Interim results for the six months ended 31 August 2015 Welcome - PowerPoint PPT Presentation

Interim results for the six months ended 31 August 2015

Welcome  Esor supporting Cancer month

Agenda Financial Overview Salient features overview Operational Prospects and Strategy overview order book Capex Conclusion 2

Overview Highlights Lowlights Financial position Return to Slow start in Gearing profitability Developments Orchards Underperforming Order book “Sold Out” RDP contract Bedded down the Trading restructured NTAV environment group 3

Progress against targets Action item Status Action Delivered improved performance Financial target to Feb 2016 On-track – PBIT August 2014 – (R32 538) – PBIT August 2015 – R10 759 Disposed R29m non-core assets H1 2016 Rationalise plant holding Done Realised loss on disposal of R1,9m Focused on stabilising Construction and Developments Restructured operations Done divisions and product delivery Streamline support services Done Achieving optimisation Protect cash On-going Cash improved by 10,3% with daily monitoring N4 – maintenance complete by 4 November 2015 Legacy contracts Done Kriel Civils & Boxhole – arbitration commenced Swaziland – Malkerns awarded Zimbabwe – Completed 3 contracts and 1 on-going Selected African growth On-going Botswana – 2 new contracts > R20m Zambia – Tendering 4

Salient features  Orchards – Extension 50

Salient features Revenue Order book Gearing R772,6bn down R1,6bn down 18,4% down 2,2% R789,8bn 23,1% R1,9bn 22,0% 23,6% Net cash Health and safety HEPS R40,5 million up LTIFR 0,59 up 2,0 cents up 11,8% R36,3 million 59,5% LTIFR 0,37 > 100% (6,6) cents ▸ Non-recurring items in H1 2016 – Retrenchment costs a further R2,1m – Loss on disposal of PPE of R1,9m 6

Salient features – 2015 ▸ N4 – 12-month maintenance period expired on 4 November 2015 – Completed November 2014 – R300k maintenance costs – Finalising contractual claims <R10m ▸ Kriel Update – TFY R’Nil – Statement of claim submitted – Mediation and arbitration in progress ▸ Kusile – Both P25 and P26 on track – Commercial issues being resolved – Payments on time 7

Financial overview  Western Aqueduct – KZN  Pipejack – Steelpoort

Statement of comprehensive income (31 AUG 2015) 2015 2014 % Continuing operations R’000 R’000 Change Revenue 772 551 789 831 (2,2) EBITDA 29 579 (7 018) >100 Amortisation and depreciation (16 385) (23 920) 46,3 PBIT 13 194 (30 938) 150,4 ▸ Revenue down 2,2% mainly due to strategic consolidation ▸ EBITDA impacted by R10m loss at Umzumbe low-cost housing project ▸ Depreciation reduced by R7,5m after disposals of Civils plant and equipment ▸ Further retrenchment of mainly operators with associated R2,1m cost ▸ Loss of R1,9m realised on sale of plant and equipment ▸ Operating profit of R27,3m on normalised trading 9

Statement of comprehensive income (31 AUG 2015) 2015 2014 % Continuing operations R’000 R’000 Change Revenue 772 551 789 831 (2,2) EBITDA 29 579 (7 018) >100 PBIT 13 194 (30 938) 150,4 Net finance expense (2 435) (1 600) (52,2) PBT 10 759 (32 538) 133,1 Taxation (4 599) 8 546 (153,8) Profit/(Loss) from operations 6 160 (23 992) 125,7 Order book 1 622 303 1 927 315 (15,8) Non-government 28% 15% Government and Parastatal 72% 85% Finance expense reduced by 8,8% with forex adjustment in PFY. Effective tax rate of 42,8% is due to tax payable in Developments SPV structure. 10

Contribution to revenue Segmental revenue (R’000) Segmental revenue (R’000) Pipelines/Pipe services 382 884 Pipelines/Pipe services 318 426 Infrastructure/Building Infrastructure/Building 345 511 463 426 and Housing and Housing Developments 47 883 Developments 32 075 Eliminations (2 201) Eliminations (24 096) TOTAL 772 551 TOTAL 789 831 11

Earnings per share (31 AUG 2015) 2015 2014 % Earning and headline earnings per share R’000 R’000 Change Profit/(loss) after tax 6 160 (23 992) 125,7 Adjustment 1 371 (1 147) – (Profit)/loss on disposal of PPE 1 371 (1 147) Headline earnings/(loss) 7 531 (25 139) 130,0 Basic earnings/(loss) per share (cents) 1,65 (6,28) 126,3 Headline earnings/(loss) per share (cents) 2,01 (6,59) 130,5 12

Statement of financial position (31 AUG 2015) 2015 2014 Continuing operations R’000 R’000 Property, plant and equipment 208 786 289 719 Disposal Goodwill 155 323 185 062 of R28,9m Review Financial assets at fair value 29 488 64 923 impairment at Feb 2016 Deferred tax 11 805 11 393 Investment in joint ventures 51 005 – Long-term receivable 761 36 630 Loans and receivables 448 003 624 736 38,8 days in trade Loans and receivables receivables Trade debtors 252 652 238 321 Contract in progress 180 211 353 435 Other receivables 15 140 32 980 448 003 624 736 13

Statement of financial position (31 AUG 2015) 2015 2014 Continuing operations R’000 R’000 Property, plant and equipment 208 786 289 719 Goodwill 155 323 185 062 Financial assets at fair value 29 488 64 923 Deferred tax 11 805 11 393 Investment in joint ventures 51 005 – Long-term receivable 761 36 630 Loans and receivables 448 003 624 736 Inventories 127 222 228 536 Current receivable 37 619 – Taxation 2 692 – Cash 40 537 50 681 Cash increased NTAV/share by R4,2m 152,0 cents TOTAL ASSETS 1 113 241 1 491 680 14

Statement of financial position (31 AUG 2015) 2015 2014 Continuing operations R’000 R’000 Share capital and reserves 673 420 742 475 Secured borrowings 142 100 228 588 Preference shares 10 239 22 279 Deferred tax 21 116 13 863 Taxation – 7 337 Provisions 12 813 15 817 Trade and other payables 253 553 461 321 34,9 days in trade payables TOTAL EQUITY AND LIABILITIES 1 113 241 1 491 680 Secured borrowings Long-term 83 984 123 372 Debt /Equity Reduced debt Short-term 58 116 105 216 reduced to by R86,5m 18,4% 142 100 228 588 15

Cash flow 26,804 42,657 26,910 1,349 11,268 10,500 1,793 2,435 10,500 40,538 36,399 16

Esor performance – relative to Construction index ▸ JSE – ALSI – Steady over 12 months – Strength over last 2 months ▸ Construction & Materials – Index reflects current sentiment – Tough trading conditions – Volatile and cyclical reporting ▸ Esor relative performance – Largely track ALSI index – Low base 17

Operational overview  ACSA – Airline office upgrade at ORT  Eskom Kusile (2015)

Construction ▸ Focus on consolidation – Infrastructure/Housing and Building – Pipelines/Sanitation – Pipe services ▸ Integration successfully completed – MD Construction – Plant ▸ Growth – Pipe services – Footprint extended to 7 provinces and 3 SADC countries ▸ Profitability – Impacted by RDP housing project – Project delivery with associated claims 19

Construction 2015 2014 Segment report R’000 R’000 Revenue 726 869 781 852 PBIT 16 632 (28 834) Segment assets 659 664 938 448 Number of employees 2 242 2 887 Revenue growth (2,2)% (28,8)% Operating margins 2,3% (3,7)% Margin excluding RDP Order book 1 505 976 1 729 700 of 3,7% Pending awards 302 500 903 700 Prospects 1 290 000 2 103 000 Non-government 21,7% 17% Government 78,3% 83% 20

Infrastructure/ Building & Housing ▸ Focus on project delivery – Kusile Package 25 general services Q1 2017 – Kusile Package 26 underground terraces facilities H1 2018 – Building – office and retail refurbishments – In-house infrastructure work at Orchards ▸ Kusile milestones achieved – Completion and testing of Fire water system – Completion of Raw water system ▸ Growth – Diepsloot project delayed but seen as Mega Project – Further infrastructure development at Orchards and Khayelitsha ▸ Profitability – Impacted by consolidation process – Cost associated with RDP housing project in KZN 21

RDP Housing – Umzumbe Contract award October 2013 Estimated completion April 2015 Value at award R66 million Duration 18 months vs 27 months Actual completion March 2016 ▸ What happened – Logistics underestimated – Productivity impacted by subcontractor mix – Consequential effects: • Employed own teams • School fees ▸ Lessons learnt – Impact of Implementation Agent – Logistics – Project team Now completing 30 houses per week 22

Water related – Pipelines, Sanitation and Pipe Services ▸ Focus on project delivery – Western and Northern Aqueducts – Major pipe jacks at O6, Steelpoort and Botswana – Lepelle MWIG (Municipal Water Infrastructure Grant) ▸ Milestones achieved – Sanitation delivered 322 sanitation facilities and 19 schools facilities – Completed piling contracts in Zimbabwe ▸ Growth – Area of growth in trackless technologies – Footprint extended to 3 SADC countries – Piling and lateral support contracts in Zimbabwe ▸ Profitability – Impacted by delayed awards – Project delivery with associated claims 23