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Group Five Limited - Interim results for the six months ended 31 December 2003

Release Date: 19/02/2004 08:00
Code(s): GRF
Wrap Text

Group Five Limited - Interim results for the six months ended 31 December 2003 Group Five Limited Incorporated in the Republic of South Africa Reg. no. 1969/000032/06 Share code: GRF ISIN: ZAE 000027405 371 Rivonia Boulevard, Rivonia PO Box 5016, Rivonia 2128, South Africa Tel +27 11 806 0111 Fax +27 11 806 0187 Email info@g5.co.za Website www.g5.co.za Interim results for the six months ended 31 December 2003 A Broad-based Offer Integrated products and services across the infrastructure value chain Infrastructural Development Services Manufacturing Construction Operations & Maintenance GROUP INCOME STATEMENT (R"000) UNAUDITED AUDITED
Six months Year ended ended 31 Dec 30 June 2003 2002 2003 Revenue 2 052 427 2 115 633 4 100 361 Operating profit 71 989 63 749 160 127 Finance costs (17 008) (13 926) (28 530) Profit before taxation 54 981 49 823 131 597 Taxation (10 996) (9 965) (30 463) Profit after taxation 43 985 39 858 101 134 Minority interest (250) (1 185) (4 366) Income attributable to ordinary shareholders 43 735 38 673 96 768 Deduct after tax effect of: Fair value increase in investment property (3 587) (7 684) (8 925) Profit on disposal of fixed assets (10 098) (4 376) (10 922) Headline earnings 30 050 26 613 76 921 Operating profit is stated after charging/(crediting): Depreciation and amortisation 49 251 39 525 88 578 Foreign exchange losses/(gains) 18 274 2 621 (2 391) ABRIDGED GROUP BALANCE SHEET (R"000) ASSETS Non-current assets Fixed assets 524 824 467 087 509 425 Investments in associates 6 040 16 463 14 659 Other investments 82 061 83 242 80 048 612 925 566 792 604 132
Current assets Bank balances and cash 199 200 337 629 263 618 Other current assets 1 158 932 1 185 495 1 225 403 1 358 132 1 523 124 1 489 021
Total assets 1 971 057 2 089 916 2 093 153 EQUITY AND LIABILITIES Capital and reserves Ordinary shareholders" interest 482 917 406 662 455 080 Minority interest 10 149 8 182 9 899 493 066 414 844 464 979 Non-current liabilities Interest-bearing borrowings 113 890 49 609 60 832 Provision for post-employment Obligations 44 443 53 207 46 199 158 333 102 816 107 031 Current liabilities Accounts payable 1 105 531 1 441 289 1 267 106 Taxation 12 218 20 691 17 862 Bank overdrafts 201 909 110 276 236 175 1 319 658 1 572 256 1 521 143
Total equity and liabilities 1 971 057 2 089 916 2 093 153 SUMMARISED CASH FLOW STATEMENT (R"000) Cash flow from operating activities Cash from operations 108 102 103 274 216 803 Working capital changes (95 107) 135 365 (87 823) Cash generated from operations 12 995 238 639 128 980 Finance costs (17 008) (13 926) (28 530) Taxation and dividends paid (32 541) (22 176) (53 131) Net cash from operating activities (36 554) 202 537 47 319 Fixed assets (net) (50 545) (57 135) (121 398) Investments (net) 5 639 (4 262) 3 047 Financing activities 51 302 (106 554) 10 029 Net (decrease)/increase in cash equivalents (30 158) 34 586 (61 003) STATISTICS UNAUDITED AUDITED
Six months Year ended ended 31 Dec 30 June 2003 2002 2003 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 43,5 38,5 111,3 Earnings per share - cents (basic and fully diluted) 63,3 56,0 140,0 Dividend cover 4,2 4,0 3,8 Dividend per share - cents 15,0 14,0 37,0 Interim 15,0 14,0 14,0 Final - - 23,0 Net asset value per share - cents 698,7 588,3 658,4 Current ratio 1 1 1 STATEMENT OF CHANGES IN EQUITY (R"000) Balance at beginning of period 455 080 381 813 381 813 Attributable profit for the period 43 735 38 673 96 768 Dividends paid (15 898) (13 824) (23 501) Closing balance at end of period 482 917 406 662 455 080 SEGMENTAL ANALYSIS (R"million) Revenue Construction 1 531 1 672 3 204 Manufacturing 359 319 631 Operations and Maintenance 147 106 234 Infrastructural Development Services 15 19 31 Total revenue 2 052 2 116 4 100 Operating profit Construction 28 40 91 Manufacturing 35 13 34 Operations and Maintenance 8 4 16 Infrastructural Development Services 1 7 19 Total operating profit 72 64 160 CAPITAL EXPENDITURE (R"000) Capital and investment expenditure for the period 75 106 85 611 162 824 Capital expenditure committed/authorised 37 486 62 436 53 420 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. Total guarantees given to third parties on behalf of subsidiary companies amounted to R940 million as at 31 December 2003 as compared to R1 115 million at 30 June 2003. The directors do not believe any exposure to loss is likely. ACCOUNTING POLICIES These consolidated condensed interim financial statements are prepared in accordance with the Statements of South African Generally Accepted Accounting Practice, 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 2003. From a dividend per share point of view disclosure has been provided based on the period to which the dividends relate. SALIENT FEATURES Change 2003 2002 Revenue - R000"s (3%) 2 052 427 2 115 633 Earnings per share - cents 13% 63,3 56,0 Headline earnings per share - cents 13% 43,5 38,5 Dividend per share - cents 7% 15,0 14,0 COMMENTS Financial Overview Despite a 3% decrease in revenue to R2,0 billion (2002: R2,1 billion) earnings per share increased by 13% from 56,0 cents to 63,3 cents per share. The increase in earnings per share represents the fourth successive period of earnings growth. This has been achieved through the Group"s strategy of restructuring into a properly positioned, broad-based portfolio of businesses to buffer tough market conditions in any one sector. During the period under review the Rand continued to strengthen, adversely affecting cross-border revenue by R100 million and resulting in exchange losses of R18,3 million (2002: R2,6 million). The strengthening of the Rand also resulted in a slowdown in infrastructure spend by the resources sector, with many projects either being cancelled or deferred. In spite of these adverse external conditions, operating profit increased by 13% to R71,9 million (2002: R63,7 million). Working capital increased due to delays in payments for work done, resulting in an increase in finance costs. Strict disciplines have been implemented within the construction business units to reduce working capital levels. An interim dividend of 15 cents per share (2002: 14 cents per share) has been declared resulting in the dividend being 4,2 times covered. Operational Review Construction Construction revenue decreased by 8% to R1,5 billion as a result of the effect of the strengthening of the Rand on cross-border contracts and the general slowdown in infrastructure spend. Operating profit decreased by 30% from R40 million to R28 million. After adjusting for the fluctuation in exchange rates, the underlying operating profit in construction showed a 10% improvement. Building revenue and operating profit both increased in line with expectations due to successfully executing both local and cross-border contracts. As expected, Roads revenue decreased following the downsizing of its activities. In addition, operating losses persisted on a number of contracts, which have now been completed. The full effect of the downsizing will become evident during the next six months, with a reduction in revenue and in the level of capital employed. Civils was affected by the decline in mining infrastructure spend, which led to a decrease in revenue. However, operating profit remained constant due to increased contract efficiencies. Engineering is heavily reliant on the resources sector and, because of project deferments and cancellations, both revenue and operating profit have been adversely affected. Manufacturing Manufacturing revenue increased by 12% to R359 million (2002: R319 million). The increase in revenue, coupled with significantly improved performances by all manufacturing activities, resulted in an improvement in operating profit of 169% to R35 million (2002: R13 million). Everite Building Products, in line with its strategic objective, continued to improve its factory efficiencies and achieved growth in operating profits during the current period compared to a loss in the comparative period. Vaal"s revenue remained constant, although operating profit continued to increase due to the introduction of upgraded technology and ongoing factory efficiencies. DPI Plastics increased both revenue and operating profit significantly. This was achieved through increased sales by the company"s black economic empowerment joint ventures and lower than expected raw material costs. Operations and Maintenance Operations and Maintenance revenue increased by 39% to R147 million (R106 million), mainly due to the improvement at Intertoll where both revenues and operating profits increased substantially. Water and Sanitation Services continued to perform in line with expectations. Infrastructural Development Services Infrastructural Development Services was adversely affected by the deferment of major projects in the mining sector. Revenue decreased and operating profit was significantly down, as all project related costs incurred during the period were written off. To address this the business unit will be diversifying to expand on clients outside the mining sector. Prospects The deferment of expenditure by the resource sector has impacted both Civils and Engineering and it is unlikely that this situation will change in the short term. The Group is therefore actively pursuing opportunities elsewhere in Africa, as well as in the Middle East. Opportunities for Building and Roads continue to be explored within South Africa. The Group"s order book of R3,1 billion remains constant with the previous year. However with Roads now downsized, the Manufacturing operations continuing to improve their profitability and the possibility that the Rand may further weaken, the Board believes that the Group should have meaningful earnings growth for the year. By order of the Board GM Thomas MH Lomas Chairman Chief Executive Officer 18 February 2004 Dividend Declaration The directors have declared an interim dividend of 15 cents per ordinary share (2002: 14 cents) payable to shareholders. In order to comply with the requirements of STRATE the relevant details are: Event Date Last day to trade 7 May 2004 (Cum-dividend) Shares to commence trading 10 May 2004 ex-dividend Record date 14 May 2004 (date shareholders recorded in books) Payment date 17 May 2004 No share certificates may be dematerialised or rematerialised between 10 May 2004 and 14 May 2004, both dates inclusive. Sponsor Nedbank Corporate Date: 19/02/2004 08:00:08 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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