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Dubai Contract Bears Fruit for Group Five |
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2/18/2006 7:33:08 AM |
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ENGINEERING and construction company Group Five has reported a 64,4% jump in "over-border" revenue for the six months to December as the group settled in the Middle East market.
Group Five's work with Dubai Civil Aviation contributed to the increase in the group's over-border contracts. Foreign work currently contributes 45% of the group's order book.
CEO Mike Lomas said the increase in foreign work was in line with the company's strategy to improve overall margins.
Lomas said the construction order book was at a record R5,3bn for the period to end-June this year and at R4,4bn to December this year.
The higher margins in Dubai saw the group's civil, roads and earthworks businesses recover from the previous corresponding period's R2m operating loss to a R6m operating profit.
The company merged the businesses during the period under review.
The merger led to what Lomas said was "focused resource utilisation" and a R10m reduction in overhead costs.
Civils, roads and earthworks increased the group's revenue by 46,5%, from R490m to R718m.
Total revenue increased 34,8%, from R2,3bn to R3,1bn.
Headline earnings a share were up 35,8% from 51,1c to 69,4c.
Earnings a share were up 18,8% to 81c from the previous 68,2c. Dividends a share were up 17,6% to 20c from the previous 17c.
Capital expenditure was up from the previous period's R35m to R113m, mainly because of the growing work in Dubai, according to financial director Paul O' Flaherty.
Despite the generally good performance, some businesses struggled.
For instance, its manufacturing businesses -- which include Everite Building Products, Vaal Sanitaryware and DPI Plastics -- did not have a good six months. Operating profit was down to R29m from R38m.
Most affected was Vaal Sanitaryware, which Lomas said was battling strong competition from imports. DPI Plastics had suffered low civils activity in the first six months of the year, he said.
The group's construction operations, which contribute 80% to the group's bottom line, saw a 42,5% increase in revenue from R1,7bn to R2,5bn and its profit was up 53%.
Construction consists of housing, engineering projects, civils, roads and earthworks.
Buildings and housing's operating profit more than doubled from R17m to R36m.
The company has benefited from the strong local property market.
However, like other engineering firms, it has bemoaned the lack of a skilled work force.
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