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ESR
ESR
Esor Limited - Audited Financial Results for the year ended 28 February
2006
Esor Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/000732/06)
(JSE code: ESR & ISIN: ZAE000078408)
("Esor" or "the company")
HIGHLIGHTS
Results ahead of pre-listing forecasts
Attributable earnings up by 119,8% to R13,3 million
HEPS up by 111,7%
Net tangible asset value per share up by 114,4%
Successful listing on AltX
AUDITED FINANCIAL RESULTS
for the year ended 28 February 2006
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
28 February 28 February
2006 2005
Audited Audited*
R R
Revenue 125 393 423 100 062 308
Cost of sales (98 771 669) (82 643 143)
Gross profit 26 621 754 17 419 165
Other operating income 1 057 065 275 880
Operating expenses (7 060 394) (7 876 195)
Earnings before interest, tax, 20 618 425 9 818 850
depreciation and amortisation
Depreciation (2 649 992) (1 480 752)
Profit before interest and 17 968 433 8 338 098
taxation
Net interest received 492 506 362 928
Profit before taxation 18 460 939 8 701 026
Taxation (5 122 332) (2 633 247)
Profit for the year 13 338 607 6 067 779
Reconciliation of headline
earnings:
Profit attributable to 13 338 607 6 067 779
ordinary shareholders
Adjusted for profit on (653 358) (95 592)
disposal of property, plant
and equipment
Headline earnings 12 685 249 5 972 187
Weighted average shares in 99 992 667 99 992 000
issue on which earnings are
based
Basic earnings per share 13,3 6,1
(cents)
Adjusted for -
Profit on disposal of (0,6) (0,1)
property, plant and equipment
(after tax) (cents)
Headline earnings per share 12,7 6,0
(cents)
Dividend per share (cents)
* Restated under IFRS
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
28 February 28 February
2006 2005
Audited Audited*
R R
Cash flows from operating 4 779 987 1 911 012
activities
Cash receipts from customers 120 826 600 90 489 500
Cash paid to suppliers and (114 131 058) (85 423 563)
employees
Cash generated from operations 6 695 542 5 065 937
Interest received 981 761 908 654
Interest paid (489 255) (545 726)
Taxation paid (2 408 061) (3 517 853)
Cash flows from investing (806 908) (1 830 720)
activities
Acquisition of property, plant (2 229 109) (2 514 568)
and equipment
Proceeds on disposal of 572 201 683 848
property, plant and equipment
Proceeds on disposal of 850 000 -
investment property
Cash flows from financing 1 879 969 213 845
activities
Increase/(decrease) in 2 191 869 (146 732)
unsecured loans
(Decrease)/increase in secured (311 900) 360 577
borrowings
Net increase in cash and cash 5 853 048 294 137
equivalents
Cash and cash equivalents at 6 783 353 6 489 216
beginning of year
Cash and cash equivalents at 12 636 401 6 783 353
end of year
* Restated under IFRS
CONSOLIDATED BALANCE SHEET
28 February 28 February
2006 2005
Audited Audited*
R R
ASSETS
Non-current assets 20 463 031 10 030 757
Property, plant and equipment 20 463 031 9 973 735
Investment property - 57 022
Current assets 40 722 483 35 496 172
Inventories 35 618 42 791
Unsecured loans 4 776 5 246 189
Trade and other receivables 28 045 688 23 310 593
Bank and cash 12 636 401 6 896 599
Total assets 61 185 514 45 526 929
EQUITY AND LIABILITIES
Share capital and reserves 36 939 884 17 229 399
Share capital and premium 6 371 980 102
Accumulated profits 30 567 904 17 229 297
Non-current liabilities 4 797 144 5 304 214
Secured borrowings 2 836 914 3 048 569
Deferred taxation 1 960 230 2 255 645
Current liabilities 19 448 486 22 993 316
Trade and other payables 9 546 132 17 585 892
Current portion of secured 1 908 798 2 009 043
borrowings
Taxation owing 3 570 056 532 763
Unsecured loans 4 423 500 2 752 372
Bank overdraft - 113 246
Total equity and liabilities 61 185 514 45 526 929
Shares in issue 100 000 000 100 000 000
Net asset value per share 36,94 17,23
(cents)
Net tangible asset value per 36,94 17,23
share (cents)
* Restated under IFRS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Accumu-
Share Share lated
capital premium profits* Total
R R R R
Balance at 1 102 - 11 161 518 11 161 620
March 2004
As previously 102 - 8 493 593 8 493 695
reported
IFRS - - 2 667 925 2 667 925
adjustment
Net profit for - - 6 067 779 6 067 779
the year
Balance at 1 102 - 17 229 297 17 229 399
March 2005
As previously 102 - 14 181 882 14 181 984
reported
IFRS - - 3 047 415 3 047 415
adjustment
Share issue 8 6 855 065 - 6 855 073
Share issue - (483 195) - (483 195)
expenses
Capitalisation 99 890 (99 890) - -
issue
Net profit for - - 13 338 607 13 338 607
the year
Balance at 28 100 000 6 271 980 30 567 904 36 939 884
February 2006
* Restated under IFRS
COMMENTS
INTRODUCTION
The directors are pleased to present the maiden annual financial results of
the company for the year to 28 February 2006 ("the year"), which exceed the
forecasts set out in the pre-listing prospectus in all material respects.
The annual financial results mark Esor"s 30th year of profitability. Post
year-end on 14 March 2006 the company listed successfully on the
Alternative Exchange (AltX) of the JSE Limited.
REVIEW OF OPERATIONS
Esor"s performance improved substantially. Thriving trading conditions in
the construction industry helped drive demand for Esor"s services.
Management"s strict cost control and focus on operational efficiencies were
reflected in significantly higher operating margins.
SEGMENTAL ANALYSIS OF GROUP OPERATIONS
No segmental analysis is presented as the group operates mainly in a single
business and geographical segment. Minor operations are undertaken outside
the borders of South Africa which account for less than 2% of revenue and
expenses.
BLACK ECONOMIC EMPOWERMENT ("BEE")
The conclusion of an appropriate BEE transaction is a primary objective for
the new financial year. The company is currently evaluating structures that
can accommodate both an independent empowered equity partner and employee
equity participation. More than 70% of Esor"s 220-strong workforce is made
up of Historically Disadvantaged South Africans.
FINANCIAL RESULTS
Group revenue increased by 25,3% to R125,4 million for the year, off which
EBITDA grew by 110,0% to R20,6 million. Operating margins improved
dramatically by 115,0%, reflecting the underlying strength of Esor"s
operations.
During the year the group invested in organic growth through the purchase
of capital equipment to the value of R2,2 million and the acquisition of
operating premises with an aggregate cost of R11,6 million.
PROSPECTS
Esor intends to use the monies raised pre-listing to continue increasing
capacity at its current operations to accommodate rising demand for its
services.
The construction industry remains robust at present and is expected to
maintain, if not exceed, current levels of activity over the short to
medium term. The order book for Esor"s new financial year already stands in
excess of R70 million. The directors are accordingly confident that the
group will show real growth in headline earnings per share for the year
ending 28 February 2007.
DIVIDEND POLICY
In line with strategy to reinvest in the group in order to sustain Esor"s
growth, no dividend has been declared for the year. Esor"s dividend policy
will be reviewed annually in light of the group"s cash flow, gearing and
capital requirements.
BASIS OF PREPARATION, ACCOUNTING POLICIES AND NOTES
Basis of preparation
The consolidated annual financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS). These
are the group"s first IFRS-compliant consolidated annual financial
statements and the provisions of IFRS 1 First Time Adoption of IFRS have
been accordingly applied.
Comparative information
The previous year"s comparative information has been restated to take
account of the effects of correctly providing for the depreciation and
valuation of property, plant and equipment as required by the relevant
authorities and IAS 16, which was not previously provided for.
Post balance sheet events
Subsequent to year-end, on 14 March 2006, the company has allotted 20
million ordinary shares at a premium of R0,999 per share as part of the
private placement for the purpose of listing on AltX. Subsequent to the
listing on AltX, the company has issued and allotted 3 000 000 shares to
the share incentive scheme at the listing price of R1,00 per share.
Auditors" report
The group"s auditors, RSM Betty & Dickson (Durban), have audited the group
annual financial statements. A copy of their unqualified audit opinion is
available for inspection at the company"s registered office.
Appreciation
We thank our loyal staff, the majority of whom have remained with the group
for more than 15 years, for their commitment and hard work which have
helped Esor to achieve its listing on AltX. We also thank our business
partners, advisors, suppliers and most importantly our 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
24 May 2006
Warning: The listing of ordinary shares in the company is on Altx.
Investors are advised of the risks of investing in a company listed on
Altx. Investors are advised that the JSE does not guarantee the viability
or the success of a company listed on Altx. In terms of the Listings
Requirements, the company is obliged to appoint and retain a Designated
Advisor, which is required to, inter alia, attend all board meetings held
by the company to ensure that all the Listings Requirements and applicable
regulations are complied with, approve the Financial Director of the
company and guide the company in a competent, professional and impartial
manner. If the company fails to retain a Designated Advisor, it must make
arrangements to appoint a new Designated Advisor within 10 business days,
failing which the company faces suspension of trading of its securities. If
a Designated Advisor is not appointed within 30 days of its suspension, the
company faces the termination of its listing without the prospect of an
appropriate offer to minority shareholders.
CORPORATE INFORMATION
Non-executive directors: I G Jefferiss; D M Thompson.
Executive directors: M L Barber; A M Field; B Krone (CEO); M L Trevisani
(Financial Director).
Registration number: 1994/000732/06.
Registered address: 130 Aberdare Drive, Phoenix Industrial Park, Durban,
4051.
Postal address: PO Box 40096, Red Hill, 4071.
Company secretary: M L Trevisani.
Telephone: 031 507 1051.
Facsimile: 031 507 5709
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited.
Designated Advisor: Exchange Sponsors (Pty) Limited
www.esor.co.za
Date: 24/05/2006 09:00:09 AM Produced by the JSE SENS Department
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