Murray & Roberts share recovery shortlived

Ecsa: When a disaster such as this occurs, it’s not a foregone conclusion that an engineer on site failed to do their job.

After an initial strong recovery on Thursday morning, the share price of embattled construction company Murray & Roberts sank marginally lower than the record low it reached on Wednesday, after a pedestrian bridge collapse claimed two lives and injured more than 20 others.

It closed 0.45% lower than the previous day’s close at R11.10.

M&R intraday share price performance

 

The pedestrian bridge was being constructed over the M1 highway in Johannesburg, one of the busiest roads in the country. It collapsed shortly after 15:00 on Wednesday, seemingly due to a failure of the scaffolding.

The structure fell on several vehicles and emergency services worked until 23:00 that night to free trapped motorists, whereafter the contractor could start clearing the scene. The SABC reported that three people were still in the high care units of different hospitals on Thursday night.

Murray & Roberts CEO Henry Laas thanked everybody who worked through the night on the rescue and clearing operations. He said the road was re-opened around 15:00 on Thursday.

Laas said the company made contact with the families of the victims.

“We have also spoken with a number of the injured and will ensure they, and all affected parties, are receiving the necessary care and monitor their recovery. Over the next period, we will work closely with a team of independent counselling and trauma practitioners to ensure they are given all appropriate assistance,” he said.

Investigation

Laas earlier told Moneyweb that, apart from the investigation by the Department of Labour, the company will also do its own investigation to determine the cause of the event. The internal investigation will be strengthened by a specialised investigator with experience of incidents of this extent and a forensic engineer. Further expertise will be procured, should the need develop, he said.

The Engineering Council of South Africa (Ecsa) confirmed that it has a statutory responsibility to investigate any matter where public health and safety has been compromised. 

On Friday, Ecsa told Moneyweb that its role in the incident will be to determine whether a registered engineering professional(s) is involved in the construction project. If so it will determine whether their role in the project is linked to the collapse. If they aren’t registered with Ecsa the inquiry stops there as it doesn’t have jurisdiction over them. 

For Ecsa-registered engineers involved in the project and found “to have acted in a manner that amounts to a breach of conduct”, the severity of Ecsa’s sanction hinges on the extent of their role and its relationship with the collapse. “Sanctions include, but not limited to: a reprimand, peer counselling, a fine, or even deregistration,” says Ecsa.

Two professional Ecsa-registered civil engineers – were onsite and conducted an inspection and preliminary investigation on Wednesday. “A preliminary report will be tabled at Ecsa’s Investigation Committee on 29/10/2015 …. [they will] make a determination as to the way forward.”

“In a construction project of this magnitude there are different role players. When disaster such as the current one occurs, it is not a foregone conclusion that an engineer or engineers on site failed to do their job. Such a collapse could be as a result of an act or omission by one or more of the role players involved, hence the multiple investigations being carried out to make such a determination,” clarified Ecsa.

Johannesburg Mayor Parks Tau said on Wednesday night that the City had also appointed consultants to launch an investigation on its behalf.

It is not clear how long it will be before the investigations are finalised. Murray & Roberts urged people not to speculate about the cause of the event, but rather wait for the results.

Laas told Moneyweb Murray & Roberts did not use a subcontractor for the scaffolding. It was erected by its own staff.

He added that the company is very aware of the “astronomic effect” of the event on its reputation.

This comes as confidence in the construction industry from government and the public remains, low following the collusion scandal that saw all the major players admitting to bid rigging in 2013 and most paying huge fines.

Asked about the share price that is now 75% lower than five years ago and 53% lower than a year ago, Laas said investors don’t see where growth will come from. The company operates internationally in the oil and gas and mining industries that are suffering as a result of low oil and commodity prices, while the local market has little opportunity.

Since his appointment in 2011 Laas has been able to stabilise the company from an operational point of view and return it to profitability. He says while the company knows that it operates in cyclical markets, it has confidence in its strategy.

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When a bus rolls down an embankment killing 50 +, we don’t see the share price tank or the MD visiting people in hospital. When a mine has a fatality does the price tank? So what’s the big deal here??? There is already a small clue re: a cement truck that may have allegedly bumped the structure. Wait for the investigation to run its cause.

Without in any way trivialising this tragedy, I have to agree with you completely, the media has blown this out of proportion, but maybe with good reason…

A vehicle or mining accident is exactly that, an accident, whereas a bridge collapse is, even before investigations have begun, instinctively assumed to be an avoidable negligence-related occurrence, harsh, I know, but true, so the media plays on this fact, and creates unwarranted hype.

Maybe the fact that it was in Sandton was also a drawcard, nobody would’ve known (or cared for that matter) had this happened, in say, Mpumalanga.

The share price re-action was rather knee-jerk, in anticipation of negative publicity, legal ramifications, fines, being sued etc,, The construction industry hasn’t exactly covered itself in much glory of late, this just adds more salt to the wound.

Interesting – I haven’t seen anyone write about WACO International delaying their listing due to this accident, they supplied the scaffolding so they could be on the line. Whoever has been working on the listing and the private equity company behind the proposed listing (think it’s Ethos) must be gutted!

End of comments.

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