Group Five grows earnings in mixed environment

Listed construction company Group Five says its earnings for the year to June should improve substantially.

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Johannesburg - Listed construction company Group Five says its earnings for the year to June should improve substantially.

In a statement issued on Monday, it notes that fully diluted headline earnings per share to be between 60 to 70 percent higher than the year before.

Headline earnings - a key measure of performance - will also be the same range higher, coming in at between 328 to 349 cents a share.

Fully diluted earnings per share should be between 65 percent and 75 percent higher, or 365 cents to 387 cents per share.

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Earnings per share, which includes once-off items, should be between 65 to 75 percent higher, coming in at between 366 cents and 389 cents per share.

Group Five explains the gains are due to “an exceptional result from the investments and concessions cluster, boosted by significant fair value profit realised from the group’s Eastern European project investment portfolio as a result of underlying project cash-flows being materially better than those originally forecast”.

It adds operating profit performance was also strong “with excellent delivery across all secured contracts”.

Engineering and construction, however, continued to perform at low levels with operating performance below expectation. The civil engineering segment’s operating performance improved in line with expectations, although the group raised a material provision within this segment in the second half of the financial year against a previously certified but now “problematic debt”.

“The group is pursuing its rights on this matter with a focus on recovery.”

The building and housing segment is generally in line with recent guidance provided in February 2016, it says.

A softer performance by the projects and energy segments was realised, which reflects continued overall tight market conditions.

“Despite extremely difficult South African trading conditions, the manufacturing cluster delivered an acceptable, albeit lower, result,” it adds.

The construction company’s results should be published on August 15.

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