Group Five earnings 561c vs 508c

Posted On Tuesday, 10 August 2010 02:00 Published by Commercial Property News
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Group Five has reported diluted headline earnings of 561c for the year ended June 2010, from 561c previously.

Group FiveConstruction entity Group Five on Tuesday reported diluted headline earnings of 561 cents for the year ended June 2010, from 561 cents previously.

The group's earnings per share were down 48% to 280 cents from 544 cents earlier.

Revenue declined to R11.337 billion versus R12.090 billion mainly due to a reduction in domestic construction materials volumes and in African resources markets, the group said.

Operating profit before fair value adjustments and impairment adjustments was up 10% at R876.90 million, from R797.18 million earlier.

The group's profit for the year amounted to R313.68 million versus R534.55 million earlier.

Commenting on the results, Group Five CEO Mike Upton, said: "During the year, the markets in which we operate experienced increased volatility and uncertainty, mainly as a result of the global financial stresses, as well as due to a hiatus in South African public sector spending.

Against these factors, we believe we posted a robust result, with delivery against our key financial goals of margin, cash generation and gearing.

We are particularly pleased with the strong margin performance of 7.7% compared to 6.6% last year.

"The performance and excellent track record of contract delivery achieved during the period would not have been possible without the significant operational discipline and the dedication of all our people, who once again demonstrated fortitude and resilience under challenging circumstances."

A final dividend of 74 cents per share was declared from 72 cents in 2009, bringing the total dividend for the year to 137 cents per share from 130 cents, an increase for the year of 5%.

The group said it generated R327 million in net cash with R1.2 billion cash from operations during the year under review.

"The improvement was as a result of continued generation of cash profits as well as a focus on maintaining working capital levels."

The year under review saw in increase in advance payments of R128 million while excess billings decreased by R756 million in line with expectations, as large contracts progressed to completion, Group Five said.

Construction contributed 82.8% of group revenue in the year under review, from 82.5%.

Construction revenue decreased by 6% from R9.9 billion to R9.4 billion and reported operating profit increased by 21% from R573 million to R695 million.

Manufacturing contributed 7.6% to group revenue, from 6.8%. Revenue increased by 6.1% from R816.1 million to R866.2 million.

The reported operating profit repeated the prior year's delivery of R86.8 million although the overall core operating profit margin percentage decreased to 9.5%, from 10.6%, it said.

Construction Materials contributed 4.3% to group revenue, from 5.6% in 2009.

"This cluster experienced a particularly tough trading year, with volumes and prices depressed by the slow roll out of public infrastructure and current recessionary pressures in the residential property market," Group Five said.

Reported operating profit decreased by 64% to R20.2 million and the overall core operating profit margin decreased to 3.6% from 8.4%.

Investments and Concessions consist of Infrastructure Concessions and Property Developments. This cluster contributed 5.2% to group revenue.

Revenue increased by 6% from R527.9 million to R557.2 million.

The core operating profit margin remained largely unchanged at 15.1%, with reported operating profit increasing by 7.5% to R85.6 million.

"Although Property Developments did not generate positive returns during this financial year, its performance was in line with expectations, as the group progressed its strategy of disinvestment from the residential sector in favour of securing A-grade commercial and retail property development positions in South Africa," Group Five said.

Revenue on Property Developments' therefore decreased by 65% to R34.6 million and the business incurred a reported operating loss for the year of R10.7 million, from a previous profit of R2.3 million.

"Engineering projects encountered a more difficult year, with many contracts in Africa and the Middle East postponed and delayed due to the financial constraints following the economic downturn," the group noted.

Revenue therefore decreased by 39.1% to R1.5 billion (50% local) and reported operating profit decreased by 29% to R147.7 million.

However, the core operating profit margin percentage improved to 9.4%, Group Five said.

During the second half of F2010, a recovery in enquiry levels from the sub-Saharan African mining markets was experienced, which resulted in some contract awards.

"This trend is expected to continue in certain minerals categories.

"There was also a significant progression in the South African power, energy and mining markets over the past six months, which augurs well for a recovery," it said.

The group said its construction one-year order book at end June 2010 stood at R7.1 billion, from R8.6 billion in 2009, while its total secured construction order book is R9.2 billion from R11.6 billion previously.

The value of the group's target pipeline as at 30 June 2010 stood at R119 billion, up from R115 billion in February 2010, with activity in all its markets, it said.

Based on the group's tender pipeline, it expects material contract opportunities to realise over the next 12 to 18 months, both in terms of its target geographies and sectors.

Group Five said it remains cautiously optimistic about future prospects.

"The South African government's public works programme, specifically in the areas of power generation, transport, water and housing, has the potential to create growth opportunities within the South African construction sector," it said.

The group added that the African outlook for private sector fixed investment and primary infrastructure had started to improve, but spending was likely to only come through slowly during the 2011 calendar year, with more certainty emerging from 2012.

"In the Middle East, the group has moved into new territories outside of Dubai.

"These markets provide technically attractive opportunities aligned to thegroup's capabilities in infrastructure contracts related to industrial works, power, transport and water," it said.

The group added that it continues to grow its expertise and capacity in areas where it has developed a multi-disciplinary delivery capability, namely power, transport and water, mining and large infrastructure works, with a geographic expansionary stance.

"In the year ahead, growth could well be slow. However, the group's current order book and its pipeline of opportunities support a generally positive outlook," it concluded.

Source: I-Net Bridge

Publisher: I-Net Bridge
Source: I-Net Bridge

Last modified on Monday, 08 July 2013 20:19

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