Wrap Text
GRF - Group Five Limited - Unaudited interim group results for the six months
ended 31 December 2010
GROUP FIVE
Structured ingenuity
371 Rivonia Boulevard, Rivonia / PO Box 3951, Rivonia 2128, South Africa
Tel: +27 11 806 0111, 0860 55 55 56 / Fax: +27 11 803 5829
Email: info@groupfive.co.za / www.groupfive.co.za
Incorporated in the Republic of South Africa / Reg. no. 1969/000032/06
JSE code: GRF ISIN: ZAE000027405
Unaudited interim group results for the six months ended 31 December 2010
Revenue
(R`millions)
Down 16%
Dec 10 4 812
Dec 09 5 709
Operating profit before fair value adjustments and impairment adjustments
(R`millions)
Down 19%
Dec 10 324
Dec 09 399
Cash and cash equivalents
(R`millions)
Down 706
Dec 10 2 400
June 10 3 106
Fully diluted headline earnings per share
(cents)
Down 21%
Dec 10 198
Dec 09 249
Earnings per share after fair value adjustments and impairment adjustments
(cents)
Dec 10 354 loss
Dec 09 265 profit
Contribution of each business segment to group revenue and group operating
profit
4 x graphs
Commentary
INTRODUCTION
The period under review remained extremely volatile and unpredictable, with a
slow recovery evident in international markets, particularly in African
resources and Eastern European concessions, but a domestic market that is
regarded as the worst in decades. Against these difficult markets, the group
took a decision not to chase order book at the expense of cash and quality of
work, but rather to look for better margin work outside of South Africa,
preserve cash, cut costs rather than to carry them and not to fund low margin
building contracts.
Whilst the group`s Construction, Manufacturing and Concessions businesses have
performed well in light of these tough market conditions, further adverse
cyclical and recent 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 in terms of
the future of this cluster and processing a further impairment, as outlined
below.
FINANCIAL PERFORMANCE
Headline earnings per share (HEPS) decreased by 22.6% and fully diluted HEPS
(FDHEPS) by 20.5%. Due to an impairment charge on property, plant and
equipment (including intangible and goodwill assets) within the Construction
Materials business, earnings per share (EPS) is a loss of 354 cents per share
and fully diluted EPS (FDEPS) is a loss of 328 cents per share.
Group revenue decreased by 15.7% from R5,7 billion to R4,8 billion due to a
reduction in activity levels within the buildings and civil infrastructure
markets and the group`s decision not to chase volumes at the expense of
margin. Revenue in Manufacturing and Construction Materials was also
negatively impacted by adverse market conditions. These conditions, combined
with increasing price competition, resulted in operating profit before fair
value adjustments and impairment adjustments decreasing by 18.7% from R399
million to R324 million. The group operating margin decreased from 7.0% to
6.7%. Included within operating profit is a deficit on the group`s pension
fund of R3 million. Excluding all non-core earnings adjustments, operating
margin is 6.8%.
Fair value net upward adjustments of R10,4 million (2009: R10,4
million) were recorded during the period relating to the group`s interests
in Eastern European service concessions.
In line with expectations, net finance income of R12,0 million was recorded
during the period compared to net finance income of R7,6 million in the
prior period.
The group recognised a tax expense of R94 million despite having a pre-tax
loss of R204 million, mainly due to the effect of the limited taxation
deduction on the Construction Materials impairment adjustment, secondary
taxation on dividends paid and taxation from African jurisdictions with
taxation rates higher than the South African corporate tax rate.
FINANCIAL POSITION
The group balance sheet continues to be sound, with a nil net gearing ratio as
at 31 December 2010.
The group processed a gross impairment of R550 million (H2 F2010: R326
million) in its Construction Materials business due to management concluding
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. This impairment is in addition to the gross impairment of R326
million taken at 30 June 2010.
Furthermore, during the period, an amount of R9,3 million (2009: R10,6
million) was charged to the income statement, mainly as a result of a
conservative treatment on the amount due from contract claims on a terminated
Indian toll road contract, carried as a discontinued operation.
CASH FLOW
The group generated R462 million cash from operations before working capital
changes. However, although in line with expectations, working capital
absorption of R805 million resulted in a net cash outflow of R706 million in
the period. As expected, the finalisation of the large local infrastructure
contracts saw the unwinding of advance payments and the settlement of creditor
final accounts. Pleasingly, working capital outflows are as a result of the
settlement of trade and other payables only, whereas working capital continues
to improve in all other areas of trade and other receivables and management of
inventory levels.
DIVIDEND
The group`s adopted dividend policy is approximately four times basic earnings
per share dividend cover. In recognition of the non-cash nature of the
Construction Materials impairment adjustment, the board has approved a
dividend based on a cover of approximately four times earnings per share of
R2,07 before recording of impairment adjustments and pension fund deficits. An
interim dividend of 52 cents per share (2009: 63 cents) has been declared. The
dividend policy therefore remains unchanged, being based on the medium term
business outlook, availability of liquid resources and the solid contribution
from the group.
BUSINESS COMBINATIONS
There were no business combinations in the period under review.
SHAREHOLDING
Further to the group`s previous statement regarding the unwinding of the iLima
Consortium (iLima) shareholding, the courts have awarded in Group Five`s
favour and instructed the return of the group`s shares by iLima, currently
delayed due to the liquidation of iLima. As previously reported, this
unwinding will have no material bearing on the group`s results. The group has
excluded the iLima shareholding from its current BBBEE scorecard and confirms
that its scorecard has not been adversely affected. The group`s BBBEE status
is currently a very competitive Level 2.
INDUSTRY MATTERS
As announced on SENS on 1 February 2011, the group has adopted a proactive
stance in respect of the ongoing investigation by the Competition Commission
into alleged anti-competitive behaviour within the construction industry. In
2008, the group took the lead and initiated an invasive internal investigation
of its own. The group has co-operated with the Commission for the last two
years in the interests of determining if it had any exposure and to take
advantage of the Commission`s leniency programme to assuage the risk of any
penalties and/or fines. The group believes it has no such exposure, although
this cannot be guaranteed. The board of Group Five once again confirms its
support for the Commission`s process, its commitment to assist the Commission
in its objective to rid the sector of anti-competitive behaviour and
reiterates its zero tolerance stance with respect to transgressions against
compliance, ethics and integrity. In accordance with the Competition
Commission requirements, the group cannot divulge any further detail about the
process at this time.
Operational review
INTRODUCTION
The South African private sectors in which the group`s Construction businesses
operate, namely mining, industry and real estate, remained weak. The timing of
resumption in government infrastructure spending has been and will remain a
key factor for the domestic South African construction industry. Although
there is a planned capital investment in excess of R811 billion in public
infrastructure spend and R40 billion identified in the PPP and concessions
market for large public buildings and roads, as well as power developments,
only a few significant awards have been made in the last four consecutive
halves.
Whilst the group has focused on, and benefited from, the South African
domestic public sector spend for the past two years, it has now returned to a
more balanced portfolio of local domestic markets, with resumption in
expanding international order books.
In this regard, there has been an increase in activity in the African power,
energy and mining sectors in gold, copper, zinc, uranium and coal.
In the Middle East, the group continued to actively pursue new infrastructure
opportunities, including power and heavy industry in an expanding number of
countries. New contracts were recently won in Abu Dhabi, Jordan and Qatar. The
resolution of the commercial closure of the two previously reported terminated
contracts in Dubai is proceeding in an orderly fashion.
GROUP
The group`s operating margin is reported net of the following non-
core/operational transactions: profit on sale of assets, disposal of
subsidiaries, pension fund surpluses and deficits. The group`s operating
margin, both including and excluding such adjustments, is reflected below.
Six months Full year Six months
ended ended ended
31 December 30 June 31 December
2010 2010 2009
Revenue - (R`000) 4 811 683 11 337 588 5 708 793
Reported operating margin % 6.7 7.7 7.0
Core operating margin %* 6.8 7.3 7.0
* = core operating margin % is defined as reported operating
margin % adjusted for the non-core transactions listed above.
= reported operating margin % is defined as operating profit
before fair value adjustments and impairment adjustments as a %
of revenue.
INVESTMENTS AND CONCESSIONS
(including Infrastructure Six months Full year Six months
Concessions and Property ended ended ended
Developments) 31 December 30 June 31 December
2010 2010 2009
Revenue - (R`000) 282 361 591 871 334 349
Reported operating margin % 13.8 12.7 12.1
Core operating margin %* 14.1 12.8 12.1
Investments and Concessions consists of Infrastructure Concessions and
Property Developments. This cluster contributed 5.9% (2009: 5.9%) to group
revenue.
INFRASTRUCTURE CONCESSIONS
This segment demonstrated a consistent performance, despite the continued
effects of the deep recession and exceptionally poor weather across the
European region. Although revenue decreased by 13.4% to R269 million (2009:
R310 million), core operating margin improved to 16.4% (2009: 14.8%), with
core operating profit largely unchanged at R44 million (2009: R46 million).
Going forward, Eastern European and African concession opportunities are set
to remain attractive, with further new projects under development in toll
roads and power. The timing of awards in the South African buildings PPP
market, however, remains uncertain.
PROPERTY DEVELOPMENTS
Although Property Developments did not generate positive returns during this
financial year, its performance was in line with expectations, as the group
continues its programme of disinvestment from the residential sector in favour
of securing development and portfolio management positions in A-grade
commercial and retail properties in South Africa.
Therefore, as expected, Property Developments` revenue decreased by 43.1% to
R14 million (2009: R24 million) and core operating profit reflected a small
loss of R4,2 million (2009: R5,5 million loss).
MANUFACTURING
Six months Full year Six months
ended ended ended
31 December 30 June 31 December
2010 2010 2009
Revenue - (R`000) 405 138 866 221 454 022
Reported operating margin % 7.8 10.0 9.6
Core operating margin %* 7.9 9.5 9.6
Manufacturing consists of building products business, Everite, as well as
steel fabrication businesses. Manufacturing contributed 8.4% (2009: 8.0%) to
group revenue.
Manufacturing limited the earnings decline in tough market conditions, with a
solid performance from especially Everite and Group Five Pipe, which offset
weaker construction steel markets.
Revenue decreased by 10.8% from R454 million to R405 million. Core operating
profit decreased by 26.8% from R44 million to R32 million, resulting
in a core operating margin of 7.9% (2009: 9.6%).
The results were achieved through continuous improvement in production
techniques, an efficient supply chain, quick stock turns, product range
extension and geographic expansion in Everite.
In the period under review, further progress was made in developing the
group`s Advanced Building Technologies (ABT) product offering into the housing
and building market.
CONSTRUCTION MATERIALS
Six months Full year Six months
ended ended ended
31 December 30 June 31 December
2010 2010 2009
Revenue - (R`000) 240 705 491 860 269 038
Reported operating margin % (13.9) 4.1 7.1
Core operating margin %* (13.9) 3.6 7.1
Construction Materials comprises aggregates, readymix concrete and mining
services. Construction Materials contributed 5.0% (2009: 4.7%) to group
revenue.
In spite of aggressive cost reduction and process improvement measures taken,
this cluster had to deal with the worst downturn for decades in the aggregates
and readymix market. The asphalt, mobile crushing, sand and mining services
operations have not been as materially affected. Unseasonally heavy rains also
affected operations in the last quarter. Revenue for the six months therefore
decreased by 10.5% from R269 million to R241 million, with a core operating
loss of R33 million (2009: profit of R19 million).
As outlined above, the group has processed a further impairment due to the
following factors:
Cyclical factors
Independent research confirms this down cycle as the most severe in 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.
Fundamental structural factors
Current indications are that more than 150 million tons of waste dump rock
could progressively enter the aggregates market as the Department of Mineral
Resources is pushing for mines to rehabilitate old dumps. This alters the
outlook for Construction Materials fundamentally. 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.
CONSTRUCTION
Six months Full year Six months
ended ended ended
31 December 30 June 31 December
2010 2010 2009
Revenue - (R`000) 3 883 479 9 387 636 4 651 383
Reported operating margin % 7.4 7.4 6.4
Core operating margin %* 7.4 6.9 6.4
Construction comprises the business segments of Building and Housing, Civil
Engineering and Engineering Projects. Engineering Projects incorporates the
businesses of Projects and Engineering & Construction (E+C).
Construction continued to be the largest cluster in the group, contributing
81% to group revenue (2009: 82%).
As a result of good contract execution, the core operating margins remained
strong and in line with expectations. The overall Construction core operating
margin period on period improved from 6.4% to 7.4%. Although slightly down
from the H2 F2010 Construction margin of 7.5%, this margin is pleasing in
light of the group`s stated objective of maintaining a margin in excess of 5%
in Construction.
Construction revenue decreased by 16.5% from R4,7 billion to R3,9 billion
and core operating profit decreased by 2.6% to R288 million (2009: R296
million).
Over-border work contributed 25% (2009: 17%) to Construction revenue.
Building and Housing
Six months Full year Six months
ended ended ended
31 December 30 June 31 December
2010 2010 2009
Revenue - (R`000) 1 215 101 3 186 142 1 551 383
Reported operating margin % 7.5 7.4 6.0
Core operating margin %* 7.5 6.9 6.0
In spite of the private building sector remaining extremely weak, Building and
Housing managed to mitigate this impact through the contribution from some
public sector contracts, as well as a focus on over-border opportunities,
improved execution and supply chain savings.
Although revenue decreased by 21.7% from R1,6 billion (98% local) to R1,2
billion (79% local), core operating profit decreased by only 1.7% to R91
million (2009: R93 million), resulting in a strong improvement in the core
operating margin to 7.5% (2009: 6.0%).
The strong results were achieved due to the completion of large contracts, as
well as timeously and successfully focusing on the securing of new over-border
and domestic contracts in public buildings and the educational and healthcare
sectors.
During the period, the private sector property market remained weak, which was
coupled with the slowdown in government`s promised infrastructure spend and
delays in awards of certain PPP projects.
The secured one-year order book stands at R2,5 billion (64% local) (FY 2010:
R2,6 billion and 78% local) and secured work at R3,8 billion (58% local)
(FY 2010: R3,5 billion (77% local)).
Civil Engineering
Six months Full year Six months
ended ended ended
31 December 30 June 31 December
2010 2010 2009
Revenue - (R`000) 1 863 462 4 713 487 2 412 214
Reported operating margin % 6.9 6.6 5.9
Core operating margin %* 7.0 6.2 5.9
Civil Engineering includes the group`s activities in South Africa, the rest of
Africa and the Middle East.
Civil Engineering revenue decreased by 22.7% from R2,4 billion (82% local) to
R1,9 billion (86% local). Core operating profit did well to reduce by only
9.3% from R143 million to R130 million, accompanied by a pleasing increase in
overall core operating margin to 7.0% from 5.9% in the corresponding period
and 6.4% in H2 F2010. This was due to successful execution and effective
commercial management of large contracts in both the public and private
sector.
Although tendering activity is high and increasing, awards are currently
infrequent.
In the Middle East, the group continues to be conservative in its treatment of
the cancelled contracts that continue to progress slowly to resolution.
Geographical expansion in the region is progressing, whilst taking due
cognisance of the risk imposed by the recent political unrest in the region.
Civil`s secured one-year order book stands at R2,2 billion (73% local),
compared to R3,0 billion (85% local) as at 30 June 2010. The full order book
is at R3,7 billion (51% local) (FY 2010 R3,8 billion (80% local)).
Engineering Projects
Six months Full year Six months
ended ended ended
31 December 30 June 31 December
2010 2010 2009
Revenue - (R`000) 804 916 1 488 007 687 787
Reported operating margin % 8.3 9.9 8.8
Core operating margin %* 8.4 9.4 8.8
The Engineering Projects cluster incorporates the Projects business and the
newly constituted Engineering & Construction (E+C) business.
A recovery in the African mining markets is underway. There was also some
progression in the southern African power and energy markets over the past six
months. During the period, revenue increased from R688 million (57% local) to
R805 million (44% local), with core operating profit increasing by 11.6% from
R60 million to R67 million. Core operating margin remained strong at 8.4%
(2009: 8.8%).
The secured one-year order book stands at R1,4 billion (75% local),
which is stable as compared to 30 June 2010 when R1,4 billion secured work
(51% local) was reported. The full secured order book stands at R1,8 billion
(81% local) (FY 2010: R1,9 billion (64% local)).
Prospects
Construction Materials is receiving intense attention in response to a
severely worsened outlook, while Manufacturing is performing well against very
tough markets, with Investments and Concessions positioned for growth.
The group`s core business of Construction is well positioned and active in key
sectors with good growth potential, with a proven reputation for the
successful delivery of large complex contracts. The Construction one-year
order book stands at R6,1 billion (30 June 2010: R7,1 billion). The
group`s total secured Construction order book stands at R9,3 billion (30 June
2010: R9,2 billion). The value of the group`s target pipeline stands at R104
billion, down from R119 billion in August 2010, with activity in all its
markets.
On a group level, the South African government`s public works programme has
the potential to create growth opportunities within the South African
construction sector. However, the lack of certain timing continues to plague
the domestic construction sector`s ability to plan and forecast. Against this,
the group will continue to grow its expertise and capacity in areas where it
has developed a multi-disciplinary delivery capability, namely power
generation, energy, transport, water, housing, mining and large public
infrastructure works. The group`s geographic diversification will continue,
with active trading in 18 countries in the period under review, with
developing business in seven new countries.
Certain African markets offer future prospects, with the outlook for private
sector fixed investment and primary infrastructure starting to improve.
Spending is however only likely to come through slowly during the 2011
calendar year, with more certainty emerging from calendar 2012.
In the Middle East, the group has moved into new territories outside of Dubai.
These markets provide technically attractive, higher-margin opportunities
aligned to the group`s capabilities in infrastructure and industrial
contracts.
The group`s strategic focus, its specialist skills, its current order book and
its pipeline of opportunities support a positive medium and long term outlook,
although short term earnings are likely to be under pressure.
Estimates and contingencies
The group makes estimates and assumptions concerning the future, particularly
with regard to construction contract profit taking, provisions, arbitrations
and claims and various fair value accounting policies. The resulting
accounting estimates and judgments can, by definition, therefore only
approximate the actual results. Estimates and judgments are continually
evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances.
Total financial institution guarantees given to third parties on behalf of
subsidiary companies amounted to R4 312 million as at 31 December 2010,
compared to R5 062 million as at 30 June 2010.
Distribution to shareholders by way of a capital reduction from stated capital
("the distribution")
The directors have declared the distribution of 52 cents per ordinary share
(2009: 63 cents dividend) payable to shareholders.
DATES OF THE DISTRIBUTION
In order to comply with the requirements of Strate, the relevant details are:
Event Date
Last day to trade (cum-distribution) Friday, 8 April 2011
Shares to commence trading (ex- Monday, 11 April 2011
distribution)
Record date (date shareholders recorded in Friday,15 April 2011
books)
Payment date Monday, 18 April 2011
No share certificates may be dematerialised or Monday, 11 April 2011,
rematerialised between and Friday, 15 April
2011, both dates
inclusive.
TERMS OF PAYMENT
The distribution of 52 cents per ordinary share will be paid to shareholders
from Group Five`s stated capital.
FINANCIAL EFFECTS OF THE DISTRIBUTION
The unaudited pro forma financial effects of the distribution on earnings per
share ("EPS"), headline earnings per share ("HEPS"), the net asset value
("NAV") and net tangible asset value ("NTAV") per share are set out below.
This unaudited pro forma financial information has been prepared for
illustrative purposes only. It may therefore not give a fair reflection of
Group Five`s financial position and results of operations, nor the effect and
impact of the distribution going forward. The information is the
responsibility of the directors of Group Five.
Before the After the %
distri- distri- change
bution(1) bution(2)
Earnings per share (EPS) (354) (355) (0,3)
(cents) (loss)
Headline earnings per share 214 212 (0,6)
(HEPS) (cents)
NAV (cents) 212 206 (2,5)
NTAV (cents) 210 205 (2,7)
Number of shares for EPS and 95 910 95 910 -
HEPS purposes (`000)
Number of shares for NAV and 95 910 95 910 -
NTAV (`000)
Notes:
1. Based on Group Five`s unaudited interim group results for the
six months ended 31 December 2010.
2. Based on the assumption that the distribution took place on
1 July 2010 for income statement purposes and on 31 December
2010 for balance sheet purposes.
3. EPS and HEPS have been adjusted to take into account the
interest foregone on cash balances used in making the
distribution of R49,9 million.
4. After taking into account the reduction in stated capital
following the distribution of R49,9 million.
OPINION OF THE DIRECTORS
The directors of Group Five have considered the effect of the distribution and
are satisfied that, for a period of 12 months from 10 February 2011, being the
date of the declaration of the distribution:
the company and its subsidiaries will be able, in the ordinary
course of business, to pay its debts;
the assets of the company and its subsidiaries will be in
excess of the liabilities, having been recognised and measured
in accordance with the accounting policies used in the audited
results for the year ended 30 June 2010;
the share capital and reserves of the company and its
subsidiaries will be adequate; and
the working capital and working capital resources of the
company and its subsidiaries will be adequate for a period of
12 months from 10 February 2011, being the date of the
declaration of the distribution.
Basis of preparation
These consolidated condensed interim financial statements for the six months
ended 31 December 2010 have been prepared in accordance with IAS 34, "Interim
Financial Reporting" and in the manner required by the Companies Act of South
Africa. The consolidated condensed interim financial information should be
read in conjunction with the annual financial statements for the year ended 30
June 2010, which have been prepared in accordance with International Financial
Reporting Standards (IFRS). The accounting policies applied are consistent
with those of the annual financial statements for the year ended 30 June 2010,
as described in those financial statements.
The above information has not been reviewed or reported on by Group Five`s
auditors.
Forward looking statements
Certain statement in this release that are neither reported financial results
nor other historical information are forward looking statements including but
not limited to predictions of or indications of future earnings. Undue
reliance should not be placed on such statements because, by their very
nature, they are subject to known and unknown risks and uncertainties and can
be affected by other factors that could cause actual results and company plans
and objectives to differ materially from those expressed or implied in the
forward-looking statements.
BOARD CHANGES
During the period under review, there were no changes to the board of
directors.
ACKNOWLEDGMENTS
The group wishes to recognise the hard work and commitment of its employees.
On behalf of the board
MP Buthelezi MR Upton
Chairperson Chief Executive Officer
10 February 2011
Board of Directors: MP Buthelezi* (Chairperson), MR Upton (CEO), CMF Teixeira
(CFO), L Chalker*+, KK Mpinga*, SG Morris*, JL Job*, LE Bakoro (*)
*(Non-executive director) +(British) (DRC)
Transfer Secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall
Street, Johannesburg 2001
Consolidated condensed income statement
Unaudited Audited
Six months ended Year ended
31 December 30 June
(R`000) 2010 2009 2010
Revenue 4 811 683 5 708 793 11 337 588
Operating profit before 324 575 399 146 876 895
fair value adjustments and
impairment adjustments
Fair value adjustments 10 417 10 391 13 532
relating to investment in
service concessions
Impairment of property, (550 540) - (325 569)
plant and equipment and
goodwill
Operating (loss)/profit (215 548) 409 537 564 858
Share of (loss)/profit (521) 1 017 1 347
from associates
Finance income 58 374 63 966 143 303
Finance costs (46 378) (56 387) (115 432)
(Loss)/profit before (204 073) 418 133 594 076
taxation
Taxation (94 354) (133 233) (258 297)
(Loss)/profit after (298 427) 284 900 335 779
taxation from continuing
operations
Loss for the period from (9 284) (10 571) (22 102)
discontinued operations
(Loss)/profit for the (307 711) 274 329 313 677
period
Allocated as follows:
Equity shareholders of (339 362) 252 547 267 377
Group Five Limited
Non controlling interest 31 651 21 782 46 300
(307 711) 274 329 313 677
(Loss)/earnings per (3,54) 2,65 2,80
share - R
Fully diluted (3,28) 2,39 2,56
(loss)/earnings per
share - R
Determination of headline earnings
Unaudited Audited
Six months ended Year ended
31 December 30 June
(R`000) 2010 2009 2010
Attributable (loss)/profit (339 362) 252 547 267 377
Adjusted for (net of tax) 544 249 10 571 318 534
- Profit on sale of (202) - (267)
property, plant and
equipment and investment
property
- (Profit)/loss on (819) - 3 567
disposal of subsidiary
- Impairment of property, 535 986 - 293 132
plant and equipment
- Losses on disposal of 9 284 10 571 22 102
discontinued operations
Headline earnings 204 887 263 118 585 911
Consolidated statement of comprehensive income
Unaudited Audited
Six months ended Year ended
31 December 30 June
(R`000) 2010 2009 2010
(Loss)/profit for the (307 711) 274 329 313 677
period
Other comprehensive income
for the period net of tax
Exchange differences on (64 994) (33 177) (68 889)
translating foreign
operations
Total comprehensive (372 705) 241 152 244 788
(loss)/income for the
period
Total comprehensive
(loss)/income for the
period attributable to
Equity shareholders of (404 356) 219 370 198 488
Group Five Limited
Non controlling interest 31 651 21 782 46 300
Total comprehensive (372 705) 241 152 244 788
(loss)/income for the
period
Consolidated condensed statement of financial position
Unaudited Audited
Six months ended Year ended
31 December 30 June
(R`000) 2010 2009 2010
ASSETS
Non-current assets
Property, plant and 1 529 649 2 460 893 2 106 573
equipment and investment
property
Goodwill - 24 859 24 859
Investments - service 243 693 224 417 224 311
concessions
Investments - property 128 691 120 000 128 691
developments
Other non-current assets 178 206 82 477 173 918
2 080 239 2 912 646 2 658 352
Current assets
Other current assets 3 539 915 3 930 980 4 096 899
Bank balances and cash 2 417 047 3 262 105 3 129 990
5 956 962 7 193 085 7 226 889
Non-current assets 59 233 73 153 65 153
classified as held for
sale
Total assets 8 096 434 10 178 884 9 950 394
EQUITY AND LIABILITIES
Capital and reserves
Equity attributable to 2 030 748 2 541 387 2 486 357
equity holders of the
parent
Non controlling interest 93 638 51 537 75 055
2 124 386 2 592 924 2 561 412
Non-current liabilities
Interest bearing 832 349 877 287 843 244
borrowings
Other non-current 62 558 61 746 64 945
liabilities
894 907 939 033 908 189
Current liabilities
Other current liabilities 5 059 644 6 627 533 6 456 620
Bank overdrafts 17 497 19 394 24 173
5 077 141 6 646 927 6 480 793
Total liabilities 5 972 048 7 585 960 7 388 982
Total equity and 8 096 434 10 178 884 9 950 394
liabilities
Consolidated condensed statement of cash flow
Unaudited Audited
Six months ended Year ended
31 December 30 June
(R`000) 2010 2009 2010
Cash flow from operating
activities
Profit before working 462 188 571 819 1 132 993
capital changes
Working capital changes (805 481) 170 428 58 001
Cash (utilised)/generated (343 293) 742 301 1 190 994
from operations
Finance income - (net) 11 996 7 580 27 871
Taxation and dividends (192 451) (119 087) (284 241)
paid
Net cash (utilised)/ (523 748) 630 794 934 624
generated by operating
activities
Property, plant and (58 754) (72 910) (124 739)
equipment and investment
property (net)
Investments (net) (20 594) (38 724) (46 901)
Net cash utilised in (79 348) (111 634) (171 640)
investing activities
Net cash utilised in (49 431) (40 109) (398 601)
financing activities
Effects of exchange rates (53 739) (14 764) (36 990)
on cash and cash
equivalents
Net cash generated by - - -
discontinued operations
Net (decrease)/increase in (706 266) 464 287 327 393
cash and cash equivalents
Consolidated segmental analysis
Unaudited Audited
Six months ended Year
ended
% 31 December 30 June
(R`000) chang 2010 2009 2010
e
REVENUE
Investments (16) 282 361 334 349 591 871
and
Concessions
Infrastructure (13) 268 567 310 119 557 227
Concessions
Property (43) 13 794 24 230 34 644
Developments
Manufacturing (11) 405 138 454 022 866 221
Construction (11) 240 705 269 038 491 860
Materials
Construction (17) 3 883 4 651 9 387 636
479 384
Building and (22) 1 215 1 551 3 186 142
Housing 101 383
Civil (23) 1 863 2 412 4 713 487
Engineering 462 214
Engineering 17 804 916 687 787 1 488 007
Projects
Total revenue (16) 4 811 5 708 11 337
683 793 588
(R`000) H1 %
2011
Core chang
margi e
n %
OPERATING
PROFIT
Investments 14.1 (2) 39 832 40 523 75 928
and
Concessions
Infrastructure 16.4 (4) 44 038 46 048 83 974
Concessions
Property (30.5 (24) (4 206) (5 525) (8 046)
Developments )
Manufacturing 7.9 (27) 31 860 43 520 82 300
Construction (13.9 (275) (33 422) 19 061 17 624
Materials )
Construction 7.4 (3) 288 212 296 042 649 967
Building and 7.5 (2) 91 278 92 900 220 022
Housing
Civil 7.0 (9) 129 590 142 823 290 001
Engineering
Engineering 8.4 12 67 344 60 319 139 944
Projects
Total core 6.8 (18) 326 482 399 146 825 819
operating
profit
Adjustments for non-operational
transactions
Pension fund (deficit)/surplus (3 000) - 55 161
Profit/(loss) on sale of 1 093 - (4 085)
subsidiary
Reported operating profit 324 575 399 146 876 895
before fair value and
impairment adjustments
Consolidated condensed statement of changes in equity
Unaudited Audited
Six months ended Year ended
31 December 30 June
(R`000) 2010 2009 2010
Balance at 1 July 2 561 412 2 407 843 2 407 843
Net (loss)/profit for the (307 711) 274 329 313 677
period
Other comprehensive income (64 994) (33 177) (68 889)
for the period
Share options expense 19 721 17 091 43 002
Distribution to non (13 068) (4 611) (5 611)
controlling interest
Dividends paid (70 974) (68 551) (128 610)
Balance at end of period 2 124 386 2 592 924 2 561 412
Statistics
Unaudited Audited
Six months ended Year ended
31 December 30 June
2010 2009 2010
Number of ordinary 95 910 170 94 765 894 95 335 170
shares
Shares in issue 120 911 817 120 244 494 120 911 817
Less: Shares held by (25 001 (25 478 (25 576
share trusts 647) 600) 647)
Weighted average number 95 910 95 236 95 378
of shares (`000s)
Fully diluted weighted 103 467 105 494 104 376
average number of shares
(`000s)
(Loss)/earnings per (3,54) 2,65 2,80
share - R
Headline earnings per 2,14 2,76 6,14
share - R
Fully diluted (loss)/ (3,28) 2,39 2,56
earnings per share - R
Fully diluted headline 1,98 2,49 5,61
earnings per share - R
Dividend cover (based on (6,8) 4,2 2,0
(loss)/earnings per
share)
Dividend cover (based on 4,0 4,2 4,0
core earnings per share)
Dividend per share 52 63,0 137,0
(cents)
Interim 52 63,0 63,0
Final - - 74,0
Net asset value per 21,2 26,8 26,08
share - R
Net debt to equity ratio - - -
Current ratio 1.2 0.6 1.1
Capital expenditure and depreciation
Unaudited Audited
Six months ended Year ended
31 December 30 June
(R`000) 2010 2009 2010
Capital expenditure for 72 575 111 427 210 026
the period
Capital expenditure 109 852 94 238 209 577
committed or authorised at
the period end
Depreciation for 117 530 131 133 245 235
the period
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