Home Accounting and Auditing PwC abandons struggling Group Five

PwC abandons struggling Group Five

423
0

From Business Day: Group Five, which was put into business rescue earlier in 2019 after lenders pulled the plug on the struggling construction company, has also been ditched by external auditor PwC.

Once a stalwart of SA’s construction industry, Group Five said in June that shareholders are unlikely to get anything out of its business rescue process — a legal framework aimed at rehabilitating financially distressed companies.

Group Five and other former industry heavyweights — including Basil Read, which is also in business rescue — have succumbed to a dearth of major construction projects amid a downturn in the domestic economy and a deterioration of the country’s public finances.

Group Five said on Wednesday that PwC had resigned as its external auditor with immediate effect as the contract had become too risky for the professional services firm.

“PwC’s reasons for resigning relate to the resignation by a number of non-executive directors of Group Five, and the resignation by a number of senior executives and key finance staff members, which has increased the risk of continuing as external auditors,” the group said.

Group Five announced in June that chair Nonyameko Mandindi had resigned along with three non-executive directors, including former CEO Michael Upton.

PwC resigned as auditor of the company for the financial year  started July 1 2018.

Group Five said its board would start the process of appointing a new auditor.

According to a presentation posted on the company’s website in June, Group Five’s losses have been steadily growing. It made a total loss of R1.8bn in the eight months to end-February. In the year to end-June 2018, it made a loss of R1.3bn, while in 2017, its losses were about R800m.