JSE civil engineering group and leading geotechnical specialist, Esorfranki, continued to meet market expectations with significant growth in a tough economic environment for the year to February 2010 ("the year") realising the benefits of previous investment in expansion and diversification. Increases in both the top and bottom line exceeded 30% as the group overcame the impact of the global economic meltdown and local inclement weather conditions on its markets. During the year Esorfranki successfully transferred to the JSE Main Board to facilitate more appropriate comparison with like civil engineering construction groups.

Expansion in 2009 into broader civil engineering services as well as diversification into specialist pipeline capability helped drive a 31,3% increase in revenue to

R1,9 billion, generating a 37% increase in profit after tax ("PAT") to R197,6 million. Headline earnings was up 15,6% on the previous year, translating into higher headline earnings per share ("HEPS") of 71,3 cents. In light of the strong performance, while also taking into account prevailing economic conditions, Esorfranki declared a dividend for the year equal to the previous year of 15 cents a share.

CEO Bernie Krone says the group has continued to distinguish itself among peers, "still kicking in the face of the economic and political storms in South Africa and on the continent". He is pleased with the success of all three business units in securing promising project pipelines despite leaner project availability and tighter margins in the face of intensifying competition.

During the year Geotechnical weathered the dramatically shrunken project pool in South Africa but is reporting decreased revenue. Krone points out that despite the challenges, including heavy rains slowing productivity on all active contracts and delaying the start of new ones, the business unit increased operating margins to 17,4%. Two major domestic infrastructure projects – Gautrain and Kusile Power Station – are ongoing. "Forced to look cross-border for real growth, Geotechnical has made strides by securing R55 million worth of contracts in Botswana and R27 million in the DRC."

He says this is only the start of Geotechnical's Africa expansion, with a strategic objective for the year ahead to increase the contribution to revenue of foreign currency denominated projects from 27% to at least 40%. "To this end we are actively diverting plant and people to countries including Angola, Botswana, the DRC and Mozambique."

Esorfranki Civils upped revenue by a respectable 17,4% to R715 million with work progressing on the R21 highway upgrade and N4 interchange construction in contracts worth over R500 million. Looking to 2011 Krone says the business unit will reap the rewards of its shifted focus to the mining sector as well as its positioning to take part in the Medupi Power Station now that Eskom has the financing to continue construction.

Esorfranki Pipelines also grew revenue for the year by 13,6% and operating profit marginally, despite severe contract award delays placing the business unit under pressure. "Pipelines secured a R240 million contract from Rand Water, which bodes well for the year ahead." He adds that likely opportunities in the municipal and parastatal sectors should bolster prospects, especially in the regions of KwaZulu-Natal, Gauteng and Mpumalanga.

Esorfranki replicated its operational achievements with strategic milestones including elevating its BEE rating to a 'Level 5' and promising to target 'Level 4' before the end of the current year. The group is already fully empowered at ownership level and ahead of the Construction Charter's target of 26% black ownership, with a total direct black shareholding of 29%. "We are also concentrating intently on increasing black representation at middle and senior management through upskilling programmes to promote our own promising staff."

Krone says 2009's substantial capital investment in plant positioned the group well for future growth, enabling Esorfranki to halve expenditure in the year past and again reduce to a R72 million capex plan for the year ahead. "We believe our plant is a differentiator giving us a competitive edge, and we are satisfied that prior work and capital has established a well-maintained, sufficient operating fleet."

In the year ahead he says he expects market conditions to continue challenging the group, with real recovery only expected in 2011 and going forward. Nonetheless he and his board are optimistic about Esorfranki's sustainable growth, starting off FY2011 with an order book already in hand of R1,6 billion. "We are positive we will meet our targets for the year ahead to continue delivering expected returns to our loyal stakeholders," he says. He concludes realistically that Esorfranki is "but one cog in the intricate financial engine that drives the still–embattled economy. This engine is currently not firing on all cylinders and until it operates at full efficiency we'll continue to do the best we can."

Ends.

Issued by: Michèle Mackey/ Sunet Grobler

(011) 325 5944/ 082 497 9827

On behalf of: Esorfranki Limited

Bernie Krone, CEO

(011) 882 3906/ 083 259 5984

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Share Code: ESR

Issue date: 26 May 2010