• Majority of businesses performed well against tough market conditions. However, an impairment in Construction Materials (the smallest group revenue contributor) processed in December 2010 and tough market conditions in Manufacturing significantly impacted group results
• Construction, which represents 80% of group revenue, managed to fight tough markets with core operating profit margin percentage declining only slightly from 6,9% in F2010 to 6,5%
• Over-border expansion progressing well, with the over-border portion of the order book increasing from 24% to 30%
• The Construction order book held at R8,8-billion, slightly down from the R9,2 billion in the prior year. The group's order book is independently assured by PWC
• Continued healthy balance sheet, with no net gearing

Commenting on the results, Group Five CEO Mike Upton, said:

"Last year set a high base as results still included large 2010 infrastructure contracts. In contrast, this year saw significantly diminished market activity and contract delays. Against these extremely difficult markets we followed a strategy to avoid, for as long as is possible, securing an order book of low-margin work with poor cash flows. This allowed us to maintain a healthy balance sheet supported with an appropriate gearing and liquidity position.

"To rebuild our order books in a sustainable manner, we focused on a broader international stance, with an immediate emphasis on a larger footprint involving more of our businesses re-establishing operations in familiar African countries and achieving early wins in the re-emergence of the mining and energy markets in Africa. The Middle East business is being rebuilt as markets there recover.

"Therefore, we believe our order book is filled with the best quality work we could find in these volatile markets. Importantly, we started the 2012 financial year with 81% of our 2011 Construction revenue already secured.

Summary

• Group revenue decreased by 18,8% from R11,3-billion to R9,2-billion due to a reduction in activity levels within the buildings, housing and civil infrastructure markets, client-driven contract delays and the group's decision not to chase volumes at the expense of margin and cash absorption
• Headline earnings per share (HEPS) decreased by 45,9% and fully diluted HEPS (FDHEPS) by 43,9%
• As an indication of the underlying operating performance of the group, excluding pension fund adjustments (which had a negative effect in the period and a material positive effect in the prior year) and the impairment in Construction Materials, adjusted fully diluted HEPS would have been 40% down to 317 cents per share (F2010: 524 cents per share)
• Operating profit before fair value adjustments and impairment adjustments decreased by 43,1% from R877-million to R499-million
• The group operating profit margin was 5,4% (2010: 7,7%)
• Due to an impairment charge on property, plant and equipment and goodwill within the Construction Materials business, earnings per share (EPS) and fully diluted EPS (FDEPS) was a loss of 227 cents per share
• The group generated R756,3-million cash from operations before working capital changes
• Cash on hand at period end was R2,2-billion (2010: R3,1-billion)
• The group balance sheet continues to be sound, with a nil net gearing ratio
• Due to the non-cash nature of the Construction Materials impairment adjustment processed in December, the board approved a final dividend of 20 cents per share (2010: 74 cents). This brings the total dividend for the year to 72 cents per share (2010: 137 cents)         

In terms of the Competition Commissions investigation into the construction sector, Upton said:

“Group Five took a very proactive stance with the Commission and completed intensive internal investigations in its business during 2009 and 2010 to ensure full discovery of any infringements. We signed a conditional leniency agreement on 29 July, without penalty, pending conclusion of the Commission’s industry investigation. We have therefore not raised any provisions for fines. We believe we have taken the best possible route by taking the lead in proactively co-operating with the Commission.