Murray and Roberts announces proposed acquisition of Clough Limited - CNBC Africa

Murray and Roberts announces proposed acquisition of Clough Limited

Southern Africa

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“Clough is an international oil and gas company, it has benefitted greatly from the opportunity in Australia and Australasia over the past couple of years, and we think that the capital spend on green field projects will start tapering off in about two to three years’ time,” Murray and Roberts CEO Henry Laas told CNBC Africa on Thursday.

“But all the new LNG plants that have been built over the past couple of years are presenting a great opportunity for Clough in terms of asset support and maintenance work into the future. However the acquisition from a strategic point of view makes sense to [DATA MUR:Murray and Roberts] because we believe that the gas finds along the coastlines of Africa is presenting a significant opportunity.”

The South Africa-based construction contractor, which released its results for the financial year ended June on Thursday,  reported headline earnings per share up from a loss of 246 cents to a profit of 186 cents per share.

The group has mining and oil and gas operating platforms in Africa, but the proposed acquisition of Clough Limited is expected to present a strong growth opportunity in the immediate short term.

Murray & Roberts will make an offer to acquire the remaining 38.4 per cent of shares in Clough Limited it does not already own at 1.46 Australian dollars per share. 

The group’s revenue from continuing operations improved by 9 per cent to 34.6 billion rand from 31.7 billion rand in the previous financial year.  

The group also made disposals worth 2.2 billion rand in the financial year.

“What we decided to do is to focus on our core competencies of engineering and construction, and businesses that do not fit that definition; we decided to dispose of those. It is primarily businesses in the manufacturing section that we refer to as businesses in the construction products operating platform, so those businesses have been disposed of,” Laas explained.

He added that the group had been in losses for a substantial period of time, and that the group would not be expecting a significant improvement in their loss figures short to medium term.

This is partly because of a growing competitive environment in South Africa’s construction sector, and the strong performance of its international segments, which have been faring better than local segments.

“We’re of the view that our construction business in South Africa at best will earn a margin of between one and three per cent. The market is still extremely competitive, the opportunities are starting to come through but very slowly, and we don’t think that we will easily report a margin of greater than three per cent,” he said.

“If we get to a point where South African businesses start doing better, the relative contribution will improve. We don’t think that it would ever be more than 25 per cent of the group EBIT as a whole.”