A Ghana power station disaster cost Group Five R649 million – and now will be moving out of its swanky head office before asking shareholders for more cash
- Group Five said the last six months of 2017 were terrible for it – even relative to its expectations that things would be bad.
- Its attributable interim loss was nearly three times that of the year before, in large part thanks to a R649 million hit on a power station contract in Ghana.
- It has found funders to front it up to R650 million in cash to keep it afloat, but it would rather replace that debt with shareholder money, soon.
- Money-saving initiatives include moving out of its head office "as soon as possible"
Construction company Group Five released a terrible set of results – by even its own low expectations – to shareholders on Thursday, and said it would be turning to them to raise cash in the second half of its financial year.
Group Five reported a 14.5% drop in revenues for the last six months of 2017, compared to the previous year, and a loss just shy of R760 million – for an average monthly loss of R127 million.
Its headline loss was nearly triple that of the last half of 2016.
CEO Themba Mosai was apologetic.
"We expected this period to remain very difficult," he told shareholders. "Unfortunately, even against this expectation, our results for the six months to December were significantly below our objectives and very disappointing."
Much of the loss was due to a single, disastrous project: the Kpone thermal power station Group Five is building in Ghana.
Kpone was responsible for R649 million of its operating loss, Group Five said.
Construction on the station is late, and Group Five faces massive penalties for not delivering it on time.
Group Five has promised to sue various other parties it blames for the delays on the site, and on Thursday said it would ensure "continued senior team focus to drive this contract to completion".
It has also promised to move out of its swanky new head office outside Johannesburg "as soon as possible" to save money, among other initiatives.
In the meanwhile, though, it will be coming to shareholders for cash.
In late March – in the nick of time before it had to publish the interim results – Group Five landed up to R650 million in short-term funding.
But on Thursday it said it would "prefer to approach shareholders to discuss recapitalisation options and replacement of this debt as soon as possible."
It said it would ask approval from shareholders for whatever it identifies as "the best course of action for financial support" some time after June.
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