The meeting was prompted by irreconcilable differences with major shareholder, asset manager Allan Gray, resulting in the resignation of the existing Group Five board.
The listed construction and engineering group’s shares closed at R19.10 yesterday.
Group Five said it expected to report a share and headline loss of at least 590c for the year to June, from earnings a share of 375c and headline earnings a share of 335c in the previous year.
However, it highlighted that the financial results for the previous year included an exceptional result from the investments and concessions cluster, which resulted in a R730 million positive impact on earnings.
Philisiwe Mthethwa, the outgoing chairperson of Group Five, said a large driver of the expected loss was the continued difficulties experienced by the engineering and construction cluster.
Mthethwa said it was regrettable that the current board was leaving with such poor results but expressed confidence that the long-term future of Group Five was positive, with some of the interventions already implemented.
She also believed Group Five had the right team and strategy to ensure it success. However, Mthethwa said Group Five’s board still questioned the manner in which Allan Gray had conducted itself.
“In our view, it is contrary to what we would expect from one of the most highly respected and responsible fund managers in South Africa. To demand the removal of the entire board is an unusual occurrence in the absence of clear governance failures,” she said.
Mthethwa said this type of conduct had been further exacerbated by Allan Gray nominating five non-executive directors as a package.
“It is therefore important to disclose that Allan Gray’s intention and that one of the key underlying reasons for the removal of the board was the refusal to entertain discussions to unbundle the group and sell off the assets,” she said.
Leonard Kruger, a portfolio manager at Allan Gray, refuted the suggestion that Allan Gray had nominated five non-executive directors as a block or package. However, Mthethwa said they had this in writing from Allan Gray. Justin Chinyanta, an outgoing non-executive director, claimed there was “an agenda on the part of Allan Gray”.
But Kruger said Allan Gray did not have any ulterior agenda. “We simply want what is best for Group Five and for a new board to take this company forward,” he said. Five of the eight new non-executive directors elected were nominated by Allan Gray.
They were Reitumetse Jackie Huntley, Nazeem Martin, Nonyameko Mandindi, John Job and Mike Upton, a former Group Five chief executive.
The other non-executive directors elected were Cora Fernandez, Thabo Kgogo and Edward Williams.
Themba Mosai, the chief executive of Group Five, said the meeting was a bitter-sweet moment for him.
Mosai said it was sweet because after a few months of turmoil, there was hope for finality on this matter and the chance to recover and move forward as a business, but bitter because he was bidding farewell to a group of people who he had come to greatly admire and respect. He said Group Five had to embrace transformation and diversity to remain relevant in South Africa and in Africa.
“It is sick society where the majority has to create laws to protect itself against the minority. It is a sick society where perceptions of competence is apportioned on the basis of pigmentation.
“We released a trading update today. Judge us on that. Judge us on our results, our performance, and not the tone of our skin colour. Those crude measures have proved ineffective,” he said.