Johannesburg - Murray & Roberts (M&R) is expecting the quantum of an award to one of the Gautrain Rapid Rail project disputes to be announced next month. However, the construction company indicated that the dispute over the water ingress problem between the Park and Rosebank stations remained unresolved and was going to court.
The quantum award expected next month relates to the Gautrain Sandton Cavern claim and follows a ruling made in favour of the Bombela Civils Joint Venture (BCJV) in October 2013.
M&R has a 45 percent shareholding in BCJV, which was contracted to design, build, operate, maintain and partially finance the Gautrain project.
Uncertainty
An arbitration award in November 2013 about the water ingress problem was in favour of the Gauteng government, resulting in M&R making a R300 million provision in its 2014 financial year for its share of the potential construction costs to be incurred by the joint venture to rectify the problem.
Henry Laas, M&R’s chief executive, said yesterday that the extent of any other potential financial impact related to this dispute could not be determined.
“Various matters between the parties, relating to the arbitration award, remain unresolved and will be heard in court. The timing of any future work is uncertain,” he said.
Laas said the legal process for the joint venture’s multibillion-rand Gautrain delay disruption claim was progressing, but the merit and quantum hearings would only be heard from the first quarter of next year.
He added that the arbitration process for M&R’s Dubai International Airport claim was continuing and “a process of amicable engagement with the Dubai government” was running parallel with legal proceedings. This claim was expected to be resolved next year, he said.
A subdued global economy, weak demand and a slump in commodity prices, especially oil, plus an R134m operating loss by M&R’s power and water platform dented the group’s financial performance in the year to June.
Diluted headline earnings a share from continuing operations declined by 1.9 percent to 201c from 205c.
Group revenue from continuing operations decreased by 15 percent to R30.6 billion from R36bn.
Attributable profit fell by 30 percent to R881m from R1.26bn, which included R422m from the disposal of discontinued operations that were not repeated in the new financial year.
An unchanged dividend of 50c a share was declared.
Order book
The group’s order book was R38.3bn at year-end compared with R40.9bn in the previous year.
Laas said the group did well to maintain earnings broadly in line with the previous financial year and was constantly adjusting its cost structures according to market requirements.
He said the group expects a more challenging 2016 financial year and earnings would come under pressure in the year ahead because of the declining order book over the past two years.
Shares shed 3.69 percent yesterday to close at R12.02.
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