Murray & Roberts has reported a significant narrowing of its losses in the six months to end-December, with the company saying its new capital structure and financing arrangements would create a “leaner and more agile group”.
The JSE-listed engineering and mining contracting services firm reported an attributable loss of just R95m, down 96.2% from the previous matching period.
It said the diluted headline loss per share from continuing operations had also improved to 16c from 27c before.
After rising as much as 19.83% earlier in the day, by 2pm the company’s share price had gained just 3.3% to R1.25.
M&R is recovering from the loss of its Australian subsidiaries, Clough and RUC Cementation Mining Contractors, which it has restated as discontinued operations.
After the hit in Australia, the group is now an engineering and contracting services company, focused on the Africa and Americas underground mining markets, and renewable energy and power infrastructure in Sub-Saharan Africa.
In the light of its smaller size, M&R has been implementing a sustainable capital structure which, apart from the refinancing of the group’s debt, has included a thorough cost review necessitating several rationalisation and restructuring decisions.
On Wednesday, the group said the outcome of the shake-up was that M&R now consisted of four operating companies and respective MDs. Subsequently, the mining platform CEO and CFO, Mike da Costa and Trevor Naidoo, respectively, left the group at the end of February.
“The group’s organisational structure has been rationalised and will no longer be structured around ‘business platforms’ but around four operating companies, rendering all platform CEO and CFO roles as redundant,” the company said.
“The MDs of the four operating companies have been appointed to the M&R Ltd board, reporting to Henry Laas as group CEO, who has agreed with the M&R board to extend his tenure as group CEO to August 2025.”
OptiPower, its energy infrastructure project delivery segment focused on Sub-Saharan Africa is now led by Steve Harrison. Japie du Plessis now heads M&R cementation, which is focused on Africa, while cementation Americas is led by Eric Smith.
Terra Nova Technologies (TNT), which provides materials-handling design, consulting services and general contracting to the mining and minerals industries, is now headed by Stephen Kou.
As part of various cost-reduction initiatives, the company said headcount and office space at the group’s corporate office in Johannesburg would be reduced by 40%.
Net debt stood at R247m at the end of December, down from R1.9bn.
Due to M&R’s reduced earnings base, the group has faced a significant challenge in servicing its debt in SA and agreed to a time-scaled deleveraging plan to settle all of its debt with a consortium of SA banks.
M&R said it was looking to conclude its debt refinancing process in SA by June, saying thereafter the group’s banking facilities in SA would once again be aligned with the local business capacity, giving the group room to focus on growing its business from its present base and improving cash generation and profitability.
The firm, with a market capitalisation of R578m on the JSE, said implementing the deleveraging plan initiatives had helped it reduce debt by about R1.3bn so far.
“The group is committed to concluding the implementation of a sustainable capital structure and new financing arrangements during the 2024 calendar year,” M&R said, “thereby creating a leaner and more agile group that will be well positioned to pursue opportunities for growth, most likely through its international mining business.”
M&R said the global mining industry was expected to grow over the next five years, notwithstanding depressed commodity prices, with increased investment into minerals and metals required for energy transition.
“The mining business is expected to return strong earnings in the near term, mainly because of forecast growth in the Americas,” it said.
The company’s mining businesses generate most of its revenue and earnings and are diversified across the northern and southern hemispheres.
Following the loss of RUC as part of the voluntary administration of the group's companies in Australia in December 2022, M&R has maintained its intention to capacitate Cementation APAC to service the Asia-Pacific mining region, following the SA debt refinancing.
M&R's order book, at R14.7bn was R1.4bn lower than reported in the prior comparative period.
By market close the share price was up 7.44% to R1.30.
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