Murray & Roberts improves financial performance and prepares for growth
29 February 2012
Murray & Roberts today announced its interim results for the six months ended 31 December 2011.
The Group generated revenue of R16,7 billion (2010: R15,1 billion) and reported an attributable loss of R528 million (2010: R636 million). This loss is primarily as a result of additional cost provisions, amounting to R831 million, on Gorgon Pioneer Material Offloading Facility (GPMOF) and Middle East contracts. The order book increased to R57,0 billion and the operating margin contained therein is within the Group's targeted range of 5,0% to 7,5%. The net debt position at 31 December 2011 was R21 million, compared to a net debt position of R1,0 billion at 31 December 2010.
Henry Laas, group chief executive comments: "Although the business environment is still being impacted by the uncertain global economic and financial markets, the Group maintains a strong order book and is experiencing improved trading conditions in all operating platforms, other than Construction Africa and Middle East and Construction Products Africa."
The Group continues to experience challenges on three projects in the Construction Africa and Middle East platform. The GPMOF project encountered late site access, material scope changes and continued adverse weather conditions. Project completion is now scheduled for the second half of the current financial year.
Gautrain water ingress rectification work in the section between Park and Rosebank Stations is being undertaken, the effectiveness of which will be reviewed in March 2012. The Gautrain arbitration will be a protracted process and finalisation is now expected by 2014.
The Medupi Civils contract is progressing satisfactorily despite significant increase in project scope. Negotiations are in progress with Eskom to resolve outstanding claims related thereto.
The Group successfully restructured its South African term debt and bank facilities, which better aligns the debt repayment tenure with the timing of anticipated proceeds to be derived from the settlement of the Group's major claims. The new debt package of approximately R4,3 billion (previously R3,4 billion) includes facilities ranging from on-demand to four-year facilities.
In addition to solidifying its operating and financial position, the Group has sought to retain its strategic flexibility and to preserve and grow long-term shareholder value. In light of the Recovery & Growth Plan, funding of the order book, optimal balance sheet structure, debt repayment tenure and the protracted nature of the claims settlement process, the Board decided to undertake a rights offer to raise approximately R2,0 billion in additional capital from shareholders.
Laas comments: "We are pleased to announce that all resolutions proposed at the General Meeting for purposes of the proposed rights offer were approved by the requisite majority of shareholders. We would like to thank our shareholders for their vote of confidence in our Recovery & Growth Plan."
The Group's health and safety vision is "Together to Zero Harm" with the stated goal of having zero fatalities and disabling injuries. The Lost Time Injury Frequency Rate (LTIFR) as at 31 December 2011 was 1.04, just above the Group's target of achieving a LTIFR of less than one per million man hours by June 2012.
"The safety of all people who work for or with the Group is of paramount importance and we remain committed to adopting the highest safety standards at all of our operations." continues Laas.
The Group continues to engage with the Competition Commission in finalising its Fast-Track submission. Based on current information the Board is of the view that an increase in the penalty provision raised in the previous financial year is not necessary and hopes to conclude discussions with the Commission in the current financial year.
"We are engaging the Group's challenges with a new leadership, renewed focus on risk management, health and safety, a sound order book and a determination to grow the business while reducing debt. It remains our objective to return to profitability as soon as possible," concludes Laas.
About Murray & Roberts:
Murray & Roberts is South Africa's leading engineering, contracting and construction services company, with a primary focus on the resources-driven construction markets in industry and mining, oil and gas, and power and energy in Africa, the Middle East, Southeast Asia, Australasia, North and South America. The company offers civil, mechanical, electrical, mining and process engineering; general building and construction; materials supply and services to the construction industry; and management of concession operations. Murray & Roberts is committed to the delivery of infrastructure to enable economic and social development in a sustainable way.