Subject to general shareholder approval, the Clough family will initially divest a 14% stake in the company to South Africa's Murray & Roberts for $40.8 million, cutting its interests to 39.85%.
Additionally Murray & Roberts will take a 60 million share placement at 68 cents per share, adding another $40.8 million to the Clough coffers and taking its own interests to 29.3%.
The announcement to the market yesterday followed six months of discussions between the two groups about joint pursuit of resources projects in Australia, Asia and Africa, Clough said.
“Murray and Roberts’ impressive track record in construction and process plants and those of Clough in oil and gas, coupled with the market diversity, will create real and additional opportunities for growth,” Clough chief executive officer David Singleton said.
“This alliance and the strategic issues it addresses will be complementary to the other strategic moves highlighted in Clough’s full-year results. Taken together, they amount to a big step forward in the rebuilding of Clough.”
Clough’s full-year report delivered a $16.2 million after tax profit, compared with a net loss of $9.5 million in the previous year. Revenue was well down, dipping 23.1% to $752.98 million. Its order book at the end of June stood at $407 million.
“The full-year result is encouraging after the poor performance in 2002-03 and is in line with our forecasts,” Singleton said. “Clough is a tighter and leaner company than it was a year ago with new management systems, a more acceptable risk profile and a changing internal culture.”
After resolving outstanding claims from four major EPC contracts during the year, which included an $11 million provisional loss in the reporting period, the focus now was on rebuilding the order book. The company is aiming to generate 50% of earnings from low-risk projects.
Oil and gas remain Clough’s main revenue source, contributing 69% to group revenue, while the property arm’s pre-tax operating profit of $9.8 million – triple its contribution from last year - was in line with its plans to become more active in the Australian market.
Clough is expecting a profit improvement in the 2005 fiscal year, despite reduced turnover.
Shares in Clough were sitting at 60 cents after morning trading, up 7% on yesterday.
