Murray & Roberts ecstatic about earnings

Posted On Thursday, 27 October 2005 02:00 Published by Commercial Property News
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Murray and Roberts is upbeat about prospects, with directors expecting real growth in headline earnings in the year to June 30 2006

Construction IndustrySouth African construction group Murray and Roberts (M&R, MUR) is upbeat about prospects, with directors expecting the next few years to be positive for the group and real growth in headline earnings in the year to June 30 2006.

Providing an update on its various projects on Tuesday, M&R said it is experiencing a significant increase in construction activity in South Africa and expects this to continue into the future.

A full review of business systems, overhead structure and reporting arrangements in the construction operations has been commissioned to optimise performance efficiency, it said.

"The pending award of Gautrain Rapid Rail Link and VRESAP Pipeline plus long-term developments planned for the power and other sectors, indicate the primary region of construction activity in SA as Gauteng and surrounding provinces," it said.

"To ensure balance between capacity and opportunity the Group intends in future restrict the South African business of M&R Construction to this market and establish its current Cape and SADC business units under separate management."

The group said the 2005 financial year saw a major shift in its business make-up and strategic focus. In the past year it secured a number of significant projects, notably the expansion of Dubai International Airport and the Pebble Bed Modular Reactor (PBMR).

The group acquired the Cementation Mining Company Africa, Cementation Skanska Canada Inc and a strategic first stage shareholding in Clough Limited in Australia.

M&R's project order book increased to 9.9 billion rand at 30 September 2005 and subsequently, with various partners, has secured the award of the 1.5 billion rand VRESAP Pipeline for the Trans Caledon Tunnel Authority and the PBMR Demonstrations Plant engineer, procure and construction management (EPCM) contract.

In addition, M&R and Clough form part of an international joint venture that is short-listed for the EPCM contract on a major gold mining project in Western Australia.

In recent acquisitions and disposals activity, the sale of Criterion Equipment to Jay & Jayendra Group has been finalised in an empowerment transaction valued at 85 million rand.

M&R has also lodged its formal offer to the minority shareholders of Concor. Should this be approved by the High Court of SA and competition authorities, Concor will become a wholly owned subsidiary of M&R that will enable an empowerment strategy in terms of the pending Construction Charter. Should the scheme not succeed, it will own at least 50.1% of Concor and the company will remain listed on the JSE.
 
Minority shareholders of Clough will vote on November 9 on the proposed transaction that will see M&R increase its shareholding in the company to 46% immediately and to 49% over the next two years. Clough is thinly capitalised at present with high levels of debt following significant project problems over the past two years, M&R said.
 
This latest transaction establishes M&R as the principal shareholder in Clough and facilitates a more proactive engagement of the company and its business.
 
Elsewhere, the Dubai International Airport is experiencing delays and out-of-sequence performance in many of its major contracts. This primarily relates to the current scale and intensity of construction activity in the region and is delaying progress on the M&R joint venture contract. M&R is engaged with the client in resolution of these challenges, it said.
 
Progress to full financial close on the Gautrain Project is complex, with the target date of December 2005 under pressure, it added.
 
In a further development, shareholders are due to vote on M&R's proposed broad-based black economic empowerment transaction on November 21, followed by a scheme meeting under order of the High Court of SA.

Last modified on Friday, 18 October 2013 12:52

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