The announcement was published on Sens at noon and, by 1.45pm, the share price had dropped 19.11% to R28.31. An hour later, it had recovered to R29.91 but was still 14.54% down on the day.
The news came a few days after the Competition Commission announced its referral to the Competition Tribunal of a complaint about bid-rigging relating to contracts for the construction of stadiums for the 2010 Fifa World Cup.
Group Five is the one big construction company that has not been fined for widespread bid-rigging since it was the main whistle-blower. The company is however implicated in the stadium projects and the commission is seeking a penalty equal to 10% of its revenue in this case.
Outgoing CEO Mike Upton said the referral was expected. The group had lengthy discussions with the commission and could not reach consensus on the allegations. “The group welcomes the opportunity to address and clarify this long outstanding issue to bring certainty to shareholders, employees and all other stakeholders,” Upton said. Group Five had earlier made provision for a possible fine.
The poor performance in the current period was contributed to disappointing results in Group Five’s civil engineering division. At a media presentation yesterday, Upton said the civil engineering market was weak and operational difficulties and restructuring costs would weigh on results. Recovery of this division was only expected from 2016.