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Audited interim results
for the six months ended
31 August 2010
Period of relevance
The 2010 World Cup
• “Key factors influencing the Group performance in the first half of the year include the
negative impact of the Rand’s strength on the (Zambia) operations and the increased
competition in the roads infrastructure sector resulting in increased pressure on
margins.” (Raubex 14-10-2010 trading statement)
• “It is stormy economic times in the world and the Group is engaged with a number of
significant projects that are experiencing a variety of difficulties associated with such
times. (Brian Bruce, Group Chief Executive M & R )
• “Looking ahead Roads & Earthworks is facing aggressive tendering and depressed
margins due to both the economic downturn and current mega-projects coming to an
end.” (Stefanutti Stocks 2010 AR)
• Post 2010 FIFA World Cup TM construction sector in South Africa facing
short to medium term challenges. (Aveng 2010 AR)
• The first six months of the current financial year have been tough but prospects are
now looking distinctly brighter despite the current lull in the aftermath of the
Fifa World Cup. (Bernie Krone Esorfranki CEO)
Economic outlook
Comparitive interim review
H1 FY 2010
R’ 000H2 FY 2010
R’ 000
H1 FY 2011
R’000
Revenue 1 018 268 839 549 750 798
Gross Margin 291 027 205 749 147 504
PBIT 176 409 129 165 38 013
Capex 64,0m 32,0m 37,3 m
Ratio’s
Operating Margins 17,1% 15,4% 5,1%
Turnover increase/ (decrease) on
previous (Interim Period)
21,8% (17,5%) (10,6%)
Gross Margin 28,2% 24,5% 19,6%
CEO Confidence dips for the first time in over a year
Contents
• Salient features
• Financial review
• Operational review
• Group Geographical
segments
• Capex
• General
• Corporate Governance
• Conclusion
• Contacts
Salient Features – 31 August 2010
R1 billion Order book
26% Revenue
68% EBITDA
90% HEPS
R58,7 million operating cash generated
R1 billion Short-term prospect pipeline
HEPS down from 41.3 to 4.1
Group Operating Margin 5% (2010:17%)
Geotechnical 6% (2010:17%)
Civils 11% (2010:24%)
Pipelines 0.4% (2010:19%)
Salient Features – 31 August 2010
Financial review
Statement of Financial Position
Salient Features as at:
Aug 2009
R’ 000
Feb 2010
R’ 000
Aug 2010R’000
Assets
Non- current assets 999 341 999 551 986 302
Current assets 768 221 648 273 622 468
Total assets 1 767 562 1 647 824 1 608 770
Equities and Liabilities
Share capital and reserves 673 374 808 028 758 829
Non- current liabilities 367 499 405 711 376 813
Current liabilities 726 689 434 085 473 128
Total Equity and Liabilities 1 767 562 1 647 824 1 608 770
Net asset value per share
(cents)
241,7 275.6 258,4
Total assets ↓ R13,2m
Cash ↓ R28,8 m
Trade & other receivables ↑ R14,7m
PPE R 37,3 m capex
Cash reserves
Operational cash-flow generated R59 m
Acquisition PPE (R37,3m)
Dividends paid (R44m)
Secured borrowings
Debt/equity ratio 34,1% (Aug 2009 : 35,6%)
Equity
Profits after tax R12m
FCTR (R20m)
Dividend paid (R44m)
Statement of Financial Position
Salient Features - Feb10 to Aug 10
Debt :equity ratio
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2007 2008 2009 2010 2011
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Financial years
R 0
00's
Debt:equity Equity
Interest bearing debt
Debt:equity ratio
Statement of Income Salient Features
Aug 2009
R’ 000
% Aug 2010
R’ 000
Revenue 1 018 268 (26,3) 750 798
EBITDA 235 588 (68,1) 75 171
Profit after tax 114 854 (89,3) 12 311
Headline earnings 114 885 (89,5) 12 006
Headline earnings per share 41,3 (90,1) 4,1
Civils monthly revenue
Geotechnical monthly revenue
Pipelines monthly revenue
Business Unit Order Book
(millions)
Secured
Revenue H2
(millions)
Secured Revenue
2012 FY
(millions)
Geotechnical 254 204 50
Civils 502 373 129
Pipelines 240 108 132
Total 996 685 311
Order book as at 31st August 2010
• Eskom Medupi Power Station Kusile (Bravo) Power Station Nuclear Power Station 3rd Coal Fired Station
• Sanral GFIP phase 2
N1 /N2 PPP concessions (Geotechnical) General road infrastructure
• Transnet• Portnet• Petronet• Coega
Mthombo refinery awaiting cabinet approval
• Expansion in Resource Arena• Mozambique Gasline• African New Markets
Equitorial Guinea Gabon
DRC Angola Mozambique
• Gautrain Private Development Spinoff• Private & Commercial Developments
2011 forecast and beyond
Operational Review
Esorfranki structure
Need to replace this image with the white background
and blue lines – will add the milestones onto the globe
Esorfranki Group MilestonesEsorfranki Milestones
2009 Esor transfers to JSE Main Board
Esor renamed Esorfranki Limited
The Esorfranki Group revenue jumps to R1.4billion
Esofranki Limited branded
2008 Franki Africa acquires Geo Compaction Dynamics
and expands
Esor acquires the Patula and Shearwater groups,
diversifying into Civils and Pipeline Construction
Esor wins ‘AltX National Business Award’
2007 Esor achieves a group revenue of R1 billion
2006 Esor listed on the AltX
Esor acquires Franki Africa (Pty) Ltd
2007 Esor achieves a group revenue of R1 billion
2002 Shearwater Group is established
1995 The Patula Group is established
1994 Esor (Pty) Ltd established following a restructuring of the Geotechnical
operations and property companies
1998 Franki Africa (Pty) Ltd established following a management buy - out
1981 Esor Ground Engineering (Tvl) (Pty) limited started in the Transvaal
1976 Esor established as Esor Ground Engineering (Pty) Ltd in Durban
1946 Franki Africa established in South Africa
2010 The Esorfranki achieves R1,9 billion turnover
Esorfranki Group- Network
Esorfranki Group- EXCO
Civils
Geotechnical
Pipelines
Shared Services
Geotechnical products and services
Pipejacking
Bridgejacking
Piling
Lateral Support
Marine Structures
Ground Improvement
Dynamic Compaction
Ground Remediation
Soils Investigation
Esor Africa N17 bridge jacking
Franki Africa – Kusile Powerstation
Geotechnical Segment RevenueAug 2009
R’ 000
Aug 2010
R’ 000
Segment Revenue 527 674 423 180
PBIT 88 534 24 820
Segment Assets 793 534 713 901
No of employees 1 710 1 408
Revenue growth (8,8%) (19,8%)
Operating margins 16,7% 5,9%
Break even revenue 207 637 295 194
Order book 329 295 254 089
Pending awards 206 630 190 252
Prospects 1 594 279 1 480 843
Non-government 41%* 56%
Government 59%* 42%
* As at 28/02/2010
Civils products and services
Road building
Bridge construction
Township infrastructure
Mining infrastructure
Water reticulation
Water towers & reservoirs
Sewer reticulation
Bulk earthworks
Building
Esorfranki Civils - R21 PACKAGE J
Atcom Mine
N4 - Rustenburg
Civils Segment RevenueAug 2009
R’ 000Aug 2010
R’ 000
Segment Revenue 375 498 225 301
PBIT 90 036 24 097
Segment Assets 498 805 459 909
No of employees 1 277 1 176
Revenue growth - (39,9%)
Operating margins 23,9% 10,6%
Break-even Revenue 80 833 125 008
Order book 729 167 501 801
Pending awards 311 464 515 000
Prospects 1 096 000 2 600 000
Non-government 22%* 36%
Government 78%* 64%
* As at 28/02/2010
Pipelines products and Services
Gas & Petrochemical steel pipelines
Water & Wastewater pipelines & pump stations
Sewer pipelines & pump stations
Pipeline refurbishments
Cement mortar lining
Valve chambers
Associated concrete structures
Associated infrastructure
Esorfranki Pipelines BG3 Pipeline
Pipelines Segment RevenueAug 2009
R’ 000Aug 2010
R’ 000
Segment Revenue 130 553 102 297
PBIT 24 496 423
Segment Assets 181 791 103 546
No of employees 713 467
Revenue growth - (21,6%)
Operating margins 18,7% 0,41%
Break-even Revenue 33 012 98 264
Order book 119 723 240 488
Pending award 300 000 425 000
Prospect 5 800 000 5 900 000
Non-government 0%* 0%
Government 100%* 100%
* As at 28/02/2010
Capex
Segments
(R ‘000’s)
Financial years
2011 2010 2009
Geotechnical 9 439 42 727 163 831
Civils 9 527 49 711 14 435
Pipelines 6 204 3 096 8 824
Corporate 12 136 500 1 265
Total 37 306 96 034 188 355
South Africa 34 336 58 097 139 766
Sub-Sahara 2 970 37 937 48 589
Group Geographical Segments
South Africa
(R’000)
Africa
(R’000)
Total
(R’000)
Segment Revenue 589 879 160 899 750 798
PBIT 4 215 33 802 38 017
(Loss)/profit after Tax (9 867) 22 178 12 311
Segment Assets 1 307 756 301 014 1 608 770
Order Book 950 986 45 392 996 378
No of employees 2 814 245 3 059
Operating margins 0,71% 29% 5,1%
Non-government 42% (30% FY 2010)
Government 58% (70% FY 2010)
Corporate Governance
Board of Directors
4 Independent Non-executives
2 Executives
Audit & RiskCommittee
Human Resourses & Nominations Committee
Auditors – KPMG
Company Secretary - iThemba Governance and
Statutory Solutions (Pty)
General• Mega Projects
• Africa
• Loan Covenants
• Confidence levels
• King 3 readiness
• Succession planning
• Challenges
– Protracted awards/funding
– Competition and margin squeeze– Strong ZAR/ Angolan liquidity
– Working capital pressure
– Lack of private investment spend
Conclusion•The Esorfranki Group is aware that trading conditions will
continue to be tight going forward
•We will continue to experience margin squeeze
•We are aware that Government’s planned spending is under pressure through decreased revenue streams and
funding constraints
•Africa remains a difficult but opportunistic market for the group
•Not withstanding these conditions and restraints our
management team believe we have the acumen and the wherewithal to steer the group successfully through these
troubled times.
Contact details
+ 27 83 419 2942
+27 11 822 3906
+27 11 822 1158
Tammy Davies | Group Marketing manager
+ 27 83 259 2584
+27 11 822 3906
+27 11 822 1158
Bernie Krone| CEO
+ 27 84 556 2486
+27 11 822 3906
+27 11 822 1158
Wayne van Houten| CFO
Esorfranki Limited | 30 Activia road Activia Park Germiston 1401
PO Box 6478 Dunswart 1508 South Africa
