Johannesburg - Group Five’s chief executive is to leave, the South African construction group said on Wednesday as it recorded its first six-month loss in 11 years due to a R255 million settlement with the government.
Shares in Group Five fell 2.91 percent to R23.32 after it announced the loss, which was also due to weakness in orders in its main engineering and construction business, and a drastic cut to its dividend.
Eric Vemer, who joined the company in 2005 and was appointed chief executive in December 2014, will leave in the next few weeks, Group Five said, after helping it access infrastructure investments in Europe and Australia during his tenure.
Group Five was one of seven construction companies which agreed in October to contribute a total of R1.5 billion over the next 12 years towards a fund to develop skills in the sector and give black South African workers a bigger role.
This followed antitrust authorities imposing a penalty on the sector in 2013 for collusion in tendering processes.
Group Five, which makes 67percent of its revenue in South Africa, posted a 310cents per share loss for the six months ended December 2016, after a profit of 131c in 2015.
“Operating losses incurred by the Projects and Civil Engineering segments, the impact of continuing weak order book intake in the Engineering and Construction cluster as a whole and the resultant under-recovery of direct and indirect overheads have weighed heavily on these results,” Vemer said.
Group Five makes 81.2 percent of its revenue from the engineering and construction division. Revenue in that division decreased by 23.4 percent to R4.8 billion. The group cut its dividend by 6 7 percent to 14c per share from 42c.