MURRAY & Roberts (M&R) and Aveng are generally regarded as the bellwether stocks for the construction and engineering sector, so their results are examined with diligence. In this case it’s M&R’s performance for the year to end-June, and it isn’t good.
This year’s loss of R736m is certainly a lot better than the R1.7bn haemorrhaging in 2011. At the heart of M&R’s troubles is the little matter of the disappearing great infrastructure spend. Where is it? Every man and his dog knows that the government has committed itself to nearly R900bn of capital spend over the next few years — but what has happened to it? It keeps being talked about and then vanishing, like fluffy clouds on a hot day.
M&R’s revenue went up by nearly R5bn, a notable enough achievement in a tough year. Most of that improvement came from its mining operations (up better than R2bn) and its Australian oil and gas work (up more than R3bn).
But the company really got pulled across the table by the Australians on the Gorgon Pioneer Material Offloading Facility serving the Gorgon Gas Fields off Western Australia, described as the largest natural gas resource discovered in the region. M&R had to stump up R2bn over 16 months and its statement says it "represents one of the largest single cash losses in recent times".
Group Five has similarly reported poor financials recently, underlining the poverty of the construction sector right now. One inevitable result is that skills move offshore — experienced South African engineers and artisans go off to find work elsewhere. It’s not as though we had a surplus of these people to begin with, and that means if the great infrastructure build ever gets into gear it will take that much longer and cost more to put things into place.
M&R is in recovery mode. My guess is that’s how will it be for at least another two years.
I expect nonexecutive chairman Roy Andersen, who never likes overstaying his welcome in these jobs, is likely to depart midway through next year, when he will hope to be able to report that the recovery is more or less confirmed.
SO MINES minister Susan Shabangu is at it again, accompanied by many bleeding hearts: the mines must do more, she told Parliament, to share the mineral wealth of the country.
What she didn’t tell Parliament is that in their most recent financial year the three main platinum mines paid R6,17bn in direct taxes on revenue of R18,6bn. That’s 33% to the state without considering operating costs, new capital expenditure and, let it be said, social investment. These numbers also don’t include import and export duties, withholding taxes, payroll taxes and the rest.
Anglo Platinum spent R187m last year on social programmes; it plans to build 20,000 houses by 2017, with 1,300 already completed; it has instituted a R3.5bn black economic empowerment community equity ownership scheme.
Lonmin has built 1,149 houses and converted 60 hostel blocks into single and family units. Its goal is 5,500 houses and the conversion of 128 hostel blocks by 2014. So perhaps the question should more properly be, what is government doing to help these communities?
HAS anyone looked at Racec’s website lately? An albatross suggested I take a peek, so I googled and found that Racec, a listed black-empowered engineering company in the rail sector, is also offering, under Operations, "Penile enhancement panties would be the most up-to-date…?"
Hey? A click on Operations reveals a sober accounting of what it’s doing — and nothing further about penile enhancement.
Well, it’s worth a laugh, but someone at Racec should look into this. They’ve been hacked. On the other hand, maybe the company is adopting a new and pantalisingly virile approach to its business.
ANOTHER of my growing flock of wandering albatrosses flew in yesterday. And it delivered union federation Cosatu’s audited financial statements as at December 31 last year, as presented to its central executive committee between May 28 and 30.
I’ve been trying to get these for months and was repeatedly blocked by Cosatu’s mildly spoken and sometimes irritated spokesman, Patrick Craven. It just shows it’s not easy to keep a secret in Johannesburg.
Not that there’s much in these accounts about which to be secretive. Auditor Deloitte & Touche has signed off with a qualified opinion, but this is based on technical matters and doesn’t warrant concern. By and large the statements show an organisation managed with prudence.
But it is nowhere near as large financially as I expected. Revenue was a modest R72m; salaries accounted for R27m, other operating expenses R48m. The overall surplus, achieved through interest from funds on call, was R1m, significantly lower than the R3.5m in 2010. Cosatu doesn’t pay tax.
The balance sheet has some interesting statistics. Cosatu has accumulated funds of R24m, not a bad nest egg in troubled times. It is in cash positive territory, so its gearing is zero. Many CEs would give much to be in that position.
Cosatu has a political fund reserve which stands at R6.6m. From contributions of R4.3m received during the year it gave R1.6m to the Chris Hani Institute, used R1.3m for May Day activities and handed R946,000 to the South African Communist Party.
The list of those providing grants makes good reading: R2m from the Department of Labour, R1.4m from arts and culture (whatever for?), R1m from Investec, R1m from the Lottery, R100,000 from Anglo American.
Cosatu lists 20 affiliates, one of which, the Security Forces Union, disaffiliated in August last year. The South African Medical Association is also an affiliate, which struck me as somewhat out of place.
Overall, this is an unpretentious organisation with a big mouth and a thin stick. To get to the real money one needs to access the statements of the individual trade unions which constitute Cosatu’s membership.
More in this section
- Thank you for making South Africa work
- THE LAST WORD: Stellenbosch guru can take Reinet gap
- TAX TALK: Carbon tax must be explained to laymen
- THIS IS THE BUSINESS: Education — not BEE — will drive our success
- BULL’S EYE: Pension? No, stick to beer
- IN THE MARKETS: Better ways to get investment than through blackmail