Results boost Murray & Roberts shares 2.3%

Murray & Roberts CEO Henry Laas says the board is pleased with the significant improvement in the group’s financial results and expects the group’s positive earnings trend to continue in the medium to long term.

The largest construction company on the JSE by market capitalisation, Murray & Roberts, closed 2.3% higher at R24.50 a share last week Thursday, a day after releasing its financial results for the year to June.

Shareholders at the results presentation were given an assurance by the company that the group was focused on earnings growth in the next financial year and that collusive behaviour would not be repeated.

Murray & Roberts is trying to raise cash to buy out the 38.4% of remaining shares of Australian oil, gas, engineering and construction group Clough for about R4bn.

It is offering Clough investors A1.46 a share, a premium of about 30%, which values the stake at about A449m.

Murray & Roberts intends to finance the proposal through a combination of existing cash and/or new debt facilities, and the use of excess Clough cash.

After the market closed on Wednesday, it reported a return to profitability buoyed by the performance of international businesses and gains on disposals of others.

Diluted headline earnings per share swung from a loss of R2.61 last year to a profit of R1.32 this year. “The board is pleased with the significant improvement in the group’s financial results and expects the group’s positive earnings trend to continue in the medium to long term, driven mainly by its international operations,” CEO Henry Laas said in Wednesday’s results statement.

The group was embroiled in industry-wide collusion in the financial year, and was fined R309m by the Competition Commission following an investigation into construction groups.

“It was the result of unauthorised actions of a handful of directors in our subsidiary companies,” Mr Laas said.

At the end of June, its net cash position was R4.3bn, versus R1.2bn for the same period last year. It made R2.2bn net cash on disposing of businesses.

“To support our long-term growth objective we redefined the market sectors on which we wish to focus. We have identified energy — oil and gas and power — and mining and minerals as the sectors presenting the best medium- to long-term growth opportunity, and which will most likely enable us to deliver the returns our shareholders expect,” Mr Laas said.