CONSOLIDATED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2014.

CONSOLIDATED RESULTSFOR THE YEAR ENDED 28 FEBRUARY 2014

3

STORY LINE

LowlightsLoss making

contracts in CivilsTrading

environment

HighlightsGeotechnical

saleDevelopments

establishedPipelines

maintained growth

Financial position

Gearing Order book Going concern

4

AGENDA

• Salient features

• Financial overview

• Operational overview

• Strategy

• Prospects and order book

• Conclusion

5

SALIENTFEATURES

6

SALIENT FEATURES (CONTINUED OPERATIONS)

Non-recurring items in financial year 2014

• Sale of Geotechnical business

• Impairment of goodwill

A year of many highs and lows

Revenue

R1,593bn

R1,538bn

Order book

R2,6bn

R2,2bn

Gearing

27,0%

32,3%

Net cash

R20,9 million

R33,6 million

Health & Safety

LTIFR 0,86

LTIFR 0,59

HEPS

(11,3) cents

20,5 cents

▲ 3,6% ▲ 18,6% ▼ 16,4%

▼ ▲ ▼ 155,1%

Reduced to 0,43at April 2014

7

SALIENT FEATURES CONTINUED

Sale of Geotechnical business

• Approval at GM - 18 November 2013

• Disposal valued at R592 million including fair value

of contingent consideration of R65 million

• Cash received to date R497 million

• Outstanding Issues

› Registration of off-shore properties

› Rationalisation of legacy legal structures

• Sale proceeds utilised as follows:

R’mil

› Settle HYB 210

› Dividend of 38 cents/share 150

› Working capital investment 70

› Geotech borrowings settled 45

8

FINANCIAL REVIEW

9

FINANCIAL RESULTS IN CONTEXT

Lowlights

• Finalisation of loss making contracts

› N4 impacted by Marikana unrest, bridge design error and consequential late completion

› Kriel Civils and Boxhole contracts impacted by changes in construction methodology, subject to claims (not traded)

› Hwelereng road contract for RAL subject to numerous delays and consequential late completion

• Labour unrest impacted productivity on most sites

• Civil’s conservative view on estimated final completion

margin on Kusile contracts

Highlights

• Increase in revenue and profitability maintained in Pipelines

• Established Developments business

• Gearing down to 27%

• Order book increase to R2,6 billion

• B-BBEE certified as Level 3 at 78,96 from level 4

Major drainageat N4

On the back of weak markets with margins remaining under pressure

10

SUMMARY STATEMENT OF COMPREHENSIVE INCOME

Segmental summary of Earnings2014

R’0002013

R’000

Geotechnical 50 178 62 203

Civils (142 546) 39 380

Pipelines 29 319 21 543

Developments 962 -

Corporate and eliminations (104 074) (35 416)

Consolidated earnings (166 161) 87 710

Adjusted

Loss/impairment of assets 84 934 (10 683)

Loss on disposal of discontinued operations 38 190

Headline earnings (43 043) 77 027

11

STATEMENT OF COMPREHENSIVE INCOME

Continuing operations2014

R’0002013

R’000%

Change

Revenue 1 592 835 1 538 101 3,6

EBITDA (135 342) 163 454 (182,8)

PBIT (281 761) 74 890 (476,2)

- Operating (loss)/profit before non-recurring items

(158 639) 64 207 (347,1)

- Non-recurring items (123 122) 10 683 n/a

Net Finance expense (37 440) (31 652) 18,9

PBT (319 201) 43 238 n/a

Taxation 102 862 (18 136) n/a

(Loss)/profit from continuing operations (216 339) 25 102 n/a

Order book 2 607 718 2 168 485 18,6

12


Discontinued operations2014

R’0002013

R’000

Revenue 724 052 787 857

EBITDA 96 361 106 217

Attributable earnings 50 178 62 608

Sale consideration 592 485

NAV of discontinued operation 624 458

Loss on disposal (31 973)

Net profit from discontinued operations 50 178

Taxation effect 36 349

Surplus on disposal 54 554

13


Earnings per share2014

R’0002013

R’000

(Loss)/profit after tax (166 161) 87 710

Adjustment 123 122 10 683

Headline earnings (43 039) 77 027

(Loss)/earnings per share (cents) (43,5) 23,5

Headline (loss)/earnings per share (cents) (11,3) 20,5

14

STATEMENT OF FINANCIAL POSITION

Financial overview2014

R’0002013

R’000

Property, plant and equipment 320 135 822 678

Intangibles and goodwill 185 062 392 051

Financial asset at fair value 64 923 3

Deferred tax 11 457 22 729

Long-term receivables 32 083 27 726

Trade debtors and contracts in progress 659 928 826 713

Inventories and land for development 221 345 69 721

Taxation 13 455 14 513

Cash and cash equivalents 40 423 67 647

Total assets 1 548 811 2 243 781

NAV/share203,5 cents

NTAV/share168,6 cents

45 daysin trade

receivable

2014 Currentratio 1,65

15

STATEMENT OF FINANCIAL POSITION

Financial overview2014

R’0002013

R’000

Share capital and reserves 777 219 1 053 262

Secured borrowings 237 393 447 988

Deferred tax liability 21 335 148 906

Bank overdraft 19 583 34 059

Preference shares 23 424 21 000

Taxation 19 131 4 508

Trade and other payables 437 013 493 816

Provisions 13 713 40 242

Total equity and liabilities 1 548 811 2 243 781

Debt/equity 26,5% 32,3%

64 daysin trade

payables

16

CASH FLOW

0

100 000

200 000

300 000

400 000

500 000

600 000

17

OPERATIONAL REVIEW

18

THE YEAR GENERAL

General market

• General tough contracting conditions - tight margins

and fierce competition

• Risk transfer to contractor

• Focus on contract completion

• Finalising commercial compensation claims

• Still awaiting budgeted public sector expenditure

• Tender activity increased but seems to be budgetary

• Infrequent and delayed awards

Reaction

• Rebuilding order book - focus on skills

• Cautious approach to Africa

• Right-sizing

Action

• Look to consolidate construction operations in year ahead

• Office established in Zimbabwe

19

PIPELINES

Pipelines2014

R’0002013

R’000

Revenue 579 285 323 552

PBIT 39 892 30 583

Segment assets 254 857 191 552

Number of employees 1 163 763

Revenue growth 79% 42%

Operating margins 9% 10%

Order book 654 205 518 822

Pending awards 351 700 32 000

Prospects 1 380 000 1 630 000

Non-government -% -%

Government 100% 100%

20

PIPELINES CONTINUED

• Focused on contract completion and commercial

compensation (BG3 and Mopani)

• Infrequent and delayed awards impacting 2014/15

• Start-up of major contracts - Northern and Western

Aqueduct

• Competition from new entrants (perceived low barrier

of entry)

• Impact of level 3 B-BBEE rating

• Cross-border focus - Namibia, Zambia and Zimbabwe

› Time and cost

• Sanitation project for eThekwini progressing well

• Plant expansion of R10 million on back of awarded work

Focus on project delivery

Office established in Zimbabwe

BG3100ton crane

pipe lift

21

CIVILS

Civils2014

R’0002013

R’000

Revenue 961 599 1 214 549

PBIT (183 881) 76 525


Number of employees 1 969 2 701

Revenue growth (20,8)% 47%

Operating margins (13,9)% 6%

Order book 1 228 500 1 269 039

Pending awards 552 000 1 235 000

Prospects 723 000 2 940 000

Non-government 35% 45%

Government 65% 55%

22

CIVILS CONTINUED

• Loss making contracts (N4, Kriel and RAL)

• Generally tough contracting conditions

• Focus on contract completion and commercial

compensation

• Rebuilding order book at acceptable margins and risk

• Still awaiting budgeted public sector expenditure

• Delayed awards

• Fierce competition at tight margins

• Contracts at Kusile

› Crushing nearing completion (no claims)

› General services piping 62% complete (no claims)

› Bulk earthworks - original contract nearing completion

with minor claims

› Underground facilities 51% complete with substantial

scope changes and claims submitted

• Plant optimisation nearing completion

Look to continue consolidating

construction operations in year

ahead

Reinvigorated business

N4

Temporary staging

to portal structure

23

CIVILS LOSS MAKING CONTRACTS

N4 Bakwena• Contract award 4 May 2011

• Value at award R370 million

• Duration originally 30 months

What happened• Tendered at time of economic crisis at break even

• Anticipated/historical productivity never achieved resulting

in R62 million loss on allowable

› Steel and fuel strikes in 2012/13

› Marikana killings in March 2013

› Platinum strike 2014

• Consequential effects:

› Plant utilisation achieved 60% and R60 million loss

› Late completion of project forecasted to be August 2014

with impact on P&G

What now• Agreed programme with client - completion August 2014

• Reduced resources to activity levels

• Negotiating contractual entitlements and claims

• Design errors - variation agreed with costs

Placingselected fill

at N4

24

CIVILS LOSS MAKING CONTRACTS

Kriel Civils and Boxhole

What happened• Tendered at time of low work on hand at break even

• Scope changed materially - subject to claim

• Client imposed restrictions on methodology and access

• Availability of client supplied materials


› Productivity and utilisation never achieved, R32 million losson labour and plant

› Late completion of project – Civils in May 2014

– Boxhole in July 2014

What now• Civil contract complete - snags being finalised

• Agreed Boxhole programme with client - completion July 2014

• Reduced resources to activity levels

• Continued with commercial claims process

Earthworksat Kriel

Boxhole• Contract award 11 April 2012


• Duration 8 months

Civils• Contract award 11 April 2012



25

CIVILS LOSS MAKING CONTRACTS | CONTINUED

RAL road contract - Hwelereng

• Contract award 10 March 2011



What happened

• Tendered at time of economic crisis at break even

• Re-work impacting completion

• Availability of crushed materials

• Never achieved tendered production rates


› Productivity and utilisation never achieved,

R27 million loss on labour and plant

› Late completion of project with associated costs

What now

• Contract complete - handover finalised

• Awarded associated works contract of R30 million,

mainly subcontractors

Road upgradeat Hwelereng

for RAL

26

CIVILS TURNAROUND STARTED NOVEMBER 2012

Actions and timeline

• Loss making contracts

• Productivity

• Utilisation

• Tender and estimating

• Commercial

• Civils Recovery Strategy 2014.ppt

Building bridgesat Diepsloot

27

DEVELOPMENTS

Developments2014

R’0002013

R’000

Revenue 63 356 -

PBIT 1 401 (1 668)


Number of employees 3 1

Revenue growth N/A N/A

Operating margins 2,2% N/A

Order book 724 632 410 900

Pending awards 895 876 1 000 000

Prospects 4 000 000 2 000 000

Non-government 51% N/A

Government 49% N/A

28

DEVELOPMENTS CONTINUED

Established division during the year

• Orchards R30 million sales in 2014

› Project potential to be realised exceeds R240 million

• Broke ground at Diepsloot East, north of Johannesburg

› Project potential to be realised exceeds R2 billion,

with commercial element

• Uitvlugt is an integrated residential development in

Three Rivers East with land transferred to Esor

› Project potential excluding top structures to be

realised exceeds R600 million

• Soshanguve is a residential development in Tshwane with

Esor acquiring development rights

› Project potential to be realised exceeds R150 million

• Division may expand into top structure development

• Potential in social and gap housing expected to increase

over the next few years

• Demand for affordable housing exceeds supply, but may

be impacted by rising interest rates and unemployment

Strategically important division

due to secondary work potential

for group

Orchards

Completed houses

29

STRATEGY

30

STRATEGY

Strategic themes

• Consolidate and rationalise

• Streamline support functions

• Build on strong brand

• Leadership

• Commercial astuteness

• Cash flow

• Positive about SADC

Strategic alignment to improve

combined strength

Keep it simple

31

PROSPECTS AND ORDER BOOK

32

LOOKING AHEAD

Prospects

• SANRAL - budget of R10 billion pa

• Transnet - various rail and port projects in the pipeline

• Eskom - ongoing work at Kusile and Medupi power stations

with potential for Coal 3

• Major water projects planned for SA, Lesotho and Zambia

• Schools - R5 billion worth of tenders submitted and still to

be awarded

Order book

• Order book increased by 18,6% to R2,6 billion

• One-year and total order book both at satisfactory levels

against FY2014 revenue

• Work on hand heavily weighted in favour of Government

and Parastatal work

33

ORDER BOOK

2 year secured order bookOrder book

R’mil

Secured revenueFY 2015

R’mil

Secured revenue

FY 2015 + R’mil

Civils 1 228 500 828 500 400 000

Developments 724 632 157 000 567 632

Pipelines 654 586 357 498 297 088

Total secured 2 607 718 1 342 998 1 264 720

Non-government 13% 11% 15%

Government 87% 89% 85%

Pending awards

Civils 552 000 257 000 295 000

Developments 895 876 41 053 854 823

Pipelines 351 700 235 700 116 000

Total pending 1 799 576 533 753 1 265 823

34

ORDER BOOK LEGACY LOSS MAKING CONTRACTS IN WOH

Impact of loss making contracts on 2015

order book

• Civils order book - R1,2 billion

• Included FY15 order book is R25,4 million re

legacy loss making contracts

• Order book includes R203,8 million work secured

prior to FY14

• New work secured represents 81% of order book

R203,8m

R25,4m

R998,3m

Old work still to be completed

Old work still to be completed

Old loss making work to be completed 2015

New secured work

35

CAPEX

36

CAPEX

CAPEX2015

R’mil2014 R’mil

2013 R’mil

Civils - 26 313 132 406

Pipelines 20 300 9 596 17 083

Corporate 6 960 2 117 1 626

Total spend/approved 27 260 38 026 151 115

Depreciation 48 124 61 780 79 807

Depreciation cover 0,57 0,62 1,89

37

CONCLUSION

38

IN SUMMARY

• Tough year across industry

• Maintained growth in Pipelines

• Established Developments

Actions taken

• Gearing improved

• Controlled growth mainly in RSA with prospects in select

African countries

• Rebuilding Civils

› Implemented and tracking progress

› Complete loss making contracts

› Improve commercial acumen

39

DISCLAIMER

Forward-looking statements

This presentation contains forward-looking statements that, unless otherwise

indicated, reflect the company’s expectations as at 28 February 2014. Actual results

may differ materially from the company’s expectations if known and unknown risks

or uncertainties affect its business or if estimates or assumptions prove inaccurate.

The company cannot guarantee that any forward-looking statement will materialise

and, accordingly, readers are cautioned not to place undue reliance on these

forward-looking statements. The company disclaims any intention and assumes no

obligation to update or revise any forward-looking statement even if new

information becomes available as a result of future events or for any other reason

save as required by statute or regulation.

40

Esor Limited

30 Activia Road, Activia Park, Germiston 1401

PO Box 6478, Dunswart, 1508, South Africa

Bernie Krone | CEO

+ 27 83 259 5984

+27 11 776 8700

+27 11 822 1158

[email protected]

Wessel van Zyl | CFO

+ 27 82 498 3518

+27 11 776 8700

+27 11 822 1158

[email protected]

CONTACT US

mailto:[email protected]

mailto:[email protected]

CONSOLIDATED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2014.

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