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GROUP FIVE LIMITED
Registration number 1969/000032/06
GROUP INCOME STATEMENT (R'000) % Change UNAUDITED RESTATED
Six months ended Year ended
31 December 30 June
2000 1999 * 2000 *
Revenue 12.7 1,663,626 1,476,454 2,863,410
Operating profit 10.9% 36,494 32,904 48,159 Finance
costs -4.4% (4,394) (4,597) (8,231)
Profit before taxation 13.4% 32,100 28,307 39,928
Taxation 22.0% (8,988) (7,365) (10,675)
Profit after taxation 10.4% 23,112 20,942 29,253
Minority interest (136) (178) (205)
Attributable profit 10.7% 22,976 20,764 29,048
Dividends 4.4% (6,912) (6,622) (10,301)
Retained profit for the period 13.6% 16,064 14,142 18,747
Operating profit is stated after
charging:
Depreciation and amortisation 30,180 33,609 66,260
ABRIDGED GROUP BALANCE SHEET (R'000) UNAUDITED AUDITED
31 December 31 December 30 June
2000 1999 2000
ASSETS
Non-current assets
Fixed assets 396,600 358,962 354,265
Investments - associates 23,653 45,030 46,123 Investment
- other 65,005 38,416 59,941
485,258 442,408 460,329
Current assets
Bank balances and cash 146,278 104,956 171,299
Other current assets 775,220 669,328 975,693
921,498 774,284 1,146,992
Total assets 1,406,756 1,216,692 1,607,321
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders' interest 451,030 460,293 468,070 Minority
interest 230 3,592 1,228
451,260 463,885 469,298
Non-current liabilities
Interest bearing borrowings 27,706 3,391 9,205
Deferred taxation 12,891 17,587 4,641
40,597 20,978 13,846
Current liabilities
Accounts payable 812,988 636,004 909,029
Bank overdrafts and short-term
Borrowings 94,999 89,203 211,694
Shareholders for dividend 6,912 6,622 3,454
914,899 731,829 1,124,177
Total equity and liabilities 1,406,756 1,216,692 1,607,321
SUMMARISED CASH FLOW STATEMENT (R'000)
Cash flow from operating activities
Cash from operations 66,674 64,053 109,861
Working capital changes 114,039 (28,625) (83,402)
Cash generated from operations 180,713 35,428 26,459
Finance cost (4,394) (4,597) (8,231)
Taxation and dividends paid (17,419) (14,914) (26,855)
Net cash from operating
Activities 158,900 15,917 (8,627)
Fixed assets (net) (71,115) (32,826) (58,283)
Investment (net) (15,698) (15,408) (27,369)
Financing activities 18,501 (3,403) 2,411
Net increase/(decrease)
in cash equivalents 90,588 (35,720) (91,868)
INVESTMENTS
Unlisted shares at cost
and directors' valuation 65,005 38,416 59,941
Capital expenditure for
the period 84,786 40,304 85,068
Capital expenditure committed
or authorised 51,931 36,526 112,473
STATISTICS
Number of ordinary shares 69 119 591 69 119 591 69 119 591
Shares in issue 73 573 023 73 573 023 73 573 023
Less: Treasury shares 4 453 432 4 453 432 4 453 432
Earnings per share -
cents 33.2 30.0 42.0
Dividend cover 3.3 3.1 2.8
Dividends per share -
Cents 10.0 9.0 14.0
Interim 10.0 9.0 9.0
Final 5.0
Net asset value per
share - cents 652.5 625.6 636.2
Current ratio 1.0 1.1 1.0
STATEMENT OF CHANGES IN EQUITY Total Stated
Capital Reserves
Balance at 1 July 2000 468,070 292,529 175,541
Retained earnings for the period 22,976 22,976
Dividends (6,912) (6,912)
Treasury shares (33,104) (33,104)
Closing balance 451,030 259,425 191,605
SEGMENTAL ANALYSIS
1.1 REVENUE
Construction 1,263,285 1,086,302 2,153,709
Manufacturing 301,393 297,764 554,755
Other 98,948 92,388 154,946
Total revenue 1,663,626 1,476,454 2,863,410
1.2 OPERATING PROFIT
Construction 34,562 23,935 37,722
Manufacturing (174) 10,362 4,638
Other 2,106 (1,395) 5,799
Total operating
Profit 36,494 32,902 48,159
* Note
The comparative income statement figures for the six months ended 31 December
1999 and the year ended 30 June 2000 have been restated as though the
unbundling of the group and the deregistration of SM Goldstein Limited and
Group Five Holdings Limited had taken place on 1 July 1999.
This has been done to better reflect the comparative results of the Group's
trading.
COMPLIANCE WITH GAAP
These interim results have been compiled in accordance with Statements of
Generally Accepted Accounting Practice in South Africa.
The same accounting policies and methods of computation have been used in the
preparation of these interim financial statements as were used in the annual
financial statements to 30 June 2000.
SALIENT FEATURES
Increase 2000 1999
Cash generated from operations - R000's 410.1% 180,713 35,428
Revenue - R000's 12.7% 1,663,626 1,476,454
Earnings per share - cents 10.7% 33.2 30.0
Interim dividend declared - cents 11.1% 10.0 9.0
COMMENTS
FINANCIAL OVERVIEW
Turnover is 12% higher than that of the comparable period in the previous
financial year and profit before tax increased by 13% to R32,100 (1999 :
R28,307). Cash generated from operations has increased strongly as a result of
effective management of working capital by the Group's construction activities.
RESTRUCTURING THE BUSINESS
During the period under review, Group Five embarked on a successful external
and internal restructuring plan aimed at improving efficiencies and creating
shareholder value.
Externally, the pyramid and low voting share control structures were eliminated
resulting in only one single listed entity, Group Five, having only one class
of share in issue.
This was achieved by converting the Group Five "N" shares to Group Five
ordinary shares, unbundling the underlying interests of Group Five Holdings and
SM Goldstein and terminating their listings.
Internally, the operational structures were flattened by removing divisions, an
internal quality audit on staff was done, poor performers were removed, new
appointments were made and the board is being strengthened.
OPERATIONAL REVIEW
It is pleasing to report a significant increase in the Group's order book.
The building activities continued to grow both turnover and profitability
having secured two large contracts - Didata's new head office in South Africa
and an $80 million housing project in Angola.
Engineering has returned to profitability. Civils has increased both its order
books and profitability, whilst Roads results for the period were adversely
affected by low margin contracts in Malawi which have now been substantially
completed.
DPI Plastics continues to grow its market share and is producing satisfactory
returns. Fundamental changes have been made to the management teams of the
Group's other manufacturing activities where trading conditions are being
hampered by factory inefficiencies. New managing directors have been appointed
in of each of these three business units.
The process of converting Everite Building Products into an asbestos-free
single site manufacturing business will be complete by June 2001 and
considerable benefits are expected to flow from that date.
Despite the substantial investment in the new manufacturing facility, the
Group's net cash position has strengthened as a result of the positive cash
flows during the last six months. The receipt during February 2001 of the
proceeds from the development of the new offices for ABN-AMRO Bank and Deutsche
Bank Securities has further improved the cash position of the Group.
PROSPECTS
Government's statement that it will increase infrastructure expenditure in its
drive to create jobs will benefit the construction industry if delivery becomes
a reality.
The noticeable improvement in the Group's secured order books is as a result of
the upswing in expenditure by the resource sector. Further growth in the order
book is also expected from opportunities outside of South Africa.
Given the above, the Board is confident that the Group's earnings for the next
six months should at least equal those of the six months under review.
DIVIDEND DECLARATION
The directors have declared an interim dividend of 10 cents per ordinary share
(1999 : 9 cents) payable to shareholders registered in the books of the company
at the close of business on Friday, 16 March 2001. Dividend cheques will be
posted to shareholders on or about 6 April 2001.
On behalf of the Board
M H LOMAS H C TURNER
21 February 2001
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