M&R ‘at start of growth phase’

Unchanged dividend of 45c

MURRAY & Roberts (M&R) believes its 2018 financial year will be the start of a new earnings growth period for the listed multinational engineering and construction group.

M&R chief executive Henry Laas yesterday said leading researchers believed the metals and minerals cycle had turned.

The assessment resulted in M&R declaring an unchanged gross annual dividend of 45c a share for the year to June despite a R570 million loss incurred in the Middle East and a R170m net present value charge for its cash contribution over 12 years in terms of the Voluntary Rebuilding Programme (VRP) agreement with the government.

Seven listed construction companies agreed to collectively contribute R1.5 billion for development projects and committed to promote transformation and black participation and ownership in the construction sector in terms of the VRP, which also settled any claims and potential claims for damages these companies faced from certain public entities.

The loss in the Middle East and VRP charge was partially offset by a R160 million profit realised in the Bombela Civils Joint-Venture, which was contracted to design, build, operate, maintain and partially finance the Gautrain rapid rail project, following settlement of a Gautrain claim.

M&R earlier this week reported it had increased its shareholding in the Bombela Concession Company to 50 percent through the acquisition of a further 17 percent for R405m. The deal is still subject to various approvals.

The Bombela Concession Company holds the 15-year concession for operating and maintaining the Gautrain system until March 2026.

M&R reported an 8 percent increase in diluted continuing headline earnings a share, excluding the Middle East, to 212c in the year to June from 197c in the previous year.

Revenue from continuing operations, also excluding the Middle East, declined by 15 percent to R20.8bn from R24.5bn.

Profit before interest and tax, excluding the Middle East, dropped by 21 percent to R1.1bn from R1.3bn.

The group maintained its strong cash position with cash, net of debt, at R1.8bn.

The order book for continuing operations reduced marginally to R26.9bn from R28.7bn in June last year.

The M&R share price dropped 4.34 percent yesterday to close at R13.68.