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Murray & Roberts returns to profitability with strong order book of R60.7bn

Murray & Roberts' corporate head office

Murray & Roberts has announced its annual results for the year ended 30th June 2021 with the group on the cusp of a multi-year period of strong earnings growth.

The group is recovering from the initial impact it experienced in FY2020 from the pandemic, and related deferrals, closures, and restrictions, with continuing operations returning to profitability in the year under review. Our exposure to the natural resources, industrial, energy, water and infrastructure markets, and strong order book from those markets, holds the potential for meaningful earnings growth in FY2022 and in the medium term” commented Henry Laas, Murray & Roberts Group Chief Executive.

The group’s revenue from continuing operations increased to R21.9 billion (FY2020: R20.8 billion), of which 81% was generated from outside of South Africa. It reported strong growth in earnings before interest and tax from continuing operations to R540 million (FY2020: R17 million loss). Operating earnings were partly offset by an increased loss for discounted operations, resulting predominantly from non-recurring extraordinary and non-cash losses, while the attributable loss reduced to R180 million (FY2020: R352 million loss).

The effective tax rate remains high at 73%, mainly due to withholding tax in foreign jurisdictions, as well as losses incurred in entities where future taxable earnings are uncertain. Consequently, no deferred tax assets could be recognised on these losses, and it is expected that the tax rate will normalise at more acceptable levels in the near term.

The company’s growth in earnings from continuing operations resulted in diluted continuing headline earnings per share of 16 cents (FY2020: 88 cents loss per share). Cash, net of debt, also improved to R0.7 billion (FY2020: R0.1 billion net debt) with an order book of R60.7 billion (FY2020: R54.2 billion).

The group reported a strong book order of R60.7 billion (FY2020: R54.2 billion) which includes several multi-year contracts. The project pipeline includes near orders of R11.1 billion (FY2020: R11.4 billion) and Category 1 opportunities of R84.1 billion (FY2020: R121.3 billion) of which circa R30 billion is being negotiated on a sole-tender basis.

The group’s strategic decision to exit the Middle East in 2017 has been a multi-year and complex task which has been exacerbated by the arduous process of managing commercial close outs for all completed building projects, but it is progressing, and the company has entered a transaction process with a UAE-based investment company for the sale of its Abu Dhabi and Dubai companies. The transaction is expected to be concluded by the end of September 2021 and although the group will retain certain contingent liabilities post the sale, the proposed transaction will significantly reduce the outflow of legal and operating costs in the UAE.

Over the next three years, Murray & Roberts expects most of its revenue to be derived from its two international business platforms, which have established credible positions in regions and sectors with sustainable growth prospects.

The board resolved not to declare a dividend for the period under review.