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Murray & Roberts down on lower revenue, profit

Heading to court on Gautrain water ingress.

The share price of construction group Murray & Roberts ended the day 0.88% lower at R12.37 after the publication of its annual results around 16:00 on Wednesday, wiping out gains made earlier in the day.

Murray & Roberts

Murray & Roberts reported R30.6 billion revenue, down from R36 billion in the previous year, and R881 million attributable earnings, down from R1.2 billion in the previous financial year.

Diluted continuing headline earnings per share of 201c were reported, compared to 205c in the corresponding period, but the dividend of 50c was maintained.

The group ascribed the revenue decline to subdued markets, especially in the oil and gas sector.

This also affected the order book, which is down from R40.9 billion a year before to R38.3 billion.

The internationally-focused oil and gas and underground mining businesses contributed 94% of earnings before interest and tax.

The underground mining order book continued to grow, boasting awards like the R4.8 billion Kalagadi Manganese and R3 billion Booysendal contracts.

Giving an update on its major claims, the group said the Gorgon Pioneer Materials Offloading Facility claims process had been closed out and final payment had been received.

The Gautrain Sandton Cavern claim was ruled in 2013 in favour of the Bombela Civil Joint Venture in which Murray & Roberts has an equity stake. The quantification is expected next month.

The Gautrain water ingress dispute that was ruled against the Bombela Concession Company in 2013, but had unresolved issues relating to the award, will be heard in court. Murray & Roberts has a 45% stake in Bombela Concession Company. The group raised a provision of R300 million in the previous financial year for its share of the construction cost, but in light of the pending litigation any further impact, as well as the timing of the work, is uncertain.

The multi-billion rand Gautrain delay and disruption claim, that relates to the late and out-of-sequence hand-over of land for construction, is progressing towards arbitration. The group said early rulings on the legal interpretation of certain clauses were largely in favour of the Bombela Concession Company. The merits and quantum of these claims will be heard early next year and presumably only concluded in 2017.

Murray & Roberts said that any award would attract interest from 2009, Murray & Roberts.

The claim in relation to the Dubai International Airport is ongoing and is expected to be resolved some time next year.

The group expects the current financial year to be more challenging due to the subdued international economy, weak demand for commodities and low inestment in fixed capital formation in South Africa.

It said earnings would come under pressure, but resource market sectors were cyclical and that Murray & Roberts was well positioned to realise its 2020 growth strategy.

“Our balance sheet strength will enable us to extend the success of our bolt-on acquisition strategy, as we grow our capability to provide services in all segments of the project value chain”, the group said.

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