Wrap Text
Preliminary report for the year ended 30 June 2013
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)
PRELIMINARY REPORT FOR THE YEAR ENDED 30 JUNE 2013
- REVENUE UP TO R34,6 BILLION
- HEPS OF 186 CENTS
- ATTRIBUTABLE EARNINGS UP TO R1,0 BILLION
- ORDER BOOK OF R46,1 BILLION
- NET CASH UP TO R4,3 BILLION
Salient Features
- Record low lost time injury frequency rate (LTIFR) of 0.82 (FY2012: 1.14),
but regrettably two fatalities (FY2012: 4)
- Revenue from continuing operations improved by 9% to R34,6 billion
(FY2012: R31,7 billion)
- Attributable earnings improved from a loss of R0,7 billion to a profit of
R1,0 billion
- HEPS improved from a loss of 246 cents to a profit of 186 cents
- Order book of R46,1 billion
- Net cash position of R4,3 billion
- Attributable profit of R223 million realised from Cloughs disposal of its
investment in Forge
- Strong contribution by Clough in a buoyant oil & gas market
- Fast-Track Settlement Process with Competition Commission concluded
- Impact of industrial and labour unrest on the Groups profit
- Project losses in South African businesses
From Recovery to Growth
Murray & Roberts is a group of companies and brands aligned to the same
purpose and vision, and guided by the same set of values. By 2020, the
Group aims to be the leading diversified engineering and construction
group in the global underground mining market and selected emerging
markets in the natural resources and infrastructure sectors.
Murray & Roberts has a three year Recovery & Growth strategy. The Group
ended FY2013 having successfully negotiated its Recovery year in FY2012
and accomplished significant milestones in the first of its two Growth years.
In FY2013 the Group returned to profitability, signalling more robust and
sustainable levels of revenue and profit.
To support long-term growth the Group has focused on its core competencies of
engineering & construction and identified the energy (oil & gas and power)
and mining & minerals market sectors as presenting the best medium- to long
term growth opportunity.
Structurally, the Group began the year with five operating platforms
which, by the end of the year, had reduced to four platforms, following
the sale of the Construction Products Africa businesses, which was
classified as discontinued at year-end. Further detail on this disposal is
provided in this announcement. Two of the four platforms now represent the
Groups regional businesses (with an African focus) and the remaining two,
the international businesses (with a global focus).
Proposed Acquisition of Clough
Murray & Roberts announced its intention to acquire all of the outstanding
ordinary shares in Clough Limited (Clough), in which it is a 61.6%
shareholder, on 30 July 2013 (Proposed Acquisition). The Group has had a
long association with Clough since initially acquiring a shareholding in
2003. Clough is listed on the Australian Stock Exchange and is a leading
engineering and construction company in the Australasian oil & gas market
sector and an integral part of the Groups strategy. The Proposed Acquisition
is strategically compelling and consistent with the Groups long-term growth
plans.
The Proposed Acquisition holds a number of key benefits for the Group:
- Secures control of 100% of Cloughs operations, assets, cash flow and
strategy
- Increases exposure to market sectors which present medium- to long term
growth potential
- Murray & Roberts and Clough to better leverage Cloughs oil & gas
capabilities and expertise into opportunities in Africa
- Expected to be immediately profit per share accretive
- Group net cash position maintained given use of Clough cash to part fund
acquisition
- Low execution risk given Murray & Roberts existing understanding of the
business
- Creates focused diversified engineering and construction business,
leveraging capabilities and competencies across Australasia, Southeast Asia
and Africa
The Proposed Acquisition, a Category 1 transaction in terms of the JSE
Limited Listings Requirements, is subject to various conditions precedent
being met, including approval by both Murray & Roberts and Clough
shareholders. The Proposed Acquisition should be concluded towards the end
of the 2013 calendar year. Shareholders are referred to a separate
Category 1 transaction announcement regarding the Proposed Acquisition
released on the Stock Exchange News Service (SENS) today and to be
published in the press on Thursday, 29 August 2013.
Health and Safety
The Board deeply regrets the death of two (2) employees (2012:4) who
sustained fatal injuries while on duty. We are saddened by the occurrence
of these incidents despite the significant reduction in our injury rates.
The Board extends its heartfelt condolences to the families, friends and
colleagues of the deceased.
Murray & Roberts achieved a record low LTIFR of 0.82 (June 2012: 1.14) for
the year under review, which is better than our target of 1.0. This
outcome was made possible by the continuous commitment to safety by all
Murray & Roberts employees.
Good progress has been made in implementing the Zero Harm through
Effective Leadership programme which is aimed at establishing a high
performance culture that will ensure sustainable improvement in health and
safety. During the year under review, we also developed an integrated
employee health and wellness programme which includes initiatives for the
prevention, early identification and management of all occupational health
and wellness conditions which may impact on employees health and
productivity. This programme will be implemented during the FY2014.
Competition Commission
The Board regrets and rejects any form of anti-competitive behaviour in
the Group.
In June 2013 the Group entered into a settlement agreement with South
Africas Competition Commission in terms of its Fast-Track Settlement
Process (FTSP) relating to historical anti-competitive practices in the
construction industry and was fined R309 million.
There are five (5) remaining historical incidents of collusive conduct
(excluded from the concluded FTSP) still to be settled with the
Competition Commission. The Board is of the view that the potential
penalties on these transgressions will not be material compared to the
penalty paid on the conclusion of the FTSP and it remains committed to
concluding this matter rapidly for the benefit of all stakeholders. The
Group has provided for a potential penalty in the FY2013 accounts.
Murray & Roberts is a well-recognised name in South Africa and it has
played a significant role in developing the countrys infrastructure for
more than 110 years. The Company has a strong value system and it requires
ethical business conduct from all its employees. While current management
were not implicated in any anti-competitive practices, it has taken
decisive action to ensure that such practices will not be repeated.
Financial Year to 30 June 20131
In the year under review, the Group completed the disposal of the business of
Union Carriage & Wagon Company and the Steel Business. On 28 June 2013 the
Group announced the sale of the remaining manufacturing businesses within the
Construction Products Africa operating platform, with the exception of Hall
Longmore, subject only to Competition Commission approval. Accordingly, these
businesses have been recorded as discontinued operations during the year
under review. The financial results of the previous corresponding reporting
period have been restated on the same basis.
In the year under review, the Group generated revenue of R34,6 billion (June
2012: R31,7 billion) and reported attributable profit of R1,0 billion (June
2012: R0,7 billion attributable loss). This result includes an attributable
profit of R223 million on the disposal of Cloughs investment in Forge Group
Limited (Forge). Diluted profit per share were 245 cents (June 2012: 214
cents diluted loss per share) and diluted headline profit per share were
186 cents (June 2012: 246 cents diluted headline loss per share).
At June 2013, the Groups net cash position was R4,3 billion (June 2012:
R1,2 billion). The net cash proceeds from disposals equalled R2,2 billion.
All term debt was repaid in the year under review.
The Group is pleased to report an order book of R46,1 billion (June 2012;
R45,3 billion).
The Group experienced the financial impact of the industrial and labour
unrest during the year under review, specifically at the Medupi and Kusile
project sites and in the mining sector. The state of industrial relations in
South Africa remains of grave concern. The growing tendency for unprotected
strikes and unrealistic wage demands impacts on contractors abilities to
execute work on time, within budget and safely. It also acts as a strong
disincentive for private investment in infrastructural development.
Update on the Groups Major Claim Processes2
Uncertified revenue, representing outstanding claims, remained largely
unchanged at R2,1 billion (June 2012: R2,0 billion).
During the year under review the Group continued to pursue its
entitlements in terms of its major claims. Following the successful
arbitration ruling on the principle of design change at Gorgon Pioneer
Materials Offloading Facility (GPMOF) and favourable interim award on
quantum, the respondent, Boskalis, withdrew its objection against this
interim award. The quantum will now be determined in arbitration, due to
commence in the first half of FY2014. It is expected that the legal and
commercial processes on the Dubai International Airport and the Gautrain
project will be closed out towards the end of FY2016.
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 continue to be a challenging
and protracted process.
Operating Performance**
Construction Africa and Middle East:
Construction Middle
Africa Marine East Total
R millions 2013 2012 2013 2012 2013 2012 2013 2012
Revenue 5 971 5 848 288 903 575 1 357 6 834 8 108
Operating
(loss)/profit (32) 321 51 (1 184) (47) (454) (28) (1 317)
Margin (%) -1% 5% 18% -131% -8% -33% 0% -16%
Segment
assets 3 677 3 447 915 658 1 823 1 578 6 415 5 683
People 7 560 7 393 53 131 106 199 7 719 7 723
LTIFR
(Fatalities) 0.9(0) 1.0(0) 0(0) 0.6(0) 0.3(0) 0.5(0) 0.7(0) 0.7(0)
Order book 7 053 7 163 269 178 1 394 1 654 8 716 8 995
Revenues decreased 16% to R6,8 billion (June 2012: R8,1 billion) with an
operating loss of R28 million (June 2012: R1 317 million). The order book
decreased to R 8,7 billion (June 2012: R9,0 billion).
Commercial conditions in both southern Africa and the Middle East this
year continued to be demanding. Civil construction work on the Eskom power
programme was negatively affected by significant and ongoing industrial
action.
Notwithstanding some challenging projects, the buildings business secured
a sizeable order book with a number of awards towards the end of the year.
The margins remain low, but are market-related.
The risks associated with this platforms historical over-reliance on
spend by the South African and United Arab Emirates (UAE) economies is
being mitigated by a stronger focus on selected countries in sub-Saharan
Africa. Increased capital expenditure, needed to unlock Africas minerals
resources is expected to lead to extensive upgrading of infrastructure
across the continent.
Our detailed analysis of engineering and construction opportunities from
the publicised government budget, generally reported to be in the region
of R800 billion, indicates that much of this consists of funds that have
either already been committed, funds that have been earmarked for the
manufacturing sector or projects that are already under construction.
The platform has right-sized its Middle East business and is focussing on
closing out commercial issues on completed projects.
Engineering Africa:
Power Programme6 Engineering7 Total
R millions 2013 2012 2013 2012 2013 2012
Revenue 4 008 4 327 1 028 886 5 036 5 213
Operating
profit/(loss) 227 237 (90) (37) 137 200
Margin (%) 6% 5% -9% -4% 3% 4%
Segment assets 1 328 1 556 509 546 1 837 2 102
People 6 243 6 222 898 2 061 7 141 8 283
LTIFR
(Fatalities) 0.7(0) 0.8(0) 0.2(0) 0.2(0) 0.5(0) 0.7(0)
Order book 5 890 6 121 580 647 6 470 6 768
6 Murray & Roberts Projects power programme contracts and Genrec.
7 Includes Wade Walker, Concor Engineering, Murray & Roberts Water and
Murray & Roberts Projects non-power programme projects.
Revenues decreased 3% to R5,0 billion (June 2012: R5,2 billion), whilst
operating profit reduced to R137 million (June 2012: R200 million). The
order book decreased marginally to R6,5 billion (June 2012: R6,8 billion).
Certain businesses in the platform were reorganised, resulting in a
well-resourced specialist engineering competence that offers engineering
and construction solutions in the fields of power & energy, water and
mining & metals.
Work on the Eskom power programme returned acceptable financial results
despite a challenging labour-relations environment. The commercial
arrangement with Hitachi entered into in FY2011 lessened the negative
financial impact from these disruptions.
Murray & Roberts Projects, which this year accounted for some 70% of
platform revenue, is currently repositioning itself for growth
opportunities outside of the current South African power programme which
completes circa 2017. The platform aims to benefit from the growing African
oil & gas opportunities.
Concor Engineering and Wade Walker performed poorly, but are both expected
to significantly improve their contributions to platform profit in FY2014.
Concor Engineering is increasingly active in the mining and minerals
processing sector.
Construction Global Underground Mining:
Africa Australasia The Americas Total
R millions 2013 2012 2013 2012 2013 2012 2013 2012
Revenue 3 203 5 687 1 014 958 3 687 3 214 7 904 9 859
Operating
(loss)/profit (65) 250 85 90 298 265 318 605
Margin (%) -2% 4% 8% 9% 8% 8% 4% 6%
Segment assets 1 195 1 508 661 639 1 609 1 459 3 465 3 606
People 6 163 16 650 184 469 1 342 1 494 7 689 18 613
LTIFR
(Fatalities) 2.5 (1) 2.6(3) 1.0(0) 2.9(0) 1.2(0) 1.7(1) 2.3(1) 2.5(4)
Order book 6 406 3 529 1 094 1 184 2 434 4 095 9 934 8 808
Revenues decreased 20% to R7,9 billion (June 2012: R9,9 billion), while
operating profit declined to R318 million (June 2012: R605 million). The
order book increased to R9,9 billion (June 2012: R8,8 billion).
The platform experienced trying and fundamental challenges during the
year under review.
In its African operations this platform experienced a significant decline in
financial performance mainly due to the mutually agreed termination of the
Aquarius contract and through underperformances on some of its projects.
However, as from FY2014, Murray & Roberts Cementation will benefit from
its participation in De Beers new Venetia diamond mine project. This
investment by De Beers potentially represents the Groups largest single
opportunity since the Eskom power build programme. Sub-Saharan Africa
represents a very material opportunity for the platform as a whole, as
mining activity in the region gains increasing momentum. The business
continues to win work with mining majors in the region.
While the North American and Australian operations returned satisfactory
financial performance, the immediate outlook for these businesses was
clouded by deferments of new projects and termination of existing
projects. After several years of strong growth, Cementation Canada and
Cementation United States are facing more challenging market conditions.
With little upturn expected in the Australian market, RUC Cementation is
expanding its reach into the Asia-Pacific region.
The pooling of resources within the Global Underground Mining Platform
represents a sizeable competitive advantage. Within a number of emerging
markets, the Global Underground Mining Platform is today well placed to win
and execute work for its clients.
Construction Australasia Oil & Gas and Minerals:
Fabrication,
Commissioning Corporate
and Asset overheads
Engineering Projects Support and Other Total
R millions 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
Revenue 4 658 2 833 7 635 4 394 1 102 640 1 405 617 14 800 8 484
Operating
profit/
(loss)8 659 394 521 276 101 42 221 (426) 1 502 286
Margin (%) 14% 14% 7% 6% 9% 7% 16% -69% 10% 3%
People 1 371 846 4 286 3 214 536 405 150 320 6 343 4 785
Segment
assets 3 478 3 995
LTIFR
(Fatalities) 0.2(0) 0.1(0)
Order book 20 593 19 444
8 Operating profit includes R681 million profit on sale of Forge and
R821 million relating to trading profit.
Clough performed exceptionally well this year. Revenue and operating
profit increased to R14,8 billion (June 2012: R8,5 billion) and
R1,5 billion (June 2012: R0,3 billion) respectively, aided by a weakening Rand
exchange rate and profit on disposal of Forge of R681 million. The order
book increased to R20,6 billion (June 2012: R19,4 billion).
The restructuring of the business, which commenced during FY2012, was
successfully completed. The four business divisions Engineering, Capital
Projects, Jetties & Near-Shore Marine, and Commissioning & Asset Support
are all profitable and contributing to Cloughs overall profitability.
During the year under review, Clough established a joint-venture with
South Korean manpower and logistics company Coens Energy and launched
Clough Coens Commissioning and Completions, a business that will provide
specialised commissioning and completions services to onshore and offshore
oil & gas facilities. Clough is the major partner at 55%.
In January 2013 Clough acquired the specialised commissioning, completion
and hazard area inspections contractor, e2o. Although a small acquisition,
it strategically positions Clough in the growing LNG plant commissioning
market. In the short to medium term, commissioning is envisaged to be a
particularly lucrative field for those possessing the required systems and
knowhow as several large Australian LNG projects move from the
construction phase to the operations phase. This is a growth market which
is expected to largely counter the impact of an expected decline in the
Australian LNG capital-build programme as from 2017.
Full details of Cloughs financial results for the full year and its
prospects have been published on its website www.clough.com.au.
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 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
Revenue - 117 719 1 179 56 384 4 58 3 957 3 738 4 736 5 476
Operating
(loss)/profit - - (26) (42) (12) (43) 3 68 387 197 352 180
Margin (%) - 0% -4% -4% -21% -11% 75% 117% 10% 5% 7% 3%
Order book - - - - - - - - 374 1 334 374 1 334
9 Includes Hall Longmore, Rocla, Much Asphalt, Technicrete, Ocon Brick and
UCW.
On 29 January 2013 the Group announced the disposal of Union Carriage &
Wagon Company to a black-owned consortium. The Group realised fair value
in the sale price, which exceeded book value.
The disposal of the Steel Business became unconditional following
Competition Commission approval.
On 28 June 2013 the Group announced the successful conclusion of the
disposal of the balance of its Construction Products Africa operating
platform (excluding Hall Longmore), comprising the Groups manufacturing
businesses. The group of businesses included Much Asphalt, Rocla,
Technicrete and Ocon Brick. The total cash consideration in respect of the
transaction was approximately R1,3 billion before transaction costs. This
transaction is subject to Competition Commission approval. Negotiations
with potential buyers for the sale of the remaining Hall Longmore business
are ongoing and shareholders will be advised in due course of the outcome
thereof.
Dividend
The Board has resolved not to declare a dividend for the full year, in order
to preserve cash to fund its strategy and growth plans.
Board Of Directors
During the year under review, Mr. Tony Routledge, Dr. Namane Magau and
Dr. Sibusiso Sibisi retired from the Board. Subsequent to year-end,
Ms.Thenjiwe Chikane resigned from the Board. Dr. Orrie Fenn resigned from the
Board, due to his appointment as platform executive for the Construction
Global Underground Mining platform. Our sincere appreciation is extended to
all of these directors for their valued contribution.
Effective 1 March 2013, Adv. Mahlape Sello succeeded Mr. Roy Andersen as
non-executive chairman, following his planned retirement, as announced in
August 2012. The Board thanks Mr. Andersen for his valued counsel.
Ms. Ntombi Langa-Royds joined the Board in June 2013 as a non-executive
director, chairman of the Social & Ethics Committee and member of the
Remuneration and Human Resources Committee.
Appreciation
We would like to thank our stakeholders for their ongoing support, in a
year in which distressing legacy issues have taken their toll on the
Groups reputation. We look forward to restoring trust and earning the
support of all our stakeholders, as we continue to bring the lessons of
the past to bear on ensuring a brighter future for the Group.
Prospects Statement
The Board is pleased with the significant improvement in the Groups
financial results and expects the Groups positive earnings trend to
continue in the medium- to long term, driven mainly by its international
operations.
The information on which this prospects statement is based has not been
reviewed or reported on by the Groups external auditors.
On behalf of the directors
Mahlape Sello Henry Laas Cobus Bester
Chairman of the Board Group Chief Executive Group Financial Director
Bedfordview
28 August 2013
1 The financial results of the previous corresponding reporting period
have been restated to reflect discontinued operations. The order book
includes R0,4 billion (FY2013) and R1,3 billion (FY2012) in the
discontinued Construction Products Africa businesses. The order book includes
R0,4 billion in the disposed Construction Products Africa businesses.
2 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 annual engagement with independent
legal, commercial and claims consultants.
** 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 year ended 30 June 2012.
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
for the year ended 30 June 2013
Audited Audited1
Annual Annual
30 June 30 June
R millions 2013 2012
Continuing operations
Revenue 34 575 31 668
Profit before interest,
depreciation and amortisation 2 446 243
Depreciation (707) (576)
Amortisation of intangible assets (33) (25)
Profit/(loss) before interest and
taxation (note 2) 1 706 (358)
Net interest expense (115) (248)
Profit/(loss) before taxation 1 591 (606)
Taxation (545) (221)
Profit/(loss) after taxation 1 046 (827)
Income from equity accounted
investments 165 143
Profit/(loss) from continuing
operations 1 211 (684)
Profit from discontinued operations
(note 3) 259 92
Profit/(loss) for the year 1 470 (592)
Attributable to:
Owners of Murray & Roberts
Holdings Limited 1 004 (736)
Non-controlling interests 466 144
1 470 (592)
Profit/(loss) per share from
continuing and discontinued
operations (cents)
Diluted 245 (214)
Basic 247 (214)
Profit/(loss) per share from
continuing operations (cents)
Diluted 183 (246)
Basic 185 (247)
Net asset value per share (Rands) 16 13
SUPPLEMENTARY STATEMENT OF
FINANCIAL PERFORMANCE INFORMATION
Number of ordinary shares in issue
(000) 444 736 444 736
Reconciliation of weighted average
number of shares in issue (000)
Weighted average number of ordinary
shares in issue 444 736 382 712
Less: Weighted average number of
shares held by The Murray & Roberts
Trust (3 189) (6 338)
Less: Weighted average number of
shares held by the Letsema BBBEE
trusts (31 863) (32 115)
Less: Weighted average number of
shares held by subsidiary companies (2 809) (736)
Weighted average number of shares
used for basic per share
calculation 406 875 343 523
Add: Dilutive adjustment for share
options 3 813 699
Weighted average number of shares
used for diluted per share
calculation 410 688 344 222
1 Restated for discontinued operations.
Headline profit/(loss) per share
from continuing and discontinued
operations (cents) (note 4)
Diluted 186 (246)
Basic 188 (246)
Headline profit/(loss) per share
from continuing operations (cents)
(note 4)
Diluted 132 (261)
Basic 134 (262)
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2013
Audited Audited
Annual Annual
30 June 30 June
R millions 2013 2012
Items that may be reclassified
subsequently to profit or loss:
Profit/(loss) for the year 1 470 (592)
Effects of cash flow hedges 14 20
Taxation related to effects of cash
flow hedges (4) (4)
Effects of available-for-sale
financial assets - (1)
Foreign currency translation
movements 190 617
Total comprehensive income for the
year 1 670 40
Attributable to:
Owners of Murray & Roberts
Holdings Limited 1 116 (298)
Non-controlling interests 554 338
1 670 40
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2013
Audited Audited
Annual Annual
30 June 30 June
R millions 2013 2012
ASSETS
Non-current assets 7 162 8 394
Property, plant and equipment 3 055 3 600
Goodwill 488 437
Deferred taxation assets 657 634
Investments in associate companies 34 885
Amounts due from contract customers
(note 5) 2 003 2 060
Other non-current assets 925 778
Current assets 15 591 13 143
Inventories 349 731
Trade and other receivables 2 022 2 127
Amounts due from contract customers
(note 5) 6 876 6 806
Current taxation assets 60 91
Cash and cash equivalents 6 284 3 388
Assets classified as held-for-sale 1 779 905
TOTAL ASSETS 24 532 22 442
EQUITY AND LIABILITIES
Total equity 8 698 7 102
Attributable to owners of Murray &
Roberts Holdings Limited 7 041 5 887
Non-controlling interests 1 657 1 215
Non-current liabilities 1 958 1 596
Long term liabilities2 534 494
Long term provisions 239 165
Deferred taxation liabilities 151 211
Other non-current liabilities 1 034 726
Current liabilities 13 210 13 495
Amounts due to contract customers
(note 5) 3 406 3 019
Accounts and other payables 7 830 8 609
Current taxation liabilities 545 175
Bank overdrafts2 898 39
Short term loans2 531 1 653
Liabilities directly associated
with assets classified as
held-for-sale 666 249
TOTAL EQUITY AND LIABILITIES 24 532 22 442
2 Interest-bearing borrowings.
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2013
Attributable
to
owners
of
Murray Non-
& Roberts control-
Stated Other Retained Holdings ling
R millions capital reserves earnings Limited interests Total
Balance at 30
June 2011
(Audited) 757 189 3 275 4 221 1 100 5 321
Total
comprehensive
income/(loss) for
the year - 438 (736) (298) 338 40
Rights issue to
owners of Murray
& Roberts
Holdings Limited
(net of
transaction
costs) 1 910 - - 1 910 - 1 910
Treasury shares
acquired (net) 43 - - 43 - 43
(Disposal)/purchase
of
non-controlling
interests (net) - - (12) (12) (152) (164)
Net movement in
non-controlling
interests loans - - - - (21) (21)
Disposal of
business - (1) - (1) - (1)
Issue of shares
to
non-controlling
interests - - - - 23 23
Recognition of
share-based
payment - 33 - 33 - 33
Transfer to
retained earnings - (32) 32 - - -
Transfer to
non-controlling
interests - (2) - (2) 2 -
Dividends
declared and
paid3 - - (7) (7) (75) (82)
Balance at 30
June 2012
(Audited) 2 710 625 2 552 5 887 1 215 7 102
Total
comprehensive
income for the
year - 112 1 004 1 116 554 1 670
Treasury shares
acquired (net) 4 - - 4 - 4
Repayment of
non-controlling
interest
shareholding - - - - (2) (2)
Net movement in
non-controlling
interests loans - - - - (39) (39)
Issue of shares
to
non-controlling
interests - - - - 5 5
Recognition of
share-based
payment - 48 - 48 - 48
Transfer to
retained earnings - (16) 16 - - -
Transfer to
non-controlling
interests - (5) - (5) 5 -
Dividends
declared and
paid3 - - (9) (9) (81) (90)
Balance at 30
June 2013
(Audited) 2 714 764 3 563 7 041 1 657 8 698
3 Dividends relate to distributions made by entities that hold treasury shares.
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2013
Audited Audited
Annual Annual
30 June 30 June
R millions 2013 2012
Cash generated from/(utilised in)
operations 2 049 (1 580)
Interest received 143 107
Interest paid (265) (388)
Taxation paid (271) (429)
Operating cash flow 1 656 (2 290)
Dividends paid to owners of
Murray & Roberts Holdings Limited (9) (7)
Dividends paid to non-controlling
interests (81) (75)
Cash flow from operating activities 1 566 (2 372)
Acquisition of businesses (note 7) (84) (15)
Acquisition of share capital in
start up company - (10)
Acquisition of non-controlling
interests - (48)
Dividends received from associate
companies 71 46
Acquisition of associates - (133)
Increase in investments - (67)
Purchase of other investments by
discontinued operations - (40)
Purchase of investment property - (20)
Purchase of intangible assets other
than goodwill (21) (17)
Purchase of property, plant and
equipment by discontinued
operations (42) (34)
Purchase of property, plant and
equipment (1 089) (959)
Replacements (321) (569)
Additions (768) (390)
Proceeds on disposal of property,
plant and equipment 129 164
Proceeds on disposal of businesses
(note 7) 403 822
Proceeds on disposal of assets
held-for-sale 134 127
Advance payment in respect of
property disposals 45 -
Proceeds on disposal of investments
in associates (note 7) 1 784 15
Repayment of investment in
associate loan 4 -
Cash related to
acquisition/disposal of businesses (74) (271)
Cash related to assets held-for-sale (23) 258
Proceeds from realisation of
investment and loan repayments 132 165
Other (net) 3 2
Cash flow from investing activities 1 372 (15)
Net (decrease)/increase in
borrowings (1 189) 342
Treasury share disposals (net) 4 43
Proceeds on share issue to
non-controlling interests 5 23
Repayment of non-controlling
interest shareholding (2) -
Proceeds from rights issue to
owners of Murray & Roberts Holdings
Limited (net of transaction costs) - 1 910
Cash flow from financing activities (1 182) 2 318
Net increase/(decrease) in cash and
cash equivalents 1 756 (69)
Net cash and cash equivalents at
beginning of year 3 349 3 054
Effect of foreign exchange rates 281 364
Net cash and cash equivalents at
end of year 5 386 3 349
Net cash and cash equivalents
comprises of:
Cash and cash equivalents 6 284 3 388
Bank overdrafts (898) (39)
Net cash and cash equivalents at
end of year 5 386 3 349
SUMMARISED CONSOLIDATED SEGMENTAL ANALYSIS
for the year ended 30 June 2013
Audited Audited1
Annual Annual
30 June 30 June
R millions 2013 2012
Revenue4
Construction Africa and Middle East 6 834 8 108
Engineering Africa 5 036 5 213
Construction Global Underground
Mining 7 904 9 859
Construction Australasia Oil & Gas
and Minerals 14 800 8 484
Corporate & Properties 1 4
Continuing operations 34 575 31 668
Discontinued operations 4 736 5 476
39 311 37 144
Continuing operations
Profit/(loss) before interest and
taxation5
Construction Africa and Middle East (28) (1 317)
Engineering Africa 137 200
Construction Global Underground
Mining 318 605
Construction Australasia Oil & Gas
and Minerals 1 502 286
Corporate & Properties (223) (132)
Profit/(loss) before interest and
taxation 1 706 (358)
Net interest expense (115) (248)
Profit/(loss) before taxation 1 591 (606)
Discontinued operations
Profit before interest and taxation5 352 180
Net interest expense (7) (32)
Profit before taxation 345 148
4 Revenue is disclosed net of inter-segmental revenue. Inter-segmental
revenue for the Group is R169 million (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 30 June 2013
Audited Audited
Annual Annual
30 June 30 June
R millions 2013 2012
Construction Africa and Middle East 6 415 5 683
Engineering Africa 1 837 2 102
Construction Products Africa 2 102 2 755
Construction Global Underground
Mining 3 465 3 606
Construction Australasia Oil & Gas
and Minerals 3 478 3 995
Corporate & Properties 234 188
17 531 18 329
Reconciliation of segmental assets
Total assets 24 532 22 442
Deferred taxation assets (657) (634)
Current taxation assets (60) (91)
Cash and cash equivalents (6 284) (3 388)
17 531 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 preliminary summarised consolidated annual financial statements for the
year ended 30 June 2013 have been prepared in compliance with the Listings
Requirements of the JSE Limited, the framework concepts and the measurement
and recognition requirements of International Financial Reporting Standards
(IFRS), the requirements of the International Accounting Standards (IAS)
34, Interim Financial Reporting, SAICA Financial Reporting Guidelines as
issued by the Accounting Practices Committee and Financial Pronouncements as
issued by the Financial Reporting Standards Council and the Companies Act,
No. 71 of 2008. These statements were compiled under the supervision of
Mr AJ Bester (CA) SA, Group financial director and have been audited in terms
of Section 29(1) of the Act.
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 following new and revised Standards and Interpretations
have been adopted in the current year; IAS 1: Presentation of Financial
Statements, IAS 12: Income Taxes and certain improvements to IFRSs 2012.
External auditors, Deloitte & Touche, have issued their opinion on the
Groups annual financial statements for the year ended 30 June 2013. The
audit was conducted in accordance with International Standards on Auditing.
The auditor responsible for the audit is AJ Zoghby. They have issued an
unmodified audit opinion on the consolidated annual financial statements and
preliminary summarised consolidated financial statements. These preliminary
summarised consolidated financial statements have been derived and are
consistent in all material respects with the Groups annual financial
statements. A copy of their audit report is available for inspection at the
companys registered office. Any reference to future financial performance
included in this announcement has not been audited and 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:
30 June 30 June
R millions 2013 2012
Profit on sale of associate,
Forge Group Limited 681 -
Medupi Civils Joint Venture
contract losses (185) -
GPMOF contract losses - (1 189)
Middle East contract losses - (387)
496 (1 576)
Items by nature1
Cost of sales (31 558) (30 628)
Distribution and marketing expenses (19) (14)
Administration expenses (2 801) (2 259)
Other operating income 1 509 875
(32 869) (32 026)
3. Profit from discontinued operations
The Group continues to dispose of its investment properties with proceeds of
R89 million received in the current financial year. The remaining properties
are expected to be disposed of within the next 12 months. The non-core
operations relating to the Steel Business and Union Carriage and Wagon
Proprietary Limited were disposed of in the last quarter of the financial
year. Refer to note 7 for further details.
The Board took 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 Brick and
Technicrete.
The disposal of the majority of the Construction Products Africa operations
was concluded on 28 June 2013. The businesses and underlying assets of Much
Asphalt were disposed of to a consortium comprising of Capitalworks and
certain senior management and executives of Much Asphalt, while the Rocla,
Ocon Brick and Technicrete entities were disposed of to a consortium
comprising of Capitalworks, RMB Ventures and certain senior management and
executives of Rocla, Ocon Brick and Technicrete. The disposal remains subject
to Competition Commission approval and is envisaged to take place in the
first quarter of the 2014 financial year. The total proceeds on the
transaction is R1 325 million before transaction costs. R1 150 million will
be received on the effective date, R75 million is receivable 12 months after
the effective date and the remaining R100 million is receivable 24 months
after the effective date. 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.
3.1 Profit from discontinued operations
30 June 30 June1
R millions 2013 2012
Revenue 4 736 5 476
Profit before interest,
depreciation and amortisation 412 268
Depreciation and amortisation (60) (88)
Profit before interest and taxation
(note 3.2) 352 180
Net interest expense (7) (32)
Profit before taxation 345 148
Taxation (86) (57)
Profit after taxation 259 91
Income from equity accounted
investments - 1
Profit from discontinued operations 259 92
Attributable to:
Owners of Murray & Roberts
Holdings Limited 251 112
Non-controlling interests 8 (20)
259 92
3.2 Profit before interest and taxation
Profit before interest and taxation includes the following significant items:
Profit on disposal of businesses 139 -
Other impairments (54) (25)
85 (25)
3.3 Cash flows from discontinued operations include the following:
Cash flow from operating activities 43 (139)
Cash flow from investing activities 382 1 089
Cash flow from financing activities (192) (483)
Net increase in cash and cash
equivalents 233 467
4. Reconciliation of headline profit/(loss)
30 June 30 June1
R millions 2013 2012
Profit/(loss) attributable to
owners of Murray & Roberts Holdings
Limited 1 004 (736)
Investment property fair value
adjustments - (32)
Profit on disposal of businesses
(net) (139) (47)
Profit on disposal of associates
(net) (681) (13)
Loss/(profit) on disposal of
property, plant and equipment (net) 13 (44)
Impairment of assets* 32 24
Fair value adjustments and
loss/(profit) on disposal of assets
held-for-sale 72 (29)
Reversal of impairment of associate (13) -
Fair value recognised on associate (10) -
Other (net) - (4)
Non-controlling interests effects
on adjustments 141 21
Taxation effects on adjustments 346 14
Headline profit/(loss) 765 (846)
Adjustments for discontinued
operations:
Profit from discontinued operations (259) (92)
Non-controlling interests 8 (20)
Investment property fair value
adjustments - 20
Profit on disposal of businesses
(net) 139 47
Profit on disposal of associates
(net) - 3
Loss on disposal of property, plant
and equipment (net) (1) (1)
Impairment of assets* - (25)
Fair value adjustments and
(loss)/profit on disposal of assets
held-for-sale (72) 29
Non-controlling interests effects
on adjustments (1) (18)
Taxation effects on adjustments (35) 3
Headline profit/(loss) from
continuing operations 544 (900)
* The impairment relates to an assessment performed of the fair value
less costs to sell in comparison to the carrying value of property,
plant and equipment of various operations.
5. Contracts-in-progress and contract receivables
30 June 30 June
R millions 2013 2012
Contracts-in-progress
(cost incurred plus
recognised profits,
less recognised losses) 3 067 2 849
Uncertified claims and
variations less payments
received on account
(recognised in terms of
IAS 11: Construction Contracts) 2 062 1 951
Uncertified claims and variations 2 062 2 001
Less: Payments received on account - (50)
Amounts receivable on contracts
(net of impairment provisions) 3 301 3 642
Retentions receivable
(net of impairment provisions) 449 424
8 879 8 866
Amounts received in excess
of work completed (3 406) (3 019)
5 473 5 847
Disclosed as:
Amounts due from contract
customers non-current 2 003 2 060
Amounts due from contract
customers current 6 876 6 806
Amounts due to contract
customers current (3 406) (3 019)
5 473 5 847
The non-current amounts are considered by management to be recoverable.
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.
30 June 30 June
R millions 2013 2012
Operating lease commitments 1 805 2 058
Contingent liabilities 1 470 1 445
Financial institution guarantees 10 491 10 285
On 19 June 2013 Murray & Roberts agreed to settle with the Competition
Commission and conclude the investigation into historical anti-competitive
behaviour. A penalty of R309 million in full and final settlement of all
matters being investigated as part of the Competition Commissions
Fast-Track Settlement Process has been accrued for in the Groups annual
financial statements. The Competition Tribunal approved the penalty on
22 July 2013. The payment of the penalty will be made in three equal
instalments, with the first payable one month after approval by the
Competition Tribunal, the second payment 12 months thereafter and the
third payment 24 months after the first payment.
There are five remaining historical incidents of collusive conduct
(excluded from the concluded Fast-Track Settlement Process) that still
need to be settled with the Competition Commission. The Board is of the
view that the potential penalties on these transgressions will not be
material compared to the penalty paid on the conclusion of the Fast-Track
Settlement Process and it remains committed to concluding this matter
rapidly for the benefit of all stakeholders. The Group has provided for a
potential penalty in the financial year 2013 accounts.
7. Business acquisitions/disposals
Clough Limited (Clough) acquired e2o (Proprietary) Limited, a leading
provider of specialised commissioning, completion and hazardous area
inspection services to the energy and resources sectors on 31 January 2013
for a consideration of R84 million.
The Group disposed of the following non-core assets during the current
financial year:
Disposal of the business, assets and liabilities of Cape Town Iron
and Steel Works (CISCO) on 1 July 2012 with proceeds of R80 million.
Disposal of 100% shareholding in Murray & Roberts Retail Asset
Management Proprietary Limited on 1 April 2013 with proceeds of R115 million
and R120 million outstanding as a vendor loan.
Disposal of the business, assets and liabilities of RSC Botswana, a
branch of Murray & Roberts Botswana Limited on 31 May 2013 with proceeds
of R6 million.
Disposal of the business, assets and liabilities of Union Carriage
and Wagon (UCW) on 13 June 2013 for gross proceeds of R300 million, of
which R215 million (R202 million net of transaction costs) was received
prior to year end and R85 million as a vendor loan received subsequent to
year end.
The Group also disposed of its 36% shareholding in Forge Group Limited on
26 March 2013 for proceeds of R1 784 million, resulting in a profit on
sale of R681 million.
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 Group announced on 30 July 2013 its intention, with the support of
Clough's independent directors, to acquire the remaining 38.4% non-
controlling interest in Clough for a price of AUD1,46 per share (Proposed
Acquisition). The Group has successfully completed its confirmatory due
diligence and is pleased to announce that Murray & Roberts and Clough have
entered into a binding Scheme Implementation Agreement (SIA) on 28 August
2013 to give effect to the Proposed Acquisition. The SIA outlines the process
and terms under which Murray & Roberts will make an offer to acquire the
remaining 38.4% of shares outstanding in Clough by way of a Scheme of
Arrangement (Scheme) under the Australian Corporations Act 2001 (Cth). The
independent directors of Clough unanimously recommended that Clough
shareholders vote in favour of the Scheme, in the absence of a superior
proposal, and subject to an independent expert expressing an opinion that the
Scheme is in the best interests of the Clough shareholders, excluding Murray
& Roberts and its associate companies. The transaction will be funded through
a combination of existing cash on Cloughs statement of financial position
and modest acquisition financing. The Proposed Acquisition is still subject
to, amongst others, Cloughs non-controlling interest approval as well as
separate approval by the Group's shareholders.
The directors are not aware of any other matter or circumstance arising since
the end of the financial year, not otherwise dealt with in the Groups annual
financial statements, which significantly affects the financial position at
30 June 2013 or the results of its operations or cash flows for the year then
ended.
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 Braamfontein 2001
PO Box 4844, Johannesburg, 2000
Sponsor:
Deutsche Securities (SA) (Proprietary) Limited
Secretary:
E Joubert
Directors:
M Sello* (Chairman)
HJ Laas (Managing and Chief Executive)
DD Barber*
AJ Bester
NB Langa-Royds*
JM McMahon1*
WA Nairn*
RT Vice*
1British *Non-executive
website: www.murrob.com mobisite: http://murrob.mobi e-mail: clientservice.com
MURRAY & ROBERTS VALUES ARE THE ULTIMATE GUIDE OF OUR INTENT AND ACTIONS.
THEY ALIGN AND UNITE ALL OUR PEOPLE ACROSS OUR DIVERSE OPERATING PLATFORMS.
OUR VALUES:
CARE
INTEGRITY
RESPECT
ACCOUNTABILITY
COMMITMENT
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 or Cloughs
website, nor any website accessible by hyperlinks on the Groups website
is incorporated in, or forms part of, this announcement.
Date: 28/08/2013 05:58:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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