SOUTH AFRICA – Group Five, a construction company plans to delist from the Johannesburg Securities Exchange (JSE) in 15th June 2020, ending a more than four-decade history as a publicly traded company. This is after the company went into business rescue in September 2019. 

Established in 1974 as an amalgamation of five companies in and listed on the local bourse, has been struggling over the past five years due to South Africa’s weak economy, which hasn’t breached the 2% growth mark since 2013. Big infrastructure projects have dried up over that time as government reined in its spending 

The group’s business rescue practitioners said in a stock exchange recently that they do not believe that there is any realistic prospect of there being any residual value available for or attributable to the company’s shareholders.” 

Group Five added that it no longer complies with some JSE listing requirements, and is also unable to release its annual results. Over the past three months some of the country’s best known firms, including Edcon and Comair, have filed for business rescue on the back of a persistently weak economy, a situation that has been further complicated by the economic shock of the Covid-19 pandemic. 

Its business rescue practitioners, Peter van den Steen and Dave Lake, concluded that the company would be wound up and between 3,000 and 3,500 jobs saved through the restructuring and sale of businesses and contracts to new owners. The Covid-19 pandemic has delayed parts of the winding-up process, the practitioners have said. 

Shares in Group Five were valued at R99 million (US$5.38m) when they were suspended in March 2019, an astonishing turnaround of fortunes for the company whose market capitalisation peaked at R6.8bn in 2007. 

Group Five’s management said that the company could no longer meet the listing requirements and had to leave the JSE, where it attracted public investors for 46 years. 

This means the public will be left with a handful of construction companies, most of them penny stocks, to put their money behind. And the JSE, which already has 300 fewer listed companies than it did two decades ago, will be tallying up losses from listing fees. 

Group Five could no longer keep its listing because it did not have a duly constituted board following resignations of nonexecutive directors in June and the resignation of its interim CEO in October 2019. 

No board committees were in existence and therefore Group Five does not comply with corporate governance rules, under the King IV Code on Corporate Governance. 

Group Five has been unable to release audited financial results, with the last financial results having been released on June 30 2018, which contained an operating loss of about R1.2 billion (US$65.15m).