| Thu 21 Feb 2002, 0:00 | | Group Five Limited - Interim Results |
|
Group Five Limited
JSE Share Code: GRF
ISIN Code: ZAE000027405
GROUP INCOME STATEMENT (R'000)
UNAUDITED AUDITED
Six months Year ended
ended 31 Dec 30 June
2001 2000 2001
Revenue 1 953 848 1 663 626 3 167 000
Operating 49 727 35 607 84 455
profit
Finance costs (9 003) (4 394) (8 025)
Profit before 40 724 31 213 76 430
taxation
Taxation (10 352) (8 838) (21 144)
Profit after 30 372 22 375 55 286
taxation
Minority (1 695) (136) (3 672)
interest
Attributable 28 677 22 239 51 614
profit for the
period
Operating
profit is
stated after
charging:
Depreciation 35 991 30 567 65 063
and
amortisation
Profit on
disposal of
fixed
assets and 2 271 1 750 3 769
investments
ABRIDGED GROUP
BALANCE SHEET
(R'000)
ASSETS
Non-current
assets
Fixed assets 420 792 300 101 385 017
Investments in 20 917 23 653 24 964
associates
Other 83 645 65 005 66 983
investments
525 354 388 759 476 964
Current assets
Bank balances 332 328 146 278 228 816
and cash
Other current 967 619 775 220 937 204
assets
1 299 947 921 498 1 166 020
Total assets 1 825 301 1 310 257 1 642 984
EQUITY AND
LIABILITIES
Capital and
reserves
Ordinary 364 599 325 631 343 525
shareholders'
interest
Minority 5 068 230 3 882
interest
369 667 325 861 347 407
Non-current
liabilities
Interest 33 824 27 706 30 895
bearing
borrowings
Provision for 42 000 41 000 41 500
post-employment
obligations
Deferred 4 076 12 891 2 191
taxation
79 900 81 597 74 586
Current
liabilities
Accounts 1 156 723 800 888 1 124 404
payable
Bank overdrafts 211 246 94 999 86 219
and short-term
borrowings
Shareholders 7 765 6 912 10 368
for dividend
1 375 734 902 799 1 220 991
Total equity 1 825 301 1 310 257 1 642 984
and liabilities
SUMMARISED CASH
FLOW STATEMENT
(R'000)
Cash flow from
operating
activities
Cash from 75 267 66 674 131 920
operations
Working capital 141 114 039 265 737
changes
Cash generated 75 408 180 713 397 657
from operations
Finance cost (9 003) (4 394) (8 025)
Taxation and (27 669) (17 419) (34 658)
dividends paid
Net cash from 38 736 158 900 354 974
operating
activities
Fixed assets (60 816) (71 115) (175 844)
(net)
(excluding non-
cash items)
Investments (12 613) (15 698) (17 828)
(net)
Financing 2 929 18 501 (22 882)
activities
Net (31 764) 90 588 138 420
(decrease)/incr
ease in cash
equivalents
STATISTICS
Number of 69 119 591 69 119 591 69 119 591
ordinary shares
Shares in issue 73 573 023 73 573 023 73 573 023
Less: Treasury 4 453 432 4 453 432 4 453 432
shares
Headline
earnings per
share - cents
(Attributable
profit adjusted
for after tax
profit
on disposal of 39.2 30.4 70.9
fixed assets
and
investments)
Basic and 41.5 32.2 74.7
diluted
earnings per
share-cents
Dividend cover 3.8 3.2 2.8
Dividends per
share - cents
Interim 11.0 10.0 10.0
Final - - 15.0
Net asset value 527.5 471.1 497.0
per share -
cents
Current ratio 0.9 1.0 1.0
STATEMENT OF
CHANGES IN
EQUITY (R'000)
Balance at 343 525 338 854 338 854
beginning of
period
Change in - (28 550) (28 550)
accounting
policy
Attributable 28 677 22 239 51 614
profit for the
period
Dividends paid (7 603) (6 912) (18 393)
Closing balance 364 599 325 631 343 525
at end of
period
SEGMENTAL
ANALYSIS
(R'000)
Revenue
Construction 1 546 002 1 141 682 2 349 659
Manufacturing 291 082 301 393 585 849
Other 116 764 220 551 231 492
Total revenue 1 953 848 1 663 626 3 167 000
Operating
profit
Construction 67 408 30 797 59 762
Manufacturing (31 116) (1 061) 1 561
Other 13 435 5 871 23 132
Total operating 49 727 35 607 84 455
profit
CAPITAL
EXPENDITURE
Capital and 84 383 84 786 202 807
investment
expenditure for
the period
Capital 49 178 51 931 110 38
expenditure
committed/autho
rised
CONTINGENCIES
There are no legal or arbitration proceedings including any that are pending
or that the Group is aware of or any obligations relating thereto, that have
had or that may have, in the opinion of the directors, a material effect on
the Group's financial position and accordingly no contingencies or
provisions have been raised therefore.
Total guarantees given to third parties on behalf of subsidiary companies
amounted to R1,458 million as at 31 December 2001 as compared to R1,266
million at 30 June 2001. The directors do not believe any exposure to loss
is likely.
ACCOUNTING POLICIES
These consolidated condensed interim financial statements are prepared in
accordance with AC127 and Schedule 4 of the South African Companies Act.
The accounting policies used in the preparation of the interim financial
statements are consistent with those used in the annual financial statements
for the financial year ended 30 June 2001 except for the adoption of AC116
(revised) "Employee Benefits".
The adoption of this accounting standard has resulted in the Group accruing
for certain post employment medical and pension costs for certain of its
retirees as well as other current employment costs over the period of
employment, as opposed to accounting for these costs on a cash paid basis.
The effect of the adoption of this accounting standard on the prior
interim's and prior financial year's attributable profit was a decrease of
R0,4million and R0,7 million, respectively, and on the prior interim's and
prior financial year's ordinary shareholders' interest a decrease of
R28,8 million and R29,2 million, respectively.
In addition, the comparative consolidated condensed interim financial
statements have also been adjusted from those previously presented to effect
the change in accounting policy, noted below, which was adopted in the
annual financial statements for the year ended 30 June 2001.
Previously property was carried at revalued amount; property is now
classified as either investment property, which is accounted for at fair
value, or owner occupied property which is accounted for at depreciated
cost; the effect of this change on the prior interim's attributable profit
was a decrease of R0,4 million and on the prior interim's ordinary
shareholders interest a decrease of R96,5 million.
COMMENTS
Financial Overview
The continued growth of the Group in its target markets resulted in a
revenue increase of 17.4% from R 1 663,6 million to R 1 953,8 million and
an increase in operating profit of 39.6% from R 35,6 million to R 49,7
million when compared to the prior interim period. Attributable profit
increased 29.3% from R 22,2 million to R 28,7 million, despite the 104.8%
increase in finance costs, which resulted from a significant increase in
working capital in the Road's business.
Operational Review
Construction
Construction, which contributed approximately 79% to the Group revenue,
experienced strong revenue growth, particularly in activities outside of
South Africa which, as a result of the depreciating Rand, resulted in
increased margins.
Buildings was a strong performer contributing approximately 50% of the total
construction turnover. Buoyed by a good performance in Angola, higher
margins were achieved.
The Civils business showed strong growth in revenue and profitability as a
result of an increase in projects, mainly in the mining sector.
An improved operational focus resulted in increased revenue and
profitability in the Engineering business.
The Roads business operated in difficult market conditions and, despite a
decrease in turnover and an abnormally high investment in working capital,
margins improved as a result of hard currency earnings for work obtained
outside of South Africa. Active steps are being taken to reduce the working
capital to acceptable levels.
Manufacturing
Manufacturing contributed approximately 15% to the Group revenue.
The results from Everite and AC Pipes were disappointing. The return to
profitability at Everite was not achieved due to ongoing commissioning
problems with the single site project. A decision was taken to extend the
December 2001 shut down at Everite in order to accelerate the refurbishment
of the plant. The benefits of the single site project and refurbishment will
only become evident during the next six months.
AC Pipes' infrastructural development market experienced a further downturn
and in spite of cost saving measures adopted, recorded a higher than
expected loss. The business will continue to be downscaled.
The above losses were offset to an extent by an improved performance from
Vaal Sanitaryware, which returned to profitability through increased
production. Despite severe competition, DPI matched its prior period
performance in turnover and marginally increased profitability.
The attention of shareholders is drawn to recent statements in the media
speculating on the probability of litigation against companies involved in
the mining of asbestos and the manufacture of asbestos based products.
Everite, a company of this Group has also been a target of this speculation.
Everite has focused on mitigating risks regarding asbestos related issues
over a number of decades. The view of the directors regarding litigation is
contained in the contingencies' note to these interim financial statements.
Other
Operations and Maintenance and Infrastructural Development Services
contributed approximately 6% to Group revenue.
The profitability of the Group's other businesses improved due to an
appreciation in the value of investment properties held within
Infrastructural Development and the continued growth of both turnover and
profitability of the Intertoll business.
Prospects
While an order book in excess of R 3 billion is encouraging, the problems
in both Everite and AC Pipes remain a cause for concern in the short to
medium term. The Board, however, remains confident that the decision to
consolidate Everite on a single site was the correct one and that the
business will return to profitability.
All things considered, the Board is confident that the Group's earnings over
the second six months should exceed those of the first six months.
On behalf of the Board
GM Thomas MH Lomas
21 February 2002
Dividend declaration
The directors have declared a final dividend of 11 cents per ordinary share
(2000: 10 cents) payable to shareholders. In order to comply with the
requirements of STRATE the relevant details are:
Event: Date:
Last day to trade Friday 8 March 2002
(Cum-dividend)
Shares to commence trading Monday 11 March 2002
ex-dividend
Record date Friday 15 March 2002
(date shareholders recorded
in books)
Payment date Monday 18 March 2002
No share certificates may be dematerialised or rematerialised between
Monday, 4 March 2002 and Friday 15 March 2001, both dates inclusive.
