Group Five spikes as CEO revises strategy
The group reiterates its newly constituted board is committed to a critical evaluation of strategy
Group Five CEO Themba Mosai supported by his executive team had formulated a revised strategy and optimal structure for the group, which the board had approved in principle, the listed construction and engineering group said on Friday.
The share shot up 14.5% to close at R9.
The group reiterated that its newly constituted board had committed to a critical evaluation of strategy and the appropriateness of its clusters, businesses and asset base to ensure stakeholder value. "As far as I can ascertain the move [on the JSE] today may be mostly just market related rather than [based on] any material information made public by Group Five," Dexter Mahachi, an analyst at Momentum SP Reid Securities, said on Friday.
"We are still waiting for the company to announce its new strategies to the market."
Group Five said its board and management team were conscious of the "urgent need to address its underperforming operations in a rapidly changing and challenging market".
It also needed to ensure that the strategic positioning of all clusters and businesses in the group were evaluated. "The board is committed to report back to the market on its strategic intent and implementation plan as soon as possible. The board and management will finalise and communicate the agreed way forward during the course of October."
Group Five posted a total comprehensive loss for the year to June 2017 of R907m compared with a profit of R737m in 2016, as revenue plunged from R13.8bn to R10.8bn.
The bulk of the decline stemmed from the stagnant mainstay engineering and construction business, which made heavy losses across the board.
Group Five confirmed it had received "a number of expressions of interest from credible parties" and continued to attract new expressions of interest.
"These relate to various assets and businesses within the group. It should be noted that the board is currently not in possession of a firm intention offer," the group said.
The board said it was aware of its responsibility and fiduciary duty to evaluate any action that could potentially lead to value enhancement for shareholders.
It also said it was assessing all expressions of interest it had received and would engage with parties, where appropriate, and was committed to keeping shareholders properly informed of developments.
The uncertainty for Group Five comes amid general uncertainty among SA’s major listed infrastructure groups after the South African National Roads Agency recently said it would in future only do business with companies that were at least 51% black-owned and that had a minimum rating of level 2 on the broad-based BEE scorecard.