GRF - Group Five Limited - Revised trading update

GRF - Group Five Limited - Revised trading update                               
Group Five Limited                                                              
(Incorporated in the Republic of South Africa)                                  
(Registration Number 1969/000032/06)                                            
Share code: GRF  ISIN: ZAE000027405                                             
("Group Five" or "the group")                                                   
Revised Trading Update                                                          
Shareholders are referred to the trading update released on SENS on 18          
January 2011 ("the previous trading update"). Whilst the group`s Construction,  
Manufacturing and Concessions businesses have performed in line with            
expectations, further adverse cyclical and fundamental changes in the           
Construction Materials markets, particularly in the aggregates and readymix     
markets, have occurred.  This resulted in the group taking a revised and more   
conservative view with respect to both the future of this cluster and the value 
of the long term assets, including intangibles, on its balance sheet for this   
cluster. The operational performance for the period under review remains        
unchanged and in line with expectations. The asphalt, mobile crushing, sand and 
mining services operations have not been as materially affected.                
Management has concluded that the foreseeable market valuation of the aggregate 
and certain readymix assets is now considerably less than the current carrying  
amount on the balance sheet. The group therefore deems it responsible to further
impair the affected intangible and supporting fixed assets within this cluster. 
This requires an increase in the gross impairment of the Construction Materials 
assets from the R152m inferred in the previous trading update to a gross        
impairment of R550m (R536m net of taxation). This is in addition to the         
impairment of R326 million taken at 30 June 2010.                               
The impairment does not affect the headline earnings stated in the previous     
trading update. Fully diluted headline earnings per share ("FDHEPS") will still 
be between 15% and 25% lower (187 cents per share to 212 cents per share).      
Following the increased impairment, fully diluted earnings per share ("FDEPS")  
will be a loss of 328 cents per share and earnings per share ("EPS") will be a  
loss of 354 cents per share.                                                    
The impairment does not affect the group`s dividend policy, which is based on   
underlying operational performance and liquid resources.                        
The increased impairment was processed due to the following factors:            
Cyclical factors                                                                
Independent research confirms this down cycle as the most severe for decades.   
The dearth of workflow into the Gauteng construction sector has resulted in     
industry volumes and prices within the aggregates and readymix markets recently 
dropping substantially below the group`s most conservative forecast levels. The 
aggregates and readymix markets have seen declines of 30-70% in volume and 10-  
40% in price from the peak of the market in 2008.                               
Fundamental structural factors                                                  
Large quantities of low-cost mine dump rock have entered the aggregates market  
in the last few weeks and vast quantities are expected to follow. This will     
structurally change the business environment for an extended period. Cement     
producers, active in the readymix market, also continue to aggressively cut     
prices to protect cement powder volumes.                                        
Recovery plans have been intensified to mitigate the significant adverse shift  
in the market. These include severely reducing output in line with demand,      
changing product mix, closing, selling, consolidating and relocating multiple   
sites and possible divestment of business units.                                
The above information has not been reviewed or reported on by Group Five`s      
auditors. The group`s results will be released on SENS on 14th February 2011    
when the group will be updating the market on its business in a presentation in 
Johannesburg on the same day, and in Cape Town on 15th February 2011. The       
presentation will be available on the 14th February 2011 for all stakeholders on
the group`s website, www.groupfive.co.za.                                       
Johannesburg                                                                    
11 February 2011                                                                
Sponsor                                                                         
Nedbank Capital                                                                 
Date: 11/02/2011 12:00:06 Supplied by www.sharenet.co.za                     
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