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.

Group CEO Eric VernerVemer’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.


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