Gothic horror story

If this column were to launch some species of frequent-flyer scheme, Group Five would be right up there in the platinum section, with speedy check-in, lounge access and unseemly quantities of brown-nosing from ground staff and cabin crew alike. It’s always good to welcome back an old friend, though perhaps the long-suffering shareholders may be a little less amused at what has become a corporate version of one of the more grisly Gothic horror stories, published to gasping subscribers in six-monthly instalments.

The share price has enjoyed something of a dead-cat bounce since the days when it looked like it was heading rapidly to zero, but you’d have to be a bottom picker with carbon-fibre cojones to play this as a momentum trade. The past year has seen more value destruction, as Group Five racked up an operating loss of a cheeky R1.4bn, much of which can be attributed to its woeful gas and oil power plant contract in Kpone, Ghana, which alone cost the group R1.3bn in the year.

Aside from this apocalypse, there were the usual complaints about contracts not being secured or arriving late, as well as significant costs incurred in rightsizing the group for current market conditions. The plan is now to address liquidity concerns by selling a number of businesses, including a large chunk of its investment in Intertoll Capital Partners, and to focus on a core business that should be far less volatile and, over time, more profitable. For shareholders who have taken a lengthy hammering, it can’t come soon enough.