| Wed 21 May 2008, 7:30 | | ESR - Esor Limited - Audited consolidated annual r |
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ESR
ESR
ESR - Esor Limited - Audited consolidated annual results for the year ended 29
February 2008
ESOR LIMITED
(Registration number 1994/000732/06)
Incorporated in the Republic of South Africa
(Share Code: ESR & ISIN Code: ZAE000078408)
("Esor or "the company")
AUDITED CONSOLIDATED ANNUAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2008
HIGHLIGHTS
Revenue up 249%
EBITDA up 243%
Headline earnings up 240%
NAV per share up 46%
NTAV per share up 83%
Condensed Consolidated Balance Sheet
2008 2007
R`000 R`000
ASSETS
Non-current assets 359 947 238 579
Property, plant and equipment 262 741 139 861
Intangible assets 94 529 94 529
Deferred taxation 2 677 4 189
Current assets 398 524 226 817
Inventories 7 224 6 877
Taxation 3 527 5 743
Trade and other receivables 271 914 161 549
Cash at bank and on hand 115 859 52 648
Total assets 758 471 465 396
EQUITY AND LIABILITIES
Share capital and reserves 389 664 240 020
Share capital and premium 213 587 175 352
Equity compensation reserve 2 361 658
Foreign currency translation reserve 6 683 41
Post retirement benefit reserve 4 (681)
Accumulated profits 167 029 64 650
Non-current liabilities 107 323 71 724
Secured borrowings 85 169 43 915
Post retirement benefits 8 106 10 507
Deferred taxation 14 048 17 302
Current liabilities 261 484 153 652
Current portion of secured borrowings 21 304 7 939
Taxation 26 781 3 047
Provisions 15 559 21 400
Trade and other payables 197 840 121 266
Total equity and liabilities 758 471 465 396
Number of ordinary shares in issue 247 904 243 371
Weighted average number of ordinary 224 560 150 771
shares
Diluted weighted average number of 228 677 153 466
shares
Net asset value per share (cents) 160.3 109.8
Net tangible asset value per share 121.4 66.5
(cents)
Condensed Consolidated Income Statement
2008 2007
R`000 R`000
Revenue 1 017 480 291 392
Cost of sales (745 546) (209 465)
Gross profit 271 934 81 927
Other operating income 1 651 1 133
Operating expenses (90 087) (29 600)
Profit before interest, depreciation 183 498 53 460
& taxation
Depreciation (30 391) (8 654)
Profit before interest and taxation 153 107 44 806
Interest paid (28 171) (15 245)
Interest received 32 883 17 420
Profit before taxation 157 819 46 981
Taxation (41 817) (12 899)
Profit for the year 116 002 34 082
Headline earnings reconciliation:
Basic earnings 116 002 34 082
Profit on disposal of property, plant (760) (184)
and equipment
Loss on disposal of property, plant 46 -
and equipment
Headline earnings 115 288 33 898
Earnings per share
Basic earnings per share 51.7 cents 22.6 cents
Diluted earnings per share 50.7 cents 22.2 cents
Headline earnings per share 51.3 cents 22.5 cents
Dividends per share 20.0 cents 6.0 cents
Statement of Recognised Income and Expenses
2008 2007
R`000 R`000
Defined benefit plan actuarial gain 685 (681)
/ (loss)
Shares issued 8 670 137 900
Share issue expenses (435) (10 613)
Share based payments 1 703 42 351
Derecognition of special purpose 30 667 -
entity
Dividends paid (14 290) -
Foreign currency translation 6 642 41
differences for foreign operations
Income and expenses recognised 33 642 168 998
directly to equity
Profit for the year 116 002 34 082
Total recognised income and expenses 149 644 203 080
for the year
Condensed Consolidated Cash Flow Statement
2008 2007
R`000 R`000
Cash flows from operating activities 119 066 32 877
Cash receipts from customers 909 365 258 833
Cash paid to suppliers and employees (759 138) (216 904)
Cash generated from operations 150 227 41 929
Dividends paid (14 290) -
Interest received 10 805 3 007
Interest paid (8 669) (1 720)
Taxation paid (19 007) (10 339)
Cash flows from investing activities (146 399) (146 638)
Acquisition of property, plant and (147 470) (41 263)
equipment
Proceeds on disposal of property, 1 071 409
plant and equipment.
Brand name acquired - (94 529)
Acquisition of subsidiary - (11 255)
Cash flows from financing activities 90 544 153 773
Decrease in unsecured loans - (4 419)
Increase in secured borrowings 54 619 30 905
Share issue net of issue expenses 38 235 127 287
Post retirement benefit (2 310) -
Net increase in cash and cash 63 211 40 012
equivalents
Net cash and cash equivalents at 52 648 12 636
beginning of year
Cash and cash equivalents at end of 115 859 52 648
year
Segmental report
Southern Other Consolidate
Africa regions d
2008 2008 2008
R`000 R`000 R`000
Revenue
External sales 848 273 169 207 1 017 480
Total revenue 848 273 169 207 1 017 480
Result
Segment result 114 484 38 623 153 107
Interest expense (19 596) (8 575) (28 171)
Interest income 14 608 18 275 32 883
Income taxes (27 058) (14 759) (41 817)
Profit 82 438 33 564 116 002
Other information
Segment assets 628 708 129 763 758 471
Consolidated total assets 628 708 129 763 758 471
Segment liabilities 341 762 27 045 368 807
Consolidated total 341 762 27 045 368 807
liabilities
Capital expenditure 127 331 20 139 147 470
Depreciation 14 559 15 832 30 391
Commentary
Introduction
The directors of Esor are proud to present the annual financial results for the
year ended 29 February 2008 ("the year"), which reflect a record performance for
the group. The year saw Esor`s organic growth double across all disciplines and
in all regions of operation. In addition the annual results reflect the
inclusion for the full twelve months of Franki Africa (Pty) Limited ("Franki"),
acquired in November 2006, which performed equally well to boost top and bottom
line.
The group is firmly aligned to infrastructure spend including Government`s
approximately R590 billion public investment programme to be deployed over the
next five years.
The two underlying companies, Esor and Franki, provide specialist civil
engineering and geotechnical services encompassing field investigation, design,
testing capabilities, piling, pipe jacking, soil improvement and lateral
support.
Review of Operations
Thriving market conditions continued to drive demand for Esor`s services.
Margins in the second half of the year were to an extent impacted by unusually
high rainfall in Gauteng prior to and following the month closure for `Builders
holidays`, affecting the year`s final quarter. However management`s commitment
to strict cost control with focus on optimising operational efficiencies and an
aggressive plant renewal policy, resulted in consistent operating margins
overall year-on-year.
Gautrain has been a major contributor to the group`s growth - of the R420
million worth of projects secured, R170 million worth of work was completed
during the year. Esor also completed piling projects for Airports Company South
Africa (ACSA) at the new King Shaka and Cape Town International Airports and
contracts for piling, pedestrian culvert jacking and lateral support at OR Tambo
International Airport. Work on the stadia for the 2010 World Cup has also been
completed, specifically at Athlone Stadium in Cape Town, Moses Mabhida Stadium
in Durban and Port Elizabeth Stadium.
The group further entrenched its presence in Africa building on Franki`s
existing foothold in oil-rich Angola. Contracts for piling, lateral support and
marine works projects were completed during the year.
CAPEX and Plant Replacement Policy
During the year the group invested R147,5 million in the purchase of capital
equipment, compared to R41,3 million in the previous year.
Skills Shortage
Esor strives to be the employer of choice in the industry. In light of the
current industry-wide skills shortage, the group`s staff retention record
reflects its achievement of this objective and is a strong competitive
advantage. Esor has a solid base of young semi-skilled and skilled employees,
which reflected a net gain of employees for the year. The group is
well-positioned to address the skills shortage having some time ago identified
candidates to advance to management level positions using in-house training
facilities and external suppliers. Esor`s philosophy of empowerment, assigning
responsibility and engendering a sense of ownership of the business, is a major
contributing factor to the strength and depth of the skills pool.
Black Economic Empowerment
Esor remains strongly committed to BEE and is constantly striving to increase
black ownership of the group. Esor has recently been rated as a "Level 6"
contributor in terms of the Department of Trade and Industry`s BBBEE Codes of
Good Practice.
74% of Esor`s workforce is black and emphasis is placed on training suitable
candidates to accelerate promotion to management level. In addition, three non-
executive directors on the company`s board are black.
Through the Esor Broad Based Share Ownership Scheme, implemented in 2006, all
permanent staff below executive management level hold an aggregate 7.56% stake
in the company.
Financial Results
Group revenue increased to R1 billion from R291 million in the previous year.
Earnings before interest, taxation, depreciation, and amortisation (EBITDA)
increased by 243% to R183 million from R53 million. Headline earnings rose 240%
to R115 million equating to 51,3 cents per share (HEPS). Net asset value per
share increased by 46% from 109,8 cents per share to 160,3 cents per share and
net tangible asset value per share rose by 83% from 66,5 cents per share to
121,4 cents per share, based on the number of shares in issue at year-end.
Basis of preparation
The audited consolidated financial statements for the year ended 29 February
2008 have been prepared in compliance with International Financial Reporting
Standards (IFRS) IAS 34 and the South African Companies Act, 1973. The
accounting policies and methods of measurement and recognition applied in
preparation of these audited condensed consolidated financial statements are
consistent with those applied in the group`s most recent audited annual
financial statements for the previous year ended 28 February 2007.
Audit Opinion
These condensed consolidated financial results for the year have been audited by
the company`s auditors, RSM Betty & Dickson (Durban). Their unmodified audit
report on the consolidated annual financial statements is available for
inspection at the registered office of the company.
Prospects
Prospects for the upcoming year look positive with 60% of the order book for the
year to February 2009 in hand, and key projects targeted and identified to
achieve the balance. The Gautrain is expected to continue as a strong growth
driver and further, is stimulating major development within the radius of its
stations` use areas, which will dramatically alter the urban landscape and
further boost the construction industry beyond 2010. A plethora of new
developments is in the pipeline including high-rise office towers, hotel
developments and various retail and commercial building projects.
As a major participant in Government`s infrastructure spend, Eskom`s commitment
to energy development and private sector investment, Esor is well-positioned to
withstand the current economic downturn. The directors believe that a period of
consolidation may follow which will be to the long-term benefit of the industry.
As the group is cash positive and major capex spend has already been incurred,
the impact on Esor of rising interest rates will be mitigated to a large extent.
In addition the impact on Esor of exchange rate fluctuations is mitigated by
forward cover on contracts.
The directors further believe that ongoing penetration into Africa offers good
growth prospects and Esor plans to leverage Franki`s established base in sub-
Saharan Africa to this end.
The Franki acquisition has proved incredibly successful with the group
leveraging the synergistic benefits in areas such as plant, marketing, resources
and human resources. Further acquisitions that could present similar benefits
for the group in complementary fields, or which could assist Esor in
diversifying, will be considered in the year ahead.
Dividend Policy
In line with policy Esor has declared a final dividend of 20,0 cents per share
for the year, amounting to R49,6 million in total.
Relevant dates are as follows:
Last day to trade cum dividend Friday, 6 June 2008
Commence trading ex dividend Monday, 9 June 2008
Record date Friday, 13 June 2008
Dividend payable Tuesday, 17 June 2008
Share certificates may not be dematerialised or rematerialised
between Monday 9 June 2008 and Friday 13 June 2008, both dates
inclusive.
Appreciation
Esor recognises the key role our staff plays in the success of the group and we
thank them unconditionally. We also thank our business partners, advisors,
suppliers, clients and most importantly our shareholders for their ongoing
support and faith in the group.
On behalf of the board.
Bernard Krone Mauro Trevisani
Chief Executive Officer Financial Director
21 May 2008
DIRECTORS
DM Thompson (Chairman)^, B Krone (Chief Executive Officer), ML Trevisani
(Financial Director) **, ML Barber, AM Field*, E Dube^, JM Hlongwane^, RP
McLintock, FA Sonn ^ (Alternate: JC van Reenen)^, W van Houten
* British ** Italian ^ non-executive
GROUP SECRETARY
ID Stephen 130 Aberdare Drive, Phoenix Industrial Park, Durban, 4051
P.O. Box 40096, Red Hill, 4071
TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
Ground Floor, 70 Marshal Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
DESIGNATED ADVISORS
Exchange Sponsors (Proprietary) Limited
INVESTOR RELATIONS
Envisage Investor & Corporate Relations
Date: 21/05/2008 07:30:01 Produced by the JSE SENS Department.
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