| Thu 19 Feb 2004, 8:08 | | Interim results for six months ended 31 Dec 03 |
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Group Five Limited - Interim results for the six months ended 31 December 2003
Group Five Limited
Incorporated in the Republic of South Africa
Reg. no. 1969/000032/06
Share code: GRF ISIN: ZAE 000027405
371 Rivonia Boulevard, Rivonia
PO Box 5016, Rivonia 2128, South Africa
Tel +27 11 806 0111
Fax +27 11 806 0187
Email info@g5.co.za
Website www.g5.co.za
Interim results for the six months ended 31 December 2003
A Broad-based Offer
Integrated products and services across the infrastructure value chain
Infrastructural Development Services
Manufacturing
Construction
Operations & Maintenance
GROUP INCOME STATEMENT (R"000)
UNAUDITED AUDITED
Six months Year ended
ended 31 Dec 30 June
2003 2002 2003
Revenue 2 052 427 2 115 633 4 100 361
Operating profit 71 989 63 749 160 127
Finance costs (17 008) (13 926) (28 530)
Profit before taxation 54 981 49 823 131 597
Taxation (10 996) (9 965) (30 463)
Profit after taxation 43 985 39 858 101 134
Minority interest (250) (1 185) (4 366)
Income attributable to
ordinary shareholders 43 735 38 673 96 768
Deduct after tax effect of:
Fair value increase in
investment property (3 587) (7 684) (8 925)
Profit on disposal of fixed assets (10 098) (4 376) (10 922)
Headline earnings 30 050 26 613 76 921
Operating profit is stated after
charging/(crediting):
Depreciation and amortisation 49 251 39 525 88 578
Foreign exchange losses/(gains) 18 274 2 621 (2 391)
ABRIDGED GROUP BALANCE SHEET (R"000)
ASSETS
Non-current assets
Fixed assets 524 824 467 087 509 425
Investments in associates 6 040 16 463 14 659
Other investments 82 061 83 242 80 048
612 925 566 792 604 132
Current assets
Bank balances and cash 199 200 337 629 263 618
Other current assets 1 158 932 1 185 495 1 225 403
1 358 132 1 523 124 1 489 021
Total assets 1 971 057 2 089 916 2 093 153
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders" interest 482 917 406 662 455 080
Minority interest 10 149 8 182 9 899
493 066 414 844 464 979
Non-current liabilities
Interest-bearing borrowings 113 890 49 609 60 832
Provision for post-employment
Obligations 44 443 53 207 46 199
158 333 102 816 107 031
Current liabilities
Accounts payable 1 105 531 1 441 289 1 267 106
Taxation 12 218 20 691 17 862
Bank overdrafts 201 909 110 276 236 175
1 319 658 1 572 256 1 521 143
Total equity and liabilities 1 971 057 2 089 916 2 093 153
SUMMARISED CASH FLOW STATEMENT (R"000)
Cash flow from operating activities
Cash from operations 108 102 103 274 216 803
Working capital changes (95 107) 135 365 (87 823)
Cash generated from operations 12 995 238 639 128 980
Finance costs (17 008) (13 926) (28 530)
Taxation and dividends paid (32 541) (22 176) (53 131)
Net cash from operating activities (36 554) 202 537 47 319
Fixed assets (net) (50 545) (57 135) (121 398)
Investments (net) 5 639 (4 262) 3 047
Financing activities 51 302 (106 554) 10 029
Net (decrease)/increase in
cash equivalents (30 158) 34 586 (61 003)
STATISTICS
UNAUDITED AUDITED
Six months Year ended
ended 31 Dec 30 June
2003 2002 2003
Number of ordinary shares 69 119 591 69 119 591 69 119 591
Shares in issue 73 573 023 73 573 023 73 573 023
Less: Treasury shares 4 453 432 4 453 432 4 453 432
Headline earnings per
share - cents 43,5 38,5 111,3
Earnings per share - cents
(basic and fully diluted) 63,3 56,0 140,0
Dividend cover 4,2 4,0 3,8
Dividend per share - cents 15,0 14,0 37,0
Interim 15,0 14,0 14,0
Final - - 23,0
Net asset value per share - cents 698,7 588,3 658,4
Current ratio 1 1 1
STATEMENT OF CHANGES IN EQUITY (R"000)
Balance at beginning of period 455 080 381 813 381 813
Attributable profit for
the period 43 735 38 673 96 768
Dividends paid (15 898) (13 824) (23 501)
Closing balance at end of period 482 917 406 662 455 080
SEGMENTAL ANALYSIS (R"million)
Revenue
Construction 1 531 1 672 3 204
Manufacturing 359 319 631
Operations and Maintenance 147 106 234
Infrastructural Development Services 15 19 31
Total revenue 2 052 2 116 4 100
Operating profit
Construction 28 40 91
Manufacturing 35 13 34
Operations and Maintenance 8 4 16
Infrastructural Development Services 1 7 19
Total operating profit 72 64 160
CAPITAL EXPENDITURE (R"000)
Capital and investment expenditure
for the period 75 106 85 611 162 824
Capital expenditure
committed/authorised 37 486 62 436 53 420
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.
Total guarantees given to third parties on behalf of subsidiary companies
amounted to R940 million as at 31 December 2003 as compared to R1 115 million at
30 June 2003. The directors do not believe any exposure to loss is likely.
ACCOUNTING POLICIES
These consolidated condensed interim financial statements are prepared in
accordance with the Statements of South African Generally Accepted Accounting
Practice, 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 2003. From a dividend per share point of view
disclosure has been provided based on the period to which the dividends relate.
SALIENT FEATURES
Change 2003 2002
Revenue - R000"s (3%) 2 052 427 2 115 633
Earnings per share - cents 13% 63,3 56,0
Headline earnings per share - cents 13% 43,5 38,5
Dividend per share - cents 7% 15,0 14,0
COMMENTS
Financial Overview
Despite a 3% decrease in revenue to R2,0 billion (2002: R2,1 billion) earnings
per share increased by 13% from 56,0 cents to 63,3 cents per share.
The increase in earnings per share represents the fourth successive period of
earnings growth. This has been achieved through the Group"s strategy of
restructuring into a properly positioned, broad-based portfolio of businesses to
buffer tough market conditions in any one sector.
During the period under review the Rand continued to strengthen, adversely
affecting cross-border revenue by R100 million and resulting in exchange losses
of R18,3 million (2002: R2,6 million). The strengthening of the Rand also
resulted in a slowdown in infrastructure spend by the resources sector, with
many projects either being cancelled or deferred.
In spite of these adverse external conditions, operating profit increased by 13%
to R71,9 million (2002: R63,7 million).
Working capital increased due to delays in payments for work done, resulting in
an increase in finance costs. Strict disciplines have been implemented within
the construction business units to reduce working capital levels.
An interim dividend of 15 cents per share (2002: 14 cents per share) has been
declared resulting in the dividend being 4,2 times covered.
Operational Review
Construction
Construction revenue decreased by 8% to R1,5 billion as a result of the effect
of the strengthening of the Rand on cross-border contracts and the general
slowdown in infrastructure spend. Operating profit decreased by 30% from R40
million to R28 million.
After adjusting for the fluctuation in exchange rates, the underlying operating
profit in construction showed a 10% improvement.
Building revenue and operating profit both increased in line with expectations
due to successfully executing both local and cross-border contracts.
As expected, Roads revenue decreased following the downsizing of its activities.
In addition, operating losses persisted on a number of contracts, which have now
been completed. The full effect of the downsizing will become evident during the
next six months, with a reduction in revenue and in the level of capital
employed.
Civils was affected by the decline in mining infrastructure spend, which led to
a decrease in revenue. However, operating profit remained constant due to
increased contract efficiencies.
Engineering is heavily reliant on the resources sector and, because of project
deferments and cancellations, both revenue and operating profit have been
adversely affected.
Manufacturing
Manufacturing revenue increased by 12% to R359 million (2002: R319 million). The
increase in revenue, coupled with significantly improved performances by all
manufacturing activities, resulted in an improvement in operating profit of 169%
to R35 million (2002: R13 million).
Everite Building Products, in line with its strategic objective, continued to
improve its factory efficiencies and achieved growth in operating profits during
the current period compared to a loss in the comparative period.
Vaal"s revenue remained constant, although operating profit continued to
increase due to the introduction of upgraded technology and ongoing factory
efficiencies.
DPI Plastics increased both revenue and operating profit significantly. This was
achieved through increased sales by the company"s black economic empowerment
joint ventures and lower than expected raw material costs.
Operations and Maintenance
Operations and Maintenance revenue increased by 39% to R147 million (R106
million), mainly due to the improvement at Intertoll where both revenues and
operating profits increased substantially.
Water and Sanitation Services continued to perform in line with expectations.
Infrastructural Development Services
Infrastructural Development Services was adversely affected by the deferment of
major projects in the mining sector. Revenue decreased and operating profit was
significantly down, as all project related costs incurred during the period were
written off. To address this the business unit will be diversifying to expand on
clients outside the mining sector.
Prospects
The deferment of expenditure by the resource sector has impacted both Civils and
Engineering and it is unlikely that this situation will change in the short
term. The Group is therefore actively pursuing opportunities elsewhere in
Africa, as well as in the Middle East. Opportunities for Building and Roads
continue to be explored within South Africa.
The Group"s order book of R3,1 billion remains constant with the previous year.
However with Roads now downsized, the Manufacturing operations continuing to
improve their profitability and the possibility that the Rand may further
weaken, the Board believes that the Group should have meaningful earnings growth
for the year.
By order of the Board
GM Thomas MH Lomas
Chairman Chief Executive Officer
18 February 2004
Dividend Declaration
The directors have declared an interim dividend of 15 cents per ordinary share
(2002: 14 cents) payable to shareholders.
In order to comply with the requirements of STRATE the relevant details are:
Event Date
Last day to trade 7 May 2004
(Cum-dividend)
Shares to commence trading 10 May 2004
ex-dividend
Record date 14 May 2004
(date shareholders recorded in books)
Payment date 17 May 2004
No share certificates may be dematerialised or rematerialised between 10 May
2004 and 14 May 2004, both dates inclusive.
Sponsor
Nedbank Corporate
Date: 19/02/2004 08:00:08 AM Produced by the JSE SENS Department
