Wrap Text
Reviewed interim results for the six months ended 31 December 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”)
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
SALIENT FEATURES
- Lost time injury frequency rate improved to 0.82 (December 2012: 0.85), but
regrettably two fatal incidents (December 2012: 0) were reported
- Revenue from continuing operations improved to R19 billion (December 2012:
R16,3 billion)
- Attributable earnings improved to R724 million (December 2012:
R262 million)
- Diluted HEPS from continuing operations improved by 41% to 62 cents
(December 2012: 44 cents), diluted HEPS improved by 25% to 86 cents
(December 2012: 69 cents)
- Robust order book of R44,9 billion (December 2012: R48,3 billion)
- Improved net cash position of R2 billion (December 2012: R1,1 billion)
- Acquisition of Clough minority shares and delisting
- Sale of Construction Products businesses nearing conclusion
A NEW STRATEGIC FUTURE
Murray & Roberts is in the final year of its three-year Recovery & Growth
strategy, which returned the Group to profitability and established a
foundation for growth. The Group successfully delivered its Recovery Year and
has substantially achieved all of the strategic objectives that were set for
its two Growth Years. Profitability in the South African operations continues
to be a priority.
The Recovery & Growth plan created a stronger financial basis and returned
focus to the Group’s core competency of engineering and construction, with
increased emphasis on the natural resources markets of oil & gas and metals
& minerals, which have been identified as the sectors presenting the best
sustainable growth potential in the medium-to long term.
The Group is now developing its next strategic phase; A New Strategic Future.
The prime objective of this strategy is to optimise shareholder return by
investing in specific growth market sectors and to expand the Group’s business
into more profitable segments of the engineering and construction value chain.
AFRICA STRATEGY
Implementation of the Group’s hub-and-spoke strategy for Africa is progressing
well. Representative offices have been established in West Africa (Ghana –
Accra) since January 2013 and in Central Africa (Zambia – Kitwe) since October
2013. The office in Maputo, Mozambique, will be opened in the first quarter
of calendar year 2014. Extensive market engagement is underway to develop
business opportunities in these regions.
HEALTH AND SAFETY
The Board deeply regrets the death of two (2) employees (December 2012: 0) who
sustained fatal injuries while on duty and extends its heartfelt condolences
to the families, friends and colleagues of the deceased. Unfortunately, two
further fatal incidents occurred in the first two months of the calendar year.
For the period under review, the Group achieved a lost time injury frequency
rate of 0.82 (December 2012: 0.85) which is better than the target of 0.9.
The occurrence of fatal incidents, despite significant progress achieved in
safety improvement programmes, deeply concerns the Board. The Group continues
to focus on operational discipline and entrenching safety management practices
and procedures in order to prevent the occurrence of such tragedies.
The Group’s employee health and wellness programme, Philisa, which includes
initiatives for the prevention, early identification and management of all
occupational health and wellness conditions, has been launched.
FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
The Attributable Earnings graph reflects Attributable Earnings and Earnings
per Share for the half year periods beginning financial year 2010. It should
be noted that the after tax profit of R223 million on the disposal of Clough’s
investment in Forge in the second half of Financial Year 2013 was reported as
part of continuing operations in the Group’s results, but was reclassified as
discontinued in the graph.
For the six months of Financial Year 2014, the Group generated revenue of
R19 billion (December 2012: R16,3 billion) and reported attributable profit of
R724 million (December 2012: R262 million). This significant growth was
primarily recorded in discontinued operations which include profit on disposal
of the Group’s construction products businesses. Diluted earnings per share
was 175 cents (December 2012: 64 cents per share). Diluted headline earnings
per share was 86 cents (December 2012: 69 cents per share) and diluted
continuing headline earnings per share was 62 cents (December 2012: 44 cents)
representing growth of 41%.
At 31 December 2013, the Group’s net cash position was R2 billion (December
2012: R1,1 billion) and this is after the conclusion of the R4,4 billion
Clough transaction in December 2013.
The Group’s order book moderately decreased to R44,9 billion (December 2012:
R48,3 billion) which is considered to be a strong position given the continued
softness in various of the Group’s markets.
OPERATING PERFORMANCE**
Regional Platform – Construction Africa and Middle East:
Construction Africa Marine Middle East Total
December 2013 2012 2013 2012 2013 2012 2013 2012
R millions
Revenue 3 243 2 993 98 184 434 286 3 775 3 463
Operating
profit/(loss) 149 34 (5) 45 (12) (46) 132 33
Margin (%) 5% 1% (5%) 24% (3%) (16%) 3% 1%
LTIFR (Fatalities) 0.49(0) 0.86(0) 0(0) 0(0) 0(0) 0.35(0) 0.29(0) 0.68(0)
Order book 6 550 6 886 220 314 1 855 1 447 8 625 8 647
Revenues increased 9% to R3,8 billion (December 2012: R3,5 billion) with an
operating profit of R132 million (December 2012: R33 million). The order book
remained stable at R8,6 billion (December 2012: R8,6 billion). The margin in
Construction Africa is attributed to Tolcon and Murray & Roberts Concessions.
The platform returned an improved profit for the first six months of the year.
The local market is still a highly competitive environment with low margins.
New orders were secured in the Roads & Earthworks and Buildings businesses
although the order book in the civil and mining businesses is weak. The
business in the Middle East secured its first project award in more than two
years for a residential development in joint-venture at Al-Raha Beach in Abu
Dhabi.
Intermittent labour stoppages were experienced during the period under review.
Resolution of several outstanding commercial matters at Medupi, the loss
making opencast mining project at Lonmin and closeout of subcontractors on
legacy projects in the Middle East will be a priority in the second half of
the financial year.
Regional Platform – Engineering Africa:
Power Programme1 Engineering2 Total
December 2013 2012 2013 2012 2013 2012
R millions
Revenue 1 971 2 010 318 538 2 289 2 548
Operating
profit/(loss) 106 96 (59) (61) 47 35
Margin (%) 5% 5% (19%) (11%) 2% 1%
LTIFR (Fatalities) 0.83(0) 0.77(0) 0.43(0) 0.50(0) 0.73(0) 0.61(0)
Order book 5 623 7 093 573 627 6 196 7 720
1 Murray & Roberts Projects power programme contracts and Genrec.
2 Includes Wade Walker, Concor Engineering, Murray & Roberts Water and
Murray & Roberts Projects non-power programme projects.
Revenues decreased 10% to R2,3 billion (December 2012: R2,5 billion), whilst
operating profit increased to R47 million (December 2012: R35 million). Work
on the Eskom power programme returned acceptable financial results and reduced
losses were reported for the engineering businesses. The order book decreased
to R6,2 billion (December 2012: R7,7 billion) as construction on the Medupi
and Kusile power station projects progresses and due to the delayed
adjudication on several large tenders.
Murray & Roberts Projects is well positioned in the renewable energy sector
and orders are expected to be secured early in the new financial year. Concor
Engineering and Wade Walker are struggling to build order book, but both
businesses are well positioned in bids on three substantial projects. Genrec
has a stable order book and is focussing on further enhancing operational
efficiencies, whilst Murray & Roberts Water is developing its order book and
prospects remain positive.
International Platform – Construction Global Underground Mining:
Africa Australasia The Americas Total
December 2013 2012 2013 2012 2013 2012 2013 2012
R millions
Revenue 1 537 1 614 363 552 1 452 1 853 3 352 4 019
Operating
(loss)/profit (7) (137) 33 51 67 172 93 86
Margin (%) 0% (9%) 9% 9% 5% 9% 3% 2%
LTIFR
(Fatalities) 2.73(1) 2.26(0) 2.12(0) 0(0) 0.72(0) 1.11(0) 2.40(1) 1.95(0)
Order book 4 372 4 621 1 375 831 3 769 3 619 9 516 9 071
Revenues decreased 17% to R3,4 billion (December 2012: R4 billion), while
operating profit increased to R94 million (December 2012: R86 million). The
order book increased marginally to R9,5 billion (December 2012: R9,1 billion).
The African operations experienced mixed fortunes and reported a significantly
reduced loss for the first six months. The South African operations continue
to be impacted by the losses incurred at the Impumelelo mine project for
Sasol, although a strong contribution was made by the operations in Zambia.
Work has commenced on De Beers’ Venetia diamond mine and R600 million for
early works is reflected in the Group’s order book – additional order value to
be included post commercial close. This project represents a significant long-
term opportunity for the African operations.
The business in the Americas reported a sharp decline in revenue and profit
due to very tough market conditions. Although market conditions in the
Americas remain challenging, there are encouraging signs of market
improvement. The business in Canada is tendering on a few new projects and the
North American business now holds a strong order book after the recent award
of two large projects on the Kennecott Utah Copper and Lundin Eagle Nickel and
Copper mines.
Tough market conditions persist in the Australian market and an upturn in the
near future is unlikely. This business is thus expanding its reach into the
Asia Pacific region and it is active in Indonesia and commenced with its first
raise boring contract in the Philippines. The Australian business secured an
order at the Oyu Tolgoi project in Mongolia before the project was stopped
several months ago and it is anticipated that operations will recommence this
year.
International Platform – Construction Australasia Oil & Gas and Minerals3:
Fabrication,
Commissioning Corporate
and Asset overheads
Engineering Projects Support and Other Total
December 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
R millions
Revenue 2 524 2 070 4 713 3 131 898 516 1 431 597 9 566 6 314
Operating
profit/(loss) 392 298 185 216 139 39 (248) (219) 468 334
Margin (%) 16% 14% 4% 7% 15% 8% (17%) (37%) 5% 5%
LTIFR
(Fatalities) 0.24(1) 0.09(0)
Order book 8 264 7 005 6 962 11 455 4 970 3 177 229 380 20 425 22 017
3 Excluding Forge in 2012. Forge was an associate and was equity accounted
at 36% at December 2012 within Clough’s consolidated results. Forge
was sold during March 2013.
Revenue and operating profit increased strongly to R9,6 billion (December
2012: R6,3 billion) and R468 million (December 2012: R334 million)
respectively. The order book decreased marginally to R20,4 billion (December
2012: R22 billion), however Clough Limited (“Clough”) is actively pursuing
prospects across the oil & gas sectors in Australia and Papua New Guinea.
Murray & Roberts completed the acquisition of all the minority
shares in Clough on 11 December 2013 and Clough subsequently delisted from the
Australian Stock Exchange. Clough is now a wholly owned subsidiary of
Murray & Roberts. Clough is a leading engineering and construction company in
the Australasian oil & gas market sector and is an integral part of the
Group’s long term growth plans.
Clough delivered a strong operational and financial result during the period
under review and it is expected that this performance will continue during the
second half of the year. Clough maintained a strong project order book and is
planning to grow its share in the engineering, commissioning and asset support
business of large-scale oil & gas facilities in Australia, Papua New Guinea
and further afield.
Disposal of non-core assets:
Clough
Steel Marine Construction
Reinforcing Services Properties Products
Products & Properties SA Africa5 Total
December 2013 20124 2013 2012 2013 2012 2013 2012 2013 2012
R millions
Revenue 63 422 8 27 1 2 1 365 1 928 1 437 2 379
Operating
profit/(loss) 2 15 (29) (2) 1 2 668 109 642 124
Margin (%) 3% 4% (363%) (7%) 100% 100% 49% 6% 45% 5%
Order book - - - - - - 155 863 155 863
4 Restated for adoption of IFRS 11: Joint Arrangements. The results of
affected joint ventures are now equity accounted rather than
proportionately consolidated.
5 Includes Hall Longmore, Rocla, Much Asphalt, Technicrete, Ocon Brick and
UCW (only included in 2012).
The Group successfully disposed of Much Asphalt, Ocon Brick, Technicrete and
Rocla in 2013. Finalisation of the sale of the Hall Longmore business is at an
advanced stage and the Group expects Competition Commission approval in the
first quarter of the calendar year.
UPDATE ON THE GROUP’S MAJOR CLAIMS PROCESSES
Gautrain Delay & Disruption Claim – This is by far the largest element of the
Gautrain claims. The legal process on this multi-billion rand claim is
progressing. This is a very complex process and the claim is expected to be
settled no sooner than 2016. Any award will attract interest dating from 2009
to the date of award.
Gautrain Sandton Cavern Claim – The merits of this claim was ruled by the
arbitrator in favour of the Bombela Civil Joint Venture in October 2013. The
quantum hearing is scheduled for July 2015.
Gautrain Water Ingress Dispute – In November 2013 an arbitration award was
made in the Gautrain water ingress dispute between the Gauteng Province and
the Bombela Concession Company. The Tribunal supported Province’s
interpretation of the water ingress specification for the amount of ground
water contractually allowed to drain through the Gautrain tunnel and ruled
that in certain parts of the tunnel the non-compliance with specification
could be settled through financial compensation and in other parts (sections
between Park Station and Rosebank Station) additional works by the Bombela
Civil Joint Venture (of which Murray & Roberts has a 45% shareholding) would
be required to meet the specification.
A panel of technical experts and design consultants have been appointed to
design a technical solution to the water ingress and the Bombela Civil Joint
Venture should be in a position towards September 2014 to have a reasonable
view of the potential cost and other implications of any remedial works to the
Park and Rosebank station hubs.
Given the uncertainty at this stage of the potential financial implication of
this ruling, no financial provision has been made in the Group’s financial
accounts. This matter is a contingent liability.
Gorgon Pioneer Materials Offloading Facility (“GPMOF”) – As previously
reported, the merits of the design change claim on GPMOF in Australia was
ruled in Murray & Roberts’ favour by the arbitrator during June 2013 and the
hearing on the claim quantum is scheduled to commence in July 2014. It is
expected that the quantum of design change claim will be determined by
December 2014. There are also several additional claims that are being
progressed on this project.
Dubai International Airport – The arbitration for the Dubai International
Airport claim is ongoing. The parties are considering an alternative
settlement mechanism to the legal process of arbitration.
UNCERTIFIED REVENUES
Total uncertified revenue, largely represented by the Group’s outstanding
major claims on Gautrain Delay & Disruption, GPMOF and Dubai International
Airport, reduced to R1,8 billion (June 2013: R2,1 billion).
The Group’s uncertified revenue on the projects mentioned above is
considerably lower than the estimated value of its claims.
COMPETITION COMMISSION
The Board rejects any form of anti-competitive behaviour in the Group. There
are five (5) remaining historical incidents of collusive conduct, excluded
from the concluded Fast-Track Settlement Process (“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
imposed 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.
Six former directors of subsidiary companies were implicated in the
Competition Commission’s investigation. These persons are no longer employed
by the Group; the last of whom left in 2010. Murray & Roberts has committed to
take action against these former executives, which it is in the process of
doing. Relevant information is being shared with the South African Police
Service and the former executives have been informed accordingly. The Group is
also pursuing further action and is in discussions with them in this regard.
Current management is not implicated in any anti-competitive practices and has
taken decisive steps to ensure that such practices will not be repeated.
DIVIDEND
The Board has resolved not to declare a dividend for the six months under
review.
APPRECIATION
We thank our employees for their commitment and contribution in delivering
this set of Group results. We would also like to thank all our stakeholders
for their ongoing support.
CHANGES TO THE BOARD
Ms. Thenjiwe Chikane resigned from the Board on 20 August 2013 and Mr. Michael
McMahon was appointed to the Audit & Sustainability Committee on 18 September
2013. Mr. Bert Kok has been appointed as the company secretary of
Murray & Roberts with effect from 26 February 2014. Mrs. Rentia Joubert has
stepped down as company secretary to take up another position within the
Group.
PROSPECTS STATEMENT
The Board is pleased with the Group’s improved financial position as reported
for the first six months of the year and expects the earnings growth trend to
continue in the medium-to long term.
The information on which this prospects statement is based has not been
reviewed or reported on by the Group’s external auditors.
On behalf of the directors:
Mahlape Sello Henry Laas Cobus Bester
Chairman of the Board Group Chief Executive Group Financial Director
Bedfordview
27 February 2014
** The operating performance information disclosed has been extracted from
the Group’s operational reporting systems. The “LTIFR” information
has not been subject to a review by the Group’s auditors. The Corporate
& Properties segment is excluded from the operational analysis. Unless
otherwise noted, all comparisons are to the Group’s performance as at
and for the six month period ended 31 December 2012.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2013 2012 2013
Continuing operations
Revenue 18 982 16 344 34 575
Profit before interest,
depreciation and amortisation 1 017 764 2 446
Depreciation (332) (349) (707)
Amortisation of intangible
assets (16) (15) (33)
Profit before interest and
taxation (note 2) 669 400 1 706
Net interest income/(expense) 2 (76) (115)
Profit before taxation 671 324 1 591
Taxation (271) (109) (545)
Profit after taxation 400 215 1 046
Income from equity accounted
investments - 112 165
Profit from continuing
operations 400 327 1 211
Profit from discontinued
operations (note 3) 463 93 259
Profit for the period 863 420 1 470
Attributable to:
– Owners of Murray &
Roberts Holdings Limited 724 262 1 004
– Non-controlling interests 139 158 466
863 420 1 470
Profit per share from
continuing and discontinued
operations (cents)
– Diluted 175 64 245
– Basic 178 64 247
Profit per share from
continuing operations (cents)
– Diluted 63 43 183
– Basic 64 44 185
Net asset value per share
(Rands) 12 14 16
Supplementary statement of financial
performance information
Number of ordinary shares in
issue (‘000) 444 736 444 736 444 736
Reconciliation of weighted
average number of shares in
issue (‘000)
Weighted average number of
ordinary shares in issue 444 736 444 736 444 736
Less: Weighted average number
of shares held by The Murray
& Roberts Trust (1 959) (4 753) (3 189)
Less: Weighted average number
of shares held by the Letsema
BBBEE trusts (31 817) (31 884) (31 863)
Less: Weighted average number
of shares held by the
subsidiary companies (4 758) (1 303) (2 809)
Weighted average number of
shares used for basic per
share calculation 406 202 406 796 406 875
Add: Dilutive adjustment for
share options 7 543 4 012 3 813
Weighted average number of
shares used for diluted per
share calculation 413 745 410 808 410 688
Headline profit per share
from continuing and
discontinued operations
(cents) (note 4)
– Diluted 86 69 186
– Basic 88 69 188
Headline profit per share
from continuing operations
(cents) (note 4)
– Diluted 62 44 132
– Basic 63 44 134
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2013 2012 2013
Items that may be
reclassified subsequently to
profit or loss:
Profit for the period 863 420 1 470
Effects of cash flow hedges (3) 8 14
Taxation related to effects
of cash flow hedges 1 (2) (4)
Foreign currency translation
movements 212 134 190
Total comprehensive income
for the period 1 073 560 1 670
Attributable to:
– Owners of Murray &
Roberts Holdings Limited 867 345 1 116
– Non-controlling interests 206 215 554
1 073 560 1 670
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2013
Reviewed Reviewed6 Audited6
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2013 2012 2013
ASSETS
Non-current assets 7 495 8 072 7 162
Property, plant and equipment 3 177 2 980 3 055
Goodwill 490 438 488
Deferred taxation assets 663 638 657
Investments in associate
companies 25 1 013 34
Amounts due from contract
customers (note 5) 2 072 2 181 2 003
Other non-current assets 1 068 822 925
Current assets 12 059 12 422 15 591
Inventories 218 315 349
Trade and other receivables 2 216 2 809 2 022
Amounts due from contract
customers (note 5) 5 362 5 259 6 876
Current taxation assets - - 60
Cash and cash equivalents 4 263 4 039 6 284
Assets classified as
held-for-sale 698 2 203 1 774
TOTAL ASSETS 20 252 22 697 24 527
EQUITY AND LIABILITIES
Total equity 5 423 7 581 8 698
Attributable to owners of
Murray & Roberts Holdings
Limited 5 393 6 251 7 041
Non-controlling interests 30 1 330 1 657
Non-current liabilities 1 829 1 918 1 958
Long term liabilities7 354 547 534
Long term provisions 280 189 239
Deferred taxation liabilities 220 166 151
Other non-current liabilities 975 1 016 1 034
Current liabilities 12 935 12 614 13 210
Amounts due to contract
customers (note 5) 3 254 3 312 3 406
Accounts and other payables 7 459 6 806 7 830
Current taxation liabilities 282 139 545
Bank overdrafts7 - 1 302 898
Short term loans7 1 940 1 055 531
Liabilities directly
associated with assets
classified as held-for-sale 65 584 661
TOTAL EQUITY AND LIABILITIES 20 252 22 697 24 527
6 Restated for adoption of IFRS 11: Joint Arrangements. The results of
affected joint ventures are now equity accounted rather than
proportionately consolidated.
7 Interest-bearing borrowings.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 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 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
Total
comprehensive
income for the
period - 29 742 771 339 1 110
Treasury shares
disposed (net) 4 - - 4 - 4
Net movement in
non-controlling
interests loans - - - - (10) (10)
Transfer to
non-controlling
interests - (3) - (3) 3 -
Repayment of
non-controlling
interest
shareholding - - - - (2) (2)
Issue of shares
to
non-controlling
interests - - - - 4 4
Transfer to
retained earnings - (16) 16 - - -
Recognition of
share-based
payment - 27 - 27 - 27
Dividends
declared and
paid8 - - (9) (9) (7) (16)
Balance at
30 June 2013
(Audited) 2 714 764 3 563 7 041 1 657 8 698
Total
comprehensive
income for the
period - 143 724 867 206 1 073
Treasury shares
acquired (net) (27) - - (27) - (27)
Recognition of
share-based
payment - 29 - 29 - 29
Issue of shares
to non-controlling
interests - - - - 6 6
Disposal of
businesses - (1) - (1) (24) (25)
Transfer to
non-controlling
interests - (3) - (3) 3 -
Acquisition of
existing
non-controlling
interests - - (2 510) (2 510) (1 424) (3 934)
Dividends
declared and
paid8* - - (3) (3) (394) (397)
Balance at
31 December 2013
(Reviewed) 2 687 932 1 774 5 393 30 5 423
8 Dividends relate to distributions made by entities that hold treasury
shares.
* The dividends paid to non-controlling interests represent the special
dividend paid by Clough as part of the agreement for the acquisition of
the Clough non-controlling interests.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
Reviewed Reviewed6 Audited6
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2013 2012 2013
Cash generated by operations 1 661 545 2 045
Interest received 118 50 142
Interest paid (102) (128) (265)
Taxation paid (593) (96) (271)
Operating cash flow 1 084 371 1 651
Dividends paid to owners of
Murray & Roberts Holdings
Limited (3) - (9)
Dividends paid to
non-controlling interests (1) (74) (81)
Cash flow from operating
activities 1 080 297 1 561
Acquisition of businesses - - (84)
Dividends received from
associate companies - 26 71
Purchase of intangible assets
other than goodwill (22) (11) (21)
Purchase of property, plant
and equipment by
discontinued operations (23) (4) (42)
Purchase of property, plant
and equipment (488) (554) (1 089)
– Replacements (141) (151) (321)
– Additions (347) (403) (768)
Proceeds on disposal of
property, plant and equipment 86 25 129
Proceeds on disposal of
businesses (note 7) 1 150 80 403
Proceeds on disposal of
assets held-for-sale 17 72 143
Advance payment in respect of
property disposals - - 45
Proceeds on disposal of
investment in associate - - 1 784
Repayment of investment in
associate loan - - 4
Cash related to equity
accounted joint ventures
held-for-sale - 5 (4)
Cash related to
disposal of
businesses (30) - (74)
Cash related to assets
held-for-sale 21 (104) (23)
Proceeds from realisation of
investment 126 66 132
Other (net) 2 4 3
Cash flow from investing
activities 839 (395) 1 377
Net increase/(decrease) in
borrowings 1 138 (641) (1 189)
Treasury shares
(purchased)/disposed (net) (27) - 4
Proceeds on share issue to
non-controlling interests 6 1 5
Acquisition of Clough
non-controlling interests
(note 7) (4 395) - -
Repayment of non-controlling
interest shareholding - - (2)
Cash flow from financing
activities (3 278) (640) (1 182)
Net (decrease)/increase in
cash and cash equivalents (1 359) (738) 1 756
Net cash and cash equivalents
at beginning of period 5 386 3 349 3 349
Effect of foreign exchange
rates 236 126 281
Net cash and cash equivalents
at end of period 4 263 2 737 5 386
Net cash and cash equivalents
comprises of:
Cash and cash equivalents 4 263 4 039 6 284
Bank overdrafts - (1 302) (898)
Net cash and cash equivalents
at end of period 4 263 2 737 5 386
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
Reviewed Reviewed6 Audited6
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2013 2012 2013
Revenue9
Construction Africa and
Middle East 3 775 3 463 6 834
Engineering Africa 2 289 2 548 5 036
Construction Global
Underground Mining 3 352 4 019 7 904
Construction Australasia Oil
& Gas and Minerals 9 566 6 314 14 800
Corporate & Properties - - 1
Continuing operations 18 982 16 344 34 575
Discontinued operations 1 437 2 379 4 638
Revenue 20 419 18 723 39 213
Continuing operations
Profit before interest and
Taxation10
Construction Africa and
Middle East 132 33 (28)
Engineering Africa 47 35 137
Construction Global
Underground Mining 93 86 318
Construction Australasia Oil
& Gas and Minerals 468 334 1 502
Corporate & Properties (71) (88) (223)
Profit before interest and
taxation 669 400 1 706
Net interest income/(expense) 2 (76) (115)
Profit before taxation 671 324 1 591
Discontinued operations
Profit before interest and
Taxation10 642 124 351
Net interest income/(expense) 14 (1) (8)
Profit before taxation 656 123 343
9 Revenue is disclosed net of inter-segmental revenue. Inter-segmental
revenue for the Group is R33 million (2012: R167 million and June 2013:
R169 million).
10 The chief operating decision maker utilises profit/(loss)
before interest and taxation in the assessment of a segment’s
performance.
SEGMENTAL ASSETS
AT 31 DECEMBER 2013
Reviewed Reviewed6 Audited6
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2013 2012 2013
Construction Africa and
Middle East 5 739 5 096 6 415
Engineering Africa 1 540 1 776 1 837
Construction Products Africa 869 2 311 2 097
Construction Global
Underground Mining 2 997 3 305 3 465
Construction Australasia Oil
& Gas and Minerals 3 339 4 315 3 478
Corporate & Properties 842 1 217 234
15 326 18 020 17 526
Reconciliation of segmental
assets
Total assets 20 252 22 697 24 527
Deferred taxation assets (663) (638) (657)
Current taxation assets - - (60)
Cash and cash equivalents (4 263) (4 039) (6 284)
15 326 18 020 17 526
SEGMENTAL LIABILITIES
AT 31 DECEMBER 2013
Reviewed Reviewed6 Audited6
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2013 2012 2013
Construction Africa and
Middle East 5 016 4 524 5 171
Engineering Africa 1 361 1 381 1 686
Construction Products Africa 247 563 775
Construction Global
Underground Mining 1 819 2 076 2 136
Construction Australasia Oil
& Gas and Minerals 4 009 3 411 4 070
Corporate & Properties 1 875 1 554 397
14 327 13 509 14 235
Reconciliation of segmental
liabilites
Total liabilities 14 829 15 116 15 829
Deferred taxation liabilities (220) (166) (151)
Current taxation liabilities (282) (139) (545)
Bank overdrafts - (1 302) (898)
14 327 13 509 14 235
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 consolidated interim financial statements are prepared in
accordance with International Financial Reporting Standard, (IAS) 34
Interim Financial Reporting, the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncements
as issued by Financial Reporting Standards Council and the requirements of
the Companies Act of South Africa. The accounting policies applied in the
preparation of these interim financial statements are in terms of
International Financial Reporting Standards and are, with the exception of
the adoption of a new accounting standard, IFRS 11: Joint Arrangements,
consistent with those applied in the previous annual financial statements.
In accordance with IFRS 11, the accounting for certain affected joint
ventures has been changed from the proportionate accounting method to the
equity accounting method and certain comparatives have been restated.
These statements were compiled under the supervision of Mr AJ Bester (CA) SA,
the Group financial director.
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 Company’s registered office. Any
reference to future financial performance included in this announcement has
not been reviewed or reported on by the Group’s external auditors.
2. Profit before interest and taxation
Profit before interest and taxation includes the following significant items:
31 December 31 December 30 June
R millions 2013 2012 2013
Profit on sale of associate,
Forge Group Limited - - 681
Medupi Civils Joint Venture
contract losses - - (185)
- - 496
Items by nature
Cost of sales (17 236) (14 854) (31 558)
Distribution and marketing
expenses (4) (4) (19)
Administration expenses (1 377) (1 296) (2 801)
Other operating income 304 210 1 509
(18 313) (15 944) (32 869)
3. Profit from discontinued operations
The Group disposed of the majority of the businesses (comprising Much
Asphalt, Rocla, Ocon Brick and Technicrete) in its Construction Products
Africa platform for a consideration of R1 325 million on 31 October 2013
(effective date). Of the total consideration, R1 150 million was 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 is subject to
certain contractual conditions that need to be met. Negotiations with
potential buyers for the sale of Hall Longmore, the only remaining
business in the Construction Products Africa platform, are ongoing.
3.1 Profit from discontinued operations
31 December 31 December6 30 June6
R millions 2013 2012 2013
Revenue 1 437 2 379 4 638
Profit before interest,
depreciation and amortisation 642 158 411
Depreciation and amortisation - (34) (60)
Profit before interest and
taxation (note 3.2) 642 124 351
Net interest income/(expense) 14 (1) (8)
Taxation expense (193) (31) (85)
Income from investment in
joint ventures - 1 1
Profit from discontinued
operations 463 93 259
Attributable to:
– Owners of Murray &
Roberts Holdings Limited 463 84 251
– Non-controlling interests
relating to discontinued
operations - 9 8
463 93 259
3.2 Profit before interest and taxation
Profit before interest and
taxation includes the
following significant items:
Profit on disposal of
businesses 553 50 139
Other impairments (20) (57) (54)
533 (7) 85
3.3 Cash flows from discontinued operations include the following:
Cash flow from operating
activities (9) (18) 38
Cash flow from investing
activities 1 133 (69) 387
Cash flow from financing
activities - 73 (192)
Net increase/(decrease) in
cash and cash equivalents 1 124 (14) 233
4. Reconciliation of headline profit
31 December 31 December 30 June
R millions 2013 2012 2013
Profit attributable to owners
of Murray & Roberts Holdings
Limited 724 262 1 004
Profit on disposal of
businesses (net) (553) (50) (139)
Profit on disposal of
associate (net) - - (681)
(Profit)/loss on disposal of
property, plant and equipment
(net) (9) 1 13
Impairment of other assets 8 20 32
Fair value adjustments and
loss/(profit) on disposal of assets
held-for-sale (net) 34 47 72
Reversal of impairment of
associate - - (13)
Fair value recognised on
associate - - (10)
Non-controlling interests
effects on adjustments (4) 4 141
Taxation effects on
adjustments 156 (2) 346
Headline profit 356 282 765
Adjustments for discontinued
operations:
Profit from discontinued
operations (463) (93) (259)
Non-controlling interests - 9 8
Profit on disposal of
businesses (net) 553 50 139
Loss on disposal of property,
plant and equipment (net) - - (1)
Impairment of other assets - (20) -
Fair value adjustments and
(loss)/profit on disposal of assets
held-for-sale (net) (34) (47) (72)
Non-controlling interests
effects on adjustments 1 (4) (1)
Taxation effects on
adjustments (156) 2 (35)
Headline profit from
continuing operations 257 179 544
5. Contracts-in-progress and contract receivables
31 December 31 December 30 June
R millions 2013 2012 2013
Contracts-in-progress
(cost incurred plus recognised
profits, less recognised losses) 2 854 2 149 3 067
Uncertified claims and variations
(recognised in terms of IAS 11:
Construction Contracts) 1 782 1 849 2 062
Amounts receivable on contracts
(net of impairment provisions) 2 482 3 054 3 301
Retentions receivable
(net of impairment provisions) 316 388 449
7 434 7 440 8 879
Amounts received in excess of
work completed (3 254) (3 312) (3 406)
4 180 4 128 5 473
Disclosed as:
Amounts due from contract
customers – non-current 2 072 2 181 2 003
Amounts due from contract
customers – current 5 362 5 259 6 876
Amounts due to contract
customers – current (3 254) (3 312) (3 406)
4 180 4 128 5 473
The non-current amounts are considered by management to be recoverable.
6. Contingent liabilities
Contingent liabilities relate 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
R millions 2013 2012 2013
Operating lease commitments 1 880 2 161 1 805
Contingent liabilities 1 833 1 280 1 470
Financial institution
guarantees 10 549 10 639 10 491
With regards to Competition Commission matters, 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 2013
financial year.
An arbitration award has been made in the Gautrain water
ingress dispute between Gauteng Province and the Bombela Concession
Company. The Tribunal ruled that in certain parts of the tunnel the
non-compliance with specification could be settled through financial
compensation and in other parts additional works by the Bombela Civil
Joint Venture (of which Murray & Roberts has a 45% shareholding) would be
required to meet the specification. The Bombela Civils Joint Venture has
appointed experts to perform a technical evaluation of the potential
remedial work that may be required and their report is expected towards
September 2014. The amount of the financial compensation and remedial
work is yet to be determined and cannot be measured with sufficient
reliability, as a result no provision has been raised.
7. Business disposals/acquisitions
The Group disposed of the majority of the businesses (comprising Much
Asphalt, Rocla, Ocon Brick and Technicrete) in its Construction Products
Africa platform for a consideration of R1 325 million on 31 October 2013.
Refer to note 3 for additional information.
Murray & Roberts completed the acquisition of all the non-controlling
interests shares in Clough Limited (“Clough”) on 11 December 2013 for
a consideration of R4 395 million (including transaction costs). The
acquisition was funded through a combination of Clough on-balance sheet
cash of R2 927 million as well as an external bridge facility of
R1 468 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 2013.
10. Events after reporting date
The directors are not aware of any matter or circumstance arising after
the period ended 31 December 2013, not otherwise dealt with in the
Group’s interim results, which significantly affects the financial
position at 31 December 2013 or the results of its operations or cash
flows for the period then ended.
Directors:
M Sello* (Chairman)
HJ Laas (Managing and Chief Executive)
DD Barber*
AJ Bester
NB Langa-Royds*
JM McMahon1*
WA Nairn*
RT Vice*
Secretary: L Kok
1British *Non-executive
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
website: www.murrob.com
mobisite: http://murrob.mobi
e-mail: clientservice.com
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 Group’s strategy; the
economic outlook for the industry; use of the proceeds of the rights offer;
and the Group’s liquidity and capital resources and expenditure. These
forward-looking statements speak only as of the date of this announcement and
are not based on historical facts, but rather reflect the Group’s current
expectations concerning future results and events and generally may be
identified by the use of forward-looking words or phrases such as “believe”,
“expect”, “anticipate”, “intend”, “should”, “planned”, “may”, “potential” or
similar words and phrases. The Group undertakes no obligation to update
publicly or release any revisions to these forward looking statements to
reflect events or circumstances after the date of this announcement or to
reflect the occurrence of any unexpected events. Neither the content of the
Group’s website, nor any website accessible by hyperlinks on the Group’s
website is incorporated in, or forms part of, this announcement.
Date: 27/02/2014 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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