Murray & Roberts (M&R) has completed the sale of its stake in Bombela Concession, and the debt-leaner group is optimistic about prospects for its multinational Mining Platform and Africa-focused PIW (power, water industrial) Platform.
The sale of the stake in Bombela Concession to a subsidiary of Europe-based Intertoll International Holdings B.V. had been finalised, and the R1.26 billion proceeds would be used to repay debt, M&R’s directors said in a trading update yesterday.
The share price fell 1.25% midday to around R1.88, a price well down from R12.52 a year ago.
The share price decline reflects the problems the multinational construction and engineering group has been facing. In August 2022 strong growth in revenue and earnings were reported for the year to June, but the uncertain global environment and project delays led to working capital constraints, and no dividend was declared.
Then in the six months to December 31, the group reported a R2.5bn attributable loss versus R55m profit a year before, and its debt was at R2bn at that stage.
A major Australia-based subsidiary went into business administration, and the group is currently working to extricate one of the mining subsidiaries from the administration. The aim of the sale of the Bombela Concession stake was to improve liquidity in the group.
M&R’s directors said its debt would reduce to R1.39bn, based on the balance as at December 31, 2022.
This debt would comprise of corporate debt of R789 million, self-servicing debt of R462m - mainly asset-based finance for equipment on mining projects - and IFRS16 (International Financial Reporting Standards): Leases debt of R140m of mainly office leases.
The annual interest cost was also expected to be reduced by some R95m.
M&R’s directors said projects were progressing in line with their expectations.
The Mining Platform represents R14.1bn of the total order book of R16.1bn, and the PIW Platform represents R2bn.
The Mining platform holds the equivalent value in near orders as it has in its order book, presenting a good opportunity for growth, directors said.
The PIW platform had secured several orders in South Africa’s renewable energy sector which offered a strong pipeline for future work, supporting the expectation of a return to profitability for the platform in the short term, they said.
“The group continues to focus on cash generation through operational performance, cost reduction and managing working capital prudently,” they said.
BUSINESS REPORT