GROUP FIVE LIMITED - Management interaction with stakeholders

Management interaction with stakeholders

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”)


MANAGEMENT INTERACTION WITH STAKEHOLDERS

Group Five shareholders are advised that the executive management of the group will today
meet with:

    -   members of the media; and
    -   members of the financial community, including shareholders and financial analysts,
        for a presentation and schedule of meetings.

The discussions will include
   -    the group’s view on current market conditions; and
   -    a general business update, with a focus on
           o trading performance by segment, including updated margin guidance
           o order book details as at September 2014
           o balance sheet and working capital.

Copies of all presentations delivered and hand-outs provided at the meetings have been
placed on the group’s website www.groupfive.co.za.


OPERATIONAL UPDATE

The group’s businesses are performing in line with management expectations and in
accordance with the guidance provided in June 2014 (previously made available to all
stakeholders on the group’s website), except for the Civil Engineering and Engineering &
Construction segments.

Business reviews:

Investments and Concessions
Good operating performance continues, and with growth in value of equity investments.
The South African market remains tight, but in line with expectations.

Engineering and Construction
Although a number of opportunities exist in the power sector both locally and in the rest of
Africa, the delay in awards, and more significantly the delay in obtaining notice to proceed
on the Ghana Kpone contract, has slowed revenue in the short term. Notice to proceed is
expected to still be received in H1 F2015.
In addition, technical close out is required on a few current contracts nearing completion in
order to achieve the group’s guided underlying margin. This will not be fully achieved in the
first half of this financial year.

Manufacturing
The Manufacturing cluster is experiencing stable but flat markets, with prospects for volume
recovery expected in F2016. The focus has been on cost efficiencies, product range
expansion and increase in exports. The cluster was impacted somewhat by industrial action
in the first quarter of this financial year.

Building and Housing
Although the business continues to experience market-related weak margins, it continues to
deliver a solid performance within these conditions.

Civil Engineering
The transport and infrastructure markets have weakened markedly. A higher number of
tenders are available, but margins have been further pressured and few contracts of
significance have been awarded.

In addition, operational difficulties on one contract have materially impacted the business
performance in the first half of the financial year. Focused interventions are in place to
address the operational issues.

As a result of a lack of awards in the current period and the group’s focus of not pursuing
high levels of revenue with current low market-related margins, the group has embarked on
a restructuring and rationalisation process. This has added cost to the current financial year,
which diluted the previously guided margin range. Retrenchment costs will be incurred in
both H1 and H2 of F2015.

Recovery is expected from F2016.

Projects
The business continues to deliver a good performance. However margins are diluted
somewhat with an increase in the portion of the current order book to be executed in South
Africa and in neighbouring regions which traditionally deliver lower margins than that in the
rest of Africa.

Margin guidance update:

Stakeholders are encouraged to review the presentations on the group’s website for
additional disclosure on
   -   the group’s Contracting and Operations & Maintenance order book as at 30
       September 2014 and
   -   updated margin guidance by business segment, specifically, which includes
       disclosure on margin expectations for the Civil Engineering and Engineering &
       Construction segments being weaker than those previously guided with the F2014
       year-end financial results release.
Competition Commission:

The group notes the Competition Commission statement with respect to its referral of
alleged collusive tendering by various firms including Group Five Limited.

This was anticipated.

The group has engaged in lengthy discussions with the Competition Commission and, having
not reached consensus on the allegations made against the group, the group informed the
Competition Commission that it elected to assess its position upon review of the
Competition Commission referral to the Competition Tribunal.

The group welcomes the opportunity to address and clarify this long outstanding issue in
order to bring certainty to shareholders, employees and all other stakeholders.


TRADING STATEMENT

As a result of a weaker performance by the Civil Engineering and Engineering & Construction
segments, shareholders are advised that earnings per share ("EPS") and headline earnings
per share ("HEPS") for the six months ending 31 December 2014 will be more than 20%
down from EPS of 200 cents and HEPS of 204 cents for the prior comparative period (being
31 December 2013). Further guidance will be provided to shareholders once the Company is
in a position to determine the range of the expected decrease in EPS and HEPS, ahead of the
release of its interim results for the period ending 31 December 2014.


REPORTING

The group’s results for the interim period ended 31 December 2014 will be released on
SENS on 11 February 2015 when the group will update the market on its business in a
presentation in Johannesburg on the same day, and in Cape Town on 12 February 2015. The
presentation will be available for all stakeholders on the group’s website,
www.groupfive.co.za.

Sandton
17 November 2014

Investment bank and sponsor
Nedbank Capital

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