JSE-listed construction company Group Five said in a statement released on Friday that it expected fully diluted headline earnings a share for the year ended June 30 to be between 60% and 70% lower than the restated 310 cents a share of the previous financial year.
Headline earnings a share were also expected to be between 60% and 70% lower than the restated 326 cents a share of the previous year.
Group Five said headline earnings in the second half of the 2012 financial year were affected by, among others, losses in the Middle East as the group addressed the close-out of legacy and loss-making contracts, as well as operational losses within the construction materials segment, incurred before the sale of these businesses.
The company said it was progressing with the disposal of the businesses within its construction materials cluster.
“Offers have been received and the related negotiations are either at an advanced stage, or concluded for each of these businesses.”
Actions taken in these and other areas, which “severely impacted” the 2012 financial year results, were necessary to close out the legacy and non-value-generating elements of the group’s operations, noted the company.
These actions provide “a good foundation” for performance improvement in the 2013 financial year, it added. The group’s liquidity and balance sheet also remained sound.
Looking at market conditions, Group Five said emphasis on a larger geographic footprint for more of the group’s business units, the beneficial contribution of the group’s annuity-type businesses of investments and concessions and manufacturing, as well as the group’s strong position in the mining and energy markets in Africa, had mitigated, to some extent, the effects of continued weakness in the South African construction and engineering markets.
Despite the cancellation and delay in domestic public sector work, particularly public-private partnerships, the uncertainty surrounding urban freeway tolling and the delayed national renewable-energy programme, a slow, tentative broader market recovery had materialised.
This was reflected in some order-book recovery in the second half of the financial year.
The group expected a gradual improvement in its trading performance from the 2013 financial year.
Group Five’s results were set to be released on August 13.