DAMAGES CLAIM KICKS OFF
M&R seeks billions for disruptions
The arbitration process to decide on Murray & Roberts’ multibillion rand Gautrain delay and disruption claim is scheduled to commence next month.
THE ARBITRATION process to decide on Murray & Roberts’ (M&R) multibillion-rand Gautrain delay and disruption claim is scheduled to commence next month.
M&R group chief executive Henry Laas said while the claim was not expected to be settled sooner than the 2016 calendar year, any award would attract interest dating from 2009.
Laas said last year the delay and disruption claim against the Gauteng provincial government involved “not hundreds of millions but billions of rand”.
He added this week that the hearing to determine the quantum of its claim – related to the Gautrain Sandton cavern – was scheduled to take place in May this year.
This arbitration claim was ruled in favour of the Bombela civil joint venture, in which M&R had a 45 percent shareholding, in October 2013.
An arbitration panel ruled in November 2013 against the Bombela civil joint venture in another Gautrain dispute related to the water ingress problem between Park Station and Rosebank.
M&R made a R300m provision in its 2014 financial year for its share of the potential construction costs to be incurred by the joint venture to rectify the water ingress problem. Laas said this week the extent of any other potential financial impact, if any, related to this matter had not yet been determined.
M&R shares dropped as much as 4.6 percent to R17.02, the lowest level since Septem- ber 2005. The stock eased 1.96 percent to close at R17.50.
M&R also has a major outstanding claim related to the Dubai International Airport.
Laas said the arbitration process for this claim was ongoing but it was expected to be resolved during this year.
M&R on Wednesday reported a 39 percent growth in diluted continuing headline earnings a share to 79c in the six months to December from 57c in the previous corresponding period.
Revenue declined by 15 per- cent to R15.9bn largely because of a reduction in revenue from the group’s oil and gas business in Australia. Profit slumped by 57 percent to R369m.
The previous corresponding period include a R388m profit from the sale of discontinued operations and a R98m trading profit from discontinued operations. The net cash position deteriorated to R900m from R2bn.
Laas attributed this to R162m that was used to fund acquisitions and the utilisation of about R1.3bn in advances by customers.
Acquisitions by the group in the reporting period included boutique US-based engineering company CH-IV International for R35m; Scotland-based privately owned engineering services company Booth Welsh for R79m; and Aquamarine Water Treatment for R26m.
An interim dividend was not declared.
The group’s order book reduced by 16 percent from R44.9bn in December 2013.
Laas attributed this largely to the order book of the oil and gas platform transitioning to smaller and shorter term contracts and fewer new projects being secured in the infrastructure, building, energy and industrial platforms.
Market conditions had created short- to medium-term growth challenges in the sectors within which M&R operated.
The recent unexpected and significant drop in oil and commodity prices had created market uncertainty, which in the short to medium term would impact investment decisions of oil and gas and resources companies, he said.