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MURRAY & ROBERTS HOLDINGS LIMITED
(REGISTRATION NUMBER 05/29826/06)
PRELIMINARY REPORT IN RESPECT OF THE YEAR ENDED 30 JUNE 1998
HEADLINE EARNINGS 49 CENTS PER SHARE
DISPOSAL OF CEMENT, AGGREGATES AND READY MIX ACTIVITIES
OPERATING CASH FLOW - R1 275 MILLION
DIVIDEND 48,5 CENTS PER SHARE
CONTRACTING ORDER BOOKS AT RECORD LEVELS
THE AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 1998 ARE AS SET OUT
BELOW:
SUMMARISED CONSOLIDATED INCOME STATEMENT
YEAR ENDED
30 JUNE 30 JUNE
(R MILLIONS) 1998 1997
GROUP TURNOVER 12 586 12 082
ONGOING OPERATIONS (NOTE 1) 10 703 8 711
MAJOR TRAIN CONTRACTS 372 502
DISCONTINUED OPERATIONS (NOTES 1 AND 2) 1 511 2 869
EARNINGS BEFORE INTEREST AND
EXCEPTIONAL ITEMS (EBIT) 545 227
ONGOING OPERATIONS (NOTE 1) 361 350
MAJOR TRAIN CONTRACTS 74 (340)
DISCONTINUED OPERATIONS (NOTES 1 AND 2) 110 217
EXCEPTIONAL ITEMS 348 (118)
EARNINGS BEFORE INTEREST AND TAXATION 893 109
INTEREST (262) (308)
EARNINGS/(LOSS) BEFORE TAXATION 631 (199)
TAXATION (65) (42)
EARNINGS/(LOSS) AFTER TAXATION 566 (241)
OUTSIDE SHAREHOLDERS' INTEREST (48) (31)
EARNINGS/(LOSS) ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 518 (272)
AVERAGE NUMBER OF ORDINARY SHARES IN
ISSUE ('000) 345 968 345 968
EARNINGS/(LOSS) PER SHARE - TOTAL 150C (79C)
- HEADLINE 49C (44C)
DIVIDEND PER SHARE 48,5C 48,5C
INTERIM 14,5C 14,5C
FINAL 34,0C 34,0C
OPERATING CASH FLOW PER SHARE 369C (29C)
HEADLINE EARNINGS/(LOSS)
(R MILLIONS)
ATTRIBUTABLE EARNINGS/(LOSS) 518 (272)
ADJUSTMENTS: NET PROFIT ON DISPOSALS/CLOSURES (338) (82)
ADJUSTMENTS: PROVISIONS - SUBSIDIARIES' ASSETS
AND HEADLEASES (10) 200
HEADLINE EARNINGS/(LOSS) 170 (154)
NOTES:
1. COMPARATIVE FIGURES HAVE BEEN RESTATED FOR THE RECLASSIFICATION BETWEEN
ONGOING AND DISCONTINUED ITEMS.
2. TURNOVER AND EBIT CONTRIBUTIONS FROM ACTIVITIES DISCONTINUED SINCE 1 JULY
1996.
SUMMARISED CONSOLIDATED BALANCE SHEET
30 JUNE 30 JUNE
(R MILLIONS) 1998 1997
PROPERTY, PLANT AND EQUIPMENT 2 091 2 667
INVESTMENTS 243 204
CURRENT ASSETS (EXCLUDING BANK BALANCES) 3 634 3 699
TOTAL TANGIBLE ASSETS 5 968 6 570
GOODWILL 269 501
TOTAL ASSETS 6 237 7 071
DEFERRED TAXATION (280) (362)
OTHER NON-INTEREST BEARING DEBT (3 368) (2 700)
EMPLOYMENT OF CAPITAL 2 589 4 009
ORDINARY SHAREHOLDERS' FUNDS 3 003 2 693
OUTSIDE SHAREHOLDERS' INTEREST 362 215
PERMANENT CAPITAL 3 365 2 908
NET (FUNDS ON HAND AND CASH
EQUIVALENTS)/BORROWINGS (776) 1 101
LONG TERM BORROWINGS - FINANCE LEASES 39 207
LONG TERM BORROWINGS - OTHER 827 791
SHORT TERM BORROWINGS 482 539
BANK BALANCES AND DEPOSITS (581) (436)
RECEIVABLE - MAJOR DISPOSAL (1 543) -
CAPITAL EMPLOYED 2 589 4 009
SUPPLEMENTARY INFORMATION
NET ASSET VALUE PER SHARE (CENTS) 868 778
CONSOLIDATED CAPITAL EXPENDITURE (RM)
- SPENT DURING YEAR 609 515
- COMMITTED/AUTHORISED 607 654
DEPRECIATION CHARGE (RM) 383 384
YEAR ENDED
30 JUNE 30 JUNE
(R MILLIONS) 1998 1997
CASH GENERATED BY OPERATIONS 878 554
INTEREST AND TAXATION PAID (307) (399)
DECREASE/(INCREASE) IN WORKING CAPITAL 704 (254)
OPERATING CASH FLOW 1 275 (99)
DIVIDENDS PAID (182) (179)
CASH RETAINED/(UTILISED) IN OPERATIONS 1 093 (278)
NET DIVESTMENT/(INVESTMENT) ACTIVITIES 979 (121)
NET CASH GENERATED/(UTILISED) 2 072 (399)
COMMENTS
PROFITABILITY
THE GROUP HAS PERFORMED SATISFACTORILY IN THE YEAR TO 30 JUNE 1998 ACHIEVING
HEADLINE EARNINGS PER SHARE OF 49 CENTS COMPARED TO THE LOSS OF 44 CENTS PER
SHARE RECORDED LAST YEAR.
WITHIN THIS TURNAROUND:
THE TURNOVER ACHIEVED IN ONGOING OPERATIONS REFLECTED A SUBSTANTIAL INCREASE
DUE TO THE INCLUSION OF TURNOVER FROM THE UNITRANS MOTORS ACTIVITIES
(PREVIOUSLY MALBAK MOTOR HOLDINGS), ACQUIRED BY UNITRANS WITH EFFECT FROM 1
JANUARY 1998.
DESPITE A CONTRIBUTION OF R32 MILLION FROM THIS NEW ACTIVITY, THE CONSOLIDATED
EBIT CONTRIBUTION FROM ONGOING OPERATIONS REFLECTED AN IMPROVEMENT OF ONLY 3%,
MAINLY DUE TO OPERATING LOSSES INCURRED IN THE AUTOMOTIVE COMPONENT ACTIVITIES
OF THE ENGINEERING OPERATING GROUP. IN PARTICULAR, THE ALLOY WHEELS
INTERNATIONAL (AWI) DIVISION INCURRED AN EBIT LOSS OF R98 MILLION.
FOLLOWING THE LOSSES MADE IN RESPECT OF MAJOR TRAIN CONTRACTS LAST YEAR, AN
INSURANCE RECOVERY OF R78 MILLION WAS ACHIEVED IN OCTOBER 1997, WITH THE
COMPLETION OF THE REMAINING CONTRACTS PROCEEDING AT AN APPROXIMATE BREAK-EVEN
POSITION.
THE CONTRIBUTIONS TO CONSOLIDATED EBIT FROM ONGOING OPERATIONS WERE AS FOLLOWS:
6 MONTHS
(R MILLIONS) YEAR ENDED ENDED
30 JUNE 30 JUNE 31 DEC.
1998 1997* 1997*
CONTRACTORS 163 119 68
MATERIALS 85 32 45
ENGINEERING (22) 103 22
CORPORATE HEAD OFFICE (35) (28) (17)
191 226 118
TRANSPORT 170 124 81
361 350 199
*COMPARATIVE FIGURES RESTATED FOR SUBSEQUENT RECLASSIFICATION OF ONGOING
OPERATIONS.
THE EBIT CONTRIBUTION FROM DISCONTINUED OPERATIONS INCLUDES THE RESULTS OF THE
CEMENT AND RELATED ACTIVITIES WHICH WERE SOLD WITH EFFECT FROM 30 JUNE 1998.
THE COMPARATIVE FIGURE INCLUDES THE CONTRIBUTION BY THE FEDSTONE GROUP OF
COMPANIES WHICH WAS SOLD ON 31 DECEMBER 1996. DETAILS OF THESE CONTRIBUTIONS
ARE SET OUT BELOW:
(R MILLIONS) YEAR ENDED
30 JUNE 30 JUNE
1998 1997
CEMENT AND RELATED ACTIVITIES 125 131
OTHER (15) 86
110 217
EXCEPTIONAL ITEMS
THE GROUP DISPOSED OF ITS CEMENT, AGGREGATES AND READY MIX ACTIVITIES WITH
EFFECT FROM 30 JUNE 1998, RESULTING IN AN EXCEPTIONAL SURPLUS OF R384 MILLION.
THE SALE OF THESE ACTIVITIES FOLLOWED A STRATEGIC REVIEW OF THE GROUP'S LONG
TERM OBJECTIVES RESULTING IN THE DECISION THAT M&R SHOULD FOCUS ITS BUSINESS
ACTIVITIES IN AREAS WHERE IT HAS SIGNIFICANT MARKET LEADERSHIP AND IS
INTERNATIONALLY COMPETITIVE. IN THIS REGARD, SHAREHOLDERS ARE REFERRED TO THE
SEPARATE ANNOUNCEMENT ADVISING THAT THE NECESSARY RESOLUTION APPROVING THIS
DISPOSAL WAS PASSED AT A GENERAL MEETING OF SHAREHOLDERS HELD ON 27 AUGUST 1998
IN THE INTERIM REPORT PUBLISHED ON 26 FEBRUARY 1998, SHAREHOLDERS WERE ADVISED
THAT THE GROUP HAD AGREED TO SELL ITS SHAREHOLDING IN UNION CARRIAGE & WAGON
(PTY) LIMITED WITH EFFECT FROM 1 JULY 1998. THE PURCHASER'S FUNDING FROM SOUTH
EAST ASIA HAS NOT BEEN FORTHCOMING AND THIS SALE HAS BEEN CANCELLED.
OTHER DISPOSALS WERE MADE DURING THE YEAR AS PART OF THE OVERALL DISPOSAL
PROGRAMME REFERRED TO IN PREVIOUS REPORTS. DETAILS OF THESE DISPOSALS WILL BE
GIVEN IN THE ANNUAL REPORT.
GROUP STRUCTURE
THE GROUP IS BEING RESTRUCTURED TO INCLUDE ALL OF THE TRADING ACTIVITIES, WITH
THE EXCEPTION OF THE 54,5% INVESTMENT IN UNITRANS, INTO ONE OPERATING GROUP,
MURRAY & ROBERTS LIMITED.
CASH FLOW AND BALANCE SHEET
THE GROUP ACHIEVED AN OPERATING CASH FLOW OF R1 275 MILLION IN THE YEAR AND
THIS, TOGETHER WITH THE DISPOSAL PROCEEDS, HAS RESULTED IN A MAJOR IMPROVEMENT
IN THE BALANCE SHEET WITH THE ELIMINATION OF NET BORROWINGS AT 30 JUNE 1998.
THE GROUP CONTINUES TO INVEST IN ITS PRODUCTIVE RESOURCES BY WAY OF A CAPITAL
RENEWAL AND EXPANSION PROGRAMME WITH CAPITAL EXPENDITURE OF APPROXIMATELY R600
MILLION APPROVED FOR THE 1999 FINANCIAL YEAR.
PROSPECTS
DESPITE THE SLUGGISH SOUTH AFRICAN ECONOMY, LOCAL CONTRACTING ORDER BOOKS ARE
AT RECORD LEVELS. THE GROUP'S TERRITORIAL DIVERSIFICATION HAS CONTINUED
SUCCESSFULLY, PARTICULARLY IN CONTRACTING OPERATIONS IN AFRICA AND THE MIDDLE
EAST, AND THE ORDER BOOKS IN MOST OF THESE TERRITORIES ARE STRONG. THE RECENT
DEPRECIATION OF THE SOUTH AFRICAN CURRENCY SHOULD CREATE A COMPETITIVE
ADVANTAGE FOR EXPORTS AND THE GROUP IS WELL PLACED TO TAKE ADVANTAGE OF THIS.
EXPERIENCED SENIOR MANAGEMENT HAS TAKEN CHARGE OF THE GROUP'S AWI ACTIVITIES
AND ALL EFFORTS ARE BEING MADE TO CONTAIN THE OPERATING LOSSES OF THOSE
BUSINESSES IN THE SHORT TERM. AT THE SAME TIME, NECESSARY STRATEGIES ARE BEING
DEVELOPED TO RESTORE THESE ACTIVITIES TO PROFITABILITY, INCLUDING THE
POSSIBILITY OF APPROPRIATE ALLIANCES TO IMPROVE THEIR POSITIONING IN A GROWING
MARKET.
UNITRANS HAS ENTERED A NEW PHASE OF EXPANSION AND IS ANTICIPATING A
SATISFACTORY IMPROVEMENT IN EARNINGS PER SHARE IN THE FORTHCOMING YEAR.
WE EXPECT TO ACHIEVE A STRONG GROWTH IN HEADLINE EARNINGS PER SHARE IN THE YEAR
TO 30 JUNE 1999 AND SEE IT AS AN IMPORTANT PERIOD FOR ESTABLISHING THE PLATFORM
FOR SUPERIOR GROWTH INTO THE FUTURE.
DIVIDEND
YOUR BOARD HAS DECLARED A FINAL DIVIDEND OF 34 CENTS PER SHARE (1997: 34
CENTS), BRINGING THE TOTAL DIVIDEND FOR THE YEAR TO 48,5 CENTS PER SHARE (1997:
48,5 CENTS). ATTENTION IS DRAWN TO THE FORMAL ANNOUNCEMENT THAT APPEARS BELOW.
ON BEHALF OF THE BOARD
BEDFORDVIEW D.C. BRINK EXECUTIVE CHAIRMAN
27 AUGUST 1998 L.B. BIRD FINANCIAL DIRECTOR
NOTICE TO SHAREHOLDERS
DECLARATION OF FINAL ORDINARY DIVIDEND NO. 99
NOTICE IS HEREBY GIVEN THAT FINAL ORDINARY DIVIDEND NO. 99 OF 34 CENTS PER
SHARE MAKING A TOTAL DISTRIBUTION OF 48,5 CENTS FOR THE YEAR ENDED 30 JUNE 1998
(1997: 48,5 CENTS) HAS BEEN DECLARED PAYABLE TO HOLDERS OF ORDINARY SHARES
REGISTERED IN THE BOOKS OF THE COMPANY AT THE CLOSE OF BUSINESS ON 2 OCTOBER
1998.
DIVIDEND PAYMENTS WILL BE MADE ELECTRONICALLY OR POSTED ON 23 OCTOBER 1998.
BY ORDER OF THE BOARD
BEDFORDVIEW L. J. LINDSAY
27 AUGUST 1998 SECRETARY
DIRECTORATE
D.C. BRINK EXECUTIVE CHAIRMAN, B.N. BAM, L.B. BIRD, W.P. ESTERHUYSE, P.G.
JOUBERT, M.W. MCCULLOCH, A.A. ROUTLEDGE, J.J.M. VAN ZYL.
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