekwini 
Municipality, is able to leverage existing capacity and skills to accommodate this growth area.

The group will continue to focus on reducing debt and improving cash flow.

Directorate
As announced at interim results, a long-planned restructuring of the board was effected during 
the year. The restructured board is operating well under the helm of Chairman Bernie Krone and 
CEO Wessel van Zyl, supported by CFO Bruce Atkinson.

Oswald Franks was appointed as Lead Independent Director and three new independent non-executive 
directors were added. Dave Thompson and Franklin Sonn retired as independent non-executive 
Chairman and independent non-executive director, respectively, effective 21 August 2014.

Effective 21 August 2014 Heather Sonn and Eugene Erasmus were appointed as independent non-executive 
directors, while Keneilwe Moloko was appointed as independent non-executive director effective 
6 October 2014.

The new board continues to ensure compliance with governance and transformation requirements, 
with a valuable mix of business, financial and engineering expertise.

Dividend declaration
In line with group policy, no dividend has been declared (2014: 38 cents interim dividend following 
the disposal of the geotechnical business). It remains the policy of the group to review the dividend 
policy annually in light of cash flow, gearing, capital requirements and bank covenants.

Events after the reporting date
As of 1 March 2015, Esor restructured the group into six product areas, namely:
Building/Housing
Developments
Infrastructure
Pipe services
Pipelines
Sanitation

On 2 March 2015, the company received notification from the Construction Industry Development 
Board ('CIDB') that they were investigating those companies implicated in the Competition Commission 
enquiry. We are currently in discussions with the CIDB to resolve the matter. The board of the CIDB, 
on 12 May 2015, resolved to suspend the formal enquiry pending resolution of the legal challenges 
to its regulations.

There were no other significant events after the reporting date.

Basis of preparation
The summarised consolidated financial statements are prepared in accordance with the requirements 
of the JSE Limited Listings Requirements for abridged reports, and the requirements of the Companies 
Act applicable to summarised financial statements. The Listings Requirements require abridged reports 
to be prepared in accordance with the framework concepts and the measurement and recognition requirements 
of International Financial Reporting Standards ('IFRS') and the SAICA Financial Reporting Guides as 
issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial 
Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 
Interim Financial Reporting. The accounting policies applied in the preparation of the consolidated 
financial statements, from which the summarised consolidated financial statements were derived, are 
in terms of International Financial Reporting Standards and are consistent with the accounting policies 
applied in the preparation of the previous consolidated financial statements. The financial statements 
that are summarised in this report were prepared by the CFO, Bruce Atkinson.

Audit opinion
This summarised report is extracted from audited information, but is not itself audited. The financial 
statements were audited by KPMG Inc., who expressed an unmodified opinion thereon.

The audited financial statements and the auditor's report thereon are available for inspection at the 
company's registered office. The directors take full responsibility for the preparation of the summarised 
report and the financial information has been correctly extracted from the underlying annual financial 
statements.

The group audited financial statements, which were prepared under the supervision of the CFO, 
Bruce Atkinson CA(SA), are available for inspection at the company's registered office and will 
be included in the Integrated Annual Report 2015 to be posted to stakeholders on or about 28 May 2015.

Annual general meeting
The annual general meeting of the company will be held at the company's offices, 30 Activia Road, 
Activia Park, Germiston on Friday, 26 June 2015 at 10:00. The notice of annual general meeting 
forms part of the Integrated Annual Report 2015, to be posted to stakeholders on or about 28 May 2015.

The board of directors of the company determined that, in terms of section 62(3)(a), as read with 
section 59 of the Companies Act, 2008 (Act 71 of 2008), as amended, the record date for the purposes 
of determining which shareholders of the company are entitled to participate in and vote at the 
annual general meeting is Friday, 19 June 2015. Accordingly, the last day to trade Esor shares in 
order to be recorded in the Register to be entitled to vote will be Thursday, 11 June 2015.

Appreciation
We thank our directors, both existing and new, for their input and commend management and our 
employees for their ongoing commitment. We also thank our business partners, suppliers, advisors 
and our valued clients and shareholders for their continued confidence in the group.

On behalf of the board

Bernie Krone
Chairman

Wessel van Zyl
CEO

28 May 2015

Statements of financial position at 28 February 2015
                                                                             Group
                                                                      2015          2014
                                                                     R'000         R'000
Assets                                                         
Non-current assets                                                 475 950       613 660
Property, plant and equipment                                      230 932       320 135
Goodwill                                                           155 323       185 062
Financial asset at fair value through profit or loss                29 488        64 923
Deferred tax asset                                                  10 566        11 457
Investment and loan to joint venture                                48 880             -
Loans and long-term receivables                                        761        32 083
Current assets                                                     753 117       935 151
Loans and receivables                                               35 014             -
Inventories                                                        149 374       221 345
Non-current assets held-for-sale                                    20 046             -
Taxation                                                             8 014        13 455
Trade and other receivables                                        504 330       659 928
Cash and cash equivalents                                           36 339        40 423
Total assets                                                     1 229 067     1 548 811
Equity and liabilities                                         
Share capital and reserves                                         667 340       777 219
Share capital and premium                                          583 730       586 145
Equity compensation reserve                                              -        19 213
Foreign currency translation reserve                                27 033        23 665
Retained earnings                                                   56 577       148 196
Non-current liabilities                                            121 586       207 802
Secured borrowings                                                 101 837       163 043
Preference shares                                                        -        23 424
Deferred tax liability                                              19 749        21 335
Current liabilities                                                440 141       563 790
Current portion of secured borrowings                               82 920        74 350
Current portion of preference shares                                21 000             -
Bank overdraft                                                           -        19 583
Taxation                                                             2 644        19 131
Provisions                                                          11 458        13 713
Trade and other payables                                           322 119       437 013
Total equity and liabilities                                     1 229 067     1 548 811

Statement of profit or loss and other comprehensive income 
for the year ended 28 February 2015
                                                                            Group
                                                                      2015          2014
CONTINUING OPERATIONS                                                R'000         R'000
Revenue                                                          1 448 363     1 592 835
Cost of sales                                                   (1 385 681)   (1 611 624)
Gross profit                                                        62 682       (18 789)
Other income                                                        10 170        10 564
Operating expenses                                                 (95 963)     (127 117)
Loss before interest, tax, amortisation,
impairments and depreciation                                       (23 111)     (135 342)
Amortisation, impairments and depreciation                         (78 650)     (146 419)
Results from operating activities                                 (101 761)     (281 761)
Finance income                                                      19 538         4 980
Finance costs                                                      (22 983)      (42 420)
Loss before income tax                                            (105 206)     (319 201)
Taxation income                                                      5 314       102 862
Loss from continuing operations                                    (99 892)     (216 339)
Discontinued operations
Profit from discontinued operations, net of
income tax                                                               -        50 178
Loss                                                               (99 892)     (166 161)
Other comprehensive income:
Items that are or may be reclassified to profit or loss
Foreign currency translation differences for foreign
operations                                                          (9 770)       25 568
Related taxes                                                        2 198        (5 753)
Other comprehensive income, net of tax                              (7 572)       19 815
Loss attributable to:
Owners of the company                                              (99 892)     (166 161)
Total comprehensive income attributable to:
Owners of the company                                             (107 464)     (146 346)
Reconciliation of headline loss:
Loss after tax                                                     (99 892)     (166 161)
Net (profit)/loss on disposal of property, plant and
equipment                                                             (893)          294
Impairment of property, plant and equipment and goodwill            29 739        84 638
Loss on disposal of discontinued operations                              -        38 190
Headline loss                                                      (71 046)      (43 039)

                                                                            Group
                                                                      2015          2014
CONTINUING OPERATIONS                                                R'000         R'000
Reconciliation of headline loss from
continuing operations
Loss after tax                                                     (99 892)    (216 339)
Net (profit)/loss on disposal of property, plant                 
and equipment                                                         (893)         294
Impairment of property, plant and equipment                      
and goodwill                                                        29 739       84 638
Loss on disposal of discontinued operations                              -       38 190
Headline loss                                                      (71 046)     (93 217)
Earnings per share                                               
Basic loss per share (cents)                                         (26,4)       (43,5)
Diluted loss per share (cents)                                       (26,4)       (43,5)
Headline loss per share (cents)                                      (18,8)       (11,3)
Diluted headline loss per share (cents)                              (18,8)       (11,3)
Net asset value per share (cents)                                    178,3        203,5
Net tangible asset value per share (cents)                           148,4        168,6
Earnings per share from continuing operations                    
Basic loss per share (cents)                                         (26,4)       (56,6)
Diluted loss per share (cents)                                       (26,4)       (56,6)
Headline loss per share (cents)                                      (18,8)       (24,4)
Diluted headline loss per share (cents)                              (18,8)       (24,4)
Earnings per share from discontinued operations                  
Basic earnings per share (cents)                                         -         13,1
Diluted earnings per share (cents)                                       -         13,1
Headline earnings per share (cents)                                      -         13,1
Diluted headline earnings per share (cents)                              -         13,1

Statements of changes in equity for the year ended 28 February 2015
                                                                                 Equity
                                                                                compen-
                                                         Share       Share       sation
                                                       capital     premium      reserve
Group                                                    R'000       R'000        R'000
Balance at 28 February 2013                                376     570 924       18 606
Loss for the year                                            -           -            -
Other comprehensive income                                   -           -            -
Total comprehensive income for the year                      -           -            -
Transactions with owners, recorded                   
directly in equity                                   
Contributions by and distributions                   
to owners                                            
Dividends to equity holders                                  -           -            -
Share-based payment transactions                             -           -          607
Treasury shares - disposed                                   6      14 839            -
Total transactions with owners                               6      14 839          607
Balance at 28 February 2014                                382     585 763       19 213
Loss for the year                                            -           -            -
Other comprehensive income                                   -           -            -
Total comprehensive income for the year                      -           -            -
Transactions with owners, recorded                   
directly in equity                                   
Contributions by and distributions                   
to owners                                            
Transfer to retained earnings                                -           -      (19 213)
Shares acquired                                             (8)     (2 407)           -
Total transactions with owners                              (8)     (2 407)     (19 213)
Balance at 28 February 2015                                374     583 356            -
                                                     
                                                       Foreign
                                                      currency
                                                   translation    Retained        Total
                                                       reserve    earnings       equity
Group                                                    R'000       R'000        R'000
Balance at 28 February 2013                              3 850     459 506    1 053 262
Loss for the year                                            -    (166 161)    (166 161)
Other comprehensive income                              19 815           -       19 815
Total comprehensive income for the year                 19 815    (166 161)    (146 346)
Transactions with owners, recorded                   
directly in equity                                   
Contributions by and distributions                   
to owners                                            
Dividends to equity holders                                  -    (145 149)    (145 149)
Share-based payment transactions                             -           -          607
Treasury shares - disposed                                   -           -       14 845
Total transactions with owners                               -    (145 149)    (129 697)
Balance at 28 February 2014                             23 665     148 196      777 219
Loss for the year                                            -     (99 892)     (99 892)
Other comprehensive income                              (7 572)          -       (7 572)
Total comprehensive income for the year                 (7 572)    (99 892)    (107 464)
Transactions with owners, recorded                   
directly in equity                                   
Contributions by and distributions                   
to owners                                            
Transfer to retained earnings                           10 940       8 273            -
Shares acquired                                              -           -       (2 415)
Total transactions with owners                          10 940       8 273       (2 415)
Balance at 28 February 2015                             27 033      56 577      667 340

Statements of cash flow for the year ended 28 February 2015
                                                                           Group
                                                                      2015         2014
                                                                     R'000        R'000
Cash flows from operating activities                                97 943     (279 069)
Cash receipts from customers                                     1 643 961    1 487 579
Cash paid to suppliers and employees                            (1 532 274)  (1 575 788)
Cash generated by/(utilised in) operations                         111 687      (88 209)
Finance income                                                      19 538       25 957
Finance costs                                                      (22 983)     (71 213)
Dividends paid                                                           -     (145 149)
Taxation paid                                                      (10 299)        (455)
Cash flows from investing activities                               (27 393)     422 816
Additions to property, plant and equipment                         (20 468)     (52 564)
Proceeds on disposal of property, plant and equipment               41 954       79 312
Acquisition of business, net of cash                                     *      (40 558)
Loan advanced to joint venture                                     (48 880)           -
Disposal of discontinued operations, net of cash                         1      437 387
Investments acquired                                                     -         (761)
Cash flows from financing activities                               (55 051)    (156 495)
Decrease in secured borrowings                                     (52 636)    (171 340)
Shares acquired                                                     (2 415)           -
Proceeds from share issue, net of issue expenses                         -       14 845
Net increase/(decrease) in cash and cash equivalents                15 499      (12 748)
Net cash and cash equivalents at beginning of year                  20 840       33 588
Cash and cash equivalents at end of year                            36 339       20 840
* Less than R1 000

Segmental analysis

Operating segments
The group has three reportable segments, which are the group's strategic business units.
                                                                               Develop-
                                                     Civils      Pipelines         ment
                                                      R'000          R'000        R'000
Group
2015
External revenue                                    787 983        584 507       75 873
Inter-segment revenue                                     -         50 824            -
Segment revenue                                     787 983        635 331       75 873
Segment result
(Loss)/profit before interest and taxation          (48 256)        35 470        4 297
Net finance (cost)/income                            (8 063)         2 012       (4 000)
Taxation                                             20 948          8 948       (1 668)
Segment (loss)/profit                               (35 371)        46 430       (1 371)
Segment assets                                      415 710        359 878      196 644
Segment liabilities                                 554 770        263 774      179 773
Capital and non-cash items
Additions to property, plant and equipment            4 243         11 496            -
Depreciation                                          2 920         14 024            -
Impairment loss                                           -              -            -
Number of employees                                   1 287          1 094            3

                                                                 Corporate
                                                                       and     Consoli-
                                                              eliminations        dated
                                                                     R'000        R'000
Group
2015
External revenue                                                         -    1 448 363
Inter-segment revenue                                              (50 824)           -
Segment revenue                                                    (50 824)   1 448 363
Segment result
(Loss)/profit before interest and taxation                         (93 272)    (101 761)
Net finance (cost)/income                                            6 606       (3 445)
Taxation                                                           (22 914)       5 314
Segment (loss)/profit                                             (109 580)     (99 892)
Segment assets                                                     216 835    1 189 067
Segment liabilities                                               (476 590)     521 727
Capital and non-cash items
Additions to property, plant and equipment                           4 729       20 468
Depreciation                                                        31 967       48 911
Impairment loss                                                     29 739       29 739
Number of employees                                                    154        2 538
                                                   
                                                                               Develop-
                                                     Civils      Pipelines         ment
                                                      R'000          R'000        R'000
Group                                              
2014                                               
External revenue                                    961 599        579 285       63 356
Inter-segment revenue                                42 690              -            -
Segment revenue                                   1 004 289        579 285       63 356
Segment result                                     
(Loss)/profit before interest and taxation         (183 881)        39 892        1 404
Net finance (cost)/income                           (15 179)         1 318         (342)
Taxation                                             56 514        (11 891)        (100)
Segment (loss)/profit                              (142 546)        29 319          962
                                                   
                                                                 Corporate
                                                       Geo-            and     Consoli-
                                                  technical   eliminations        dated
                                                      R'000          R'000        R'000
Group                                              
2014                                               
External revenue                                    712 646              -    2 316 887
Inter-segment revenue                                11 406        (54 096)           -
Segment revenue                                     724 052        (54 096)   2 316 887
Segment result                                     
(Loss)/profit before interest and taxation           71 037       (139 176)    (210 724)
Net finance (cost)/income                            (6 644)       (23 237)     (44 084)
Taxation                                            (14 215)        58 339       88 647
Segment (loss)/profit                                50 178       (104 074)    (166 161)

                                                                               Develop-
                                                     Civils      Pipelines         ment
                                                      R'000          R'000        R'000
Segment assets                                      788 590        254 857      264 454
Segment liabilities                                 875 797        204 802      245 312
Capital and non-cash items
Additions to property, plant and
equipment                                            26 313          9 596            -
Depreciation                                         50 257          6 176            -
Impairment loss                                           -              -            -
Number of employees                                   1 969          1 163            3

                                                                 Corporate
                                                       Geo-            and     Consoli-
                                                  technical   eliminations        dated
                                                      R'000          R'000        R'000
Segment assets                                            -        313 449    1 621 350
Segment liabilities                                       -       (481 780)     844 131
Capital and non-cash items
Additions to property, plant and
equipment                                            14 538          2 117       52 564
Depreciation                                         23 435          5 347       85 215
Impairment loss                                           -         84 446       84 446
Number of employees                                       -             35        3 170

Revenue generated from significant customers includes:
                                                   Business           2015         2014
Customer                                               unit          R'000        R'000
Eskom Holdings SOC Limited                           Civils        566 120      596 492
Department of Human Settlements                      Civils         49 792            -
Airports Company South Africa                        Civils         30 224            -
Umgeni Water                                      Pipelines         77 744      146 064
Ethekwini Municipality                            Pipelines        335 845       98 824
uThukela Municipality                             Pipelines         33 766            -
Bakwena Platinum Corridor Concessionaire          
(Pty) Limited                                        Civils              -       69 213
Anglo American Inyosi Coal                           Civils              -       47 672
Rand Water                                        Pipelines         29 035       23 484
Katu Developers (Pty) Ltd                            Civils              -       59 990
                                                                   
                                                                           South Africa
                                                                      2015         2014
Geographical information                                             R'000        R'000
Total revenue from external customers                            1 447 464    2 015 474
Property, plant and equipment                                      249 857      319 014
                                                                   
                                                                          Other regions
                                                                      2015         2014
Geographical information                                             R'000        R'000
Total revenue from external customers                                  899      301 413
Property, plant and equipment                                        1 121        1 121
                                                                   
                                                                           Consolidated
                                                                      2015         2014
Geographical information                                             R'000        R'000
Total revenue from external customers                            1 448 363    2 316 887
Property, plant and equipment                                      250 978      320 135

Financial asset at fair value through profit or loss
The contingent consideration receivable, a Level 3 financial asset, arose from the 
disposal of the discontinued operation in the comparative period, which includes a 
clause that entitles the seller to an amount of R150 million if the discontinued 
operation's cumulative EBITDA over the next three years exceeds a threshold. The 
fair value is determined considering the estimated receivable, discounted to present 
value. The fair value is based on key unobservable inputs of EBITDA growth of the 
business of 3% and 12% in the years ending December 2015 and 2016 respectively, and 
a discount factor of 9%. Prior year growth was calculated at 8%. The fair value was 
determined by the group finance department. Scenarios on EBITDA growth were developed 
by management together with management of the discontinued operation considering the 
economy generally and their knowledge of the geotechnical business. The estimated fair 
value increases the higher the annual EBITDA growth rate, the higher the EBITDA margin 
and the lower the discount rate. Management considers that changing the above mentioned 
unobservable inputs to reflect other reasonably possible alternative assumptions would 
not result in a significant change in the estimated fair value.

Directors
B Krone (Chairman)**
WC van Zyl (CEO)
BW Atkinson (CFO)
EG Dube*
E Erasmus*
Dr OW Franks* (Lead Independent)
KR Moloko*
HJ Sonn*
* Independent non-executive
** Non-executive

Company secretary
iThemba Governance and Statutory Solutions (Pty) Limited
Monument Office Park
Suite 5 - 102
79 Steenbok Avenue
Monumentpark
0181

PO Box 25160
Monumentpark
0181

Registered office
30 Activia Road
Activia Park
Germiston
1401

PO Box 6478
Dunswart
1508

Telephone: +27 11 776 8700
Fax: +27 11 822 1158

Sponsor
Vunani Corporate Finance
Vunani House
Vunani Office Park
151 Katherine Street
Sandton
2196

PO Box 652419
Benmore
2010

Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg
2001

PO Box 61051
Marshalltown
2107

Investor relations
Envisage Investor & Corporate Relations
4th Floor South Wing
Hyde Park Corner
Jan Smuts Avenue
Hyde Park
2196

Germiston
28 May 2015





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