| Wed 23 May 2007, 8:50 | | ESR - Esor Limited - Audited financial results: ye |
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ESR
ESR
ESR - Esor Limited - Audited financial results: year ended 28 February 2007
Esor Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/000732/06)
(JSE code: ESR & ISIN: ZAE000078408)
("Esor" or "the company")
HIGHLIGHTS
All key performance indicators ahead of forecasts
Revenue UP 132%
HEPS UP 77%
EBITDA UP 163%
Dividend of 6 cents per share
Successful integration of Franki acquisition
BEE equity participation at 26,86%
AUDITED FINANCIAL RESULTS
for the year ended 28 February 2007
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
28 February 28 February
2007 2006
Audited Audited
R`000 R`000
Revenue 291 392 125 393
Cost of sales (209 465) (98 772)
Gross profit 81 927 26 621
Other operating income 1 133 1 057
Operating expenses (28 712) (7 060)
Earnings before interest, tax, 54 348 20 618
depreciation and amortisation
Depreciation (8 654) (2 650)
Profit before interest and 45 694 17 968
taxation
Net interest received 1 287 493
Profit before taxation 46 981 18 461
Taxation (12 899) (5 122)
Profit for the year 34 082 13 339
Reconciliation of headline
earnings:
Profit attributable to 34 082 13 339
ordinary shareholders
Adjusted for profit on (184) (653)
disposal of property, plant
and equipment
Headline earnings 33 898 12 685
Weighted average shares in 150 771 99 993
issue on which earnings are
based
Basic earnings per share 22.6 13.3
(cents)
Adjusted for -
Profit on disposal of (0.1) (0.6)
property, plant and equipment
(after tax) (cents)
Headline earnings per share 22.5 12.7
(cents)("HEPS")
Dividend per share (cents) 6.0 -
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
28 February 28 February
2007 2006
Audited Audited
R`000 R`000
Cash flows from operating 32 877 4 781
activities
Cash receipts from customers 258 833 120 827
Cash paid to suppliers and (216 904) (114 131)
employees
Cash generated from operations 41 929 6 696
Interest received 3 007 982
Interest paid (1 720) (489)
Taxation paid (10 339) (2 408)
Cash flows from investing (146 638) (808)
activities
Acquisition of property, plant (41 263) (2 229)
and equipment
Proceeds on disposal of 409 571
property, plant and equipment
Proceeds on disposal of - 850
investment property
Brand name acquired (94 529) -
Acquisition of subsidiary (11 255) -
Cash flows from financing 153 773 1 880
activities
Increase/(decrease) in (4 419) 2 192
unsecured loans
(Decrease)/increase in secured 30 905 (312)
borrowings
Share issue net of issue 127 287 -
expenses
Net increase in cash and cash 40 012 5 853
equivalents
Cash and cash equivalents at 12 636 6 783
beginning of year
Cash and cash equivalents at 52 648 12 636
end of year
CONSOLIDATED BALANCE SHEET
28 February 28 February
2007 2006
Audited Audited
R`000 R`000
ASSETS
Non-current assets 238 579 20 463
Property, plant and equipment 139 861 20 463
Intangible assets 94 529 -
Deferred taxation 4 189 -
Current assets 226 817 40 723
Inventories 6 877 36
Unsecured loans - 5
Taxation overpaid 5 743 -
Trade and other receivables 161 549 28 046
Bank and cash 52 648 12 636
Total assets 465 396 61 186
EQUITY AND LIABILITIES
Share capital and reserves 240 020 36 940
Share capital and premium 175 352 6 372
Equity compensation reserve 658 -
Foreign currency translation 41 -
reserve
Post retirement benefit (681) -
reserve
Accumulated profits 64 650 30 568
Non-current liabilities 71 724 4 797
Secured borrowings 43 915 2 837
Post retirement benefits 10 507 -
Deferred taxation 17 302 1 960
Current liabilities 153 652 19 449
Trade and other payables 121 266 9 546
Current portion of secured 7 939 1 909
borrowings
Taxation owing 3 047 3 570
Provisions 21 400 -
Unsecured loans - 4 424
Total equity and liabilities 465 396 61 186
Shares in issue 243 371 510 100 000 000
Net asset value per share 109.79 36.94
(cents)
Net tangible asset value per 66.55 36.94
share (cents)
SEGMENTAL REPORT
Southern Africa Other regions Consolidated
2007 2006 2007 2006 2007 2006
R`000 R`000 R`000 R`000 R`000 R`000
Revenue 256 591 125 393 34 801 - 291 392 125 393
Profit 36 939 13 339 (2857) - 34 082 13 339
Total assets 370 667 61 186 94 729 - 465 396 61 186
Total 187 549 24 285 37 827 - 225 376 24 285
liabilities
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity Foreign Post
Share Share compens Currency Retire- Accumu-
ation transla- ment lated
capital premium reserve tion benefit profits Total
reserve reserve
R`000 R`000 R`000 R`000 R`000 R`000 R`000
Balance at * - - - - 17 229 17 229
1 March
2005
Share issue * 6 855 - - - - 6 855
Share issue - (483) - - - - (483)
expenses
Capitalisat 100 (100) - - - - -
ion issue
Net profit - - - - - 13 339 13 339
for the
year
Balance at 100 6 272 - - - 30 568 36 940
1 March
2006
Share issue 93 137 807 - - - - 137 900
Share issue - (10 613) - - - - (10
expenses 613)
Share-based 26 41 667 - - - - 41 693
payments
Foreign - - - 41 - - 41
currency
translation
adjustment
Post - - - - (681) - (681)
retirement
defined
benefit
Share - - 658 - - - 658
options
granted
Profit for - - - - - 34 082 34 082
the year
Balance at 219 175 133 658 41 (681) 64 650 240 020
28 February
2007
* Amount less than R1 000.
COMMENTS
INTRODUCTION
The directors are pleased to present the annual financial results of the company
for the year ended 28 February 2007 ("the year"), which significantly exceed the
forecasts in the revised listing particulars ("revised listing forecasts")
issued on the acquisition of Franki Africa (Pty) Limited ("Franki") in October
2006. The successful year was marked by a number of strategic milestones. On 14
March 2006 Esor listed on the Alternative Exchange ("AltX") of the JSE Limited.
In the third quarter of 2006 Esor concluded the acquisition of Franki at the
same time boosting black ownership and directorship ahead of Charter
requirements and expanding its services offering and footprint.
Although only four months of Franki`s trading figures have been consolidated
into the group results from the effective date of the acquisition, the benefits
of the acquisition are reflected in Franki`s contribution to the substantial
increases in all of Esor`s key performance indicators.
Esor has declared a final dividend of 6 cents per share for the year, more than
three times the 1,97 cents per share in the revised listing forecasts. This
move further reinforces Esor`s leadership as the first construction-related
company on AltX to do so.
REVIEW OF OPERATIONS
Esor has continued its strategy of selectively pursuing contracts offering
higher profit margins. This has yielded a strong increase in profits
commensurate with a substantial increase in revenue.
Thriving market conditions continue to drive unabated demand for Esor`s
services. At the same time management`s strict cost control and focus on
operational efficiency have led to improved operating margins.
During the year Esor completed a number of large-scale contracts including
piling and lateral support for the expansion to OR Tambo International Airport
valued at R150 million and the R20 million pipejacking and intake work for the
Vaal River Eastern Subsystem Augmentation Project (VRESAP).
FINANCIAL RESULTS
Group revenue more than doubled to R291,4 million from R125,4 million in the
previous year, 14,5% ahead of the R254,5 million in the revised listing
forecasts. EBITDA increased by 163% to R54,3 million from R20,6 million and
exceeded the revised listing forecast of R41,9 million by 29,6%. Headline
earnings rose 167,2% to R33,9 million equating to 22,5 cents per share (HEPS),
53,7% ahead of the revised listing forecast of 14,64 cents per share.
Cash on hand tripled (317,5%) to R52,6 million. During the year the group
invested in organic growth with the purchase of capital equipment to the value
of R41,2 million.
SEGMENTAL ANALYSIS
The company is managed in South Africa but operates in two principal areas of
the world, namely Southern Africa and the other regions. In South Africa, its
home country, the main focus is on the construction of piles and other related
geotechnical and civil engineering procedures. The company also operates in
Namibia, Swaziland, Lesotho, Mozambique, Botswana,Angola, Mauritius and
Seychelles. The geographical locations are the basis on which the group reports
its primary segment information.
BLACK ECONOMIC EMPOWERMENT ("BEE")
As part of the Franki acquisition BEE ownership was boosted to 26,86% ahead of
Charter requirements. In terms of the deal a BEE consortium including Esor and
Franki staff, funded the cash component of the purchase price. Black employees
now hold a 7,7% stake in the company through the Esor Broad Based Share
Ownership Scheme.
More than 70% of the group`s 1075 core employees are black.
ACQUISITION
As previously announced on 25 August 2006 and 9 October 2006 Esor concluded the
acquisition of Franki for an aggregate consideration of R186 million. Franki has
a 60-year track record and operates throughout South Africa, sub-Saharan Africa
and the Indian Ocean Islands providing specialist geotechnical services
including laboratory testing, piling, underpinning and soil improvement, as well
as a full range of services for the marine construction market.
The two companies are each strongly branded in the geotechnical contracting
market, and it is intended that this strategy of independent branding will
remain in place for the foreseeable future. At the same time synergistic
cultures, management styles and operating systems have ensured successful
integration and the group is operating as a seamless entity.
DIRECTORS
Following the conclusion of the Franki acquisition Roy McLintock and Wayne van
Houten, the CEO and Financial Director of Franki respectively, were appointed to
the Esor board as executive directors. Further, Ethan Dube, Mlungisi Hlongwane
and Franklin Sonn were appointed to the board as non-executive directors in
January 2007, taking black board representation to 30%.
Ian Jefferiss resigned from the board with effect from 23 November 2006. The
board thanks him for his contribution.
PROSPECTS
Organic growth and aggressive investment in plant expansion and renewal have
resulted in increased capacity for Esor. This together with Franki`s additional
capacity and excellent performance, has ideally positioned Esor to take
advantage of spiralling demand as government and parastatal infrastructure
programmes are implemented. Increasing demand for Esor`s services for the
municipal and commercial sectors further enhances the group`s prospects.
The group has a healthy order book with budgeted value for the current financial
year in excess of R570 million. Both Esor and Franki have already secured
contracts in all areas of government infrastructure spend including the
Gautrain, 2010 stadia and the Airports Company of South Africa (ACSA). The
directors are confident of achieving real growth in HEPS subject to market
conditions remaining favourable.
Esor will continue its strategy of capital expenditure on state-of-the-art
equipment to revitalise its plant, specifically rigs to boost hydraulic
efficiency. In the interim new plant will be used to augment current equipment
and enable Esor to meet demand.
DIVIDEND POLICY
At interim results in November 2006 Esor announced its intention to declare a
dividend at year-end equating to 40% of after tax profit. The directors of Esor
have declared a final dividend of R0.06 per share for the year, covered 3.7 by
HEPS, three times higher than the 1,97 cents per share in the revised listing
forecasts. The dividend will be financed out of current profits.
The salient dates for the dividend are as follows:
Last day to trade shares cum div Friday, 8 June 2007
Shares trade ex dividend Monday, 11 June 2007
Record date Friday, 15 June 2007
Payment date Monday, 18 June 2007
No share certificates may be dematerialised or rematerialised between Monday, 11
June 2007 and Friday, 15 June 2007, both dates inclusive.
BASIS OF PREPARATION
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards and the Companies Act of South
Africa, 1973. The accounting policies used to prepare these annual financial
statements are consistent with those applied at the previous year-end.
AUDIT OPINION
The annual financial statements for the year ended 28 February 2007 have been
audited by Esor`s auditors RSM Betty & Dickson (Durban). Their unqualified audit
report is available for inspection at the company`s registered office.
APPRECIATION
The group recognises the value of its staff, many of whom have been with the
group for more than 15 years. The directors thank them for their loyalty and
work ethic which have contributed to the successful listing on Altx and Esor`s
exceptional results. The board also reiterates its welcome and thanks to the
management and staff of Franki, who have already proved integral to the group,
and believes the initial goodwill shown by both companies will continue to the
benefit of all stakeholders. Esor also thanks its business partners, advisors,
suppliers, clients and shareholders for their ongoing support and faith in the
group.
By order of the Board
Bernard Krone Mauro L Trevisani
Chief Executive Officer Financial Director
23 May 2007
Directors: DM Thompson* (Chairman), B Krone (CEO), ML Trevisani# (Financial
Director), ML Barber, E Dube*, AM Field %, JM Hlongwane*, RP McLintock, FA
Sonn*, W van Houten, J van Reenen (alternate to F Sonn)
Non-executive director
Independent
#Italian Citizen
% British Citizen
Registered office: 130 Aberdare Drive, Phoenix Industrial Park, Durban, 4051 (PO
Box 40096, Red Hill, 4071)
Telephone: 031 507 1051
Facsimile: 031 507 5709
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg, 2001 (PO Box 61763, Marshalltown, 2107)
Designated Adviser: Exchange Sponsors (Pty) Limited
Company secretary: ID Stephen
www.esor.co.za
Date: 23/05/2007 08:50:01 Produced by the JSE SENS Department.
