HIGHLIGHTS
Revenue up 31,3%
PAT up 37,8%
NAV per share up 23,5%
HEPS up 15,6%
COMMENTARY
The audited summarised consolidated results of Esorfranki for the year ended 28 February 2010 ("the year") demonstrate the group's delivery of promised returns through sustained leadership and continued resilience in a challenging market, with significant year-on-year increases in profit after tax ("PAT") and headline earnings per share ("HEPS").
Revenue of R1,9 billion reflects the group's expansion from a geotechnical leader to a broader civil engineering operation, including the positive contributions of the civil engineering and pipelines acquisitions in 2009.
In a strategic milestone Esorfranki transferred to the `Heavy Construction' sector of the Main Board of the JSE on 25 June 2009, capping three successful years on AltX. The group is now appropriately positioned alongside civil engineering construction peers.
Financial results
Revenue increased 31,3% compared to the previous year with PAT of R197,6 million translating into HEPS of 71,3 cents, 15,6% higher than the previous year.
Earnings before interest, taxation, deprecation, impairments and amortisation ("EBITDA") increased 19,4% to R389 million from R325,9 million. EBITDA includes a R19,3 million amortisation of customer contracts following the acquisition of Esorfranki Civils (formerly Patula Construction (Pty) Limited) and Esorfranki Pipelines (formerly Shearwater Plant Hire (Pty) Limited).
The strengthening of the South African Rand in the second half of the year negatively impacted on the translation of foreign operation income, resulting in a post tax charge of R28,9 million.
Cash generated by operations remained robust at R159,6 million (2009: R161,6 million), after tax payments of R126,9 million following changes to the South African provisional tax regulations which became effective in the year.
Esorfranki met all its loan covenants during the year.
Review of operations
Notwithstanding the negative impact of excessive rain in the second half of the year, contract delays and pressure on margins, the business units achieved pleasing results in a challenging macro-economic environment. Esorfranki Geotechnical (comprising Esor Africa and Franki Africa)
As anticipated, revenue declined 20,6% to R944,8 million from R1,2 billion due to the adverse economic and trading conditions, resulting in a contracting market. Operating margins improved year-on-year by 3,3% to 17,4%. Foreign operations accounted for 27,2% (2009: 24%) of Geotechnical revenue.
The business unit recently won a number of major cross-border projects with a combined value of R55 million. These include pipe-jacking for a Gaborone sewer and piling and dynamic compaction for the Jwaneng Cut 8 project. Current contracts for both Gautrain and the new Kusile Power Station remain ongoing in the short-term.
Esorfranki Civils
Revenue increased 17,4 % to R715 million from R609 million in the previous year. The business unit achieved PAT of R100,5 million and respectable operating margins of 20,2%.
Esorfranki Civils is continuing work on Johannesburg's R21 between the N12 interchange and Pomona Road, and is also progressing with the R174 million contract for the second carriageway from the Modikane interchange to the R512 Brits West interchange on the N4. Esorfranki Pipelines
Esorfranki Pipelines posted year-on-year revenue growth of 13,6% to R229 million. Notwithstanding the negative impact of contract delays in the latter part of the year, the business unit posted operating profits of R31 million equating to operating margins of 13,6%.
The business unit was recently awarded a R240 million contract from Rand Water for the construction of the BG3 Pipeline.
CAPEX
Esorfranki regards fleet maintenance and enhancement as key to growth and a significant differentiator. During the year the group invested R96 million (2009: R188,4 million) in property, plant and equipment ("PPE") to expand and maintain operations. The Geotechnical business unit accounted for R42,8 million of this, with R49,7 million invested in PPE at Esorfranki Civils and R3,0 million at Esorfranki Pipelines.
To accommodate future growth and to maintain its competitive edge, the board hasapproved capital expenditure for Esorfranki of R72,0 million for the 2011 financial year.
Black Economic Empowerment
During the year Esorfranki improved its rating to a `Level 5' contributor (from `Level 6') in terms of the Department of Trade & Industry's B-BBEE Codes of Good Practice. The group has set the short-term target of elevation to `Level 4' and intends to focus on improving all areas of scorecarding to achieve this
objective.
Incorporating retail shareholders on the open market, direct black ownership stands at 29%. Included in this is the 4,4% stake in the company held by black staff through the Esor Broad Based Share Ownership Scheme. More than 85% of the group's 3 225 strong workforce is black and emphasis is placed on skills training and development to accelerate promotion into middle and senior management.
Prospects
The board remains positive that Esorfranki is on track to achieve its targets for the year ahead despite the continued tough trading conditions.
With an order book in hand of approximately R1,6 billion (Geotechnical: R534 million; Esorfranki Civils: R726 million; Esorfranki Pipelines: R314 million) prospects for growth are sufficiently promising to support the board's optimistic outlook.
Esorfranki will continue to focus on Africa and is expected to benefit from an established presence and operating track record in growth nodes on the continent. In the Geotechnical business unit the intention is to significantly escalate the foreign contribution to revenue from 27% to 40% to improve growth.
Esorfranki is therefore actively re-deploying plant and personnel across the continent including to Angola, Botswana, the DRC and Mozambique.
Esorfranki Civils anticipates continued construction projects, with work phases on the Medupi Power Station expected to come back on-stream following the IMF loan award to Eskom. In addition, the business unit is targeting opportunities in the mining sector, particularly in the coal and platinum arenas.
Esorfranki Pipelines is expected to benefit from increasing demand in KwaZulu- Natal, Gauteng and Mpumalanga mainly from municipalities and parastatals including Trans-Caledon Tunnel Authority.
Directorate
During the year Jonathan (Mlungisi) Hlongwane resigned as an independent non- executive director with effect from 26 February 2010. Alternate director to Dr FA Sonn, Johan van Reenen, resigned with effect from 30 November 2009. We thank both Mlungisi and Johan for their contribution.
Dividend declaration
The board has declared a dividend of 15,0 cents per share (2009: 15 cents per share), which equates to 4,75 times dividend cover on HEPS. It remains the policy of the group to review the dividend annually in light of cash flow, gearing and net external debt on the statement of financial position, future availability of credit and the covenants imposed in terms of current financing arrangements.
The salient dates for the dividend are as follows:
Last day to trade cum dividend Thursday, 10 June 2010
Shares trade ex dividend Friday, 11 June 2010
Record date Friday, 18 June 2010
Payment date Monday, 21 June 2010
No share certificates may be dematerialised or rematerialised between Friday, 11 June 2010 and Friday, 18 June 2010, both dates inclusive.
Annual general meeting
The annual general meeting of the company will be held at the company's offices,30 Activia Road, Activia Park, Germiston on Friday, 25 June 2010 at 10h00.
Wednesday, May 26, 2010
Thursday, May 20, 2010
Pan African Resources Plc - Resource upgrade for Phoenix
RESOURCE UPGRADE FOR PHOENIX
HIGHLIGHTS
Total resource increased by 15.8% to 469,000 ounces 4E Platinum Group Metals (`PGM 4E's')
In situ grade increased by 2.6% to 3.15g/t PGM 4E's
THE PHOENIX PROJECT
The Phoenix Project is 100% owned by Phoenix Platinum Mining (Pty) Limited , a wholly owned subsidiary of Pan African.
Phoenix concluded an exclusivity agreement with International Ferro Metals SA (Pty) Limited on 18 February 2010, which agreement sets out the terms and conditions under which Phoenix may construct a Chromite Tailings Retreatment Plant on the IFM property. The site position for the CTRP was agreed on 31 March 2010 and the detailed engineering design of the CTRP is ahead of schedule. Construction is anticipated to commence during the first quarter of 2011 while first production is planned for September 2011.
Metallicon Process Consulting (Pty) Limited was appointed by Pan African to validate and verify all procedures relating to the resource estimate. The estimation process was carried out through a comprehensive drilling, sampling and assaying programme that underpins the resource calculation.
The process resulted in the metal content increasing by 15.8% from 405,000 ounces PGM 4E's reported in the Company's unaudited interim results for the six months ended 31 December 2009, to 469,000 ounces PGM 4E's. The grade increased by 2.6% from 3.07g/t PGM 4E's to 3.15g/t PGM 4E's.
HIGHLIGHTS
Total resource increased by 15.8% to 469,000 ounces 4E Platinum Group Metals (`PGM 4E's')
In situ grade increased by 2.6% to 3.15g/t PGM 4E's
THE PHOENIX PROJECT
The Phoenix Project is 100% owned by Phoenix Platinum Mining (Pty) Limited , a wholly owned subsidiary of Pan African.
Phoenix concluded an exclusivity agreement with International Ferro Metals SA (Pty) Limited on 18 February 2010, which agreement sets out the terms and conditions under which Phoenix may construct a Chromite Tailings Retreatment Plant on the IFM property. The site position for the CTRP was agreed on 31 March 2010 and the detailed engineering design of the CTRP is ahead of schedule. Construction is anticipated to commence during the first quarter of 2011 while first production is planned for September 2011.
Metallicon Process Consulting (Pty) Limited was appointed by Pan African to validate and verify all procedures relating to the resource estimate. The estimation process was carried out through a comprehensive drilling, sampling and assaying programme that underpins the resource calculation.
The process resulted in the metal content increasing by 15.8% from 405,000 ounces PGM 4E's reported in the Company's unaudited interim results for the six months ended 31 December 2009, to 469,000 ounces PGM 4E's. The grade increased by 2.6% from 3.07g/t PGM 4E's to 3.15g/t PGM 4E's.
Tuesday, May 18, 2010
Pan African Resources Plc
UPDATE ON CONDITIONAL ACQUISITION OF A 25% STAKE IN THE RK1 CONSORTIUM AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the announcement released on, 31 March 2010, in which Pan African advised that it had signed a conditional Sale and Purchase Agreement with Ivanhoe Nickel and Platinum Limited to acquire a 25% interest in the RK1 Consortium. RK1 owns a Chromite Tailings Retreatment Plant situated at Kroondal on the Western Limb of the Bushveld Complex in the North West Province of South Africa, which produces Platinum Group Metals concentrate.
The Transaction was subject to, inter alia, the successful completion of a technical and financial due diligence investigation by Pan African. Subsequent to the completion of the Due Diligence, the Company has elected not to proceed with the Transaction.
This decision will not affect the interim Exclusivity and Agreed Terms Agreement entered into on 17 February 2010 between Pan African, its wholly-owned subsidiary Phoenix Platinum Mining (Pty) Limited and International Ferro Metals SA (Pty) Ltd which relates to the siting and construction of the Phoenix CTRP on the IFM Mine Property. This is progressing ahead of schedule and first production is still planned for September 2011.
Withdrawal of cautionary announcement Shareholders are referred to the cautionary announcement first released on 31 March 2010 and subsequently renewed on 30 April 2010, and in terms of the Listings Requirements of JSE Limited are advised that, as the company has elected not to proceed with the Transaction, caution is no longer required to beexercised when dealing in the company`s securities.
Shareholders are referred to the announcement released on, 31 March 2010, in which Pan African advised that it had signed a conditional Sale and Purchase Agreement with Ivanhoe Nickel and Platinum Limited to acquire a 25% interest in the RK1 Consortium. RK1 owns a Chromite Tailings Retreatment Plant situated at Kroondal on the Western Limb of the Bushveld Complex in the North West Province of South Africa, which produces Platinum Group Metals concentrate.
The Transaction was subject to, inter alia, the successful completion of a technical and financial due diligence investigation by Pan African. Subsequent to the completion of the Due Diligence, the Company has elected not to proceed with the Transaction.
This decision will not affect the interim Exclusivity and Agreed Terms Agreement entered into on 17 February 2010 between Pan African, its wholly-owned subsidiary Phoenix Platinum Mining (Pty) Limited and International Ferro Metals SA (Pty) Ltd which relates to the siting and construction of the Phoenix CTRP on the IFM Mine Property. This is progressing ahead of schedule and first production is still planned for September 2011.
Withdrawal of cautionary announcement Shareholders are referred to the cautionary announcement first released on 31 March 2010 and subsequently renewed on 30 April 2010, and in terms of the Listings Requirements of JSE Limited are advised that, as the company has elected not to proceed with the Transaction, caution is no longer required to beexercised when dealing in the company`s securities.
Monday, May 17, 2010
CIC Holdings Limited - Reviewed group results for the year ended 28 February 2010
REVIEWED GROUP RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2010 KEY INFORMATION
- Profit from operations up 49,6% to N$105,1 million.
- Headline earnings up 24,4% to N$58,2 million.
- Headline earnings per share up 24,3% to 25,6 cents.
COMMENTARY
The Group's income streams emanate from three main business segments, being the agency division, sales and merchandising and staffing solutions. Revenue growth has been satisfactory in most markets, given the challenges in African economies and the global financial crisis.
Whilst businesses outside of South Africa fared better for the period, the general trend can be described as positive. The agency divisions remain the largest segment of the Group's business both from a revenue and profit perspective, followed by the sales and merchandising business, and then staffing solutions.
RESULTS
Total revenue for the period increased by 12% to N$2,5 billion. Profit from operations grew a satisfactory 49,6% to N$105,1 million and operating profit margins improved to 4,2% from 3,1%.
This growth was due to a combination of improving category mix in the agency divisions, good margin improvements in staffing solutions, and acquisitions within the sales and merchandising space.
Foreign exchange exposure in the Mozambique operations resulted in a loss of N$9,5 million. This was due to a weakening of the Mozambique Metical against theRand during the period.
Profit before tax improved 37,6% to N$95,2 million. Income tax charges were adversely affected by secondary, withholding and additional taxes that relate mainly to dividend payments by Group companies.
SEGMENTAL REVIEW AGENCY DIVISIONS
All businesses performed to expectation at operating profit level. The performance of this division was marred by the significance of the foreign exchange loss in the Mozambican business.
Namibia enjoyed good top line trading with good additional volumes being generated cross border with Angola for most of the year. Botswana also enjoyed top line growth in many categories with some Zimbabwean cross border upside in the first six months of the year.
Mozambique experienced a difficult year of trading as the local currency played havoc with pricing to the customers as the currency devalued. Consumers resisted price increases and consumption in almost all categories were negatively affected. A number of new categories were added during the year which assisted
in bolstering the basket of sales. Whilst this year has had its challenges there remains a good air of optimism with an expected improvement in the local economy.
STAFFING SOLUTIONS
The staffing solutions business performed well in a tough trading environment. The hospitality division increased its customer base and performed to expectation.
The Botswana division performed particularly well as it expanded its service offering during the year.
SALES AND MERCHANDISING
The Group is now well represented throughout South Africa. CIC increased its shareholding in Vital Merchandising Services Holdings (Pty) Limited ("VMS") by 24,5% during the year. VMS acquired a major shareholding in Peak Instore (Pty) Limited, a brand activations company, during the last quarter.
Profitability was bolstered somewhat by the increase in shareholding in the sales and merchandising business. The business as such performed fairly well in South Africa against the backdrop of a slow economy, high wage increases and trade destocking.
PROSPECT
The fall of published inflation numbers may well be a positive sign for the regional economy. However, higher wage increases and the threat of lingering and persistent high fuel prices will aggravate cost increases and put pressure on margins.
In many instances there are price decreases in the pipeline that merely aggravate margin pressure, whilst consumers remain hawkish regarding increased spending.
Focus will have to be on cost innovation to impact positively on margins, but not affecting service delivery.
It is hoped that there is stability in Mozambique towards the World Cup. In addition the government published salary and wage increases at a new minimum level in May. It is hoped that this will restore some upside to consumer spending, particularly around the World Cup.
Staffing solutions should enjoy some strong upside with the World Cup activity in the hospitality sector in the first six months of the financial year. The Group has a major shareholding in Horizon Distributors Limited, an agency business based in Zambia. This is a start up business and it is an exciting
venture for the Group. A number of Principals have already signed up, with exciting prospects of additions during the year. Whilst the business will achieve profitability for the full year, it is anticipated that meaningful
results will be achieved in the second year of operation.
The Group continues to focus on acquisitions and expansions within the Southern African region. This remains a cornerstone requirement for growth to expand CIC's footprint in Africa.
The Group acquired a further effective 24,5% interest in VMS. As result of the transaction VMS became a subsidiary of CIC and is no longer treated as an Associate. In terms of IFRS 3 (revised) a deemed disposal of the equityaccounted investment took place at fair value when the additional shares were
acquired. This resulted in an accounting loss of R5,4 million which represents the difference between the carrying value and the fair value of the equity accounted investment on the effective date. This loss is excluded from the calculation of Headline Earnings.
Operating lease commitments
The Group has outstanding operating lease commitments totalling N$85,3 million (2009 - N$87,1 million).
Dividend
The directors are pleased to announce that they have declared a final dividend of 7 cents per share on 12 May 2010 (2009 - 5,5 cents). Shareholders are further advised that non-resident shareholders' tax ("NRST") of 10% is deductible by CIC from any dividend distributed by CIC to its shareholders who are non-resident in Namibia and who do not carry on business in Namibia.
The salient dates for the payment of this dividend are set out below:
Last date to trade cum dividend Friday, 25 June 2010
Trading ex dividend commences Monday, 28 June 2010
Record date Friday, 2 July 2010
Payment date Monday, 5 July 2010
- Profit from operations up 49,6% to N$105,1 million.
- Headline earnings up 24,4% to N$58,2 million.
- Headline earnings per share up 24,3% to 25,6 cents.
COMMENTARY
The Group's income streams emanate from three main business segments, being the agency division, sales and merchandising and staffing solutions. Revenue growth has been satisfactory in most markets, given the challenges in African economies and the global financial crisis.
Whilst businesses outside of South Africa fared better for the period, the general trend can be described as positive. The agency divisions remain the largest segment of the Group's business both from a revenue and profit perspective, followed by the sales and merchandising business, and then staffing solutions.
RESULTS
Total revenue for the period increased by 12% to N$2,5 billion. Profit from operations grew a satisfactory 49,6% to N$105,1 million and operating profit margins improved to 4,2% from 3,1%.
This growth was due to a combination of improving category mix in the agency divisions, good margin improvements in staffing solutions, and acquisitions within the sales and merchandising space.
Foreign exchange exposure in the Mozambique operations resulted in a loss of N$9,5 million. This was due to a weakening of the Mozambique Metical against theRand during the period.
Profit before tax improved 37,6% to N$95,2 million. Income tax charges were adversely affected by secondary, withholding and additional taxes that relate mainly to dividend payments by Group companies.
SEGMENTAL REVIEW AGENCY DIVISIONS
All businesses performed to expectation at operating profit level. The performance of this division was marred by the significance of the foreign exchange loss in the Mozambican business.
Namibia enjoyed good top line trading with good additional volumes being generated cross border with Angola for most of the year. Botswana also enjoyed top line growth in many categories with some Zimbabwean cross border upside in the first six months of the year.
Mozambique experienced a difficult year of trading as the local currency played havoc with pricing to the customers as the currency devalued. Consumers resisted price increases and consumption in almost all categories were negatively affected. A number of new categories were added during the year which assisted
in bolstering the basket of sales. Whilst this year has had its challenges there remains a good air of optimism with an expected improvement in the local economy.
STAFFING SOLUTIONS
The staffing solutions business performed well in a tough trading environment. The hospitality division increased its customer base and performed to expectation.
The Botswana division performed particularly well as it expanded its service offering during the year.
SALES AND MERCHANDISING
The Group is now well represented throughout South Africa. CIC increased its shareholding in Vital Merchandising Services Holdings (Pty) Limited ("VMS") by 24,5% during the year. VMS acquired a major shareholding in Peak Instore (Pty) Limited, a brand activations company, during the last quarter.
Profitability was bolstered somewhat by the increase in shareholding in the sales and merchandising business. The business as such performed fairly well in South Africa against the backdrop of a slow economy, high wage increases and trade destocking.
PROSPECT
The fall of published inflation numbers may well be a positive sign for the regional economy. However, higher wage increases and the threat of lingering and persistent high fuel prices will aggravate cost increases and put pressure on margins.
In many instances there are price decreases in the pipeline that merely aggravate margin pressure, whilst consumers remain hawkish regarding increased spending.
Focus will have to be on cost innovation to impact positively on margins, but not affecting service delivery.
It is hoped that there is stability in Mozambique towards the World Cup. In addition the government published salary and wage increases at a new minimum level in May. It is hoped that this will restore some upside to consumer spending, particularly around the World Cup.
Staffing solutions should enjoy some strong upside with the World Cup activity in the hospitality sector in the first six months of the financial year. The Group has a major shareholding in Horizon Distributors Limited, an agency business based in Zambia. This is a start up business and it is an exciting
venture for the Group. A number of Principals have already signed up, with exciting prospects of additions during the year. Whilst the business will achieve profitability for the full year, it is anticipated that meaningful
results will be achieved in the second year of operation.
The Group continues to focus on acquisitions and expansions within the Southern African region. This remains a cornerstone requirement for growth to expand CIC's footprint in Africa.
The Group acquired a further effective 24,5% interest in VMS. As result of the transaction VMS became a subsidiary of CIC and is no longer treated as an Associate. In terms of IFRS 3 (revised) a deemed disposal of the equityaccounted investment took place at fair value when the additional shares were
acquired. This resulted in an accounting loss of R5,4 million which represents the difference between the carrying value and the fair value of the equity accounted investment on the effective date. This loss is excluded from the calculation of Headline Earnings.
Operating lease commitments
The Group has outstanding operating lease commitments totalling N$85,3 million (2009 - N$87,1 million).
Dividend
The directors are pleased to announce that they have declared a final dividend of 7 cents per share on 12 May 2010 (2009 - 5,5 cents). Shareholders are further advised that non-resident shareholders' tax ("NRST") of 10% is deductible by CIC from any dividend distributed by CIC to its shareholders who are non-resident in Namibia and who do not carry on business in Namibia.
The salient dates for the payment of this dividend are set out below:
Last date to trade cum dividend Friday, 25 June 2010
Trading ex dividend commences Monday, 28 June 2010
Record date Friday, 2 July 2010
Payment date Monday, 5 July 2010
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