Building on sand

Meanwhile over in the construction sector, Group Five’s results tell of a company that’s looking shaken and stirred.

In the year to June there was a wholesale purge of the boardroom led by Allan Gray, which holds 25% of the struggling builder.

Allan Gray appears to have been basing its tactics on the methods favoured by the Assyrian king Sennacherib, who was well known in certain quarters for coming down like the wolf on the fold.

The former directors would do well to check for lupine bite marks on the posteriors of their pinstripes.

The door out of the boardroom has been peculiarly busy in the period, and now it is up to the incoming team to assess quite how dire the state of the company is, and quite what they can do to extricate it from the mess.

Group Five has suffered a number of negative exceptional items in the year, but perhaps more worrying are the operating losses incurred by its engineering and construction division, and the effect of continuing orderbook weakness in that segment.

Key to Group Five’s recovery will be its ability to respond more nimbly to changing market dynamics, reducing the size of the group and ensuring that it is leaner and more able to concentrate its resources on areas that show promising opportunities.

Group Five needs to get back to the basics of disciplined contract management and tight cost control, with greater accountability across the group. This will present no small challenge in a market that remains moribund, and the struggle is by no means over.