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WELCOME

WELCOME. Table of contents. Welcome Salient features Sustainability achievements Financial review Strategy Short-term challenges and progress Medium to long-term strategy Operational review Products, services and clients Competitors and value proposition

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WELCOME

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  1. WELCOME

  2. Table of contents • Welcome • Salient features • Sustainability achievements • Financial review • Strategy • Short-term challenges and progress • Medium to long-term strategy • Operational review • Products, services and clients • Competitors and value proposition • Geographical footprint and key contracts • Risk management • Segmental review • Order book and outlook • Capex • Conclusion

  3. SALIENT FEATURES

  4. Salient features – 28 February 2013 • Revenue up 31.3% to R2.3bn (2012:R1.8bn) • EBITDA up 103% to R269.3m (2012:R132.6m) • Headline earnings up 220% to R77m (2012:R24m) • HEPS up 231% to 20.5 cents (2012:6.2 cents) • PAT up 382% to R87.7m (2012:R18.2m) • EPS up 400% to 23.5 cents (2012:4.7 cents) • Order book up 43.7% to R2.5bn (2012:R1.8bn) • Operating cash decreased by R60m to R33.6m

  5. Salient features continued • Gross margin 16.1% • Operating margin 6.5% • Established on-the-ground presence in Ghana and Tanzania • Esorfranki Pipelines secured project in Swaziland • Invested R194m in property, plant & equipment • Invested R68m in property developments • ISO 18001 safety accreditation achieved

  6. Sustainability achievements • We have maintained a successful return to profitability for three successive periods • Gross margin 16.1% • Operating margin 6.5% • Our order book has been strengthened to R2.5bn • Established on-the-ground presence in Ghana and Tanzania • Esorfranki Pipelines secured project in Swaziland • Invested R194m in property, plant & equipment • ISO 9001 Quality accreditation maintained in all divisions • ISO 18001 accreditation has been obtained in all divisions • ISO 14001 accreditation was obtained in all divisions post year-end • Our LTIFR of 0.59 is significantly better than the industry norm of 1.33 • Regrettably one fatality at the beginning of this calendar year

  7. FINANCIAL REVIEW 28 February 2013

  8. Statement of Financial Position: salient features as at 28 February 2013

  9. Statement of Financial Position: salient features (1 March 2012 – 28 February 2013)

  10. Statement of Income: salient features

  11. STRATEGY

  12. Material issues • MATERIAL ISSUE • Growth considering the external environment • CHALLENGE • Intensifying competition and margin contraction • RESPONSE & PROGRESS • Expansion in the African market • Targeting higher margin private sector projects such as low cost housing • Taking equity share in developments

  13. Material issues • MATERIAL ISSUE • B-BBEE scorecard • CHALLENGE • To continually strengthen Esorfranki’s B-BBEE position and comply with Construction Charter requirements essential for securing government and parastatal contracts • RESPONSE AND PROGRESS • Ownership - in negotiations with potential BEE investor with expected finalisationin June 2013 • Management - examination of board structure with intention of appointing black female non-exec by end H1 2014 • Maximise procurement, business development and CSI spends

  14. Material issues • MATERIAL ISSUE • Liquidity - financial management during times of growth • CHALLENGE • Balancing the group’s growth (double construction sector) with liquidity to service investments in housing and development • RESPONSE & PROGRESS • Sufficient liquidity and capital to meet business objectives through additionalbanking facilities • Provision of company and institutional guarantees to free up cash retentions

  15. Material issues • MATERIAL ISSUE • Project execution - on time, within budget and to required quality • CHALLENGE • Ability to start projects efficiently and manage limited senior resources and volatile labour while ensuring quality and safety • RESPONSE & PROGRESS • Efficient risk-controlled delivery of quality projects • Limits of authority depending on size and profile of contracts • Project team monitors risk, execution, cost and payment from appointment on monthly basis • SHEQ compliance continuously monitored within the frameworks ofISO 9001, 14001 & 18001

  16. Material issues • MATERIAL ISSUE • Skills shortage • CHALLENGE • Scarce resources undermine delivery and expansion • RESPONSE & PROGRESS • Creation of attractive employment proposition, a people-centred culture,skills development programme and succession planning • Employees are offered bursaries as well as skills training • LDC employees are trained in a wider range of skills than is required forthe contract for their further empowerment • In-house accredited training centre based at Germiston workshop

  17. Material issues • MATERIAL ISSUE • SHEQ – impact of safety, health, environment and quality on operations • CHALLENGE • Potential threat to employees, natural resources, client’s and group’s reputationthrough non-compliance • RESPONSE & PROGRESS • ISO 9001, ISO 14001¹ and ISO 18001 accredited • Superior safety record (LTIFR<1.00)² compared to industry average of 1.33 • Safety management system implemented in Africa • Rejuvenated fuel-efficient fleet and fuel-efficiency plan • SHEQ training, regular internal & external audits • Strategies for reducing, re-using and recycling resources 1 Post year-end ISO 14001 Environmental accreditation achieved2 Actual February 2013 rolling monthly average LTIFR of 0.59

  18. Material issues • MATERIAL ISSUE • Past collusive and anti-competitive practices within the industry • CHALLENGE • To settle all outstanding Competition Commission issues • PROGRESS • The CC investigation into alleged anti-competitive behaviour in the piling and drilling markets was referred to the Tribunal following a failed settlement offer. Negotiations have been reopened post year-end and the board is convinced that the estimated penalty provision previously allowed in the financial statements will suffice • During the recent fast track settlement process offered to the construction industry Esorfranki Limited filed one marker relating to a prescribed offence and will accept an imposed fine of R115 850 • Esorfranki was further mistakenly implicated in one other instance relating to Shearwater prior to acquisition which has now fallen away • Any further developments will be communicated to all stakeholders as they occur

  19. Medium to long-term strategy • Continue harnessing synergy within the group • Expand product offering and grow market share • Geographical diversity in Civils and Pipelines • Environmental accreditation ISO 14001 obtained post year-end • Securing long-term contracts to create future visibility and to underpin sustainability • Focus on sustainable growth nodes within government infrastructure programmeswhen they occur • Supply chain management will take cognisance of environmental impactand carbon emissions will be measured and managed • Addressing Construction Charter requirements to improve B-BBEE scoring by31 December 2013 • Focus on concession and development projects • Focus on private sector clients to balance dependency on government contracts

  20. OPERATIONAL REVIEW 28 February 2013

  21. Products & Services • Geotechnical • Pipelines • Civils • Piling • Lateral support • Marine structures • Pipejacking • Thrust boring • Bridgejacking • Diaphragm walls • Ground improvement • Dynamic compaction • Ground remediation • Soils investigation • Geotechnical design • Gas and petrochemical steel pipelines • Water and wastewater pipelines • Sewer pipelines • Pump stations • Pipeline refurbishments • Cement mortar lining • Valve chambers • Associated concrete structures • Associated infrastructure • Pressure testing • Road construction • Bridge construction • Township infrastructure • Mining infrastructure • Water reticulation • Water towers • Reservoirs • Sewer reticulation • Bulk earthworks • Building • Housing • Development

  22. Clients • Geotechnical • Pipelines • Civils • Civil contractors • Building contractors • Listed & private contractors • Government at: • Central • Provincial • Municipal levels • Property development companies • Parastatals: • Eskom • Transnet • Rand Water • Umgeni Water • Portnet, etc • Mining sector including most major mining houses • Government at: • Central • Provincial • Municipal levels • Parastatals: • Transnet • Rand Water • Umgeni Water • Portnet • TCTA & DWAF • Mining sector • Private clients • RBM • Foscor • Mondi • Cross-border • FIPAG Mocambique • Botswana Government • Zimbabwe • Swaziland • Eskom • Sanral • Anglo Coal • Xstrata • RAL • Gauteng Province • Government • Central • Provincial • Municipal levels • Private developers • Bakwena Concessions • Debswana

  23. Competitors • Geotechnical • Pipelines • Civils • Steffanutti Stocks in-house geotechnical division • Aveng in-house geotechnical division • Dura (SolentacheBachy is a large global contractor) • Wepex • Gauteng Piling • Terrastrata • Geomechanics • Keller (largest global geotechnical contractor) • WK Pipelines • WBHO • Aveng • Group 5 • Steffanutti Stocks • Cerimele Construction • Murray & Dixen • Concor • Ikon • Murray & Roberts • Aveng • WBHO • Group 5 • Steffanutti Stocks • Basil Read • Raubex • Erbacon • Protech-Khutheli • Diesel Power • Haw & Inglis

  24. Value proposition • Geotechnical • Pipelines • Civils • Geotechnical market leader in South Africa • Good reputation and well known brand in SSA • Design alternatives constantly investigated • Geographical diversity entrenched and expanded • Depth of management know-how • Well-established business processes over 65 years • Plant capacity retooled and modernised • ISO 9001, ISO14001 andISO 18001 accredited • Niche leader in welded pipelines • Supply and install all aspects of cross-country pipelines • Supply and install pipelines in a myriad of materials • Experienced and talented management team • Excellent track record with blue-chip clients • Extended work footprint to Swaziland • ISO 9001, ISO14001 andISO 18001 accredited • Diversified range of construction services • Plant capacity and capability expanded • Excellent workshop facilities • Strong relationships with clients and consulting engineers • Experienced and talented management team • Increased longer-term projects in order book • ISO 9001, ISO14001 andISO 18001 accredited

  25. Geographical footprint AFRICA GHANA UGANDA KENYA DRC SEYCHELLES TANZANIA ANGOLA MALAWI ZAMBIA MOZAMBIQUE ZIMBABWE MADAGASCAR NAMIBIA MAURITIUS BOTSWANA SWAZILAND

  26. Geotechnical - key contracts

  27. Pipelines - key contracts

  28. Civils - key contracts

  29. RISK MANAGEMENT

  30. Matrix of major risks

  31. Risk management

  32. SEGMENTAL REVIEW

  33. Segmental review - Geotechnical

  34. Segmental review - Pipelines

  35. Segmental review - Civils

  36. ORDER BOOK AND OUTLOOK

  37. Order book as at 28 February 2013

  38. Geotechnical outlook as at 28 Feb 2013

  39. Pipelines outlook as at 28 Feb 2013

  40. Civils outlook as at 28 Feb 2013

  41. Civils outlook as at 28 Feb 2013

  42. General outlook 2014FY and beyond

  43. General outlook 2014FY and beyond

  44. CAPEX

  45. Capex

  46. Conclusion • Having successfully maintained a profitable position for three successive periods, we are confident that the leaner, meaner, happier, more focused persona of Esorfranki Limited will continue to bode well for the future of all its stakeholders!THANK YOU!

  47. Disclaimer • Forward-looking statements • This presentation contains forward-looking statements that, unless otherwise indicated, reflect the company’s expectations as at 28 February 2013. 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.

  48. Esorfranki 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 • Bernie.krone@esorfranki.co.za • Wessel van Zyl | CFO • + 27 82 498 3518 • +27 11 776 8700 • +27 11 822 1158 • Wessel.vanzyl@esorfranki.co.za www.esorfranki.co.za

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