GROUP FIVE LIMITED - Trading statement

Trading statement

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

Group Five shareholders are advised that, for the six months ended 31 December 2015, the
group expects:

   -   Fully diluted headline earnings per share (“FDHEPS”) to be between 15%- 25% higher
       (124 cents to 135 cents per share);
   -   Headline earnings per share (“HEPS”) to be between 15%-25% higher (125 cents to
       136 cents per share);
   -   Fully diluted earnings per share (“FDEPS”) to be between 35% - 45% higher (158 cents
       to 170 cents per share); and
   -   Earnings per share (“EPS”) to be between 35% - 45% higher (159 cents to 171 cents
       per share)

than the FDHEPS of 108 cents per share, the HEPS of 109 cents per share, the FDEPS of 117
cents per share and the EPS of 118 cents per share published for the previous corresponding
period (six months ended 31 December 2014).

RESULTS IN CONTEXT

Strong financial results from the Investments and Concessions (I&C) cluster have more than
offset a continued weak performance by the Engineering & Construction (E&C) cluster, which
produced operating results below expectation for the interim reporting period. E&C
performance was impacted by weaker trading in South Africa combined with additional costs
of rationalisation. Manufacturing continued to perform in line with forecasts albeit at reduced
levels from the prior comparable period.

Engineering & Construction (E&C)

As reported with the group’s market update in December 2015, the South African
construction and engineering market has experienced further delays in contract awards and
low volumes of work flow in an industry already impacted by over-capacity. This placed
pressure on the replenishment of the group’s Contracting order book and on tender margins.

In the first half of this financial year, the group incurred retrenchment costs and holding costs
of core teams in addition to those accrued during F2015. This follows additional interventions
not originally planned but which have been necessitated due to further market weakness.
These costs negatively affected performance, specifically within the Civil Engineering
segment.

Tendering activity in the mining and oil and gas sectors is subdued, which has placed the
Projects business under continued pressure.

Although bidding activity in the power sector remains buoyant, revenue and profit for this
kind of work is cyclical by nature due to the length of time taken to achieve contract awards.

The group is making steady progress in its sector-led African expansion strategy which
leverages off established bases in West, Southern and East Africa, with a particular focus on
the energy, transport and real estate markets. These markets continue to show solid medium
to long- term prospects.

Manufacturing

Despite suffering declining volumes in the fibre-cement business and a lack of contract
awards in the steel pipe water sector, Manufacturing performed well and in line with
forecasts, albeit at reduced levels from the prior comparable trading period.

A continued focus on cost efficiencies and diversification into a broader range of traded goods
assisted in negating the pressure from decreasing volumes in the South African market.

Investments & Concessions (I&C)

The Investments & Concessions cluster delivered an excellent result due to continued strong
performance from the underlying projects.

Increasing heavy and light vehicle traffic numbers on the East European projects continue to
improve project cash flows, which drive investment performance. This, together with a
maturing project portfolio risk profile and the meaningful depreciation of the Rand against
the Euro, has resulted in notably stronger fair value gains on service concessions, over those
traditionally reported, boosting the cluster’s results.

Furthermore, the results of I&C have been further bolstered by development profits realised
and gains made on the value of the G5 Properties’ project portfolio.

It is pleasing to note that the beneficial contribution of the group’s annuity-type businesses
of Investment & Concessions and Manufacturing has mitigated the effects of current
continued weakness in the South African construction and engineering market.

REPORTING

The above information has not been reviewed or reported on by Group Five’s auditors. The
group's results for the interim period ended 31 December 2015 will be released on SENS on
15 February 2016 when the group will update the market on its business in a presentation in
Johannesburg on the same day, and in Cape Town on 16 February 2016. The presentation will
be available for all stakeholders on the group's website, www.groupfive.co.za.


Sandton
29 January 2016

Investment bank and sponsor
Nedbank Corporate and Investment Banking

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