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GROUP FIVE LIMITED - Unaudited interim group results for the six months ended 31 December 2015

Release Date: 15/02/2016 08:00
Code(s): GRF     PDF:  
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Unaudited interim group results for the six months ended 31 December 2015

Group Five
Structured ingenuity
Incorporated in the Republic of South Africa
Reg. no. 1969/000032/06
JSE code: GRF
ISIN: ZAE 000027405

UNAUDITED INTERIM GROUP RESULTS
for the six months ended 31 December 2015

REVENUE up 5% to R7,3 billion
Dec 15 = R7,3 billion
Dec 14 = R6,9 billion

OPERATING PROFIT
up 41% to R289,2 million
Dec 15 = R289 million
Dec 14 = R206 million

TOTAL ORDER BOOK#
down 6% to R17,6 billion from June 2015
Dec 15 = R17,6 billion
June 15 = R18,8 billion

NET ASSET VALUE* up 17% to R33,79 per share from June 2015
Dec 15 = R33,79
June 15 = R28,96

CASH AND CASH EQUIVALENTS up R203 million from June 15 to R3,6 billion
Dec 15 = R3,6 billion
June 15 = R3,4 billion

FULLY DILUTED HEADLINE EARNINGS PER SHARE up 21% to 131 cents per share
Dec 15 = 131 cents
Dec 14 = 108 cents

EARNINGS PER SHARE up 42% to 168 cents per share
Dec 15 = 168 cents
Dec 14 = 118 cents

DIVIDENDS PER SHARE up 40% to 42 cents per share
Dec 15 = 42 cents
Dec 14 = 30 cents

# Total order book is the sum of the group Contracting order book and Operations & Maintenance order book.
* Net asset value relates to that attributable to equity holders of the parent.

Condensed consolidated income statement
for the six months ended 31 December 2015
                                                                    Unaudited                Audited
                                                             six months ended 31 Dec      year ended
(R'000)                                                           2015          2014*    30 Jun 2015

Revenue                                                      7 265 425      6 903 082     13 875 570
Operating profit before fair value adjustments                 135 428        159 794        250 750
Fair value adjustment relating to investment in service
concessions and investment property                            153 837         45 756        115 726

Operating profit                                               289 265        205 550        366 476
Share of equity accounted profits                                9 686         18 876         24 592
Finance costs                                                  (39 870)       (31 732)       (64 255)
Finance income                                                  31 535         28 150         62 633

Profit before taxation                                         290 616        220 844        389 446
Taxation                                                       (90 091)       (75 087)      (109 045)

Profit for the period                                          200 525        145 757        280 401
Allocated as follows:
Equity shareholders of Group Five Limited                      169 650        119 029        223 884
Non-controlling interest                                        30 875         26 728         56 517
                                                               200 525        145 757        280 401

Earnings per share - R                                            1,68           1,18           2,22
Fully diluted earnings per share - R                              1,68           1,17           2,21

* Restated for the application of IFRS 5 - Non-current assets held for sale and discontinued
  operations, as a result of the decision to transfer the remaining business within the discontinued
  cluster of Construction Materials into continuing operations within the Manufacturing cluster.

Condensed consolidated statement of comprehensive income
for the six months ended 31 December 2015

                                                                    Unaudited                Audited
                                                              six months ended 31 Dec     year ended
(R'000)                                                           2015           2014    30 Jun 2015

Profit for the period                                          200 525        145 757        280 401

Other comprehensive income for the period net of tax
Items that may be subsequently reclassified to profit
or loss
Exchange differences on translating foreign
operations                                                     331 882         96 929        131 114
Items that will not be reclassified to profit or loss
Re-measurement of pension fund                                       -              -         20 440
Tax on re-measurement of pension fund                                -              -         (5 723)

Other comprehensive income for the period                      331 882         96 929        145 831

Total comprehensive income for the period                      532 407        242 686        426 232

Other comprehensive income attributable to:
Equity shareholders of Group Five Limited                      501 532        215 958        369 715
Non-controlling interest                                        30 875         26 728         56 517

Total comprehensive income for the period                      532 407        242 686        426 232

Determination of headline earnings
for the six months ended 31 December 2015
                                                                    Unaudited                Audited
                                                              six months ended 31 Dec     year ended
(R'000)                                                           2015           2014    30 Jun 2015

Attributable profit                                            169 650        119 029        223 884

Adjusted for (net of tax)                                      (37 344)        (9 238)       (17 331)

- (Profit)/loss on disposal of property, plant
  and equipment                                                (22 154)         1 125           (918)
- Profit on fair value adjustment of
  investment property                                          (35 445)             -              -
- Profit on fair value adjustment on investment
  property held by associate company                                 -        (10 363)       (13 787)
- Net loss/(profit) on disposal of investment in
  associate and impairment/(reversal of impairment)
  of investment in associate                                    20 255              -         (2 626)

Headline earnings                                              132 306        109 791        206 553

Condensed consolidated statement of financial position
as at 31 December 2015

                                                                       Unaudited             Audited
                                                                      31 December            30 June
(R'000)                                                          2015            2014           2015

Assets
Non-current assets

Property, plant and equipment and investment property        1 031 250        956 131         954 091
Investments - service concessions                              605 836        366 547         384 095
Other non-current assets                                       850 598        478 384         729 717
                                                             2 487 684      1 801 062       2 067 903
Current assets

Other current assets                                         4 606 560      4 949 861       4 807 222
Bank balances and cash                                       3 592 829      3 124 104       3 389 936
                                                             8 199 389      8 073 965       8 197 158
Non-current assets classified as held for sale                       -         46 260               -

Total assets                                                10 687 073      9 921 287      10 265 061

Equity and liabilities
Capital and reserves

Equity attributable to equity holders of the parent          3 416 983      2 789 589       2 928 378
Non-controlling interest                                        62 492         88 225          58 969
                                                             3 479 475      2 877 814       2 987 347
Non-current liabilities

Interest-bearing borrowings                                    475 028        475 392         477 234
Other non-current liabilities                                  135 650        156 975         120 122
                                                               610 678        632 367         597 356
Current liabilities
Other current liabilities                                    6 596 920      6 391 553       6 680 358
                                                             6 596 920      6 391 553       6 680 358

Liabilities associated with non-current assets classified
as held for sale                                                     -         19 553               -

Total liabilities                                            7 207 598      7 043 473       7 277 714

Total equity and liabilities                                10 687 073      9 921 287      10 265 061

Condensed consolidated statement of cash flow
for the six months ended 31 December 2015

                                                                     Unaudited                Audited
                                                              six months ended 31 Dec      year ended
(R'000)                                                           2015          2014*     30 Jun 2015

Cash flow from operating activities
Cash from operations before working capital changes            214 633        231 166         425 144
Working capital changes                                         98 210         89 171         118 838

Cash generated from operations                                 312 843        320 337         543 982
Finance costs - net                                             (8 335)        (3 582)         (1 622)
Taxation and dividends paid                                   (139 324)      (182 382)       (304 209)

Net cash generated by operating activities                     165 184        134 373         238 151

Property, plant and equipment and investment
property - net                                                 (58 999)       (14 591)        (69 749)
Investments - net                                             (169 442)        96 531            -

Net cash (utilised in)/generated by investing activities      (228 441)        81 940         (69 749)

Net cash (utilised in)/ generated by financing activities      (59 207)       (50 760)        217 643

Effects of exchange rates on cash and cash
equivalents                                                    325 357         48 823          82 794

Net increase in cash and cash equivalents                      202 893        214 376         468 839

Cash equivalents at beginning of period                      3 389 936      2 921 097       2 921 097

Cash equivalents at end of period                            3 592 829      3 135 473       3 389 936

- Included in cash and cash equivalents per the
  statement of financial position                            3 592 829      3 124 104       3 389 936
- Included in non-current assets classified as
  held for sale                                                      -         11 369               -
                                                             3 592 829      3 135 473       3 389 936

* Restated for the application of IFRS 5 - Non-current assets held for sale and discontinued
  operations, as a result of the decision to transfer the remaining business within the discontinued
  cluster of Construction Materials into continuing operations within the Manufacturing cluster.

Capital expenditure and depreciation
for the six months ended 31 December 2015

                                                                     Unaudited                Audited
                                                              six months ended 31 Dec      year ended
(R'000)                                                           2015           2014     30 Jun 2015

- Capital expenditure for the period                           124 272         54 746         148 596
- Capital expenditure committed or authorised
  for the next period                                          143 493        147 201         376 496
- Depreciation for the period                                   80 771         82 487         187 138

Condensed consolidated statement of changes in equity
for the six months ended 31 December 2015
                                                                     Unaudited                Audited
                                                              six months ended 31 Dec      year ended
(R'000)                                                           2015           2014     30 Jun 2015

Balance at 1 July                                            2 987 347      2 692 973       2 692 973
Net profit for the period                                      200 525        145 757         280 401
Other comprehensive income for the period                      331 882         96 929         145 831
Share - based payment expense                                   12 366          9 427          24 744
Distribution to non-controlling interests                      (27 352)       (11 801)        (70 846)
Dividends paid                                                 (25 293)       (55 471)        (85 756)

Balance at end of period                                     3 479 475      2 877 814       2 987 347

Condensed consolidated segmental analysis
for the six months ended 31 December 2015

                                                                      Unaudited                   Audited
                                                         %       six months ended 31 Dec       year ended
(R'000)                                             change           2015          2014*      30 Jun 2015

Revenue
Engineering & Construction                             5.1      6 250 981      5 948 752       11 875 357
    
    Building & Housing                                13.4      2 656 924      2 343 479        4 885 951
    Civil Engineering                                (22.4)     1 261 940      1 626 410        2 665 751
    Projects                                          40.6      1 308 640        930 653        2 213 758
    Energy                                            (2,4)     1 023 477      1 048 210        2 109 897

Investments & Concessions                             29.2        586 386        453 807          995 125
Manufacturing                                        (15.7)       446 094        529 284        1 058 795

Total                                                  5.1      7 283 461      6 931 843       13 929 277

Joint arrangements equity accounted and
joint arrangements wholly consolidated                            (18 036)       (28 761)         (53 707)

Revenue per income statement                           5.2      7 265 425      6 903 082       13 875 570
 
                                            %            %
(R'000)                                margin       change

Operating profit
Engineering & Construction                1.0        (13.6)        59 855         69 268           43 836
    
    Building & Housing                    1.3        (24.9)        34 579         46 064           91 383
    Civil Engineering                    (1.4)       (61.5)       (17 122)       (44 453)         (96 263)
    Projects                              1.8        (58.3)        23 315         55 897           20 411
    Energy                                1.9         62.3         19 083         11 760           28 305

Investments & Concessions                38.8        117.9        227 502        104 409          236 638
Manufacturing                             6.2        (33.4)        27 780         41 684           67 894

Total core operating profit               4.3         46.3        315 137        215 361          348 368

Adjustments for non-operational transactions
Joint arrangements equity accounted and joint
arrangements wholly consolidated                                   (5 672)        (8 528)         (11 313)
Pension fund surplus                                                    -              -           18 874
Re-measurement of employment obligation                                55         (1 283)           7 921
Net (loss)/profit on disposal of investment in associate
and (impairment)/reversal of impairment of investment
in associate                                                      (20 255)             -            2 626

Operating profit per income statement                             289 265        205 550          366 476

Share of equity accounted profits                                   9 686         18 876           24 592
Finance costs - net                                                (8 335)        (3 582)          (1 622)

Profit before taxation per income statement                       290 616        220 844          389 446

* Restated for the application of IFRS 5 - Non-current assets held for sale and discontinued
  operations, as a result of the decision to transfer the remaining business within the discontinued
  cluster of Construction Materials into continuing operations within the Manufacturing cluster.

Statistics
as at 31 December 2015

                                                                       Unaudited                  Audited
                                                                 six months ended 31 Dec       year ended
                                                                     2015           2014      30 Jun 2015

Number of ordinary shares                                     101 126 895    100 884 278      101 124 905

- Shares in issue                                             112 206 869    112 174 803      112 206 869
- Less: shares held by share trusts                           (11 079 974)   (11 290 525)     (11 081 964)

Weighted average number of shares ('000s)                         101 126        100 834          100 895
Fully diluted weighted average number of shares ('000s)           101 144        101 554          101 298
 EPS - R                                                             1,68           1,18             2,22
 HEPS - R                                                            1,31           1,09             2,05
 Fully diluted EPS - R                                               1,68           1,17             2,21
 Fully diluted HEPS - R                                              1,31           1,08             2,04
Dividend cover (based on earnings per share)                          4,0            3,9              4,0
Dividends per share (cents)                                          42,0           30,0             55,0

- Interim                                                            42,0           30,0             30,0
- Final                                                                 -              -             25,0

Net asset value per share - R*                                      33,79          27,65            28,96
Net debt to equity ratio                                                -              -                -
Current ratio                                                         1,2            1,3              1,2

EPS:  Earnings per share.
HEPS: Headline earnings per share.

* Net asset value relates to that attributable to equity holders of the parent.

COMMENTARY

Introduction

The group delivered a pleasing improvement in earnings for the first six months of F2016 over the low base of the prior comparable period. This improved
performance was driven by strong results from the Investments & Concessions cluster. This more than offset a continued weak performance from the
Engineering & Construction cluster, which delivered operating results below expectation. The Manufacturing cluster delivered a similar result to that of the
prior six months against difficult South African markets.

Restructuring action taken and operational improvements within the Engineering & Construction cluster over the last year have started to deliver results,
with a gratifying improvement in the overall reported contract loss-making ratio achieved. However, construction markets have mostly remained weak, with
further pressure in certain areas of the business. This necessitated an additional reduction in business carrying costs, over that originally planned, in line
with the declining level of new order intake. The corrective action and related negative operational gearing against a declining order intake, particularly in
the Civil Engineering and Projects segments, placed pressure on operating margin delivery within the Engineering & Construction cluster.

Investments & Concessions enjoyed a very pleasing first half, with good operational results buoyed by strong fair value profit realised on the investment
portfolio comprising the group's Eastern European toll road assets. This was as a result of a maturing project portfolio risk profile and the meaningful
depreciation of the Rand against the Euro. Additional fair value growth and profit was realised from a South African property asset.

The Manufacturing cluster experienced challenging markets in all the product areas of, fibre cement and related products, reinforcing steel supply and
large-bore steel water pipe. Despite these market pressures, the management team was able to continue driving operational efficiencies to optimise
production cost. This resulted in a satisfactory financial performance in line with the second half of the prior financial year, albeit down on the prior
comparable reporting period.

Performance summary

The following segment performances contributed to the group's reported total operating profit:

- Engineering & Construction
  - Building & Housing:
    Although this segment was again the strongest performer in the Engineering & Construction cluster, it delivered a lower result due to ongoing margin
    pressure. However, revenue increased over the prior comparable period and order intake in the South African private and public sector markets
    remained strong, albeit at reduced levels against F2015.
 
  - Civil Engineering:
    Although the reported loss was substantially reduced against the previous period, the segment remained the worst performing segment in the
    Engineering & Construction cluster. The order book declined further and additional retrenchment costs were taken to decrease permanent overheads in
    line with current and forecast market conditions. The group expects an improving performance in the second half following recent contract wins.
  
  - Projects:
    Whilst remaining profitable, this segment's profitability is significantly lower than historic levels. This is, in part, due to the shift in order book mix which
    now includes a material share of local sub-contracting work in the power sector which is in line with the strategy of pursuing work in this sector to
    compensate for a lack of new contract awards in the higher-margin mining and oil and gas sectors. In addition, labour unrest, especially at a Kwazulu-
    Natal contract, impacted segment performance. Securing new work will be key to driving a recovery in future profits from the current low reported
    levels.
  
  - Energy:
    This segment reports improved profitability in line with the successful execution of the secured order book. However, the continued holding costs
    relating to nuclear readiness weighed on the overall result.

- Investments & Concessions:
  This cluster delivered an outstanding performance due to robust operational delivery by the Eastern European operations of Infrastructure Concessions.
  Strong value growth in the portfolio of Eastern European project investments as well as in the South African properties portfolio, also contributed to the
  outperformance of this cluster. Fair value upward adjustments of R153,8 million (H1 F2015: R45,7 million) were realised from the group's investments in
  service concessions and investment properties. New project wins in the period further bolstered this cluster's outlook.

- Manufacturing:
  As expected, this cluster delivered a lower result due to tight market conditions in South Africa for fibre cement, reinforcing steel and large-bore steel
  water pipe. Whilst a sharp reduction in the number of Gauteng power outages assisted plant operations compared to the previous year, further innovation
  was essential to decrease manufacturing costs in line with declining market demand and rising imported material costs of production. Significant new
  projects in South Africa for large bore water pipe are almost non-existent in the short term, with contract wins requiring small quantities of bespoke pipe
  for specific client installations. The group's reinforcing steel business was able to deliver a steady performance and mitigate against declining demand in
  the Civil Engineering segment through product supplies to the Building segment. Supply to the Building segment now exceeds supply to the Civil
  Engineering segment.

Financial performance

Headline earnings per share (HEPS) of 131 cents represents an increase of 20.2%, and fully diluted HEPS (FDHEPS) of 131 cents per share an increase of
21.3%, compared to the HEPS and FDHEPS of 109 cents and 108 cents per share respectively for H1 F2015. Earnings per share (EPS) of 168 cents and fully
diluted EPS (FDEPS) of 168 cents per share represents a 42.4% and 43.6% increase respectively over the 118 cents per share and 117 cents per share for H1
F2015. The difference between earnings and headline earnings in the period was mainly as a result of a profit on the fair value adjustment of an investment
property, as well as profit on sale of fixed assets.

Group revenue increased by 5.2% from R6,9* billion to R7,3 billion, mainly as a result of increased revenue from the Investments & Concessions cluster and
the Building & Housing and Projects segments within the Engineering & Construction cluster.

The group's core operating profit increased by 46.3% from R215,4* million to R315,1 million, mainly as a result of the stronger fair value gains on service
concessions (R110,2 million) and fair value gains on investment property (R43,6 million), over those traditionally reported (H1 F2015: R45,8 million and nil
respectively). As a result, the Investment & Concessions core operating profit increased by 117.9%. The Manufacturing core operating profit decreased by
33.4% and the Engineering & Construction cluster's core operating profit decreased by 13.6%. The group's overall core operating margin increased from
3.1% in the comparable period to 4.3%. The group's total operating margin increased to 4.0% (H1 F2015: 3.0%).

Group net finance costs of R8,3 million were recorded (H1 F2015: R3,6* million). The effective tax rate of 31% (H1 F2015: 34%) was higher than the South
African statutory tax rate of 28%. This was mainly due to a prudent approach adopted in terms of the raising of deferred taxation assets and an increase in
under-provided taxation from the past year. This was partially offset by taxation liabilities in jurisdictions with lower taxation rates.

* Restated for the application of IFRS 5 - Non-current assets held for sale and discontinued operations, as a result of the decision to transfer the remaining
  business within the discontinued cluster of Construction Materials into continuing operations within the Manufacturing cluster.

Financial position

It is pleasing to note that the group's statement of financial position continues to be sound, with a nil net gearing ratio and an increase in the bank and cash
balance to R3,6 billion as at 31 December 2015 (F2015: R3,4 billion and H1 F2015: R3,1 billion). Excess cash will be applied to future equity investments. At
period end the group reported R1,4 billion (F2015: R938,6 million) in excess-billings-over-work-performed and R803,5 million (F2015: R1,1 billion) in advance
payments received.

Notice is hereby given that, in terms of the provisions of section 45(5) of the Companies Act, No 71 of 2008 (South Africa) and pursuant to the special
resolution passed at the annual general meeting of the company held on 3 November 2015, authorising the company to provide direct or indirect financial
assistance to related or inter-related parties, the board of directors (the board) has resolved in terms of section 45(2) of the Act to authorise Group Five to
provide financial assistance to its subsidiary, which financial assistance exceeds one-tenth of one percent of the company's net worth.

The financial assistance is in the form of a guarantee for borrowing facilities. During the period the group concluded on the following transactions:
- Settlement of a revolving credit facility for USD 20 million, bearing a variable interest, linked to LIBOR, at the 2015 year end of 2.03%, which was repaid in
  September 2015
- Raising of a USD 15 million facility in December 2015, of which USD 12 million has been utilised, bearing variable interest, linked to LIBOR, at period end
  of 1.64%. Settlement date is May 2016
- Retaining a revolving credit facility for R250 million bearing a variable interest, linked to JIBAR, at period end of 8.7%.

Financial instruments, other than investments in service concessions that are measured at fair value, are measured at carrying value which approximates
their fair value. The group values its investments in service concessions at fair value at the time of investing or making an irrevocable commitment to invest.
Fair values are determined using the discounted cash flow method of valuation using anticipated future cash flow based on market-related exchange and
inflation rates. The relevant Euro ZAR exchange rate used was 16,95 (H1 F2015: 14,31). The cash flows are discounted at appropriate rates that take into
account the relevant market and project risks. Discount rates ranging between 9% and 14% were used. (H1 F2015: 9% - 14%).

* Restated for the application of IFRS 5 - Non-current assets held for sale and discontinued operations, as a result of the decision to transfer the remaining
  business within the discontinued cluster of Construction Materials into continuing operations within the Manufacturing cluster.

Cash flow

The group's cash flow position is pleasing. The group generated R214,6 million (H1 F2015: R231,2* million) cash from operations before working capital
enhancements of R98,2 million (H1 F2015: R89,2* million). This resulted in a net cash inflow from operating activities of R165,2 million (H1 F2015: R134,4
million) after settlement of taxation liabilities of R114,0 million (H1 F2015: R126,9 million) and dividend to shareholders of R25,3 million (H1 F2015: R55,5
million).

Net cash investment of R59,0 million (H1 F2015: R14,5 million) in plant and equipment and investment property was made, with net borrowings repaid of
R105,7 million (H1 F2015: net R44,9 million repaid).Proceeds on service concessions investments of R57,9 million (H1 F2015: R100,8 million) were realised
and the group invested R169,4 million with the acquisition of 12.7% in the M6 Phase 1 project in Hungary, a long term concession with a remaining ten-year
term. The depreciation of the South Africa Rand against foreign currencies, especially the USD Dollar, resulted in an enhancement in the South African rand
equivalent of foreign cash balances by R325,4 million (H1 F2015: R48,8 million). This resulted in a net inflow of R202,9 million (H1 F2015: R214,4 million) and
closing bank and cash on hand at the end of the period of R3,6 billion (H1 F2015:R 3,1 billion and F2015: R3,4 billion).

Dividend

The group has an approximate four times basic earnings per share dividend cover policy. This policy is subject to review on a semi-annual basis, prior to
dividend declaration, as distributions are influenced by business growth expectations, acquisition activity or movements in earnings as a result of fair value
accounting adjustments. In line with this policy, a dividend for this period of 42 cents per share (H1 F2015: 30 cents) has been declared. The dividend policy
therefore remains unchanged, based on the medium term business outlook and the availability of liquid resources.

Business combinations

There were no business combinations during the current reporting period. In the prior year the remaining business within the group's discontinued cluster of
Construction Materials was transferred into continuing operations. This operation now trades within the Manufacturing cluster.

In December 2015, in line with its stated strategy, the group invested R169,4 million and acquired 12.7% of the M6 Phase 1 project, a long term road
concession in Hungary with ten-year remaining term.

Shareholding

The implementation of a Black Professionals Staff Trust and Izakhiwo Imfundo Bursary Trust was approved by shareholders on 27 November 2012. The
transaction was concluded on 16 January 2013 following the fulfilment of all conditions precedent.

The estimated share-based payment benefit with respect to the Black Professionals Staff Trust at period-end date was R46,8 million (June 2014: R149,9
million, December 2014: R87,0 million, June 2015: R86,4 million) and is recognised as a cash-settled share-based payment transaction over the life of the
scheme from the effective date of this transaction to the assumed end date of November 2020. An amount of R6,8 million (H1 F2015: R887k) was credited to
earnings in H1 F2016.

The implementation of the Izakhiwo Imfundo Bursary Trust portion of the revised transaction resulted in a two million share increase in prior years. The
implementation of the Black Professionals Staff Trust at the effective date did not increase the weighted average number of shares in issue, as these remain
anti-dilutive at 31 December 2015. However, this is required to be reassessed at each reporting period.

Industry matters

Management have continued to engage with the Competition Commission of South Africa (the Commission) in an attempt to responsibly settle any
outstanding matters on reasonable terms, while conscious of its accountability to conclude this matter for the benefit of all its stakeholders. As reported
previously, the group secured conditional leniency from the Commission in terms of the Commission's Corporate Leniency Policy in return for full disclosure
of all matters that the group was able to uncover during its internal investigation process.

The group was implicated in four contracts which had not been detected through its internal investigation. In the prior year the Commission confirmed that
its investigation into two of the four implicated contracts was concluded, and the cases were dropped.

As anticipated, in the prior year the Commission referred the alleged collusive tendering on the two remaining contracts to the Competition Tribunal.
Proceedings with the Tribunal continue, with the group maintaining a co-operative stance with the competition authorities to conclude the matter and offer
certainty to shareholders, employees and all other stakeholders.

Based on legal counsel assessment, any settlement or liability would be adequately covered by the provision raised in F2013.

The group continues to drive industry transformation priorities through its internal strategy, under the leadership of the CEO. The group views addressing
the issues of company and sector transformation as fundamental to aligning the company with national and sector priorities, both in South Africa and across
Sub-Saharan Africa. Group Five continues to directly and indirectly champion and support the national and African agenda for the roll out of sorely needed
infrastructure, through various development initiatives undertaken in line with the objectives embodied in the South African Government's National
Development Plan (NDP), and similar plans which champion African infrastructure development.

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.

Accounting estimates and judgements can, by definition, only approximate results, as the actual results may differ from such estimates. Estimates and
judgements are continually evaluated and are based on historic experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances.

Stakeholder attention is drawn to the contingent risk of civil claims possibly being lodged against the group, and all construction companies which were
implicated in anti-competitive behaviour, following the Competition Commission release of its findings in June 2013 and the public interest reported in recent
months.

Total financial institution guarantees given to third parties on behalf of subsidiary companies amounted to R7 448 million as at 31 December 2015, compared
to R7 144 million as at 30 June 2015 and R7 298 million as at 31 December 2014.

Operational review

Group

The group provides both its total operating margin, as well as the core operating margin from operations, as per the segmental report. The core operating
margin is the total operating margin adjusted for non-core/headline transactions such as pension fund surpluses, profit/loss on sale of or impairment/
reversal of impairment of subsidiaries and associates and the re-measurement of employment obligations.

The core operating margin reflects the underlying operating performance. Both margins include the fair value upward adjustments in Investments &
Concessions and profit/loss on sale of property, plant and equipment and investment property, as these are within the control of the group.

The total operating margin excludes joint arrangements equity accounted and wholly consolidated, whilst the core margin does not adjust for these joint
arrangements for segmental reporting purposes.

During the prior year, the group transferred the remaining business within its discontinued cluster of Construction Materials into continuing operations. This
operation now trades within the Manufacturing cluster.

                                                           Six months    Six months           Year
                                                                ended         ended          ended
                                                               31 Dec        31 Dec        30 June
                                                                 2015          2014           2015
                                                            Unaudited     Unaudited*       Audited

Revenue - (R'000)                                           7 265 425     6 903 082     13 875 570
Total operating margin per income statement - %                   4.0           3.0            2.6
Core operating margin per segmental report - %                    4.3           3.1            2.5


* Restated for the application of IFRS 5 - Non-current assets held for sale and discontinued operations, as a result of the decision to transfer the remaining
  business within the discontinued cluster of Construction Materials into continuing operations within the Manufacturing cluster.


Engineering & Construction

                                                           Six months    Six months           Year
                                                                ended         ended          ended
                                                               31 Dec        31 Dec        30 June
                                                                 2015          2014           2015
                                                            Unaudited     Unaudited        Audited

Revenue - (R'000)                                           6 250 981     5 948 752     11 875 357
Core operating margin per segmental report - %                    1.0           1.2            0.4

The Engineering & Construction cluster contributed 85.8% to group revenue (H1 F2015: 85.8%) and 19.0% to group core operating profit (H1 F2015: 32.2%).
Revenue remained largely unchanged, with a 5% increase from R5,9 billion to R6,2 billion. Core operating profit decreased by 13.6% from R69,3 million to
R59,9 million. The overall Engineering & Construction core operating profit margin percentage was 1.0% (H1 F2015: 1.2%). Over-border work contributed
29% (H1 F2015: 24%) to cluster revenues.

The South African construction and engineering market 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.

As cost cutting initiatives by nature lag the softening of the market, the group is experiencing negative operational gearing following a declining order intake.
This undermined operational margin delivery within the cluster. Furthermore, although in line with the delivery programme, limited profit recognition on the
significant Kpone Power contract, as it is at an early stage of contract execution, added further margin pressure.

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 necessitated due to further market weakness. These costs negatively affected performance,
specifically within the Civil Engineering segment.

Despite the significant operational pressures on the cluster, interventions undertaken to continue to improve standards of safety, a heightened focus on
quality, further improvement in contract life-cycle risk management, and direct ownership and accountability for operational delivery continued to deliver
results. A pleasing improvement in the quality and timeous delivery of contracts, improved satisfaction levels of clients, and a reduction in the overall
contract loss-making ratio bodes well for delivery from this cluster when order book growth resumes.

It is however extremely sad to have to report one fatality during the reporting period, following a fall from height in the Building segment. The group provided
full support to the deceased's family through this tragic event. Immediate additional action was taken to continue to drive our safety systems, standards,
culture and performance.

Building & Housing

                                                            Six months      Six months          Year
                                                                 ended           ended         ended
                                                                31 Dec          31 Dec       30 June
                                                                  2015            2014          2015
                                                             Unaudited       Unaudited       Audited

Revenue - (R'000)                                            2 656 924       2 343 479     4 885 951
Core operating margin per segmental report - %                     1.3             2.0           1.9

Building & Housing revenue increased by 13.4% from R2,3 billion (99% local) to R2,7 billion (100% local). The segment reported a 24.9% decrease in core
operating profit over the comparable period, from R46,1 million to R34,6 million. This resulted in the overall core operating margin percentage decreasing
from 2.0% to 1.3%.The order book, whilst reduced, remains at a high level.

The results continue to illustrate the extremely tough conditions in this segment where thin margins reign, despite generally good execution performance
against tender budgets.

The Building team commenced construction on a number of significant new contracts in the reporting period, and successfully completed and handed over a
number of new-build South African contracts. The City of Tshwane's new municipal headquarters' public private partnership project (Munitoria) is proceeding
well and in line with programme. Whilst the level of tender enquiries in the building market remains active, it continues to be highly competitive. The
medium term outlook remains less certain in a rising domestic interest rate environment. Successful execution on secured mine housing contracts
continues, although the shorter term outlook for new contracts in this sector is limited. The segment also focuses on local social housing contracts, noting
that the project approval and commencement cycle for these contracts remain slow. The segment continues to develop selective building and housing
contracts in the rest of Africa that provide strong medium term prospects and which are in line with the group's contracting and country risk appetite and
which complement the group's competitive differentiators.

The secured one-year order book stands at R3,6 billion (100% local) (F2015: R4,4 billion and 100% local) (H1 F2015: R4,6 billion and 100% local). The total
secured order book stands at R5,0 billion (100% local) (F2015: R6,1 billion and 100% local) (H1 F2015: R5,4 billion and 100% local).

Civil Engineering

                                                            Six months      Six months          Year
                                                                 ended           ended         ended
                                                                31 Dec          31 Dec       30 June
                                                                  2015            2014          2015
                                                             Unaudited       Unaudited       Audited

Revenue - (R'000)                                            1 261 940       1 626 410      2 665 751
Core operating margin per segmental report - %                    (1.4)           (2.7)          (3.6)

Civil Engineering includes the group's civil engineering activities in South Africa and the rest of Africa. The legacy Middle East operations' close-out
continued.

Civil Engineering reported a 22.4% decrease in revenue from R1,6 billion (59% local) to R1,3 billion (68% local), while core operations generated a loss of
R17,1 million for the six months (H1 F2015: R44,4 million loss). Included within the operating losses during the current period is an amount of R10,4 million
incurred in retrenchment and holding costs, in excess of those originally planned, as the group continues to right-size this segment to match market
demands and conditions. In addition, the business realised R16,0 million profit on sale of fixed assets. This is included within the segment's reported core
margin, in line with the group's policy, but adjusted for the determination of headline earnings.

Whilst work is available in the roads and earthworks sector, tenders are generally of a smaller size. Bidding is highly competitive and work is often awarded
at low margins. Some work is being tendered in the civil engineering sector, with the group successfully securing awards in this market towards the end of
the reporting period. Employee levels have been reduced further than previously anticipated in response to the reduced level of new contract awards. An
improved second half F2016 is expected following recent contract wins. Medium term prospects for larger roads and civils contracts in the group's targeted
African countries remain positive, with the group expecting contract awards within the next nine to 18 months.

Civil Engineering's secured one-year order book stands at R2,2 billion (54% local) (F2015: R2,1 billion and 58% local) (H1 F2015: R2,0 billion and 56% local)
The full order book is at R3,1 billion (49% local) (F2015: R3,3 billion and 53% local) (H1 F2015: R3,1 billion and 49% local).

Projects

                                                            Six months     Six months           Year
                                                                 ended          ended          ended
                                                                31 Dec         31 Dec        30 June
                                                                  2015           2014           2015
                                                             Unaudited      Unaudited        Audited

Revenue - (R'000)                                            1 308 640        930 653      2 213 758
Core operating margin per segmental report - %                     1.8            6.0            0.9

During the year, revenue increased from R930,6 million (36% local) to R1,3 billion (25% local). Core operating profit decreased by 58.3% from R55,9 million to
R23,3 million. The core operating profit margin percentage decreased to 1.8% (H1 F2015: 6.0%), largely due to an increase in the portion of the current order
book being executed in South Africa and in neighbouring regions, which traditionally delivers lower margins than those in the rest of Africa. Labour unrest,
especially at a KwaZulu-Natal project, further impacted segment performance. The business realised R14,1 million profit on sale of fixed assets. In line with
the group's policy, this is included within the segment's reported core margin, but adjusted for the determination of headline earnings.

Tendering activity in the mining sector remains very subdued, which required the business to focus on securing lower-margin work in the energy and oil and
gas sectors in alignment with other group activities. New contract wins are proving difficult to secure in the current depressed market environment, with no
immediate prospect for recovery, except in the very active African power sector.

The secured one-year order book stands at R1,5 billion (22% local) (F2015: R2,0 billion and 23% local) (H1 F2015: R2,0 billion and 17% local) The full secured
order book stands at R2,1 billion (15% local) (F2015: R2,8 billion and 18% local) (H1 F2015: R2,8 billion and 12% local).

Energy

                                                            Six months     Six months           Year
                                                                 ended          ended          ended
                                                                31 Dec         31 Dec        30 June
                                                                  2015           2014           2015
                                                             Unaudited      Unaudited        Audited

Revenue - (R'000)                                            1 023 477      1 048 210      2 109 897
Core operating margin per segmental report - %                     1.9            1.1            1.3


Revenue remained largely unchanged, with a 2.4% decrease from R1,0 billion (88% local) to R1,0 billion (56% local). Core operating profit increased by 62.3%
from R11,8 million to R19,1 million. This resulted in a core operating profit margin of 1.9% (H1 F2015: 1.1%). Included within these trading results are the
costs related to investment in future opportunities and capacity building for nuclear readiness of R13,1 million. The core operating margin before these
investment costs was thus 3.1%.

Construction of the Kpone independent power project located at Tema, near Accra (Ghana), is proceeding in line with plan. This is currently in its early stages
and targeted for completion at the end of 2017. The Energy, Projects and Civil Engineering segments are jointly responsible for the execution of this contract.
A number of significant contracts are being evaluated, negotiated and tendered across our target African countries in West, Central, Southern and East
Africa. The African power markets remain particularly buoyant, with project viabilities further supported in lower energy cost environment. Further phases of
the South African renewable energy programme present opportunities in the short term. The group continues to execute work at the Koeberg nuclear power
station as the only level one nuclear accredited major listed construction group in South Africa.

The secured one-year order book stands at R1,1 billion (9% local) (F2015: R1,3 billion and 21% local) (H1 F2015: R1,3 billion and 22% local). The full secured
order book stands at R1,6 billion (6% local) (F2015: R1,9 billion and 14% local) (H1 F2015: R2,0 billion and 14% local).

Investments & Concessions
                                                            Six months     Six months           Year
                                                                 ended          ended          ended
                                                                31 Dec         31 Dec        30 June
                                                                  2015           2014           2015
                                                             Unaudited      Unaudited        Audited

Revenue - (R'000)                                              586 386        453 807        995 125
Core operating margin per segmental report - %                    38.8           23.0           23.8


Investments & Concessions consists of transport concessions and property developments.

This cluster contributed 8.1% (H1 F2015: 6.5%) to core group revenue and 72.2% (H1 F2015: 48.5%) to core operating profit.

Revenue, which consists primarily of fees for the operation and maintenance of toll roads, increased by 29.2% from R453,8 million to R586,4 million. The
cluster delivered an improved result on the back of a good performance from the European operations and fair value upward adjustments from the group's
investment in service concessions. The core operating profit margin increased from 23.0% to 38.8%, with an increase in core operating profit of 117.9% to
R227,5 million (H1 F2015: R104,4 million). The operating profit includes upward fair value adjustments on investment property held of R43,6 million and
investment in service concessions of R110,2 million, totalling R153,8 million (H1 F2015: R45,7 million).

The Intertoll business delivered an excellent result due to continued strong performance from the underlying Eastern European projects, driven by an
ongoing focus on operational efficiencies and cost reductions, and improving project net cash flows. Increasing heavy and light vehicle traffic numbers on the
projects continue to improve project revenues, which drive investment performance. This, together with a maturing project portfolio risk profile and the
meaningful depreciation of the Rand against the Euro, resulted in notably stronger fair value gains on service concessions, over those traditionally reported.

It is pleasing to report that during the period, the Intertoll Europe business, together with international infrastructure financing partners, successfully
acquired 12.7% of the M6 Phase 1 project in Hungary, thereby securing an attractive investment with a remaining ten-year term linked to an operating
contract. The company was also awarded the operations & maintenance contract on the DBFO1 contract in Belfast Northern Ireland, for a 20-year period,
with a target commencement date of 1 April 2016.

A number of further prospects are being pursued in Europe alongside current and new complementary international partners. Working with existing
European partners, progress in early-stage development of opportunities in North America is being undertaken.

The Intertoll Africa business is delivering in line with expectations, with the Zimbabwe project now fully commissioned and performing well. A number of
new projects are being actively developed in target African countries using the Zimbabwe project as a benchmark for development.

Properties continues to make solid progress in the development of its portfolio of local and the rest of Africa projects, with an upward fair value adjustment
of R43,6 million on the Northpoint Industrial Park development in the reporting period. Existing projects continue to trade at or above expectation, with
strong partner, investor and tenant appetite for projects under development.

Manufacturing

                                                            Six months     Six months           Year
                                                                 ended          ended          ended
                                                                31 Dec         31 Dec        30 June
                                                                  2015           2014           2015
                                                             Unaudited      Unaudited*       Audited

Revenue - (R'000)                                              446 094        529 284      1 058 795
Core operating margin per segmental report - %                     6.2            7.9            6.4

* Restated for the application of IFRS 5 - Non-current assets held for sale and discontinued operations, as a result of the decision to transfer the remaining
  business within the discontinued cluster of Construction Materials into continuing operations within the Manufacturing cluster.

Manufacturing consists of the fibre cement building products business Everite, steel fabrication businesses BRI, Group Five Pipe and the Construction
Materials' sand business.

The Manufacturing cluster contributed 6.1% (H1 F2015: 7.6%*) to group revenue and 8.8% (H1 F2015: 19.4%*) to core operating profit.

Despite suffering declining volumes in the fibre cement business and a lack of contract awards in the steel pipe water sector, Manufacturing performed
reasonably well and in line with guidance, albeit at lower profit levels compared to H1 F2015.

Revenue decreased by 15.7% to R446,1 million (H1 F2015: R529,3* million) and the reported core operating profit for the period decreased by 33.4% to R27,8
million, from H1 F2015 of R41,7* million. This resulted in a core operating margin of 6.2% (H1 F2015: 7.9%*).

A continued focus in the fibre cement business on cost efficiencies, product marketing and sales strategies, cautious regional expansion and diversification
into a broader range of complementary traded products assisted in negating the pressure from decreasing volumes in the local market. The group's steel
fabrication business performed in line with plan and remained profitable, despite very challenging markets. This business adopted a number of innovative
processing, delivery and sales approaches to improve the efficiency of servicing key clients and in securing input materials at competitive cost. Demand for
large-bore steel water pipe remains very subdued, with the steel pipe water business now trading at low levels, which cover holding costs pending a recovery
in project demand.

Whilst the Manufacturing cluster continues to selectively explore and invest in new product technologies for manufacture to its existing client base, real
prospects for growth in revenue and earnings are dependent on a recovery in domestic demand, predominantly driven by an improvement in public and
private expenditure on infrastructure, including the housing and water markets.

Prospects

Group Five has a clear strategy that will deliver sustainable profit and positive economic returns over the longer term, despite challenging market conditions
in the shorter term. Corporate restructuring over the last year is delivering results through a more cost-efficient, aligned organisation, focused on profitably
and safely delivering an on-time quality product to our clients. Our improved contract loss-making ratio is testament to this.

In line with weaker markets for longer than previously anticipated, group corporate support functions continue to be assessed for value-add and
effectiveness, with additional changes implemented to further improve efficiencies and reduce overheads.

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

An expected ongoing strong contribution from our annuity business of Investments & Concessions and from Manufacturing is expected to continue to
mitigate against lower Engineering & Construction earnings through challenging markets in the shorter term, with strong group profit growth anticipated as
our order book returns to growth in the medium term.

The group's total secured Engineering & Construction Contracting order book stands at R11,8 billion (June 2015: R14,1 billion and December 2014: R13,3
billion). In addition, the group has R5,8 billion (June 2015: R4,7 billion and December 2014: R4,7 billion) in secured operations and maintenance contracts.
Given an ongoing weaker South African market and the long contract development lead times relating to African mega-contract development, uneven order
intake and order book growth can be expected to continue over time.

The overall group reported order book at December 2015 now stands at R17,6 billion (June 2015: R18,8 billion and December 2014: R18,0 billion). The value
of the group's target opportunity pipeline stands at R131 billion, with R50 billion of this pipeline currently in tender and pre-tender stage.

This is materially lower than the R225 billion pipeline and R74 billion tender and pre-tender pipeline reported in June 2015 as a result of a further
refinement and focus on targeted areas of the pipeline. This remains largely unchanged from that date. The pipeline indicates future strong demand in
power, a robust transport sector and continued activity in real estate.

 The group has intensified its focus on improving its returns on capital per cluster. The Investment & Concessions are above target and Manufacturing returns
are in line with target. Engineering & Construction is below target. The group has identified several courses of action to address this under performance.
These include further reducing costs, finding alternative project structures for improved delivery at lower risk, releasing capital and redeploying efforts into
Africa (now 41% of the group contracting order book) to compensate for the weak South African markets.

Despite market conditions remaining weak in Manufacturing and in most of the group's targeted Construction markets, an improvement in the group's
earnings performance is expected for the full year as a result of:

- the enhanced group operating structure
- an improvement in the group's reported Engineering & Construction contract loss-making ratio
- anticipated strong profit performance from Investments & Concessions.

Dividend declaration

On 5 February 2016, the directors declared a gross interim dividend of 42 cents per ordinary share (35,7 cents per ordinary share net of dividend tax) (H1
F2015: 30 cents).
- The dividend has been declared from income reserves
- In terms of dividend tax, the following additional information is disclosed:
  - The dividend is subject to dividend tax at 15% (6,30 cents per share)
  - The net dividend will therefore be 35,70000 cents per share for shareholders who are not exempt from dividend tax

The amount of shares in issue at the date of this declaration is 112 206 869 (101 126 895 exclusive of treasury shares) and the company's tax reference
number is 9625/077/71/5. In order to comply with the requirements of Strate, the relevant details are:


Event                                                          Date

Last date to trade (cum dividend)                              Friday, 8 April 2016

Shares to commence trading (ex-dividend)                       Monday, 11 April 2016
Record date (date shareholders
recorded in books)                                             Friday, 15 April 2016

Payment date                                                   Monday, 18 April 2016

No share certificates may be dematerialised or rematerialised between Monday, 11 April 2016 and Friday, 15 April 2016, both dates inclusive.

Basis of preparation

These consolidated condensed interim financial statements for the six months ended 31 December 2015 have been prepared in accordance with the
framework concepts, the recognition and measurement criteria of International Financial Reporting, Standards ("IFRS"), the SAICA Financial Reporting
guides, as issued by the Accounting Practices Committee and the financial pronouncements as issued by the Financial Reporting Standards Council, and the
information required by International Accounting Standard 34: Interim Financial Reporting, as issued by the International Accounting Standards Board
("IASB"), the JSE Listings Requirements and the requirements of the Companies Act of South Africa of 2008, as amended.

The consolidated condensed interim financial information should be read in conjunction with the annual financial statements for the year ended 30 June
2015, which have been prepared in accordance with International Financial Reporting Standards (IFRS). The significant accounting policies and methods of
computation are consistent in all material respects with those applied in the previous period.

Level of assurance

The above information has not been reviewed or reported on by the Group's auditors.

The financial statements were prepared by the Chief Financial Officer CA(SA) and approved by the board of directors on 5 February 2016 and signed on its
behalf by:

MP Mthethwa                         ECJ Vemer
Chairperson                         Chief Executive Officer
5 February 2016

Board of directors: MP Mthethwa* (Chairperson), ECJ Vemer (CEO), CMF Teixeira (CFO), NJ Chinyanta*~, Dr JL Job*, W Louw*, SG Morris*, KK Mpinga*-,
B Ngonyama*, VM Rague*^, MR Thompson*
* Non-executive director ~ Zambian - DRC ^ Kenyan

Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg 2001

Sponsor: Nedbank CIB

Registered address: No 9 Country Estate Drive, Waterfall Business Estate, Jukskei View, Johannesburg 1662, South Africa
Postnet Suite 500, Private Bag X26, Sunninghill 2157, South Africa

Tel: +27 10 060 1555 Vax: 086 206 3885

Email: info@groupfive.co.za

Please visit our website: www.groupfive.co.za

Date: 15/02/2016 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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