unaudited interim group results

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unaudited interim group results. For the six months ended 31 December 2009. Agenda. overview. financial review. segmental review & prospects. group prospects. agenda. Unaudited group results for the six months ended 31 December 2009. 2. overview. - PowerPoint PPT Presentation

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<ul><li><p>unaudited interimgroup resultsFor the six months ended 31 December 2009</p></li><li><p>overviewfinancial reviewsegmental review &amp; prospectsgroup prospectsAgendaUnaudited group results for the six months ended 31 December 2009agenda*</p></li><li><p>overviewTransnet s Durban Port widening &amp; deepening contract</p></li><li><p>Financial highlights</p><p>* Excluding fair value adjustments and associates</p><p>% changeH1 2010vs H1 2009H1 2010UnauditedH1 2009UnauditedF2009AuditedRevenue Rm4% 5 7095 96812 090Operating profit Rm*6% 399377797Operating profit margin %7.0%6.3%6.6%Fully diluted earnings per share Rand10%2,392,184,86Fully diluted headline earnings per share Rand 8%2,492,305,08Dividend per share Cents 9%6358130</p></li><li><p>Investments and ConcessionsManufacturingConstruction MaterialsConstructionConcessions: Strong performance due to new projects maturingExceptional performance from especially Everite and Group Five Pipe offset weaker construction steel marketsSignificant restructuring &amp; management changes implemented;arrested the decline in operating profit Property Developments: Strategic re-positioning led to small loss in weak markets</p><p>Summary of segmental performance H1 F2010 6% of group revenue10% of operating profit8% of group revenue11% of operating profit5% of group revenue 5% of operating profit81% of group revenue 74% of operating profitBuildings: Exceptional performance due to successful repositioningCivil Engineering: Excellent performance from strong order booksEngineering Projects:Margins maintained against earnings decline</p></li><li><p>financial reviewMoses Mabhida Stadium KZN</p></li><li><p>* Annualised for interims periods presented; ** Medium term target; *** Short term target *Key financial ratios at Group Five</p><p> H1 2010UnauditedH1 2009UnauditedF2009Audited Medium term TargetsOperating profit-margin %7.0%6.3%6.6% 6% - 8%Net gearing debt to equity ratio %---maximum 33Interest covern/a12.526.410Cash from operations7287191 799cash generativeNet increase in cash (Rm)464222954cash generativeCash on hand at period end (Rm)3 2432 0462 778n/aExternal guarantees unutilised (Rm)3 8293 3773 220Sufficient for tendersDividend cover4.24.34.24.0Return on shareholder interest %*21%22%24%25 %**20% ***</p></li><li><p>Income statement *Both core and reported margins are the same for H1 F2010 and hence are not disclosed separately Differences between core and reported margin constitutes profit on sale of assets, pension fund surpluses and deficits and impairment adjustments** Excluding fair value adjustments and (loss)/income from associates</p><p>*</p><p>Rm% changeH1 2010vs H1 2009H1 2010UnauditedH1 2009UnauditedF2009AuditedRevenue-4%5 7095 96812 090Operating profit margin %*-7.0%6.3%6.6%Operating profit **6%399377797Other income net-111216Profit before finance cost and taxation6%410389813Finance income / (costs) net-8(31)(31)Profit before taxation17%418358782Effective tax rate %-32%29%29%Profit from continuing operations12%285254557Loss from discont. operations-(11)(13)(23)Net income14%274241534</p></li><li><p>Cash flow statement*Continued working capital improvementsWorking capital structure largely unchangedLevels of advanced payments increased by R59m from June 09F2010 year end cash balances expected to decrease (compared to June 2009) but not materially </p><p> RmH1 2010UnauditedH1 2009UnauditedF2009Audited Operating cash5654821 117 Working capital changes162237682</p><p>Trade and other payables(469)Trade and other receivables352Contracts in progress25Inventories254Total change162</p></li><li><p>Cash flow statement *</p><p> RmH1 2010UnauditedH1 2009UnauditedF2009Audited Operating cash5654821 117 Working capital changes162237682Cash from operations7277191 799 Finance income / (costs)8(31)(31) Tax and dividends paid(119)(118)(222)Net cash from operating activities6165701 546Property, plant &amp; equipment (net)(73)(90)(213)Investments and financing (net)(79)(290)(411)Cash generated from discontinued operations-3232Increase in cash 464222954Cash and cash equivalents on hand end of period 3 2432 046 2 778</p></li><li><p>Capital expenditure* * As previously reported *</p><p>Segment (R000)Budget F2010Actual H1 2010Nature of H1 2010 spend %Actual F2009Expan-sionReplace-mentContract specificInvestments and Concessions1 13714 1531 0591 49911 59536 6037%11%82%Manufacturing15 5397 2961 1416 155-15 45316%84%-Construction Materials55 40029 0525 2256 65317 174139 11818%23%59%Construction67 48560 74515 02613 99731 723238 33725%23%52%Total139 561111 24722 45128 30460 492429 511</p></li><li><p>BBBEE status* 31 Dec 2009 restated to include the effect of the return of the iLima consortium shares to Group *Included in current assets is R110m due by iLimaAn additional contingent liability of R62m exists with respect to contract guaranteesThe current asset, as well as the contingent liability, (if incurred), will be set off against the return of the groups shares by the iLima consortium post share returnThus, there is no income statement impairment</p><p>(000)Post % F2009- F2008Reported % F2009-F2008H1 F2010 Unaudited Post *H1 F2010 Unaudited H1 F2009 Unaudited Weighted avg. shares in issue95 23695 23694 411Dilution share trusts1 5751 5752 004Dilution iLima Mvela transaction4 3428 68311 539Reported weighted avg. shares in issue101 153105 494107 954</p><p>Fully diluted EPS R15%10%2,502,392,18Fully diluted HEPS R13%8%2,602,492,30</p></li><li><p>BBBEE status scorecard</p><p>****Group Five Limited Construction Charter Scorecard Certificate audited and issued by BEE Verification Agency CC***Current audited scorecard as amended for the effect of return of group shares currently held by iLima Consortium improvements in scorecard on track and realisable in one year ***Note that the calculation of ownership is based on a weighted score comprising:Voting rights of black women people and womenEconomic interest in Group Five by black people, women and employeesRealisation points </p><p>2008/2009Audited scorecard *2009/2010Current audited scorecard *2009/2010 Adjusted audited scorecard **Ownership***17.7919.5518.55Management3.256.976.97Employment Equity2.065.916.00Skills Development5.5312.8012.80Preferential Procurement12.1515.6818.00Enterprise Development15.0015.0010.00Socio-economic Development5.002.865.00BBBEE score %60.7878.7777.32BBBEE rating533</p></li><li><p>segmental review and prospectsConference Centre Dept of Education PPP</p></li><li><p>Infrastructure ConcessionsProperty DevelopmentsInvestments and Concessions*Gosforth Toll Plaza Gauteng6% of group revenue10% of operating profit</p></li><li><p>Investments and ConcessionsOperating Profit -12%* Revenue -1%*RmRmOperating margin %Broadening of contract base provided resilience in tough marketsExcluding Fair Value Adjustments of R12m in H1 2009 R4m in H2 2009 R10m in H1 2010** H1 F2010 versus H1 F2009</p><p>Chart1</p><p>46</p><p>36</p><p>41</p><p>Operating profit</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Operating profit463641</p><p>Chart1</p><p>338</p><p>289</p><p>334</p><p>Revenue</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Revenue338289334</p></li><li><p>Investments and Concessions Infrastructure ConcessionsOperating Profit 2%* Revenue 14%*Excluding Fair Value AdjustmentsRmRm14.8%Operating margin %* H1 F2010 versus H1 F2009Growth on the back of further new project rollouts in Poland and Hungary*</p><p>Chart1</p><p>45</p><p>35</p><p>46</p><p>Operating profit</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Operating profit453546</p><p>Chart1</p><p>271</p><p>257</p><p>310</p><p>Revenue</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Revenue271257310</p></li><li><p>investments &amp; concessions*Infrastructure Concessions: Period under reviewAchievementsFinancial close of R35 bn D1 Slovakia end F2010Bulgaria 115MW IPP combined-cycle gas peaking plant in progress Concentrated Solar Thermal Pre-qualified under Eskom IPP programme100MW private power under developmentPPPsPreferred bidder R2 bn Cape Town Rail LinkReserve bidder DEAT BuildingAdjudication awaited City of Tshwane, Dept Rural Development &amp; Land Reform, Four Prisons Programme DisappointmentsGeneral slow progress of PPP adjudication and awards in South AfricaDid not secure GORT contract</p></li><li><p>investments &amp; concessionsGroup Five skills and experience provide competitive advantage Government recommitment to PPP delivery model*Infrastructure Concessions: Outlook* Group Five estimated values</p><p>Type of concession*Pre-qualifiedPre-qualified &amp; tenderedProspectsTotal Feb 2010Total Aug 2009Transport5 00011 00016 00013 000SA PPPs (Public buildings &amp; healthcare)-7 25017 00024 25025 850IPPs (Power)9 00011 20020 20026 000Total14 0007 25039 20060 45064 850</p></li><li><p>Investments and Concessions Property DevelopmentsOperating Profit -918%* Revenue -64%*No fair value adjustmentsRmRmOperating margin %* H1 F2010 versus H1 F2009Revenue and operating profit down during transition phase; further exacerbated by severe market downturn*</p><p>Chart1</p><p>1</p><p>2</p><p>-6</p><p>Operating profit</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Operating profit12-6</p><p>Chart1</p><p>67</p><p>32</p><p>24</p><p>Revenue</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Revenue673224</p></li><li><p>Property Developments: Outlookinvestments &amp; concessions*Small loss anticipated in F2010 and into F2011, with a return to strong performance thereafter</p></li><li><p>*ManufacturingmanufacturingFibre cement pipes Everite8% of group revenue11% of operating profit</p></li><li><p>ManufacturingOperating Profit 16%* Revenue 21%*RmRmOperating margin %* H1 F2010 versus H1 F2009Exceptional performance from especially Everite and Group Five Pipe offset weaker construction steel marketsmanufacturing*</p><p>Chart1</p><p>37</p><p>49</p><p>44</p><p>Operating profit</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Operating profit374944</p><p>Chart1</p><p>374</p><p>442</p><p>454</p><p>Revenue</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Revenue374442454</p></li><li><p>Manufacturing: Period under review*AchievementsFibre Cement (Everite):Benefits from cost reductions, process improvements and product range extensionFormally established new business unit ABT (Advanced Building Technology)Increased market presence in design and manufacture of modularised building solutionsSupplied 662 structures to government in Gauteng and Eastern CapeNo material payment issues currently in our public housing contracts due to payment and contract controls implementedSteel:Low cost business model with minimal inventories Group Five Pipe up substantially, benefiting from early stages of water cycle DisappointmentsDepressed volumes and pricing in the construction steel marketDelays in low cost housing awardsHighly depressed residential market, mainly affecting Everites fibre cement products</p></li><li><p>ConcernsOngoing delays in low cost housing awardsMerchant markets expected to remain depressed for at least the next 12 months; further cost reductions at EveriteContinued strength of the Rand</p><p>OpportunitiesGovernment committed to find delivery model for affordable housing*Everite and ABT: growing presence in governments low cost and temporary relief housing marketsTender activity in the high pressure steel pipe market expected to grow with the water cycle</p><p>Manufacturing: Outlook* Feb 2010 budget speech*H2 2009 provided record earnings; Expected to maintain prior levels of performance in F2010</p></li><li><p>*Construction MaterialsContract mining at Cato Ridge- Quarry Cats 5% of group revenue5% of operating profitconstruction materials</p></li><li><p>Construction MaterialsOperating Profit -50%* Revenue -35%*RmRmOperating margin %* H1 F2010 versus H1 F2009Significant restructuring and management changes implemented;Arrested the decline in operating profit *</p><p>Chart1</p><p>38</p><p>18</p><p>19</p><p>Operating profit</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Operating profit381819</p><p>Chart1</p><p>414</p><p>258</p><p>269</p><p>Revenue</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Revenue414258269</p></li><li><p>Construction Materials: Period under reviewconstruction materialsconstruction materials*</p></li><li><p>Concerns Expect tough trading conditions in the short term 12 monthsExcess capacity vs levels of activity</p><p>OpportunitiesBusinesses more resilient to tough conditions post management interventionFocus: further improvement of asset utilisationPossible further expansion in mining-related activities Further demand generated by SANRAL roads and other infrastructure projectsImproved short term performance through further efficiencies; followed by the return of volumes in the longer term</p><p>Construction Materials: OutlookSlow recovery expected over 12 18 months construction materials*</p></li><li><p>*ConstructionKoeberg interchange Cape Town81% of group revenue74% of operating profit</p></li><li><p>Construction Overall Operating Profit 16%* Revenue -4%*RmRmOperating margin %* H1 F2010 versus H1 F2009Lower revenue due to reduction of mining sector activity Pleasing increase in all margins**</p><p>Chart1</p><p>256</p><p>318</p><p>296</p><p>Operating profit</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Operating profit256318296</p><p>Chart1</p><p>4842</p><p>5134</p><p>4651</p><p>Revenue</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Revenue484251344651</p></li><li><p>Construction Building &amp; HousingOperating Profit 80%* Revenue 16%*RmRmOperating margin %* H1 F2010 versus H1 F2009Exceptional H1 2010, supported by good contract close-outs and ongoing public and private contracts secured since August 2009*</p><p>Chart1</p><p>52</p><p>89</p><p>93</p><p>Operating profit</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Operating profit528993</p><p>Chart1</p><p>1332</p><p>1567</p><p>1551</p><p>Revenue</p><p>Sheet1</p><p>H1 2009H2 2009H1 2010</p><p>Revenue133215671551</p></li><li><p>*Building and Housing: Period under reviewconstruction* = percentage completionAchievementsRestocking local and international order books through early positioningEarnings growth driven by execution of large multi-disciplinary projects such as:</p><p>Industry payment delays within public housing market addressed by management </p><p>DisappointmentsTraditional housing business resized due to slow roll out of affordable housing and lack of private sector demandContinued low activity levels within local private and public real estate</p><p>King Shaka International Airport 72%*Moses Mabhida Soccer Stadium 100%*Gauteng Bus Rapid Transit system (BRT) Phase 1 91%*Phase 1B 4%*Nedcor Sandton 1st 4 star green building in SA 82%*Levy Junction, Zambia mixed use facility 5%*</p></li><li><p>ConcernsSlow recovery (12 18 months) within private real estate sectorContinued delay in Building PPP awardsSlow roll out of affordable housing OpportunitiesExpansion in carefully selected high growth African marketsDesign and build capability in both Building and Housing marketsPPPs prisons, hospitals, public sector buildingsEntry-level bank-financed and low cost housing Housing infrastructure for new power stations and regional mining expansion</p><p>Building &amp; Housing: Outlookconstruction*</p></li><li><p>*Sustainable business across broader base of markets F2010 expected to deliver growth, albeit at a lower rate than H1 F2010Building &amp; Housing: OutlookconstructionPlease refer to Appendix containing details of current contracts34% of total Feb 2010 order bookSome recently secured projects:Gauteng Bus Rapid Transit system (BRT) Phase 1B Levy Junction, Zambia mixed use facility Netcare Medical Centre WaterfallNtuzuma Court KZNKing Shaka DTP building </p><p>Activity levelsPricingMarginSA: Timing of recovery uncertainOver-border: Improving activity levelsTraditional tender market under pressure;Focus shifting to more complex contracts &amp; international marketsMargins sustainable at 4% 5% </p><p>Full Order Book reported Aug 2009R4 570m (Local 81%)Full Order Book reported Feb 2010R3 588m (Local 72%)</p></li><li><p>Construction Civil EngineeringOperating Profit 39%* Revenue 10%*RmRmOperating...</p></li></ul>