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GROUP FIVE LIMITED - INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER
2002
Group Five Limited
Reg. No. 1969/000032/06
Share Code: GRF ISIN: ZAE 000027405
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
Interim results for the six months ended 31 December 2002
Salient Features
Change 2002 2001
Revenue - R000`s +8,3% 2 115 6331 953 848
Earnings per share - cents +34,9% 56,0 41,5
Headline earnings per share - cents +50,4% 38,5 25,6
Dividend per share - cents +27,3% 14,0 11,0
GROUP INCOME STATEMENT (R`000)
UNAUDITED AUDITED
Six months Year ended
ended 31 Dec 30 June
2002 2001 2002
Revenue 2 115 633 1 953 848 4 020 756
Operating profit 63 749 49 727 124 573
Finance costs (13 926)(9 003) (26 397)
Profit before taxation 49 823 40 724 98 176
Taxation (9 965) (10 352) (19 821)
Profit after taxation 39 858 30 372 78 355
Minority interest (1 185) (1 695) (1 346)
Attributable profit for the
period 38 673 28 677 77 009
Deduct after tax effect of:
Fair value increase in
investment property (7 684) (8 683) (13 936)
Profit on disposal of
fixed assets (4 376) (2 271) (5 876)
Headline earnings 26 613 17 723 57 197
Operating profit is stated after
charging/(crediting):
Depreciation and amortisation 39 525 35 991 81 072
Foreign exchange losses/(gains) 2 621 (43 227) (64 201)
ABRIDGED GROUP BALANCE SHEET (R`000)
ASSETS
Non-current assets
Fixed assets 467 087 420 792 449 477
Investments in associates 16 463 20 917 16 652
Other investments 83 242 83 645 78 793
566 792 525 354 544 922
Current assets
Bank balances and cash 337 629 332 328 299 873
Other current assets 1 185 495 967 619 1 428 161
1 523 124 1 299 947 1 728 034
Total assets 2 089 916 1 825 301 2 272 956
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders`
interest 406 662 372 364 381 813
Minority interest 8 182 5 068 5 949
414 844 377 432 387 762
Non-current liabilities
Interest bearing borrowings 49 609 33 824 50 803
Provision for post-employment
obligations 53 207 42 000 55 296
Deferred taxation - 4 076 -
102 816 79 900 106 099
Current liabilities
Accounts payable 1 441 289 1 118 612 1 548 590
Taxation 20 691 38 111 19 078
Project finance - 29 585 104 321
Bank overdrafts 110 276 181 661 107 106
1 572 256 1 367 969 1 779 095
Total equity and liabilities 2 089 916 1 825 301 2 272 956
SUMMARISED CASH FLOW STATEMENT (R`000)
Cash flow from operating activities
Cash from operations 103 274 75 267 179 738
Working capital changes 135 365 141 (47 462)
Cash generated from operations 238 639 75 408 132 276
Finance costs (13 926) (9 003) (26 397)
Taxation and dividends paid (22 176) (27 669) (61 953)
Net cash from operating
activities 202 537 38 736 43 926
Fixed assets (net)
(excluding non-cash items) (57 135) (60 816) (123 202)
Investments (net) (4 262) (12 613) (9 540)
Financing activities (106 554) 32 514 124 229
Net increase/(decrease) in
cash equivalents 34 586 (2 179) 35 413
STATISTICS
UNAUDITED AUDITED
Six months Year ended
ended 31 Dec 30 June
2002 2001 2002
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
Headline earnings per share
- cents 38,5 25,6 82,8
Earnings per share - cents
(basic and fully diluted) 56,0 41,5 111,4
Dividend cover 4,0 3,8 3,6
Dividend per share - cents 14,0 11,0 31,0
Interim 14,0 11,0 11,0
Final - - 20,0
Net asset value per share
- cents 588,35 38,7 552,4
Current ratio 0,97 0,95 0,96
STATEMENT OF CHANGES IN EQUITY (R`000)
Balance at beginning of
period 381 813 354 055 322 775
Attributable profit for
the period 38 673 28 677 77 009
Dividends paid (13 824) (10 368) (17 971)
Closing balance at end
of period 406 662 372 364 381 813
SEGMENTAL ANALYSIS (R`million)
Revenue
Construction 1 672 1 546 3 180
Manufacturing 319 291 612
Operations and Maintenance 106 86 197
Infrastructural
Development Services 19 31 32
Total revenue 2 116 1 954 4 021
Operating profit
Construction 40 67 137
Manufacturing 13 (31) (52)
Operations and Maintenance 4 6 25
Infrastructural Development
Services 7 8 15
Total operating profit 64 50 125
CAPITAL EXPENDITURE (R`000)
Capital and investment expenditure
for the period 85 611 84 383 172 046
Capital expenditure
committed/authorized 62 436 49 178 77 303
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 therefor.
Total guarantees given to third parties on behalf of subsidiary companies
amounted to R1,1 billion as at 31 December 2002 as compared to R1,2 billion
at 30 June 2002. 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 2002. The unaudited results for the six
months ended 31 December 2001 have been adjusted for the change in
accounting policy regarding the recognition of dividends paid. In terms of
this accounting policy dividends paid are only accrued when approved by the
Board of Directors. From a dividend per share point of view disclosure has
been provided based on the period to which the dividends relate.
The calculation of all headline earnings presented is based on the
Interpretation of Statement of Investment Practice No. 1 issued by the South
African Institute of Chartered Accountants in December 2002.
COMMENTS
Financial Overview
Revenue increased by 8% to R2,1 billion (2001: R1,9 billion), earnings per
share by 35% to 56 cents (2001: 41,5 cents) and headline earnings by 50% to
38,5 cents (2001: 25,6 cents).
The 28% increase in operating profit to R63,7 million (2001: R49,7 million)
was due to a significant improvement in the Manufacturing results. Finance
costs increased due to higher levels of borrowings and interest rates
relative to the comparative prior period.
An interim dividend of 14 cents per share was declared, up 3 cents from the
previous interim dividend of 11 cents per share.
OPERATIONAL REVIEW
Construction
Although Construction revenue increased by 8% to R1,7 billion (2001: R1,5
billion), operating profit decreased from R67 million to R40 million
primarily due to a poor performance by Roads. The strengthening of the SA
Rand resulted in foreign exchange losses of R2,6 million compared to gains
of R43 million in the comparative prior period.
The consolidation of the Roads operations into a single business unit on a
single site was completed during the current period. The costs of the
consolidation, together with the run-out costs on problematic contracts
completed during the period, resulted in a larger than expected loss. The
appointment of a new managing director from within the Group during
December, coupled with most of the problematic contracts being completed,
should lead to an improvement in Roads` performance in the next six months.
Both Civils and Engineering maintained the levels of profitability achieved
in the comparative prior period due to continued levels of operational
efficiencies in Civils and an increase in turnover in the case of
Engineering.
Buildings performed well but did not match the results of the previous
period due to exchange losses and delays in contract awards in Angola.
However, over-border activities continue to increase which should be
positive in the medium term.
Manufacturing
Manufacturing revenue increased by 10% to R319 million (2001: R291 million)
and operating results improved significantly from a loss of R31 million to a
profit of R13 million.
In Everite Building Products, the benefits of the appointment of a new
managing director and senior staff during 2002 are evident in the
significant reduction in operating losses achieved during the period.
Production has increased, wastage decreased, and costs have been reduced
despite incurring retrenchment costs of R6 million during the period. All
Manufacturing operations are now asbestos free and new products are being
developed for both the local and offshore markets.
Vaal Sanitaryware has continued to improve its operational efficiencies.
This, together with enhanced levels of service to customers, has resulted in
a further improvement in operating profit relative to the comparative prior
period. The benefits of the introduction of new technologies covering high
pressure casting and drying currently being installed will further enhance
future performance.
DPI Plastics performed well during the period, increasing both sales and
operating profit, and the investment in the Gemini Biax project should
produce benefits in the second quarter of 2003.
Operations and Maintenance
Intertoll`s revenue for the period was below expectation due to delays in
equipment supply on new projects. This resulted in a decrease in operating
profit relative to the comparative prior period.
Infrastructural Development Services
Infrastructural Development Services achieved profitability in line with
expectations and is now well positioned with several high-quality clients.
PROSPECTS
The future for Manufacturing is positive given the efficiencies now being
achieved in the manufacturing processes and the relatively stable market
conditions.
Infrastructural spend coupled with expenditure by the resource and
industrial sectors presents strong growth prospects for the construction
sector. With an order book in excess of R3 billion the outlook for
Construction is also positive. In the short term, delays in contract awards,
particularly in Angola, and uncertainties surrounding the future strength of
the SA Rand, remain a cause for concern.
However, the Board is confident that the Group`s earnings over the next six
months will exceed those of the comparable period in the prior year.
On behalf of the board
GM Thomas MH Lomas
11 February 2003
Dividend Declaration
The directors have declared an interim dividend of 14 cents per ordinary
share (2001: 11 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) 4 April 2003
Shares to commence trading
ex-dividend 7 April 2003
Record date
(date shareholders recorded in books)11 April 2003
Payment date 14 April 2003
No share certificates may be dematerialised or rematerialised between
7 April 2003 and 11 April 2003, both dates inclusive.
Date: 12/02/2003 08:29:00 AM Supplied by www.sharenet.co.za
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