Roy Cokayne

MURRAY & Roberts (M&R) expects to report significantly higher annual earnings despite making a R300 million provision for its share of the potential costs to solve the Gautrain water ingress problem between Park and Rosebank stations.

The listed construction and engineering group said yesterday that it expected to post diluted headline earnings a share from continuing operations for the year to June of between R2 and R2.10 compared with a restated R1.23 the previous year.

M&R also reported that it had achieved additional income of R323m from the financial settlement with Boskalis Australia of claims and counterclaims related to the Gorgon Pioneer materials offloading facility project in Australia. This follows the group reporting in June that it had reached financial settlement with Boskalis Australia on its major claim for the Gorgon Pioneer facility.

It said the agreement provided for two cash payments, one at the end of last month and the other at the end of next month, and the uncertified revenue taken to book on the Gorgon Pioneer project during previous financial years had now been certified.

The provision relating to the Gautrain projects follows the arbitration award in November last year in favour of the Gauteng provincial government.

M&R said a panel of technical experts and design consultants had been appointed to design a technical solution to the water ingress and, based on an early assessment of these plans, the company had recorded a R300m provision for its share of potential costs to be incurred.

The group said the legal process on its multibillion-rand Gautrain delay and disruption claim against the Gauteng provincial government was progressing but this claim was not expected to be settled sooner than 2016.

Group chief executive Henry Laas said earlier this year that the delay and disruption claim involved “not hundreds of millions but billions of rand”.

M&R also has an unresolved claim related to a variation in the construction methodology for Gautrain Sandton station.

It said that the arbitration for its claims on the Dubai International Airport project was under way and was expected to be resolved next year.

M&R previously made uncertified revenue provisions of more than R2 billion for claims related to the Gautrain, Gorgon Pioneer and Dubai airport.

The group also provided additional details yesterday about the planned disposal of its wholly owned Tolcon subsidiary to an unidentified buyer for an undisclosed amount, which it announced last week.

M&R said its concessions businesses were not part of Tolcon and the sale agreement excluded its investments in the Bombela Concession Company, Bombela Operating Company, the Entilini Concession and its operating companies. The agreement was subject to Competition Commission and other approvals. Stakeholders would be updated in due course.

M&R expects to publish full-year results on August 27.

The shares fell 0.12 percent to close at R24.30 yesterday.