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MURRAY & ROBERTS HOLDINGS LIMITED (REGISTRATION NUMBER 1948/029826/06) INTERIM REPORT TO SHAREHOLDERS - 31 DECEMBER 1999 SUMMARISED CONSOLIDATED INCOME STATEMENT
UNAUDITED AUDITED
6 MONTHS ENDED YEAR ENDED
(R MILLIONS) 31.12.99 31.12.98 30.6.99
GROUP TURNOVER 6 684 6 445 12 972
ONGOING OPERATIONS 6 684 6 220 12 639 DISPOSALS/DISCONTINUED
OPERATIONS - 225 333 EARNINGS BEFORE DEPRECIATION, INTEREST
AND EXCEPTIONAL ITEMS 306 209 571
DEPRECIATION 186 183 368 EARNINGS BEFORE INTEREST, EXCEPTIONAL ITEMS AND
TAXATION 120 26 203
ONGOING OPERATIONS 120 57 210 DISPOSALS/DISCONTINUED
OPERATIONS - (31) (7)
EXCEPTIONAL ITEMS (13) (46) (76) EARNINGS/(LOSS) BEFORE
INTEREST AND TAXATION 107 (20) 127
INTEREST (48) (68) (109) EARNINGS/(LOSS) BEFORE
TAXATION 59 (88) 18
TAXATION (13) (35) (32)
EARNINGS/(LOSS) AFTER TAXATION 46 (123) (14)
OUTSIDE SHAREHOLDERS' INTEREST (33) (27) (52) EARNINGS/(LOSS) ATTRIBUTABLE
TO ORDINARY SHAREHOLDERS 13 (150) (66) AVERAGE NUMBER OF ORDINARY SHARES
IN ISSUE ('000) 345 968 345 968 345 968 EARNINGS/(LOSS) PER SHARE
- TOTAL 4C (43C) (19C)
- HEADLINE 8C (30C) 3C
DIVIDEND PER SHARE - - 50C
OPERATING CASH FLOW PER SHARE 21C (95C) 90C HEADLINE EARNINGS/(LOSS)
ATTRIBUTABLE EARNINGS/(LOSS) 13 (150) (66) ADJUSTMENTS: NET LOSS ON DISCONTINUED
PROPERTY ACTIVITIES 24 26 74 NET (PROFIT)/LOSS ON
DISPOSALS AND CLOSURES (11) 20 22 PROVISIONS - SUBSIDIARIES'
ASSETS AND HEADLEASES - - (20)
HEADLINE EARNINGS/(LOSS) 26 (104) 10 SEGMENTAL ANALYSIS - ONGOING OPERATIONS SIX MONTHS TO
31.12.99 31.12.98
EARNINGS BEFORE EARNINGS BEFORE (R MILLIONS) TURNOVER INTEREST AND TAX TURNOVER INTEREST AND TAX CONTRACTING 2 348 49 2 367 40 DESIGN AND PROJECT
MANAGEMENT 102 9 84 2 CONTRACTING
SERVICES 480 17 284 26
PIPING SYSTEMS 363 (17) 367 12 SPECIALIST
MANUFACTURING 318 (5) 388 8 ENGINEERING AND
MINING SUPPLIES 101 (5) 120 5 ALLOY WHEELS
MANUFACTURE 558 (9) 484 (79) OTHER AUTOMOTIVE
COMPONENTS 121 (10) 127 (6)
CORPORATE/OTHER - (23) 13 (54) MURRAY & ROBERTS
LIMITED 4 391 6 4 234 (46)
UNITRANS 2 293 114 1 986 103
GROUP 6 684 120 6 220 57 SUMMARISED CONSOLIDATED BALANCE SHEET
UNAUDITED AUDITED
(R MILLIONS) 31.12.99 31.12.98 30.6.99
FIXED ASSETS 2 116 1 999 2 023
INVESTMENTS 176 347 132 CURRENT ASSETS
(EXCLUDING BANK BALANCES) 3 117 3 597 3 328
TOTAL TANGIBLE ASSETS 5 409 5 943 5 483
GOODWILL 90 242 151
TOTAL ASSETS 5 499 6 185 5 634
DEFERRED TAXATION (240) (242) (242) OTHER NON INTEREST
BEARING DEBT (2 727) (2 795) (3 225)
CAPITAL EMPLOYED 2 532 3 148 2 167
ORDINARY SHAREHOLDERS' FUNDS 2 336 2 847 2 410
OUTSIDE SHAREHOLDERS' INTEREST 342 352 329
PERMANENT CAPITAL 2 678 3 199 2 739 NET FUNDS ON HAND AND
CASH EQUIVALENTS (146) (51) (572) LONG TERM BORROWINGS
P FINANCE LEASES 58 12 42 LONG TERM BORROWINGS
P OTHER 402 625 472
SHORT TERM BORROWINGS 223 156 216
BANK BALANCES AND DEPOSITS (739) (844) (1 122)
RECEIVABLES P DISPOSALS (90) - (180)
CAPITAL EMPLOYED 2 532 3 148 2 167
CAPITAL EXPENDITURE 300 237 536 NET ASSET VALUE PER
SHARE (CENTS) 675 823 697 NOTES:
1. ORDINARY SHAREHOLDERS' FUNDS AT 31 DECEMBER 1999 AND 30 JUNE 1999 ARE STATED AFTER DEDUCTING THE COST OF ORDINARY SHARES HELD BY THE MURRAY & ROBERTS TRUST 2. CAPITAL EXPENDITURE COMMITMENTS AMOUNTED TO R106 MILLION AT 31 DECEMBER 1999 SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
UNAUDITED AUDITED
6 MONTHS ENDED YEAR ENDED
(R MILLIONS) 31.12.99 31.12.98 30.6.99
CASH GENERATED BY OPERATIONS 249 230 522
INTEREST AND TAXATION PAID (65) (148) (146)
INCREASE IN WORKING CAPITAL (112) (412) 117
OPERATING CASH FLOW 72 (330) 493
DIVIDENDS PAID (173) (118) (137) CASH (UTILISED)/RETAINED
IN OPERATIONS (101) (448) 356
NET INVESTMENT ACTIVITIES (325) (279) (566)
NET CASH UTILISED (426) (727) (210) SUMMARISED STATEMENT OF CHANGES IN EQUITY
UNAUDITED AUDITED
6 MONTHS ENDED YEAR ENDED
(R MILLIONS) 31.12.99 31.12.98 30.6.99
OPENING BALANCE 2 410 3 003 3 003 EARNINGS ATTRIBUTABLE
TO SHAREHOLDERS 13 (150) (66)
DIVIDENDS PAID - - (173) REVALUATION OF MAJOR
FIXED ASSETS - - (50)
GOODWILL AMORTISED (78) (30) (168) FOREIGN CURRENCY TRANSLATION MOVEMENTS
ON INVESTMENTS (9) 24 14 SHARES HELD BY
THE MURRAY & ROBERTS TRUST - - (150)
2 336 2 847 2 410 COMMENTS PROFITABILITY
AS FORECAST IN THE 1999 ANNUAL REPORT, THE GROUP HAS RETURNED TO PROFITABILITY WITH EARNINGS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS OF R13 MILLION FOR THE SIX MONTHS UNDER REVIEW AS COMPARED TO AN ATTRIBUTABLE LOSS OF R150 MILLION IN THE COMPARATIVE PERIOD LAST YEAR.
WITHIN THIS OVERALL IMPROVEMENT, A NUMBER OF THE SOUTH AFRICAN NON CONTRACTING ACTIVITIES HAVE STILL NOT EXPERIENCED ANY MEANINGFUL IMPROVEMENTS IN THEIR MARKETS. THE SEGMENTAL ANALYSIS ABOVE REFLECTS THE RESULTS OF THE DISAPPOINTING PERFORMANCES IN THESE OPERATIONS.
THE CONTRACTING OPERATIONS HAVE PERFORMED WELL IN THE SIX MONTHS UNDER REVIEW. THE INTERNATIONAL THRUST INTO SOUTHERN AFRICA AND THE MIDDLE EAST CONTINUES TO BE A PRIORITY. IT SHOULD BE NOTED THAT THE NATURE OF THIS DIVISION'S ACTIVITIES MAKES IT POSSIBLE TO OPERATE CONSISTENTLY WITH LOW, OR EVEN NEGATIVE, CAPITAL EMPLOYED.
THE DESIGN AND PROJECT MANAGEMENT ACTIVITIES HAVE INCREASED THEIR CONTRIBUTION TO THE GROUP WITH GOOD PERFORMANCES ON DOMESTIC PROJECTS AND THE MOZAL ALUMINIUM SMELTER IN MOZAMBIQUE.
THE CONTRACTING SERVICES DIVISION, WHICH NOW INCLUDES 100% OF THE REINFORCING STEEL ACTIVITIES, HAS BEEN AFFECTED BY THE DEPRESSED AND COMPETITIVE CONDITIONS IN THE LOCAL FIXED INVESTMENT MARKET AS HAVE THE ACTIVITIES IN ENGINEERING AND MINING SUPPLIES AND PIPING SYSTEMS. THIS LATTER DIVISION WAS ALSO BADLY AFFECTED BY PROBLEMS IN COMMISSIONING A NEW MILL AT HALL LONGMORE.
SPECIALIST MANUFACTURING WAS ALSO AFFECTED BY A DEPRESSED LOCAL MARKET AND LOWER TRADING ACTIVITY AFTER THE ASIAN CRISIS.
THE ALLOY WHEELS MANUFACTURING OPERATIONS RECORDED A LOSS FOR THE SIX MONTH PERIOD, BUT AT A LEVEL WHICH CONSTITUTED A CONSIDERABLE IMPROVEMENT ON THE COMPARATIVE PERIOD LAST YEAR. A POSITIVE CONTRIBUTION HAD BEEN BUDGETED FROM THIS DIVISION, BUT INCREASED SCRAP RATES AND INEFFICIENCIES FOLLOWING THE SUMMER SHUTDOWN OF THE CANADIAN PLANT, MORE THAN OFFSET OPERATING IMPROVEMENTS IN THE UNITED KINGDOM AND PORT ELIZABETH PLANTS. THIS DIVISION'S PROFITABILITY HAS ALSO BEEN DETRIMENTALLY AFFECTED BY THE UNFORESEEN STRENGTHENING OF THE CURRENCIES OF THE COUNTRIES IN WHICH AWI MANUFACTURES.
THE OTHER AUTOMOTIVE COMPONENTS OPERATIONS HAVE RECORDED A DEPRESSED
PERFORMANCE AS THEY ADAPT TO THE EFFECTS OF GLOBALISATION ON THE LOCAL MOTOR INDUSTRY.
UNITRANS PRODUCED PLEASING RESULTS FOR THE SIX MONTHS UNDER REVIEW WITH ATTRIBUTABLE EARNINGS 28% HIGHER THAN IN THE COMPARABLE PERIOD. THIS
IMPROVEMENT REFLECTS THE COST SAVINGS GENERATED BY THE RATIONALISATION OF THE FREIGHT, PASSENGER AND MOTOR DIVISIONS AND THE EFFECTIVE MANAGEMENT OF WORKING CAPITAL.
DURING THE SIX MONTHS UNDER REVIEW, EXCEPTIONAL LOSSES WERE INCURRED IN RESPECT OF CERTAIN DISCONTINUED PROPERTY ASSET MANAGEMENT ACTIVITIES, OFFSET TO SOME EXTENT BY NET CAPITAL PROFITS ON DISPOSALS AND CLOSURES. CASH FLOW AND BALANCE SHEET
THE GROUP ACHIEVED A POSITIVE OPERATING CASH FLOW OF R72 MILLION IN THE SIX MONTHS UNDER REVIEW AS COMPARED TO THE R330 MILLION OUTFLOW RECORDED IN THE SAME PERIOD LAST YEAR. AN AMOUNT OF R325 MILLION WAS EXPENDED IN NET INVESTMENT ACTIVITIES INCLUDING THE ACQUISITION OF THE REINFORCING STEEL ACTIVITIES PREVIOUSLY OWNED BY THE STOCKS & STOCKS GROUP, THE 50% OF REINFORCING STEEL HOLDINGS NOT ALREADY OWNED AND STEEL PIPE INDUSTRIES.
THE GROUP'S BALANCE SHEET REMAINS STRONG WITH NET FUNDS AND CASH EQUIVALENTS ON HAND OF R146 MILLION AT 31 DECEMBER 1999. THESE NET FUNDS INCLUDED SIGNIFICANT FUNDS HELD OFFSHORE TO SUPPORT THE GROUP'S INTERNATIONAL CONTRACTING
OPERATIONS. THE CASH EQUIVALENTS INCLUDED AN AMOUNT OF R90 MILLION STILL OWED TO THE GROUP FOR THE SALE OF ASTAS. YEAR 2000 COMPLIANCE
NO PROBLEMS WERE ENCOUNTERED WITH THE GROUP'S COMPUTER AND OTHER SYSTEMS DURING THE ADVENT OF THE NEW YEAR. GROUP STRATEGY AND PROSPECTS
THE GROUP CONTINUES A STRATEGIC REVIEW OF ALL ITS BUSINESS UNITS AIMED AT ACHIEVING GROWTH BY IDENTIFYING NEW BUSINESS OPPORTUNITIES, IMPROVING OPERATING EFFICIENCIES AND DISPOSING OF BUSINESSES THAT DO NOT MEET OUR CRITERIA. THE GROUP WILL CONTINUE TO FOCUS ON THE PROVISION OF INDUSTRIAL INFRASTRUCTURE AND SERVICES. WE HAVE A STRONG BASE IN SOUTH AFRICA IN CONSTRUCTION, MANUFACTURING AND TRANSPORT P ALL SECTORS WITH SIGNIFICANT POTENTIAL AND IN WHICH WE HAVE REAL COMPETITIVE ADVANTAGES. WE ARE MAKING GOOD HEADWAY INTO MANY FOREIGN MARKETS AND THE RESULTING KNOWLEDGE, EXPERIENCE AND ALLIANCES MAKE US CONFIDENT OF FUTURE GAINS WORLDWIDE.
WE ARE A STRONG GROUP WITH A HARD-EARNED REPUTATION FOR DELIVERY UNDER TOUGH CIRCUMSTANCES. WE INTEND USING THIS CAPABILITY TO DRIVE PERFORMANCE NOW AND IN THE FUTURE.
THE GROUP IS FORECASTING AN IMPROVED PERFORMANCE IN THE SECOND HALF OF THE FINANCIAL YEAR. DIVIDEND
IN VIEW OF THE RELATIVELY LOW LEVEL OF FIRST HALF EARNINGS AND THE CASH REQUIREMENTS OF THE GROWTH STRATEGY REFERRED TO ABOVE, THE BOARD HAS DETERMINED THAT THE YEAR'S TOTAL DIVIDEND SHOULD AGAIN BE CONSIDERED AT THE YEAR END AND ACCORDINGLY NO INTERIM DIVIDEND HAS BEEN DECLARED. THE BOARD EXPECTS THAT THE GROUP WILL BE IN A POSITION TO PAY A DIVIDEND BASED ON THE LEVEL OF THE ANNUAL EARNINGS. ON BEHALF OF THE BOARD
BEDFORDVIEW D.C. BRINK EXECUTIVE CHAIRMAN
28 FEBRUARY 2000 L.B. BIRD FINANCIAL DIRECTOR
DIRECTORATE: D.C. BRINK EXECUTIVE CHAIRMAN, B.N. BAM, L.B.BIRD, W.P.
ESTERHUYSE, P.G. JOUBERT, A.A. ROUTLEDGE, J. J. M. VAN ZYL. SECRETARY: L. J. LINDSAY
