3 Min Read
(Recasts lead with CEO resigning, adds share price, details)
By Nqobile Dludla
JOHANNESBURG, Feb 22 (Reuters) - 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 country's government.
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)