Why is Group Five's board so upbeat?
Acting CEO Themba Mosai has put in place ‘meaningful changes since his appointment at the beginning of March’
Group Five’s restructuring is progressing, says the group’s board.
The company is restructuring following its operating loss of R338m in the second six months of 2016.
Part of the loss resulted from agreeing to pay R225m towards a collective R1.5bn voluntary settlement.
The settlement — a deal with the state involving seven other listed construction and engineering groups — is aimed at helping to transform the sector.
In an update on Wednesday, the board said acting CEO, Themba Mosai, had implemented meaningful changes since his appointment at the beginning of March 2017.
"The changes are aimed at unlocking shareholder value and addressing mainly the [unprofitable] engineering and construction cluster."
The restructuring had resulted in the business being split into a South African construction business and a construction business serving the rest of Africa. There would also be a separate unit to service procurement, engineering and other construction businesses, the board said.
Group Five’s restructuring had led to a retrenchment programme set to conclude at the end of June.
"The main objective of these changes is to right-size the business in line with the current market conditions," the board said.
"The financial impact of these retrenchments was not included in the market guidance provided as these could not be quantified at the time. The impact of the retrenchments will be included within the second-half financial year 2017 results and additional guidance will be provided, should this be required, once the process has been completed," said the board.
The South African and rest-of-Africa construction businesses would be led by the executive director of construction, Mark Humphreys, who has been with the group for 29 years. He has been the chief operating officer of the engineering and construction cluster for the past two years.
Peter de Vries, who has been with the group for 11 years, would lead Group Five’s engineering, procurement and construction division.
The process of appointing a permanent CEO was under way, the board said.