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Group Five Limited - Audited Results For The Year Ended 30 June 2002
GROUP FIVE LIMITED
Reg. No. 1969/000032/06
Share Code: GRF ISIN: ZAE000027405
Audited results for the year ended 30 June 2002
GROUP INCOME STATEMENT (R`000) AUDITED
Year ended 30 June
2002 2001
Revenue 4 020 756 3 167 000
Operating profit 124 573 80 136
Finance costs (26 397) (8 025)
Profit before taxation 98 176 72 111
Taxation (19 821) (21 378)
Profit after taxation 78 355 50 733
Minority interest (1 346) (3 672)
Attributable profit 77 009 47 061
After tax effect of
- Profit on disposal of
fixed assets and investments (5 876) (2 638)
Headline earnings 71 133 44 423
Operating profit is stated after charging:
Depreciation and amortisation 81 072 65 063
SUMMARISED CASH FLOW STATEMENT (R`000)
Cash flow from operating activities
Cash from operations 179 738 124 781
Working capital changes (47 462) 271 763
Cash generated from operations 132 276 396 544
Finance costs (26 397) (8 025)
Taxation and dividends paid (61 953) (33 547)
Net cash from operating activities 43 926 354 972
Fixed assets (net)
(excluding non-cash items) (123 202) (175 844)
Investments (net) (9 540) (17 826)
Financing activities 19 908 (22 882)
Net (decrease)/increase
in cash equivalents (68 908) 138 420
SEGMENTAL ANALYSIS (R million)
Revenue
Construction 3 180 2 324
Manufacturing 612 586
Operations and maintenance 197 150
Other 32 107
4 021 3 167
Operating profit
Construction 137 62
Manufacturing (52) (5)
Operations and maintenance 25 9
Other 15 14
125 80
STATEMENT OF CHANGES IN EQUITY (R`000)
Balance at 1 July 322 775 338 854
Change in accounting
policies (refer below) - (52 772)
Attributable profit for the year 77 009 47 061
Dividends paid (17 971) (10 368)
Balance at 30 June 381 813 322 775
ABRIDGED GROUP BALANCE SHEET (R`000) AUDITED
Year ended 30 June
2002 2001
ASSETS
Non-current assets
Fixed assets 449 477 385 017
Investments - associates 16 652 24 964
- other 78 793 56 827
544 922 466 808
Current assets
Bank balances and cash 299 873 228 816
Other current assets 1 428 161 947 360
1 728 034 1 176 176
Total assets 2 272 956 1 642 984
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders interest 381 813 322 775
Minority interest 5 949 3 882
387 762 326 657
Non-current liabilities
Interest bearing borrowings 50 803 30 895
Provision for post-employment
obligations 55 296 61 346
Deferred taxation - 2 191
106 099 94 432
Current liabilities
Accounts payable and other current
liabilities 1 567 668 1 150 433
Bank overdrafts and short-term
borrowings 211 427 71 462
1 779 095 1 221 895
Total equity and liabilities 2 272 956 1 642 984
CAPITAL EXPENDITURE
- Capital and investment
expenditure for the year 172 046 202 807
- Capital expenditure
committed or authorized 77 303 110 389
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 267 million as at 30 June 2002 as compared
to R1 266 million at 30 June 2001. The directors do not believe any
exposure to loss is likely.
STATISTICS
Number of ordinary shares 69 119 591 69 119 591
Shares in issue 73 573 023 73 573 023
Less: Treasury shares 4 453 432 4 453 432
Earnings per share/fully diluted
earnings per share (cents) 111,4 68,1
Headline earnings per share (cents) 102,9 64,3
Dividend cover - old accounting policy 3,6 2,7
Dividends per share
(old accounting policy) - cents 31,0 25,0
Interim 11,0 10,0
Final 20,0 15,0
Dividend cover - new accounting policy 4,3 4,6
Dividends per share
(new accounting policy) - cents 26,0 15,0
Interim 11,0 10,0
Final 15,0 5,0
Net asset value per share - cents 552,4 467,0
Current ratio 1,0 1,0
Salient Features
Change 2002 2001
Revenue - R000`s + 27,0% 4 020 756 3 167 000
Earnings per share - cents + 63,6% 111,4 68,1
Headline earnings per share - cents + 60,0% 102,9 64,3
Dividends per share - cents
(under new accounting policy) + 73,3% 26,0 15,0
Dividends per share - cents
(under previous accounting policy) + 24,0% 31,0 25,0
COMMENTS
Financial Overview
Revenue increased by 27% to R4,0 billion (2001: R3,2 billion),
earnings per share by 64% to 111,4 cents (2001: 68,1 cents) and
headline earnings per share by 60% to 102,9 cents (2001: 64,3
cents).
The significant increase of 56% in operating profit to R124,6
million was due to an outstanding performance by the Group`s
construction activities. The profit before tax increase of 36% to
R98,1 million was achieved after charging finance costs of R26,4
million (2001: R8,0 million). The increase in finance costs was
mainly due to an increase in working capital and the effect of the
interest rate increases announced during the past year.
A final dividend of 20 cents was declared. In terms of the Group`s
policy, total dividends of 31 cents relating to the year under
review are approximately 3,6 times covered.
OPERATIONAL REVIEW
Construction
With the exception of the roads business, all of the Group`s
construction activities performed extremely well. Revenue increased
by 37% to R3,2 billion and operating profit by 121% to R137 million.
The overall contract margins improved due to better overhead
recoveries resulting from the increase in revenue, improved
operating performances due to good project management and cost
control, together with both realised and unrealised foreign exchange
gains. Buildings achieved strong growth in revenue and doubled
profitability during the year with good all round performances, both
locally and cross-border.
Civils significantly increased revenue and doubled profitability,
mainly as a result of increased expenditure by the resource and
industrial sectors.
Engineering`s revenue and profitability grew appreciably in the year
with more than 60% of the work being undertaken outside of South
Africa.
Roads revenue remained constant, but operating profit was adversely
affected by a few problematic contracts. Working capital increased
due to contractually adverse payment terms on a number of projects
which should be completed by the end of the 2002 calendar year.
Manufacturing
Overall manufacturing revenue increased by 4% but, due to losses in
AC Pipes and Everite Building Products, posted a disappointing loss
of R52 million.
The demand for fibre cement pipes continued to decline and a
decision was taken in March 2002 to downsize the operations of AC
Pipes. The relevant factory assets have been fully depreciated and
no future losses will therefore be incurred.
Everite Building Products experienced another difficult year
following the single site integration, with production levels still
inadequate to meet demand. This resulted in a significant under-
recovery of fixed costs and a large operating loss. However, the
benefits of the appointment of a new managing director in April 2002
and other senior staff appointments are now becoming evident with
the company poised to show a significant improvement in performance
in the first quarter of the new financial year.
Vaal Sanitaryware has achieved a pleasing turnaround and DPI
Plastics, in which the Group has a 40% share, delivered in line with
expectations.
The Group is satisfied that Everite`s management of asbestos and
health issues has exceeded legal requirements. Costs associated with
the company`s past use of asbestos, including a comprehensive health
surveillance service, a voluntary disability pension policy for
current and past employees and advisory services for the installed
base of asbestos containing products, have been fully provided for.
Isolated claims for damages by third parties are being vigorously
defended and the Group is confident that the process is being
managed well.
Operations and maintenance and other
During the year Intertoll exceeded both its revenue and profit
targets. Intertoll managed to grow its South African activities,
expand its European presence and develop the Intertoll brand and
business portfolio in India.
Infrastructural Development Services was extremely active during the
year and met its targeted profitability levels.
PROSPECTS
The restructuring process started in 2000, which focused the future
direction of the Group in terms of strategy, structure, roles and
people, has, in the main, been implemented. This has resulted in an
incentivised, accountable team with strong deliverables and a clear
focus on ensuring future growth.
The order book of R3,0 billion (2001: R2,5 billion) for next year is
healthy, with a number of potential contracts in the pipeline.
The favourable business outlook, the benefits of implementing
significant change and the strong order book will result in a
further meaningful improvement in earnings in the new financial
year.
On behalf of the board
GM Thomas MH Lomas
21 August 2002
ACCOUNTING POLICIES AND AUDITORS
These results for the year ended 30 June 2002 are prepared in
accordance with South African Statements of Generally Accepted
Accounting Practice (SA GAAP). The accounting policies used are
consistent with the prior year except for the adoption of: AC116
(revised) "Employee Benefits" and AC107 (revised) "Events after the
Balance sheet date".
The adoption of AC116 has resulted in the Group accruing for 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 financial year`s attributable profit was a decrease of R5,3
million, and on the prior financial year`s ordinary shareholders`
interest a decrease of R56,2 million.
The adoption of AC107 has resulted in the Group accounting for
dividends when declared. Previously dividends paid were accrued in
the year to which they related. This change resulted in an increase
in the opening prior year distributable reserves of R 3,5 million.
The auditors of Group Five Limited are PricewaterhouseCoopers Inc.,
Chartered Accountants (SA), Registered Accountants and Auditors.
Their unqualified audit opinion is available from the company`s
registered office.
Dividend Declaration
The directors have declared a final dividend of 20 cents per
ordinary share (2001: 15 cents) payable to shareholders. In order to
comply with the requirements of STRATE the relevant details are:
Event Date
Last day to trade
(Cum-dividend) 11 October 2002
Shares to commence trading
ex dividend 14 October 2002
Record date
(date shareholders recorded in books) 18 October 2002
Payment date 21 October 2002
No share certificates may be dematerialised or rematerialised
between 14 October 2002 and 18 October 2002 both dates inclusive.
Registered Office
371 Rivonia Boulevard, Rivonia, 2128
Tel: (011) 806 0111 Fax: (011) 803 1324
E-mail: info@g5.co.za Website: www.g5.co.za
Date: 22/08/2002 08:01:00 AM Supplied by www.sharenet.co.za
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