Group Five gets a lift from property boom

Posted On Thursday, 19 August 2004 02:00 Published by eProp Commercial Property News
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The strong property market boosted construction and engineering company Group Five's building and manufacturing activities

Mike LomasThe strong property market boosted construction and engineering company Group Five's building and manufacturing activities, leading to a good set of results released on Wednesday.

"The boom in the property market led to an unprecedented rise in demand for accommodation with resultant property price increases, both of which favourably impacted the group's building and manufacturing activities,"

Group Five said in a statement.

The rand's strength, on the other hand, had an adverse effect on exports, which "resulted in a slowdown in the resources sector, which negatively influenced Group Five's civils and engineering businesses and resulted in exchange losses of R33 million".

This was significantly higher than 2003's loss of R2 million.

On the whole, Group Five's revenue for the year to June 2004 was up by 3.7 percent to R4.2 billion from the previous years R4.1 billion, while operating profit improved 11.9 percent to R179.1 million.

Earnings per share increased by 17.9 percent to 170.7 cents, the company said.

"Net finance costs increased from R28.5 million to R34.3 million due to higher average borrowings over the year, while cash and cash equivalents increased by R56.4 million by year-end following significant efforts to manage working capital," the statement read.

Group Five's construction revenue was down by one percent to R3182 million.

This makes up about 75 percent of the company's revenue.

Operating profit was also down by R43.8 million to R46.9 million. "Operating profit, excluding the effect of the currency translation, decreased by 14 percent to R80 million."


This compares to 2003's R93 million. The company attributed the decrease to problems in its roads business unit "following further consolidation and the close out of certain old projects".

In response the company has made "leadership changes" and rationalised operations.

Group Five chief executive officer Mike Lomas, said: "We managed to maintain our responsiveness and flexibility during a period of economic change through our ability to initiate new work and rapidly take up the slack created by the cancellation and deferment of local industrial and mining work."

Group Five's various business units, including Everite building products, Vaal Sanitaryware, DPI Plastics, building and operations and maintenance all reported good results, the company said.

In addition, "Infrastructural development services was restructured into two core focus areas: property developments and concessions and build, operate and transfer schemes (BOTS) and renamed development services."

Following the changes, these units have identified various projects which would only show benefits in the next two years.

Areas reporting decreases in operating profit included civils and engineering - both partly due to the impact of the strong rand.

Lomas said the company was positioned to take advantage of opportunities for economic growth in Africa and the Middle East.

"In South Africa, the increasing investment in residential, commercial and retail property underpinned by strong consumer confidence and low interest rates will continue to support strong demand for building supplies and construction skills," he said. 

Last modified on Monday, 21 October 2013 23:37

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