HEPS from continuing operations rose to 221.8 cents from 111.8 cents.
A final dividend of 36 cents per share was declared, up from 32 cents a year ago, for a total dividend of 56 cents from 49 cents before.
Revenue was up 30.1% to 5.86 billion rand, while operating profit rose to 240.8 million rand from 115.7 million rand, while profit for the year rose to 148.1 million rand from 129.8 million rand before.
During the year the group re-evaluated the ability of certain business units to support its financial targets and as a result sold its 50% interest in WSSA and its 25% interest in Group Five Saudi Pipe, closed down and sold off its concession and operations and maintenance business in India and, subsequent to year-end, disposed of its 100% interest in Vaal Sanitaryware and its 40% interest in DPI Plastics.
Roads and Earthworks was downsized and incorporated into Civil Engineering. Infrastructural Developments was restructured through the integration of the activities of Intertoll and the group's large-scale concession contract development activities and also includes Property Development Services.
The Infrastructural Developments division, which houses the businesses of Property Development Services and Infrastructure Development Services contributed 5.4% to group revenue. Property Development Services, established two years ago, had an extremely successful year, with growth in this new business starting to flow through. Operating profit increased by 124.6%, primarily as a result of the completion and transfer of a number of developments during the year, which commenced more than 18 months ago.
The business is currently developing 20 projects, Group Five said.
Infrastructure Development Services (IDS), which was reorganised during the second half of 2005 to concentrate on the development of large-scale infrastructure contracts with a value of over one billion rand, together with toll road operations and maintenance contracts, increased revenue by 43% to 189.2 million rand.
The business currently operates and maintains five toll roads in South Africa and two in Hungary and holds interests in two road service concessions in Eastern Europe.
A number of key medium-term power IPP contracts in South Africa and the rest of Africa are being pursued, together with certain toll road concession opportunities in South Africa and government building PPP opportunities on the African continent, Group Five noted.
The Manufacturing business contributed 8.1% to group revenue and operating profit surged by 67.7%, primarily due to the strong performance from Everite.
The Everite factory continues to operate at full capacity, encouraged by a strong residential building market. Everite has committed to invest in an expanded capacity programme over the next 18 months of approximately 50 million rand to take advantage of the ever-increasing low cost housing initiatives.
"This expenditure will eventually result in an increased capacity of 25%. The continued increasing demand in low cost housing and increasing capacity in the factory should lead to continued strong growth in F2007," Group Five added.
The construction division - the group's largest contributor at 86.5% of revenue - continued its strong growth and remains well positioned for further growth in this sector.
Construction revenue increased by 32.4% to 5.076 billion rand, while operating profit soared by 138% to 147.7 million rand.
Over-border work contributed 43.7% to construction revenue, while Building and Housing revenue increased by 22.9% to 2.8 billion rand.
The group reported strong performances on its East African contracts, which will be completed in the next six months. This more than offset the negative write-offs in Angola due to possible irregular activities.
All known losses relating to Angola have been fully accounted for at June year end. Prospects for 2007 are positive, with a secured one-year order book already in the region of 2.5 billion rand.
The Civil Engineering and Roads and Earthworks businesses locally and in Africa were merged during the year to improve efficiencies and lower the overhead base of the business. This business, together with the Civil Engineering business in Dubai, increased revenue by 58.1% to 1.662 billion rand and turned around the operating loss of 9.7 million rand in 2005 to an operating profit of 51.7 million rand.
Civil project tender activity locally and in Africa, as well as Dubai, continues to increase. Dubai achieved its best performance since it was established two years ago, Group Five noted.
A problem roads contract in Malawi was terminated during the year with all known losses being accounted for in prior years. The tail end of the long-term Roads loss-making contracts are complete and focused, higher-margin contracts are being pursued in South Africa.
A secured one year order book of 1.8 billion rand already exists at year-end in Civil Engineering, which should result in further growth in profitability during 2007.
Engineering Projects had a disappointing year due to the negative effect of two poor performing contracts, one of which is in Cabinda, Angola, and the other in South Africa. All known losses have been provided for at year-end. One loss-making contract is complete, with the other expected to be completed in March 2007. The irregular activities in Angola also hampered performance on the Angola contract in Cabinda, due to the knock-on work permit and import investigations. These issues have all been addressed, the group said.
Looking ahead, Group Five said the construction secured one-year order book is 4.7 billion rand, of which 42% is over-border at higher margins. A remaining capacity of 1.3 billion rand exists.
The local civil and building markets continue to improve. This, together with over-border opportunities, particularly in Dubai, and expected further growth at Everite and a continued strong performance from Property Development Services, should lead to good earnings growth for F2007, it said.
I-Net Bridge
Publisher: I-Net Bridge
Source: I-Net Bridge
