Group Five, Aveng and Basil Read are all under the kosh at the moment with the former seeing its stock value plummet 98% off its highs, according to a recent Financial Mail report.
FM reports that Group Five’s market cap has shrunk from R4.9-billion in September 2013 to R25.8-million.
This is because of numerous reasons, some of which also see its major competitors in Aveng and Basil Read battling to keep their heads above water.
Following the boom in development for the 2010 World Cup, the industry has seen a severe decline in infrastructure spending from government, with the private sector also steering clear from building of any significant nature.
That boom in 2010 was followed by a global recession, which directly cost Group Five contracts worth R4-billion in Dubai – setbacks which analysts say it has not yet recovered from.
‘One factor looming large over Group Five’s performance in 2018 has been the Kpone independent oil and gas-fired plant in Ghana. The engineering, procurement and construction contract, which Group Five won in 2014, contributed the bulk of the group’s R1.3-billion net loss for the year to end-June,’ adds the report. The firm also faces a claim of USD60.5-million for its failure to complete the Kpone project on time from its client in Ghana, Cenpower.
These big losses have in turn altered the reputation of the one-time giant which is now viewed with more suspicion in business than it was before due to weak contract execution and project disruptions, among other things.