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66th Annual General Meeting: Business Update
MURRAY & ROBERTS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1948/029826/06
JSE Share Code: MUR
ADR Code: MURZY
ISIN Code: ZAE000073441
(“Murray & Roberts” or “Group”)
66th ANNUAL GENERAL MEETING: BUSINESS UPDATE
The Group issued its 2014 Annual Integrated Report to stakeholders on 06 October 2014.
Full details of the Group’s financial results and Annual Integrated Report have been
published on the website www.murrob.com.
For the previous financial year ended 30 June 2014, the Group reported revenue of R36
billion (June 2013: R34,2 billion) and attributable earnings of R1,3 billion (June 2013: R1
billion). Diluted earnings per share was 305 cents (June 2013: 245 cents). Diluted continuing
headline earnings per share was 205 cents (June 2013: 123 cents), representing growth of
67%, compared to the last year.
At 30 June 2014, the net cash position was R1,8 billion (June 2013: R4,3 billion). The
reduction in the net cash position is mainly as a result of the Group’s acquisition of the non-
controlling interests in Clough Limited (“Clough”) for R4,4 billion in December 2013.
The Group’s order book as at 31 October 2014 remained strong at R40 billion (June 2014:
R40,9 billion).
UPDATE ON OPERATING PLATFORMS
OIL & GAS
The platform comprises the following businesses: Clough (Perth based), e2o (Adelaide
based) and Murray & Roberts Marine (Cape Town based). Subsequent to year end, Clough
acquired two specialist engineering firms; Booth Welsh (Ayrshire based) and CH-IV (Houston
based). Murray & Roberts Marine was incorporated into the Oil & Gas platform effective 01
July 2014.
Clough remains well positioned in the liquefied natural gas (“LNG”) and coal seam gas
(“CSG”) market sectors, and is undertaking work on every LNG project currently underway in
Australia and Papua New Guinea (“PNG”). The Australian oil and gas industry is transitioning
from large greenfields to brownfields projects, presenting substantial commissioning and
asset support opportunities to Clough. The effect of this transitioning is reflected in a
declining order book for Clough as commissioning and asset support work is secured
through shorter duration contracts compared to the multi-year contracts on greenfields
projects. Ongoing new market opportunities remain as gas will continue to be a growth sector
globally, with investment shifting to new basins, Africa and North America.
The oil & gas platform is extending its engineering service offering globally and recently
completed a US$5 million strategic acquisition of CH-IV, a boutique engineering company
based in the United States of America. CH-IV is highly regarded in the LNG concept and
front end engineering design (“FEED”). Clough also completed a £9 million strategic
acquisition of Booth Welsh, an engineering services company based in Ayrshire, Scotland.
Booth Welsh specialises in electrical, instrumentation, automation and controls design as
well as commissioning services.
Clough's outlook remains strong, with work to continue on major Australian LNG projects
including Chevron's Gorgon and Wheatstone, INPEX's Ichthys and Santos’ Gladstone LNG
projects. In September 2014, Clough secured an AU$70 million FEED contract for Arrow
Energy’s proposed Bowen Gas Project in central Queensland.
The Oil & Gas platform order book as at 31 October 2014 was R15,1 billion (June 2014:
R16,8 billion).
UNDERGROUND MINING
The platform comprises the following businesses: Murray & Roberts Cementation
(Johannesburg based); Cementation Canada (North Bay based); Cementation USA (Salt
Lake City based); Cementation Sudamérica (Santiago based) and RUC Cementation Mining
(Perth based).
Considering the recent subdued state of the commodity cycle, the platform continues to
perform well and is showing growth potential in developing its order book in all main
geographic areas off a relatively low base. Growth potential exists, especially with operating
mines requiring brownfields expansion projects to ensure sustainability of production
volumes, combined with demand from some open pit mines converting to underground
mining as surface operations become less economical.
Murray & Roberts Cementation has just been awarded a multi-billion Rand contract mining
project at Booysendal platinum mine, while the negotiation on the multi-billion Rand Kalagadi
Manganese contract is at an advanced stage. The decline shaft at Venetia is underway and
the pre-sink of the vertical production shaft has commenced this week. Work on Murray &
Roberts Cementation’s three major projects in Zambia continues to progress satisfactorily.
Cementation USA holds a full order book with work on existing projects progressing very
well. Cementation Canada is participating in considerable tender activity and is in final
negotiation with Compass Minerals to upgrade the shafts at their Goderich mine in Ontario at
a cost in excess of one billion Rand. For RUC Cementation Mining, the platform’s smallest
contributor, conditions in Australia remain challenging. However, the business continues to
bid and secure various opportunities.
The Underground Mining platform order book as at 31 October 2014 was R12,5 billion (June
2014: R9,9 billion).
ENERGY & INDUSTRIAL
This platform comprises the following businesses; Murray & Roberts Power & Energy,
Murray & Roberts Resources & Industrial, Murray & Roberts Water (incorporating
Aquamarine Water Treatment), Murray & Roberts Electrical & Control Systems and Genrec
Engineering.
The platform is actively working on the Medupi and Kusile power station projects and
establishing its position in the broader petrochemical, industrial engineering and renewable
energy sectors. Returning focus to the petrochemical market presents some immediate
opportunities. The platform is also targeting the industrial water sector.
The acquisition of Aquamarine Water Treatment for R28 million was recently completed.
Aquamarine is a company that designs, manufactures, installs and maintains water treatment
solutions. It currently operates in a niche market for mainly small to-medium size installations
and has developed a network of resellers throughout the African continent that serves as an
extended business development network.
The key prospects in the short term lie in the renewable and baseload Independent Power
Producer energy programme. Murray & Roberts Power & Energy is well positioned to access
available projects. The power programme on Medupi and Kusile still offers opportunities for
most of the platform’s businesses and accessing these opportunities remains a priority.
Further opportunities in the power sector, either for maintenance, outage management and
execution or operations remain for all the platform businesses. Although project wins in the
industrial water market have been few, a good foothold has been established in certain water
treatment opportunities by securing the front end engineering packages.
The Energy & Industrial platform order book as at 31 October 2014 was R5,6 billion (June
2014: R6,2 billion).
INFRASTRUCTURE & BUILDING
This platform comprises the following businesses; Murray & Roberts Buildings, Murray &
Roberts Middle East, Murray & Roberts Western Cape, Murray & Roberts Botswana, Murray
& Roberts Namibia, Murray & Roberts Infrastructure, Concor Opencast Mining and PPP
Investments and Services (Murray & Roberts Concessions).
After a number of loss-making years, the platform returned to profitability at the end of the
2014 financial year, albeit at low margins as the South African construction sector continues
to be competitive and the market in general remaining subdued, with pockets of activity in
buildings and infrastructure. A focus on operational performance to preserve margins will
remain of critical importance in this difficult environment.
Murray & Roberts Buildings holds a good order book, while Murray & Roberts Middle East
secured two new projects to the combined value of about a billion Rand towards the end of
the previous financial year. The platform’s growth into the rest of Africa (beyond SADC) is
being pursued with a number of promising prospects.
The platform is well positioned as the preferred bidder to implement civil infrastructure work
on three wind farms during the current financial year.
The Infrastructure & Building platform order book as at 31 October 2014 was R6,8 billion
(June 2014: R8 billion)
UPDATE ON THE GROUP’S MAJOR CLAIM PROCESSES
There have been no material developments on any of the Group’s major claims, for or
against, since the publication of the Group’s annual financial results on 27 August 2014. The
final payment concerning the settlement of the Gorgon Pioneer Materials Offloading major
claim was received during September 2014.
Total uncertified revenue at end-June 2014, largely represented by the Group’s outstanding
major claims on Gautrain Delay & Disruption and Dubai International Airport, stands at R1,6
billion (June 2013: R2,1 billion).
The board of directors of Murray & Roberts (“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.
PROSPECTS AND OUTLOOK
In respect of the baseline for earnings growth going forward, it is important to note that
whereas the associated income lost due to the divestment of Forge Group Limited in March
2013 was replaced by the acquisition of the minority shareholding in Clough, the Group still
needs to address the earnings gap created by the disposal of the Construction Products
operating platform in the previous financial year.
The Board is pleased with the Group’s improved financial position and is targeting continued
earnings growth 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.
Bedfordview
06 November 2014
Sponsor
Deutsche Securities (SA) Proprietary Limited
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