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GRF
GRF
Group Five Limited - Group Five Enforces Zero Tolerance For Irregular
Activities In Angola
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 Group")
GROUP FIVE ENFORCES ZERO TOLERANCE FOR IRREGULAR ACTIVITIES IN ANGOLA
Summary
The board of directors of Group Five Limited, in line with its zero tolerance
policy towards irregular business activities, believes it prudent to inform
investors of certain potential irregularities it suspects on a housing project,
the Nova Vida Project in Luanda, Angola. This project started in 2001 and
finished in 2005.
All possible eventualities relating to the above have been provided for in the
current financial year and the Group"s prospects outlined to the market in its
interim results on 15 February 2006, particularly with regards to earnings,
stands: ". continued improvement in the local civils market, as well as growth
in over-border construction markets, together with an expected second half
improvement at manufacturing and property development services, should lead to
good earnings growth for the full year to 30 June 2006".
The Group"s estimated construction order book revenue to 30 June 2006 is
currently at a record R5,0 billion and the secured one-year construction order
book to 30 June 2007 is currently R4,5 billion. Around 40% of the construction
order book is over-border.
Background
Group Five has been involved in 15 contracts in Angola since 2001. The Nova
Vida Project, Group Five"s first in Angola, was entered into with the Angolan
government in 2001 and generated total revenue of $135 million. The project was
entered into before group structures, risk management practices and management
controls were revised and tightened in 2003.
Reports were received by the management of Group Five from a variety of reliable
sources, including the Angolan authorities, expressing concern around the
possible abuse of customs, immigration and licensing exemptions and other
irregularities or potential illegal activities by Group Five personnel.
Investigations by senior executive management indicated that at least some basis
appeared to exist for reasonable suspicion that irregular activities had taken
place. Although no charges have been laid and no firm evidence has yet been
found to enable Group Five to take further action against parties suspected to
be involved, the Group felt that under the Prevention and Combating of Corrupt
Activities Act of South Africa, it had to report suspected illegal action. In
line with Group Five"s formal policy to report any potential illegal activity to
the South African Police Service (SAPS) and its zero tolerance policy towards
such activity, management therefore reported its suspicions. Group Five also
continues its internal investigations.
Negotiations have taken place with the Angolan authorities and operations and
relationships are back on a firm footing. All unpaid customs duties and other
taxes are currently being negotiated and settled.
All possible steps have been undertaken to ensure that best governance policies
are enforced in all Group Five activities, both locally and outside its borders.
Group Five implemented a formal Code of Ethics throughout the Group in 2004 and
will continue to firmly enforce its zero tolerance policy towards irregular
business practices.
On behalf of the Board of Directors
D Paizes
Chairman
Sandton
8 June 2006
Investment bank and sponsor
Nedbank Capital
Date: 08/06/2006 12:28:32 PM Produced by the JSE SENS Department
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