New-look M&R to transfer listing to Diversified Industrials board from Heavy Construction

CEO Henry Laas

CEO Henry Laas

Photo by Duane Daws

20th February 2017

By: Terence Creamer

Creamer Media Editor


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Murray & Roberts (M&R) has confirmed that its application to transfer its listing from the ‘Construction and Materials’ sector of the JSE to the ‘General Industrials’ sector has been approved and that the change will become effective from Monday, March 20. From that date, the company will trade under the ‘Diversified Industrials’ subsector, having previously traded under the ‘Heavy Construction’ subsector.

The transfer request follows far-reaching restructuring at the company over the past two years, but has been precipitated primarily by M&R’s decision to dispose of its South African infrastructure and building businesses to a consortium led by black-empowered investment company Southern Palace.

The R314-million transaction was announced in November and is likely to be completed during the second half of M&R’s current financial year, which ends on June 30. The new entity is expected to have an immediate order book of R4-billion and employ up to 2 000 people.

The new-look M&R will focus on the oil and gas, underground mining, as well as the power and water markets globally. “The company has taken a long-term view in selecting the global natural resources market sector to apply its expertise and focus as a multinational specialist engineering and construction group,” M&R said in a statement to shareholders.

CEO Henry Laas hinted to the possibility of transferring to a different subsector in August, when announcing the group’s decision to exit the infrastructure and building markets.

He noted that the infrastructure and building markets had become a far smaller contributor to the company’s revenue and profits over the past number of years and that the disposal was considered to be the “logical next step” for a company still regarded by most South Africans as a general contractor.

In fact, the group has been listed on the JSE’s ‘Construction’ sector ever since the 1967 merger of Murray & Stewart and Roberts Construction to form M&R – at the time, heavy construction was the primary activity of the company.

In 2016, underground mining and oil and gas contributed 77% to group revenues and 96% to earnings, while revenue from M&R’s home market, South Africa, fell to only 27% and the country’s earnings contribution declined a 5%. M&R reported revenue from continuing operations of R26-billion during the year to June 30, 2016, and attributable earnings of R753-million.

M&R’s decision to exit the infrastructure and building businesses is also aligned to a recent settlement agreement between government and seven leading contractors, whereby the firms either committed to selling 40% of their equity to black shareholders over the coming seven years, or to entering partnerships with emerging black contractors that will generate value equivalent to 25% of the traditional contractor’s yearly turnover.

Southern Palace CEO Lucas Tseki has stated that the acquisition is in line with the company’s strategy of migrating from it position as an investment holding company to having operational control in the companies it owns.

“Our idea is to become a leading, tier one, infrastructure player in sub-Saharan Africa. This is the same team that built the Gautrain infrastructure, it’s the same team that did the Dubai airport. We needed to ensure that we keep and maintain that capacity, and that expertise, and take this 115 years of heritage to greater heights,” Tseki said in mid-February.

Edited by Creamer Media Reporter



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