Group Five has announced that Eric Vemer, the company’s CEO, has stepped down. This follows its first six-month loss in 11 years as a result of a R255 million settlement with the government for collusion. Group Five was one of seven construction companies fined.
Vemer’s resignation was unexpected, effective “within the next few weeks” he said at a financial results presentation. He took on the role of CEO on 1 December 2014, taking over from Mike Upton. No successor has been named.
“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 Engineering & Construction (E&C) executive director Willie Zeelie will also be leaving the company. Mark Humphreys, current E&C chief operations officer has been appointed as the new head of the E&C business.
Shares in Group Five fell 2.91% to R23.32 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, according to the company. Group revenue fell to R5.83-billion in the six months ended December 31, down from the R7.26-billion reported in the same period in 2015.
Group Five, which makes 81.2% of its group revenue from the E&C division, said revenue in that division decreased by 23.4% to R4.8 billion. In addition to the impact of the settlement agreement with government, the commercial close-out and final settlement of a dispute with Transnet on its new multi-products pipeline (NMMP) negatively impacted E&C’s operating profit by a further R244-million.
Excluding the effects of the two settlement agreements, the company’s building and housing division showed a R23-million profit, civil engineering a R49-million loss, projects a R106-million loss, and the energy division a R12-million profit. Group Five’s Investments and Concessions business reported a 36% drop in core operating profit, to R145-million. Manufacturing increased its core operating profit by 25%, to R35-million.
The group cut its dividend by 67% to 14 cents per share, from 42 cents.