Cautionary Announcement and Trading Statement
28 January 2011
Murray & Roberts today informed the market with the release of a cautionary statement that warns of an expected loss in the half year to 31 December 2010. The company cites slow and arduous progress with the resolution of claims and final accounts in South Africa and Middle East, compounded by tougher trading conditions in these markets.
Commenting on the announcement, Group Chief Executive Brian Bruce said: "I and my colleagues are highly disappointed at the expected loss in the half-year despite all our efforts to date in delivering the excellent work we have on our portfolio of major projects". Bruce explained that ongoing difficulty and uncertain timing of payment resolution at project level had triggered the decision to lower the future risk profile of outstanding payments. An impairment of this nature has no adverse cash flow consequence and does not limit any rights of future recovery.
Dubai Airport, Gautrain and Medupi are public sector projects that have all suffered significant increases in their scope of works, over and above what had originally been designed and contracted. This has resulted in significant delay and disruption with additional costs against which the company's clients have certified only limited payment to date.
"I feel the resolution of these matters with our clients has been made more complex than necessary, especially as the cause of the increased scope in each case is no fault of Murray & Roberts or its partners," Bruce continued.
"I think it is fair to say, that while Murray & Roberts is challenged by the cash flow consequences of this state of affairs, the company and its people have risen above these challenges and continue to deliver diligently on their contracted responsibilities."
"We believe in our capability and resilience to deliver a final outcome that includes the recovery of our payment rights under the contracts over time." Bruce noted that it is a Murray & Roberts core value to seek resolution of disputes through direct personal discussion.
"I and my colleagues are in continuous engagement with our clients. We know our rights and are confident of an eventual outcome that will meet the requirements of all parties."
The company noted that its continuing operations are expected to deliver earnings that are down between 30% and 45% compared to the previous half-year to 31 December 2009 in a difficult market.
"This includes solid performances from many of our companies," Bruce concluded, stating that Murray & Roberts is well diversified and has the strength and resilience to deal with its current challenges and to engage the future potential in all its markets.
For further information contact:
Mr Ed Jardim
Group Communications Executive
Mobile +27 (0) 83 357 6282
Murray & Roberts Client Service
Tel: +27 (0)11 456 1144
Fax: +27 (0)86 637 0113