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New Group Five board expects even greater loss

Aug 14 2017 17:06

Cape Town – Group Five’s new board, complete with a new chairperson, amended its expected loss in its headline earnings per share for the year ended June 30 2017 from R5.90 to R8.70.

The first announcement was ahead of its extraordinary general meeting on July 24, which saw a new board of directors appointed.

Announcing its downward projection on Monday, Group Five also said Nonyameko Mandindi was elected as its new chairperson, following a board meeting on August 11.

She was one of five new board members that were appointed on July 24 after being nominated by Group Five shareholder Allan Gray.

After receiving the initial projection, the new board reviewed and approved the new set of figures, Group Five said in a statement on Monday.

“The group now has more certainty on the actual range of the loss, and therefore provides this further trading statement,” the company said.

“Shareholders are advised that, for the year ended 30 June 2017, the group expects fully diluted headline earnings per share and headline earnings per share to be a loss of between 800 cents per share and 870 cents per share; and fully diluted earnings per share and earnings per share to be a loss of between 780 cents per share and 850 cents per share.”

“The loss has increased from the estimate provided in the trading update of 24 July 2017 mainly as a result of a more conservative approach adopted on the tax treatment of a transaction, and its resultant impact on the group’s deferred taxation asset, for accounting purposes. This results in a charge against earnings and a reduction of the group's deferred taxation asset, but without any resultant cash impact.

“To a lesser extent, a more cautious approach adopted on the profit recognition of a construction contract also contributed to the losses. Although comfortable with the estimated final outcome of the contract, the board deems it appropriate to reduce profit recognition at this stage until certain milestones have been achieved. This adjustment is also not expected to generate a negative cash impact.”

Other new board appointees include Cora Fernandez as chairperson of the audit committee (subject to shareholder approval at the next annual general meeting), Jackie Huntley as chairperson of the transformation and sustainability committee, Nazeem Martin as chairperson of the remuneration committee, and Edward Williams as chairperson of the risk committee.

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