M&R CEO Henry Laas
Photo by: Creamer Media
Downscaled engineering and contracting group Murray & Roberts (M&R) is continuing with efforts to regain control of RUC, the Australian mining services business it lost when its Australian holding company and Clough entered voluntary administration in December.
Speaking at the company’s results presentation, CEO Henry Laas refused to be drawn on the precise nature of processes currently being pursued to recover the company, saying only “we are still in the race”.
M&R’s prospects seemed to have been dented in July when RUC’s administrators terminated an initial Deed of Company Arrangement proposal on the basis that certain conditions precedent had not been met.
However, Laas indicated that there was still a “reasonable chance” of securing RUC, albeit with the prosect that M&R would need to make a “monetary contribution” to do so. He also stressed that there were “no guarantees”.
The JSE-listed company should know by the end of October whether it has been successful.
Should M&R fail in its bid to regain control, it would seek to re-establish a presence in the Australia and the Asia-Pacific region, through Cementation APAC, which has recently been established in Australia to provide engineering and contracting services to mining clients in the territory.
However, the pace at which mining-related revenues and group earnings would recover relative to its position ahead of the Covid pandemic – which precipitated the financial distress that resulted in M&R relinquishing its biggest operating platform in the form of Clough during its 2023 financial year – hinged on it securing RUC.
“Should the group retain RUC, the mining platform is expected to generate earnings at a level similar to that of the 2019 and 2020 financial years,” Laas reported.
In 2019, the mining platform reported earnings of R814-million, which fell to R630-million the following year.
While M&R was optimistic about the prospects for renewables and grid-related workflow in South Africa and the Southern African region, the importance of mining services to its immediate outlook were highlighted in both its current revenue and earnings, as well as its order book.
Last year, the mining platform, which has units in Southern Africa and the Americas, recorded an operating profit of R313-million on the back of revenue of over R11-billion, while its power, industrial and water platform reported a R47-million operating loss and revenue of R1.3-billion.
The mining platform also comprised R13.6-billion of M&R’s R15.4-billion order book as of June 30, 2023.
Laas argued that M&R still had a future despite the difficulties of the 2023 financial year, which had fundamentally reshaped the group and its prospects.
“We were all shocked,” he said, indicating that there was an expectation at the start of the year that it could trade its way out of its liquidity challenges; a scenario that changed when two major claims were rebuffed.
“What we would like to do is put 2023 behind us,” he added.
M&R recorded an attributable loss of R3.2-billion after accounting for the losses in Clough and the deconsolidation of Clough and RUC and its Australian holding company.
Following the deconsolidation, equity reduced to only R1.8-billion from R5.7-billion, while net asset value a share fell to R4 from R13 in the previous year.