Wrap Text
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
In terms of the JSE Limited Listings Requirements, companies are required to publish a trading
statement as soon as they are reasonably certain that the financial results for the current reporting
period will be more than 20% different from those of the prior comparative period.
Group Five therefore advises shareholders that it will report a loss per share and headline loss per
share of at least 170 cents per share for the six months to December 2016 due to:
1. The recognition of the Group’s financial socio-economic contribution of R255 million, in
terms of the agreement reached with the government of South Africa to implement a
programme of initiatives that will significantly accelerate transformation of the South
African construction sector, as announced in a SENS announcement on 11 October 2016.
Although payment will occur at R21,25m per annum annually over a 12-year period, the
total liability must be recorded in the current reporting period as it is the period in which the
liability has been incurred.
2. The commercial close out and final settlement of certain long outstanding contracts, as
described below.
Furthermore, the group advises shareholders that, due to a disappointing performance by the
Engineering & Construction (E&C) cluster as described below, it expects profits from the underlying
E&C operations, i.e. excluding the impact of the above mentioned transactions, to be considerably
below margin guidance provided for this cluster in August 2016.
The six months ended 31 December 2015, reflected earnings per share and fully diluted earnings per
share of 168 cents and headline earnings per share and fully diluted headline earnings per share of
131 cents respectively.
Once the group has certainty on the actual range of the loss, a further trading statement will be
released on SENS.
RESULTS IN CONTEXT
Engineering & Construction
The cluster’s performance for the period under review was particularly disappointing, mostly as a
result of:
- continued weak trading conditions, impacting the Civil Engineering, Projects and Energy
segments, with a subdued order intake for the cluster during the period;
- contract losses, affecting mainly the Projects segment and materially impacting the
segment’s performance due to contract operational difficulties;
- subdued tendering activity in the mining and oil and gas sectors, which has placed Projects
under continued pressure;
- cyclical revenue and profit in the Power sector. Although bidding activity in the Power sector
remains buoyant, the length of time taken to achieve contract awards resulted in no new
awards materialising in the first six months of the financial year impacting profitability for
this segment;
The Kpone Independent Power Project continues to trade in line with expectation and programme.
In addition, the group’s focus in the current period was on the commercial close out and final
settlement of previously-disclosed long outstanding South African contracts to remove non-
performing assets, and improve the group’s balance sheet and its return on capital going forward.
Settlement has been reached on these contracts, which resulted in additional liquidity for the group
but, although now concluded, will impact the cluster’s performance for the current period.
Whilst overall short-term market conditions for construction are remaining weaker for longer than
expected, the construction industry in the group’s targeted geographies and sectors continues to
show solid medium and long term prospects.
Manufacturing and Investments & Concessions
The group’s Manufacturing cluster is delivering a steady performance in flat markets, and the
Investments & Concessions cluster continues to perform well on the back of an ongoing solid
performance from the European operations.
REPORTING
The above information has not been reviewed or reported on by the Company’s auditors. The group
expects to be in a position to provide further guidance to the market in January 2017 ahead of its
interim results announcement which is scheduled for release on 27 February 2017 when the group
will update the market on its business in a presentation in Johannesburg on the same day. The
presentation will be available for all stakeholders on the group's website, www.groupfive.co.za.
14 December 2016
Sponsor
Nedbank Corporate and Investment Banking
Date: 14/12/2016 02:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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