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Group Five Limited - Interim Results

Release Date: 21/02/2002 08:01
Code(s): GRF
Wrap Text
Group Five Limited
JSE Share Code: GRF
ISIN Code: ZAE000027405
GROUP INCOME STATEMENT (R'000)

UNAUDITED AUDITED Six months Year ended ended 31 Dec 30 June 2001 2000 2001
Revenue 1 953 848 1 663 626 3 167 000 Operating 49 727 35 607 84 455 profit
Finance costs (9 003) (4 394) (8 025) Profit before 40 724 31 213 76 430 taxation
Taxation (10 352) (8 838) (21 144) Profit after 30 372 22 375 55 286 taxation
Minority (1 695) (136) (3 672) interest
Attributable 28 677 22 239 51 614 profit for the period Operating profit is stated after charging:
Depreciation 35 991 30 567 65 063 and amortisation Profit on disposal of fixed
assets and 2 271 1 750 3 769 investments ABRIDGED GROUP BALANCE SHEET (R'000) ASSETS Non-current assets
Fixed assets 420 792 300 101 385 017 Investments in 20 917 23 653 24 964 associates
Other 83 645 65 005 66 983 investments
525 354 388 759 476 964 Current assets
Bank balances 332 328 146 278 228 816 and cash
Other current 967 619 775 220 937 204 assets
1 299 947 921 498 1 166 020 Total assets 1 825 301 1 310 257 1 642 984 EQUITY AND LIABILITIES Capital and reserves
Ordinary 364 599 325 631 343 525 shareholders' interest
Minority 5 068 230 3 882 interest
369 667 325 861 347 407 Non-current liabilities
Interest 33 824 27 706 30 895 bearing borrowings
Provision for 42 000 41 000 41 500 post-employment obligations
Deferred 4 076 12 891 2 191 taxation
79 900 81 597 74 586 Current liabilities
Accounts 1 156 723 800 888 1 124 404 payable
Bank overdrafts 211 246 94 999 86 219 and short-term borrowings
Shareholders 7 765 6 912 10 368 for dividend
1 375 734 902 799 1 220 991 Total equity 1 825 301 1 310 257 1 642 984 and liabilities SUMMARISED CASH FLOW STATEMENT (R'000) Cash flow from operating activities
Cash from 75 267 66 674 131 920 operations
Working capital 141 114 039 265 737 changes
Cash generated 75 408 180 713 397 657 from operations
Finance cost (9 003) (4 394) (8 025) Taxation and (27 669) (17 419) (34 658) dividends paid
Net cash from 38 736 158 900 354 974 operating activities
Fixed assets (60 816) (71 115) (175 844) (net) (excluding non- cash items)
Investments (12 613) (15 698) (17 828) (net)
Financing 2 929 18 501 (22 882) activities
Net (31 764) 90 588 138 420 (decrease)/incr ease in cash equivalents STATISTICS
Number of 69 119 591 69 119 591 69 119 591 ordinary shares
Shares in issue 73 573 023 73 573 023 73 573 023 Less: Treasury 4 453 432 4 453 432 4 453 432 shares Headline earnings per share - cents (Attributable profit adjusted for after tax profit
on disposal of 39.2 30.4 70.9 fixed assets and investments)
Basic and 41.5 32.2 74.7 diluted earnings per share-cents
Dividend cover 3.8 3.2 2.8 Dividends per share - cents
Interim 11.0 10.0 10.0
Final - - 15.0
Net asset value 527.5 471.1 497.0 per share - cents
Current ratio 0.9 1.0 1.0 STATEMENT OF CHANGES IN EQUITY (R'000)
Balance at 343 525 338 854 338 854 beginning of period
Change in - (28 550) (28 550) accounting policy
Attributable 28 677 22 239 51 614 profit for the period
Dividends paid (7 603) (6 912) (18 393) Closing balance 364 599 325 631 343 525 at end of period SEGMENTAL ANALYSIS (R'000) Revenue
Construction 1 546 002 1 141 682 2 349 659 Manufacturing 291 082 301 393 585 849 Other 116 764 220 551 231 492 Total revenue 1 953 848 1 663 626 3 167 000 Operating profit
Construction 67 408 30 797 59 762
Manufacturing (31 116) (1 061) 1 561
Other 13 435 5 871 23 132
Total operating 49 727 35 607 84 455 profit CAPITAL EXPENDITURE
Capital and 84 383 84 786 202 807 investment expenditure for the period
Capital 49 178 51 931 110 38 expenditure committed/autho rised CONTINGENCIES
There are no legal or arbitration proceedings including any that are pending or that the Group is aware of or any obligations relating thereto, that have had or that may have, in the opinion of the directors, a material effect on the Group's financial position and accordingly no contingencies or provisions have been raised therefore.
Total guarantees given to third parties on behalf of subsidiary companies amounted to R1,458 million as at 31 December 2001 as compared to R1,266 million at 30 June 2001. The directors do not believe any exposure to loss is likely. ACCOUNTING POLICIES
These consolidated condensed interim financial statements are prepared in accordance with AC127 and Schedule 4 of the South African Companies Act. The accounting policies used in the preparation of the interim financial statements are consistent with those used in the annual financial statements for the financial year ended 30 June 2001 except for the adoption of AC116 (revised) "Employee Benefits".
The adoption of this accounting standard has resulted in the Group accruing for certain post employment medical and pension costs for certain of its retirees as well as other current employment costs over the period of employment, as opposed to accounting for these costs on a cash paid basis. The effect of the adoption of this accounting standard on the prior
interim's and prior financial year's attributable profit was a decrease of R0,4million and R0,7 million, respectively, and on the prior interim's and prior financial year's ordinary shareholders' interest a decrease of R28,8 million and R29,2 million, respectively.
In addition, the comparative consolidated condensed interim financial statements have also been adjusted from those previously presented to effect the change in accounting policy, noted below, which was adopted in the annual financial statements for the year ended 30 June 2001.
Previously property was carried at revalued amount; property is now
classified as either investment property, which is accounted for at fair value, or owner occupied property which is accounted for at depreciated cost; the effect of this change on the prior interim's attributable profit was a decrease of R0,4 million and on the prior interim's ordinary
shareholders interest a decrease of R96,5 million. COMMENTS Financial Overview
The continued growth of the Group in its target markets resulted in a revenue increase of 17.4% from R 1 663,6 million to R 1 953,8 million and an increase in operating profit of 39.6% from R 35,6 million to R 49,7 million when compared to the prior interim period. Attributable profit increased 29.3% from R 22,2 million to R 28,7 million, despite the 104.8% increase in finance costs, which resulted from a significant increase in working capital in the Road's business. Operational Review Construction
Construction, which contributed approximately 79% to the Group revenue, experienced strong revenue growth, particularly in activities outside of South Africa which, as a result of the depreciating Rand, resulted in increased margins.
Buildings was a strong performer contributing approximately 50% of the total construction turnover. Buoyed by a good performance in Angola, higher margins were achieved.
The Civils business showed strong growth in revenue and profitability as a result of an increase in projects, mainly in the mining sector.
An improved operational focus resulted in increased revenue and profitability in the Engineering business.
The Roads business operated in difficult market conditions and, despite a decrease in turnover and an abnormally high investment in working capital, margins improved as a result of hard currency earnings for work obtained outside of South Africa. Active steps are being taken to reduce the working capital to acceptable levels. Manufacturing
Manufacturing contributed approximately 15% to the Group revenue.
The results from Everite and AC Pipes were disappointing. The return to profitability at Everite was not achieved due to ongoing commissioning problems with the single site project. A decision was taken to extend the December 2001 shut down at Everite in order to accelerate the refurbishment of the plant. The benefits of the single site project and refurbishment will only become evident during the next six months.
AC Pipes' infrastructural development market experienced a further downturn and in spite of cost saving measures adopted, recorded a higher than
expected loss. The business will continue to be downscaled.
The above losses were offset to an extent by an improved performance from Vaal Sanitaryware, which returned to profitability through increased
production. Despite severe competition, DPI matched its prior period performance in turnover and marginally increased profitability.
The attention of shareholders is drawn to recent statements in the media speculating on the probability of litigation against companies involved in the mining of asbestos and the manufacture of asbestos based products. Everite, a company of this Group has also been a target of this speculation. Everite has focused on mitigating risks regarding asbestos related issues over a number of decades. The view of the directors regarding litigation is contained in the contingencies' note to these interim financial statements. Other
Operations and Maintenance and Infrastructural Development Services contributed approximately 6% to Group revenue.
The profitability of the Group's other businesses improved due to an
appreciation in the value of investment properties held within
Infrastructural Development and the continued growth of both turnover and profitability of the Intertoll business. Prospects
While an order book in excess of R 3 billion is encouraging, the problems in both Everite and AC Pipes remain a cause for concern in the short to medium term. The Board, however, remains confident that the decision to consolidate Everite on a single site was the correct one and that the business will return to profitability.
All things considered, the Board is confident that the Group's earnings over the second six months should exceed those of the first six months. On behalf of the Board GM Thomas MH Lomas 21 February 2002 Dividend declaration
The directors have declared a final dividend of 11 cents per ordinary share (2000: 10 cents) payable to shareholders. In order to comply with the requirements of STRATE the relevant details are: Event: Date: Last day to trade Friday 8 March 2002 (Cum-dividend)
Shares to commence trading Monday 11 March 2002 ex-dividend
Record date Friday 15 March 2002 (date shareholders recorded in books)
Payment date Monday 18 March 2002
No share certificates may be dematerialised or rematerialised between Monday, 4 March 2002 and Friday 15 March 2001, both dates inclusive.

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