Wrap Text
Interim results for the six months ended 31 December 2014
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”)
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2014
SALIENT FEATURES
- Lost time injury frequency rate (“LTIFR”) improved to 0.77 (December 2013: 0.82). Regrettably two fatal incidents
(December 2013: 2) were reported.
- Diluted continuing HEPS increased by 39% to 79 cents (December 2013: 57 cents).
- Revenue from continuing operations of R15,9 billion (December 2013: R18,8 billion), reflecting a reduction in
revenue from the Oil & Gas platform.
- NAV of R14 per share (December 2013: R12 per share).
- Order book of R37,8 billion (December 2013: 44,9 billion). The Oil & Gas platform order book is transitioning to
smaller and shorter term contracts and fewer new projects have been secured in the Infrastructure & Building and
Energy & Industrial platforms.
- Strong growth in the Underground Mining platform order book.
- Substantial near orders and order book pipeline.
- A gross annual dividend, relating to the 30 June 2014 financial year, of 50 cents per share was declared on
27 August 2014 and paid during the period. A gross annual dividend for the 2015 financial year will be considered
in August 2015.
FINANCIAL HIGHLIGHTS
Revenue1 - R15,9 billion HEPS (Diluted continuing) - 79 cents
R18,8 billion (FY14 H1) 57 cents (FY14 H1)
Attributable Earnings2 - R359 million EPS2 (Diluted) - 87 cents
R724 million (FY14 H1) 175 cents (FY14 H1)
NAV - R14 per share Order Book3 - R37,8 billion
R12 per share (FY14 H1) R44,9 billion (FY14 H1)
Near Orders - R15,0 billion Pipeline - R102,9 billion
ENGINEERED EXCELLENCE – STRATEGY IMPLEMENTATION
Murray & Roberts is an international engineering-led contractor. By 2020 the Group aims to be a leading diversified
project engineering, procurement and construction group in selected natural resources sectors and supporting
infrastructure.
The Group restored financial stability, returned to profitability and resumed the payment of dividends, during the
last three years of its Recovery & Growth Strategy.
The board of directors of Murray & Roberts (“Board”) and executives have defined the growth market sectors, project
value chain segments and geographies that in the long-term will present the greatest opportunity for the Group to
unlock value by applying its core competencies of engineering and construction. These growth markets are specifically
in the oil and gas, mining, energy and industrial sectors, where the Group aims to increase its engineering,
commissioning, operations and asset support activities. Africa, South-east Asia and North America offer opportunities
for growth.
FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2014
The Group recorded revenue of R15,9 billion (December 2013: R18,8 billion) and attributable profit of R359 million
(December 2013: R724 million). The prior period profit includes a profit on sale of discontinued operations of
R388 million and R98 million trading profit from discontinued operations. Diluted continuing HEPS increased to
79 cents (December 2013: 57 cents).
The net cash position was R0,9 billion (December 2013: R2 billion). The decrease is due to the funding of acquisitions
(R162 million) and utilisation of advances from customers of approximately R1,3 billion.
The Group’s order book reduced to R37,8 billion (December 2013: R44,9 billion) mainly due to the Oil & Gas platform
order book transitioning to smaller and shorter term contracts and fewer new projects secured in the Infrastructure &
Building and Energy & Industrial platforms.
Operational excellence, to optimise project profitability is a Group-wide focus. An update per operating platform is
presented in this announcement.
GROUP OPERATING PERFORMANCE*
OIL & GAS4,5
Corporate
Construction Commissioning overheads
R millions Engineering & Fabrication Global Marine4 & Brownfields and Other Total
December 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
Revenue 2 595 2 524 642 3 937 1 556 1 085 1 410 898 630 1 122 6 833 9 566
Operating
profit/(loss) 314 384 28 187 80 14 174 99 (150) (216) 446 468
Margin (%) 12% 15% 4% 5% 5% 1% 12% 11% (24%) (19%) 7% 5%
Segment
Assets 3 932 3 339
Segment
Liabilities 3 105 4 009
LTIFR
(Fatalities) 0,41(0) 0.24(1)
Order Book 4 876 8 264 39 4 163 1 483 3 028 5 844 4 970 – – 12 242 20 425
4 With effect 1 July 2014, Marine is reported under the Oil & Gas platform under Global Marine.
In prior periods Marine’s revenue, EBIT, segmental assets and liabilities were included in the Infrastructure &
Building platform.
5 The segmental classification was changed compared to the prior year, and as a result the prior year
comparatives have been restated.
Financial Performance:
The global oil and gas sector has entered a period of uncertainty, following a declining oil price at the end of the
reporting period. However, the completion of the greenfield capital projects is creating opportunities for Clough to
secure new contracts for commissioning, brownfields and maintenance services on the projects it contributed to
constructing. Consequently, the order book reflects this transition and comprises smaller volume and shorter term
contracts.
Clough has adapted well to the changing business environment and has recorded an acceptable FY15H1 financial result.
Revenue and operating profit reduced to R6,8 billion (December 2013: R9,6 billion) and R446 million (December 2013:
R468 million) respectively. The order book decreased to R12,2 billion (December 2013: R20,4 billion). However, the
operating margin increased to 7% (December 2013: 5%). This margin improvement reflects a shift towards higher margin
engineering and commissioning projects, a focus on operational excellence and the benefit from on-going cost
efficiency programmes. The platform has near orders of R1,6 billion and a pipeline (top 10 target projects) of
R33,6 billion.
Operational Performance:
e2o, a specialist commissioning company acquired by Clough during 2013, is currently the largest commissioning company
in Australia. Revenue and profit from this business continued to grow strongly during the period under review. e2o is
executing work across four commissioning projects.
The Ichthys material offloading facility project was completed in July and work continued on several other marine
projects. Clough continued its work on every LNG project currently underway in Australia. Both CH-IV (United States of
America) and Booth Welsh (Scotland), which were acquired during the period under review, performed in line with
expectations and began to pursue joint project opportunities with Clough and other Murray & Roberts entities.
Prospects:
Market conditions are challenging as the oil price decline is forcing oil and gas companies to cut capital expenditure
programmes. This has resulted in delayed investment decisions, implementation of project cost reduction measures and
increased competition between service providers in what is currently a soft market.
Gas will continue to be a growth sector globally and the market is expected to improve in the medium term. Clough
remains well positioned in the LNG and coal seam gas market sectors. In the coming year, Clough will continue to
implement its global expansion strategy to diversify earnings regionally and create a global network of specialised
engineering and operating centres, underpinned by Murray & Roberts’ global presence.
UNDERGROUND MINING
R millions Africa Australasia The Americas Total
December 2014 2013 2014 2013 2014 2013 2014 2013
Revenue 1 769 1 537 373 363 1 359 1 452 3 501 3 352
Operating (loss)/profit (2) (7) 10 33 76 67 84 93
Margin (%) (0%) (0%) 3% 9% 6% 5% 2% 3%
Segment assets 1 102 959 637 648 1 395 1 390 3 134 2 997
Segment liabilities 937 1 123 133 165 464 531 1 534 1 819
LTIFR (Fatalities) 2.01(1) 2.73(1) 0,0(0) 2.12(0) 0,87(0) 0,72(0) 1,73(1) 2.40(1)
Order Book 8 314 4 372 1 037 1 375 4 496 3 769 13 847 9 516
Financial Performance:
Although greenfields capital expenditure in the mining sector remains at low levels, the anticipated growth in the
underground mining platform is reflected in a stronger order book.
Revenues remained relatively flat at R3,5 billion (December 2013: R3,4 billion) and operating profit decreased to
R84 million (December 2013: R93 million). The order book strengthened to R13,8 billion (December 2013: R9,5 billion).
The platform has near orders of R9,4 billion and a pipeline of R30,9 billion.
Operational Performance:
The platform is showing strong growth potential and has increased its order book in most main geographic areas off a
relatively low base, considering the recent subdued state of the global commodity cycle. In Murray & Roberts
Cementation, the Zambian operation continues to perform well. Work has commenced at the multi-billion Rand contract
mining project at Northam’s Booysendal platinum mine and work at De Beers’ Venetia diamond mine is progressing on the
two vertical shafts and one decline shaft. Negotiations on the multi-billion Rand Kalagadi Manganese contract are
continuing. Cementation USA continues to hold a full order book with work on existing projects progressing well.
Cementation Canada is participating in increased tender activity and has signed a contract with Compass Minerals to
upgrade the shafts at the Goderich mine at a value in excess of one billion Rand. In Australasia, tender activities
have increased and RUC Cementation Mining has secured a number of smaller new mine development projects.
Prospects:
In the medium term, an upturn in the global underground mining sector is expected. Most key commodities are
represented in the current portfolio of projects, and significant opportunities for organic growth exist when mining
activity picks up. Markets in Africa, Australia and the Americas are showing signs of growth. Several substantial
prospects are being pursued in Botswana and Ghana.
ENERGY & INDUSTRIAL
R millions Power Programme6 Engineering7 Total
December 2014 2013 2014 2013 2014 2013
Revenue 1 595 1 971 556 318 2 151 2 289
Operating profit/(loss) 87 106 (108) (59) (21) 47
Margin (%) 5% 5% (19%) (19%) (1%) 2%
Segment assets 985 1 185 838 355 1 823 1 540
Segment liabilities 788 1 078 370 283 1 158 1 361
LTIFR (Fatalities) 0.35(0) 0.83(0) 0.0(0) 0.43(0) 0.24(0) 0.73(0)
Order Book 4 486 5 623 877 573 5 363 6 196
6 Power programme contracts and Genrec power programme contracts.
7 Includes Electrical & Control Systems, Resources & Industrial, Water and Power & Energy non-power
programme projects and Genrec non-power programme contracts.
Financial Performance:
Revenues remained stable at R2,2 billion (December 2013: R2,3 billion), whilst an operating loss of R21 million
(December 2013: R47 million operating profit) was recorded. The decrease in earnings, outside the power programme,
is primarily due to development costs incurred on long-lead contract opportunities, as well as an increase in the cost
to complete a project in Namibia. The order book reduced to R5,4 billion (December 2013: R6,2 billion). The platform
has near orders of R0,4 billion and a pipeline of R9,3 billion.
Operational Performance:
The Medupi and Kusile power station projects remain the largest contributors to revenue and profit, with few new
opportunities coming to market in the period under review. The platform is focused on establishing a position in the
broader local petrochemical, industrial engineering and renewable energy sectors and is also targeting the industrial
water sector. Aquamarine Water Treatment was acquired in the period under review and Murray & Roberts Water is
undertaking engineering work on a new water opportunity in Ghana for a blue chip mining company.
Prospects:
The power programme continues to offer longer term opportunities for most of the businesses in this platform and
accessing these opportunities remains a priority. Operations and maintenance opportunities exist in the petrochemical,
minerals handling and processing sectors and maintenance opportunities in the power sector. The platform is also well
positioned for opportunities in the renewable power sector. Delays in securing sufficient grid connections has,
however, deferred a significant solar opportunity by about nine months.
INFRASTRUCTURE & BUILDING
R millions Construction Africa Marine4 Middle East Total
December 2014 20138 2014 2013 2014 2013 2014 20138
Revenue 3 064 3 063 – 98 399 434 3 463 3 595
Operating profit/(loss) 55 118 – (5) 11 (12) 66 101
Margin (%) 2% 4% – (5%) 3% (3%) 2% 3%
Segment assets 2 690 3 282 – 611 2 263 1 846 4 953 5 739
Segment liabilities 2 215 2 521 – 309 2 076 2 186 4 291 5 016
LTIFR (Fatalities) 1.06(1) 0.49(0) 0(0) 0(0) 0(0) 0(0) 0.66(1) 0.29(0)
Order Book 4 333 6 550 – 220 2 069 1 855 6 402 8 625
4 With effect 1 July 2014, Marine is reported under the Oil & Gas platform under Global Marine.
In prior periods Marine’s revenue, EBIT, segmental assets and liabilites were included in the
Infrastructure & Building platform.
8 Restated for discontinued operations.
Financial Performance:
The platform remained profitable in a challenging local infrastructure and building market.
Revenues decreased marginally to R3,5 billion (December 2013: R3,6 billion), while operating profit decreased to
R66 million (December 2013: R101 million) due to a reduced fair value adjustment on the Bombela Concession. Core
construction operations delivered a marginal improvement in profitability. The order book decreased to R6,4 billion
(December 2013: R8,6 billion). The platform has near orders of R3,6 billion (of which R2 billion was awarded
subsequent to the period under review) and a pipeline of R29,1 billion, including selected opportunities in the Middle
East.
Operational Performance:
Murray & Roberts Infrastructure has delivered a stable performance and is active in the South African roads and civils
market. It has been appointed the civils subcontractor on three wind farms, which have recently achieved financial
close.
Concor Opencast Mining has delivered an acceptable operational performance, but is faced with a constrained market
environment with a scarcity of new prospects.
The Buildings business operates in a low margin environment. The Matlosana Mall and Dainfern Shopping Centre projects
have been successfully completed and work is continuing on a further six shopping centres in South Africa and Namibia.
Prospects:
The South African construction market remains depressed and spending on new infrastructure halved in 2014 compared to
2013, largely due to reduced Government spending.
Included in the near orders is a residential development east of Pretoria, with a potential project value in excess of
R1 billion. Several building opportunities in Africa are being developed with a South African blue chip financial
services firm and renewable energy opportunities are being pursued in Ghana.
DISPOSAL OF NON-CORE ASSETS
Clough
Steel Marine
Reinforcing Services Properties Construction
R millions Tolcon9 Products & Properties SA Products10 Total
December 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
Revenue 76 180 2 63 2 8 – 1 (6) 1 365 74 1 617
Operating
profit/(loss) 22 31 7 2 (2) (29) – 1 (6) 668 21 673
Order book – – – – – – – – – 155 – 155
9 Tolcon was classified as discontinued in the second half of the 2014 financial year, and as a result
the prior year comparatives have been restated.
10 Includes Hall Longmore and UCW.
HEALTH AND SAFETY
The Board regrets the death of two employees (December 2013: 2) who sustained fatal injuries while on duty.
For the period under review, the lost time injury frequency rate improved to 0.77 (December 2013: 0.82). This
demonstrates the Group’s commitment to a safe working environment for all its employees.
UPDATE ON THE GROUP’S MAJOR CLAIMS PROCESSES
In favour of the Group:
Gorgon Pioneer Materials Offloading Facility (“GPMOF”) – The claim process has been closed out and the final payment
was received in October 2014.
Gautrain Sandton Cavern Claim – This arbitration claim, on its merits, was ruled in favour of the Bombela Civil Joint
Venture (Murray & Roberts shareholding 45%) in October 2013. The quantum hearing is scheduled for May 2015.
Against the Group:
Gautrain Water Ingress Dispute – In November 2013, in the dispute between Gauteng Province and the Bombela Concession
Company, the arbitration panel ruled in favour of Gauteng Province. The Company recorded a R300 million provision in
FY14 for its share of potential construction costs to be incurred by the Bombela Civil Joint Venture. The extent of
any other potential financial impact, if any, related to the matter is yet to be determined.
In arbitration:
Gautrain Delay & Disruption Claim – The legal process in this multi-billion rand claim is progressing well and the
arbitration will commence in March 2015. The claim is not expected to be settled sooner than the 2016 calendar year.
Any award will attract interest dating from 2009 to the date of award.
Dubai International Airport – The arbitration process for the Dubai International Airport claim is ongoing and the
claim is expected to be resolved during the 2015 calendar year.
DIVIDEND
A gross annual dividend, relating to the 30 June 2014 financial year, of 50 cents per share was declared on 27 August
2014 and paid during the period. A gross annual dividend for the 2015 financial year will be considered in August
2015.
CHANGES TO THE BOARD
Mr. Ralph Havenstein was appointed as an independent non-executive director and member of the Health, Safety &
Environment Committee and Social & Ethics Committee, with effect from 1 August 2014. Mr. Bill Nairn retired from the
Board with effect from 1 January 2015. The Board is thankful for Mr. Nairn’s contribution to the Company over the last
five years and wishes him well in his future endeavours. Further appointments to the Board are planned.
PROSPECTS STATEMENT
Market conditions in the sectors within which Murray & Roberts operates, in the short to medium term, present growth
challenges. The recent unexpected and significant drop in oil and commodity prices, created market uncertainty, which
in the short to medium term will impact investment decisions of oil & gas and resources companies.
Implementation of the Group’s strategic plan progresses. It is uncertain if the anticipated short term reduction in
the Oil & Gas platform’s earnings (resulting from the low oil price) will be offset by earnings growth in other
platforms.
Opportunities to increase the Group’s exposure to the more sustainable engineering and asset support/maintenance
segments of the project value chain will continue to be pursued.
The information on which this prospects statement is based has not been reviewed and reported on by the Group’s
external auditors.
Mahlape Sello Henry Laas Cobus Bester
Chairman of the Board Group Chief Executive Group Financial Director
Bedfordview
25 February 2015
* 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 2013.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
for the six months ended 31 December 2014
Reviewed Reviewed8 Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2014 2013 2014
Continuing operations
Revenue 15 948 18 802 36 039
Profit before interest, depreciation and amortisation 768 980 2 241
Depreciation (291) (330) (685)
Amortisation of intangible assets (20) (12) (23)
Profit before interest and taxation (note 2) 457 638 1 533
Net interest expense (44) – (58)
Profit before taxation 413 638 1 475
Taxation (78) (261) (499)
Profit after taxation 335 377 976
Income from equity accounted investments 2 – 1
Profit from continuing operations 337 377 977
Profit from discontinued operations (note 3) 32 486 423
Profit for the period 369 863 1 400
Attributable to:
– Owners of Murray & Roberts Holdings Limited 359 724 1 261
– Non-controlling interests 10 139 139
369 863 1 400
Profit per share from continuing and
discontinued operations (cents)
– Diluted 87 175 305
– Basic 89 178 310
Profit per share from continuing operations (cents)
– Diluted 80 58 203
– Basic 82 59 206
Net asset value per share (Rands) 14 12 13
Dividends per share (cents) – – 50
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 (30) (1 959) (331)
Less: Weighted average number of shares held by
the Letsema BBBEE trusts (31 735) (31 817) (31 770)
Less: Weighted average number of shares held by
the subsidiary companies (9 449) (4 758) (6 167)
Weighted average number of shares used for
basic per share calculation 403 522 406 202 406 468
Add: Dilutive adjustment for share options 10 191 7 543 7 592
Weighted average number of shares used for
diluted per share calculation 413 713 413 745 414 060
Headline profit per share from continuing and
discontinued operations (cents) (note 4)
– Diluted 85 86 217
– Basic 88 88 221
Headline profit per share from continuing
operations (cents) (note 4)
– Diluted 79 57 205
– Basic 81 58 208
8 Restated for discontinued operations.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 December 2014
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2014 2013 2014
Profit for the period 369 863 1 400
Items that may not be reclassified subsequently to
profit or loss:
Effects of remeasurements on retirement
benefit obligations – – (4)
Other movements – – 3
Items that may be reclassified subsequently to
profit or loss:
Effects of cash flow hedges 3 (3) (1)
Taxation related to effects of cash flow hedges (1) 1 –
Foreign currency translation movements 24 212 165
Total comprehensive income for the period 395 1 073 1 563
Attributable to:
– Owners of Murray & Roberts Holdings Limited 385 867 1 357
– Non-controlling interests 10 206 206
395 1 073 1 563
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2014
Reviewed Reviewed11 Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2014 2013 2014
ASSETS
Non-current assets 7 431 7 495 7 323
Property, plant and equipment 3 130 3 177 3 248
Goodwill (note 9) 632 490 486
Deferred taxation assets 420 663 427
Investments in associate companies 26 25 24
Amounts due from contract customers (note 5) 2 194 2 072 2 088
Other non-current assets 1 029 1 068 1 050
Current assets 10 245 13 683 12 082
Inventories 274 218 326
Trade and other receivables 2 001 2 216 1 766
Amounts due from contract customers (note 5) 5 191 5 362 5 684
Current taxation assets – – 5
Cash and cash equivalents 2 779 5 887 4 301
Assets classified as held-for-sale 148 698 406
TOTAL ASSETS 17 824 21 876 19 811
EQUITY AND LIABILITIES
Total equity 6 036 5 423 5 932
Attributable to owners of Murray & Roberts Holdings Limited 6 014 5 393 5 905
Non-controlling interests 22 30 27
Non-current liabilities 1 645 1 829 1 908
Long term liabilities12 352 354 455
Long term provisions 296 280 324
Deferred taxation liabilities 47 220 142
Other non-current liabilities 950 975 987
Current liabilities 10 134 14 559 11 872
Amounts due to contract customers (note 5) 1 929 3 254 2 326
Accounts and other payables 6 640 7 459 7 392
Current taxation liabilities 22 282 90
Bank overdrafts12 17 1 624 24
Short term loans12 1 526 1 940 2 040
Liabilities directly associated with assets
classified as held-for-sale 9 65 99
TOTAL EQUITY AND LIABILITIES 17 824 21 876 19 811
11 Restated due to amended offsetting requirements of IAS 32: Financial Instruments: Presentation. Financial assets
and liabilities may only be presented on a net basis when the Group intends to settle on a net basis. In the
prior year such intention could not be demonstrated and as a result cash and cash equivalents and bank overdrafts
have been restated.
12 Interest bearing borrowings.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2014
Attribu-
table to
owners
of
Murray & Non-
Roberts control-
Stated Other Retained Holdings ling
R millions capital reserves earnings Limited interests Total
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)
Dividend paid as part of non-controlling
interests acquisition – – – – (394) (394)
Dividends declared and paid13 – – (3) (3) – (3)
Balance at 31 December 2013 (Reviewed) 2 687 932 1 774 5 393 30 5 423
Total comprehensive income for the period – (47) 537 490 – 490
Treasury shares disposed (net) 6 – – 6 – 6
Transfer to retained earnings – (56) 56 – – –
Reallocation of reserves and share-based payment14 – 508 (555) (47) – (47)
Recognition of share-based payment – 72 – 72 – 72
Dividends declared and paid13 – – (9) (9) (3) (12)
Balance at 30 June 2014 (Audited) 2 693 1 409 1 803 5 905 27 5 932
Total comprehensive income for the period – 26 359 385 10 395
Treasury shares acquired (net) (89) – – (89) – (89)
Recognition of share-based payment – 21 – 21 – 21
Dividends declared and paid13 – – (1) (1) (15) (16)
Dividends declared to shareholders – – (207) (207) – (207)
Balance at 31 December 2014 (Reviewed) 2 604 1 456 1 954 6 014 22 6 036
13 Dividends relate to distributions made by entities that hold treasury shares.
14 Relates to the acquisition of the non-controlling interests in Clough, effective on 11 December 2013.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 December 2014
Reviewed Reviewed11 Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2014 2013 2014
Cash (utilised)/generated by operations (199) 1 661 1 776
Interest received 40 118 169
Interest paid (83) (102) (220)
Taxation paid (214) (593) (794)
Operating cash flow (456) 1 084 931
Dividends paid to owners of Murray & Roberts
Holdings Limited (208) (3) (12)
Dividends paid to non-controlling interests (15) (1) (3)
Cash flow from operating activities (679) 1 080 916
Acquisition of businesses (note 8) (162) – –
Dividends received from associate companies – – 11
Purchase of intangible assets other than goodwill (96) (22) (82)
Purchase of property, plant and equipment by
discontinued operations – (23) (24)
Purchase of property, plant and equipment (209) (488) (961)
– Replacements (51) (141) (290)
– Additions (158) (347) (671)
Proceeds on disposal of property, plant and equipment 25 86 152
Proceeds on disposal of businesses (note 8) 116 1 150 1 345
Proceeds on disposal of assets held-for-sale 46 17 58
Cash related to disposal of businesses (31) (30) (16)
Cash related to acquisition of businesses 18 – –
Cash related to assets held-for-sale (1) 21 28
Proceeds from realisation of investment 63 126 146
Other (net) – 2 (3)
Cash flow from investing activities (231) 839 654
Net (decrease)/increase in borrowings (631) 1 138 1 284
Treasury shares purchased (net) (89) (27) (21)
Proceeds on share issue to non-controlling interests – 6 6
Acquisition of Clough non-controlling interests – (4 395) (4 395)
Cash flow from financing activities (720) (3 278) (3 126)
Net decrease in cash and cash equivalents (1 630) (1 359) (1 556)
Net cash and cash equivalents at beginning of period 4 277 5 386 5 386
Effect of foreign exchange rates 115 236 447
Net cash and cash equivalents at end of period 2 762 4 263 4 277
Net cash and cash equivalents comprises of:
Cash and cash equivalents 2 779 5 887 4 301
Bank overdrafts (17) (1 624) (24)
Net cash and cash equivalents at end of period 2 762 4 263 4 277
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
for the six months ended 31 December 2014
Reviewed Reviewed8 Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2014 2013 2014
Revenue15
Infrastructure & Building4,8 3 463 3 595 7 176
Energy & Industrial 2 151 2 289 4 755
Underground Mining 3 501 3 352 6 628
Oil & Gas4 6 833 9 566 17 480
Continuing operations 15 948 18 802 36 039
Discontinued operations 74 1 617 2 025
Revenue 16 022 20 419 38 064
Continuing operations
Profit before interest and taxation16
Infrastructure & Building4,8 66 101 196
Energy & Industrial (21) 47 144
Underground Mining 84 93 258
Oil & Gas4 446 468 1 026
Corporate & Properties (118) (71) (91)
Profit before interest and taxation 457 638 1 533
Net interest expense (44) – (58)
Profit before taxation 413 638 1 475
Discontinued operations
Profit before interest and taxation16 21 673 580
Net interest income 1 16 7
Profit before taxation 22 689 587
4 With effect 1 July 2014, Marine is reported under the Oil & Gas platform under Global Marine. In prior periods
Marine’s revenue, EBIT, segmental assets and liabilities were included in the Infrastructure & Building platform.
8 Restated for discontinued operations.
15 Revenue is disclosed net of inter-segmental revenue. Inter-segmental revenue for the Group is R60 million
(2013: R33 million and June 2014: R69 million).
16 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 2014
Reviewed Reviewed11 Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2014 2013 2014
Infrastructure & Building4 4 953 5 739 5 605
Energy & Industrial 1 823 1 540 1 701
Construction Products Africa 48 869 249
Underground Mining 3 134 2 997 3 111
Oil & Gas4 3 932 3 339 3 710
Corporate & Properties 735 842 702
14 625 15 326 15 078
Reconciliation of segmental assets
Total assets 17 824 21 876 19 811
Deferred taxation assets (420) (663) (427)
Current taxation assets – – (5)
Cash and cash equivalents (2 779) (5 887) (4 301)
14 625 15 326 15 078
SEGMENTAL LIABILITIES
at 31 December 2014
Reviewed Reviewed11 Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2014 2013 2014
Infrastructure & Building4 4 291 5 016 4 728
Energy & Industrial 1 158 1 361 1 438
Construction Products Africa 24 247 82
Underground Mining 1 534 1 819 1 751
Oil & Gas4 3 105 4 009 3 649
Corporate & Properties 1 590 1 875 1 975
11 702 14 327 13 623
Reconciliation of segmental liabilities
Total liabilities 11 788 16 453 13 879
Deferred taxation liabilities (47) (220) (142)
Current taxation liabilities (22) (282) (90)
Bank overdrafts (17) (1 624) (24)
11 702 14 327 13 623
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, No.71 of 2008. The accounting policies applied in the preparation of these interim
financial statements are in terms of International Financial Reporting Standards and are consistent, with the
exception of the adoption of amendments to IFRS 2: Share-based Payment, IFRS 3: Business Combinations, IFRS 8:
Operating Segments, IFRS 13: Fair Value Measurement, IAS 16: Property, Plant and Equipment, IAS 19: Employee Benefits,
IAS 24: Related Party Disclosures, IAS 32: Financial Instruments: Presentation, IAS 36: Impairment of Assets, IAS 38:
Intangible Assets and IAS 40: Investment Property, with those applied in the previous consolidated annual financial
statements. 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 report 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.
The information presented in the notes below represent audited results for 30 June 2014 and reviewed results for
31 December 2014 and 31 December 2013.
2. Profit before interest and taxation
31 December 31 December8 30 June
R millions 2014 2013 2014
Items by nature
Cost of sales (14 430) (17 108) (32 383)
Distribution and marketing expenses (2) (3) (16)
Administration expenses (1 316) (1 350) (2 678)
Other operating income 257 297 571
(15 491) (18 164) (34 506)
8 Restated for discontinued operations.
3. Profit from discontinued operations
The Group disposed of the majority of it’s Tolcon business, effective on 1 September 2014, for a gross consideration
of R186 million (cash receivable of R136 million net of working capital, other adjustments and transaction costs). Of
the total consideration, R116 million was received on the effective date, R5 million was received in November 2014 and
the remaining R15 million is receivable 24 months after the closing date. Earlier payment of the deferred
consideration is dependant on certain contractual conditions.
The sale excludes the investments in the Bombela Concession and Bombela Operating Companies and also Entilini
Concessions and its operating companies – the Group’s Concessions businesses are not part of Tolcon.
The Group is close to reaching an agreement for the disposal of the remaining Tolcon businesses (comprising of Cape
Point Partnership and Entilini operations).
3.1 Profit from discontinued operations
31 December 31 December8 30 June
R millions 2014 2013 2014
Revenue 74 1 617 2 025
Profit before interest, depreciation and amortisation 21 679 588
Depreciation and amortisation – (6) (8)
Profit before interest and taxation (note 3.2) 21 673 580
Net interest income 1 16 7
Profit before taxation 22 689 587
Taxation credit/(expense) 9 (203) (165)
Profit after taxation 31 486 422
Income from equity accounted investments 1 – 1
Profit from discontinued operations 32 486 423
Attributable to:
– Owners of Murray & Roberts Holdings Limited 28 485 422
– Non-controlling interests relating to discontinued
operations 4 1 1
32 486 423
3.2 Profit before interest and taxation
31 December 31 December 30 June
R millions 2014 2013 2014
Profit before interest and taxation includes
the following significant items:
Profit on disposal of businesses 11 553 539
Other impairments – (20) (34)
11 533 505
3.3 Cash flows from discontinued operations include the following:
31 December 31 December8 30 June
R millions 2014 2013 2014
Cash flow from operating activities 98 17 (201)
Cash flow from investing activities 129 1 130 1 348
Cash flow from financing activities 30 – 21
Net increase in cash and cash equivalents 257 1 147 1 168
4. Reconciliation of headline earnings
31 December 31 December8 30 June
R millions 2014 2013 2014
Profit attributable to owners of Murray & Roberts
Holdings Limited 359 724 1 261
Profit on disposal of businesses (net) (11) (553) (539)
Profit on disposal of property, plant and equipment (net) (6) (9) (10)
Loss on sale of intangible assets – – 3
Impairment of assets (net) – 8 20
Fair value adjustments and (profit)/loss on
disposal of assets held-for-sale (net) (1) 34 73
Realisation of foreign currency translation reserve – – (41)
Other – – 1
Non-controlling interests effects on adjustments 7 (4) (3)
Taxation effects on adjustments 5 156 135
Headline profit 353 356 900
Adjustments for discontinued operations:
Profit from discontinued operations (32) (486) (423)
Non-controlling interests 4 – 1
Profit on disposal of businesses (net) 11 553 539
Fair value adjustments and profit/(loss) on
disposal of assets held-for-sale (net) 1 (34) (73)
Realisation of foreign currency translation reserve – – 41
Non-controlling interests effects on adjustments (7) 1 1
Taxation effects on adjustments (3) (156) (139)
Headline profit from continuing operations 327 234 847
5. Contracts-in-progress and contract receivables
31 December 31 December 30 June
R millions 2014 2013 2014
Contracts-in-progress (cost incurred plus
recognised profits, less recognised losses) 2 165 2 854 2 691
Uncertified claims and variations (recognised in
terms of IAS 11: Construction Contracts) 2 040 1 782 1 550
Amounts receivable on contracts (net of
impairment provisions) 2 852 2 482 3 286
Retentions receivable (net of impairment provisions) 328 316 245
7 385 7 434 7 772
Amounts received in excess of work completed (1 929) (3 254) (2 326)
5 456 4 180 5 446
Disclosed as:
Amounts due from contract customers – non-current17 2 194 2 072 2 088
Amounts due from contract customers – current 5 191 5 362 5 684
Amounts due to contract customers – current (1 929) (3 254) (2 326)
5 456 4 180 5 446
17 The non-current amounts are considered by management to be recoverable.
6. Financial instruments
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, short term
investments, derivatives, accounts receivable and payable and interest bearing borrowings.
31 December 31 December 30 June
R millions 2014 2013 2014
Categories of financial instruments
Financial assets
Financial assets designated as fair value through
profit or loss (level 3) 696 616 669
Loans and receivables 7 752 10 898 9 607
Available-for-sale financial assets carried at
fair value (level 1) 1 1 1
Derivative financial instruments (level 2)18 – 1 –
Financial liabilities
Loans and payables 9 204 12 087 10 413
Derivative financial instruments (level 2)18 – 3 4
6.1 Financial assets designated as fair value through profit or loss
31 December 31 December 30 June
R millions 2014 2013 2014
Investment in infrastructure service
concession (level 3)19
At the beginning of the year 669 581 581
Realisation of investment (63) (115) (146)
Fair value adjustment recognised in the
statement of financial performance 90 150 234
696 616 669
18 The derivative financial instruments’ value has been determined by using forward looking market rates, obtained
from the relevant financial institutions, until the realisation date of the relevant instruments.
19 The fair value of the Bombela Concession Company Proprietary Limited is calculated using discounted cash flow
models and a market discount rate of 19,5%. The discount rate remains unchanged from the prior year. The
discounted cash flow models are based on forecast patronage, operating costs, inflation and other economical
fundamentals, taking into consideration the operating conditions.
7. 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 2014 2013 2014
Operating lease commitments 1 571 1 880 1 799
Contingent liabilities 1 610 1 833 1 508
Financial institution guarantees 8 196 10 549 9 805
In November 2013 an arbitration award was made in favour of the Gauteng Province, in the water ingress dispute between
the Gauteng Province and the Bombela Civil Joint Venture (of which Murray & Roberts has a 45% shareholding).
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 of the tunnel additional works by the Bombela Civil Joint Venture would be
required to meet the specification. A panel of technical experts and design consultants were appointed to perform a
technical evaluation of the potential remedial work that may be required. Based on their reports and on an assessment
of designs for potential remedial work, the Group recorded a R300 million provision during the second half of the 2014
financial year, for its share of potential costs to be incurred. The amount of any other potential financial
compensation, if any, related to the matter cannot be determined.
8. Business disposals/acquisitions
The Group disposed of the majority of it’s Tolcon business effective on 1 September 2014 for a gross consideration of
R186 million (R136 million net of working capital, other adjustments and transaction costs). Refer to note 3 for
additional information.
Murray & Roberts completed the acquisition of 100% of the shares of CH-IV International (“CH-IV”) on 6 August 2014, a
boutique engineering company based in the United States of America for a consideration of R57 million. The fair value
of the net assets acquired at the date of acquisition was R35 million. The goodwill of R22 million is attributable
mainly to the expertise of the CH-IV workforce and accessibility to the contracts in the United States of America
engineering market. None of the goodwill is expected to be deductible for tax purposes.
Murray & Roberts completed the acquisition of 100% of the shares of Booth Welsh (“Booth Welsh”) on 5 September 2014, a
privately owned engineering services company based in Ayrshire, Scotland for a consideration of R79 million. The fair
value of the net liabilities acquired at the date of acquisition was R17 million. The goodwill of R96 million is
attributable mainly to the expertise of the Booth Welsh workforce and accessibility to the contracts in the European
engineering market. None of the goodwill is expected to be deductible for tax purposes.
Murray & Roberts completed the acquisition of the assets, liabilities and business of Aquamarine Water Treatment
(“Aquamarine”) on 1 October 2014, a company that designs, manufactures and installs water treatment solutions, and
offers a complete customised solution, including support for and maintenance of its installations for a consideration
of R28 million. Of the total consideration, R26 million was paid on the effective date, R1 million is payable during
October 2015 and the remaining R1 million is payable during October 2016. The fair value of the net liabilities
acquired at the date of acquisition was R1 million. The goodwill of R29 million is attributable mainly to the
expertise of Aquamarine’s key management personnel and the synergies expected to be achieved from integrating the
company into the Group’s water business. None of the goodwill is expected to be deductible for tax purposes.
R millions CH-IV Booth Welsh Aquamarine
The carrying value and fair value of net
assets acquired at the date of acquisition:
Property, plant and equipment – 4 –
Other intangible assets 4 11 –
Amounts due from contract customers – 8 3
Contract receivables 11 63 –
Trade and other receivables 1 26 1
Cash and cash equivalents 14 4 –
Deferred taxation liabilities 12 2 –
Trade and other payables (5) (33) (5)
Current taxation liability – (4) –
Borrowings – (94) –
Subcontractor liabilities (2) (4) –
Fair value of net assets acquired 35 (17) (1)
Goodwill 22 96 29
Consideration paid 57 79 28
Consideration paid in cash and cash equivalents 57 79 26
Deferred consideration – – 2
Less: Cash and cash equivalent balances acquired (14) (4) –
43 75 28
Impact of acquisitions on the results of the Group:
The profit for the period includes an amount of R5 million (CH-IV: R3 million, Booth Welsh: R1 million and Aquamarine:
R1 million) that relates to the businesses acquired during the year. The revenue includes R148 million (CH-IV:
R38 million, Booth Welsh: R95 million and Aquamarine: R15 million) in respect of the businesses acquired during the
year.
The effect on revenue of the Group from continuing operations would have been R230 million (CH-IV: R44 million, Booth
Welsh: R166 million and Aquamarine: R20 million) if the businesses had been acquired on 1 July 2014, and the profit
for the period from continuing operations would have been R11 million (CH-IV: R4 million, Booth Welsh: R5 million and
Aquamarine: R2 million).
9. Goodwill
31 December 31 December 30 June
R millions 2014 2013 2014
At the beginning of the year 486 488 488
Additions through business combinations 147 – –
Transfers to assets classified as held-for-sale – – (7)
Foreign exchange movements (1) 2 5
632 490 486
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be
impaired. As at 31 December 2014 there were no impairment indicators.
10. Dividend
A gross annual dividend, relating to the 30 June 2014 financial year, of 50 cents per share was declared on 27 August
2014 and paid during the period.
The Board has resolved not to declare an interim dividend.
11. Related party transactions
There have been no significant changes to the nature of related party transactions since 30 June 2014.
12. Events after reporting date
The directors are not aware of any matter or circumstance arising after the period ended 31 December 2014, not
otherwise dealt with in the Group’s interim results, which significantly affects the financial position at 31 December
2014 or the results of its operations or cash flows for the period then ended.
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”)
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
Directors:
M Sello* (Chairman)
HJ Laas (Managing and Chief Executive)
DD Barber*
AJ Bester
R Havenstein*
NB Langa-Royds*
JM McMahon1*
RT Vice*
Secretary: L Kok
1British *Independent non-executive
website: www.murrob.com
mobisite: http://murrob.mobi
e-mail: clientservice@murrob.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; 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: 25/02/2015 05:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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