| Wed 7 Nov 2007, 8:16 | | ESR - Esor Limited - Reviewed interim results |
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ESR
ESR
ESR - Esor Limited - Reviewed interim results
Esor Limited
Registration number: 1994/000732/06)
Incorporated in the Republic of South Africa
(Share Code: ESR & ISIN Code: ZAE000078408)
("Esor" or "the company")
REVIEWED INTERIM RESULTS
for the six months ended 31 August 2007
HIGHLIGHTS
- Revenue UP 516%
- Earnings per share UP 202%
- Headline earnings per share UP 205%
- Net asset value per share UP 141%
- Tangible net asset value per share UP 61%
Consolidated income statement
6 months ended Year ended
31 August 31 August 28 February
(Reviewed) (Reviewed) Change (Audited)
2007 2006 % 2007
R`000 R`000 R`000
Revenue 473 575 76 858 516 291 392
Gross profit 144 521 17 791 712 81 927
Other income 433 184 1 133
Operating expenses (50 975) (3 892) (28 712)
Profit before interest, 93 979 14 083 54 348
tax and depreciation
Depreciation (10 612) (994) (8 654)
Profit before interest 83 367 13 089 45 694
and taxation
Interest paid (4 394) (267) (1 720)
Interest received 2 477 1 319 3 007
Profit before taxation 81 450 14 141 46 981
Taxation (25 258) (4 118) (12 899)
Profit for the period 56 192 10 023 461 34 082
Reconciliation of
headline earnings
Profit attributable to 56 192 10 023 34 082
ordinary shareholders
Adjusted for profit on (93) (28) (184)
disposal of property,
plant and equipment
Headline earnings 56 099 9 995 462 33 898
attributable to ordinary
shareholders
Number of ordinary
shares (`000)
in issue 219 515 120 000 218 621
diluted weighted 223 638 118 478 153 466
average
weighted average 218 993 118 478 150 771
Earnings per ordinary
share (cents)
basic 25,7 8,5 202 22,6
diluted earnings 25,1 8,5 197 22,2
headline 25,6 8,4 205 22,5
Dividends per ordinary - - 6,0
share (cents)
Condensed consolidated cash flow statement
6 months ended Year ended
31 August 31 August 28 February
(Reviewed) (Reviewed) (Audited)
2007 2006 2007
R`000 R`000 R`000
Cash flows from operating 84 676 11 774 32 877
activities
Cash generated from operations 106 808 14 887 41 929
Dividend paid (14 281) - -
Interest received 2 477 1 319 3 007
Interest paid (4 394) (267) (1 720)
Taxation paid (5 934) (4 165) (10 339)
Cash flows from investing (30 566) (7 497) (146 638)
activities
Acquisition of property, plant (30 874) (7 567) (41 263)
and equipment
Proceeds on disposal of 308 70 409
property plant and equipment
Brand name acquired - - (94 529)
Acquisition of subsidiary - - (11 255)
Cash flows from financing 21 978 18 305 153 773
activities
Net movement in borrowings 20 797 (1 695) 26 486
Shares issue net of issue 1 181 20 000 127 287
expenses
Cash flows for the period 76 088 22 582 40 012
Cash and cash equivalents at 52 648 12 636 12 636
beginning of period
Cash and cash equivalents at 128 736 35 218 52 648
end of period
Consolidated balance sheet
31 August 31 August 28 February
(Reviewed) (Reviewed) (Audited)
2007 2006 2007
R`000 R`000 R`000
Assets
Property, plant and equipment 159 804 26 994 139 861
Intangible assets 94 529 - 94 529
Deferred taxation 2 285 - 4 189
Current assets
Inventories 9 077 51 6 878
Taxation 8 626 - 5 743
Trade and other receivables 194 061 36 351 161 549
Cash at bank and on hand 128 736 35 218 52 648
Total assets 597 118 98 614 465 396
EQUITY AND LIABILITIES
Share capital and premium 176 124 23 440 175 352
Equity compensation reserve 1 582 - 658
Foreign currency translation 174 - 41
reserve
Post retirement benefit (1 681) - (681)
reserve
Accumulated profits 106 561 40 591 64 650
Non-current liabilities
Secured borrowings* 67 078 4 387 51 168
Post retirement benefits 10 382 - 10 507
Deferred taxation 17 759 2 714 17 302
Current liabilities
Current portion of secured 13 952 2 556 7 940
borrowings*
Taxation 22 894 2 769 3 047
Provisions 28 234 - 14 147
Trade and other payables 154 058 22 157 121 266
Total equity and liabilities 597 118 98 614 465 396
Net asset value per share 128,81 53,36 109,79
(cents)
Tangible net asset value per 85,75 53,36 66,55
share (cents)
* Interest-bearing
Condensed consolidated segmental analysis
6 months ended Year ended
31 August 31 August 28 February
(Reviewed) (Reviewed) (Audited)
2007 2006 2007
R`000 R`000 R`000
Revenue
South Africa 391 113 76 858 256 591
Other regions 82 462 - 34 801
473 575 76 858 291 392
Profit before interest and
tax
South Africa 63 374 13 089 51 139
Other regions 19 993 - (5 445)
83 367 13 089 45 694
Profit after tax
South Africa 41 591 10 023 36 939
Other regions 14 601 - (2 857)
56 192 10 023 34 082
Total assets
South Africa 503 258 98 614 370 667
Other regions 93 860 - 94 729
597 118 98 614 465 396
Total liabilities
South Africa 278 688 34 583 187 549
Other regions 35 669 - 37 828
314 357 34 583 225 377
Consolidated statement of recognised income and expenditure
6 months ended Year ended
31 August 31 August 28 February
(Reviewed) (Reviewed) (Audited)
2007 2006 2007
R`000 R`000 R`000
Foreign currency translation 134 - 41
adjustment
Post retirement benefit (1 000) - (681)
adjustment
Net expenses recognised (866) - (640)
directly in equity
Profit for the period 56 192 10 023 34 082
Total recognised income and 55 326 10 023 33 442
expenses for the period
COMMENTS
Introduction
The directors of Esor are proud to present the interim financial results for
the six months ended 31 August 2007 ("the interim period").
From Esor`s perspective, the construction industry is at its most robust for
the past three decades. Infrastructure expansion, the Airport Company of South
Africa`s ("ACSA") national expansion projects, Gautrain and 2010 fever have
led to unprecedented demand for construction and related activities. While
government infrastructure spend may be considered the major driving force,
other factors are at play for instance commercial developments, which have
increased in number and scope nationally. All indicators are that this is not
a flash phenomenon, but a sustainable period of growth that should maintain
for at least five to eight years.
The directors believe these excellent interim results reflect the buoyancy of
Esor`s industry and particularly the group`s significant share in its growth.
The board intends to continue growing Esor`s market share for the benefit of
all stakeholders.
Review of operations
Esor`s financial performance has again reflected substantial growth in all key
performance indicators. The strategy of selective contracts continues to be
vindicated with good margins being sustained on significantly increased
turnover. Trading conditions in the construction industry continue to thrive,
fuelling continually increasing demand for Esor`s services. Management remains
committed to exercising strict cost controls with an added focus on optimising
operational efficiencies within the group. These principles, together with an
aggressive plant renewal policy, have resulted in the achievement again of
higher operating margins.
CAPEX and plant replacement policy
During the interim period the group invested in organic growth through the
purchase of capital equipment to the value of R30 million. An additional R100
million of plant is currently on order.
Management remains aggressively committed to complementing the group`s
existing fleet of equipment with "state-of-the-art" modern rigs. To date at
least 20 large piling and drilling rigs have seen the company enter an era of
hydraulic efficiency.
Black economic empowerment
26,47% of the group is owned directly by black shareholders. More than 70% of
the group`s 880-strong workforce is black. Through the Esor Broad Based Share
Ownership Scheme, implemented in 2006, staff now holds a 7,56% stake in the
company. Esor is at present rated as a `Level 6` contributor to broad based
BEE.
Acquisitions
No new acquisitions were concluded in the interim period. The financial
results of Franki Africa (Pty) Limited ("Franki"), acquired in November 2006,
have been consolidated into these financial results for the full six months of
the interim period. The complementary focus of Esor and Franki enables the
consolidated group to address all segments of the market by leveraging the
companies` respective strengths. For the interim period management effort was
therefore directed to sustaining organic growth in both companies. Appropriate
acquisition opportunities, if any, will be considered during 2008.
Financial results
The group`s financial performance for the interim period shows exciting growth
on all fronts. Turnover was up 516% to R473 million from R76,8 million and
gross profit was 712% higher from R17,8 million to R144,5 million. EBITDA
increased 567% to R94 million from R14,1 million and headline earnings by 462%
to R56,2 million from R10 million. Net asset value per share leapt by 141% to
128,8 cents from 53,4 cents (and by 17,3% from the net asset value per share
for the previous year ended 28 February 2007 of 109,8 cents). Headline
earnings per share ("HEPS") increased by 205% to 25,6 cents from 8,4 cents.
Auditor`s independent review
These condensed consolidated financial results for the interim period have
been reviewed by the company`s auditors, RSM Betty & Dickson (Durban), in
terms of International Standards on Review Engagements 2410. The scope of the
review was to enable the auditors to report that nothing had come to their
attention that caused them to believe that the accompanying condensed
consolidated interim financial statements are not presented, in all material
respects, in accordance with International Accounting Standard 34 - Interim
Financial Reporting and the South African Companies Act. Their unmodified
review report on the condensed consolidated interim financial statements is
available for inspection at the registered office of the company.
Prospects
Demand for construction and related services remains at a record peak. Esor
and Franki continue to secure contracts across all facets of government`s
infrastructure spend including ACSA upgrades and expansions, Gautrain and the
2010 stadia. Increased capacity following the inclusion in the group of Franki
has also enabled Esor to at the same time continue servicing the needs of its
more traditional clients in the municipal and private commercial sectors where
demand is equally strong.
The group has positive prospects with a healthy order book and budgeted work
for the 2008 financial year approaching R1 billion. The directors are
confident that real growth in HEPS in the next six months to year-end will be
achieved.
Dividend policy
In line with group policy no interim dividend has been declared. Management
remain committed to a full year dividend for the year to 28 February 2008.
Appreciation
Our staff, as always, plays a major role in the success of the group and we,
the directors, thank them unconditionally. We also thank our business
partners, advisors, suppliers, clients and most importantly our shareholders
for their ongoing support and faith in the group. Like the Springbok rugby
team, under the able guidance of Jake White, we believe that we have a winning
team that will continue to satisfy the expectations of all our stakeholders.
On behalf of the board.
Bernard Krone
Chief Executive Officer
7 November 2007
CORPORATE INFORMATION
Non-executive directors: DM Thompson (Chairman), E Dube, JM Hlongwane, FA Sonn
(Alternate: JC van Reenen)
Executive directors: ML Barber, AM Field*, B Krone (Chief Executive), RP
McLintock, ML Trevisani**, W van Houten * British ** Italian
Group secretary: ID Stephen
Registered office: 130 Aberdare Drive, Phoenix Industrial Park, Durban, 4051,
PO Box 40096, Red Hill, 4071.
Telephone: +27 31 507 1051 Fax: +27 31 507 5709
Transfer secretaries: Computershare Investor Services 2004 (Proprietary)
Limited, Ground Floor, 70 Marshal Street, Johannesburg, 2001,
PO Box 61051, Marshalltown, 2107
Auditors: RSM Betty & Dickson (Durban), Block A Surrey Park, 6 Barham Road,
Westville, 3629, PO Box 2120, Westville, 3630
Designated advisors: Exchange Sponsors (Proprietary) Limited, 39 First Road,
Hyde Park, 2198
www.esor.co.za
Date: 07/11/2007 08:16:55 Produced by the JSE SENS Department.
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