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Murray & Roberts Holdings Limited - Interim Report For The Six Months Ended 31

Release Date: 26/02/2003 16:35
Code(s): MUR
Wrap Text

Murray & Roberts Holdings Limited - Interim Report For The Six Months Ended 31 December 2002 Murray & Roberts Holdings Limited (Registration number 1948/029826/06) ("Murray & Roberts" or "the Group") Share Code: MUR ISIN code: ZAE00008983 Rebuilding Murray & Roberts "Our change strategy for sustainable value continues to unlock the inherent value in the Group. The resilience of our Group in the face of current economic and market uncertainty is evidence of balance sheet strength, broad leadership team quality and the strategic robustness of our market choices to date." INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2002 Highlights - Operating profit up 102% - Core earnings up 86% - Operating margin up to 5% - Ongoing revenues up 25% - Interim dividend resumed The unaudited consolidated results for the six months to 31 December 2002 are set out below: Summarised consolidated income statement Unaudited Unaudited Audited 6 months 6 months 12 months
R millions to 31.12.02 to 31.12.01 to 30.6.02 Revenue 5 177 4 401 9 027 Earnings before interest, 379 254 619 exceptional items depreciation and amortisation (EBITDA) Depreciation (116) (123) (227) Amortisation of goodwill (2) (2) (6) Earnings before interest 261 129 386 and exceptional items (EBIT) Exceptional items - (27) (2) Earnings before interest 261 102 384 and taxation Interest (51) 86 71 Net interest paid (2) (12) (10) Unrealised currency (loss) (49) 98 81 gain on offshore treasury funds Earnings before taxation 210 188 455 Taxation (29) (12) (36) Earnings after taxation 181 176 419 Income from associate 50 45 90 Minority shareholders` (1) (1) (4) interest Earnings attributable to 230 220 505 ordinary shareholders Reconciliation of headline earnings Attributable earnings 230 220 505 Exceptional items as above - 27 2 Amortisation of goodwill 2 2 6 Headline earnings 232 249 513 Headline earnings 232 249 513 Currency movement on 49 (98) (81) offshore treasury funds Headline earnings excluding 281 151 432 currency movement on offshore treasury funds Average number or ordinary 331 893 331 893 331 893 shares in issue (`000) Earnings per share 69c 66c 152c - attributable - headline 70c 75c 155c - headline excluding - - - currency movement on offshore treasury funds 85c 45c 130c Dividend per share 15c - 35c Operating cash flow per (7c) 51c 215c share Summarised consolidated balance sheet Unaudited Unaudited Audited
R millions 31.12.02 31.12.01 30.6.02 ASSETS Non-current assets 1 930 1 991 2 007 Property, plant and equipment 1 253 1 362 1 339 Associate company - Unitrans 524 460 503 Limited Other investments 153 169 165 Current assets 4 036 4 173 4 351 Accounts receivable and other 2 634 2 521 2 372 Bank balances and cash 1 402 1 652 1 979 Total tangible assets 5 966 6 164 6 358 Goodwill 13 14 15 TOTAL ASSETS 5 979 6 178 6 373 EQUITY AND LIABILITIES Permanent capital 2 546 2 485 2 657 Ordinary shareholders` funds 2 538 2 476 2 648 Minority shareholders` interest 8 9 9 Non-current liabilities 478 708 609 Long-term provision 260 306 293 Long-term loans 165 328 263 Deferred taxation 53 74 53 Current liabilities 2 955 2 985 3 107 Bank overdrafts and short-term 185 191 239 loans Accounts payable and other 2 770 2 794 2 868 TOTAL EQUITY AND LIABILITIES 5 979 6 178 6 373 Net asset value per share 765c 746c 798c SUPPLEMENTARY INFORMATION (Rm) Commitments Capital expenditure - spent 119 229 456 - authorised but unspent 246 296 384 Operating lease commitments 88 84 107 Contingent liabilities 10 37 11 Summarised consolidated CASHFLOW statement Unaudited Unaudited Audited
6 months 6 months 12 months R millions to 31.12.02 to 31.12.01 to 30.6.02 Cash generated by 367 189 592 operations before working capital changes (Increase) decrease in (359) (3) 135 working capital Cash generated by 8 186 727 operations Interest and taxation (31) (18) (15) Operating cash flow (23) 168 712 Dividends paid (116) - - Dividends paid to minority - - (3) shareholders Cash (utilised in) retained (139) 168 709 in operations Net investment activities (90) (136) (247) Net funds flow (229) 32 462 Unrealised currency (loss) (49) 98 81 gain on offshore treasury funds Net funds flow, including (278) 130 543 unrealised currency (loss) gain on offshore treasury funds Summarised statement of changes in equity Unaudited Unaudited Audited 12 6 months 6 months months
R millions to 31.12.02 to 31.12.01 to 30.6.02 Opening balance 2 648 1 982 1 982 Earnings attributable to 230 220 505 ordinary shareholders Foreign currency (215) 274 169 translation movement on investments Change in cost of shares (9) - (8) held by The Murray & Roberts Trust Dividends declared and paid (116) - - 2 538 2 476 2 648
Segmental analysis Unaudited Unaudited Audited 6 months 6 months 12 months R millions to 31.12.02 to 31.12.01 to 30.6.02 REVENUE Building and civil 1 777 1 546 3 076 engineering Industry and mining 878 692 1 447 Fabrication and manufacture 789 546 1 229 Supplies and services 1 698 1 307 2 700 Corporate 22 26 60 Ongoing operations 5 164 4 117 8 512 Discontinued operations 13 284 515 Revenue as reported 5 177 4 401 9 027 EBIT Building and civil 55 43 117 engineering Industry and mining 64 32 80 Fabrication and manufacture 60 35 104 Supplies and services 120 70 188 Corporate (42) (42) (91) Ongoing operations 257 138 398 Discontinued operations 4 (9) (12) EBIT as reported 261 129 386 Note: 1. The accounting policies and methods of computation for the six months ended 31 December 2002 are in all material respects consistent with those applied in prior years and are in accordance with South African Statements of Generally Accepted Accounting Practice. Comments The directors of Murray & Roberts are pleased to record another strong performance by the Group, with operating profit (EBIT) of R261 million, an increase of 102% on the comparative period last year. Core earnings (headline earnings excluding currency loss on offshore treasury funds) of 85 cents per share is a 86% improvement on the same period last year. A stronger rand at 31 December 2002 has resulted in a R49 million reversal of a previously reported gain of R81 million on the translation of the Group`s offshore treasury funds. All business clusters recorded increased revenues and profitability compared with the same period last year. Improved efficiencies throughout the business have resulted in an operating margin improvement to 5,0%, compared with 2,9% in the same period last year. Performance review Rebuilding Murray & Roberts continues to unlock the inherent value in the Group. The resilience of the Group in the face of current economic and market uncertainty is evidence of balance sheet strength, broad leadership team quality and the strategic robustness of market choices to date. Negative operating cash flow of R23 million is the result of an increase in working capital, primarily caused by debtor and stock build in the steel business and the funding of new activity in construction. Working capital is being tightly managed in the funding of revenue growth. The projects market in South Africa is buoyant, with strong activity in infrastructure, mining and industrial development. Commercial building, however, remains an unattractive proposition. Construction markets in the rest of Africa have delivered good growth, although payment delays have impacted on working capital. The Middle East has experienced a relatively lean period but new projects are now starting to contribute to the bottom line. Road building activities have continued to disappoint, reflecting a capacity problem in the industry that seems endemic. Provisions against known losses taken at 30 June 2002 appear adequate to cover problem contracts to completion. New leadership and targeted investment underpinned a strong turnaround in Foundries Group. Improved market conditions and tighter management drove Consani to its best first-half performance for a number of years. UCW continued to deliver good value from its volatile market. Companies forming the supplies and services cluster continue to benefit from increased expenditure in the regional construction economy. Further growth will stimulate demand for new production capacity for the first time in more than a decade. The process of streamlining corporate costs has continued, with much of the capacity required for performance risk management now integrated into the operational leadership teams. No additional provision has been considered necessary for property headleases at the half-year. A further review will be undertaken at 30 June 2003 to establish the adequacy of the long-term provision for the property headleases. The Group continues to hold a significant portion of its cash balances denominated in hard currencies, which are required to support the performance bond and guarantee requirements of international activities. Unitrans This associate reported a 20% increase in headline earnings off a 23% increase in revenues compared with the same period last year. Attributable earnings for the six months under review are R112 million which translates into R50 million of attributable earnings for Murray & Roberts. Full details are available in the Unitrans interim report published on 25 February 2003. Disposals A loss of R33 million was incurred on the disposal of Gearings Foundry and closure of the Cosmar business. These losses have been charged against the impairment provision raised in respect of these businesses in the 2000 financial year. Johnson Access was sold as part of the Group`s exit strategy from non-core operations. The manufacturing business of AWI (UK) was sold with effect from 30 June 2002 and certain protective rights in favour of the Group and its customers have been satisfied. Completion of the sale of the associated property company awaits environmental clearance. Prospects The directors are conscious of the potential impact of current political and economic volatility on the Group`s markets and activities. A project order book of R5,9 billion was available at 31 December 2002, a 15% improvement in the six months since 30 June 2002 if adjusted for the exchange rate differential. A number of major project opportunities are being pursued in South Africa, Africa and the Middle East. Order books and market demand in the products and services activities are at satisfactory levels. Many of these businesses are prominent either in their South African or global markets and will continue to pursue expansion of their activity and reach. The directors are confident that the Group will deliver the material increase in earnings per share, real growth in revenues and further improvement in profit margins that were forecast in the 2002 annual report and confirmed at the annual general meeting. Dividend The directors have decided to resume the policy of interim dividends and have declared an interim dividend of 15 cents per share in respect of the year ending 30 June 2003. Attention is drawn to the formal dividend announcement opposite. Directorate Mr Martin Shaw was appointed a non-executive director on 18 February 2003. On behalf of the Board David Brink, Chairman Brian Bruce, Chief Executive Roger Rees, Financial Director Bedfordview 26 February 2003 NOTICE TO SHAREHOLDERS Declaration of Interim Ordinary Dividend No. 102 Notice is hereby given that interim dividend No. 102 of 15 cents per share in respect of the year ending 30 June 2003 has been declared payable to ordinary shareholders recorded in the register at the close of business on Friday, 11 April 2003 in accordance with the following timetable: Last day to trade cum the dividend Friday, 4 April 2003 Shares commence trading ex the dividend Monday, 7 April 2003 Record date Friday, 11 April 2003 Payment date Monday, 14 April 2003 Share certificates may not be dematerialised or rematerialised between Monday, 7 April 2003 and Friday, 11 April 2003, both days inclusive. On Monday, 14 April 2003, the dividend will be electronically transferred to the bank accounts of all certificated shareholders where this facility has been mandated. Where this has not been mandated, cheques dated 14 April 2003 will be posted on that date. Shareholders who have dematerialised their share certificates will have their accounts, which are held at their CSDPs or brokers, credited on 14 April 2003. By order of the Board Bedfordview LJ Lindsay 26 February 2003 Secretary Directors: DC Brink (Chairman), BC Bruce* (Chief Executive), BN Bam, WP Esterhuyse, SE Funde, PG Joubert, SJ Macozoma, AJ Morgan, RW Rees*, AA Routledge, MJ Shaw, KE Smith*, JJM van Zyl *Executive Secretary: LJ Lindsay Registered office Douglas Roberts Centre, Skeen Boulevard, Bedfordview Transfer secretaries Computershare Investor Services Limited, 70 Marshall Street, Marshalltown 2001 "Our commitment to sustainable earnings growth and value creation is not negotiable." Date: 26/02/2003 04:34:53 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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