G5 hit by volatility

Group Five said yesterday it would target the government's public works programme, specifically in the areas of power generation, transport, water and housing, as potential areas for further growth.

The construction company said it would also adopt "a geographic expansionary stance" as the African outlook continues to improve, while the Middle East also shows promise.

Speaking at the release of the company's results, in Johannesburg, Group Five CEO Mike Upton, said: "We will continue to grow our expertise and capacity in areas where we have developed a multi-disciplinary delivery capability, namely power, transport and water, mining and large infrastructure works, with a geographic expansionary stance.

"Although growth in the year ahead could be slow, our current order book and pipeline of opportunities support a generally positive outlook."

Upton said the Group Five's construction one-year order book as at June 30 was at R7.1-billion, down from R8.6-billion a year ago. The company's total secured construction order book stands at R9.3-billion, down from R11.6-billion.

"In terms of growth areas, the South African government's public works programme - specifically in the areas of power generation, transport, water and housing - has the potential to create opportunities within the South African construction sector."

Upton said that the African outlook for private sector fixed investment and primary infrastructure had started to improve, but spending was likely to only come through slowly during the 2011 calendar year, with more certainty emerging from 2012.

"In the Middle East, the group has moved into new territories outside of Dubai. These markets provide technically attractive opportunities aligned to the group's capabilities in infrastructure contracts related to industrial works, power, transport and water.

"In the year ahead, growth could well be slow. However, the group's current order book and its pipeline of opportunities support a generally positive outlook," said Upton.

The company reported diluted headline earnings of 561c/share for the year ended June 2010, from 508c previously.

Earnings per share were down 48% to 280c from 544c.

Revenue declined to R11.337-billion compared with R12.090-billion - mainly due to a reduction in domestic construction materials volumes and a squeeze on African resources markets.

A final dividend of 74c/share was declared from 72c in 2009, bringing the total dividend for the year to 137c/share from 130c.