GROUP FIVE

Share price: R28.26 JSE code: GRF

SELL GROUP FIVE’S MOTORWAY concessions business, Intertoll, is proving to be a lifeline as profits from traditional construction work are being squeezed.

Management has been proactive in channelling increased investment flows to the Eastern European Intertoll business to offset declining revenues from other units.

In the year to June, Group Five said operating profit from the investment and the concessions business leapt nearly threefold to R917.4m, boosted by significant fair value gains that took the group from a loss-making to a profit position.

At the interim period, the group said it, together with international financing partners, had acquired a 12.7% stake in a 10-year motorway project in Hungary. This followed the commencement of a 20-year road contract in Northern Ireland, where the group continues to explore new prospects. It is also fishing for opportunities in North America to capitalise on exchange rate gains in hard currency.

In terms of its rating, the market appears equally split between a “buy” or a “hold”.

Group Five has consistently paid a dividend, but its prospects outside its concessions business are worrying. Profits slumped in its engineering & construction, building & housing, civils, and manufacturing clusters. Projects and energy margins improved, but the outlook for the latter remains uncertain.

And then there is the headache from civil claims. Group Five also has a pending case at the competition commission.