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M&R gets back on track with narrowed losses, lower debt

6th March 2024

By: Darren Parker

Creamer Media Contributing Editor Online

     

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JSE-listed Murray & Roberts (M&R) has reported a significant year-on-year reduction in its attributable loss for the six months ended December 31, 2023, signalling a positive turn in its financial performance.

The company recorded a substantially reduced attributable loss of R95-million for the six months under review, which is in stark contrast to the R2.5-billion loss reported for the six months ended December 2022. 

This performance was welcomed by the market, as reflected by the more than 13% rise in its share price early on March 6. By late afternoon, its share price was still trading up more than 4% compared with its March 5 close.

M&R said the much larger loss during the prior comparable period was largely owing to the loss of control of the group’s holding company in Australia Murray & Roberts Proprietary Limited (MRPL) and its subsidiaries. 

MRPL was placed under voluntary administration by MRPL directors on December 5, 2022. As a consequence, the group’s ownership in MRPL and its two subsidiary companies Clough and RUC Cementation Mining Contractors was terminated during the course of last year.

“The voluntary administration of the group’s Australian subsidiaries in December 2022, which followed the devastating impact of Covid-19 on Clough, significantly reduced the size of the group. 

“Today, M&R is an engineering and contracting services company, now focused on the African and Americas underground mining markets, and the renewable energy and power infrastructure markets in sub-Saharan Africa,” the company said.

The company reported revenue from continuing operations of R6.6-billion, showcasing growth from R5.9-billion in the corresponding period of the previous year. 

Earnings before interest and taxes from continuing operations also increased to R103-million for the period under review. This represents a notable improvement from the R89-million in earnings reported for the prior comparable period.

Further, its diluted continuing headline loss a share improved to 16c from a 27c loss in the prior comparable period. 

M&R maintained a robust order book of R14.7-billion, albeit slightly lower than the R16.1-billion reported in the first half of the 2023 financial year.

In terms of new business, the company secured near orders amounting to R10.2-billion during the period under review.

The company also made progress in reducing its net debt to R247-million, compared with about R1.9-billion in the first half of the 2023 financial year. 

As of June 30, 2023, M&R’s South African debt was about R1-billion, following the sale of the group’s 50% shareholding in the Bombela Concession Company in the preceding April.

Towards the end of the 2023 calendar year, M&R’s South African debt was further reduced to about R770-million after agreeing on new commercial terms for one of the group’s largest mining projects in South Africa, as well as the sale of a non-strategic investment in Aarden Solar and other smaller initiatives.

Meanwhile, Cementation Canada renewed its banking facilities agreement with a Canadian bank, which provides for Cementation Canada to pay dividends to M&R in support of the deleveraging initiatives. Following a dividend in January, the group’s South African debt was further reduced to about R400-million.

The group said the final milestone in the deleveraging plan is to refinance its remaining debt with a consortium of South African banks. As agreed with the current South African banks, the objective is to conclude the debt refinancing process in South Africa by June.

Considering the changes to the group’s businesses over the past two years, M&R said that it was implementing a thorough cost review, necessitating several cost rationalisation and restructuring decisions.

As such, the group’s organisational structure has been rationalised and will no longer be structured around business platforms but around four operating companies, rendering all platform CEO and CFO roles redundant. 

As a result of this decision, Mining platform CEO Mike da Costa and CFO Trevor Naidoo departed from M&R at the end of February. 

Further, former Power, Industrial & Water (PIW) CEO Steve Harrison was appointed OptiPower MD, since OptiPower was the only operating company to emerge from the former PIW platform.

The group now consists of four operating companies: OptiPower, which is focused on sub-Saharan Africa; M&R Cementation, which is focused on Africa and headed up by MD Japie du Plessis; Cementation Americas, which is focused on the Americas and headed up by MD Eric Smith; and TNT Inc, which is also focused on the Americas and headed up by MD Stephen Kou.

Meanwhile, as part of various cost reduction initiatives, headcount and office space at the group’s corporate office in Johannesburg will be reduced by about 40%.

Edited by Creamer Media Reporter

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