M&R may get a R1.3bn windfall from M-E claims
Outcome of arbitration for Dubai Airport
MURRAY & Roberts (M&R) is bracing itself for a R1.3 billion windfall next month from its Dubai Airport claim.
Group chief executive Henry Laas on Friday said he believed the outcome of the arbitration on the multi-million-rand claim “could be significant for M&R”. The ruling was delayed from November last year.
Laas said a big part of the R1.3bn in uncertified revenue reported by M&R in the year to June last year was for the claim. “That ruling could be significant for M&R; those claims are less than what we have claimed,” he said.
Laas stressed during M&R’s annual results last August that the uncertified revenue was conservatively stated.
M&R financial director Daniel Grobler said at the time that the total claims in favour of M&R were between R4bn and R6bn, but they had taken only R1.3bn to book.
This month, Laas admitted to Business Report that he still had unfinished business with M&R, a big part of which related to the conclusion of the Dubai arbitration that had been ongoing since 2008 and the group’s exit from the Middle East, as well as the Medupi and Kusile power station contracts.
M&R is the subject of a hostile takeover bid by German family-owned holding company Aton, which owns 44 percent of M&R shares. The group announced its planned exit from the Middle East in August 2016.
The Middle East business is reflected as a discontinued operation in its financial statements.
Laas said despite M&R’s stated intention to exit the Middle East, there were certain obligations the group had to see through before it could close down the business, including the completion of four projects.
He said it had now received takeover certificates for three of the projects, and it should receive the takeover certificate for the final project, the Marriott Hotel in Oman, at the end of next month.
Laas said the group then had to complete all the administration required to wind up and deregister its companies in the Middle East.
He said M&R’s scope of work at the Medupi power plant was essentially completed, while at Kusile it would continue until June next year.
But Laas said M&R had “a mountain to climb” with Mitsubishi Hitachi Power on these contracts.
“We subcontracted to Mitsubishi and Hitachi on all the commercials. Although we had a cost-plus contract that we negotiated with them in June 2011, they have lost billions and billions of rand on Medupi and Kusile.
“The last time I heard it was in excess of R20bn. If the main contractor is running short of cash, you must know that they are going to try their best to recover as much as they can from them (sub-contractors),” he said.
Laas stressed M&R had many claims and counter-claims related to Medupi and Kusile, which would take some time to settle.
M&R rose 1.45 percent on the JSE on Friday to close at R14.01.