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ESOR LIMITED - Abridged Consolidated Results for the Year Ended 29 February 2016 and Notice of Annual General Meeting

Release Date: 26/05/2016 07:30:00      Code(s): ESR       PDF(s):  
Abridged Consolidated Results for the Year Ended 29 February 2016 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 29 February 2016 and Notice of Annual
General Meeting

Highlights
- Operating profit up 103,4%
- HEPS up 176,6%
- Order book of R1,7 billion
- Gearing reduced to 15,0%
- Developments division matures and achieving targets

Commentary

Introduction
The abridged consolidated results for the year ended 29 February 2016 ('the year') continued
the positive trajectory for Esor. In the first six months the group returned to profitability.
The second half of the year performed as expected to achieve a largely break-even position,
impacted by quality issues on the Northern Aqueduct, the December builders' break and
macro economic conditions forcing some clients into financial distress. The group remained
profitable overall and returned earnings of R3,7 million for the year compared to a loss of
R99,9 million at February 2015.

The return to profitability follows a successful restructure that has resulted in a more stable
platform for growth. The process saw group supporting functions centralised for improved
efficiency - health, safety and environment, tendering, commercial, plant & yard and finance -
and incurred further retrenchment costs of R3,4 million (R12,1 million in the previous year).

The streamlining also saw the group reorganised into two core divisions - Esor Construction
and Esor Developments, driven by the need to properly leverage our areas of expertise and
focus on product delivery.

Continuing our drive for focus, post year-end Esor Construction has been regionally divided
into Inland and Coastal, each still focusing on five product lines: infrastructure, pipelines,
pipe services, building and housing and sanitation. This move will enable the group to focus
on all product lines in all regions of southern Africa and so opens new geographic markets.

Esor work on hand at R1,7 billion is still largely dependent on Government contracts, with
86% secured revenue from National, Provincial and Local Government and parastatals.
We focus on debt collection and cash management and are currently not exposed to any
Government overdue accounts.

Financial results
Revenue was impacted by the strategic consolidation initiatives as well as delays in awards
and in the implementation of the Diepsloot mixed-use housing development, and reduced
by 0,9% to R1,44 billion. Earnings improved to a profit of R3,7 million compared to a loss
of R99,9 million in the comparative period. This translated to a basic earnings per share of
1,0 cents compared to a basic loss per share of 26,4 cents in 2015. Headline earnings per
share improved to 14,4 cents at February 2016 (FY 2015 loss of 18,8 cents per share).

Cash flow improved by R6,1 million or 16,7% on February 2015 with the group reporting
R42,4 million cash on hand at February 2016. Gearing was further reduced to a comfortable
level of 15,0% after repaying R96,1 million of debt during the year.

Following the approval of the long-term incentive plan, namely the Esor Limited Share Plan,
at the AGM on 26 June 2015, Esor acquired 9,2 million shares at a cost of R2,7 million to
hedge against future volatility that resulted in a R72 000 IFRS 2 charge for the year.

Safety
Health and safety remains a priority and the group adheres to a Zero Harm approach. The
Lost Time Injury Frequency Ratio ('LTIFR') at year-end was 0,47 (2015: 0,37). The increase
was a result of a number of preventable accidents and to address the slight increase in
incidents at certain projects, we increased training and mentoring efforts as well as visible
felt leadership initiatives supported with quarterly compliance audits.

Review of operations
For the year under review the group reported in two divisions: Esor Construction and Esor
Developments.

Esor Construction
A tough macro economic landscape adversely impacted the operating environment. Depressed
commodity prices and low demand for minerals and oil affected group activity and credit
downgrades and interest rate hikes further pressured contract awards, resulting in tighter
commercial terms and extended payment terms.

Infrastructure
The Kusile power station contract remained a positive for the group. A key project milestone
was moved forward from December 2016 to September 2016 and negotiations for consequent
acceleration are underway. Unresolved claims in the ordinary course, amounting to R105 million
on the underground terraces contract, remain under negotiation with a number of these at an
advanced stage. Historical claims to March 2014 were settled in full and we are confident that
the current claims under negotiation will be resolved within the next three months.

Pipelines
The Western Aqueduct contract remains on track with good quality control and within budget.
The pipelines business in KwaZulu-Natal is expected to perform well over the next two to
three years given the number of current projects and exciting prospects. The Northern Aqueduct
contracts are presently subjected to penalties following certain quality issues that were detected
late in the project and the resultant overrun in contractual completion dates. Additional resources
were deployed to correct and complete the project within specifications and the revised agreed
timelines. However, these impacted the group's cash position. Insurance claims have been
submitted to our insurer who is currently in the process of obtaining additional information
in assessing the claim. We, together with our legal team, are confident that the costs of repair
will be recovered under the relevant insurance contract. Nonetheless we have traded a R59,8 million
loss in FY16 in recognition of the contract as onerous. None of the pending insurance claim
has been recognised.

In Limpopo projects for the province, municipalities and mines have been awarded to Esor
over the last 12 months and as a result we opened an office in Polokwane during the year.
Esor was awarded the R230 million Vuwani project and two emergency projects through the
provincial pipeline emergency repairs programme on which we are a preferred supplier.

Pipe Services
Esor gained market share in pipejacking with revenue that doubled during the year. The outlook
is promising with a number of larger projects coming to market. We have completed the complex
jacks in Steelpoort post year-end as well as performing to programme and project managing
the 06 Pipeline and pipejacks in Johannesburg. The division has also been awarded three
pipejacking contracts in Botswana, extending our footprint into Africa.

Building & housing
Revenue doubled for the year through the ACSA Duty Free upgrade, Platinum Place refurbishment
and SAA lounge upgrade, although margins were tight. The Transnet, Craftsmanship and Westgate
Shopping Centre upgrades are currently underway. The building sector is starting to settle and
we expect to see larger-scale jobs coming to market in the long term.
We have completed the two RDP housing projects in KwaZulu-Natal, which was a learning
curve for the company. Unknown terrain, unreliable subcontractors and late start-ups resulted
in a R15,9 million loss in the 2016 financial year, largely accounted for in the interim results.
We have reassessed our approach to RDP housing projects and aligned with Bigen Africa,
a consultancy firm that designs RDP houses, and are submitting joint proposals. Once successful,
this will reduce our risk to delivery by Bigen Africa becoming the Implementation Agent and
taking responsibility for the entire process.

Sanitation
The eThekwini project has been completed and was awarded 'Best sanitation project in South
Africa', providing us the best model for sanitation roll-out. There are definite opportunities
although sanitation, as an area of government spend, has been slow to take off. We have
tendered for a number of treatment plant upgrades and remain focused on this area.

Esor Developments
The affordable housing project in Khayelitsha will be undertaken in joint venture with the
Khayelitsha Community Trust. The bankability study and contractual agreements are currently
being finalised. We will develop 368 stands that are already serviced with a further potential
1 000 mixed-use opportunities over three to five years. We are presently awaiting approval
for the ready-to-build design for affordable housing of R400 000 to R500 000 a unit.

We are also in the final phase of servicing the remaining 360 stands at Orchards. After concluding
an exclusivity agreement with RBA, guaranteed by HIFSA, we have de-risked our balance
sheet. Registration of these stands is expected in January 2017. The previous phase was
successfully completed, handed over and registered in the name of RBA at the end of the
2016 financial year.

Uitvlugt in the Vaal Triangle has been negatively impacted by a stagnant economy in the area
and we are accordingly taking a phased approach to the project. We are finalising the township
layouts and obtaining the necessary approvals. Further infrastructure investments will only
be done when the market picks up.

Delays at Diepsloot continue as a result of environmental objections, which were overruled
post year-end and the project is currently in the final phases of township layout and approvals.
In terms of our agreement with Calgro M3, Esor is due a payment of R23 million by November
2016 regardless of the project progress at that time. We maintain first right of refusal on all
infrastructure work as well as 50% of the top structure work.

Africa
Africa remains a hotbed of growth with a number of opportunities in Zimbabwe, particularly in
the non-Government sector. Since there is no restraint of trade restriction in the sale agreement
of the Franki business, we are also able to capitalise on piling and lateral support projects in
the country. We are currently working on three pipejacking projects in Botswana valued together
at R28 million and progressing well on the European Union-funded Malkerns Canal Project in
Swaziland. Our African projects continue to offer a foreign currency hedge, which is favourable
in a weak Rand climate, and now account for 3% of revenue.

CAPEX
Capital expenditure of R6,7 million (2015: R20,5 million) was comparatively low year-on-year
as existing plant is sufficient for current needs. All plant and equipment was consolidated
into a single group-wide department under Support Services in the year, and centralised in
one yard. This resulted in significant cost savings and better control.

An increase in investment is expected in the next two to three years to maintain the current
fleet and balance the average age.

Transformation
Esor maintained its Level 3 B-BBEE accreditation in terms the Department of Trade & Industry's
B-BBEE Codes of Good Practice and continues to invest in improvement, specifically in enterprise
development. Eight SMMEs currently receive Esor's support.

The Esor Broad Based Share Ownership Scheme ('EBBSOS') holds a 5,32% stake in the
company.

We have put in place a number of strategies to drive further transformation within the group.
Prospects

We do not expect markets to change materially in the foreseeable future. We will continue
with business as usual, focusing on core competencies in known regions. The work on hand
is much the same as last year, which aligns with our strategy. The order book is stable at
R1,7 billion.

Notwithstanding the still harsh macro economic environment, Esor is undoubtedly in a stronger
position than two years ago and is now properly positioned for growth.

Dividend declaration
In line with group policy, no dividend has been declared (2015: Nil). 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
There were no 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. This announcement does not include the information required pursuant to paragraph
16A(j) of IAS 34. The full report is available on the issuer's website, at the issuer's registered
offices and upon request. 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.

The full integrated report is published on the same day as this report and may be obtained from
the registered office of the company, its sponsor, or its website. The integrated report provides
details of all material movements in account balances.

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 2016 to be posted to stakeholders on
or about 26 May 2016.

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, 24 June 2016 at 10:00. The notice of annual general
meeting forms part of the Integrated Annual Report 2016, to be posted to stakeholders on
or about 26 May 2016.

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, 17 June 2016. Accordingly, the last day
to trade Esor shares in order to be recorded in the Register to be entitled to vote will be
Thursday, 9 June 2016.

Appreciation
We wish to thank our management and staff for their unrelenting efforts. Our appreciation
also to our fellow directors for their ongoing measured guidance which provided a safe port
in another challenging year. We also thank our business partners, suppliers, advisors and
valued clients and shareholders for your loyal support.

On behalf of the board

Bernie Krone
Chairman

Wessel van Zyl
CEO

26 May 2016

Statements of financial position at 29 February 2016
                                                                                  Group
                                                                         2016               2015
                                                                        R'000              R'000
Assets
Non-current assets                                                    404   539       475      950
Property, plant and equipment                                         178   381       230      932
Goodwill                                                              112   091       155      323
Financial assets at fair value through profit or loss                  51   228        29      488
Deferred tax asset                                                     10   186        10      566
Investments in subsidiaries                                                   -                  -
Investment and loan to joint venture                                   51   892           48   880
Loans and long-term receivables                                             761                761
Current assets                                                        696   386       753      117
Loans and receivables                                                  35   428        35      014
Inventories                                                           108   075       149      374
Non-current assets held-for-sale                                        9   500        20      046
Unsecured loans                                                               -                  -
Taxation                                                               15   552         8      014
Trade and other receivables                                           485   409       504      330
Cash and cash equivalents                                              42   422        36      339
Total assets                                                        1 100   925     1 229      067
Equity and liabilities
Share capital and reserves                                            669 102         667 340
Share capital and premium                                             581 014         583 730
Equity compensation reserve                                                72               -
Foreign currency translation reserve                                   27 756          27 033
Retained earnings                                                      60 260          56 577
Non-current liabilities                                                72 968         121 586
Secured borrowings                                                     45 726         101 837
Preference shares                                                           -               -
Deferred tax liability                                                 27 242          19 749
Current liabilities                                                   358 855         440 141
Current portion of secured borrowings                                  55 093          82 920
Current portion of preference shares                                   10 605          21 000
Bank overdraft                                                              -               -
Financial liability at fair value through profit or loss                5 843               -
Taxation                                                                  714           2 644
Provisions                                                             17 040          11 458
Trade and other payables                                              269 560         322 119
Total equity and liabilities                                        1 100 925       1 229 067

Statements of profit or loss and other comprehensive income for the year ended 29 February 2016
                                                                               Group
                                                                         2016          2015
                                                                        R'000         R'000
Revenue                                                             1 435 901    1 448 363
Cost of sales                                                      (1 353 798) (1 385 681)
Gross profit                                                           82 103        62 682
Other income                                                           52 589        10 170
Operating expenses                                                    (52 899)     (95 963)
Profit/(loss) before interest, tax, amortisation,
impairments and depreciation                                           81 793      (23 111)
Amortisation, impairments and depreciation                            (78 016)     (78 650)
Results from operating activities                                       3 777     (101 761)
Finance income                                                         12 577        19 538
Finance costs                                                          (9 851)     (22 983)
Profit/(loss) before income tax                                         6 503     (105 206)
Taxation income                                                        (2 820)        5 314
Profit/(loss)                                                           3 683      (99 892)
Other comprehensive income:
Items that are or may be reclassified to profit or loss
Foreign currency translation differences for
foreign operations                                                             933       (9 770)
Related taxes                                                                 (210)       2 198
Other comprehensive income, net of tax                                         723       (7 572)
Profit/(loss) attributable to:
Owners of the company                                                        3 683      (99 892)
Total comprehensive income attributable to:
Owners of the company                                                        4 406     (107 464)
Earnings per share
Basic earnings/(loss) per share (cents)                                        1,0        (26,4)
Diluted earnings/(loss) per share (cents)                                      1,0        (26,4)
Headline earnings/(loss) per share (cents)                                    14,4        (18,8)
Diluted earnings/(loss) per share (cents)                                     14,1        (18,8)

Statements of changes in equity for the year ended 29 February 2016
                                                                                         Equity
                                                                                        compen-
                                                            Share            Share       sation
                                                          capital          premium      reserve
Group                                                       R'000            R'000        R'000
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            -
Profit 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
Share-based payment                                                -             -             72
Shares acquired                                                   (9)       (2 707)             -
Total transactions with owners                                    (9)       (2 707)            72
Balance at 29 February 2016                                      365       580 649             72

                                                          Foreign
                                                         currency
                                                      translation         Retained        Total
                                                          reserve         earnings       equity
Group                                                       R'000            R'000        R'000
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
Profit for the year                                                -         3 683        3   683
Other comprehensive income                                       723             -            723
Total comprehensive income for the   year                        723         3 683        4   406
Transactions with owners, recorded   directly
in equity
Contributions by and distributions   to owners
Share-based payment                                                -             -           72
Shares acquired                                                    -             -       (2 716)
Total transactions with owners                                     -             -       (2 644)
Balance at 29 February 2016                                   27 756        60 260      669 102

Statements of cash flow for the year ended 29 February 2016
                                                                                   Group
                                                                              2016          2015
                                                                             R'000         R'000
Cash flows from operating activities                                        76 254        97 943
Cash receipts from customers                                             1 454 822    1 643 961
Cash paid to suppliers and employees                                    (1 376 669) (1 532 274)
Cash generated by/(utilised in) operations                                  78 153       111 687
Finance income                                                              12 577        19 538
Finance costs                                                               (9 851)      (22 983)
Taxation paid                                                          (4   625)       (10    299)
Cash flows from investing activities                                   28   632        (27    393)
Additions to property, plant and equipment                             (6   663)       (20    468)
Proceeds on disposal of property, plant and equipment                  35   295         41    954
Acquisition of joint venture                                                  -                 *
Loan advanced to joint venture                                                -        (48    880)
Disposal of discontinued operations, net of cash                              -                 1
Cash flows from financing activities                                  (98   803)       (55    051)
Decrease in secured borrowings                                        (83   938)       (52    636)
Preference shares redeemed                                            (12   149)                -
Shares acquired                                                        (2   716)        (2    415)
Net increase/(decrease) in cash and cash equivalents                    6   083         15    499
Net cash and cash equivalents at beginning of year                     36   339         20    840
Cash and cash equivalents at end of year                               42   422         36    339
* Less than R1 000.

                                                                              Group
                                                                       2016               2015
                                                                      R'000              R'000
Reconciliation of headline earnings
The calculation of the headline earnings/(loss) per
share attributable to the ordinary equity holders of the
parent is based on the following information:
Reconciliation of headline loss:
Profit/(loss) after tax                                               3 683            (99 892)
Net profit/(loss) on disposal of property, plant
and equipment                                                         2 678                  (893)
Impairment/(reversal) of property, plant and
equipment, investments and goodwill                                  47 108             29 739
Headline earnings/(loss)                                             53 469            (71 046)
Weighted average number of ordinary shares:
Issued ordinary shares                                          395 185 430        395 185 430
Effect of own shares held                                       (24 679 252)       (17 075 798)
Effect of shares issued                                                   -                  -
Weighted average number of shares                               370 506 178        378 109 632
Dilutive average number of ordinary shares:
The calculation of the diluted earnings per share
attributable to the ordinary equity holders of the
parent is based on the following information:
Weighted average number of ordinary shares                      370 506 178         378 109 632
Effect of share incentive allocations                             8 490 000                   -
Diluted weighted average number of shares                       378 996 178         378 109 632

Segmental analysis
Operating segments
The group has two reportable segments, as described in the accounting policy note 2.23,
which are the group's strategic business units. Comparative information has been restated
in line with the new reporting segments.

                                                                         Esor             Esor
                                                                    Construc-         Develop-
                                                                         tion            ments
                                                                        R'000            R'000
Group
2016
External revenue                                                    1 341 162           94 739
Inter-segment revenue                                                   8 940                -
Segment revenue                                                     1 350 102           94 739
Segment result
Profit/(loss) before interest and taxation                             20 225           23 158
Net finance (cost)/income                                                  (4)          (1 603)
Taxation                                                                    -                -
Segment profit/(loss)                                                  20 221           21 555
Segment assets                                                        282 261          139 683
Segment liabilities                                                   262 591          124 706
Capital and non-cash items
Additions to property, plant and equipment                                  -                   -
Depreciation                                                                -                   -
Impairment loss                                                             -                   -
Number of employees                                                     2 184                   2
2015*
External revenue                                                    1 372 490           75 873
Inter-segment revenue                                                  50 824                -
Segment revenue                                                     1 423 314           75 873
Segment result
(Loss)/profit before interest and taxation                            (12   786)         4    297
Net finance (cost)/income                                              (6   051)        (4    000)
Taxation                                                               29   896         (1    668)
Segment profit/(loss)                                                  11   059         (1    371)
Segment assets                                                        775   588        196    644
Segment liabilities                                                   818   544        179    773
Capital and non-cash items
Additions to property, plant and equipment                             15 739                -
Depreciation                                                           16 944                -
Impairment loss                                                             -                -
Number of employees                                                     2 381                3
* Restated.

                                                                    Corporate
                                                                          and       Consoli-
                                                                 eliminations          dated
                                                                        R'000          R'000
Group
2016
External revenue                                                            -      1 435 901
Inter-segment revenue                                                  (8 940)             -
Segment revenue                                                        (8 940)     1 435 901
Segment result
Profit/(loss) before interest and taxation                            (39   606)       3   777
Net finance (cost)/income                                               4   333        2   726
Taxation                                                               (2   820)      (2   820)
Segment profit/(loss)                                                 (38   093)       3   683
Segment assets                                                        678   981    1 100   925
Segment liabilities                                                    44   526      431   823
Capital and non-cash items
Additions to property, plant and equipment                              7 911          7   911
Depreciation                                                           28 546         28   546
Impairment loss                                                         3 876          3   876
Number of employees                                                       214          2   400
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 profit/(loss)                                                (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
* Restated.

                                                                              South Africa
                                                                         2016         2015
Geographical information                                                R'000        R'000
Total revenue from external customers                               1 391 951    1 447 464
Property, plant and equipment                                         186 642      249 857

                                                                            Other regions
                                                                         2016        2015
Geographical information                                                R'000       R'000
Total revenue from external customers                                  43 950         899
Property, plant and equipment                                           1 239       1 121

                                                                                Consolidated
                                                                         2016           2015
Geographical information                                                R'000          R'000
Total revenue from external customers                               1 435 901      1 448 363
Property, plant and equipment                                         187 882        250 978

A separate segment report has not been prepared for the company as it had no trading operations.

Level 3: The contingent consideration receivable arose from the disposal of the discontinued
operation in the 2014 financial year, which included 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 12% in the year ending December 2016 and a discount factor of 10,5%. The fair value
was determined by the group finance department. Scenarios on EBITDA growth were developed
by the 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 estimated fair value.

Directors:
B Krone (Chairman)+
WC van Zyl (CEO)
BW Atkinson (CFO)
Dr OSW 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 652 419, 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
16th Floor, Sinosteel Plaza, 159 Rivonia Road Morningside Ext, Sandton

Date: 26/05/2016 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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