(Recasts lead with CEO resigning, adds share price, details)
By Nqobile Dludla
JOHANNESBURG Feb 22 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 255 million rand ($19 million) settlement with the
Shares in Group Five fell 2.91 percent to 23.32 rand 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.
"I will move on to new opportunities, but will assist the
board during the transition and search for a new CEO," Vemer
said in a statement.
Group Five was one of seven construction companies which
agreed in October to contribute a total of 1.5 billion rand 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 67 percent of its revenue in South
Africa, posted a 310 cents per share loss for the six months
ended December 2016, after a profit of 131 cents in 2015.
"Operating losses incurred by the Projects and Civil
Engineering segments, the impact of continuing weak order book
intake in the Engineering & 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, which makes 81.2 percent of its group revenue
from the engineering and construction division, said revenue in
that division decreased by 23.4 percent to 4.8 billion rand.
The group cut its dividend by 67 percent to 14 cents per
share from 42 cents.
($1 = 13.1100 rand)
(Editing by Vyas Mohan and Alexander Smith)