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CONSTRUCTION WORLD
OCTOBER
2016
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MARKETPLACE
Commenting on the results,
Group Five CEO Eric Vemer, said:
“These results bear testimony
to our strategy of investing and
operating across the infrastructure value
chain, which enables the generation of an
improved blended group operating margin
and the delivery of annuity income to
deliver sustained returns. During the year,
our Investments & Concessions business
especially proved its value in our portfolio,
with its performance again balancing the
cyclicality of construction earnings and
providing a strong underpin to our overall
group results.
“As a management team, we are
continually reviewing our strategy to ensure
it remains relevant to changing market
landscapes and client requirements, as
well as enhancing shareholder value. Our
portfolio of assets is therefore tested for its
strategic fit and ability to create accept-
able return on investment. During the
year, a working group with the board
and management was created to focus
on this.
“We believe we are set to
deliver strong growth and
returns over the longer term,
with a complementary
business portfolio that
provides downside
protection to earn-
ings through
tough times,
diversification between Euro, US Dollar and
Rand revenues, and strong leverage for
growth and profitability in periods of infra-
structure and resource market expansion.”
Looking forward, Vemer said: “Following
a period of introspection and cost-reduction,
our attention is again more firmly focused
outwardly on target markets and securing
the orders that will deliver the value-en-
hancing growth management seek, while
improving our returns on capital employed
across the group.
“Alongside our South African focus,
we have a clear geographic strategy of
expanding into high-growth countries in the
rest of Africa and Europe. Our localisation
strategy is organic, which does not
require material capital investment.
We take a long term view and are
prepared to spend development time
and capital in partnership with other
project developers to secure a preferred
position and role in developing, imple-
menting and operating new infrastruc-
ture assets. Our continued expansion in
these markets is based on our proven
and growing experience in the delivery
STRONG
IMPROVEMENT
in earnings
Group Five delivered a
pleasing improvement in
earnings for the full year
to June 2016 due to an
exceptional result from the
Investments & Concessions
cluster, boosted by significant
fair value profit realised from
the group’s Eastern European
project investment portfolio.
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Financial overview
• Group revenue remained largely
unchanged at R13,8-billion (F2015:
R13,9-billion)
• Core operating profit increased by
111,4% from R348,4-million to
R736,5-million
• Overall core operating margin increased
from 2,5% in the prior year to 5,3%. Total
reported operating margin increased
from 2,6% to 5,2%
• Headline earnings per share (HEPS)
of 335 cents represents an increase of
63,6%, and fully diluted HEPS (FDHEPS)
of 335 cents per share an increase
of 64,2% compared to the HEPS and
FDHEPS of 205 cents and 204 cents per
share respectively for F2015
• Earnings per share (EPS) of 375 cents
and fully diluted EPS (FDEPS) of 375
cents per share represents a 69% and
69,7% increase respectively over the
222 cents per share and 221 cents per
share for F2015.
• The statement of financial position
continues to be sound, with a nil net
gearing ratio and bank and cash balance
of R3,3-billion as at 30 June 2016 (F2015:
R3,4-billion and H1 F2016: R3,6-billion)
• The cash flow position is pleasing
o The group generated R449,4 million
(F2015: R425,1 million) cash from
operations before a minimal level
of working capital enhancement of
R30,2-million (F2015: R118,9 million)
o This resulted in a net cash inflow
from operating activities of R146,3-
million (F2015: R238,1-million) after
settlement of taxation liabilities and
the dividend to shareholders
Group Five CEO, Eric Vemer.
of complex multi-disciplinary, international-
ly-financed contracts in difficult geographies
with complex logistical and local chal-
lenges. We have a track record of operating
in-country and growing local employees
through the establishment of a permanent
presence in key target countries. Prime exam-
ples are Ghana, Poland and Hungary.”
The group’s total secured Engineering
& Construction contracting order book
stands at R11,2-billion (December 2015:
R11,8-billion, June 2015: R14,1billion).
In addition, the group has R6,1-billion
in secured operations and main-
tenance contracts (December
2015: R5,8-billion, June 2015:
R4,7-billion).