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MURRAY & ROBERTS HOLDINGS LIMITED - Disposal of Construction Products Africa Businesses and Withdrawal of Cautionary Announcement

Release Date: 28/06/2013 11:54
Code(s): MUR     PDF:  
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Disposal of Construction Products Africa Businesses and Withdrawal of Cautionary Announcement

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”)

DISPOSAL OF CONSTRUCTION PRODUCTS AFRICA BUSINESSES AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

1. INTRODUCTION

Further to the cautionary announcement included in the reviewed interim results
announcement dated 28 February 2013 and renewals of the cautionary announcement
dated 26 March 2013 and 23 May 2013, Murray & Roberts shareholders are advised that
an agreement has been concluded with a consortium comprising of Capitalworks and
certain senior management and executives of Much Asphalt for the disposal of the
businesses and underlying assets of Much Asphalt. Furthermore, an agreement has been
concluded with a consortium comprising of Capitalworks, RMB Ventures and certain senior
management and executives of the Ocon Brick, Technicrete and Rocla entities being sold
for the disposal of the businesses and underlying assets of Ocon Brick, Technicrete and
Rocla. The disposal of all these entities on a combined basis (“the Transaction”) represents
the majority of the businesses in the Construction Products Africa platform. The relevant
agreements are inter-conditional.

2. CONDITIONS PRECEDENT

The Transaction remains subject to approval by the Competition Commission.

The effective date of the Transaction will be after the above-mentioned approval and is
envisaged to take place during the first quarter of the 2014 financial year.

3. NATURE OF BUSINESS OF MURRAY & ROBERTS AND THE PURCHASERS

Murray & Roberts is South Africa’s leading engineering, contracting and construction
services company. It offers civil, mechanical, electrical and process engineering and
general building, construction and infrastructure development services to the global
underground mining market and selected emerging markets in the natural resources and
infrastructure sectors. Murray & Roberts operates in Southern Africa, Middle East,
Southeast Asia, Australasia and North & South America.

Capitalworks is an independent Private Equity firm and RMB Ventures is a Private Equity
business within FirstRand Limited.

4. RATIONALE

As stated in the Business Update released on 31 October 2012, the cautionary
announcement dated 28 February 2013 and renewals of the cautionary announcement
dated 26 March 2013 and 23 May 2013, the companies within the Construction Products
Africa platform were considered to be non-core to Murray & Roberts. Proceeds raised from
the sale of the Construction Products Africa businesses will be used to reduce debt and to
facilitate growth in other platforms which offer greater returns on capital and are more
aligned to Murray & Roberts’ core competencies of construction and engineering.

5. CONSIDERATION

The total cash consideration to be received in respect of the Transaction is approximately
R1 325 million before transaction costs. Of the total cash consideration, R1 150 million will
be received on the Effective Date, R75 million is receivable 12 months after the Effective
Date and R100 million is receivable 24 months after the Effective Date. The deferred
element of the consideration remains subject to certain contractual conditions that need to
be met.

6. CATEGORISATION OF THE TRANSACTION

In terms of the JSE Limited Listings Requirements, the Transaction is categorised as a
category 2 transaction. The transaction is not classified as a small related party transaction
in terms of the Listings Requirements of the JSE Limited.

7. FINANCIAL EFFECTS

The unaudited pro forma financial effects of the Transaction set out below have been
prepared to assist Murray & Roberts’ shareholders in assessing the impact of the
Transaction on the Group’s historical diluted and basic earnings per share (“EPS”) and
diluted and basic headline earnings per share (“HEPS”). The pro forma financial effects are
the responsibility of the directors of Murray & Roberts and are provided for illustrative
purposes only.

The pro forma financial effects have been prepared on the basis that the Transaction had
been fully implemented on 1 July 2012 for purposes of the Statement of Financial
Performance and at 31 December 2012 for purposes of the Statement of Financial Position.
It does not purport to be indicative of what the consolidated financial results would have
been had the Transaction been implemented on a different date. The material assumptions
are set out in the notes following the table.

Due to their nature, the pro forma financial effects may not fairly present the financial
position, changes in equity, results of operations or cash flows of the Group after the
Transaction.
                                                  Before         the After     the Percentage
                                                  Transaction(1)     Transaction(2) change
EPS (ZA cents)
- Diluted                                         64                  152              138%
- Basic                                           64                  153              139%

HEPS (ZA cents)
- Diluted                                         69                  57               -17%
- Basic                                           69                  57               -17%

Net asset value per share (ZAR)                   14                  15               7%
Net tangible asset value per share (ZAR)          12                  13               8%

Weighted average number of shares in issue*
(‘000)
- Diluted                                              410 808             410 808     0.00%
- Basic                                                406 796             406 796     0.00%
*excludes treasury shares


 Notes:

     1. The “Before” financial information has been extracted, without adjustment, from
        the Group’s published reviewed interim results for the six months ended 31
        December 2012. The net tangible asset value per share has not been previously
        disclosed.
     2. The pro forma “After” financial information comprises the “Before” financial
        information adjusted for the following principal assumptions:
            a. Gross proceeds on the Transaction are R1 325 million, of which R1 150
                million is utilised to reduce overdraft and term facilities, with the remaining
                R175 million consideration deferred, and present valued with adjustment
                recognised in the Statement of Financial Performance;
            b. A profit on sale, net of taxation and warranty provision, is recognised in the
                Statement of Financial Performance;
            c. Interest saving at an effective rate of 7% and taxed at 28%; and
            d. Profit on sale is excluded for the headline earnings calculation net of
                taxation.
     3. The impact of the Transaction on the Group’s net asset value and net tangible
        asset value at 31 December 2012 is an increase of approximately ZAR1.00 for
        both net asset value and net tangible asset value per share.
     4. The pro forma financial effects have been prepared using the same accounting
        policies as those applied in the most recently published annual financial
        statements of the Group.

8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

Shareholders are advised that caution is no longer required by shareholders when dealing
in Murray & Roberts’ securities.

9. UPDATE ON OTHER CORPORATE TRANSACTIONS

Negotiations with potential buyers for the sale of the Hall Longmore business are ongoing
and shareholders will be advised in due course of the outcome thereof.

As reported in the Group’s 31 December 2012 interim results, the disposal of the Steel
Business became unconditional following the approval received from the Competition
Commission. A portion of the proceeds from the sale of the Steel Business have since
been received as per the agreement.

Unconditional approval from the Competition Commission has now also been received on
the sale of Union Carriage & Wagon (“UCW”), and proceeds were partly received during
June 2013 as per the agreement.

The financial effects of the Steel Business and UCW transactions are not included in the
pro forma adjustments above.

For enquiries:

Ed Jardim (Group Communications) Tel: +27 (0)11 456 6200


Bedfordview
28 June 2013

Financial adviser: Deutsche Bank

Legal adviser: Webber Wentzel Attorneys

Sponsor: Deutsche Securities (SA) Proprietary Limited

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