Prospectus - ShareData Online - South African share prices, JSE … · 2006-03-16 · prospectus. An English copy of this prospectus, accompanied by the documents referred to under

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Esor Limited (Incorporated in the Republic of South Africa)

(Registration number: 1994/000732/06) (JSE code: ESR ISIN: ZAE000078408)

(�Esor� or �the company�)

Prospectus

Prepared and issued in terms of the Listings Requirements (�the Listings Requirements�) of JSE Limited (�the JSE�) relating to a private placement of Esor ordinary shares by way of an offer for subscription of 20 000 000 ordinary shares at an issue price of 100 cents per ordinary share in the share capital of Esor, thereby raising R20 000 000 before expenses (�the private placement�) and the subsequent listing of the ordinary shares of Esor on the Alternative Exchange (�ALTx�) of the JSE. Opening date of private placement at 09:00 on Monday, 6 March 2006 Closing date of private placement at 12:00 on* Wednesday, 8 March 2006 Anticipated listing date on ALTx at 09:00 on Tuesday, 14 March 2006 * Shareholders wishing to receive shares in dematerialised form must advise their Central Securities Depository Participant (�CSDP�) or broker of their acceptance of the offer to subscribe for shares in the manner and cut-off time stipulated by their CSDP or broker. This prospectus is not an invitation to the general public to subscribe for shares in Esor. This is an offer to selected members of the public to subscribe for shares in Esor and is issued in compliance with the Listings Requirements and the Companies Act, 1973 (Act 61 of 1973), as amended (�the Act�), for the purpose of providing information to the public and investors with regard to Esor. From commencement of business at the date of listing, the authorised share capital of Esor comprises 500 000 000 ordinary shares at a par value of 0.1 cent each and, after the private placement, 120 000 000 issued ordinary shares of 0.1 cent each. The ordinary shares issued in terms of the private placement will rank pari passu with all other ordinary shares issued by Esor. Applications must be for a minimum of 5 000 shares and in multiples of 1 000 shares thereafter. There is no actual minimum subscription for the listing to proceed. Subject to the required spread of public shareholders in terms of the Listings Requirements being obtained pursuant the private placement, the JSE has granted Esor a listing in respect of 120 000 000 ordinary shares on ALTx under the abbreviated name �Esor�, share code �ESR� and ISIN ZAE000078408, with effect from the commencement of business on Tuesday, 14 March 2006. The directors of Esor, whose names are given in Annexure 1 of this prospectus, accept, collectively and individually, full responsibility for the accuracy of the information given herein and certify that, to the best of their knowledge and belief, no facts have been omitted which would make any statement false or misleading, and that they have made all reasonable enquiries to ascertain such facts and that this prospectus contains all information required by law and the Listings Requirements. RSM Hills Howard, Chartered Accountants (SA), whose reports are included in this prospectus, have given and have not, prior to publication, withdrawn their written consent to the inclusion of their reports in the form and context in which they appear. The Designated Adviser, attorneys, commercial banker and transfer secretaries, whose names are included in this prospectus, have given and have not, prior to registration, withdrawn their written consents to the inclusion of their

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names in the capacities stated and, where applicable, to their reports being included in this prospectus. An English copy of this prospectus, accompanied by the documents referred to under �Documents available for inspection� as set out in paragraph 32 of this prospectus, was registered by the Registrar of Companies on Thursday, 2 March 2006 in terms of section 155(1) of the Act.

Warning: The listing of ordinary shares in the company is on ALTx. Investors are advised of the risks of investing in a company listed on ALTx. Investors are advised that the JSE does not guarantee the viability or the success of a company listed on ALTx. In terms of the Listings Requirements, the company is obliged to appoint and retain a Designated Adviser, which is required to, inter alia, attend all board meetings held by the company to ensure that all the Listings Requirements and applicable regulations are complied with, approve the Financial Director of the company and guide the company in a competent, professional and impartial manner. If the company fails to retain a Designated Adviser, it must make arrangements to appoint a new Designated Adviser within 10 business days, failing which the company faces suspension of trading of its securities. If a Designated Adviser is not appointed within 30 days of its suspension, the company faces the termination of its listing without the prospect of an appropriate offer to minority shareholders. The Registrar of Companies has scrutinised the information disclosed in this prospectus. The Registrar of Companies does not express a view on the risk for investors or the price of the shares. Designated Adviser Auditors and

reporting accountants

Limited Assurance Provider

Attorneys

[LOGO] [LOGO] [LOGO] [LOGO]

Exchange Sponsors RSM Hills Howard KPMG Inc Cox Yeats

Date of issue: 28 February 2006

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Corporate Information

Directors M L Barber A M Field* B. Krone M L Trevisani** I G Jefferiss�* D M Thompson� (� Non-executive) ( * British)

( ** Italian)

Company secretary and registered office [7.B.12] M L Trevisani CA (SA) 130 Aberdare Drive, Phoenix Industrial Park, Durban, 4051 (PO Box 40096, Red Hill, 4071 Telephone: 031 507 1051 Facsimile: 031 507 5709

Designated Adviser Exchange Sponsors (Pty) Limited (Registration number 1999/024433/07) 39 First Road Hyde Park, 2196 (PO Box 411216, Craighall, 2024) Telephone: (011) 447 2951 Facsimile: (011) 447 1929

Transfer secretaries Computershare Investor Services 2004 (Pty) Limited (Registration number 2004/003647/07) Ground Floor 70 Marshall Street Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) Telephone: (011) 370 5000 Facsimile: (011) 688 5210

Auditors and reporting accountants RSM Hills Howard Chartered Accountants (SA) Block A Surrey Park 6 Barham Road, Westville, 3629 (PO Box 2120 Westville,3630) Telephone 031 266 9222 Facsimile: 031 266 9299

Attorneys Cox Yeats Attorneys Physical address 12th & 13th Floors, Victoria Maine 71 Victoria Embankment, Durban, 4001 (P.O. Box 3032, Durban, 4000) Telephone: 031-3042851 Facsimile: 031-3013540

Commercial banker First National Bank Limited (Registration number 1929/001225/06) 8 Rydall Vale Park Douglas Sanders Drive La Lucia Ridge (PO Box 4130, The Square, Umhlanga Rocks, 4320) Telephone: (031) 580 6000 Facsimile: (031) 580 6045

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Limited Assurance Provider KPMG Inc (Registration number 1999/021543/21) KPMG Crescent 85 Empire Road Parktown, 2193 (Private Bag 9, Parkview, 2122) Telephone: (011) 647 7111 Facsimile: (011) 647 8000

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Table of Contents

The definitions commencing on page 11 of this prospectus apply mutatis mutandis to the following table of contents:

Page CORPORATE INFORMATION SALIENT FEATURES IMPORTANT DATES AND TIMES DEFINITIONS PROSPECTUS 1. Introduction 15 2. Incorporation and history 16 3. Industry background 16 4. Group structure Error! Bookmark not defined. 5. Nature of business 17 6. Prospects 17 7. Major shareholders 18 8. Directors and executive management 18 9. Purpose of placement and listing on ALTx 18 10. Details of the private placement 19 11. Material changes 23 12. Profit history, forecasts, unaudited pro forma financial information and dividend policy 23 13. Preliminary expenses and issue expenses 29 14. Capital commitments, lease payments and contingent liabilities 30 15. Loans receivable and borrowing powers 30 16. Property and subsidiaries acquired 31 17. Shares issued, other than for cash 31 18. Property and subsidiaries disposed or to be disposed of 31 19. Principal immovable property owned and leased 32 20. Details of subsidiaries 32 21. Share capital 32 22. Adequacy of working capital 34 23. Options and preferential rights in respect of shares 34 24. Share incentive scheme 34 25. Material contracts 34 26. Litigation statement 35 27. Advisers� interests 35 28. Consents 35 29. King Code 35 30. Directors� responsibility statement 35 28. Documents available for inspection 35 32. Paragraphs of Schedule 3 to the Act which are not applicable 36

Annexure 1 Directors, executive management, appointment, qualifications, remuneration and

borrowing powers of directors Annexure 2 Historical financial information of Esor

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Annexure 3 Independent reporting accountants� report on the historical financial information of Esor

Annexure 4 Reviewed interim financial information of Esor Annexure 5 Independent reporting accountants� report on the reviewed interim financial

information of Esor Annexure 6 Independent reporting accountants� report on the profit forecast of the group Annexure 7 Independent reporting accountants� report on the unaudited pro forma income

statement and balance sheet Annexure 8 Group Structure Annexure 9 Corporate Governance Annexure 10 Salient features of the company�s share scheme Annexure 11 Vendors Annexure 12 KPMG Limited Assurance Report Private placement application form

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Salient Features

The salient features are a summary only. For full appreciation, this prospectus should be read in its entirety. The definitions commencing on page 11 of this prospectus apply mutatis mutandis to the salient features.

1. INCORPORATION AND HISTORY

1.1. Esor was incorporated on 8 February 1994. The company�s business was founded in 1976 when its predecessor, Esor Ground Engineering (Pty) Limited, was incorporated to undertake jacked tunnelling contracts. In 1994 some of the original shareholders bought out the business from Esor Ground Engineering (Pty) Ltd and Esor Pty Ltd was born. The company converted to a public company on 22nd December 2005.

1.2. The company soon diversified into other fields of geotechnical engineering, which gave it a far greater access into a broader market. These included diverse techniques such as auger boring, piling, diaphragm walling, lateral support, ground anchoring, structural shotcreting, grouting, shaft sinking, percussion drilling, tunnelling, dewatering, marine works, bridge footings, bridges, environmental remediation and other specialist civil engineering work. This allowed the company to increase its offering and revenue generating capability and to become more involved in comprehensive building construction projects.

1.3. The expansion of the company�s offering allowed it to complete projects such as the piling contract for the Gateway Shopping Centre, piling and lateral support for the Michelangelo Towers and piping and tunnelling crossings for the Mozambique Sasol gasline.

1.4. Esor supports the large construction companies with underground construction on civil engineering and construction projects.

2. NATURE OF THE COMPANY�S BUSINESS AND INDUSTRY

2.1. Esor is one of the larger independent geotechnical engineering companies in South Africa. Geotechnical projects are conducted by four of the bigger companies, of which Esor is one, or a range of smaller companies or smaller operators. The company provides its services to customers in the construction industry, executing projects for parastatals, local government and corporations either as partners in a consortium or as the primary contractor for underground construction projects.

2.2. Esor�s executive directors are the major shareholders of the company, with each of the directors having spent more than 20 years in the business. The company operates from its premises in Durban and Germiston, executing projects in South Africa and the Southern African Development Countries. The company has a work force of more than 220 people of which 70% are black. Most of the work force has spent more than 10 years with the company.

2.3. With annual revenues totalling R 100 million for the year ended 28 February 2005, the company�s different focus areas contribute equally to its revenue.

2.4. The company�s business can be divided into the following areas:

2.4.1. Pipe Jacking

Pipejacking or jacked tunnelling of pipes and culverts formed Esor�s main line of business when the company started out 30 years ago. Pipejacking contributes approximately a third of Esor�s total revenue.

2.4.2. Piling

Piling projects precede construction work on large projects such as new building projects, new plants and extensions to mines. The company also maintains the expertise to complete marine projects, having recently completed Ushaka Pier in Durban. Piling also contributes approximately a third of the company�s total revenue.

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2.4.3. Lateral Support

Lateral support projects account for a further third of the company�s total revenue.

2.4.4. Environmental Remediation

Esor�s in-house capabilities have allowed the company to complete a number of unique projects for its customers. The extraction of contaminated water from an area, in which a petrol pipe line leaked, is an ongoing project which has drawn international attention.

3. PROSPECTS

3.1. Esor focuses on geotechnical engineering projects that form part of civil engineering and non-residential construction projects. Government announcements have indicated the intent to initiate infrastructural projects of more than R 370 billion over the next three to five years. Such projects form part of Gross Fixed Capital Formation (�GFCF�), which has shown a growth rate of 9% since 2003, which resulted in a GFCF to GDP ratio of 16.5% in 2004. It is government�s intent to increase this ratio to 25% by 2014.

3.2. Private sector investment in non-residential projects has increased in the past three years, as evident in the construction boom. It is anticipated that non-residential construction projects will continue in the next three to five years, albeit at a slower growth rate.

3.3. Esor�s principal clients are government departments, parastatals, local government and large corporates involved in the development of non-residential buildings, such as office blocks, shopping centres and retail parks. The company has experienced an average growth of more than 10% per annum in revenue over the past 8 years. The company is currently involved with a number of projects such as the new international pier at Johannesburg International Airport, and will be starting on projects such as the pipejacking for the Berg River project and piling at the Imbali Lake Apartments in Zimbali and the Bay Head Cold Storage.

4. SUMMARY OF HISTORICAL AND FORECAST INCOME STATEMENTS

The historical and forecasted financial information of Esor and its subsidiaries for the financial periods ended 28 February 2005, ending 28 February 2006 and 28 February 2007, the preparation of which is the responsibility of the directors, are set out below. The results must be read in conjunction with the independent reporting accountants� report thereon reproduced in Annexure 2, Annexure 3 and Annexure 4 hereto.

4.1. Extracts from the historical and forecast income statements

Esor

Audited Esor

Forecast Esor

Forecast Year ended 28 February 2005 2006 2007 Revenue (Rands) 100 062 308 117 288 728 130 190 488

Gross profit 17 419 165 24 551 669 27 847 526 Other income 275 880 1 176 761 300 000 Operating expenses (7 876 195) (7 023 630) (7 221 429) EBITDA 9 818 850 18 704 800 20 926 097 Depreciation (1 961 563) (1 894 776) (1 790 000) Profit before interest and taxation 7 857 287 16 810 024 19 136 097 Net interest received / (paid) 362 928 (50 255) 1 950 000 Profit before taxation 8 220 215 16 759 769 21 086 097 Taxation (2 531 926) (4 860 333) (6 114 968) Earnings attributable to ordinary shareholders 5 688 289 11 899 436 14 971 129

Adjustments for headline earnings:

Profit on sale of plant and (95 592) - -

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equipment Profit on sale of land and buildings - (793 658) - Headline earnings 5 592 697 11 105 778 14 971 129

Pro forma weighted average shares in issue 100 000 000 100 000 000 120 000 000 Pro forma earnings per share (cents) 5.69 11.90 12.48 Pro forma headline earnings per share (cents) 5.59 11.11 12.48 Pro forma dividend per share (cents) - - -

Notes:

(1) Pro forma calculation for 28 February 2005 is based on the conversion of the original 102

ordinary shares in issue to 100 000 000 shares on the last practicable date. (2) The assumptions upon which the forecast income statements are based are set out in

paragraph 11.2 of this prospectus. (3) The reduction in cost of sales and operating expenses is due to the company revising

their incentive bonuses of the directors.

(4) Other income in 2006 includes R793 658 in respect of the profit on sale of the land and buildings from Esor Plant Hire (Pty) Ltd.

(5) Net interest received has increased as a result of the interest earned on the funds raised from the private placement.

5. PURPOSE OF THE PRIVATE PLACEMENT AND THE LISTING

5.1. The purpose of the private placement is to:

- enhance investor and general public awareness of Esor, its activities and specialised skills;

- attract and retain intellectual capital through the incentive of meaningful equity participation;

- raise capital and to have the flexibility of listed shares to allow the company to take advantage of potential acquisition opportunities;

- afford members of the investing public, clients and business associates of Esor the opportunity to participate directly in the income stream derived by Esor, as well as in the future capital growth of its assets.

5.2. An amount of R20 000 000, before share issue and listing expenses, will be raised by the issue of shares for cash to private individuals, corporations and institutions. The proceeds will be utilised for capital expenditure and strategic acquisitions.

5.3. Those private individuals, corporations and institutions that have been invited to apply should do so by completing the attached private placement application form in accordance with the provisions of this prospectus and the instructions contained in the private placement application form.

5.4. No offer will be made to the general public in terms of the private placement. The private placement will be made to selected applicants only.

5.5. Subject to the achievement of the required spread of 100 public shareholders and public shareholders holding 10% of the ordinary shares of Esor, the JSE has formally approved the listing of 120 000 000 ordinary shares in the share capital of Esor on ALTx with effect from commencement of business on Wednesday, 8 March 2006. The shares will trade under the abbreviated name �Esor�, with the JSE code �ESR� and ISIN ZAE000078408.

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6. DETAILS OF THE PLACEMENT

6.1. Salient features

6.1.1. The salient features of the private placement are as follows:

Offer price per ordinary share (cents) 100

Par value per ordinary share (cents) 0.1

Premium per ordinary share (cents) 99.9

Number of ordinary shares offered in terms of private placement 20 000 000

Issue consideration before expenses R20 million

6.1.2. The opening and closing dates of the private placement are as follows:

Opening date of the private placement at 09:00 on Monday, 6 March 2006

Closing date of private placement at 12:00 on Wednesday, 8 March 2006

Anticipated listing date on ALTx at 09:00 on Tuesday, 14 March 2006

6.1.3. The placement will not be underwritten and is not subject to a minimum subscription being

achieved.

7. COPIES OF THE PROSPECTUS

Copies of the prospectus, in English, may be obtained during business hours, from date of issue of the prospectus to the closing date of the private placement from the registered offices of Esor, Exchange Sponsors (Pty) Limited and the transfer secretaries, details of which are set out in the �Corporate information� section of this prospectus.

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Important Dates and Times

2006

Abridged prospectus released on SENS on Monday, 6 March

Opening date of the private placement at 09:00 on Monday, 6 March

Closing date of private placement at 12:00 on Wednesday, 8 March

Listing of Esor on ALTx at 09:00 on Tuesday, 14 March

Safe custody accounts at CSDP or broker updated in respect of dematerialised shareholders on or about(1)

Tuesday, 14 March

Posting of share certificates in respect of certificated shareholders on or about

Tuesday, 14 March

Refund of surplus private placement application monies received (where applicable) on Wednesday, 15 March

Notes: (1) CSDP�s effect payment on a delivery versus payment basis. (2) The above dates are subject to change. Any such change will be released on SENS. (3) Shareholders wishing to receive shares in dematerialised form must advise their CSDP or

broker of their acceptance of the offer to subscribe for shares in the manner and cut-off time stipulated by their CSDP or broker.

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Definitions

In this prospectus, appendices and the attachment hereto, unless the context indicates otherwise, references to the singular include the plural and vice versa, words denoting one gender include the others, expressions denoting natural persons include juristic persons and associations of persons and vice versa, and the words in the first column hereunder have the meanings stated opposite them in the second column, as follows:

�Act� The Companies Act, 1973 (Act 61 of 1973), as amended;

�ALTx� The Alternative Exchange of the JSE;

�applicants� selected private individuals, corporations and institutions that have been invited to subscribe for Esor shares in terms of the private placement;

�application form� the application form in respect of the placement, attached to and forming part of this prospectus;

�auditors� or �independent reporting accountants�

RSM Hills Howard, Chartered Accountants (SA) (Practice number 902950E);

�BEE� as defined in the Broad-Based Black Economic Empowerment Act, 53 of 2003 and which means the economic empowerment of all black people, including women, workers, youth, people with disabilities and people living in rural areas, through diverse but integrated socio-economic strategies;

�business day� any day other than a Saturday, Sunday or official public holiday in South Africa;

�certificated shareholders�

Esor shareholders who elect to receive physical Esor share certificates;

�certificated shares� Esor shares for which physical Esor share certificates have been issued;

�common monetary area�

South Africa, the Republic of Namibia and the Kingdoms of Swaziland and Lesotho;

�CSDP� Central Securities Depository Participant as defined in terms of the Securities Services Act, 36 of 2004, appointed by an individual shareholder for purposes of, and in regard to the dematerialisation of documents of title for purposes of incorporation into the STRATE system;

�dematerialised shareholder�

a shareholder who holds ordinary shares which have been incorporated into the STRATE system and which are no longer evidenced by physical documents of title in terms of the Custody and Administration of Securities Act, 1992;

�Designated Adviser� Exchange Sponsors (Pty) Limited (Registration number 1999/024433/07), a company incorporated in accordance with the laws of South Africa, a Designated Adviser as contemplated in the Listings Requirements;

�directors� or �board of directors�

the directors of Esor, further details of whom appear in Annexure 1;

�documents of title� Share certificates, certified transfer deeds in respect of balance receipts and electronic statements and dematerialised shares or any other documents of title acceptable to Esor in respect of shares;

�EBITDA� earnings before interest, taxation, depreciation and amortisation;

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�emigrant� an emigrant from South Africa whose address is outside the common monetary area;

�Esor� or �the company� Esor Limited (Registration number 1994/000732/06), a public company incorporated in accordance with the laws of South Africa;

�Esor subsidiaries� Collectively Esor Geotechnical Engineering, Esor Plant Hire, Hammib Properties and Esor Properties; Esor Geotechnical Engineering Cape

�Esor Cape� Esor Geotechnical Engineering (Cape) (Pty) Ltd, registration number 1987/005412/07, a private company incorporated in South Africa;

�Esor Geotechnical Engineering�

Esor Geotechnical Engineering (Pty) Ltd, registration number 1985/003603/07, a private company incorporated in South Africa;

�Esor Plant Hire� Esor Plant Hire (Pty) Ltd, registration number 1985/003495/07, a private company incorporated in South Africa;

�Esor Projects� Esor Projects (Pty) Ltd, registration number 1988/000967/07, a private company incorporated in South Africa;

�Esor Properties� Esor Properties (Pty) Ltd, registration number 2005/040654/07, a private company incorporated in South Africa;

�Exchange Control Regulations�

the Exchange Control Regulations, 1961, as amended, promulgated in terms of section 9 of the Currency and Exchanges Act, 1933 (Act 9 of 1933), as amended;

�Government� The Government of South Africa;

�group� includes the holding company Esor and the trading activities of the wholly-owned Esor subsidiaries, all companies incorporated in accordance with the laws of South Africa;

�Hammib Properties� Hammib Properties (Pty) Ltd, registration number 2005/042164/07, a private company incorporated in South Africa;

"IFRS� International Financial Reporting Standards, which comprise standards and interpretations approved by the International Accounting Standards Board, International Financial Reporting Interpretations Committee and International Accounting Standards, and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee;

�incorporation� The date of incorporation of Esor, being 8 February 1994;

�the JSE� JSE Limited (Registration No. 2005/022939/06), a company duly registered and incorporated with limited liability under the company laws of South Africa, and licensed as an Exchange under the Securities Act, 2004

�the last practicable date�

the last practicable date prior to the finalisation of this Document, being Monday, 23 February 2006;

�the listing� the proposed listing of the entire issued share capital of the company on ALTx, on Tuesday, 14 March 2006;

�Listings Requirements� The Listings Requirements of the JSE;

�non-resident� a person whose registered address is outside the common monetary area and who is not an emigrant;

�ordinary shares� ordinary shares of 0.1 cent each in the share capital of the company;

�own-name registration� shareholders who hold shares that have been dematerialised and are recorded by the CSDP on the register kept by that CSDP in the name of such shareholder;

�private placement� or �placement�

the private placement of 20 000 000 ordinary shares at 100 cents per ordinary share to selected institutions, corporations and individuals for cash;

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for cash;

�this prospectus� this bound document, dated 28 February 2006, including all appendices and the attachment hereto;

"Rand� or �R� or �cents� The official currency of South Africa;

�the Registrar� The Registrar of Companies in South Africa;

�restructuring� The group restructuring involved the acquisition of 3 wholly owned subsidiaries, namely Esor Properties (Pty) Ltd, Esor Geotechnical Engineering (Pty) Ltd and Hammib Properties (Pty) Ltd. The properties owned by these companies were occupied by Esor and subject to short term operating leases.

�SENS� The Securities Exchange News Service of the JSE;

�South Africa� The Republic of South Africa;

�share incentive scheme�

the Esor Share Incentive Trust, the salient features of which are set out in Annexure 10, and comprises a deferred share purchase and option scheme;

�shareholders� holders of ordinary shares in Esor:

�STRATE� the settlement and clearing system used by the JSE, managed by STRATE Limited (Registration number 1998/022242/06), a public company incorporated in accordance with the laws of South Africa;

�transfer secretaries� Computershare Investor Services 2004 (Proprietary) Limited (Registration number 2004/003647/07), a company incorporated in accordance with the laws of South Africa.

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(�Esor� or �the company�) Directors M L Barber A M Field* B Krone M L Trevisani** I G Jefferiss� * D M Thompson� (� Non-executive) ( * British)

( ** Italian)

Prospectus

1. INTRODUCTION

1.1. Esor intends to list on AltX of the JSE as a strategic step that will allow the company to raise capital in support of its vision of becoming a prominent provider of geotechnical engineering solutions to construction companies and companies involved in civil engineering and construction projects. A listing will provide the capital which it requires for capital expenditure and strategic acquisitions.

1.2. Esor is one of the larger independent geotechnical engineering companies in South Africa and focuses on underground construction of civil engineering and non-residential construction projects. Geotechnical projects are conducted by four of the bigger companies, of which Esor is one, or a range of smaller companies or smaller operators. The company provides its services to customers in the construction industry, executing projects for parastatals, local government and corporations either as partners in a consortium or as the primary contractor for underground construction projects.

1.3. Esor focuses on the provision of geotechnical solutions, which allows it to utilise the best available technology to service the needs of the South African Construction and Civil Engineering Industries. In order to achieve this objective, Esor has established strategic relationships with consulting engineers and other specialist engineering companies. The approach provides the company with access to the state-of-the-art skills of these companies, which in tandem with Esor�s own in-house capabilities ensure that the company�s strategic objective is met.

1.4. Part of the company�s business strategy is the implementation of its empowerment objectives. With 70% of its work force black, the company�s strategy is to create a black employee trust that will acquire an equity stake in the company, along with identified empowerment partners, in order to ensure that the objectives of government�s Broad Based Black Economic Empowerment objectives are met. The company is currently in discussions with various potential empowerment partners to facilitate such a transaction.

1.5. The success of the company�s business philosophy is reflected by the company�s market position, which has resulted in the company being appointed as the primary contractor for below surface construction projects. The company�s customer-driven focus, reliability and

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competitive pricing ensured that it remains a preferred supplier of geotechnical solutions to most of the construction companies.

1.6. A listing on AltX improves the company�s ability to raise capital for strategic acquisitions. Esor will be favourably positioned for future tenders which will ensure that the company maintains its revenue growth rate of more than 10% over the next three to five years.

2. INCORPORATION AND HISTORY

2.1. Esor was incorporated on 8 February 1994. The company�s business was originally founded in 1976 when its predecessor, Esor Ground Engineering (Pty) Ltd, was incorporated to undertake jacked tunnelling contracts. In 1994 some of the original shareholders bought out the business from Esor Ground Engineering (Pty) Ltd and Esor (Pty) Ltd was born. The company converted to a public company on 22nd December 2005.

2.2. The company soon diversified into other fields of geotechnical engineering, which gave it a far greater access into a broader market. These included diverse techniques such as auger boring, piling, diaphragm walling, lateral support, ground anchoring, structural shotcreting, grouting, shaft sinking, percussion drilling, tunnelling, dewatering, marine works, bridge footings, bridges, environmental remediation and other specialist civil engineering work. This allowed the company to increase its offering and revenue generating capability and to become more involved in comprehensive building construction projects.

2.3. The expansion of the company�s offering allowed it to complete pipe jacking and tunnelling projects for the Mozambique Sasol gasline, tunnels under the Vaal river and the half tunnel of Chapman�s Peak among others. Prominent piling and lateral support projects that the company has completed include the International Convention Centre, the Gateway Shopping Centre, Constitution Hill and the Michelangelo Towers. Esor have also constructed the Ushaka Pier in Durban and conducted various projects that include the South African Petroleum Refineries remediation project in Durban.

2.4. As one of the larger independent geotechnical engineering companies in South Africa, Esor focuses on underground construction on civil engineering and construction projects. The company�s customers include the large construction firms, parastatals, local government and corporations involved in construction projects. Esor will either partner in a consortium or act as the primary contractor for underground construction projects.

3. INDUSTRY BACKGROUND

3.1. Introduction

The construction sector has, except for 1999, recorded positive growth for the last decade and contributes around 3% to total GDP. There has been a gradual upward trend in this sector�s growth, and the brisk growth in fixed investment in this sector reflects a general belief among construction firms that this will continue. Infrastructure projects such as the expansion of stadiums in preparation for the 2010 Soccer World Cup and the Gautrain Rapid Rail project are prominent examples of projects that will boost growth in this sector.

The country�s investment in residential and non-residential buildings in 2004 was around R44 billion, while R28 billion was spent on construction works including civil engineering, mining, harbours, airports and other infrastructural projects.

Several large construction projects will increase the growth rate of the construction industry. Recent announcements indicate that government intends to invest around R370 billion in infrastructure over the next three to five years. These include R84 billion for the expansion of electricity generating capacity and R37 billion for the maintenance and expansion of ports, railway lines and equipment by Transnet.

3.2. Market Segmentation

Government is the major player in construction, contributing over 43% to overall investment spending, and together with public corporations contribute to 70% of spending

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in the construction sector. The construction sector�s contribution to GFCF includes construction works (12%) Non-residential building (8%) and residential building (8%).

Growth in the construction sector is therefore linked to government policy and general economic conditions that determine the appetite for expansion. The announcement of the various large scale projects such as the planned Transnet and Eskom infrastructure projects will be awarded to industry players with the ability to execute these projects successfully. Major construction companies will utilise subcontractors to execute key elements of such projects, which will substantially benefit a company like Esor with its niche focus.

4. NATURE OF BUSINESS

4.1. Esor is one of the larger independent geotechnical engineering companies in South Africa. The company provides its services to customers in the construction industry, executing projects for parastatals, local government and corporations either as partners in a consortium or as the primary contractor for underground construction projects.

4.2. Esor�s executive directors are the major shareholders of the company, with each of the directors having spent more than 20 years in the business. The company operates from its premises in Durban and Germiston, executing projects in South Africa and the Southern Africa Development Countries. The company has a work force of more than 220 people of which 70% are black. Most of the work force has spent more than 10 years with the company.

4.3. With annual revenues totalling R 100 million for the year ended 28 February 2005, the company�s different focus areas contribute equally to its revenue.

4.4. The company�s business can be divided into the following areas:

4.4.1. Pipe Jacking

Pipejacking or jacked tunnelling of pipes and culverts formed Esor�s main line of business when the company started out 30 years ago. Pipejacking contributes approximately a third of Esor�s total revenue.

4.4.2. Piling

Piling projects precede construction work on large projects such as new building projects, new plants and extensions to mines. The company also maintains the expertise to complete marine projects, having recently completed Ushaka Pier in Durban. Piling also contributes approximately a third of the company�s total revenue

4.4.3. Lateral Support

Lateral support projects account for a third of the company�s total revenue.

4.4.4. Environmental Remediation

Esor�s in-house capabilities have allowed the company to complete a number of unique projects for its customers. The extraction of contaminated water from an area, in which a petrol pipe line leaked, is an ongoing project which has drawn international attention.

4.5. The business focus of Esor as described above has no government protection or any investment encouragement law that may affect the business

5. PROSPECTS

5.1. Esor focuses on geotechnical engineering projects that form part of civil engineering and non-residential construction projects. Government announcements have indicated the intent to initiate infrastructural projects of more than R 370 billion over the next three to five years1. Such projects form part of Gross Fixed Capital Formation (�GFCF�), which

1 H.Joffe, �Future under Construction� Business Day, 26 October, www.businessday.co.za

http://www.businessday.co.za

18

has shown a growth rate of 9% since 2003, which resulted in a GFCF to GDP ratio of 16.5% in 2004. It is government�s intent to increase this ratio to 25% by 20142.

5.2. Private sector investment in non-residential projects has increased in the past three years, as evident in the construction boom. It is anticipated that non-residential construction projects will continue in the next three to five years, albeit at a slower growth rate.

5.3. Esor�s principal clients are governmental departments, parastatals, local government and large corporates involved in the development of non-residential buildings. The company has experienced an average growth rate of more than 10% in revenue over the past 8 years. The company is currently involved with a number of projects such as the new international pier at Johannesburg International Airport, and will soon be starting on projects such as the pipejacking on the Berg River project and piling at the Imbali Lake Apartments in Zimbali and the Bay Head Cold Storage.

6. MAJOR SHAREHOLDERS

6.1. There are no shareholders other than directors, that are, directly beneficially interested in 5% or more of the issued ordinary share capital of Esor at the last practicable date. Refer to paragraph 5.1 in Annexure 1 for the directors� shareholdings.

6.2. No other shareholder will, insofar as the directors of Esor are aware, directly or indirectly, hold 5% or more of the issued share capital of Esor following the private placement. The company will have a public shareholding of at least 100 shareholders that will hold a minimum of 10% of the ordinary shares on the day of listing. There will be no controlling shareholder in Esor after the listing.

6.3. There will be no change in the controlling shareholder as a result of the private placement.

6.4. There have been no changes in the controlling shareholders and trading objects of Esor and its subsidiaries since incorporation.

6.5. The four major shareholders of Esor, being ML Barber, AM Field, B Krone and ML Trevisani, has each placed 7.5 million shares, being a total of 30 million shares, with selected investors and institutions at a price of 100 cents per share. This was done to improve the free float of Esor shares.

7. DIRECTORS AND EXECUTIVE MANAGEMENT

Details of directors and executive management, including the appointment, remuneration, borrowing powers of directors and directors� interests and declarations are set out in Annexure 1.

The company has obtained confirmation from the directors that they are free of any conflict of interest between the directors� duties to the company and their private interests.

8. PURPOSE OF PLACEMENT AND LISTING ON ALTx

8.1. Subject to the achievement of the required spread of public shareholders, the JSE has formally approved the listing of 120 000 000 ordinary shares in the share capital of Esor on ALTx with effect from commencement of business on Tuesday, 14 March 2006. The shares will trade under the abbreviated name �Esor�, with the JSE code �ESR� and ISIN ZAE000078408.

8.2. Esor has reserves of at least R2 million in retained earnings. The company will have a public shareholding of at least 100 shareholders that will hold a minimum of 10% of the ordinary shares on the day of listing.

8.3. An amount of R20 000 000, before share issue and listing expenses, will be raised by the issue of shares for cash to private individuals, corporations and institutions. The proceeds will be utilised for capital expenditure and strategic acquisitions.

2 H.Preece, In The Spotlight, Finweek 14 December 2005, p 55

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8.4. The purpose of the placement and the listing are to:

- enhance investor and general public awareness of Esor, its activities and specialised skills;

- attract and retain intellectual capital through the incentive of meaningful equity participation;

- raise capital and to have the flexibility of listed shares to allow the company to take advantage of potential acquisition opportunities;

- broaden Esor�s shareholder base and to obtain the spread of shareholders required for the listing of Esor�s ordinary shares on the JSE;

- afford members of the investing public, clients and business associates of Esor the opportunity to participate directly in the income stream derived by Esor, as well as in the future capital growth of its assets.

9. DETAILS OF THE PRIVATE PLACEMENT

9.1. Salient features

9.1.1. The salient features of the private placement are as follows:

Offer price per ordinary share (cents) 100

Par value per ordinary share (cents) 0.1

Premium per ordinary share (cents) 99.9

Number of ordinary shares offered in terms of private placement

20 000 000

Issue consideration before expenses R20 million

9.1.2. The opening and closing dates of the private placement are as follows:

Opening date of the private placement at 09:00 on Monday, 6 March 2006

Closing date of private placement at 12:00 on Wednesday, 8 March 2006

Anticipated listing date on ALTx at 09:00 on Tuesday, 14 March 2006

9.1.3. Those private individuals, corporations and institutions that have been invited to apply

should do so by completing the attached private placement application form in accordance with the provisions of this prospectus and the instructions contained in the private placement application form.

9.1.4. No offer will be made to the general public in terms of the private placement. The private placement will be made to selected applicants only.

9.1.5. The Esor ordinary shares issued in terms of the private placement will rank pari passu with all other ordinary shares issued by Esor.

9.2. Procedures for acceptance and subscription of shares in Esor

9.2.1. Applications for the private placement can be made on the attached private placement application form provided to select applicants. Photocopies or reproductions will be accepted. Each application will be regarded as a single application.

9.2.2. The private placement application may not be ceded, renounced or assigned in favour of anyone else by the applicant to whom it is addressed.

9.2.3. The private placement shares may not be applied for in the name of a minor, deceased estate, partnership or trust. Executors, trustees and individual partners may apply for the private placement shares in their own name or through nominee companies. No documentary evidence of capacity need accompany the private placement application but the directors of Esor reserve the right to call upon any applicant to furnish evidence of such capacity for noting.

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9.2.4. The private placement applications are irrevocable once received by the Designated Adviser or the company.

9.2.5. No receipts will be issued for applications and/or payments received.

9.2.6. Applications must be for a minimum of 5 000 shares and in multiples of 1 000 shares thereafter.

9.2.7. Shares will only be traded in electronic form and accordingly all shareholders who elect to receive certificated shares will first have to dematerialise their share certificates should they wish to trade therein. Applicants are advised that it takes between one and ten days to dematerialise their certificated shares depending on the volumes being processed by STRATE at the time of dematerialisation.

9.2.8. Payment may only be made by bank guaranteed cheque (crossed �not transferable), banker�s draft or electronic transfer (followed by fax or electronic proof of payment in the case of electronic transfers). Postal orders, cash or telegraphic transfers will not be accepted. Cheques must be made payable in favour of �Esor Private Placement�. All cheques and banker�s drafts will be deposited by the transfer secretaries immediately upon receipt in a designated account under the control of Esor with a registered South African bank.

9.2.9. The private placement applications will only be regarded as complete once payment for the total amount of the application has been received. Should any cheque or banker�s draft subsequently be dishonoured, the directors of Esor may, in their sole discretion, and without prejudice to any rights the company may have, regard the private placement application of such applicant as revoked or take such steps in regards thereto as they deem fit.

9.2.10. �Blocked Rand� may be used by emigrants and non-residents of the common monetary area for payment in terms of the private placement. In this regard, reference should be made to paragraph 9.12 below that deals with Exchange Control Regulations.

9.3. Application for certificated shares � payment by bank guaranteed cheque or banker�s draft

Applicants who elect to receive their allocated shares in certificated form and who wish to pay by way of bank guaranteed cheque or banker�s draft must complete and return the private placement application, together with their payment in the form of a bank guaranteed cheque or banker�s draft (crossed �not transferable� and drawn in favour of �Esor Private Placement�) in an envelope marked �Esor Private Placement� to:

if delivered by hand or by courier or if posted

Designated Adviser Designated Adviser Exchange Sponsors (Pty) Limited Exchange Sponsors (Pty Limited 39 First Road PO Box 411216 Hyde Park Craighall 2196 2024

so as to be received by no later than 12:00 on Wednesday, 8 March 2006.

No late applications will be accepted.

9.4. Application for certificated shares � payment by electronic transfer

9.4.1. Applicants who elect to receive their allocated shares in certificated form and who wish to pay by way of electronic transfer may do so, in which case the private placement application, and proof of such payment by electronic transfer must be hand delivered, posted or faxed to Esor (and not the transfer secretaries) to:

if delivered by hand or if posted or if faxed

Designated Adviser Designated Adviser Designated Adviser Exchange Sponsors (Pty) Limited Exchange Sponsors (Pty) Limited (011) 447 1929 39 First Road PO Box 411216 Hyde Park Craighall 2196 2024

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9.4.2. Payment by electronic transfer must be made into the following bank account:

Bank: First National Bank Branch: Durban Branch code: 221426 Account name: Esor Private Placement Account number: 62097753597

9.4.3. Esor accepts no responsibility and will not be liable for the correct or any allocation of private placement shares pursuant to payment being made or alleged to have been made by way of electronic transfer due to proof of such payment not being received or purported proof of such payment being insufficient or defective or Esor, for any reason, not being able to reconcile a payment or purported payment with a particular application for private placement shares.

9.5. Disadvantages of holding shares in certificated form

9.5.1. The current risks associated with holding shares in certificated form, including the risk of loss or tainted scrip, remain.

9.5.2. At the point at which the shareholder wishes to transact on the JSE, he will be required to appoint a CSDP or broker to dematerialise the shares prior to the broker being able to transact in the shares which dematerialisation can take up to 10 days. A certificated shareholder will have no recourse in the event of delays occasioned by the validation process or the acceptance or otherwise of its certificated shares by a CSDP.

9.6. Application for dematerialised shares � payment by electronic transfer or through a CSDP or broker

9.6.1. Applicants who elect to receive their allocated shares in dematerialised form and who wish to pay by way of electronic transfer may do so, in which case the private placement application and the section on their CSDP or broker, and proof of such payment by electronic transfer must be hand delivered, posted or faxed to:




Payment by electronic transfer must be made into the following bank account:


Esor accepts no responsibility and will not be liable for the correct or any allocation of private placement shares pursuant to payment being made or alleged to have been made by way of electronic transfer due to proof of such payment not being received or purported proof of such payment being insufficient or defective or Esor, for any reason, not being able to reconcile a payment or purported payment with a particular application for private placement shares.

9.6.2. Applicants who wish to receive their allocated shares in dematerialised form, must complete and return the private placement application to the Designated Adviser or their duly appointed CSDP or broker by the time and date stipulated in the agreement

22

governing their relationship with their CSDP or broker, together with the method of payment as stipulated in such agreement.

9.6.3. The brokers will collate all their respective private placement applications and forward the instruction to the brokers� nominated CSDP�s.

9.6.4. The CSDP�s will collate all the private placement applications from brokers and/or applicants and notify the transfer secretaries.

9.6.5. Brokers and CSDP�s will be notified by the transfer secretaries on the second business day following the closing of the private placement of their allocation in respect thereof.

9.6.6. In respect of those applicants who elect to receive dematerialised shares, their duly appointed CSDP�s or broker�s account will be updated on or about Tuesday, 14 March 2006.

9.7. Reservation of rights

9.7.1. The directors of Esor reserve the right to accept or refuse any application(s), either in whole or in part, or to abate any or all application(s) (whether or not received timeously) in such manner as they may, in their sole and absolute discretion, determine.

9.7.2. The directors of Esor reserve the right to accept or reject, either in whole or in part, any private placement applications should the terms and the instructions contained in this prospectus not properly be complied with.

9.8. Irrevocable undertakings

Esor holds irrevocable undertakings from various selected investors to subscribe for 20 000 000 shares in terms of the private placement, amounting to 100% of the private placement shares.

9.9. No minimum subscription

The private placement is not subject to a minimum subscription being achieved.

9.10. Oversubscriptions

9.10.1. The private placement of 20 000 000 ordinary shares have been fully allocated to the investors who have given irrevocable undertakings as set out in paragraph 9.8 above.

9.10.2. In the event of the private placement application being accepted for a lesser number of shares than applied for or rejected, any surplus application monies received, will be refunded by the company by a cheque drawn on First National Bank, inclusive of interest from the date of receipt of such monies, and posted by ordinary mail at the risk of the applicant concerned, on or about Tuesday, 14 March 2006 (or on clearance of the funds, if later) in respect of certificated shareholders only.

9.10.3. Where a listing is cancelled and persons are owed subscription refunds in terms of applications made, the sponsor ensures that the subscription monies are refunded to such persons on the day following the decision to cancel the listing together with all interest earned on such monies calculated from the date of receipt of such monies by Esor.

9.11. Issue of private placement shares

9.11.1. All private placement shares offered will be issued at the expense of Esor.

9.11.2. All private placement shares issued are subject to the provisions of Esor�s memorandum and articles of association and will rank pari passu in all respects with the existing ordinary shares in issue. Annexure 1 contains extracts of Esor�s memorandum and articles of association.

9.11.3. Esor shares will only be traded on the JSE in electronic form and, as such, all shareholders need to dematerialise their shares should they wish to trade therein. Applicants are advised that it takes between one and ten days to dematerialise

23

certificated shares, depending on volumes being processed by STRATE at the time of the dematerialisation.

9.11.4. The principle features of STRATE are as follows:

- trades executed on the JSE must be settled within five business days;

- there will be penalties for late settlement;

- electronic record of ownership replaces share certificates and physical delivery of certificates; and

- all investors are required to appoint either a broker or CSDP to act on their behalf and to handle all settlement requirements.

9.12. Exchange Control Regulations

The following summary is intended as a guide and is, therefore, not comprehensive. If you are in any doubt hereto, please consult your professional adviser.

9.12.1. A former resident of the common monetary area who has emigrated from South Africa may use blocked Rand to purchase shares in terms of this prospectus.

9.12.2. All payments in respect of subscriptions for shares by non-residents using blocked Rand must be made through an authorised dealer in foreign exchange.

9.12.3. Share certificates issued in respect of certificated shares purchased using blocked Rand in terms of this prospectus will be endorsed �non-resident�. Such share certificates will be placed under the control of the authorised dealer through whom the payment was made. Statements issued to non-resident dematerialised shareholders will be restrictively endorsed as �non-resident�.

9.12.4. If applicable, refund monies payable in respect of an unsuccessful application, emanating from blocked Rand accounts will be returned to the authorised dealer administering such blocked Rand accounts for the credit of such unsuccessful applicant�s blocked Rand account.

9.12.5. Applicants resident outside the common monetary area

9.12.5.1A person who is not resident in the common monetary area should obtain advice as to whether any governmental, and/or legal consent is required and/or whether any other formality must be observed to enable an application to be made in terms of the private placement.

9.12.5.2This prospectus is accordingly not an offer in any area or jurisdiction in which it is illegal to make such an offer. In such circumstances this prospectus is provided for information purposes only. All share certificates issued to non-residents of South Africa will be endorsed �non-resident� in terms of the Exchange Control Regulations. Statements issued to dematerialised shareholders will be restrictively endorsed as �non-resident�.

10. MATERIAL CHANGES

The directors report that there have been no material changes in the financial or trading position of Esor and the group since 28 February 2005 and 31 August 2005, other than in the ordinary course of business or as disclosed in this prospectus, in particular, the private placing, the conversion of Esor to a public company and the material acquisitions as disclosed in paragraph 15.

11. PROFIT HISTORY, FORECASTS, UNAUDITED PRO FORMA FINANCIAL INFORMATION AND DIVIDEND POLICY

11.1. Audited income statements for the Esor for the three financial years ended 28 February 2005

11.1.1. The audited historical financial information for Esor and its subsidiaries, the preparation of which is the responsibility of the directors, is presented in Annexure 2. Annexure 3

24

contains the independent reporting accountants� report on the historical financial information of Esor.

Esor

Audited Esor

Audited Esor

Audited Year ended 28 February 2003 2004 2005

Revenue (Rand) 74 625 755 108 869 755 100 062 308

Gross profit 7 646 841 16 649 726 17 419 165

Other income 140 714 239 936 275 880

Operating expenses (6 013 714) (8 798 160) (7 876 195)

EBITDA 1 773 841 8 091 502 9 818 850

Depreciation (1 039 336) (1 421 759) (1 961 563)

Profit before interest and taxation 734 505 6 669 743 7 857 287

Net interest received 699 791 831 822 362 928

Profit before taxation 1 434 296 7 501 565 8 220 215

Taxation (441 085) (2 264 682) (2 531 926)

Earnings attributable to ordinary shareholders 993 211 5 236 883 5 688 289

Adjustments for headline earnings: Profit on sale of plant and equipment (69 994) (158 960) (95 592) Loss on sale of plant and equipment - 66 546 - Headline earnings attributable to ordinary shareholders 923 217 5 144 469 5 592 697

Pro forma weighted average shares in issue (1) 100 000 000 100 000 000 100 000 000 Pro forma earnings per share (cents) 0.99 5.24 5.69 Pro forma headline earnings per share (cents) 0.92 5.15 5.59 Pro forma dividend per share (cents) - - -

Notes:

(1) The (unaudited) pro forma weighted average number of shares in issue is used in order to

reflect the effect of the share placing on the earnings per share calculations. (2) Pro forma calculation for 28 February 2005 is based on the conversion of the original 102

ordinary shares in issue to 100 000 000 on the last practicable date. (3) Reduction in revenue for the year ended 28 February 2005 is due to various delays

encountered in the starting of successfully tendered contracts, which only began toward the end of the financial year.

(4) The actual number of shares in issue, earnings per share, headline earnings per share and dividends per share calculations are set out in Annexure 2.

11.2. Profit forecasts for the years ending 28 February 2006 and 28 February 2007

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11.2.1. The consolidated profit forecasts of the group for the years ending 28 February 2006 and 28 February 2007, the preparation of which is the responsibility of the directors, are set out below. The forecasts should be read in conjunction with the independent reporting accountants� report thereon as set out in Annexure 6.

Esor

Forecast Esor

Forecast Year ending 28 February 2006 2007

Revenue (Rand) 117 288 728 130 190 488

Gross profit 24 551 669 27 847 526

Other income 1 176 761 300 000

Operating expenses (7 023 630 ) (7 221 429)

EBITDA 18 704 800 20 926 097

Depreciation (1 894 776) (1 790 000)

Profit before interest and taxation 16 810 024 19 136 097

Net interest (paid) / received (50 255) 1 950 000

Profit before taxation 16 759 769 21 086 097

Taxation (4 860 333) (6 114 968)

Earnings attributable to ordinary shareholders 11 899 436 14 971 129

Adjustments for headline earnings: - - Profit on sale of land and buildings (793 658) - Headline earnings attributable to ordinary shareholders 11 105 778 14 971 129

Weighted average shares in issue 100 000 000 120 000 000 Earnings per share (cents) 11,90 12,48 Headline earnings per share (cents) 11,11 12,48 Dividend per share (cents) - -

11.2.2. Main assumptions (1) Revenue is based on the existing organic growth levels achieved by Esor. Due to the

nature of the work performed by Esor, there are no existing long term contracts. The growth will be achieved through successful tenders on new contracts.

(2) The gross profit margins are consistent with the anticipated growth of the company. (3) Other income in 2006 includes R793 658 in respect of the profit on sale of a property by

one of the subsidiary companies, thereafter other income will remain consistent with current levels.

(4) The company adopted IFRS with effect from its 28 February 2006 year end.

11.2.3. Comments on the forecast financial information

11.2.3.1. The forecast financial information is based on the assumption that circumstances which affect the company�s business but which are outside the control of the directors, will not materially alter in such a way as to affect the trading of the company. More specifically:

trading conditions are not expected to be materially different in each of the forecast periods;

costs will increase in line with the expected rate of inflation;

26

interest rates and the basis and rates of taxation, both direct and indirect, will not change materially.

11.2.3.2. In addition, the forecast financial information is based on the assumptions that:

there will be continuity in existing management and trading policies;

there will be no change in the present accounting policies, other than the required change to IFRS mentioned above.

11.2.3.3. In the opinion of the directors, the above assumptions are significant to the forecasts as being key factors upon which the financial results of the company will depend. However certain assumptions may not materialise and/or certain unforeseen events may occur or circumstances may arise subsequent to the forecasts being made. Accordingly, the results achieved for the periods referred to above may differ from those forecast and the variations may be material.

11.3. Unaudited pro forma income statement and balance sheet

11.3.1. The pro forma financial information set out below is based on the following assumptions:

11.3.1.1. An amount of R20 million has been raised in respect of the offer.

11.3.1.2. 100% of the estimated transaction costs relating to the listing have been written off against the share premium.

11.3.1.3. The allocation of the purchase price in terms of IFRS 3 (AC140): Business Combinations has not yet been verified as this is done at year end. The pro forma financial information has been prepared on the basis the fair value of Esor Geotechnical Engineering, Esor Properties and Hammib less the costs to sell exceed their carrying value.

11.3.1.4. The pro forma financial information has been prepared on a �stand alone basis� for the restructuring and the offer.

The unaudited pro forma information of Esor before and after the restructuring (acquisition of Esor Geotechnical Engineering, Esor Properties and Hammib) and the private placement is set out below. The pro forma information is provided for illustrative purposes only and because of its nature may not give a fair presentation of the group�s results and financial position after the restructuring and private placement. The unaudited pro forma income statement and balance sheet are based on the reviewed Esor interim results at 31 August 2005 as set out in Annexure 4 and reported on by the independent reporting accountants� report in Annexure 5. The unaudited pro forma income statement and balance sheet should be read in conjunction with the independent reporting accountants� report thereon as set out in Annexure 7. It has been assumed for the purposes of the pro forma financial information that the restructuring and placement took place on 1 March 2005 for income statement purposes and 31 August for balance sheet purposes. The directors of Esor are responsible for the preparation of the unaudited pro forma financial information of Esor.

11.3.2. Unaudited pro forma income statement reflecting the Esor restructuring and private placement adjustments

Esor Group Interim before 1

restructuring and private placement

adjustments 31 August

2005 R

Restructuring adjustment

R

Unaudited pro forma

group after restructuring adjustments 31 August

2005 R

Private placement adjustment

R

Unaudited pro forma

group after restructuring and private placement


2005 R

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Revenue 77 687 064 - 77 687 064 - 77 687 064

Gross profit 14 116 878 - 14 116 878 - 14 116 878 Other income 146 089 860 060 2 1 006 149 - 1 006 149 Operating expenses (3 365 568) 328 227 3 (3 037 341) - (3 037 341) EBITDA 10 897 399 1 188 287 12 085 686 - 12 085 686 Depreciation (704 062) - (704 062) - (704 062) Profit before interest and taxation 10 193 337 1 188 287 11 381 624 - 11 381 624 Net interest received 241 030 (172) 4 240 858 - 240 858 Profit before taxation 10 434 367 1 188 115 11 622 482 - 11 622 482 Taxation (2 829 707) (143 590) 5 (2 973 297) - (2 973 297) Earnings attributable to ordinary shareholders 7 604 660 1 044 525 8 649 185 - 8 649 185 Pro forma weighted average shares in issue (1 & 2) 100 000 000 100 000 000 20 000 000 120 000 000 Earnings per share (cents) 7,61 8,65 7,21 Headline earnings per share (cents) 7,51 8,55 7,13 Dividend per share (cents) - - -

Notes:

(1) The �Before� financial information has been extracted, without adjustment from the reviewed condensed consolidated financial statements of Esor for the six months ended 31 August 2005.

(2) Other income has been adjusted to include the profit on disposal of the property in Esor Plant Hire of R792 978, as well as the rental revenue earned by Esor Geotechnical Engineering, Esor Properties and Hammib for the six months ended 31 August 2005. The property owned by Esor Plant Hire has been disposed of as it no longer played any role within the group. This company is now dormant.

(3) Operating expenses has been adjusted to eliminate the intercompany rental expenses of R525 000 on consolidation of the new subsidiaries as well as for the operating expenses of Esor Geotechnical Engineering, Esor Properties and Hammib.

(4) Net interest received has been adjusted for the interest paid to banking institutions used by Esor Geotechnical Engineering, Esor Properties and Hammib.

(5) Taxation paid has been adjusted to include the additional taxation arising from the above adjustments, calculated at 29%. This includes R29 000 in respect of Capital Gains Tax on the sale of the property in Esor Plant Hire.

(6) No income benefit with regards operating profits in respect of the private placement has been included as the cash raised will be used to fund working capital, the income benefit of which cannot be accurately estimated at this point in time.

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11.3.3. Unaudited pro forma group balance sheet reflecting the acquisition of the subsidiaries by Esor and the private placement adjustment is set out below.

Esor Group Interim before 1 restructuring and private placement


2005 R

Restructuring adjustment

R

Unaudited pro forma

group after restructuring adjustments 31 August

2005 R

Private placement adjustment

R

Unaudited pro forma

group after restructuring and private placement


2005 R

ASSETS Non-current assets 15 008 610 8 328 537 2 23 337 147 - 23 337 147 Current assets 37 908 103 899 441 3 38 807 544 17 538 000 7 56 345 554 Total assets 52 916 713 9 227 989 62 144 691 17 538 000 79 682 691 Shareholders� funds Share capital 102 99 898 4 100 000 20 000 8 120 000 Share premium - 6 965 558 4 6 965 558 17 518 000 9 24 483 558 Retained earnings 24 833 955 764 658 5 25 598 613 - 25 598 613 Ordinary shareholders� funds 24 834 057 7 830 114 32 664 171 17 538 000 50 202 171 Shareholders� loans 2 675 212 - 2 675 212 - 2 675 212 Total shareholders� funds 27 509 269 7 830 114 35 339 383 17 538 000 79 682 691 LIABILITIES Non-current liabilities 2 570 606 1 213 207 6 3 783 813 - 3 783 813 Deferred taxation 2 658 466 - 2 658 466 - 2 658 466 Current liabilities 20 178 372 184 657 20 363 029 - 20 363 029 Total liabilities 25 407 444 1 397 864 26 805 308 - 26 805 308 Total liabilities and shareholders� funds 52 916 713 9 227 978 62 144 691 17 538 000 82 144 691 Pro Forma Shares in issue 100 000 000 100 000 000 20 000 000 120 000 000 Net asset value per share (cents) 24,83 32,66 41,84 Net tangible asset value per share (cents) 24,83 32,66 41,84

Notes:

1. The �Before� financial information has been extracted, without adjustment from the reviewed condensed consolidated financial statements of Esor for the six months ended 31 August 2005. These are set out in Annexure 4.

2. Non-current assets has been adjusted to include the properties of Esor Geotechnical Engineering, Esor Properties and Hammib at an amount of R8 100 000, R1 762 000 and R1

29

760 000 respectively. The property of Esor Plant Hire was also sold. This had a carrying value of R56 342. The fair value of the investment in subsidiaries of R7 065 467 and intercompany loans amounting to R3 237 121 were also eliminated on consolidation.

3. The adjustment to current assets is attributable to the proceeds receivable on the disposal of the property in Esor Plant Hire amounting to R850 000 and also the acquisition of cash balances in the new subsidiaries.

4. Share Capital has been adjusted for the following:

a. 8 000 ordinary shares of R0,001 were allotted at a premium of R883,18 per share in exchange for 100% of the share capital in Esor Geotechnical Engineering, Esor Properties and Hammib.

b. 99 890 000 ordinary shares of R0,001 were allotted as a fully paid up capitalisation issue. The price was paid up by utilising the share premium of the company.

5. Retained income has been adjusted to include the after tax profit on sale of the property in Esor Plant Hire.

6. Non-current liabilities has been adjusted to include a loan from the shareholders of Esor amounting to R1 213 207.

7. Current assets has been adjusted to include the proceeds from the private placement of R20 million, less the estimated transaction costs of R2,462 million (listed in paragraph 12.1).

8. Share capital has been adjusted to include the 20 million shares of R0,001 allotted from the private placement.

9. The share premium account has been adjusted to include the R0,999 premium paid on allotment of the 20 million shares of R0,001 each and the estimated transaction costs of R2,462 million (listed in paragraph 12.1).

11.4. Dividends

11.4.1. It is the intention of the company to reconsider its dividend policy once the company has achieved mature growth, and periodically thereafter in light of prevailing circumstances and future cash requirements. Initially all earnings generated by the company will be utilised to fund future growth and development.

11.4.2. Any dividends not claimed for a period of not less than three years from the date on which such dividends became payable, may be forfeited for the benefit of the company.

11.4.3. There is no arrangement under which future dividends will be waived or has been waived.

11.4.4. The company�s dividend policy was not to declare any dividends. Dividends will be declared on the discretion of the directors.

12. PRELIMINARY EXPENSES AND ISSUE EXPENSES

12.1. The estimated expenses of the private placement and the listing, exclusive of Value-Added Tax, are as follows:

R�000 Printing, publication, distribution and advertising expenses - Roberts Printing

150

JSE documentation fees 37 JSE listing fees 20 Share issue expenses, fiscal duties and taxes � Computershare 100 Transfer secretaries � Computershare 50 Designated Adviser � Exchange Sponsors (Pty) Limited 455 Fund raising fees � Exchange Sponsors (Pty) Limited 750 Reporting accountants � RSM Hills Howard 150 Attorneys � Cox Yeats Attorneys 150 Consulting fees � Jetsam (Pty) Ltd 600 Estimated total 2 462

30

12.2. The abovementioned estimated expenses will be written-off against the share premium account to the extent permissible by the Act.

.

13. CAPITAL COMMITMENTS, LEASE PAYMENTS AND CONTINGENT LIABILITIES

The company had no material capital commitments, lease payments and contingent liabilities at 28 February 2005. There have been no material changes to the capital commitments, lease payments and contingent liabilities of the company since that date.

14. LOANS RECEIVABLE AND BORROWING POWERS

14.1. Since its incorporation, the company has not received any material loans, save as disclosed in paragraph 14.2 below.

14.2. The following loans have been advanced to Esor at 28 February 2005.

Lender

Loan Amount

R�000 Interest

Rate Secured Maturity M L Barber 688 0% None None

A M Field 688 0% None None

B Krone 688 0% None None

M L Trevisani 688 0% None None

Hammib International Ltd

71 0% None None

Bankfin 629 9,035% Fixed assets Paid in monthly instalments

until 31 July 2007

Wesbank 4 209 Prime less

2% Fixed assets In full by 31 August 2009

14.3. The following loans have been advanced by Esor at 28 February 2005

Borrower

Loan Amount

R�000 Interest Rate Secured Maturity

Bimmah Investments CC 1 601 10% None None

Hammib Properties CC 829 14,5% None None

Esor Properties CC 1 086 14,97% None None

Esor Geotechnical Engineering (Pty) Ltd

1 725 14,5% None None

Hammib (Pty) Ltd 5 0% None None

Esor Plant Hire (Pty) Ltd 88 10% None None

Esor Geotechnical Engineering (Cape) (Pty) Ltd

13 0% None None

Esor Projects (Pty) Ltd 2 0% None None

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15. PROPERTY AND SUBSIDIARIES ACQUIRED

15.1. Details of properties acquired by Esor since incorporation are set out below:

Company Consideration

R�000 Valuation

R�000 Details of Properties

Loans R �000

Esor Properties 740 740

Land and buildings

described as Erf 29, Activia

Park, 4 362m2 in area

-

Esor Geotechnical Engineering

5 353 5 353

Land and buildings

described as Erf 281 &

282, Phoenix Industrial Park, 10

302m2 in area

Land and buildings



- -

Hammib Properties 972 972

Land and buildings



-

Totals 7 065 7 065 -

15.2. Details of the subsidiaries are set out in paragraph 19 below, while related party transactions are listed in Annexure 2, paragraph 20.

15.3. Transactions took place at base value and therefore no goodwill was applicable.

15.4. The above companies were acquired for a total consideration of R 7,065 million settled by the issue of 8 000 ordinary Esor shares to the directors (�the vendors�) in January 2006, when the transactions was finalised. Annexure 11 provides details of the vendors, the consideration and the nature of the assets.

16. SHARES ISSUED, OTHER THAN FOR CASH

No shares have been issued or agreed to be issued by the company or any of its subsidiaries since incorporation, other than for cash, except for the issue of 8 000 ordinary shares of 0,1 cent each to the current executive directors in exchange for their shares in Esor Properties (Pty) Ltd, Hammib Properties (Pty) Ltd and Esor Geotechnical Engineering (Pty) Ltd.

17. PROPERTY AND SUBSIDIARIES DISPOSED OR TO BE DISPOSED OF

No property or subsidiaries have been disposed of during the past three years, except for the property owned by Esor Plant Hire as mentioned in notes 2 and 3 of paragraph 11.3.3.

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18. PRINCIPAL IMMOVABLE PROPERTY OWNED AND LEASED

The principle immovable property owned by the Company is set out in paragraph 15 above. The company and its subsidiaries do not lease any property.

19. DETAILS OF SUBSIDIARIES

Details of the company�s subsidiaries are set out as follows:

Name Registration

number

Date of becoming a

subsidiary Nature of business

Percentage of ordinary

issued shares

owned by Esor

Issued share

capital of subsidiary

Esor Properties (Pty) Ltd

2005/040654/07 01/12/2005 Property holding

100 R100

Esor Geotechnical Engineering (Pty) Ltd


100 R100

Hammib Properties (Pty) Ltd


100 R100

Esor Geotechnical Engineering (Cape) (Pty) Ltd

1987/005412/07 01/03/1994

Dormant 100 R100

Esor Plant Hire (Pty) Ltd

1985/003495/07 01/03/1994 Dormant 100 R100

Esor Projects (Pty) Ltd

1988/000967/07 01/03/1994 Dormant 100 R100

20. SHARE CAPITAL

20.1. Authorised and issued share capital

The authorised and issued share capital of Esor, taking into account the private placement and listing costs as set out in paragraph 12.1 above, which are to be offset against the share premium, are set out below:

Rand Authorised 500 000 000 ordinary shares of 0.1 cent each 500 000 Issued, before the private placement 100 000 000 ordinary shares of 0.1 cent each 100 000 Share premium 6 965 558 Issued, after the private placement 120 000 000 ordinary shares of 0.1 cent each 120 000 Share premium 24 483 558

20.2. All the authorised and issued shares are of the same class and rank pari passu in every

respect.

20.3. Save as set out in paragraph 20.5 below, there has been no sub-division or consolidation of shares during the three years prior to the date of issue of this prospectus.

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20.4. Save as provided for in paragraph 20.6 below, no offer has been made for the subscription or sale of shares during the three-year period preceding the date of issue of this prospectus.

20.5. Alterations to authorised share capital

20.5.1. Esor was incorporated with an authorised ordinary share capital of 1 000 ordinary shares with a par value of R1.00 each.

20.5.2. The company:

20.5.2.1. sub-divided its authorised share capital from 1 000 ordinary shares of R1.00 each into 1 000 000 ordinary shares of 0.1 cent each on 6 December 2005;

20.5.2.2. increased its authorised share capital of R 1 000 to R500 000 by the creation of 499 000 000 ordinary shares of 0.1 cent each on 18 January 2006.

20.5.3. Esor has a total authorised share capital of R500 000, comprising 500 000 000 ordinary shares of 0.1 cent each.

20.5.4. The special resolution to alter the authorised share capital was registered on 18 January 2006.

20.6. Issue of shares

20.6.1. On incorporation, Esor issued and allotted 102 ordinary par value shares of R1.00 each.

20.6.2. The company:

20.6.2.1. issued and allotted 102 ordinary shares of R 1.00 each on 8 February 1994;

20.6.2.2. converted the 102 ordinary shares of R1,00 each into 102 000 ordinary shares of R0,001 par value on 6 December 2005

20.6.2.3. issued 8 000 ordinary shares of 0,1 cent each at a premium of R883,18 per share on 31 January 2006 to the vendors of the property companies as set out in Annexure 11. The vendors are the directors of Esor.

20.6.2.4. Issued 99 890 000 shares at by way of a capitalisation issue on 31 January 2006 using the company�s share premium to fully pay up these shares.

20.6.3. At the date of issue of this prospectus, before the private placement, Esor had a total issued share capital (including share premium) of R 7,065,558 consisting of 100 000 000 ordinary shares of 0.1 cent each.

20.7. The general resolutions to approve the above issues were implemented at the time of the issues. In terms of a general resolution approved by 75% of the majority of shareholders, excluding any shareholding of the Designated Adviser and its associates, passed on 31 October 2005 the directors have the power to allot and issue ordinary shares of the company for cash, subject to the following conditions: compliance with the provisions of the Act, the Listings Requirements and the

memorandum and articles of association of Esor;

that the securities be of a class already in issue;

that securities be issued to public shareholders and not to related parties;

that an announcement giving full details, including the impact on net asset value and earnings per share, be published at the time of any issue representing, on a cumulative basis within a financial year, 5% or more of the number of securities in issue prior to the issue/s;

that issues in the aggregate in any one financial year shall not exceed 50% of the company's issued share capital of that class;

that, in determining the price at which an issue of securities will be made in terms of this authority, the maximum discount permitted shall be 10% of the weighted average traded price of those securities over the 30 business days prior to the date that the price of the issue is determined or agreed by the directors; and

that the approval will be valid until the next annual general meeting or for 15 months from the date of the resolution, whichever period is the shorter.

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20.8. Unissued shares

In terms of the resolution passed at a general meeting of Esor on 31 January 2006, after the allotment and issue of the private placement shares the 380 000 000 authorised but unissued ordinary shares in the company will be under the control of the directors of Esor until its next annual general meeting, subject to the provisions of sections 221 and 222 of the Act and the Listings Requirements.

20.9. Voting and variation of rights

The articles of association of the company provide that, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is, before or on the declaration of the result of the show of hands, demanded by any person, the chairman or by the members referred to in section 198(1)(b) of the Act. Any variation in rights attaching to shares will require the consent of the shareholders in general meeting in accordance with the company�s articles of association.

20.10. No other listings

The issued ordinary shares of Esor will be listed on ALTx. No other shares of Esor are listed on any stock exchange.

21. ADEQUACY OF WORKING CAPITAL

21.1. The directors of the company are of the opinion that the working capital available to the Esor group, prior to the private placement is adequate for the present requirements of the Esor group, i.e. for a period of 12 months from the date of issue of this prospectus and that:

21.1.1. the company and the group will be able in the ordinary course of business to pay its debts for a period of 12 months after the date of this prospectus;

21.1.2. the assets of the company and the group will be in excess of the liabilities of the company and the group for a period of 12 months after the date of this prospectus. For this purpose, the assets and liabilities should be recognised and measured in accordance with the accounting policies used in the latest audited consolidated annual financial statements;

21.1.3. the share capital and reserves of the company and the group will be adequate for ordinary business purposes for a period of 12 months after the date of this prospectus;

21.1.4. the working capital of the company and the group will be adequate for ordinary business purposes for a period of 12 months after the date of this prospectus.

22. OPTIONS AND PREFERENTIAL RIGHTS IN RESPECT OF SHARES

Save as disclosed in the share incentive scheme, the salient features of which are set out in Annexure 10, there are no contracts or arrangements, either actual or proposed, whereby any option or preferential right of any kind has been or will be given to any person to subscribe for any shares in the company or its subsidiaries.

23. SHARE INCENTIVE SCHEME

The directors of the company have established a share incentive scheme for the benefit of executive directors and employees of the group. The salient features are set out in Annexure10.

24. MATERIAL CONTRACTS

24.1. There are no material contracts, save as set out in paragraph 15 above, which have been entered into by the company during the three years preceding the date of this prospectus, other than in the ordinary course of business, conducted by the group and as disclosed in paragraphs 17 and 19 above.

35

24.2. The company is not subject to any management or royalty agreements. The company has not paid any material technical or secretarial fees during the three years preceding the issue of this prospectus.

24.3. The company has not entered into any promoters� agreements during the three years preceding the date of this prospectus.

25. LITIGATION STATEMENT

There are no legal or arbitration proceedings, including any such proceedings that are pending or threatened of which Esor is aware, that may have, or have had during the 12 months preceding the date of this prospectus, a material effect on the financial position of the group.

26. ADVISERS� INTERESTS

None of the advisers, except for the attorneys or as disclosed in terms of the Listings Requirements, whose names are set out on page 2 hold any shares in the company or have agreed to acquire any shares in the company at the date of this prospectus, except as disclosed below:

Name and capacity Number of shares

% holding in Esor

Name of beneficial owner

Marius Meyer � Director 1 000 000 0.8% Buccoli Beleggings CC (Registration number 1995/010698/23)

Wessel van der Merwe � Director 1 000 000 0.8% SA Madiba Investments (Pty) Limited (Registration number 1998/015202/07)

Van Zyl Swanepoel � Employee 200 000 0.0% Van Zyl Swanepoel Esna Colyn � Employee 50 000 0.0% Esna Colyn Chrisna Chalmers - Employee 350 000 0.3% Chrisna Chalmers

50% of the ordinary shares in the table above will be held in trust by the attorneys as set out in paragraph 5.1.2 in Annexure 1.

27. CONSENTS

Each of the company�s advisers and the transfer secretaries have consented in writing to act in the capacities stated and to their names appearing in this prospectus and have not withdrawn their consent prior to the publication of this prospectus.

28. KING CODE

The company�s Corporate Governance Report is set out in Annexure 9.

29. DIRECTORS� RESPONSIBILITY STATEMENT

The directors, whose names are set out in Annexure 1, collectively and individually, accept full responsibility for the accuracy of the information given and certify that to the best of their knowledge and belief there are no other facts the omission of which would make any statement false or misleading and that they have made all reasonable enquiries to ascertain such facts and that this prospectus contains all information required by law and the Listings Requirements.

30. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents which have been submitted to the Registrar will be available for inspection at Exchange Sponsors (Pty) Limited�s office, 39 First Road, Hyde Park, 2196, at any time during normal business hours from 08:30 to 17:00 for a period of 21 days from the date of this prospectus:

36

- the memorandum and articles of association of the company; - the signed reports by the independent reporting accountants, the texts of which

are set out in Annexure 3, Annexure 5, Annexure 6 and Annexure 7;

- the written consents of the company�s advisers and transfer secretaries to act in those capacities, which consents have not been withdrawn prior to publication;

- the company share incentive scheme; - the directors� service agreements referred to in Annexure 1; - the audited annual financial statements of Esor and its subsidiaries since February

2003; - the reviewed interim financial statements of Esor for 31 August 2005;

- irrevocable undertakings in respect of paragraph 9.8 above; and - a copy of this prospectus.

31. PARAGRAPHS OF SCHEDULE 3 TO THE ACT WHICH ARE NOT APPLICABLE

The numbers of the paragraphs in Schedule 3 to the Act, which are not applicable, are:

1(b), 2(d), 6(e)(ii), 6(g), 6(h), 8(b), 8(d), 9(b)(viii), 12(d), 12(e), 14, 17(b), 18(b), 20(b), 21, 24, 26, 27, 28 and 30.

Signed in Durban by Mauro Trevisani on behalf of all the directors of the company on 28 February 2006. SGD ________________________ Mauro Lino Trevisani SGD ________________________ For: Bernard Krone, herein represented by Mauro Lino Trevisani under and in terms of a power of attorney executed on 15 February 2006 SGD ________________________ For: Michael Laurence Barber, herein represented by Mauro Lino Trevisani under and in terms of a power of attorney executed on 15 February 2006 SGD ________________________ For: Arthur Maurice Field, herein represented by Mauro Lino Trevisani under and in terms of a power of attorney executed on 15 February 2006 SGD ________________________ For: Ian Gordon Jefferiss, herein represented by Mauro Lino Trevisani under and in terms of a power of attorney executed on 15 February 2006 SGD ________________________ For: David Murray Thompson, herein represented by Mauro Lino Trevisani under and in terms of a power of attorney executed on 15 February 2006

37

38

Annexure 1

Directors, Executive Management, Appointment, Qualification, Remuneration and Borrowing Powers of Directors

1. FULL NAMES, NATIONALITIES, AGES, BUSINESS ADDRESSES AND TITLES OF THE BOARD OF DIRECTORS OF ESOR

Director Age Occupation Business address Bernard Krone 52 Chief Executive Officer 130 Aberdare Drive,

Phoenix Industrial Park, Durban, 4051

Michael Laurence Barber 57 Director 130 Aberdare Drive, Phoenix Industrial Park, Durban, 4051

Arthur Maurice Field* 54 Director 130 Aberdare Drive, Phoenix Industrial Park, Durban, 4051

Mauro Lino Trevisani** 50 Financial director 130 Aberdare Drive, Phoenix Industrial Park, Durban, 4051

Ian Gordon Jefferiss� * 60. Non-Executive Director

130 Aberdare Drive, Phoenix Industrial Park, Durban, 4051

David Murray Thompson � 69 Non-Executive Director


(� Non-executive) ( * British)

( ** Italian)

2. EXPERIENCE OF DIRECTORS

Every construction contract presents its own set of unique problems, the solutions to which cannot simply be found in textbooks. Experience is vital to their successful conclusion but is hard-won over many years. The Esor directors are able to employ this attribute because of their many years in the industry, both within and outside the company.

2.1. Bernard Krone - Chief Executive Officer � B.Sc Eng (Civil) Pr. Eng

Bernie Krone was born in Halstead, England and came to South Africa at an early age. After completing his education at St Martin�s School he attained a BSc Civil Engineering at Wits and thereafter Professional Engineer status.

After graduation he joined L.T.A. Civil Engineering Holdings and soon moved to L.T.A. Ground Engineering where he remained, apart from a brief interlude with Watermeyer, Legge, Piesold and Uhlmann as a Project Engineer. He became Contracts Manager for GEL in charge of the ground engineering division before joining Esor in 1981.

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Bernie was made a director of Esor and tasked to launch the company in the Transvaal into geotechnical techniques other than pipe jacking. In 1987 he was appointed as Branch Manager.

In 1991 he received the Jerry Jennings Award for contributions to the �1989 Code of Practice � Lateral Support in Excavations�. Bernie�s innovative approach to engineering continued with the responsibility of jacking the first composite steel and concrete pipes in South Africa for the Rand Water Board.

This was then followed by the award to Esor of the Malvern Tunnel Project, a R52 million pipejacking contract consisting of 2,600 metres of 2,6 m diameter pipe using a LSK 130 Alpine Westphalia in-line boom cutter. Bernie was the project director for this contract which set new records for production and lengths jacked in the pipejacking industry.

Various bulk earthworks, lateral support and piling contracts followed including Discovery Health�s new headquarters and the Nedcor Corporate Head Office. He was also the project director for the bulk earthworks, lateral support and piling contract for Constitutional Hill at a contract value of R 40 million. Esor acted as main contractor for the bulk earthworks and lateral support contract for the four level deep basements of the prestigious Michelangelo Towers and Standard Bank�s new SMW Energy Centre in the Johannesburg CBD.

Bernie�s tunnelling efforts took him from the Vaal River to Chapman�s Peak Drive in Cape Town, with a little bit in between. The Vaal River Tunnel Project was constructed for Petronet at a value of R18 million while the half-tunnel which formed part of the rehabilitation of Chapmans Peak Drive came in at R 9 million.

2.2. Michael Laurence Barber- Executive Director - NDT (CE)(TN)

Mike hails originally from Durban but obtained a Civil Engineering Technician qualification while working for Roberts Construction in the Orange Free State.

He carried out many contracts in this period including the construction of five bridges and seventeen culverts on the main national road to Bloemfontein.

After a year with a building company he joined the international company Cementation, inititally as a Site Agent then Contracts Manager and finally as Natal Manager for Specialist Works.

Contracts under his control included the Durban Dolphinarium and the construction and jacking of all phases of the Warwick Avenue Relief Culvert, one of the first large jacking operations in South Africa and at the time the world�s largest.

This was followed by the construction of the Glenwood Tunnel through the Berea Ridge. This was built to the same size and employed the same techniques of the London Underground. It won the National Fulton Award for excellence in concrete, the first for a tunnel contract.

In 1984 Mike joined Esor as a director and was responsible for further tunnels under the Vaal River and a 200 metre segmental tunnel under the primary dunes at Mossel Bay as part of the Mossgas Scheme.

In 1998 he was appointed manager of Esor�s KZN branch. Various responsibilities included the role of Project Manager for the R36 Million piling contract at the new Gateway Shopping Centre, the in-house development and construction of a luxury simplex and duplex complex on the KZN north coast and the marine piling and superstructure for the pier that supplies all the seawater requirements for the uShaka Marine World.

2.3. Arthur Maurice Field � Executive Director - NDT (ES)(TN)

Born in Bristol, United Kingdom, Arthur came to South Africa at an early age to complete his high school education in Durban, whereafter he joined the City Engineers Department. He obtained the National Diploma for Engineering Survey at the Natal Technikon.

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Then followed a brief period in two professional practices before he joined Christiani and Nielson, an international company specialising in marine works and underground civil engineering projects.

Arthur carried out several kilometres of jacked tunnelling, a fledgling technique in 1981. He was also able to gain experience with all of the various piling techniques employed by C & N which were used for both land and marine purposes.

In the marine arm of the company Arthur was responsible for all survey control on a major project for containerisation in Port Elizabeth, a contract which even 25 years ago was worth R36 million. He was also the Site Agent for works in the Durban Harbour, including the floating dock ship repair jetty at workshop 24 and the small craft harbour.

In 1981 he joined Esor to carry out their pipejacking and pipe work projects and the following year was promoted to Works Manager for all spheres of specialized work carried out by Esor, including pipejacking, thrust and auger boring, rock anchors and piling.

In 1986 he became a director and shareholder of Esor. Contracts under his control included jacking a 2,5 m diameter pipe under roads and rail tracks for the Effluent Pipeline in Richards Bay and the lateral support and piling contract for the Wild Coast Hotel in the then Transkei.

He carried out the piling for the original Convention Centre and returned some eleven years later to similarly install piles and carry out specialized foundation works in the basement of the ICC to support the new Arena extension above.

Arthur was also the contracts director for the environmental remediation works for a 20 hectare site at Tara Road in Wentworth. This site has attracted international acclaim as an outstanding example of environmental rehabilitation.

2.4. Mauro Lino Trevisani - Financial Director � CA (SA)

Mauro was born in Turin, Italy and moved to South Africa at an early age. He obtained his B. Com degree and Diploma in Accountancy the University of Natal and joined Hills Howard in 1978 where he completed his articles and to ultimately qualify as a CA (SA). Subsequently he was employed by McLean and De Beer where he held the position of Audit Manager.

At the beginning of 1986 he was employed by Esor Ground Engineering (Pty) Ltd as the Financial Director for the Esor Group. This portfolio included, inter alia, overseeing day to day financial activities of the group and any necessary monetary arrangements for contracts both within and outside the country�s borders.

Mauro oversaw several financial milestones for Esor in their passage to this juncture where he will now pilot the company to a public listing. These include:

Restructuring of Esor Ground Engineering (Pty) Ltd and Esor Ground Engineering � Transvaal (Pty) Ltd to consolidate and form Esor Geotechnical Engineering (Pty) Ltd.

Establishing with the approval of the South African Reserve Bank, Hammib International Limited, a company registered in the British Virgin Islands, in order to undertake any work outside the borders of South Africa.

Restructuring of Esor Geotechnical Engineering (Pty) Ltd and various Closed Corporations to form a new trading operation of Esor (Pty) Ltd, in order to consolidate the property portfolio of the shareholders and facilitate the procurement of surety bonds for performance guarantees issued by the banks.

Restructuring of Esor group of companies in order to list on the JSE.

2.5. Ian Gordon Jefferiss - Non-Executive Director � C.Eng (Civil) Pr.Eng

Ian was educated at various schools in Tanzania, Seychelles, Denmark & Ireland. He attended a 4 year course in Civil Engineering at Trinity College, Dublin and obtained an B.A.B.A.I Honours degree in 1968.

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His employment history started as a design engineer with Roberts Construction in the Orange Free State and after a brief stint as Design Engineer for Ove Arup and Partners in Dublin, Ireland, he returned to South Africa as Technical Director of Cementation Construction in Durban. He joined Esor in 1985 and became Technical Director and Manager of the Cape, Natal and Indian Ocean operations before retiring. Ian obtained Professional Engineer status in South Africa in 1976 and in 1977 became a corporate member of the I.C.E. in the United Kingdom and registered as a Chartered Engineer. He was a member of the Management Committee of S.A.F.C.E.C. Natal Branch and chaired the liaison committee of SAFCEC with the professional body of SAACE. He became a Committee member of S.A.I.C.E., Durban Branch in 1991 and was Chairman of S.A.I.C.E. Durban Branch in 1995. Ian Jefferiss was a stalwart of the Esor team until retiring in November 2000. If anything the tempo of his life increased with his becoming both a qualified helicopter and fixed wing aircraft pilot while building his own plane.

Ian has kept abreast of the Industry in these past years by offering a consultative service to many companies for both technical and market related matters. His intimate knowledge of Esor�s niche market will serve the company well.

2.6. David Murray Thompson - Non-executive Director - CA (SA)

David qualified as a chartered accountant after obtaining his Certificate in Theory of Accountancy from the University of the Witwatersrand. He became a member of the Association of Accountants and Auditors in the United Kingdom and studied for an Advanced Management Programme at the Harvard University Cambridge in the USA.

He served as a member on the following Boards; Agreement Board of South Africa, Building Industries Federation SA, Industrialized Building Association SA, National Association of Home Builders, St Andrews College Council, Rand Pioneers. He was the past President of the Association of the Physically Disabled and past Chairman of the Rand Club. He serves in the Advisory Panel Gauteng to the M.E.C. for Housing.

David began his career as Articled Clerk with Stewart Steyns & Co. in Johannesburg. He joined L.T.A. Ltd � (Formerly James Thompson Ltd) in 1965 and worked his way from company accountant to director of LTA and Divisional Managing Director/Chairman of the Industrialized Building Division, the Mechanical Electrical Process Engineering Division and the Building Division.

The name L.T.A. is a household word in South Africa and was one of the giants of the industry that has contributed in such enormous measure to the growth of the country. Part of the amalgamation that created L.T.A. was of course the construction company James Thompson, started by David�s grandfather over 100 years ago. David�s father was the Chairman of James Thompson and his uncle the first CEO of LTA.

David Thompson comes from an era where construction was synonymous with the strong personalities at the helm of each company. His involvement in the industry continues to this day with his position as Chairman of Thubelisha Homes, a forerunner in the field of affordable housing.

3. QUALIFICATIONS, APPOINTMENT, REMUNERATION AND BORROWING POWERS OF DIRECTORS

3.1. The relevant provisions of the articles of association of Esor relating to qualifications, appointment, remuneration and borrowing powers of directors are set out in paragraph 7 below. The borrowing powers in the articles may only be varied by special resolution, although the members may set limits by way of ordinary resolution in general meetings and have not been exceeded since Esor�s incorporation.

42

3.2. According to Schedule 21, declarations completed by the directors in terms of the Listings Requirements, none of the following applies to any of the directors listed in paragraph 1 above for the 12 months preceding the date of this prospectus: bankruptcies or individual voluntary arrangements; receiverships or compulsory liquidations, creditors� voluntary liquidations, administrations, company voluntary liquidations, or any compromise or arrangement with creditors, partnership voluntary arrangements; receivership of an asset of a partnership; public criticism or disqualification in Court by way of statutory or recognised bodies of any offence involving dishonesty.

4. DIRECTORS� REMUNERATION

4.1. Remuneration and benefits paid to directors for the year ended 28 February 2005 were as follows:

Name Basic R

Bonus R

Incentive Bonus

R

Motor vehicle

R

Pension R

Medical aid R

Total R

Year ended 28 February 2005

M L Barber 827 030 160 000 840 000 - 96 000 36 969 1 959 999 A M Field 845 066 160 000 840 000 - 86 400 28 533 1 959 999 B Krone 886 714 160 000 840 000 - 38 400 34 885 1 959 999 M L Trevisani 854 688 160 000 840 000 - 86 400 18 911 1 959 999 Total 3 413 498 640 000 3 360 000 - 307 200 119 298 7 839 996

4.2. Remuneration and benefits paid to directors for the six months ended 31 August 2005

were as follows:

6 months ended 31 August 2005

M L Barber 433 740 100 000 - - 50 000 16 260 600 000 A M Field 437 678 100 000 - - 46 800 15 522 600 000 B Krone 442 902 100 000 - - 30 800 26 298 600 000 M L Trevisani 443 294 100 000 - - 46 800 9 906 600 000 Total 1 757 614 400 000 - - 174 400 67 986 2 400 000 4.3. There will be a variation in the remuneration receivable by the above directors in the sum

of R10 000 per month per director as a motor vehicle allowance. There will be no other variations as a direct consequence of the private placement and listing.

4.4. No payments were made, or accrued as payable, or are proposed to be paid within the three years preceding the date of the prospectus, either directly or indirectly, in cash or securities or otherwise to:

4.4.1. the director in respect of management, consulting, technical, secretarial fees or restraint payments;

4.4.2. a third party in lieu of directors� fees; 4.4.3. the directors as an inducement to qualify them as directors.

4.5. No director or promoter has any material beneficial interest, direct or indirect, in the promotion of Esor and in any property to be acquired or proposed to be acquired by Esor out of the proceeds of the issue or during the three years preceding the date of this prospectus.

4.6. Non-executive directors were only appointed in January 2006.

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5. DIRECTORS� SHAREHOLDINGS IN ESOR

5.1. The directors, in aggregate, directly and indirectly, will hold at the last practicable date 55.40% of Esor�s issued shares, after the private placement and disposal of shares as per par. 6.5., as follows:

Director Number of shares held Beneficial Non-beneficial Total Percenta

ge held Direct Indirect Direct Indirect

M L Barber 16 590 909 - - - 16 590 909 13.83% A M Field 16 590 909 - - - 16 590 909 13.83% B Krone 16 590 909 - - - 16 590 909 13.83% M L Trevisani 16 590 909 - - - 16 590 909 13.83% I G Jefferiss - - - - - - D M Thompson 100 000 - - - 100 000 0.08%

66 463 636 - - - 66 363 636 55.40%

5.1.1. No director has or had any interest, directly or indirectly, in any transaction, which is, or

was, material to the business of Esor and which was effected by the company since incorporation, which remains in any respect outstanding or underperformed.

5.1.2. Esor�s attorneys hold in trust 50% of the shareholding of each director and the Designated Adviser (�the relevant securities�) in Esor from the date of listing until the publication of the audited results for the year ending 28 February 2006 after which 50% of each director�s shares will be released. The balance of the shares will be held in trust until the publication of the audited results for the year ending 28 February 2007, after which they will be released. The shares will not be released before notification to the JSE and the required certificate to that effect has been lodged with the JSE.

5.2. Directors� service contracts

Each of the directors has a letter of appointment from Esor, containing such terms that are normal for such contracts and the terms relating to the remuneration of which are set out in paragraph 4.1 above. The contracts do not contain restraint of trade or favourable provisions for the directors.

6. OTHER DIRECTORSHIPS HELD BY DIRECTORS OF ESOR AND THE GROUP

Director Directorships/Memberships M L Barber Bimmah Investments CC EFA Holdings (Pty) Ltd Hammib (Proprietary) Limited Hammib International Limited Phoenix Industrial Park Lot Owners Association A M Field Bimmah Investments CC EFA Holdings (Pty) Ltd Hammib (Proprietary) Limited Hammib International Limited B. Krone Amanzi Amakhulu (Proprietary) Limited Bimmah Investments CC EFA Holdings (Pty) Ltd Hammib (Proprietary) Limited Hammib International Limited M L Trevisani Bimmah Investments CC

44

EFA Holdings (Pty) Ltd Hammib (Proprietary) Limited Hammib International Limited

7. RELEVANT PROVISIONS OF THE ARTICLES OF ASSOCIATION OF THE COMPANY PROVIDING FOR THE APPOINTMENT, QUALIFICATIONS, REMUNERATION AND BORROWING POWERS OF DIRECTORS

Extracts from the articles of association of Esor are set out below:

�15. BORROWING POWERS

The borrowing powers of the company shall be decided from time to time by the directors in their discretion.

The borrowing powers of the subsidiaries of the company shall be subject to any limitations imposed by the directors on the borrowing powers of the company.

16. DIRECTORS

Until otherwise determined by a meeting of members, the number of directors shall not be

less than 4 (four) nor more than 15 (fifteen). The directors shall have power at any time and from time to time to appoint any person as

a director, either to fill a casual vacancy or as an addition to the board, but so that the total number of the directors shall not at any time exceed the maximum number fixed. Subject to the provisions of Article 17.2, any person appointed to fill a casual vacancy or as an addition to the board shall retain office only until the next following annual general meeting of the company and shall then retire and be eligible for re-election.

The remuneration of the directors shall from time to time be determined by the company in general meeting.

The directors shall be paid all their travelling and other expenses properly and necessarily incurred by them in and about the business of the company, and in attending meetings of the directors or of committees thereof, and if any director shall be required to perform extra services or to go or to reside abroad or otherwise shall be specially occupied about the company's business, he shall be entitled to receive a remuneration to be fixed by a disinterested quorum of the directors which may be either in addition to or in substitution for the remuneration provided for in Article 16.5.

The continuing directors may act, notwithstanding any casual vacancy in their body, so long as there remain in office not less than the prescribed minimum number of directors duly qualified to act; but if the number falls below the prescribed minimum, the remaining directors shall not act except for the purpose of filling such vacancy or calling general meetings of shareholders.

A director shall cease to hold office as such: (a) if he becomes insolvent, or assigns his estate for the benefit of his

creditors, or suspends payment or files a petition for the liquidation of his affairs, or compounds generally with his creditors; or

(b) if he becomes of unsound mind; or (c) if (unless he is not required to hold a share qualification) he has not duly

qualified himself within 2 (two) months of his appointment or if he ceases to hold the required number of shares to qualify him for office; or

(d) if he is absent from meetings of the directors for 6 (six) consecutive months without leave of the directors and is not represented at any such meetings during such 6 (six) consecutive months by an alternate director and the directors resolve that the office be vacated, provided that the directors shall have power to grant any director leave of absence for any

45

or an indefinite period; or (e) if he is removed under Article 16.16 or

(f) upon giving notice in writing of his resignation; or (g) if he is pursuant to the provisions of the Legislation disqualified or

ceases to hold office or is prohibited from acting as director; or

(h) if he is directly or indirectly interested in any contract or proposed contract with the company and fails to declare his interest and the nature thereof in the manner required by the Companies Act.

17. ALTERNATE DIRECTORS

17.1 Any director shall have the power to nominate another person approved by the board to act as alternate director in his place during his absence or inability to act as such director, and on such appointment being made, the alternate director shall, in all respects, be subject to the terms and conditions existing with reference to the other directors of the company. A person may be appointed as alternate to more than one director. Where a person is alternate to more than one director or where an alternate director is a director, he shall have a separate vote, on behalf of each director he is representing in addition to his own vote, if any.

17.2 The alternate directors, whilst acting in the place of the directors who appointed them, shall exercise and discharge all the duties and functions of the directors they represent. The appointment of an alternate director shall cease on the happening of any event which, if he were a director, would cause him to cease to hold office in terms of these Articles or if the director who appointed him ceases to be a director, or gives notice to the secretary of the company that the alternate director representing him shall have ceased to do so. An alternate director shall look to the director who appointed him for his remuneration.

18. ROTATION OF DIRECTORS 18.1 At the annual general meeting held in each year after the first annual general

meeting 1/3 (one-third) of the directors, or if their number is not a multiple of 3 (three), then the number nearest to, but not less than 1/3 (one-third) shall retire from office, provided that in determining the number of directors to retire no account shall be taken of any director who by reason of the provisions of Article 19.2 is not subject to retirement. The directors so to retire at each annual general meeting shall be firstly those retiring in terms of Article 16.2 and secondly those referred to in terms of Article 16.16 and lastly those who have been longest in office since their last election or appointment. As between directors of equal seniority, the directors to retire shall, in the absence of agreement, be selected from among them by lot: Provided that notwithstanding anything herein contained, if, at the date of any annual general meeting any director will have held office for a period of 3 (three) years since his last election or appointment he shall retire at such meeting, either as one of the directors to retire in pursuance of the foregoing or additionally thereto. A retiring director shall act as a director throughout the meeting at which he retires. The length of time a director has been in office shall, save in respect of directors appointed or elected in terms of the provisions of Articles 16.2 and 16.16, be computed from the date of his last election or appointment.

18.2 Retiring directors shall be eligible for re-election. No person other than a director retiring at the meeting shall, unless recommended by the directors for election, be eligible for election to the office of director at any general meeting unless, not less than 7 (seven) days nor more than 14 (fourteen) days before the day appointed for the meeting, there shall have been given to the secretary notice in writing by some member duly qualified to be present and vote at the meeting for which such notice is given of the intention of such member to propose such person for election and also notice in writing signed by the person to be proposed of his willingness to be elected.

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19. MANAGING DIRECTORS

19.1 The directors may from time to time appoint one or more of their number to be managing director or joint managing directors of the company or to be the holder of any other executive office in the company, including for the purposes of these Articles the office of chairperson and may, subject to any contract between him or them and the company, from time to time terminate his or their appointment and appoint another or others in his or their place or places.

19.2 A managing director may be appointed by contract for a maximum period as determined by the directors from time to time and he shall not be subject to retirement by rotation and not be taken into account in determining the rotation of retirement of directors, during the period of any such contract, provided always that the number of directors so appointed shall at all times be less than one-half (½) of the number of directors in office. The managing director shall be eligible for reappointment at the expiry of any period of appointment. Subject to the terms of his contract, he shall be subject to the same provisions as to removal as the other directors and if he ceases to hold the office of director from any cause he shall ipso facto cease to be a managing director.

19.3 A director appointed in terms of the provisions of Article 19.1 to the office of managing director of the company, or to any other executive office in the company, may be paid in addition to the remuneration payable in terms of Article 16.5 or 16.6, such remuneration - not exceeding a reasonable maximum in each year - in respect of such office as may be determined by a disinterested quorum of the directors.

19.4 The directors may from time to time entrust and confer upon a managing director or other executive officer for the time being such of the powers and authorities vested in them as they think fit, and may confer such powers and authorities for such time and to be exercised for such objects and purposes and upon such terms and conditions and with such restrictions as they may think expedient and they may confer such powers and authorities either collaterally with, or to the exclusion of, and in substitution for, all or any of the powers and authorities of the directors in that regard and may from time to time revoke, withdraw, alter or vary all or any of such powers and authorities. A managing director appointed pursuant to the provisions hereof shall not be regarded as an agent or delegate of the directors and after powers have been conferred upon him by the directors in terms hereof he shall be deemed to derive such powers directly from this Article.

21. COMMITTEES

The directors may delegate or allocate any of their powers to an executive or other committee consisting of such member or members of their body or any other person or persons as they think fit. Any committee so formed shall in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed on it by the directors.

Any director who serves on an executive or other committee, or who devotes special attention to the business of the company, or who otherwise performs services which, in the opinion of the directors, are outside the scope of the ordinary duties of a director, may be paid such extra remuneration (in addition to the remuneration he may be entitled to as a director), provided that such amount shall be limited to a reasonable maximum to be fixed by a disinterested quorum of the directors.

21.3 The meetings and proceedings of any such committee consisting of 2 (two) or more members shall be governed by the provisions herein contained for regulating the meetings and proceedings of the directors so far as the same are applicable thereto and are not superseded by any regulations made by the directors under Article 20.1 and 21.1.

21.4 All acts done at any meeting of the directors or of any executive or other committee of the directors, or by any person acting as a director shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment of the directors or persons acting as aforesaid, or that they or any of them were

47

disqualified or had vacated office or were not qualified to vote, be as valid as if every such person had been duly appointed and was qualified to be and to act and vote as a director.

22. POWERS OF DIRECTORS

22.1 The management of the company shall be vested in the directors who, in addition to the powers and authorities expressly conferred upon them by these Articles, may exercise all such powers, and do all such acts and things, as may be exercised or done by the company and are not hereby or by the Companies Act expressly directed or required to be exercised or done by the company in general meeting (including without derogating from the generality of the aforegoing or from the rights of the members, the power to resolve that the company be wound up), but subject nevertheless to such management and control not being inconsistent with these Articles or with any resolution passed at any general meeting of the members in accordance therewith; but no resolution passed by the company in general meeting shall invalidate any prior act of the directors which would have been valid if such resolution had not been passed. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the directors by any other Article.

22.2 The directors shall have the power to enter into a provisional contract for the sale or alienation of the undertaking of the company, or the whole or the greater part of the assets of the company, such provisional contract shall however become binding on the company only in the event of the specific transaction proposed by the directors being approved by a resolution passed by the company in general meeting.

22.3 The directors shall have power to delegate to any person or persons any of their powers and discretions and to give to any such person or persons power of sub-delegation.

22.4 Without in any way limiting or restricting the general powers of the directors to grant pensions, allowances, gratuities and bonuses to officers or ex-officers, employees or ex-employees of the company or the dependants of such persons, it is hereby expressly declared that the directors may from time to time without any further sanction or consent of the company in general meeting (but subject to the Legislation) grant pensions, gratuities or other allowances to any person or to the widow or dependants of any deceased person in respect of services rendered by him to the company as managing director, executive director, general manager or manager, or in any other office or employment with the company, notwithstanding that he may continue to be or be elected a director or may have been a director of the company, of such amounts, for such period, whether for life or for a definite period or for a period terminable on the happening of any contingency or event, and generally upon such terms and conditions as the directors in their discretion may from time to time think fit [7.B.6.(b)]. For the purpose of this Article, the expression "executive director" shall mean a director appointed to an executive office in the company and receiving in addition to his fees as a director salary or remuneration for additional services whether under a service agreement or otherwise. The directors may authorise the payment of such donations by the company to such religious, charitable, public or other bodies, clubs, funds or associations or persons as may seem to them advisable or desirable in the interests of the company.

22.5 Unless the Legislation, these Articles and/or the requirements of the JSE require a resolution to be passed by the company in general meeting to authorise the reduction by the company of its share capital, stated capital and any capital redemption reserve fund or any share premium account, the directors shall have the power, to the extent necessary, to resolve that the company reduce its share capital, stated capital and any capital redemption reserve fund or any share premium account, whether accompanied by a payment to members as contemplated in Article 39 or without any payment to members.�

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Annexure 2

Audited historical financial information of Esor

The definitions commencing on page 11 of the prospectus have been used in this report. The consolidated income statements, balance sheets, statements of changes in equity, cash flow statements and the significant related notes for the years ended 28 February 2005, 2004 and 2003 have been extracted from the audited consolidated annual financial statements of Esor.

The historical information relating to Esor has been prepared in accordance with the South African Statements of Generally Accepted Accounting Practice.

The Independent Reporting Accountants report on the historical financial information of Esor for the years ended 28 February 2005, 2004, and 2003, issued without qualification is set out in Annexure 3 to this Document.

Financial Statement Commentary Share capital 102 shares were in issue during the year. There have been no changes to the authorized or issued share capital. Principle activities The company and its subsidiaries are engaged across the full spectrum of geotechnical engineering. These include but are not limited to, the discipline of piling, lateral support, pipe jacking, tunnelling, marine works and environmental remediation works. There has been no material change in the nature of the business of the company or its subsidiaries. The average number of employees employed by the group during the period amounted to approximately 225. General review The group�s business and operations, and the results thereof, are reflected in the attached financial statements and no other fact or circumstance material to a fair assessment of the financial position of the group has occurred. Subsequent events No material fact or circumstance has occurred between the latest financial year end and the date of this circular. Property, plant and equipment There have been no major changes in the property, plant and equipment of the group during the period or any changes in the policy relating to their use, other than as disclosed in the historical financial information. Dividends The company�s policy is to not pay dividends. It is the intention of the company to reconsider its dividend policy once the company has achieved mature growth, and periodically thereafter in light of prevailing circumstances and future cash requirements. Initially all earnings generated by the company will be utilised to fund future growth and development.

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Group structure The group consists of Esor and the following subsidiaries:

Issued Capital

R

% Held by Group

% Esor Plant Hire (Pty) Ltd 100 100 Esor Geotechnical Engineering (Cape) (Pty) Ltd 100 100 Esor Projects (Pty) Ltd 100 100 The company�s share of net profits / losses for each subsidiary and joint venture is as follows: 2005

R 2004

R 2003

R Esor Plant Hire (Pty) Ltd - - - Esor Geotechnical Engineering (Cape) (Pty) Ltd (5 247) (7 428) (11 769) Esor Projects (Pty) Ltd - - - Esor Zek Joint Venture 2 978 249 301 779 - Esor Franki Joint Venture (17 181) 1 669 320 - Esor Realeka Joint Venture 192 422 - - 3 148 243 1 963 671 (11 769) Other There have been no adjustments to previously reported historical financial information, other than those made in accordance with the company�s adoption of International Financial Reporting Standards detailed in Annexure 4. CONSOLIDATED BALANCE SHEET The consolidated balance sheets of Esor at 28 February are set out below: Year ended 28 February 2005 2004 2003 Notes R R R Audited Audited Audited ASSETS Non-current assets 10 984 813 11 110 621 8 939 564 Property, plant and equipment 2 5 681 602 5 715 493 3 431 906 Investment property 3 57 022 58 382 59 742 Unsecured loans 4 5 246 189 5 336 746 5 447 916 Current assets 30 249 983 20 454201 15 490 129 Inventories 5 42 791 23 921 44 967 Accounts receivable 6 23 310 593 13 557 497 12 355 652 Cash and cash equivalents 6 896 599 6 872 783 3 069 904 Taxation receivable - - 19 606 Total assets 41 234 796 31 564 822 24 429 693 EQUITY AND LIABILITIES Capital and reserves 14 181 984 8 493 695 3 256 812 Share capital 7 102 102 102 Retained income 14 181 882 8 493 593 3 256 710 Non-current liabilities 6 811 868 6 876 866 5 802 284 Deferred taxation 8 1 010 927 949 032 621 619 Shareholders loans 9 2 752 372 2 886 355 2 974 122 Long-term liabilities 10 3 048 569 3 041 479 2 206 543 Current Liabilities 20 240 944 16 194 261 15 370 597 Accounts payable 17 585 892 12 471 247 13 948 022

50

Current portion of long-term liabilities

10 2 009 043 1 758 862 1 422 575

Taxation owing 532 763 1 580 585 - Bank overdraft 11 113 246 383 567 - Total equity and liabilities 41 234 796 31 564 822 24 429 693 Number of shares in issue 102 102 102 Net asset value (cents) 13 903 906 8 327 152 3 192 953 Net tangible asset value (cents) 13 903 906 8 327 152 3 192 953 CONSOLIDATED INCOME STATEMENT Year ended 28 February 2005 2004 2003 Notes R R R Audited Audited Audited Revenue 12 100 062 308 108 869 755 74 625 755 Gross profit 17 419 165 16 649 726 7 646 843 Other income 13 275 880 239 936 140 714 Operating expenses (7 876 195) (8 798 160) (6 013 714) EBITDA 9 818 850 8 091 502 1 773 843 Depreciation (1 961 563) (1 421 759) (1 039 336) Profit before interest and taxation 14 7 857 287 6 669 743 734 507 Net interest received 362 928 831 822 699 791 Profit before taxation 8 220 215 7 501 565 1 434 298 Taxation 15 (2 531 926) (2 264 682) (441 087) Net profit for the year 5 688 289 5 236 883 993 211 Weighted average shares 102 102 102 Earnings per share 5 576 754 5 134 199 973 736 Headline earnings per share 5 483 036 5 043 597 905 115 Diluted earnings per share 5 576 754 5 134 199 973 736 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Share Capital

Retained income

Total

R R R Audited Audited Audited Balance at 28 February 2002 102 2 263 499 2 263 601 Net profit for the year - 993 211 993 211 Balance at 28 February 2003 102 3 256 710 3 256 812 Net profit for the year - 5 236 883 5 236 883 Balance at 28 February 2004 102 8 493 593 8 493 695 Net profit for the year - 5 688 289 5 688 289 Balance at 28 February 2005 102 14 181 882 14 181 984

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CONSOLIDATED CASH FLOW STATEMENT Year ended 28 February 2005 2004 2003 Notes R R R Audited Audited Audited Cash generated/(utilised) by operations

Cash receipts from customers 90 489 500 107 748 886 69 136 986 Cash paid to suppliers and employees (85 423 563) (102 407 372) (66 886 913)

Cash generated from operations 18 5 065 937 5 341 514 2 250 073 Interest received 908 654 1 098 297 1 245 998

Finance charges (513 357) (198 216) (445 529) Interest paid (32 369) (68 259) (100 678) Taxation paid 19 (3 517 853) (337 078) (713 371)

Net cash flows from operating activities

1 911 012 5 836 258 2 236 492

Cash flows from investing activities

Acquisition of property, plant and equipment

(2 514 568) (4 073 582) (2 498 234)

Proceeds from property, plant and equipment

683 848 462 010 70 000

Decrease/(increase) in associated company loans

90 557 111 170 (437 554)

Net cash flow from investing activities

(1 740 163) (3 500 402) (2 865 788)

Cash flows from financing activities

Decrease in unsecured loans (237 289) (248 127) (166 404)

Long-term liabilities raised 360 577 1 331 583 1 700 882

Net cash flows from financing activities

123 288 1 083 456 1 534 478

Net increase in cash and cash equivalents

294 137 3 419 312 905 183

Cash and cash equivalents at beginning of year

6 489 216 3 069 904 2 164 721

Cash and cash equivalents at end of year

6 783 353 6 489 216 3 069 904

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NOTES TO THE FINANCIAL STATEMENTS

1. Accounting policies

The financial statements have been prepared on the historical cost basis and incorporate the following principle accounting policies, which are consistent with those applied in the previous year:

1.1 Property, plant and equipment Property, plant and equipment are stated at historical cost and are depreciated on the straight line basis at rates which are considered appropriate to reduce carrying values over the useful lives of the assets to estimated residual values. The rates applied are as follows:

Plant and equipment - 20,00% per annum Motor vehicles - 25,00% per annum

Computer equipment - 33,33% per annum Furniture and fittings - 16,67% per annum

1.2 Investments

Investments in dormant subsidiaries are stated at cost.

1.3 Basis of consolidation

The consolidated financial statements include the results and financial position of Esor (Pty) Ltd and its subsidiaries and joint ventures up to 28 February each year. Subsidiaries are those companies in which the group has an interest of 50% or more of the voting rights or otherwise has the power to exercise control over the operations. Subsidiaries are fully consolidated in the group from the date on which control is transferred to the group and unconsolidated from the date that control ceases.

Joint ventures are accounted for using the proportionate consolidation method. The group combines its share of the assets and liabilities, revenues and expenses and cash flows on a line by line basis, with similar items in the financial statements of the group. All material intra-group transactions and balances have been eliminated on

consolidation.

1.4 Construction revenue The company recognises revenue on cost plus contracts when it is probable that the economic benefits associated with will flow to the company and when the contract costs attributable to the contract, whether or not specifically reimbursable, can be clearly identified and measured reliably. Contracts in progress comprise the amount of costs incurred and recognised profits to date, less progress billings. Contract revenue for the period is determined by contract work certified and is billed to customers once determined. Thus at financial year end, no amounts for contracts in progress appear on the balance sheet as all work certified has been billed.

1.5 Deferred taxation Deferred taxation is provided using the balance sheet liability method on all temporary differences between the carrying amounts for financial reporting purposes and the amounts used for taxation purposes.

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A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated unused tax losses and deductible temporary differences can be utilised. Deferred taxation is calculated using taxation rates that have been enacted at balance sheet date.

1.6 Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes party to the contractual provisions of the instrument.

Financial assets Financial assets are recognised when the company has right on or other access to economic benefit. The principal financial assets consist of investments, loans, accounts receivable and liquid cash held at financial institutions.

Financial liabilities Financial liabilities are recognised when there is a present obligation arising from past events the settlement of which is expected to result in an outflow of resources embodying economic benefits. The principal financial liabilities consist of loans and accounts payable.

2. Property, plant and equipment

2005 Cost Accumulated

depreciation Carrying value

R R R Plant and equipment 6 062 391 5 112 185 950 206

Motor vehicles 10 935 556 6 400 097 4 535 459

Furniture and fittings 207 275 177 216 30 059

Computer equipment 758 732 592 854 165 878

17 963 954 12 282 352 5 681 602 2004 Cost Accumulated


R R R Plant and equipment 6 062 391 4 813 599 1 248 792

Motor vehicles 9 535 933 5 228 786 4 307 147

Furniture and fittings 202 334 169 257 33 077

Computer equipment 714 299 587 822 126 477

16 514 957 10 799 464 5 715 493

54



R R R Plant and equipment 4 767 856 4 614 961 152 895 Motor vehicles 7 810 790 4 733 120 3 077 670 Furniture and fittings 181 450 159 235 22 215 Computer equipment 783 817 604 691 179 126 13 543 913 10 112 007 3 431 906

The carrying value of property, plant and equipment can be reconciled as follows: 2005 2004 2003 R R R Carrying value at beginning of year

5 715 493 3 431 906 1 971 654

Additions 2 514 568 4 073 582 2 498 234 Disposals (588 256) (369 596) (6) Depreciation (1 960 203) (1 420 399) (1 037 976) Carrying value at end of year

5 681 602 5 715 493 3 431 906

Certain plant and equipment and motor vehicles with a carrying value of R4 969 976 (2004: R4 930 727; 2003: R3 176 041) are encumbered in terms of note 10. Other assets are encumbered in terms of note 11. There have been no material changes in property, plant and equipment other than those already disclosed and no changes to the accounting policy used.

3. Investment property



R R R Land and buildings 67 986 10 964 57 022







55

The carrying value of investment property can be reconciled as follows: 2005 2004 2003 R R R Carrying value at beginning of year

58 382 59 742 61 102

Additions - - - Disposals - - - Depreciation (1 360) (1 360) (1 360) Carrying value at end of year

57 022 58 382 59 742

Land and buildings are described as section 8 and section 23 of Sectional Plan No SS 349/2000 in the scheme known as Dorado Bay; situate at Tinely Manor Beach, Dolphin Coast Local Council Area, Province of KwaZulu Natal, in extent 123 and 34 square metres respectively.

4. Unsecured loans

Unsecured loans to associated companies 2005 2004 2003 R R R * Bimmah Investments CC 1 600 637 1 512 053 1 488 685 * Hammib Properties CC 829 380 839 776 845 054 * Esor Properties CC 1 086 345 1 080 188 1 082 719 * Esor Geotechnical Engineering (Pty) Ltd 1 725 051 1 899 953 2 026 682 ** Hammib (Pty) Ltd 4 776 4 776 4 776 5 246 189 5 336 746 5 447 916

The above loans originated on incorporation of the company and are unsecured as

they are group companies and the directors did not feel that security was necessary.

* No fixed terms of repayment have been set. ** These loans are interest free and no fixed terms for repayment have been set.

5. Inventories 2005 2004 2003 R R R Inventories 42 791 23 921 44 967

Inventories comprise fuel and sundry consumables used for maintaining plant and equipment.

6. Accounts receivable

2005 2004 2003 R R R Trade receivables 19 511 924 9 893 830 10 078 664 Retentions 3 771 711 3 636 709 2 250 030 Other receivables 26 958 26 958 26 958 23 310 593 13 557 497 12 355 652

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Trade receivables and retention monies have been ceded to secure the bank overdraft facilities described in note 11.

7. Share capital

2005 2004 2003 R R R Authorised : 1 000 ordinary shares of R1 each 1 000 1 000 1 000 Issued : 102 ordinary shares of R1 each 102 102 102

In terms of the minutes of the company, the directors are authorised to allot or issue any unissued shares in their discretion, subject to the provisions of Section 222 (c) of the Act.

8. Deferred taxation

2005 2004 2003 R R R Balance at beginning of year (949 032) (621 619) (514 977) Movements during the year:

Leave pay accruals 25 608 88 591 53 390 Retentions (87 503) (416 004) (160 032)

Balance at end of year (1 010 927) (949 032) (621 619) The balance comprises:

Leave pay accruals 167 589 141 981 53 390 Retentions (1 178 516) (1 091 013) (675 009)

(1 010 927) (949 032) (621 619) 9. Shareholders loans

2005 2004 2003

R R R

Shareholders 2 752 372 2 886 355 2 974 122 These loans are interest free and no fixed terms for repayment have been set.

10 Long-term liabilities

2005 2004 2003 R R R Unsecured loans - 103 306 263 666 Secured Creditors 5 057 612 4 697 035 3 365 452 Closing balance 5 057 612 4 800 341 3 629 118

Interest payable on secured creditors ranges between prime less 1,5% and prime less 2,0%. At 28 February 2005, prime was 10,5%. The current monthly instalments total R214 973 and will be repaid in monthly instalments ending on 28 February 2011. This amount was secured over plant and equipment with a carrying value of R4 969 976.

57

Unsecured loans attract interest at 12% per annum and were repaid during the 2005 year.

Aggregate

2005 2004 2003 R R R Aggregate long term liabilities 3 048 569 3 041 479 2 206 543 Aggregate current portion included under current liabilities 2 009 043 1 758 862 1 422 575 Aggregate long term portion 5 057 612 4 800 341 3 629 118

11. Bank overdraft First National Bank, a division of FirstRand Bank Limited

The direct overdraft facility of R3 500 000, guarantee facility of R11 500 000 and settlement facility of R145 000 are secured by:-

General Notarial Covering Bond for R10 000 000. Unlimited letter of suretyship by Esor Geotechnical Engineering (Pty)Ltd

supported by:- a) 1st and 2nd covering bonds totalling R1 900 000, over Erf 281 and Erf 282 of

Phoenix Industrial Park. b) 1st and 2nd covering bonds totalling R1 300 000, over Erf 30 Activia Park.

Letter of surety for R800 000 by Esor Properties CC supported by :- c) 1st and 2nd covering bonds totalling R800 000 over Erf 29 Activia Park,

Gauteng. Cession of debts. Cession of retention monies.

12. Revenue

2005 2004 2003 R R R Contract cost incurred 82 643 143 92 220 029 67 932 502 Recognised profits 17 419 165 16 649 726 6 693 253 Contract revenue 100 062 308 108 869 755 74 625 755

13. Other income

2005 2004 2003 R R R Collection commission 62 200 58 450 50 595 Profit on disposal of property, plant and equipment 95 592 158 960 69 994 Rental income 15 789 10 526 6 105 Sundry income 102 299 12 000 14 020 275 880 239 936 140 714

14. Operating profit before interest

2005 R

2004 R

2003 R

58

Operating profit before interest is stated after taking into account the following items which require separate disclosure:

Income Profit on disposal of property, plant and equipment 95 592 158 960 69 994 Expenditure Auditors remuneration 71 061 80 250 73 798 Audit fees 45 340 63 790 59 000 Fees for other services 25 721 16 460 14 798 Depreciation 1 961 563 1 421 759 1 039 336 Plant and equipment 298 586 233 502 79 983 Investment property 1 360 1 360 1 360 Motor vehicles 1 551 856 1 091 725 872 246 Computer equipment 7 958 84 765 81 095 Furniture and fittings 101 803 10 407 4 652 Loss on disposal of property, plant and equipment - 66 546 - Operating lease charges 7 188 284 9 059 552 6 810 939 Hire of equipment 6 138 284 7 958 552 5 693 439 Rental 1 050 000 1 101 000 1 117 500

15. Taxation

2005 2004 2003 R R R SA normal taxation

Current year 2 470 031 1 937 269 334 443 Deferred taxation 61 895 327 413 106 642 2 531 926 2 264 682 441 085

Reconciliation of tax rates: % % % Taxation at standard rates 30.00 30.00 30.00 Non deductible expenditure 0.39 0.19 0.75 Change in tax rate 0.41 0.00 0.00 Effective rate 30.80 30.19 30.75

Secondary tax on companies A potential for STC exists. Should the company declare a dividend, the dividend declared would attract taxation at 12.5%. The maximum dividend which can be declared is R12 606 117 (2004 : R7 549 860) and this would attract STC of R1 575 765 (2004 : R943 733).

16. Directors� emoluments

Basic R

Bonus R

Pension R

Medical Aid R

Total R

28 February 2005 M L Barber 827 030 1 000 000 96 000 36 969 1 959 999 A M Field 845 066 1 000 000 86 400 28 533 1 959 999 B Krone 886 714 1 000 000 38 400 34 885 1 959 999 M L Trevisani 854 688 1 000 000 86 400 18 911 1 959 999 3 413 498 4 000 000 307 200 119 298 7 839 996 29 February 2004

59

M L Barber 766 360 1 066 000 89 000 34 640 1 956 000 A M Field 784 518 1 066 000 80 100 25 382 1 956 000 B Krone 807 944 1 066 000 35 952 54 904 1 964 800 M L Trevisani 791 168 1 066 000 80 100 18 732 1 956 000 3 149 990 4 264 000 285 152 133 658 7 832 800 28 February 2003 M L Barber 730 099 170 000 76 971 22 996 1 000 066 A M Field 737 909 170 000 67 125 14 352 998 693 B Krone 758 203 170 000 32 463 43 798 1 004 464 M L Trevisani 980 391 170 000 66 913 16 712 991 533 2 973 427 680 000 243 472 97 858 3 994 756

18. Reconciliation of net profit before taxation to cash generated from operations

2005 2004 2003 R R R Net profit before taxation 8 220 215 7 501 565 1 434 298 Adjust for :-

Investment income (908 654) (1 098 297) (1 245 998) Profit on disposal of property, plant and equipment (95 592) (158 960) (69 994) Loss on disposal of property, plant and equipment - 66 546 - Depreciation 1 961 563 1 421 759 1 039 336 Finance charges 513 357 198 216 445 529 Interest paid 32 369 68 259 100 678

Operating profit before working capital changes 9 723 258 7 999 088 1 703 847

Working capital changes (4 657 321) (2 657 574) 546 224 (Increase)/decrease in accounts receivable (9 753 096) (1 201 845) (5 559 489) (Increase)/decrease in inventories (18 870) 21 046 636 Increase/(decrease) in accounts payable 5 114 645 (1 476 775) 6 105 077

Cash generated from operations 5 065 937 5 341 514 2 250 073

17. Taxation paid

2005 2004 2003 R R R Amounts (under)/overpaid at beginning of year (1 580 585) 19 606 (359 322) Amounts charged to income statement (2 470 031) (1 937 269) (334 443) Amounts underpaid at end of year 532 763 1 580 585 (19 606) (3 517 853) (337 078) (713 371)

19. Subsidiary and joint venture performance

The performance of subsidiary and joint ventures during the year was as follows: 2005 2004 2003 R R R Esor Plant Hire 2 753 153 (6 600) Esor Zek Joint Venture 2 978 249 301 779 - Esor Realeka Joint Venture 192 422 - - Esor Franki Joint Venture (17 181) 1 669 320 -

60

3 156 243 1 971 252 (6 600)

20. Contingent liabilities

20.1. Bank overdraft facilities

The company has the bank overdraft facilities of its subsidiaries and associated companies.

The balance of all guaranteed overdrafts at year end was :

113 246 383 859 -

20.2. Act of Suretyship

The company acts as surety and co-principal debtor for amounts due by Esor Geotechnical Engineering (Pty) Ltd to First National Bank, a division of FirstRand Bank Limited. There were no such amounts outstanding during the periods under review.

- - -

20.3. Contract guarantees

There are contract guarantees held in the name of Esor (Pty) Ltd to the value of :

8 276 482 7 048 767 2 610 205

21. Financial instruments

21.1. Accounts receivable Accounts receivable comprise net amounts receivable for construction work performed including retentions withheld by customers. The directors consider that the carrying amount of accounts receivable approximate their value. First National Bank, a division of FirstRand Bank Limited hold a cession of the company's retention monies.

21.1 Cash at bank and on hand Cash at bank and on hand comprise cash and cash at bank. The carrying amount of these assets approximates to their fair values.

21.2 Accounts payable Accounts payable comprise amounts outstanding for trade purchases and ongoing costs. The directors consider that the carrying amount of trade and other payables approximates to their fair value.

21.3 Unsecured loans and secured creditors Unsecured loans comprise loans from shareholders, directors and related parties. Secured creditors comprise instalment sale agreements. The directors consider the carrying amount of the unsecured loans and secured creditors to approximate their fair values.

21.4 Interest rate risk The company is exposed to interest rate risk as it borrows funds at variable interest rates. Details of interest bearing debt is more fully disclosed in note 11.

21.5 Credit risk

61

The company's principal financial assets are bank balances and cash, accounts receivable, loans and investments, which represents the company's maximum exposure to credit risk in relation to financial assets. The amounts presented in the balance sheet are net of allowances for doubtful receivables, estimated by the company's management based on prior experience and their assessment of the current economic environment. The company has no significant concentration of credit risk, with exposure spread over a large number of counter parties and customers.

21.6 Liquidity risk The company has not experienced liquidity problems as they have sufficient funds available as well as overdraft facilities to enable them to meet commitments associated with financial instruments.

22 Related parties

The directors of Esor Ltd were also sole shareholders, directors or members of the following related parties with which transactions took place : Party Nature of transaction Volume

2005 R

Volume 2004

R

Volume 2003

R Bimmah Investments CC Interest 151 205 148 868 153 136 Rent - 68 400 105 600 Esor Geotechnical Engineering (Pty) Ltd

Rent 564 000 555 000 552 000

Interest 275 493 293 869 208 334 Collection Commission 37 300 34 050 27 600 Administration fee 6 000 6 000 6 000 Esor Plant Hire (Pty) Ltd Interest 8 000 7 181 6 436 Esor Properties CC Interest 161 704 162 083 162 502 Rent 270 000 270 000 252 000 Administration fee 6 000 6 000 - Collection Commission 14 100 13 600 18 600 Hammib Properties CC Rent 216 000 216 000 207 900 Interest 121 768 122 533 123 530 Collection Commission 10 800 10 800 10 395

The company also has the following related parties with which no transactions took place : Esor Geotechnical Engineering (Cape) (Pty) Ltd Esor Projects (Pty) Ltd Hammib (Pty) Ltd Hammib International Ltd

23 Segmental Reporting

The company does not present a segmental report as the company only operates in one business segment, namely Civil Engineering, and within a single geographical segment, being the Republic of South Africa. Minor operations are undertaken outside the borders of South Africa, but these account for less than 2% of revenue and expenses.

24 Joint Ventures 2005 2004 2003

62

R R R 22.1 Esor Zek Joint Venture Esor (Pty) Ltd entered into a Joint Venture with Zek Construction CC who each have a 90% and 10% interest in the Joint Venture respectively. The ventureres proportionate share of assets and liabilities which are included in the figures in the consolidated financial statements are as follows Balance sheet Non-current assets - - Current assets 4 186 112 2 284 143 4 186 112 2 284 143

Non-current liabilities - - - Current liabilities 4 186 112 2 284 143 - 4 186 112 2 284 143 -

Income statement Revenue 25 504 149 7 563 517 - Cost of sales (22 526 291) (7 261 794) - Gross profit 2 977 858 301 723 - Other income 1 370 249 - Other expenses (979) (193) - Net profit before tax 2 978 249 301 779 -

22.2 Esor Realeka Joint Venture Esor (Pty) Ltd entered into a Joint Venture with Realeka Investments (Pty) Ltd who each have a 50% interest in the Joint Venture. The ventureres proportionate share of assets and liabilities which are included in the figures in the consolidated financial statements are as follows: Balance sheet Non-current assets - - - Current assets 2 745 419 - -

2 745 419 - -

Non-current liabilities - - - Current liabilities 2 745 419 - -

2 745 419 - -

Income statement Revenue 6 349 448 - - Cost of sales (6 155 030) - -

Gross profit 194 418 - - Other income 1 567 - - Other expenses (3 563) - -

Net profit before tax 192 422 - -

63

22.3 Esor Franki Joint Venture Esor (Pty) Ltd entered into a Joint Venture with Franki Africa (Pty) Ltd who each have a 50% interest in the Joint Venture. The ventureres proportionate share of assets and liabilities which are included in the figures in the consolidated financial statements are as follows: Balance sheet Non-current assets - - - Current assets 2 745 419 - - 2 745 419 - - Non-current liabilities - - - Current liabilities 2 745 419 - - 2 745 419 - - Income statement Revenue 6 349 448 - - Cost of sales (6 155 030) - - Gross profit 194 418 - - Other income 1 567 - - Other expenses (3 563) - - Net profit before tax 192 422 - -

23. Retirement benefit information

All permanent staff are members of a Pension or Provident Fund. Wage employees contribute 5% of their remuneration to Old Mutual Orion Plan Provident Fund. The company matches their contribution by contributing 2,6% to this provident fund and 2,4% to the Momentum Group Life Scheme. Salaried employees contribute either 5% or 7,5% of their remuneration (depending on number of years service) to the Funds @ Work for Esor (Pty) Ltd Pension Fund. Again, the company matches their contribution by contributing an equal amount to the Funds @ Work for Esor (Pty) Ltd Provident Fund. The company contributes the full amount due to the Momentum Group Life Scheme on behalf of Salaried Employees. The funds are defined contribution funds and are governed by the Pension Fund Act 24 of 1956. There are no other post retirement benefit obligations.

Contributions to retirement benefit funds 1 272 368 1 725 605 1 028 043

2005

R2004

R 2003

R

22. Earnings per share

Earnings per share is derived by

dividing the net profit or loss for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Weighted average number of shares 102 102 102

64

Headline earnings is determined as follows:

Profit after tax (earnings) 5 688 289 5 236 883 993 211

Adjusted for: Profit from sale of property, plant

and equipment (95 592) (158 960) (69 994)

Loss from sale of property, plant and equipment

- 66 546 -

Headline earnings 5 592 697 5 144 469 923 217

Basic earnings per share (cents) 5 576 754 5 134 199 973 736

Headline earnings per share (cents) 5 483 036 5 043 597 905 114

65

Annexure 3

Independent Reporting Accountants� report on the Historical Financial Information of Esor

�The Directors Esor Limited PO Box 40096 Red Hill 4071

INTRODUCTION

The definitions commencing on page 11 of this prospectus have been used in this report.

PURPOSE OF THIS REPORT

At your request, we present our report on the historical financial information of Esor, for the purposes of complying with the Listings Requirements of the JSE Limited and for inclusion in this Document dated 28 February 2006.

RESPONSIBILITY

The directors of Esor are responsible for the compilation, contents and preparation of this prospectus and for the accuracy of the information contained therein. The directors of Esor are responsible for the financial information to which this report on historical financial information of Esor relate, and from which such reports have been prepared.

Our responsibility is to express an audit opinion on the report on historical financial information for the years ended 28 February 2005, 29 February 2004 and 28 February 2003. HISTORICAL FINANCIAL INFORMATION FOR THE PERIODS ENDED 28 FEBRUARY 2003, 29 FEBRUARY 2004 AND 28 FBRUARY 2005 We have audited the historical financial information of Esor relating to the years ended 28 February 2005, 29 February 2004 and 28 February 2003 as set in Annexure 2 to this Document dated 28 February 2006.

SCOPE

We conducted our audit in accordance with the statements of South African Auditing Standards. Those statements require that we plan and perform the audit to obtain reasonable assurance about whether the historical financial information relating to the years ended 28 February 2005, 29 February 2004 and 28 February 2003 is free of material misstatement.

Our audit included examining, on a test basis, evidence supporting the amounts and disclosures in the abovementioned historical financial information. The evidence included that previously obtained by us relating to the audit of the annual financial statements underlying the historical financial information. Our audit also included assessing the accounting principles used and significant estimates made by management as well as evaluating the overall historical financial information presentation. We believe that our audits provide a reasonable basis for our opinion.

AUDIT OPINION

23 February 2006

Dear Sirs

INDEPENDENT REPORTING ACCOUNTANTS� REPORT ON THE AUDITED HISTORICAL FINANCIAL INFORMATION OF ESOR

66

In our opinion, the historical financial information of Esor relating to the years ended 28 February 2005, 29 February 2004 and 28 February 2003, for the purposes of this prospectus dated 10 February 2006 presents fairly, in all material respects, the financial position of Esor for the years ended 28 February 2005, 29 February 2004 and 28 February 2003 in accordance with South African Statements of Generally Accepted Accounting Practice and in the manner required by the Companies Act in South Africa and the JSE Listings Requirements.

CONSENT

We consent to the inclusion of this letter and the reference to our opinion in the prospectus to be issued to Esor shareholders in the form and context in which it appears.

Yours faithfully

RSM Hills Howard Chartered Accountants (SA) Registered Accountants and Auditors PO Box 2120 Westville 3630 South Africa Per: B A Michel Partner�

67

Annexure 4

Reviewed interim financial information of Esor

Commentary on the historical financial information

2. Basis of preparation

The reviewed interim financial statements of Esor for the period ended 31 August 2005 are prepared in terms of International Financial Reporting Standards.

The independent reporting accountants report on the reviewed financial information of Esor for the interim period ended 31 August 2005, issued without qualification by RSM Hills Howard, is set out in Annexure 5 to this Document.

BALANCE SHEET

Reviewed 31 August

2005

*Audited

28 February 2005

R R

Assets

Property, plant and equipment 9 988 630 9 973 735

Investment property 56 342 57 022

Investments 12 192 12 192

Unsecured loans 4 936 680 5 175 557

Loans to subsidiaries 14 766 14 766

Current assets 37 908 103 30 293 655

Total assets 52 916 715 45 526 927

Equity and liabilities

Capital and reserves 24 834 058 17 229 397

Non-current liabilities 7 904 285 8 056 587

Current liabilities 20 178 372 20 240 943

Total equity and liabilities 52 916 715 45 526 927

Net asset value per share (cents) 24,83 17.23 Tangible net asset value per share (cents)

24,83 17,23

*restated under International Financial Reporting Standards Note 1 Net asset value per share is based on the 100 000 000 shares in issue at the end of

the period.

68

INCOME STATEMENT for the period ended 31 August 2005

Reviewed6 months

ended31 August

2005

*Reviewed6 months

ended31 August

2004

R R Gross revenue 77 687 064 44 654 813 Cost of sales (63 570 186) (37 697 091) Gross profit 14 116 878 6 957 722 Other income 146 089 48 745 Operating costs (3 365 568) (3 004 432) 10 897 399 4 002 034 Depreciation (704 062) ( 647 666) Operating profit 10 193 337 3 354 368 Interest received 432 523 451 811 Interest paid (191 493) (250 059) Profit before taxation 10 434 367 3 556 121 Taxation (2 829 707) (756 342) Profit after taxation 7 604 660 2 799 779 Adjustments for headline earnings (99 769) (3 995) Headline earnings attributable to ordinary shareholders

7 504 891 2 795 784

Pro forma weighted average number of shares in issue 100 000 000 100 000 000Pro forma basic earnings per share (cents) 7,61 2,80Pro forma headline earnings per share (cents) 7,51 2,80

Pro forma dividends per share (cents) - -

*Restated under International Financial Reporting Standards.

69

INTERIM STATEMENT OF CHANGES IN EQUITY for the period ended 31 August 2005 Reviewed

Share capital

ReviewedDistributabl

e reserveReviewed

Total

2004 R R R Balance at 1 March 2004 as previously reported 102 8 493 593 8 493 695 Adjustment for change to IFRS (IAS16) - 2 667 925 2 667 925 Restated balance at 1 March 2004 102 11 161 518 11 161 620 Net profit for the period - 2 799 779 2 799 779 Balance at 31 August 2004 102 13 961 297 13 961 399 2005 Balance at 1 March 2005 as previously reported 102 14 181 882 14 181 984 Adjustment for change to IFRS (IAS16) - 3 047 414 3 047 414 Restated balance at 1 March 2005 102 17 229 296 17 229 398 Net profit for the period - 7 604 660 7 604 660 Balance at 31 August 2005 102 24 833 956 24 834 058

70

CASH FLOW STATEMENT for the period ended 31 August 2005

Reviewed

6 months

ended

August

2005

Reviewed

6 months

ended

August

2004

R R

Cash flows from operating activities 448 893 (2 828 642)

Cash flows from investing activities (379 632) (316 090)

Cash flows from financing activities (514 055) (576 913)

Decrease in cash and cash equivalents (444 794) (3 721 645)

Cash and cash equivalents at beginning of the period

6 783 352 6 489 217

Cash and cash equivalents at end of the period 6 338 558 2 767 572

Remuneration of directors

Remuneration and benefits paid to directors for the interim period ended 31 August 2005 were as follows:

31 August 2005 31 August 2004

Basic salary

R

Other benefits

R

Total

R

Basic salary

R

Other benefits

R

Total

R

M L Barber 433 740 166 260 600 000 412 620 67 380 480 000

A M Field 437 678 162 322 600 000 422 784 57 216 480 000

B Krone 442 902 157 098 600 000 433 128 46 872 480 000

M L Trevisani 443 294 156 706 600 000 427 434 52 566 480 000

1 757 614 642 386 2 400 000 1 695 966 224 034 1 920 000

Basis of preparation

The financial statements are prepared in accordance with International Financial Reporting Standards effective at 31 August 2005 as well as the Companies Act in South Africa.

These are the first financial statements prepared in terms of International Financial Reporting Standards. The condensed interim financial statements have been prepared in accordance with IAS34.

The independent reporting accountants report on the interim financial information of Esor for the interim period ended 31 August 2005 is set out in Annexure 5 to this Document.

First time adoption of IFRS

71

The first time adoption of IFRS has resulted in a change in accounting policy for property, plant and equipment. Previously, property, plant and equipment were depreciated on a straight-line basis over their useful life. Under IAS 16, Property, Plant and Equipment, the residual values and remaining useful lives of these assets are required to be assessed on an annual basis.

RESTATED BALANCE SHEET AS AT 28 FEBRUARY 2005

Audited SA GAAP

R

Effect of Transition

R IFRS

R

ASSETS

Non current assets Property, plant and equipment 5 681 602 4 292 133 9 973 735 Other non current assets 5 259 537 - 5 259 537

Current assets 30 293 657 - 30 293 657

Total assets 41 234 796 4 292 133 45 526 929

EQUITY AND LIABILITIES

Shareholders Funds Share capital and premium 102 - 102 Distributable reserves 14 181 882 3 047 414 17 229 296 Non current liabilities 6 811 868 1 244 719 8 056 587 Current liabilities 20 240 944 - 20 240 944 Total equity and liabilities 41 234 796 4 292 133 45 526 929

72

Annexure 5

Independent reporting accountants� report on reviewed interim financial information of Esor

The Directors Esor Limited PO Box 40096 Red Hill 4071

23 February 2006

Dear Sirs

INDEPENDENT REPORTING ACCOUNTANTS� REPORT ON THE REVIEWED INTERIM FINANCIAL INFORMATION OF ESOR

INTRODUCTION

The definitions commencing on page 11 of this prospectus have been used in this report.

PURPOSE OF THIS REPORT

At your request, we present our report on the interim financial information of Esor, for the purposes of complying with the Listings Requirements of the JSE Limited and for inclusion in this prospectus dated 28 February 2006.

RESPONSIBILITY

The directors of Esor are responsible for the compilation, contents and preparation of this prospectus, and for the accuracy of the information contained therein. The directors of Esor are responsible for the financial information to which this reporting accountants� report relate, and from which such report has been prepared.

Our responsibility is to express a review opinion on the report on interim financial information of Esor.

REVIEW REPORT OF INTERIM FINANCIAL INFORMATION FOR THE PERIOD ENDED 31 AUGUST 2005

We have reviewed the interim financial information of Esor relating to the period ended 31 August 2005 as set out in the report of interim financial information attached as Annexure 4 to this prospectus dated 28 February 2006.

We conducted our review in accordance with the International Standards on Review Engagements. This standard requires that we plan and perform the review to obtain moderate assurance that the interim financial information relating to the period ended 31 August 2005 is free of material misstatement. A review is limited primarily to enquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information of Esor for the period ended 31 August 2005 for purposes of this prospectus dated 28 February 2005 is fairly presented, in all material respects, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act in South Africa and the JSE Listings Requirements.

Other than as a result of the private placing, as outlined in this document, there have been no material changes in the financial or trading position of Esor and any of its subsidiaries since 31 August 2005, the date of the latest interim results of Esor.

73

Yours faithfully

RSM Hills Howard Chartered Accountants (SA) Registered Accountants and Auditors PO Box 2120 Westville 3630 South Africa Per: B A Michel Partner�

74

Annexure 6

Independent Reporting Accountants� Report on the Profit Forecast of Esor

�The Directors RED HILL Esor Limited P O Box 40096 23 February 2006 Dear Sirs,

INDEPENDENT REPORTING ACCOUNTANTS� LIMITED ASSURANCE REPORT ON THE FORECAST OF ESOR LIMITED

We have examined the consolidated profit forecast of Esor Limited for the periods� ended 28 February 2006 and 28 February 2007 set out in the Prospectus to Esor Limited�s shareholders dated on or about 28 February 2006. Director�s responsibility The directors of Esor Limited are responsible for the forecast, including the assumptions set out in paragraph 11.2.2 to the Prospectus, on which it is based and for the financial information from which it has been prepared. This responsibility, arising from compliance with the requirements of the JSE Limited (�JSE Listings Requirements�), includes determining whether the assumptions, barring unforeseen circumstances, provide a reasonable basis for the preparation of the forecast, whether the forecast has been properly compiled on the basis stated and whether the forecast is presented on a basis consistent with the accounting policies of Esor Limited. Reporting accountants� responsibility Our responsibility is to provide a limited assurance report on the forecast prepared for the purpose of complying with the JSE Listings Requirements and for inclusion in the circular. We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements applicable to the Examination of Prospective Financial Information. This standard requires us to obtain sufficient appropriate evidence as to whether: Management�s best-estimate assumptions on which the forecast is based are not

unreasonable and are consistent with the purpose of the information; The forecast is properly prepared on the basis of the assumptions; The forecast is properly presented and all material assumptions are adequately

disclosed; and The forecast, is prepared and presented on a basis consistent with the accounting

policies of Esor Limited for the period concerned.

In a limited assurance engagement the evidence-gathering procedures are more limited than for a reasonable assurance engagement and therefore less assurance is obtained, than in a reasonable assurance engagement. We believe our evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusion.

75

Conclusion Based on our examination of the evidence obtained, nothing has come to our attention which causes us to believe that: The assumptions, barring unforeseen circumstances, do not provide a reasonable basis

for the preparation of the forecast; The forecast has not been properly compiled on the basis stated; The forecast has not been properly presented and all material assumptions are not

adequately disclosed; and The forecast, is not presented on a basis consistent with the accounting policies of Esor

Limited. Actual results are likely to be different from the forecast since anticipated events frequently do not occur as expected and the variation may be material, accordingly no assurance is expressed regarding the achievability of the forecast. Yours faithfully RSM Hills Howard Registered Accountants and auditors Chartered Accountants (SA) PO Box 2120 Westville 3630 South Africa Per: B A Michel Partner�

76

Annexure 7

Independent Reporting Accountants� Report on the Unaudited Pro Forma Income Statement and Balance Sheet

�The Directors Esor Limited P O Box 40096 RED HILL 23 February 2006 Dear Sirs,

INDEPENDENT REPORTING ACCOUNTANTS� LIMITED ASSURANCE REPORT ON THE UNAUDITED PRO FORMA FINANCIAL EFFECTS, INCOME STATEMENT AND BALANCE SHEET

Introduction We have performed our limited assurance engagement with regard to the unaudited pro forma financial effects, income statement and balance sheet (collectively �the pro forma financial information�) of Esor Limited set out in the paragraph 11.3 of the Prospectus to be dated on or about 28 February 2006 issued in connection with the group restructuring and private placement of 20 000 000 ordinary shares. The pro forma financial information has been prepared for purposes of complying with the requirements of the JSE Limited (�JSE�), for illustrative purposes only, to provide information about how the group restructuring and private placement of 20 000 000 ordinary shares �transactions� might have affected the reported financial information had the transactions been undertaken on 1 March 2005 for income statement purposes and on 31 August 2005 for balance sheet purposes. Because of its nature, the pro forma financial information may not present a fair reflection of the financial position, changes in equity, results of operations or cash flows of Esor Limited, after the transaction. Responsibilities The directors of Esor Limited are solely responsible for the compilation, contents and presentation of the pro forma financial information contained in the Prospectus and for the financial information from which it has been prepared. Their responsibility includes determining that the pro forma financial information contained in the Prospectus has been properly compiled on the basis stated, the basis is consistent with the accounting policies of Esor Limited and the pro forma adjustments are appropriate for the purposes of the pro forma financial information as disclosed in terms of the JSE Listings Requirements. Reporting accountants� responsibility

77

Our responsibility is to express a limited assurance conclusion on the pro forma financial information included in the Prospectus. We conducted our limited assurance engagement in accordance with the International Standard on Assurance Engagements applicable to Assurance Engagements Other Than Audits or Reviews of Historical Financial information and the Revised Guide on Pro Forma Financial Information issued by the South African Institute of Chartered Accountants. This standard requires us to obtain sufficient appropriate evidence on which to base our conclusion. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue. Sources of information and work performed Our procedures consisted primarily of comparing the unadjusted audited historical financial information of Esor Limited with the source documents, considering the pro forma adjustments in light of the accounting policies of Esor Limited, considering the evidence supporting the pro forma adjustments, recalculating the amounts based on the information obtained and discussing the pro forma financial information with the directors of Esor Limited. In arriving at our conclusion, we have relied upon financial information prepared by the directors of Esor Limited. Whilst our work performed involved an analysis of the historical reviewed financial information and other information provided to us, our limited assurance engagement does not constitute either an audit or review of any of the underlying financial information undertaken in accordance with the International Standards on Auditing or the International Standards on Review Engagements and accordingly, we do not express an audit or review opinion. In a limited assurance engagement the evidence-gathering procedures are more limited than for a reasonable assurance engagement and therefore less assurance is obtained than in a reasonable assurance engagement. We believe that our evidence obtained is sufficient and appropriate to provide a basis for our conclusion. Opinion

Based on our examination of the evidence obtained, nothing has come to our attention that causes us to believe that in terms of Section 8.17 and 8.30 of the JSE Listings Requirements: the pro forma financial information has not been properly compiled on the basis stated, such basis is inconsistent with the accounting policies of Esor Limited, and the adjustments are not appropriate for the purposes of the pro forma financial information

as disclosed pursuant to section 8.30 of the JSE Listings Requirements. Yours faithfully RSM Hills Howard Registered Accountants and auditors Chartered Accountants (SA) PO Box 2120 Westville 3630 South Africa Per: B A Michel Partner�

78

Annexure 8

Group Structure

The group structure, at the last practicable date is set out below :

Esor Limited


(Pty) Ltd

Esor Plant Hire (Pty) Ltd

Esor Properties (Pty) Ltd

100%

Hammib Properties (Pty) Ltd

100% 100%


(Cape)(Pty) Ltd

Esor Projects (Pty) Ltd

100% 100% 100%

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Annexure 9

Corporate Governance

The board of directors of Esor sets the group�s overall policy and provides guidance and input in areas relating to strategic direction, planning, acquisitions, performance measurement, resource allocation, key appointments, standards of conduct and communication with shareholders.

The company�s corporate philosophy is consistent with the principles of the King Report II on Corporate Governance � 2002 in that, inter alia:

- the roles of Chairman and Managing Director will be separated;

- a non-executive director will be elected Non-Executive Chairman;

- service contracts of executive directors do not exceed four years in duration;

- Remuneration and Audit Committees are chaired by non-executive directors.

A Non-Executive Chairman will be appointed once the company has identified a person suitably qualified for the position.

The board will, as a minimum, ensure compliance with the following:

Code of Conduct The directors acknowledge the importance of sound corporate governance and the guidelines set out in the Principles of Good Corporate Governance and Code of Best Practice (�Combined Code�). The directors therefore intend to embrace the Combined Code so far as is appropriate having regard to the size and nature of the various companies making up the group. The board will take such measures so far as is practicable to comply with the Combined Code.

Board of directors The company has four executive directors and two non-executive directors at this stage. The non-executive directors are all fully independent of management and free to make their own decisions and independent judgements. They enjoy no benefits from the company for their services as directors other than their fees and potential capital gains and dividends on their interests in ordinary shares and options.

The non-executive directors are high calibre professionals and sufficient in number for their independent views to carry significant weight in the board�s deliberations and decisions.

The board retains full and effective control over the company. Apart from the quarterly meetings, additional meetings are arranged when necessary to review strategy, planning, operations, financial performance, risk and capital expenditure, human resource and environmental management. The board is also responsible for monitoring the activities of the executive management.

At this stage, the company does not have a formal Nomination or Risk Committee. Future appointments to the board will, however, be formal and a transparent matter for the board as a whole.

The Executive Committee The Executive Committee comprises the four executive directors. The Executive Committee, is responsible for the daily running of the group, regularly reviews current operations in detail,, develops strategy and policy proposals for consideration by the board and then implements its directives.

Audit Committee

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The Audit Committee, chaired by IG Jefferiss, and attended by both the company�s Designated Adviser and DM Thompson, will be formed for the purposes of monitoring and reviewing:

- the effectiveness of the group�s information systems and other systems of internal control;

- the effectiveness of the internal audit function; - the reports of both the external and internal auditors; - the annual report and specifically the annual financial statements included

therein; - the accounting policies of the group and any proposed revisions thereto; - the external audit findings, reports and fees and the approval thereof; - compliance with applicable legislation and requirements of regulatory authorities.

The Audit Committee will set the principles for recommending the use of the external auditors for non-audit services. The Audit Committee will meet at least bi-annually to meet the objectives as set out above. The internal and external auditors have unrestricted access to the Audit Committee and its chairman with a view to ensuring that their independence is not impaired. Remuneration Committee The Remuneration Committee is chaired by a non-executive director and will be attended by the Designated Adviser and one other non-executive director. This committee will establish the group�s remuneration philosophy, review the terms and conditions of employment of the executive directors and other executives, as well as incentive schemes.

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Annexure 10

Salient Features of the Company�s Share Scheme

The salient features of the employee share trust, which was adopted on 22 December 2005, established as an incentive to promote the continued growth of the company by giving employees an opportunity to acquire shares therein, are set out below.

1. Introduction This Scheme is introduced for the purpose of providing an opportunity to the

Employees of Esor Limited and its subsidiaries to acquire Shares in the capital of the Company, either directly or through the grant of options, so as to give such Employees an incentive to advance the interests of the Company for the benefit of all of the Company�s stakeholders.

2. Definitions

(a) �Acceptance Date� means the date on which an Employee accepts an offer in terms of clause 10.

(b) �Board� means the board of directors of the Company acting either

itself or through any committee constituted by it for the purpose of administering this Scheme, and �directors� shall have a similar meaning.

(c) �Company� means Esor Limited, Registration No 1994/000732/06.

(d) �Employee� means an employee of the Group who is entitled in

terms of any provision of the Companies Act, 1973, as amended, to purchase shares from a trust such as referred to herein and shall include an executive director of the Group to whom an offer shall have been directed to acquire Shares in the Company.

(e) �Employee�s Debt� means amounts owing by an Employee to the

Scheme from time to time in respect of the purchase price of Shares.

(f) �Group� means the Company and its subsidiaries.

(g) �JSE� means the JSE Securities Exchange South Africa.

(h) �Scheme� means the scheme to enable Employees to acquire

and/or fund the acquisition of Shares, the terms of which are embodied in this deed.

(i) �Shares� means ordinary shares in the Company.

(j) �Trustees� means the trustees of the Trust from time to time.

5. Trustees

5.1 The Trust shall be administered and represented by Trustees appointed from time to time by the Board who may not be executive directors or employees of the Company.

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The first Trustees are Alastair Hay and I G Jefferiss. There shall at all times be a minimum of two Trustees in office.

9. Funding

9.1 The funds required by the Trust to give effect to the purpose and object of the Trust shall be provided from its own resources if any and/or loans by the Company and/or loans by third parties procured by the Company as the Board may from time to time direct.

9.2 Loans granted to the Trustees as aforesaid shall be utilised only for the purposes of the Scheme.

9.3 Unless the Board directs otherwise, the surplus funds of the Trust shall be utilised for the repayment of any outstanding loans granted by the Company.

10. Share Acquisition

10.1 The Trustees shall from time to time as and when so directed in writing by the Board:

(a) purchase or acquire Shares;

(b) subscribe for Shares;

(c) offer to sell such number of Shares held by the Trust to such Employees as the Board may direct.

10.2 The Shares referred to shall rank pari passu in all respects with the existing ordinary shares in the Company.

10.3 The number of Shares covered by the Scheme in respect of which any portion of the purchase price is still payable to the Trustees shall not at any time exceed 15% of the issued share capital of the Company. This limitation may be adjusted from time to time as approved by the Company in general meeting and the JSE.

10.4 The maximum number of Shares which may be issued to one Employee pursuant to this Scheme shall not exceed 3 % provided that this limitation may also be adjusted as contemplated in clause 10.3.

10.5 An offer of Shares made to an Employee shall: (a) be personal to the offeree and not capable of assignment;

(b) be available for acceptance in full or in multiples of 100 Shares by written notice to the Trustees within a period of 20 business days from date of receipt;

(c) be made at the market value thereof determined with reference to the middle market price of the Shares on the JSE on the trading day immediately preceding the date on which the offer is made, less such discount as may be determined by the Board subject to the requirements of the JSE;

d) specify the cash deposit if any to be paid in reduction of the purchase price upon acceptance of the offer.

10.6 Subject to payment of the relevant deposit, if any, the Employee shall be entitled to the release and transfer of Shares offered in tranches of 20% thereof on each anniversary of the Acceptance Date.

11. Options

11.1 The Trustees shall from time to time as and when so directed by the Board offer options in respect of Shares to Employees.

11.2 An option shall: (a) confer on an Employee the right upon exercise to acquire the

relevant number of Shares in the Company;

(b) be personal to the offeree and not capable of assignment;

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(c) be available for acceptance in full or in multiples of 100 Shares by written notice to the Trustees;

(d) be made at the market value thereof determined with reference to the middle market price of the Shares on the JSE on the trading day immediately preceding the date on which the option is granted, less such discount as may be determined by the Board subject to the requirements of the JSE;

(e) specify the cash deposit if any to be paid in reduction of the purchase price upon acceptance of the offer.

11.3 The provisions of clauses 10.2 to 10.4 shall apply mutatis mutandis to Shares which are the subject of options granted to Employees.

11.4 An Employee may exercise the option granted in tranches of 20% of the Shares subject to the option on each anniversary of the date of the grant of the option and shall, subject to the payment of the relevant deposit, if any, be entitled to release and transfer of the Shares concerned.

11.5 Unless an Employee exercises the option granted to him in respect of all of the Shares concerned by the fifth anniversary of the date of grant of the option, the option shall lapse in relation to the Shares which at that date remain subject to the option.

11.6 If an Employee surrenders his estate or his estate is sequestrated, the option granted to him shall lapse and any amount outstanding in respect of Shares acquired pursuant to the exercise of the option shall immediately become due, owing and payable.

12. Payment for Shares

12.1 The Trust may lend an Employee the balance of the purchase price payable by him for Shares after taking into account any deposit required to be paid in terms of clause 10.5(d) or 11.2(d).

12.2 The amount payable by an Employee in respect of Shares purchased shall be paid in full by the fifth anniversary of the Acceptance Date or the date of grant of the option referred to in clause 11, as the case may be.

12.3 Shares acquired by an Employee pursuant to rights issues and capitalisation issues shall be released and transferred to the Employee, subject to payment where applicable, on the same basis as set out in clauses 10.6 and 11.4.

12.4 Amounts payable by Employees to the Trust in respect of the acquisition of Shares shall bear interest at a rate which is not less than the rate of interest stipulated from time to time in terms of the Seventh Schedule of the Income Tax Act, 1962, as amended. The Board may in its discretion alter the rate of interest from time to time, provided that it may not do so retrospectively.

12.5 If an Employee fails to pay any amount payable to the Trust in respect of the acquisition of Shares on due date and remains in default for 20 days after having received written notice to make payment, the Trustees may cancel the sale and take possession of the Shares concerned, in which event neither party shall have any further claim against the other. In the alternative, the Trustees may in their discretion afford the Employee the opportunity to sell so many of his Shares as may be necessary to enable him to discharge his outstanding debt so as to permit the release of a portion of his Shares to him.

12.6 If an Employee retires in terms of the rules of the Group�s pension or provident fund or with the approval of the Board or he becomes personally incapacitated, he shall, within two years after retiring or becoming permanently incapacitated, have the right:

(a) to elect to pay his Employee�s Debt in full in respect of all of the Shares purchased by him and have them released to him or to have his Shares repurchased by the Trustees at a price equal to the amount already paid by the Employee plus any balance outstanding, so that neither party has any further claim against the other; and

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(b) to exercise the option in respect of all of the remaining Shares subject to the option granted to him and, subject to payment of the relevant purchase price, to have the Shares released and transferred to him.

12.7 If an Employee dies before having paid his Employee�s Debt in full or before the time allowed for the exercise of an option granted to him, the provisions contained in clause 12.6 shall apply mutatis mutandis.

12.8 If an Employee: (a) ceases to be employed by the Group for a reason other than

retirement, incapacitation or death; or

(b) wishes to terminate his participation in the Scheme,

then, upon the date upon which he ceases to be employed by the Group or the date upon which he notifies the Trustees in writing that he no longer wishes to participate as a member of the Scheme, as the case may be, the Trustees, in their sole and absolute discretion, may repurchase the Shares from the Employee at a price equal to the amount already paid by the Employee plus any balance outstanding in respect of the Shares so that neither party has any further claim against the other. Unless the Trustees exercise their discretion in terms of this clause 12.8 to repurchase the Shares, the Employee shall, upon the termination of his employment as contemplated herein, become liable to pay his full outstanding Employee�s Debt.

12.9 Notwithstanding the provisions of clause 12.8, if the employment of an Employee with the Group is terminated as a result of dishonesty or upon such other grounds as would justify a summary dismissal in law, the price payable by the Trustees as contemplated in clause 12.8 shall be the lesser of the price calculated in terms of clause 12.8 or the closing price of the Shares on the JSE on the trading day immediately preceding the date of termination of the Employee�s employment.

13. Rights Issues

If the Company makes a rights issue, an Employee shall have the right to participate in such rights issue in respect of his Shares except that such Shares shall be subject to the provisions of the Scheme.

14. Capitalisation

Every Employee shall in respect of his Shares participate in any capitalisation issue by the Company as if the purchase price of those Shares had, at the record date of such capitalisation issue, been paid in full.

15. Takeover

Should control of the Company pass to another person or company as a result of a takeover, reconstruction or amalgamation which makes provision for the Employees to receive equity instruments allotted and issued by such other persons or in such other company in substitution of their Shares on terms in the opinion of the Auditors (such opinion being given by them as experts and not as arbitrators or quasi arbitrators) not less favourable than those on which those Employees are entitled to their Shares, they shall be obliged to accept such equity instruments in such other company on such terms.

16. Amendments

It shall be competent for the Board and the Trustees to amend any of the provisions of the Scheme provided that:

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16.1 no such amendment shall affect the vested rights of any Employee; and 16.2 no such amendment affecting any of the following matters shall be competent

unless it is sanctioned by the Company in general meeting: (a) the eligibility of Employees under this Scheme;

(b) the proportion, expressed as a percentage, which the Shares that may be acquired by the Trustees for purposes of the Scheme, bears to the entire issued ordinary share capital of the Company for the time being;

(c) the maximum number of Shares that may be acquired by any Employee;

(d) the voting, dividend, transfer and other rights, including those arising on a liquidation of the Company, attaching to the Shares;

(e) any amendment of this clause 20.2.

17. Duty to Report The Company shall in its annual financial statements provide particulars of:

17.1 the number of Shares which have been taken up by Employees in terms of offers made to them and which Shares are subject to the Scheme;

17.2 any changes in the number of Shares which have been taken up by Employees during the year;

17.3 the number of Shares initially taken up by Employees which during the year have ceased to be subject to the Scheme;

17.4 the purchase price at which Employees were offered Shares during the year and the total number of Shares taken up by Employees at such purchase price;

17.5 the total number of Shares still available to be taken up by Employees in terms of the Scheme; and

17.6 the aggregate amount owing by Employees to the Trust at the end of each year.�

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Annexure 11

Vendors

The following represents a list of all the vendors of material assets acquired by Esor during the three years preceding the publication of this Prospectus

Nature of asset acquired or to be acquired

Names of vendors Acquiring company

Date of acquisition

Addresses of vendor Amount paid or payable in cash or securities to each

vendor 100 % of share capital of Esor Properties (Pty) limited

ML Barber, AM Field, B Krone, ML Trevisani

Esor 25/01/2006


838 ordinary shares in Esor for R 740 413

100 % of share capital of Esor Geotechnical Engineering (Pty) limited


Esor 25/01/2006


6 061 ordinary shares in Esor for R 5 353 136

100 % of share capital of Hammib Properties (Pty) limited


Esor 25/01/2006


1 101 ordinary shares in Esor for R 971 918

Notes:

1. No normal warranties have been given on the above transaction, while none of the assets or the book of debts have been guaranteed.

2. The sale agreements does not pertain any restraints of trade on the vendors and does not preclude them from carrying on business in competition with Esor.

3. The accrued taxation liabilities in all of the vendor companies will be settled by Esor on their respective due dates.

4. Considerations paid for the assets in the vendor companies equalled the net asset value of those companies at the date of acquisition.

5. The shareholders and directors of the vendors are also shareholders and directors of the acquiring companies.

6. No amount of any cash or securities were paid or is payable to any promoter that is not a director.

7. All assets acquired were transferred into Esor�s name. These assets are pledged as described in Annexure 2, paragraph 11.

8. Esor has not entered into any substantial transaction or has not entered into an agreement to make such a substantial acquisition or disposal or other substantial transaction subsequent to the last audited annual financial statements

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Annexure 12 The Directors Esor Limited PO Box 40096 Red Hill 4071

24 February 2006

Dear Sirs

Independent Limited Assurance Report regarding the Presentation and Disclosures of Historical Financial Information, Pro-forma Financial Information and Profit Forecast Information, contained in the Prospectus for the Proposed Listing of Esor Limited, in Compliance with Section 8 and Sections 7A and 7B of the Listing Requirements of the JSE Limited and Schedule 3 of the South African Companies Act Introduction Esor Limited (�Esor�) proposes to list its ordinary shares on the Alt X Exchange of the JSE Limited (�JSE�). At your request, we have completed our assurance engagement to provide limited assurance regarding the presentation and disclosures contained in the Historical Financial Information, Pro-forma Financial Information and Profit Forecast Information, set out in Annexures 2 to 7 of the Prospectus to Esor shareholders to be dated on or about 2 March 2006 (�Prospectus�) in compliance with the requirements of Section 8 and Sections 7A and 7B of the Listings Requirements of the JSE (the �Listings Requirements�) and Schedule 3 of the South African Companies Act 61, of 1973, as amended (�Companies Act�). We are not the auditors of Esor or its subsidiaries, and have not performed an audit or a review of the audited Annual Financial Statements for the year ended 28 February 2005, prepared in accordance with South African Standards of Generally Accepted Accounting Practice, and the reviewed Condensed Interim Financial Statements for the six months ended 31 August 2005, prepared in accordance with International Financial Reporting Standards, on which the Historical Financial Information, Pro-forma Financial Information and Profit Forecast Information is based. The reporting accountants issued an unqualified opinion on the Esor Annual Financial Statements for the year ended 28 February 2005 and an unqualified review opinion on the Condensed Interim Financial Statements for the six months ended 31 August 2005. Responsibility of the directors and the reporting accountants The directors of Esor are responsible for the compilation, contents and preparation of the Prospectus and for the accuracy of the information, including the financial information, contained therein and for the financial information from which it has been prepared. The reporting accountants are responsible for reporting on the Historical Financial Information, Pro-forma Financial Information and Profit Forecast Information of Esor as presented in Annexures 2 to 7 of the Prospectus. Responsibility of the assurance provider

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Our responsibility is to report any instances of non-compliance to you and to express our limited assurance conclusion, on whether or not the presentation and disclosure requirements of the relevant paragraphs of Section 8 and Sections 7A and 7B of the Listings Requirements and Schedule 3 of the Companies Act have been met, in the Historical Financial Information, Pro-forma Financial Information and Profit Forecast Information disclosed in Annexures 2 to 7 of the Prospectus. Our assurance engagement was performed in accordance with the International Standard on Assurance Engagements, ISAE 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information. This standard requires us to comply with ethical requirements and to plan and perform our assurance engagement to obtain limited assurance, expressed below, regarding the subject matter of the engagement. Work performed Our procedures did not involve an independent examination of the financial information of Esor included in the Prospectus and consisted primarily of comparing the audited Annual Financial Statements for the year ended 28 February 2005 and reviewed Condensed Interim Financial Statements for the six months ended 31 August 2005 to the presentation and disclosure of the Historical Financial Information and the Pro-forma Financial Information of Esor included in the Prospectus. Thereafter, we compared the Historical Financial Information, the Pro-forma Financial Information and Profit Forecast Information of Esor included in the Prospectus to the disclosure requirements of Section 8 and Sections 7A and 7B of the Listings Requirements and Schedule 3 of the Companies Act. In addition, the presentation and disclosure guidance contained in the Revised Guide on Pro Forma Financial Information and the Revised Guide on Forecasts both issued by the South African Institute of Chartered Accountants, and in the International Standard on Assurance Engagements ISAE 3400 The Examination of Prospective Financial Information, was considered. Our additional procedures performed with regard to the Pro-forma Financial Information, consisted primarily of comparing the unadjusted audited historical financial information of Esor with the source documents, considering the pro forma adjustments in light of the accounting policies of Esor and evidence supporting the pro forma adjustments, recalculating the amounts based on the information obtained, and discussing the pro forma financial information with the directors and auditors of Esor. In arriving at our conclusion, we have relied upon financial information prepared by the directors of Esor and other information from various public, financial and industry sources. Because the above procedures do not constitute either an audit or review performed in accordance with the International Standards on Auditing or International Standards on Review Engagements, we do not express any assurance on the fair presentation of the financial information of Esor included in the Prospectus. Had we performed additional procedures, or had we performed an audit or review of the financial information of Esor included in the Prospectus other matters might have come to our attention that would have been reported to you. In a limited assurance engagement the evidence-gathering procedures are more limited than for a reasonable assurance engagement and therefore less assurance is obtained than in a reasonable assurance engagement.

We believe our evidence is sufficient and appropriate to provide a basis for our conclusion.

Conclusion Based on our work, nothing has come to our attention that causes us to believe that the presentation and disclosures of the Historical Financial Information for the year ended 28 February 2005, prepared in accordance with South African Standards of Generally Accepted Accounting Practice, the Condensed Interim Financial Statements for the six months ended 31 August 2005, prepared in accordance with International Financial Reporting

89

Standards, the Pro-forma Financial Information and the Profit Forecast Information of Esor, included in Annexures 2 to 7 of the Prospectus is not in accordance with Section 8 and Sections 7A and 7B of the Listings Requirements and Schedule 3 of the Companies Act. Yours faithfully KPMG Inc.

Per Mickey Bove Director

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(�Esor� or �the company�)

PRIVATE PLACEMENT APPLICATION FORM

In terms of the private placement of 20 000 000 Esor shares at an issue price of 100

cents per share registered in terms of the prospectus issued on or about 28 February 2006 (�the prospectus�)

Please refer to the instructions overleaf before completing this private placement application form.

Certificated shares � Payment by bank guaranteed cheque or banker�s draft

Applicants who elect to receive their allocated shares in certificated form and who wish to pay by way of bank guaranteed cheque or banker�s draft must complete and return the private placement application, together with their payment in the form of a bank guaranteed cheque or banker�s draft (crossed �not transferable� and drawn in favour of �Esor Private Placement�) in an envelope marked �Esor Private Placement� to:

if delivered by hand or by courier or if posted

Designated Adviser Designated Adviser Exchange Sponsors (Pty) Limited Exchange Sponsors (Pty) Limited 39 First Road PO Box 411216 Hyde Park Craighall 2196 2024

Certificated shares � payment by electronic transfer

Applicants who elect to receive their allocated shares in certificated form and who wish to pay by way of electronic transfer may do so, in which case the private placement application, and proof of such payment by electronic transfer must be hand delivered, posted or faxed to Esor (and not the transfer secretaries) to:






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Dematerialised shares � payment by electronic transfer or through a CSDP or broker

Applicants who elect to receive their allocated shares in dematerialised form and who wish to pay by way of electronic transfer must do so, in which case the private placement application and the section on their CSDP or broker must be completed, and proof of such payment by electronic transfer must be hand delivered, posted or faxed to:







Applicants, who wish to receive their allocated shares in dematerialised form, can also complete and return this private placement application form to their duly appointed CSDP or broker by the time and date stipulated in the agreement governing their relationship with their CSDP or broker, together with the method of payment as stipulated in such agreement.

NO LATE APPLICATIONS WILL BE ACCEPTED.

Reservation of rights

The directors of Esor reserve the right to accept or refuse any application(s), either in whole of in part, or to abate any or all application(s) (whether or not received timeously) in such manner as they may, in their sole and absolute discretion, determine.

The directors of Esor reserve the right to accept or reject, either in whole or in part, any private placement applications should the terms contained in this prospectus of which this private placement application forms part and the instructions herein not be properly complied with.

Applications must be for a minimum of 5 000 shares and multiples of 1 000 thereafter.

To the directors Esor Limited 1. I/We, the undersigned, confirm that I/we have full legal capacity to contract and, having

read the prospectus, hereby irrevocably apply for and request you to accept my/our

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application for the undermentioned number of shares in Esor at 100 cents per share or any lesser number that may, in your absolute discretion, be allotted to me/us, subject to the articles of association of Esor.

2. I/We wish to receive our allocated shares in dematerialised form and will hand this private placement application form to my / our appointed CSDP or broker. I/We accept that payment in respect of these applications will be, in terms of the custody agreement entered into between me/us and our CSDP or broker, on delivery versus payment basis. (Delete if not applicable)

3. I/We wish to receive our allocated shares in certificated form and commit to accept the physical share certificate. Accordingly I/We hereby enclose a crossed cheque/banker�s draft in favour of �Esor Private Placement� for the appropriate amount due in terms of this application. (Delete if not applicable)

4. I/We understand that the subscription for shares in terms of the prospectus is conditional on the granting of a listing of the shares of Esor, by Tuesday, 14 March 2006 or such later date as the directors may determine, on the Alternative Exchange (�ALTx�) of the JSE.

Dated 2006 Telephone number ( ) Signature Assisted by (where applicable) Surname of individual or Name of entity Mr

Mrs Miss Other title

First names (in full)

To be completed by all applicants Postal address (Preferably PO Box address) Refund cheque and/or share certificate, if applicable, will be sent to this address

Telephone number ( ) Total number of ordinary shares applied for Note: Minimum number of 5 000 shares and thereafter in multiples of 1 000 shares

(Enter figures only � not words)

Total amount of cheque or banker�s draft to cover ordinary shares applied for herein at 100 cents per share

R (Enter figures only � not words)

This form must be handed to the applicant�s CSDP or broker for completion and submission

CSDP or broker name Settlement bank account number Bank BIC code STRATE Business Partner ID Bank CSD account number This application will constitute a legal contract between issuer and applicant. The issuer of the shares is Esor. Application forms for certificated or uncertificated shares where this portion has not been completed will not be accepted.

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Instructions: 1. Applications may be made on this private placement application form only. Copies or

reproductions of this private placement application form will be accepted. 2. Applications are irrevocable and may not be withdrawn once submitted to the

Designated Adviser, transfer secretaries, CSDP�s or brokers. 3. All CSDP�s and brokers will be required to retain this application form for presentation

to the directors if required. 4. Please refer to the terms and conditions of the private placement set out in paragraph

10 of the prospectus. Applicants should consult their brokers, bankers or other professional advisers in case of doubt as to the correct completion of this private placement application form.

5. Applicants must be for a minimum of 5 000 shares and thereafter in whole multiples of 1 000.

6. Applicants who wish to receive their shares in uncertificated form and who do have a CSDP or broker, must do so in terms of the custody agreement entered into between them and their CSDP or broker on a delivery versus payment basis.

7. Applicants who wish to receive their shares in certificated form must submit only one private placement application form and one cheque or banker�s draft in respect of each application. Payment may also be by way of electronic transfer as set out above. To the extent that more than one application is submitted, the first private placement application form received will be the one in respect of which Esor shares will be allocated in terms of the prospectus and further application form(s) will be ignored. The application monies applicable thereto will be held by the transfer secretaries and returned without interest to the applicants concerned with all other returned cheques in terms of the prospectus at the applicant�s risk. Postal orders, cash or telegraphic transfers will not be accepted.

8. No receipts will be issued for application forms, application monies or any supporting documentation and applications will only be regarded as complete when the relevant cheque/banker�s draft has been paid. All monies will be deposited immediately for payment. If a receipt is required, shareholders or lodging agents are required to prepare special transaction receipts for application forms lodged.

9. If any cheque or banker�s draft is dishonoured, the company may, in its sole discretion, regard the relevant application as invalid or take such other steps in regard thereto as it may deem fit.

10. All alterations on this private placement application form must be authenticated by full signature.

11. Esor will use the �certified transfer deeds� and other temporary �documents of title� procedure approved by the JSE Limited and therefore will issue only a �block� certificate for the shares allotted in terms of this application.

12. Blocked Rand may be used by emigrants and non-residents of the common monetary area (comprising the Republics of South African and Namibia and the Kingdoms of Swaziland and Lesotho) for payment in terms of this and reference should be made to paragraph 10.12 of the prospectus, which deals with Exchange Control Regulations.