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MURRAY & ROBERTS HOLDINGS LIMITED - 64th Annual General Meeting - Business Update

Release Date: 31/10/2012 11:10
Code(s): MUR     PDF:  
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64th Annual General Meeting - Business Update

MURRAY & ROBERTS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1948/029826/06
JSE Share Code: MUR
ISIN Code: ZAE000073441
(“Murray & Roberts” or “Group” or “Company”)


64th ANNUAL GENERAL MEETING

BUSINESS UPDATE

In the preliminary report for the year ended 30 June 2012, the Group reported on its financial
results, its Recovery & Growth strategy and prospects. The Group issued its 2012 Annual
Integrated Report to stakeholders on 28 September 2012. Full details of the Group’s financial
results and Annual Integrated Report have been published on the website www.murrob.com.

For the previous financial year ended June 2012, the Group reported an improved net cash
position of R1,2 billion and a substantially reduced loss. The net cash position as at the end
of September 2012 was unchanged from the year-end position. Notwithstanding the impact
on profit of the recent industrial and labour unrest of approximately R200 million across the
Group, the earnings trend continues to show improvement.

The 2012 financial year concluded with an order book of R45,3 billion. The Group is pleased
to report that the order book increased to R48,0 billion at September 2012.

UPDATE ON THE GROUP’S MAJOR CLAIM PROCESSES

The level of uncertified revenues remains unchanged. The Group’s uncertified revenues
recognised on projects are considerably lower than the estimated value of its claims. The
Board and management remain committed to the resolution of all contractual disputes and
the collection of proceeds from claim settlements, while recognising that this will be a
challenging and protracted process. The claim processes relate to the following projects:

   -   Gautrain – The claims recovery team is making steady progress. Resolution through
       arbitration of the major delay and disruption claim against the Gauteng Provincial
       Government is expected by December 2014. The additional arbitration regarding the
       dispute on the water ingress matter in the Rosebank to Park Stations section of the
       tunnel, commenced in September 2012. The time allocated for this arbitration was
       insufficient and the arbitration will continue in March 2013, with a ruling only expected
       by June 2013. The Gautrain continues to operate safely and smoothly in this section
       of the tunnel.

   -   GPMOF – The Group received a favourable arbitration ruling on the first three
       disputes, relating primarily to the principle of scope changes from the tendered
       design. The arbitration on the quantum of the claim has progressed slower than
       anticipated and an outcome is only expected in the second half of the current
       financial year. The commercial process on the balance of the claims is progressing
       and resolution through arbitration is expected by December 2013.

   -   Dubai International Airport – The arbitration tribunal has ruled that the ultimate
       respondent to this claim is the Government of Dubai. The UAE supreme court is to
       determine which government department is the actual respondent. Resolution
       through arbitration is expected by December 2013. A parallel process to the
       arbitration has been initiated to explore alternative methods of resolution.

UPDATE ON OPERATIONS

Construction Africa and Middle East: This operating platform continues to experience
difficult market conditions and pressure on margins.

A major and growing infrastructural backlog exists in South Africa. At a recent Presidential
Infrastructure Investment Conference, President Jacob Zuma said South Africa would spend
as much as R4-trillion on infrastructure development projects over the next 15 years, and
about R844 billion over the next three years.

The platform remains well positioned to participate in any projects that come to market.
However, as this stage, tender documents for major infrastructure projects have not yet been
issued by Government.

Construction Global Underground Mining: Murray & Roberts Cementation has been
severely impacted by the ongoing labour unrest experienced by the mining sector in South
Africa. The cancellation of Lonmin’s K4 shaft project, significant delays on other projects and
delays in the award of new projects all impacted on the domestic operation. The international
mining operations in Canada and Australia are experiencing buoyant market conditions and
continue to perform well. The growth in profits in these businesses will not be sufficient to
offset the reduction in profits forecast by Murray & Roberts Cementation. The platform is thus
expected to report a reduction in profit when compared to the previous financial year.

Construction Australasia Oil & Gas and Minerals: Clough recently announced that
secured revenue increased following the award of a number of new contracts and that it
expects to achieve a minimum profit margin of 5% (excluding Forge) for the current financial
year. Clough expects this strong performance to continue in the following years. Forge
continues to deliver value, with the company having reported for the past financial year its
sixth consecutive year of strong growth. The oil and gas infrastructure market in Western
Australia remains buoyant. Full details of Clough’s updated trading outlook and Chairman’s
Address have been published on its website www.clough.com.au.

Engineering Africa: This operating platform is performing in line with expectations.
Substantial opportunities exist across Africa in water infrastructure, waste water, acid mine
drainage and desalination. As part of the platform’s focus to grow its capability in areas other
than the current power programme, it recently secured a project for the design, supply and
delivery of two Modular Water Treatment Plants for Goldfields Ghana Limited. A joint venture
agreement was also concluded in August 2012 with WorleyParsons - an engineering,
procurement and construction firm based in Australia, to address the large potential for
operation, maintenance and efficiency enhancement services in the power sector.

In the short to medium term, Engineering Africa will continue to position itself for new
opportunities in nuclear and renewable energy, water, minerals and the oil & gas market
segments.

Construction Products Africa: Market conditions remain muted and operational
performances are divergent. Most businesses are very dependent on public sector work,
which continue to be of limited scale. Although the platform provides diversification to the
Group through its different risk and earnings profiles, it is not core to Murray & Roberts.

DISPOSAL OF THE STEEL BUSINESS

Subsequent to year-end, the Company concluded the sale of its Steel Business, including
Cisco, at book value. The Steel Business transaction, excluding Cisco, is subject to
Competition Commission (“Commission”) approval, of which the decision is pending. The
cash from the sale of Cisco has been received.

COMPETITION COMMISSION

The Commission engaged the construction industry on applications submitted through the
2011 Fast-Track process. The Group has not yet reached finality with the Commission
regarding any potential penalty relating to historic anti-competitive practices. The Board is of
the view that, based on the information presently available, the penalty provision held as at
30 June 2012 is adequate.

PROSPECTS AND OUTLOOK

The Board is satisfied that the Recovery process has been largely and successfully
concluded and has approved the Group’s growth strategy.

Shareholders will be updated on the Group’s prospects of returning to profitability in or
around the time that the interim results are announced in February 2013.

The above financial information has not been reviewed or reported on by the Group’s
external auditors.

Bedfordview
31 October 2012

Sponsor
Deutsche Securities (SA) (Pty) Ltd

About Murray & Roberts

Murray & Roberts is South Africa’s leading engineering, contracting and construction
services company. It offers civil, mechanical, electrical, mining and process engineering;
general building, construction and infrastructure development; materials supply and services
to the global underground mining market and selected emerging market natural resources
and infrastructure sectors.

The company operates in Southern Africa, Middle East, Southeast Asia, Australasia and
North and South America. The company is based in Johannesburg South Africa, where it has
a public listing on the JSE Limited.

Murray & Roberts is a group of world-class companies and brands aligned to the same
purpose and vision, and guided by the same set of values.

More information is available at www.murrob.com

Disclaimer

This announcement is not an offer for the sale of securities. The securities discussed herein have not
been and will not be registered under the U.S. Securities Act of 1933 (“U.S. Securities Act”), or under
any securities laws of any state or other jurisdiction of the United States and may not be offered, sold,
taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United
States absent an exemption from, or in a transaction not subject to, the registration requirements of
the U.S. Securities Act and in compliance with any applicable securities laws of any state or other
jurisdiction of the United States.

This announcement includes certain various “forward-looking statements” within the meaning of
Section 27A of the US Securities Act 10 1933 and Section 21 E of the Securities Exchange Act of
1934 that reflect the current views or expectations of the Board with respect to future events and
financial and operational performance. All statements other than statements of historical fact are, or
may be deemed to be, forward-looking statements, including, without limitation, those concerning: the
Group’s strategy; the economic outlook for the industry; use of the proceeds of the rights offer; and the
Group’s liquidity and capital resources and expenditure. These forward-looking statements speak only
as of the date of this announcement and are not based on historical facts, but rather reflect the
Group’s current expectations concerning future results and events and generally may be identified by
the use of forward-looking words or phrases such as “believe”, “expect”, “anticipate”, “intend”, “should”,
“planned”, “may”, “potential” or similar words and phrases. The Group undertakes no obligation to
update publicly or release any revisions to these forward looking statements to reflect events or
circumstances after the date of this announcement or to reflect the occurrence of any unexpected
events.

Neither the content of the Group’s website, Clough’s website nor any website accessible by hyperlinks
on the Group’s website is incorporated in, or forms part of, this announcement.

Date: 31/10/2012 11:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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