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Trading Update
GROUP FIVE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1969/000032/06)
Share code: GRF ISIN: ZAE 000027405
("Group Five" or "the company" or "the group")
TRADING STATEMENT
UPDATE ON DISPOSAL OF CONSTRUCTION MATERIALS SEGMENT
The group remains under cautionary as it progresses the disposal of the businesses
that comprised the group’s Construction Materials cluster. Offers have been received
and the related negotiations are either at an advanced stage or concluded for each
of these businesses.
TRADING UPDATE
As guided by the recent SENS announcement issued by the group on 29th May
2012, F2012 has been adversely impacted by the following items:
• Costs incurred, some non-cash in the year, relating to downward carrying
value adjustments as well as additional provisions raised, resulting from the
de-risking action taken in the preparation for final close out of legacy and loss-
making contracts in the Middle East.
• Operating losses, restructuring costs and impairments to the carrying value of
assets within the discontinued Construction Materials segment disclosed as
Non-Current Assets held for sale
• Impairment of the Indian contract claim disclosed as Non-Current Assets held
for sale.
• Closure of the troubled steel fabrication facility in manufacturing for which
costs were already recorded in H1 F2012.
The actions taken in these areas, which severely impacted the F2012 result were
necessary to close out the legacy and non-value generating elements of the group’s
operations. These actions provide a good foundation for performance improvement
in F2013.
Excluding the items listed above, all of the group's operations, which include
Investment and Concessions, Manufacturing and Construction, are trading in line
with performance expectations. In addition, the group’s liquidity and balance sheet
remains sound.
Shareholders are therefore advised that, for the year ended 30 June 2012, the group
expects:
• Fully diluted headline earnings per share (“FDHEPS”) to be between 60%-
70% lower (93 cents per share to 124 cents per share) than the restated
FDHEPS of 310 cents per share for the previous corresponding period;
• Headline earnings per share (“HEPS”) to be between 60%-70% lower (98
cents per share to 131 cents per share) than the restated HEPS of 326 cent
per share for the previous corresponding period;
• Fully diluted earnings per share (“FDEPS”) and earnings per share (“EPS”) to
be between 270 cents loss per share to 300 cents loss per share (F2011:
restated 227 cents loss per share) for the previous corresponding period;
To assist for comparative purposes, various losses and profits, perpetuated by
closure and non-recurring events, and included in the guidance given above had the
following impact:
• H2 F2012 Headline earnings were affected by
o Losses in the Middle East as the group addressed the close out of
legacy and loss-making contracts.
o Operational losses within the Construction Materials segment,
incurred before the sale of these businesses
• F2012 Earnings for the current financial year have been affected by:
o Impairments to the carrying value of net assets in Construction
Materials and of the India claim as disclosed above. These
impairments were recorded in H2 F2012
o A positive pension fund valuation net adjustment of R11million
recorded in H2 F2012
The positive effect of an increase in fair value adjustments on service
concessions and property within Investment and Concessions,
regarded as a component of the normal earnings within this segment.
These adjustments were mostly recorded in H1 of F2012.
The F2012 FDHEPS and FDEPS guidance provided above is calculated using fully
diluted shares. The F2012 fully diluted number of shares approximates the group’s
basic weighted average number of shares held as, although it includes the dilutory
effect of the shares held by the group’s BBBEE shareholders, due to the current
lower value of the group’s share price these are not dilutive in the current period.
MARKET CONDITIONS
Emphasis on a larger geographic footprint for more of the group’s business units, the
beneficial contribution of the group’s annuity-type businesses of Investments and
Concessions and Manufacturing, as well as the group’s strong position in the mining
and energy markets in Africa has mitigated, to some extent, the effects of continued
weakness in the South African construction and engineering markets.
Despite the cancellation and delay in domestic public sector works, particularly
public sector PPPs, the uncertainty surrounding urban freeway tolling and the
delayed national renewable energy programme, a slow, tentative broader market
recovery from H2 F2012 has materialised. This is reflected in some order book
recovery in the second half. A gradual improvement in the group’s trading
performance from F2013 is expected.
REPORTING
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 13th August 2012 when
the group will be updating the market on its business in a presentation in
Johannesburg on the same day, and a presentation in Cape Town on 14th August
2012. The presentation will be available on the 13th August 2012 for all stakeholders
on the group’s website, www.groupfive.co.za.
Johannesburg
20 July 2012
Investment Bank and Sponsor
Nedbank Capital
Date: 20/07/2012 11:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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