Aveng CEO Roger Jardine
Photo by: Duane Daws
Reaction to the announcement that Aveng CEO Roger Jardine had resigned was sharply divided – with some expressing genuine shock and others indicating that it came as “no surprise”, owing to the recent poor performance of the company.
Jardine’s resignation was effective from August 31, when CFO Kobus Verster would step in as acting CEO from September 1. The board’s nominations committee would, in the meantime, initiate a process to appoint a permanent replacement.
In a note to shareholders, Jardine indicated that the Competition Commission investigation into construction-sector collusion and bid rigging had been “personally very taxing”.
“The settlement agreement confirmed by the Competition Tribunal last month provides a fresh platform for the group to move forward and to build on the culture of ethical corporate behaviour that we have worked so hard to implement. I feel it is now an appropriate time to move on,” he explained.
Aveng was fined R307-million and was one of 15 firms to conclude settlement agreements collectively valued at R1.46-billion.
Jardine said he had found it difficult to deal with matters that occurred prior to his appointment, but which only came to light after he joined the group five years ago.
All of the analysts canvassed by Engineering News Online felt that the reason provided in the Stock Exchange News Service notice offered only part of the rationale for the resignation – none of these individuals was prepared to speak on the record, however.
Some argued that Jardine might even have been pushed to resign, owing to a series of issues at the company, most notably the resurfacing of problems as Aveng Grinaker-LTA.
On August 5, the company informed shareholders that its earnings for the year to June 30, 2013, would decline by up to 10% compared with the prior year.
It attributed the decline to “much higher losses” from Aveng Grinaker-LTA, which, following a review, had been forced to revise cost-to-completion estimates on a number of projects. Aveng’s share price, which has more than halved since its highs of five years ago, fell sharply after the release of that trading update.
One analyst raised concerns that the problems at Aveng Grinaker-LTA might be worse than had been communicated, adding that, while trading conditions were difficult, the performance had been compounded by poor management decisions.
However, another analyst described the resignation as a “major shock”, and expressed concern about the ability of the company to secure a suitable replacement, particularly in light of the prevailing poor image of the industry. This individual was also not convinced that there was an obvious internal candidate to replace Jardine.
Apart from the statement the company made no additional comment, indicating that greater insight could be shared at the group’s upcoming results presentation on September 10.
Chairperson Angus Band said Jardine had played a key role in managing a complex regulatory process with the Competition Commission. “He has also had to manage the group in the midst of material economic uncertainty, which placed the sector as a whole under major pressure,” Band added.
Jardine gave no indication as to his future plans, but it is believed that he is planning to take a sabbatical before pursuing any other opportunities.