Wrap Text
Reviewed Interim Results for the six months ended 31 December 2012
MURRAY & ROBERTS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1948/029826/06
JSE Share Code: MUR
ADR Code: MURZY
ISIN: ZAE000073441
(Murray & Roberts or Group or Company)
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2012
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
for the six months ended 31 December 2012
Reviewed Reviewed1* Audited1
6 months to 6 months to Annual
31 December 31 December 30 June
2012 2011 2012
R millions
Continuing operations
Revenue 16 344 15 015 31 668
Profit/(Loss) before
interest, depreciation
and amortisation 764 (33) 243
Depreciation (349) (284) (576)
Amortisation of
intangible assets (15) (11) (25)
Profit/(Loss) before
interest and taxation
(note 2) 400 (328) (358)
Net interest expense (76) (90) (248)
Profit/(Loss) before
taxation 324 (418) (606)
Taxation (109) (198) (221)
Profit/(Loss) after
taxation 215 (616) (827)
Income from equity
accounted investments 112 63 143
Profit/(Loss) from
continuing operations 327 (553) (684)
Profit from discontinued
operations (note 3) 93 72 92
Profit/(Loss) for the
period 420 (481) (592)
Attributable to:
Owners of
Murray & Roberts
Holdings Limited 262 (528) (736)
Non-controlling
interests 158 47 144
420 (481) (592)
Earnings/(Loss) per
share from continuing
and discontinued
operations (cents)
Diluted 64 (161) (214)
Basic 64 (161) (214)
Earnings/(Loss) per
share from continuing
operations (cents)
Diluted 43 (187) (246)
Basic 44 (187) (247)
Net asset value per
share (Rands) 14 12 13
SUPPLEMENTARY STATEMENT OF FINANCIAL PERFORMANCE INFORMATION
Number of ordinary
shares in issue (000) 444 736 331 893 444 736
Reconciliation of
weighted average
number of shares
in issue (000)
Weighted average
number of ordinary
shares in issue 444 736 367 784 382 712
Less: Weighted average
number of shares held by
The Murray & Roberts Trust (4 753) (6 678) (6 338)
Less: Weighted average
number of shares held by
the Letsema BBBEE trusts (31 884) (31 955) (32 115)
Less: Weighted average
number of shares held by
the subsidiary companies (1 303) (749) (736)
Weighted average number
of shares used for basic
per share calculation 406 796 328 402 343 523
Add: Dilutive adjustment
for share options 4 012 285 699
Weighted average number
of shares used for diluted
per share calculation 410 808 328 687 344 222
1 Restated for discontinued operations.
* The weighted average number of shares in issue have been adjusted in the
prior period due to the rights issue made to shareholders in April 2012.
Headline profit/(loss)
per share from
continuing and
discontinued
operations (cents) (note 4)
Diluted 69 (190) (246)
Basic 69 (190) (246)
Headline profit/(loss)
per share from
continuing operations
(cents) (note 4)
Diluted 44 (195) (261)
Basic 44 (195) (262)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 December 2012
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
2012 2011 2012
R millions
Profit/(Loss) for
the period 420 (481) (592)
Effects of cash
flow hedges 8 16 20
Taxation related to
effects of cash
flow hedges (2) (5) (4)
Effects of
available-for-sale
financial assets - - (1)
Foreign currency
translation movements 134 570 617
Total comprehensive
income for the period 560 100 40
Attributable to:
Owners of
Murray & Roberts
Holdings Limited 345 (110) (298)
Non-controlling
interests 215 210 338
560 100 40
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2012
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
2012 2011 2012
R millions
ASSETS
Non-current assets 8 072 5 964 8 394
Property, plant and
equipment 2 980 3 511 3 600
Goodwill 438 438 437
Deferred taxation assets 638 535 634
Investments in associate
companies 1 013 679 885
Amounts due from
contract customers
(note 5) 2 181 - 2 060
Other non-current
assets 822 801 778
Current assets 12 422 13 518 13 143
Inventories 315 866 731
Trade and other
receivables 2 809 2 548 2 127
Amounts due from
contract customers
(note 5) 5 259 6 462 6 806
Current taxation assets - - 91
Cash and cash equivalents 4 039 3 642 3 388
Assets classified
as held-for-sale 2 207 1 142 905
TOTAL ASSETS 22 701 20 624 22 442
EQUITY AND LIABILITIES
Total equity 7 581 5 268 7 102
Attributable to owners
of Murray & Roberts
Holdings Limited 6 251 4 130 5 887
Non-controlling interests 1 330 1 138 1 215
Non-current liabilities 1 918 3 169 1 596
Long-term liabilities2 547 2 615 494
Long-term provisions 189 147 165
Deferred taxation
liabilities 166 334 211
Other non-current
liabilities 1 016 73 726
Current liabilities 12 614 11 859 13 495
Amounts due to contract
customers (note 5) 3 312 2 985 3 019
Accounts and other payables 6 806 7 714 8 609
Current taxation liabilities 139 112 175
Bank overdrafts2 1 302 523 39
Short-term loans2 1 055 525 1 653
Liabilities directly
associated with assets
classified as held-for-sale 588 328 249
TOTAL EQUITY AND LIABILITIES 22 701 20 624 22 442
2 Interest-bearing borrowings.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2012
Attrib-
Stated utable
capital, to
Share owners Non-
capital of Murray control-
and & Roberts ling
share Other Retained Holdings inter-
premium reserves earnings Limited ests Total
R millions
Balance at
30 June 2011
(Audited) 757 189 3 275 4 221 1 100 5 321
Total
comprehensive
income/(loss)
for the period - 418 (528) (110) 210 100
Treasury shares
acquired (net) 3 - - 3 - 3
(Disposal)/
purchase of
non-controlling
interests (net) - - - - (95) (95)
Net movement in
non-controlling
interests loans - - - - (13) (13)
Recognition of
share-based
payment - 18 - 18 - 18
Transfer to
non-controlling
interests - (2) - (2) 2 -
Dividends
declared
and paid - - - - (66) (66)
Balance at
31 December 2011
(Reviewed) 760 623 2 747 4 130 1 138 5 268
Total
comprehensive
income/(loss)
for the period - 20 (208) (188) 128 (60)
Rights issue
to owners of
Murray & Roberts
Holdings Limited
(net of
transaction
costs) 1 910 - - 1 910 - 1 910
Treasury
shares
acquired (net) 40 - - 40 - 40
(Disposal)/
purchase of
non-controlling
interests (net) - - (12) (12) (57) (69)
Net movement in
non-controlling
interests loans - - - - (8) (8)
Disposal of
business - (1) - (1) - (1)
Issue of shares to
non-controlling
interests - - - - 23 23
Transfer to
retained earnings - (32) 32 - - -
Recognition of
share-based payment - 15 - 15 - 15
Dividends
declared and paid3 - - (7) (7) (9) (16)
Balance at
30 June 2012
(Audited) 2 710 625 2 552 5 887 1 215 7 102
Total
comprehensive
income for the
period - 83 262 345 215 560
Issue of shares to
non-controlling
interests - - - - 1 1
Net movement in
non-controlling
interests loans - - - - (29) (29)
Transfer to
non-controlling
interests - (2) - (2) 2 -
Recognition of
share-based
payment - 21 - 21 - 21
Dividends
declared
and paid - - - - (74) (74)
Balance at
31 December 2012
(Reviewed) 2 710 727 2 814 6 251 1 330 7 581
3 Dividends relate to distributions made by entities that hold treasury shares.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 December 2012
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
2012 2011 2012
R millions
Cash generated by/
(utilised in) operations 549 (1 373) (1 580)
Interest received 51 49 107
Interest paid (128) (159) (388)
Taxation paid (96) (146) (429)
Operating cash flow 376 (1 629) (2 290)
Dividends paid to
owners of
Murray & Roberts
Holdings Limited - - (7)
Dividends paid to
non-controlling
interests (74) (66) (75)
Cash flow from
operating activities 302 (1 695) (2 372)
Acquisition of businesses - (14) (15)
Acquisition of
share capital in
start up company - - (10)
Acquisition of
non-controlling interests - - (48)
Dividends received from
associate companies 26 16 46
Acquisition of associates - - (133)
Increase in investments - (67) (67)
Purchase of other
investments by
discontinued operations - (50) (40)
Purchase of investment
property - - (20)
Purchase of intangible
assets other than goodwill (11) (5) (17)
Purchase of property, plant
and equipment by
discontinued operations (4) (36) (34)
Purchase of property,
plant and equipment (554) (430) (959)
Replacements (151) (138) (569)
Additions (403) (292) (390)
Proceeds on disposal of
property, plant and equipment 25 66 164
Proceeds on disposal of
businesses (note 7) 80 857 822
Proceeds on disposal of
assets held-for-sale 72 95 127
Proceeds on disposal of
investments in associates - 6 15
Cash related to acquisition/
(disposal) of businesses - - (271)
Cash related to assets
held-for-sale (104) (83) 258
Proceeds from loan
repayments and dividends
received 66 - 165
Other (net) 4 (2) 2
Cash flow from investing
activities (400) 353 (15)
Net (decrease)/increase
in borrowings (641) 1 077 342
Treasury share disposals
(net) - 3 43
Proceeds on share issue
to non-controlling
interests 1 - 23
Proceeds from rights
issue to owners of
Murray & Roberts
Holdings Limited
(net of transaction costs) - - 1 910
Cash flow from financing
activities (640) 1 080 2 318
Net decrease in cash
and cash equivalents (738) (262) (69)
Net cash and cash
equivalents at
beginning of period 3 349 3 054 3 054
Effect of foreign
exchange rates 126 327 364
Net cash and cash
equivalents at
end of period 2 737 3 119 3 349
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
for the six months ended 31 December 2012
Reviewed Reviewed1 Audited1
6 months to 6 months to Annual
31 December 31 December 30 June
2012 2011 2012
R millions
Revenue4
Construction Africa
and Middle East 3 463 4 379 8 108
Engineering Africa 2 548 2 322 5 213
Construction Global
Underground Mining 4 019 4 696 9 859
Construction Australasia
Oil & Gas and Minerals 6 314 3 618 8 484
Corporate & Properties - - 4
Continuing operations 16 344 15 015 31 668
Discontinued operations 2 428 2 866 5 476
18 772 17 881 37 144
Continuing operations
Profit/(Loss) before
interest and taxation5
Construction Africa and
Middle East 33 (779) (1 317)
Engineering Africa 35 103 200
Construction Global
Underground Mining 86 335 605
Construction Australasia
Oil & Gas and Minerals 334 82 286
Corporate & Properties (88) (69) (132)
Profit/(Loss) before
interest and taxation 400 (328) (358)
Net interest expense (76) (90) (248)
Profit/(Loss) before taxation 324 (418) (606)
Discontinued operations
Profit before interest
and taxation5 125 111 180
Net interest expense (1) (20) (32)
Profit before taxation 124 91 148
4 Revenue is disclosed net of inter-segmental revenue. Inter-segmental
revenue for the Group is R167 million (2011: R41 million and June 2012:
R257 million).
5 The chief operating decision maker utilises profit/(loss) before interest
and taxation in the assessment of a segments performance.
SEGMENTAL ASSETS
at 31 December 2012
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
2012 2011 2012
R millions
Construction Africa and
Middle East 5 096 4 996 5 683
Engineering Africa 1 776 1 652 2 102
Construction Products Africa 2 315 2 762 2 755
Construction Global
Underground Mining 3 305 3 324 3 606
Construction Australasia
Oil & Gas and Minerals 4 315 2 822 3 995
Corporate & Properties 1 217 891 188
18 024 16 447 18 329
Reconciliation of
segmental assets
Total assets 22 701 20 624 22 442
Deferred taxation assets (638) (535) (634)
Current taxation assets - - (91)
Cash and cash equivalents (4 039) (3 642) (3 388)
18 024 16 447 18 329
NOTES
1. Basis of preparation
The Group operates in the construction, engineering and mining environment
and as a result the revenue is not seasonal in nature but is influenced by
the nature of the contracts that are currently in progress. Refer to
commentary for a more detailed report on the performance of the different
operating platforms within the Group.
The condensed reviewed consolidated financial statements have been prepared
in compliance with the Listings Requirements of the JSE Limited, the
recognition and measurement requirements of International Financial
Reporting Standards (IFRS), the requirements of International Accounting
Standards (IAS) 34, Interim Financial Reporting, SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and the South African
Companies Act, No. 71 of 2008. These statements were compiled under the
supervision of Mr AJ Bester, the Group Financial Director.
The accounting policies used in the preparation of these results are in
accordance with IFRS and are consistent in all material respects with those
used in the audited annual financial statements for the year ended 30 June
2012.
The review has been conducted in accordance with International Standards on
Review Engagements 2410, Review of Interim Financial Information Performed
by the Independent Auditor, Deloitte & Touche, and their unmodified review
opinion is available for inspection at the Companys registered office. Any
reference to future financial performance included in this announcement has
not been reviewed or reported on by the Groups external auditors.
2. Profit/(Loss) before interest and taxation
Profit/(loss) before interest and taxation includes the following
significant items:
31 December 31 December 30 June
R millions 2012 2011 2012
GPMOF - (600) (1 189)
Middle East operations - (231) (387)
Other impairments (20) - (25)
(20) (831) (1 601)
Items by nature1
Cost of sales (14 854) (14 516) (30 628)
Distribution and
marketing expenses (4) (5) (14)
Administration expenses (1 296) (1 084) (2 259)
Other operating income 210 262 875
(15 944) (15 343) (32 026)
3. Profit from discontinued operations
The Group disposed of a portion of its Steel Business at the beginning of
the 2013 financial year, with the sale of the remaining portion currently
being finalised and payment expected to be received in March 2013. The
Board has taken the decision to dispose of the Groups Construction Products
Africa operating platform as its operations are considered to be non-core
to the Group. The Construction Products Africa operating platform comprises
of the following entities: Hall Longmore; Rocla; Much Asphalt; Ocon;
Technicrete and UCW. The Group continues to dispose of its investment
properties. The sale of UCW was finalised in January 2013 and proceeds are
expected to be received by June 2013.
31 December 31 December 30 June
2012 2011 2012
R millions
Revenue 2 428 2 866 5 476
Profit before interest,
depreciation and
amortisation 159 161 268
Depreciation and
amortisation (34) (50) (88)
Profit before interest
and taxation 125 111 180
Net interest expense (1) (20) (32)
Taxation expense (31) (19) (57)
Income from equity
accounted investments - - 1
Profit from discontinued
operations 93 72 92
Non-controlling
interests relating to
discontinued operations (9) 15 20
Cash flows from
discontinued operations
include the following:
Cash flow from
operating activities (13) 36 (139)
Cash flow from
investing activities (74) 839 1 089
Cash flow from
financing activities 73 (356) (483)
Net (decrease)/increase
in cash and cash equivalents (14) 519 467
4. Reconciliation of headline profit/(loss)
31 December 31 December1 30 June1
2012 2011 2012
R millions
Profit/(Loss) attributable
to owners of
Murray & Roberts
Holdings Limited 262 (528) (736)
Investment property
fair value adjustments - - (32)
Profit on disposal of
businesses (net) (50) (59) (47)
Profit on disposal of
associates (net) - (5) (13)
Loss/(Profit) on disposal
of property, plant and
equipment (net) 1 (30) (44)
Impairment of goodwill
and other assets+ 20 - 24
Fair value adjustment and
loss/(profit) on disposal
of assets held-for-sale 47 (29) (29)
Other (net) - - (4)
Non-controlling interests
effects on adjustments 4 18 21
Taxation effects on
adjustments (2) 10 14
Headline profit/(loss) 282 (623) (846)
Adjustments for
discontinued operations:
Profit from discontinued
operations (93) (72) (92)
Non-controlling interests 9 (15) (20)
Investment property fair
value adjustments - - 20
Profit on disposal of
businesses (net) 50 59 47
Profit on disposal of
associates (net) - 5 3
Profit on disposal of
property, plant and
equipment (net) - - (1)
Impairment of other assets+ (20) - (25)
Fair value adjustment and
(loss)/profit on disposal
of assets held-for-sale (47) 29 29
Non-controlling interests
effects on adjustments (4) (20) (18)
Taxation effects on
adjustments 2 (3) 3
Headline profit/(loss)
from continuing operations 179 (640) (900)
+ The impairment relates to an assessment performed of the fair value less
costs to sell in comparison to the carrying value of plant and equipment in
the Construction Products Africa operating platform.
5. Contracts-in-progress and contract receivables
31 December 31 December 30 June
2012 2011 2012
R millions
Contracts-in-progress
(cost incurred plus
recognised profits,
less recognised losses) 2 149 1 435 2 849
Uncertified claims and
variations less payments
received on account
(recognised in terms of
IAS 11: Construction
Contracts) 1 849 2 203 1 951
Uncertified claims
and variations 1 849 2 675 2 001
Less: Payments received
on account - (472) (50)
Amounts receivable on
contracts (net of
impairment provisions) 3 054 2 539 3 642
Retentions receivable
(net of impairment provisions) 388 285 424
7 440 6 462 8 866
Amounts received in excess
of work completed (3 312) (2 985) (3 019)
4 128 3 477 5 847
Disclosed as:
Amounts due from
contract customers
non-current 2 181 - 2 060
Amounts due from
contract customers
current 5 259 6 462 6 806
Amounts due to contract
customers current (3 312) (2 985) (3 019)
4 128 3 477 5 847
During the period between December 2011 and June 2012, circumstances changed
and developed which resulted in a portion of amounts due from contract
customers being expected to be received only after 12 months from the end of
June 2012. Therefore, these amounts have been classified as non-current on
the statement of financial position. Management considers these amounts to
be fully recoverable. No further change in circumstances has occurred
between June 2012 and December 2012.
6. Contingent liabilities
Contingent liabilities are related to disputes, claims and legal proceedings
in the ordinary course of business. The Group does not account for any
potential contingent liabilities where a back to back arrangement exists
with clients or subcontractors, and there is a legal right to offset.
31 December 31 December 30 June
2012 2011 2012
R millions
Operating lease
commitments 2 161 1 968 2 058
Contingent liabilities 1 280 1 238 1 445
Financial institution
guarantees 10 639 9 740 10 285
The Competition Commission (Commission) engaged the construction industry
in April 2011 and the Group submitted applications through the April 2011
Fast-Track process. A provision was raised based on the potential violations
that were identified as a result of this process. The Board is of the
opinion that the provision raised for this liability is adequate to cover
any additional penalties that may arise as a result of the investigation.
However, there is no guarantee as to the size of the penalty or the
sufficiency of the provision.
7. Business acquisitions/disposals
The Group did not make any acquisitions during the six months ended
31 December 2012.
The Group disposed of a portion of the Steel Business during the course of
this financial period.
8. Dividend
The Board has resolved not to declare a dividend.
9. Related party transactions
There have been no significant changes to the nature of related party
transactions since 30 June 2012.
10. Events after reporting date
The directors are not aware of any matter or circumstance arising after the
period ended 31 December 2012, not otherwise dealt with in the Groups
interim results, which significantly affects the financial position at
31 December 2012 or the results of its operations or cash flows for the
period then ended.
COMMENTARY
Salient Features
- Strong improvement in Health and Safety
- Return to profitability
- Revenue improved by 9% to R16,3 billion
- Attributable earnings improved from a loss of R528 million
to a profit of R262 million
- HEPS improved from a loss of 190 cents to a profit of 69 cents
- Order book stable at R48,3 billion
- Net cash of R1,1 billion
- Disposal of non-core assets commenced
Positioned for Growth
The Board is pleased to announce that the Group has returned to
profitability, mainly as a result of the completion of problematic
contracts, which reported losses in prior financial periods.
Following the Global Financial Crisis and major losses on several large
projects, Murray & Roberts on 1 July 2011 embarked on a three year Recovery
& Growth strategy. The plan for the Recovery year to June 2012 was
successfully implemented and the Board approved the Growth strategy for the
2013 and 2014 financial years.
In developing the Growth strategy, the Board evaluated all market sectors
and geographies in which the Group is active, with the objective to identify
those market sectors and geographies that present the best long-term
financial growth potential to shareholders.
The Groups current operating platforms are no longer optimally aligned with
those market sectors and geographies identified. The Growth strategy is thus
primarily focused on disposals and acquisitions. Achieving increased
profitability in the South African operations will also continue to be a
priority.
Financial Report
for the six months ended 31 December 2012 and Cautionary Announcement
As stated in the Business Update released to stakeholders on 31 October 2012
and the Cautionary included in this reviewed interim results announcement,
the companies within the Construction Products Africa operating platform are
considered to be non-core. These businesses have accordingly been classified
as discontinued operations. The financial results of the previous
corresponding reporting period have been restated on the same basis.
For the six months ended 31 December 2012, the Group generated revenue of
R16,3 billion (December 2011: R15,0 billion) and reported attributable
earnings of R262 million (2011: R528 million attributable loss). Diluted
earnings per share were 64 cents (December 2011: 161 cents diluted loss per
share) and diluted headline earnings per share were 69 cents (December 2011:
190 cents diluted headline loss per share).
Further as was stated in the Business Update of 31 October 2012, the impact
of the industrial and labour unrest on the Groups profit, was approximately
R200 million.
R500 million long-term debt was repaid in September 2012. At December 2012
the Groups net cash position was R1,1 billion (December 2011: R21 million
net debt).
The Group is pleased to report that its order book was maintained at
R48,3 billion, with the offshore component increasing to 60% (December 2011:
40%). The average potential margin imbedded in the order book is within the
Groups strategic range of 5,0% to 7,5%.
Health and Safety
Murray & Roberts achieved a record low lost time injury frequency rate
(LTIFR) of 0.85 (December 2011: 1.04) for the first six months of the 2013
financial year. No fatality was recorded during the half year reporting
period. This outcome was made possible by the continuous commitment to
safety by all Murray & Roberts employees and subcontractors.
The Stop.Think brand has been enhanced to include the new dimension of
Act.24/7 and the new brand Stop.Think.Act.24/7 was launched on 20 November
2012 to 200 Murray & Roberts senior executives. Act emphasises the
importance of taking action to correct unsafe conditions and behaviours as
well as recognising positive behaviour whilst 24/7 highlights the need of
safety awareness at all times whether at work or at home. This initiative
aims to establish consistency in leadership interactions on construction
sites across the Group, to increase leadership visibility and to actively
build a stronger safety culture.
Update on the Groups Major Claim Processes
The uncertified revenue moderately reduced to R1,8 billion (June 2012:
R2,0 billion). The Groups uncertified revenue previously recognised on
challenging projects is considerably lower than the estimated value of its
claims. These claims have been taken to book in compliance with IAS11
(Construction Contracts) following engagement with independent legal,
commercial and claims consultants.
- Gautrain Rapid Rail link (Gautrain) The hearing for the arbitration
of the major delay and disruption claim against the Gauteng Provincial
Government has been scheduled to commence in May 2014.
It is expected that a ruling on the principle of the claim will be made by
December 2014 and on quantum by December 2015. The arbitration regarding the
dispute on the water ingress matter on the Rosebank Station to Park Station
section of the tunnel commenced in September 2012 and will continue in March
2013, with a ruling expected by June 2013. The Gautrain continues to operate
safely.
- Gorgon Pioneer Materials Offloading Facility (GPMOF) Following a
successful ruling on the principle of the design change claim, the resulting
arbitration process on the quantum of this claim has been delayed. The
arbitrator delivered an interim award on 19 December 2012 that the quantum
should include all related costs incurred and the client is challenging this
ruling in the Australian Supreme Court. Accordingly, it is unlikely that
this design change quantum claim will be resolved in the current financial
year. The commercial process on the balance of the claims is now only
expected to be resolved during financial year 2014.
- Dubai International Airport According to legal advice on the UAE
Supreme Courts ruling of 19 February 2013, the Dubai Government is the
respondent to the claim and the arbitration panel has the jurisdiction to
decide all matters referred to it for adjudication. The arbitration is
expected to be concluded by December 2013.
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.
Operating Performance**
Construction Africa and Middle East:
Construction Middle
Africa Marine East Total
R millions 2012 2011 2012 2011 2012 2011 2012 2011
Revenue 2 993 2 892 184 559 286 928 3 463 4 379
Operating
profit/
(loss) 34 81 45 (621) (46) (239) 33 (779)
Margin (%) 1% 3% 24% -111% -16% -26% 1% -18%
LTIFR
(Fatalities) 0.86(0) 0.83(0) 0(0) 0(0) 0.35(0) 0.51(0) 0.68(0) 0.63(0)
Order book 6 886 8 612 314 449 1 447 1 605 8 647 10 666
Revenues decreased 21% to R3,5 billion (2011: R4,4 billion) with an
operating profit of R33 million (2011: R779 million operating loss). The
order book decreased to R8,6 billion (June 2012: R9,0 billion).
Notwithstanding the challenging South African industrial relations
environment, in particular as experienced at the Medupi power station
contract, the platform returned a modest profit.
The Group looks forward to participating in Governments plans for new major
project infrastructure spend in the construction sector. However, new major
construction projects and investment in infrastructure development (roads,
dams, power stations, railway lines, sea ports, schools and hospitals) have
been slow to come to market and should remain an imperative.
The Company has curtailed its activities in the Middle East and is focussing
on closing out issues on legacy projects. The Group currently has one
project under construction in the Middle East and will pursue new
opportunities on a selective basis.
The platform will continue to focus on infrastructure opportunities in South
Africa and the rest of Africa and remains well positioned to participate in
projects that come to market.
Construction Global Underground Mining:
Africa Australasia The Americas Total
R millions 2012 2011 2012 2011 2012 2011 2012 2011
Revenue 1 614 2 725 552 454 1 853 1 517 4 019 4 696
Operating
(loss)/
profit (137) 142 51 48 172 145 86 335
Margin (%) -9% 5% 9% 11% 9% 10% 2% 7%
LTIFR
(Fatalities) 2.26(0) 2.24(2) 0(0) 1(0) 1.11(0) 1.24(1) 1.95(0) 2.15(3)
Order book 4 621 11 052 831 1 164 3 619 3 862 9 071 16 078
Revenues decreased 14% to R4,0 billion (2011: R4,7 billion) while operating
profit declined to R86 million (2011: R335 million). The order book
increased to R9,1 billion (June 2012: R8,8 billion) despite cancellations on
tendered as well as awarded contracts. The improvement in the order book is
primarily due to new project awards.
The South African operation was impacted by the loss of the Aquarius
contract, labour unrest, postponement of two large projects, as well as two
loss-making contracts. Although the international mining operations in
Canada and Australia are experiencing more favourable market conditions,
they also suffered the consequences of project cancellations and
postponements. The international businesses continue to perform well with
margins in excess of the Groups strategic target range.
Construction Global Underground Mining will continue to pursue growth
opportunities globally, which may include acquisitions in the medium term.
Construction Australasia Oil & Gas and Minerals6:
Commis- Fabrication,
sioning Corporate
and Asset overheads
Engineering Projects Support and Other Total
R millions 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
Revenue 2 070 1 253 3 131 2 028 516 216 597 121 6 314 3 618
Operating
profit/
(loss) 298 170 216 107 39 8 (219) (203) 334 82
Margin (%) 14% 14% 7% 5% 8% 4% -37% -168% 5% 2%
LTIFR
(Fatalities) 0.09(0) 0.28(0)
Order book 22 017 15 353
6 Excluding Forge. Forge is an associate and is equity accounted at 36%
(December 2011:33%) within Cloughs consolidated results.
Murray & Roberts has a 62% share in Clough, and Clough has a 36% share in
Forge. Both Clough and Forge are listed companies on the Australian Stock
Exchange.
Clough performed exceptionally well in favourable market conditions. Revenue
and operating profit, excluding Forge, increased to R6,3 billion
(2011: R3,6 billion) and R334 million (2011: R82 million) respectively,
aided by a weakening Rand exchange rate. The order book increased to
R22,0 billion (June 2012: R19,4 billion). As at 31 December 2012, Cloughs
order book was 77% cost reimbursable and 94% leveraged to the LNG sector.
Clough recently announced the acquisition of e2o (Proprietary) Limited, a
leading provider of specialised commissioning, completion and hazardous area
inspection services to the energy and resources sectors.
Forge Limited returned a solid financial performance with both revenues and
operating profit increasing by 151% and 102% respectively.
Full details of the Clough and Forge financial results for the interim
period and their prospects have been published on their websites
www.clough.com.au and www.forgegroup.com.au respectively.
Engineering Africa:
Power
Programme7 Engineering8 Total
R millions 2012 2011 2012 2011 2012 2011
Revenue 2 010 1 876 538 446 2 548 2 322
Operating
profit/(loss) 96 102 (61) 1 35 103
Margin (%) 5% 5% -11% - 1% 4%
LTIFR (Fatalities) 0.77(0) 0.86(0) 0.50(0) 0.58(0) 0.61(0) 0.80(0)
Order book 7 093 12 822 627 791 7 720 13 613
7 Murray & Roberts Projects power programme contracts and Genrec.
8 Includes Wade Walker, Concor Engineering and Murray & Roberts Projects
non-power programme projects.
Revenues increased to R2,5 billion (2011: R2,3 billion), whilst operating
profit reduced to R35 million (2011: R103 million). The order book increased
to R7,7 billion (June 2012: R6,8 billion). The improvement in the order book
is primarily due to order book movements on the power programme.
Murray & Roberts Projects and Genrec continue to perform well and in line
with expectations on the Medupi and Kusile power projects. However, poor
performance was recorded in both Concor Engineering and Wade Walker.
Engineering Africa will maintain its focus on engineering and construction
services in Sub-Saharan Africa, whilst positioning itself for new
opportunities in the energy, water, minerals and the oil & gas market
segments. This operating platform will establish a position in the water
sector by developing this capacity in-house, rather than by acquisition as
was previously contemplated.
Disposal of non-core assets:
Crane Hire Clough
Services Steel Marine Proper- Construc-
(Johnson Reinforcing Services & ties tion
Arabia) Products Properties SA Products9 Total
R millions 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
Revenue - 114 471 655 27 377 2 5 1 928 1 715 2 428 2 866
Operating
profit/
(loss) - 2 16 (24) (2) (19) 2 47 109 105 125 111
Trading - 2 16 (24) (2) (19) 2 47 129 105 145 111
Asset
Impairment - - - - - - - - (20) - (20) -
Margin (%) - 2% 3% -4% -7% -5% 100% 940% 6% 6% 5% 4%
Order book - - - - - - - - 863 1 193 863 1 193
9 Includes Hall Longmore, Rocla, Much Asphalt, Ocon, Technicrete and UCW.
On 29 January 2013 the Group announced the disposal of Union Carriage &
Wagon Company (UCW) to the CTE Consortium, a consortium including CTE
Investments (Proprietary) Limited and the Industrial Development
Corporation. The Group has realised fair value in the sale price, which was
in excess of the carrying value.
The disposal of the Steel Business became unconditional following approval
received from the Competition Commission (Commission).
All businesses within the Construction Products Africa operating platform,
other than Hall Longmore, are performing in line with expectations.
Competition Commission
Press articles with regard to collusion in the construction industry were
recently published and this matter was subsequently extensively reported on
in various media. This is not the first time that collusive activity has
been reported on and it has been a matter of investigation by the Commission
for a number of years.
Murray & Roberts was one of the first companies in the sector to bring
conduct of this nature to the attention of the Commission and has engaged
in extensive internal investigations, with the assistance of independent
external legal advisers, to uncover the conduct. We are confident that any
historical conduct of this nature within the Group has been rooted out.
Murray & Roberts supports free and competitive trading in every jurisdiction
in which we operate and has zero tolerance for any anti-competitive or
corrupt behaviour. The Group has implemented specific actions to prevent
transgressions in the future. These include the enforcement of our Statement
of Business Principles, annual compliance declarations by all executives,
compliance declarations with each tender submitted and ongoing compliance
training.
The Commission has engaged with various players in the construction industry
on applications submitted through the 2011 Fast-Track process. The Group has
participated in this process but has not yet reached finality with the
Commission regarding the potential penalty relating to historic anti-
competitive practices. The Board is of the view that it has adequately
provided for potential penalties.
Dividend
The Board has resolved not to declare a dividend for the half-year.
Shareholders will be updated on the prospects of a dividend for the full
financial year at the time that the annual results are announced in August
2013.
Board of Directors
During the period, Mr. Tony Routledge, Dr. Namane Magau and Dr. Sibusiso
Sibisi retired from the Board. Our sincere thanks are extended to all of
these directors for their commitment and contribution. Ms.Thenjiwe Chikane
joined the Board in June 2012 as a non-executive director and a member of
the Audit & Sustainability Committee and Risk Management Committee.
Effective 1 March 2013, Adv. Mahlape Sello will replace Mr. Roy Andersen as
non-executive chairman, following his planned retirement, as announced in
August 2012. The Board would like to thank Mr. Andersen for his valued
counsel and wish him well in his future endeavours.
Prospects Statement
The Groups vision is to be a leading diversified engineering and
construction Group in the global underground mining market and selected
emerging markets in the natural resources and infrastructure sectors by
2020. These market sectors present the best future growth potential for the
Group.
Implementation of Murray & Roberts Growth strategy will better position the
Group to sustain growth and profitability in the medium to long term. The
Board is of the view that the improvement in the earnings trend will
continue.
The information on which this prospects statement is based has not been
reviewed or reported on by the Groups external auditors.
Cautionary Announcement
Shareholders are advised that the Company has entered into advanced
discussions with potential buyers with regard to the proposed disposal of
the companies and underlying assets held in the Construction Products Africa
platform.
Accordingly, shareholders are advised to exercise caution when dealing in
the Companys securities until a detailed announcement including/or a
withdrawal of cautionary announcement is published.
On behalf of the directors
Roy Andersen
Chairman of the Board
Henry Laas
Group Chief Executive
Cobus Bester
Group Financial Director
Bedfordview
28 February 2012
Registered office:
Douglas Roberts Centre,
22 Skeen Boulevard,
Bedfordview 2007
PO Box 1000
Bedfordview 2008
Registrar:
Link Market Services South Africa Proprietary Limited
13th floor, Rennie House,
19 Ameshoff Street,
Johannesburg 2001
PO Box 4844
Johannesburg 2000
Sponsor:
Deutsche Securities (SA) (Proprietary) Limited
Directors:
RC Andersen* (Chairman)
HJ Laas (Group Chief Executive)
DD Barber*
AJ Bester
TCP Chikane*
O Fenn1
JM McMahon1*
WA Nairn*
M Sello*
RT Vice*
1British *Non-executive
Secretary:
E Joubert
website: www.murrob.com
.mobi site: http://murrob.mobi
e-mail: clientservice@murrob.com
** The operating performance information disclosed has been extracted from
the Groups operational reporting systems. The LTIFR information has not
been subject to a review by the Groups auditors. The Corporate & Properties
segment is excluded from the operational analysis. Unless otherwise noted,
all comparisons are to the Groups performance as at and for the six month
period ended 31 December 2011.
Disclaimer
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 Groups strategy; the
economic outlook for the industry; use of the proceeds of the rights offer;
and the Groups 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 Groups
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 Groups website, Cloughs website, Forges website nor
any website accessible by hyperlinks on the Groups website is incorporated
in, or forms part of, this announcement.
Date: 28/02/2013 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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