The multinational engineering and construction group said yesterday that the Dubai International Arbitration Centre had extended its deadline for the award from May to November this year.
M&R chief executive Henry Laas said this was a large and complex dispute, and the arbitration tribunal requested more time to deliver its award.
Laas said the group’s uncertified revenue remained at R1billion at the end of December, and was largely represented by claims on the projects in the Middle East.
M&R at one stage had uncertified revenue claims valued at more than R2bn, but this reduced after the settlement of claims related to the Gautrain rapid rail project and the Gorgon Pioneer materials offloading facility in Australia.
M&R yesterday attributed an improvement in the group’s financial performance in the six months to December to a reduced loss in the Middle East, the one-off charge related to the Voluntary Rebuilding Programme agreement with the South African government incurred in the prior period not being repeated in this reporting period, and strong earnings growth by the group’s underground mining platform.
Revenue from continuing operations increased by 10percent to R11.8bn from R10.7bn.
Diluted continuing headline earnings a share grew by 104percent to 55cents from 29c.
Attributable earnings were 283percent higher at R110million compared with the R60m loss in the prior period.
Cash generated by operations increased by 43percent to R400m from R279m.
Cash, excluding debt, increased by 18percent to R1.3bn.
The order book for continuing operations declined by 10percent to R22.1bn from R24.5bn.
Laas said the reduced order book reflected market conditions and project delays in the oil and gas and the power and water sectors.
He said the financial results and the order book of the power and water platform were declining as Eskom’s Medupi and Kusile power station projects neared completion. The order book for this platform decreased to R2.7bn from R5.8bn.
Laas said the financial results of the power and water platform continued to be underpinned by Medupi and Kusile, where work was expected to be largely completed by the end of this calendar year.
“The power sector in South Africa is presenting very little opportunity, as new power station projects have all been delayed, with no other large alternative opportunities identified in the short to medium term.
“While the water treatment sector in South Africa is presenting increasing opportunity, it is not yet of sufficient scale to materially and positively impact the platform’s financial performance,” he said.
Laas said efforts were ongoing to replenish the order book, with a focus on prospects in complementary markets, such as mining, pulp and paper, chemicals and energy.
He said the oil and gas platform was expanding its international footprint, but earnings were still largely derived from Australasia.
Laas said the underground mining platform was the largest contributor to group earnings in the reporting period.
He expected the improvement in commodity prices and increased investment by mining companies to present long-term growth potential for this business.
M&R shares rose 2.76percent on the JSE yesterday to close at R11.16.
- BUSINESS REPORT