Wrap Text
Financial Report for the six months ended 31 December 2015
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”)
ENGINEERED EXCELLENCE - STRATEGY IMPLEMENTATION
SALIENT FEATURES
- Lost time injury frequency rate of 0.78 (December 2014: 0.77).
Regrettably two fatal incidents (December 2014: 2) were reported.
- Revenue from continuing operations of R15,3 billion (December 2014: R15,9 billion).
- Diluted continuing HEPS increased by 10% to 87 cents (December 2014: 79 cents).
- Attributable earnings increased by 5% to R376 million (December 2014: R359 million).
- Net cash increased by 12% to R988 million (December 2014: R884 million).
- NAV R16 per share (December 2014: R14 per share).
- Strong financial performance and order book growth from the Underground Mining platform.
- Order book increased by 7% to R40,5 billion (December 2014: R37,8 billion) driven primarily by the Underground Mining platform.
STRATEGY – ACHIEVING OUR 2020 VISION
By 2020 the Group aims to be a leading international diversified project engineering, procurement and construction group in
selected natural resource sectors and supporting infrastructure. In the Group’s New Strategic Future plan, specific objectives and
priorities were defined to give clear expression to the Group’s strategic direction.
The Group’s strategic objectives are:
- Grow profitability and cash flows;
- Focus on international natural resource market sectors;
- Diversify business model into higher margin project value chain segments;
- Deliver project and commercial management excellence;
- Enhance the safety, performance and diversity of our people; and
- Enhance shareholder value.
The Group’s strategy is to adapt its business model by enhancing its specialist engineering, commissioning and asset support and
maintenance capabilities to complement its construction activities. These services yield higher margins and carry lower risk than
services provided in the construction segment of the project value chain.
The Group’s strategy implementation is progressing according to plan.
FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Murray & Roberts is largely exposed to the global natural resources sector and is navigating its way through very difficult times
and challenging trading conditions. Commodity prices remain weak, producers are in a battle for survival and are cutting back on
project and other expenditure, and commodity demand is not reacting positively as of yet.
Against the background of a subdued global economy, persistent weak demand for commodities and resulting prices and low investment
in fixed capital formation in South Africa, the Group has increased its earnings and is constantly reviewing and adjusting its
cost structures according to market requirements.
The Group recorded revenue of R15,3 billion (December 2014: R15,9 billion) and attributable earnings of R376 million (December
2014: R359 million). Diluted continuing headline earnings per share (“HEPS”) increased by 10% to 87 cents (December 2014:
79 cents).
The net cash position at 31 December 2015 increased by 12% to R988 million (December 2014: R884 million). Working capital in the
current market is a challenge due to slower payment by clients across all four business platforms. Efficient cash flow management
and cost saving initiatives remain a specific focus for the Group.
The Group is pleased to report that its order book increased to R40,5 billion (December 2014: R37,8 billion), primarily as a
result of order book growth in the Underground Mining platform. The embedded order book margin is at the lower end of the Group’s
target margin range of 5% to 7%.
Capital expenditure for the period was lower at R190 million (December 2014: R209 million) of which R104 million (December 2014:
R158 million) was for expansion and R86 million (December 2014: R51 million) for replacement.
ORDER BOOK, NEAR ORDERS AND PROJECT PIPELINE
The Group’s order book and project pipeline is outlined below.
Pipeline
R billions Order Book Near Orders Category 1 Category 2 Category 3
Infrastructure & Building 7.4 1.3 13.2 38.7 55.6
Power & Water 7.7 0.3 8.2 39.3 14.1
Underground Mining 16.3 9.2 26.3 6.3 22.2
Oil & Gas 9.1 1.6 30.5 27.3 276.7
31 December 2015 Totals 40.5 12.4 78.2 111.6 368.6
30 June 2015 Totals 38.3 7.9 75.3 93.7 247.6
- Near Orders - Tenders where the Group is the preferred bidder and final award is subject to financial/commercial close.
- Category 1 - Tenders the Group is currently working on (excluding Near Orders).
- Category 2 - Budgets, feasibilities and pre-qualifications the Group is currently working on.
- Category 3 - Opportunities which are being tracked and are expected to come to the market in the next 36 months.
ROUP OPERATING PERFORMANCE#
OIL & GAS
Com- Corporate
Construction missioning & overheads
R millions Engineering & Fabrication Global Marine Brownfields and Other Total
December 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Revenue 1 612 2 595 - 642 612 1 556 3 486 1 410 347 630 6 057 6 833
Operating
profit/(loss) 158 314 - 28 (49) 80 353 174 (187) (150) 275 446
Margin (%) 10% 12% - 4% (8%) 5% 10% 12% - - 5% 7%
Order Book 1 508 4 876 - 39 555 1 483 7 064 5 844 - - 9 127 12 242
Segment assets 4 206 3 932
Segment liabilities 3 130 3 105
LTIFR (Fatalities) 0.30(0) 0.41(0)
Financial Performance: The sustained weakness in the oil price continues to impact the business with a slowdown in implementation
of current projects, slower ramp up on new projects, deferral of projects and increased pressure on margins.
Revenue and operating profit reduced to R6,1 billion (December 2014: R6,8 billion) and R275 million (December 2014: R446 million)
respectively. The order book decreased to R9,1 billion (December 2014: R12,2 billion).
Operational Performance and Outlook: Peter Bennett, the successor to Kevin Gallagher, was appointed as Chief Executive Officer of
the Murray & Roberts Oil & Gas business on 1 February 2016. Peter is an experienced oil and gas executive and joins the Group
after 26 years with Chicago Bridge & Iron Co., a leading global engineering, procurement and construction company, focused on
energy infrastructure. Peter has working experience in Australia, Asia Pacific, Europe, Africa, the Middle East and North America,
making him the ideal candidate to lead the Murray & Roberts Oil & Gas business platform and Clough.
During January 2016 Clough secured a three year contract with ConocoPhillips in Australia, to provide asset support, operations
and maintenance services to the Bayu-Undan offshore field development and two new hook-up services contracts on the Ichthys
Liquefied Natural Gas (“LNG”) Project’s Floating, Production, Storage and Offloading facility.
This platform continues to expand its Engineering, Procurement and Construction (“EPC”) services to new growth regions. Clough
acquired Enercore Projects Limited (“Enercore”), a small privately owned engineering services company headquartered in Calgary,
Canada in October 2015. Enercore specialises in the provision of Engineering, Procurement and Construction Management services to
the Canadian oil and gas sector and this acquisition establishes a base for Clough’s Canadian EPC project delivery arm.
The Commissioning and Brownfields division is targeting the Australian brownfields market opportunity, as the new LNG production
facilities become operational. This presents significant opportunity in the Australasian LNG commissioning, operations and
maintenance market. Clough currently has the largest share of the Australasian commissioning market. The Wheatstone Jetty project
is coming to a close and the commercial processes should be closed out in the first half of the new financial year.
The short-term future of the oil and gas market remains uncertain due to the low oil price and prospects will only improve when
oil companies again start to invest. In the medium to long term, it is expected that new LNG project opportunities in North
America, Africa and Papua New Guinea will present attractive growth potential.
UNDERGROUND MINING
R millions Africa Australasia The Americas Total
December 2015 2014 2015 2014 2015 2014 2015 2014
Revenue 1 729 1 769 570 373 1 899 1 359 4 198 3 501
Operating profit/(loss) 16 (2) 43 10 160 76 219 84
Margin (%) 1% - 8% 3% 8% 6% 5% 2%
Order Book 10 328 8 314 1 878 1 037 4 051 4 496 16 257 13 847
Segment assets 987 1 102 809 637 2 087 1 395 3 883 3 134
Segment liabilities 810 937 191 133 743 464 1 744 1 534
LTIFR (Fatalities) 2.65(1) 2.01(1) 0.0(0) 0.0(0) 1.59(0) 0.87(0) 2.18(1) 1.73(1)
Financial Performance: Mining companies’ requirement to maintain their ongoing infrastructure replacement spend contributed to
the platform’s order book growth and strong financial performance. Although from a macro-economic point of view, the market
remains challenging, the platform is successful in all regions in securing a good share of the limited opportunity that the market
presents.
Revenues increased to R4,2 billion (December 2014: R3,5 billion) and operating profit increased to R219 million (December 2014:
R84 million). The order book also showed strong growth to R16,3 billion (December 2014: R13,8 billion).
Operational Performance and Outlook: This platform continues to successfully provide infrastructure replacement services on
operating mines across all regions. This work historically represented about 80% of the platform’s work.
Cementation Africa is operating in a challenging market. Community unrest in the region of the Booysendal mine contributed to
lower performance incentives achieved and the slowdown in the Zambian copper belt region is also impacting the business.
Project opportunities in the United States market are slowing down, but the Canadian and Australian markets are presenting
potential for growth from a low base. RUC Cementation has secured additional work at its Freeport project and Cementation Canada
is close to securing a new twin-shaft project.
The platform is well positioned for major project opportunities including Oyu Tolgoi (Mongolia) and substantial scope growth at
Freeport (Indonesia). In the short term, weak demand for commodities and low commodity prices will limit growth potential, but the
commodity cycle upturn expected in the medium term will bring strong growth opportunity considering the large pipeline of
underground mining projects.
POWER & WATER
R millions Power Programme1 Other2 Total
December 2015 2014 2015 2014 2015 2014
Revenue 2 067 1 595 19 556 2 086 2 151
Operating profit/(loss) 103 87 (183) (108) (80) (21)
Margin (%) 5% 5% (963%) (19%) (4%) (1%)
Order Book 6 951 4 486 729 877 7 680 5 363
Segment assets 1 005 985 623 838 1 628 1 823
Segment liabilities 760 788 411 370 1 171 1 158
LTIFR (Fatalities) 1.04(0) 0.35(0) 1.86(0) 0.0(0) 1.27(0) 0.24(0)
1 Power programme contracts and Genrec power programme contracts.
2 Includes Power & Water non-power programme projects and Genrec non-power programme contracts.
Financial Performance: Market conditions and operational requirements resulted in a major restructuring of this platform in the
previous financial year. Apart from the resultant losses recorded in that period, further impairment of uncertified revenue on
legacy projects of R138 million resulted in the platform reporting a loss for the period under review. These losses on legacy
projects will be contained within the first half of the current financial year and not repeated. The platform continues to
struggle to secure meaningful projects in a subdued market and the reported financial result is net of a R36 million asset
impairment at Genrec Engineering. The platform’s market focus has been narrowed to predominantly the power and water sectors.
Revenues decreased marginally to R2,1 billion (December 2014: R2,2 billion), whilst an operating loss of R80 million (December
2014: R21 million operating loss) was recorded, after the R174 million impairment mentioned above. The order book increased to
R7,7 billion (December 2014: R5,4 billion), of which approximately 91% relates to the power programme.
Operational Performance and Outlook: The platform has been selected as the preferred EPC and Operations & Maintenance contractor
on the ‘George Biomass’ project, an Independent Power Producer (“IPP”) project with Murray & Roberts Concessions as co-developer.
The contract for the repair and maintenance of the Morupule A power station, on behalf of Botswana Power Corporation, was also
secured. These projects are valued at about R300 million each. Medupi and Kusile will continue to provide baseload work for the
platform for at least the next four years, although revenue from these projects will be declining every year, due to the projects
nearing completion.
The power sector has seen some increased levels of private investment and government announced its plans for thermal generation
IPPs and planned Gas-to-Power programmes early in 2016. Further opportunities include the Illanga solar power project and the
Duvha boiler rebuild project. Opportunities do exist in the maintenance and refurbishment of older Eskom thermal power stations,
but engagement has been slow and difficult to realise, especially due to a few established players currently being in place.
Aquamarine’s integration with Murray & Roberts Water is complete. Aquamarine’s modular or containerised water treatment systems
will be offered into the rest of Africa, using Aquamarine’s marketing network and Murray & Roberts Water’s engineering and project
integration skills. The medium-term objective for Aquamarine is to grow the business in order to make a more meaningful
contribution to the platform’s revenue. Murray & Roberts Water has not yet gained traction in their targeted market sectors.
INFRASTRUCTURE & BUILDING
R millions Construction Africa Middle East Total
December 2015 2014 2015 2014 2015 2014
Revenue 2 201 3 064 774 399 2 975 3 463
Operating profit/(loss) 60 55 (45) 11 15 66
Margin (%) 3% 2% (6%) 3% 1% 2%
Order Book 5 364 4 333 2 069 2 069 7 433 6 402
Segment assets 2 244 2 690 3 353 2 263 5 597 4 953
Segment liabilities 1 466 2 215 2 927 2 076 4 393 4 291
LTIFR (Fatalities) 0.53(1) 1.06(1) 0.0(0) 0.0(0) 0.22(1) 0.66(1)
Financial Performance: The platform continued to report a profit in the period under review. Although the roads business has
secured some work, the building market is slowing down. The civil market is slowing further and there is very little opportunity
in opencast mining. The Middle East presents some opportunity, but the market remains competitive in a high commercial risk
environment.
Revenues decreased to R3 billion (December 2014: R3,5 billion), while operating profit decreased to R15 million (December 2014:
R66 million). The order book increased to R7,4 billion (December 2014: R6,4 billion).
Operational Performance and Outlook: The buildings market is the only market currently presenting opportunity for larger
contractors, but it is slowing down. The platform secured a R830 million road contract with Sanral for the upgrade of a 33,7km
stretch of the N2 between Mtunzini Toll Plaza and Empangeni T-Junction in KwaZulu Natal, which is due to start in the current
financial year.
To mitigate against the risk of low margins in a soft construction market, the platform is pursuing project development
opportunities, through participation in select property developments both in and outside South Africa. These include participation
as a co-developer of two Gauteng-based residential developments with an expected combined project value of about R1,5 billion, and
building developments in the rest of Africa in partnership with a South African blue chip financial services firm. The investment
in the Bombela Concession Company continues to perform well.
The platform is largely dependent on opportunities in South Africa, and meaningful growth is subject to increased government and
private sector investment in fixed capital formation. The government recently announced new infrastructure budget plans, including
investments in new ports and water infrastructure.
DISCONTINUED OPERATIONS
Steel Reinforcing Construction
R millions Tolcon Products Clough Properties Products3 Total
December 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Revenue 6 76 - 2 - 2 - (6) 6 74
Operating
profit/(loss) 8 22 - 7 - (2) (5) (6) 3 21
3 Includes Hall Longmore and UCW.
HEALTH AND SAFETY
The safety of its employees is of specific importance to the Group. Safe work outcomes are not only a moral obligation, but
positions the Group as a contractor of choice.
The board of directors of Murray & Roberts (“Board”) deeply regrets the death of two (December 2014: 2) employees who sustained
fatal injuries whilst on duty. Emmanuel Mupanda (26), a flagman employed by Murray & Roberts Infrastructure, was fatally struck by
a public vehicle whilst conducting his duties in an enclosed section of the Bela-Bela Polokwane road and Mike Mwenda (33), an
employee of Murray & Roberts Cementation Zambia, who worked as a rock drill operator at the Mufulira Copper Mine project,
sustained fatal injuries after a fall-of-ground incident occurred. The Group’s overall lost time injury frequency rate was however
maintained at an industry-leading level of 0.78 (December 2014: 0.77).
The Group has started the implementation of a Major Accident Prevention programme in order to mitigate fatal risks in its
operations. The Major Accident Prevention programme has achieved excellent results within Clough to date and will be rolled-out to
the rest of the Group under Clough’s stewardship.
UPDATE ON THE GROUP’S MAJOR CLAIMS PROCESSES
Since the publication of the Group’s annual financial results on 26 August 2015, the legal processes are all progressing with time
schedules for hearings now established.
As at the end of December 2015, the Group’s uncertified revenue, primarily represented by the Group’s major claims on Gautrain and
Dubai International Airport, remained largely unchanged, other than for forex movements. The Group remains committed to resolving
these outstanding claims.
Gautrain Sandton Cavern Claim – This claim, on its merits, was ruled in favour of the Bombela Civil Joint Venture (“BCJV”) in
October 2013 (Murray & Roberts shareholding of 45%). The quantum is expected to be awarded on 2 March 2016.
Gautrain Water Ingress Dispute – In November 2013, in the dispute between Gauteng Province and the Bombela Concession Company
(“BCC”), the arbitration panel ruled in favour of Gauteng Province. The Company raised a provision of about R300 million in the
prior financial years for its share of potential construction costs to be incurred by the BCJV. The extent of any other potential
financial impact related to the matter is yet to be determined. Various matters between the parties, relating to the arbitration
award, remain unresolved and will be heard in court. Heads of Argument were filed in February 2016 and the court hearing will
proceed in June 2016. While this matter lies in the jurisdiction of the courts, the date on which remedial work will commence
remains uncertain.
Gautrain Delay & Disruption Claim – Due to the complexity of this multi-billion rand claim, the initial arbitration hearings were
focused on addressing the legal interpretation of various clauses in the Gautrain concession agreement.
The Group reported on 8 July 2015 that the first two arbitration rulings (the right to proceed with a claim for additional costs
incurred on two cantilever bridges and to an extension of time and compensation due to late handover of land) were largely in
favour of the BCC. The legal bases of these claims have now firmly been established. The hearings for the two cantilever bridges
claim will be heard as from the first quarter of calendar year 2016 and an award is expected to be handed down before the end of
the calendar year. The balance of the Delay & Disruption claim is scheduled to be heard in calendar year 2017. Any award will
attract interest dating from 2009 to the date of award.
Dubai International Airport – Key dates in the arbitration process for the Dubai International Airport claim have now been
confirmed. A preliminary issue matter will be heard during March 2016 and the arbitration hearing will take place from April to
May 2017. The claim is expected to be resolved during the 2017 calendar year.
GRAYSTON PEDESTRIAN BRIDGE TEMPORARY SUPPORT STRUCTURE COLLAPSE – UPDATE
On behalf of the Board, we once again express our heartfelt condolences to the bereaved and offer sincere sympathy to those
injured. Stakeholders are referred to the statements released on the Stock Exchange News Service of the JSE Limited (“SENS”) on
15 October 2015, 20 October 2015, 5 November 2015 and 1 December 2015 respectively, and also the market update call held on
22 October 2015, of which the transcript is available on the website www.murrob.com.
The Department of Labour (“DoL”) is responsible for leading the official investigation. In November 2015, the DoL instituted a
Section 32 Inquiry into the incident and the first meetings were held on 8 December 2015 and 16 February 2016.
It is imperative that the Company understands what the possible cause/causes of this incident was/were. It is too early to
speculate on any preliminary findings and the Company will continue to fully cooperate with the DoL.
All costs incurred to date have been expensed. The direct financial impact of this incident on the Group is not expected to be
material considering its comprehensive insurance cover. Refer to note below on contingent liabilities for further detail.
COMPETITION MATTERS
As communicated on 10 December 2015, the Group entered into a consent agreement for the full and final settlement of the specific
historical conduct outlined in the agreement on four matters, which concludes proceedings between the Competition Commission and
Murray & Roberts in respect of this conduct. The R64 million fine relates to historical collusive conduct which occurred between
2004 and 2007 and which could not be settled at the time of the Fast Track Settlement Process in 2013. The fine was as reported
and provided for in previous financial years and is payable on 31 August 2016.
CHANGES TO THE BOARD
Suresh Kana was appointed to the Board on 1 July 2015 and as a member of the audit & sustainability, risk management and
remuneration & human resources committees. Xolani Mkhwanazi joined the Board on 1 August 2015 and was appointed as a member of the
risk management and health, safety & environment committees. Keith Spence was appointed to the Board on 25 November 2015 and as a
member of the risk management, health, safety & environment and social & ethics committees. Effective 24 February 2016, Keith
stepped down from the social & ethics committee and was appointed to the audit & sustainability committee, subject to shareholder
approval at the next annual general meeting.
DIVIDEND UPDATE
As communicated at the release of the Group’s full year results on 26 August 2015, the Board considered and approved a new
dividend policy. In terms of this policy, the Board will consider paying an annual dividend of between three and four times
earnings cover.
PROSPECTS STATEMENT
Despite the FY2016 H1 improvement on the prior comparable period, considering the weak global economy and ongoing difficult
trading conditions, the Group expects a decline in operational earnings for FY2016 when compared to FY2015. Historically, the
second half of the year yielded a better result than the first half, but it is unlikely to be the case in the current financial
year.
The Group is continuing to implement its New Strategic Future plan. The natural resource market sectors are cyclical and
implementation of this plan will position the Group well for the upturn.
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
24 February 2016
# 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 2014.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
for the six months ended 31 December 2015
Reviewed Reviewed Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
R millions 2015 2014 2015
Continuing operations
Revenue 15 316 15 948 30 568
Profit before interest, depreciation and
amortisation 870 768 1 742
Depreciation (271) (291) (575)
Amortisation of intangible assets (27) (20) (42)
Profit before interest and taxation (note 2) 572 457 1 125
Net interest expense (50) (44) (72)
Profit before taxation 522 413 1 053
Taxation (143) (78) (194)
Profit after taxation 379 335 859
Income from equity accounted investments 6 2 3
Profit from continuing operations 385 337 862
Profit from discontinued operations (note 3) 2 32 32
Profit for the period 387 369 894
Attributable to:
- Owners of Murray & Roberts Holdings Limited 376 359 881
- Non-controlling interests 11 10 13
387 369 894
Earnings per share from continuing and
discontinued operations (cents)
- Diluted 91 87 213
- Basic 94 89 218
Earnings per share from continuing operations (cents)
- Diluted 90 80 208
- Basic 94 82 213
SUPPLEMENTARY STATEMENT OF FINANCIAL PERFORMANCE INFORMATION
Net asset value per share (Rands) 16 14 15
Dividends per share (cents) - - 50
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) (30) (30)
Less: Weighted average number of shares held
by the Letsema BBBEE trusts (31 703) (31 735) (31 731)
Less: Weighted average number of shares held
by the subsidiary companies (14 826) (9 449) (9 594)
Weighted average number of shares used for
basic per share calculation 398 177 403 522 403 381
Add: Dilutive adjustment 15 287 10 191 10 022
Weighted average number of shares used for
diluted per share calculation 413 464 413 713 413 403
Headline earnings per share from continuing
and discontinued operations (cents) (note 4)
- Diluted 86 85 207
- Basic 89 88 212
Headline earnings per share from continuing
operations (cents) (note 4)
- Diluted 87 79 201
- Basic 90 81 206
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 December 2015
Reviewed Reviewed Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
R millions 2015 2014 2015
Profit for the period 387 369 894
Items that will not be reclassified
subsequently to profit or loss:
Effects of remeasurements on retirement
benefit obligations - - (10)
Items that will be reclassified subsequently
to profit or loss:
Effects of cash flow hedges - 3 (1)
Taxation related to effects of cash flow hedges - (1) 1
Reclassification adjustment relating to
cash flow hedges transferred to profit or loss – – 3
Exchange differences on translating foreign
operations 564 24 3
Reclassification adjustment relating to
available-for-sale financial assets disposed
of during the period - - 2
Total comprehensive income for the period 951 395 892
Attributable to:
- Owners of Murray & Roberts Holdings Limited 939 385 879
- Non-controlling interests 12 10 13
951 395 892
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2015
Reviewed Reviewed Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
R millions 2015 2014 2015
ASSETS
Non-current assets 8 306 7 431 7 643
Property, plant and equipment 3 142 3 130 3 021
Investment properties 23 14 18
Goodwill (note 9) 698 632 636
Deferred taxation assets 649 420 596
Investments in associate companies 15 26 28
Investment in joint venture 46 - 46
Amounts due from contract customers (note 5) 2 661 2 194 2 259
Other non-current assets 1 072 1 015 1 039
Current assets 11 175 10 245 11 076
Inventories 285 274 261
Trade and other receivables 1 557 2 001 1 657
Amounts due from contract customers (note 5) 6 298 5 191 6 204
Current taxation assets 120 - 63
Cash and cash equivalents 2 915 2 779 2 891
Assets classified as held-for-sale 79 148 84
TOTAL ASSETS 19 560 17 824 18 803
EQUITY AND LIABILITIES
Total equity 7 165 6 036 6 523
Attributable to owners of Murray & Roberts
Holdings Limited 7 128 6 014 6 498
Non-controlling interests 37 22 25
Non-current liabilities 3 060 1 645 2 526
Long term liabilities4 1 436 352 1 141
Long term provisions 145 296 264
Deferred taxation liabilities 245 47 133
Other non-current liabilities 1 234 950 988
Current liabilities 9 334 10 134 9 750
Amounts due to contract customers (note 5) 2 046 1 929 2 121
Accounts and other payables 6 767 6 640 7 189
Current taxation liabilities 30 22 103
Bank overdrafts4 140 17 44
Short term loans4 351 1 526 293
Liabilities directly associated with assets
classified as held-for-sale 1 9 4
TOTAL EQUITY AND LIABILITIES 19 560 17 824 18 803
4 Interest bearing borrowings.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2015
Attributable
to owners of
Murray &
Roberts Non-
Stated Other Retained Holdings controlling
R millions capital reserves earnings Limited interests Total
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 paid5 - - (1) (1) (15) (16)
Dividends declared and paid to
owners of Murray & Roberts Holdings Limited - - (207) (207) - (207)
Balance at 31 December 2014 (Reviewed) 2 604 1 456 1 954 6 014 22 6 036
Total comprehensive income for the period - (28) 522 494 3 497
Treasury shares acquired (net) (18) - - (18) - (18)
Recognition of share-based payment - 27 - 27 - 27
Transfer to retained earnings - (110) 110 - - -
Utilisation of share-based payment reserve - (2) - (2) - (2)
Dividends declared and paid5 - - (17) (17) - (17)
Balance at 30 June 2015 (Audited) 2 586 1 343 2 569 6 498 25 6 523
Total comprehensive income for the period - 563 376 939 12 951
Treasury shares acquired (net) (92) - - (92) - (92)
Shares vested on employee share
incentive schemes 31 (31) - - - -
Reversal of previously
recognised share-based payment* - (8) - (8) - (8)
Dividends declared and paid to
owners of Murray & Roberts Holdings Limited - - (209) (209) - (209)
Balance at 31 December 2015 (Reviewed) 2 525 1 867 2 736 7 128 37 7 165
5 Dividends relate to distributions made by entities that hold treasury shares.
* Specific non-market conditions have not been met in the current financial year resulting in a reversal.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 December 2015
Reviewed Reviewed Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
R millions 2015 2014 2015
Cash (utilised)/generated by operations (50) (199) 1 065
Interest received 29 40 85
Interest paid (79) (83) (157)
Taxation paid (151) (214) (408)
Operating cash flow (251) (456) 585
Dividends paid to owners of Murray & Roberts
Holdings Limited (209) (208) (225)
Dividends paid to non-controlling interests - (15) (15)
Cash flow from operating activities (460) (679) 345
Acquisition of businesses (note 8) (22) (162) (162)
Dividends received from joint ventures
classified as held-for-sale 2 - 35
Dividends received from associate companies 18 - -
Investment in joint venture - - (46)
Purchase of intangible assets other than
goodwill (21) (96) (125)
Purchase of property, plant and equipment (190) (209) (425)
-Replacements (86) (51) (135)
-Additions (104) (158) (290)
Proceeds on disposal of property, plant and
equipment 78 25 76
Proceeds on disposal of businesses (note 8) 13 116 122
Proceeds on disposal of assets held-for-sale - 46 64
Cash related to (disposal)/acquisition of
businesses - (13) 18
Cash related to assets held-for-sale (2) (1) (3)
Proceeds from realisation of investment 54 63 132
Other (net) (1) - (2)
Cash flow from investing activities (71) (231) (316)
Net increase/(decrease) in borrowings 137 (631) (1 197)
Treasury shares acquired (net) (92) (89) (107)
Cash flow from financing activities 45 (720) (1 304)
Net decrease in cash and cash equivalents (486) (1 630) (1 275)
Net cash and cash equivalents at beginning of
period 2 847 4 277 4 277
Effect of foreign exchange rates 414 115 (155)
Net cash and cash equivalents at end of period 2 775 2 762 2 847
Net cash and cash equivalents comprises of:
Cash and cash equivalents 2 915 2 779 2 891
Bank overdrafts (140) (17) (44)
Net cash and cash equivalents at end of period 2 775 2 762 2 847
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
for the six months ended 31 December 2015
Reviewed Reviewed Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
R millions 2015 2014 2015
Revenue6
Infrastructure & Building 2 975 3 463 6 959
Power & Water 2 086 2 151 4 238
Underground Mining 4 198 3 501 7 565
Oil & Gas 6 057 6 833 11 806
Continuing operations 15 316 15 948 30 568
Discontinued operations 6 74 88
15 322 16 022 30 656
Continuing operations
Profit before interest and taxation7
Infrastructure & Building 15 66 205
Power & Water (80) (21) (134)
Underground Mining 219 84 411
Oil & Gas 275 446 838
Corporate & Properties 143 (118) (195)
Profit before interest and taxation 572 457 1 125
Net interest expense (50) (44) (72)
Profit before taxation 522 413 1 053
Discontinued operations
Profit before interest and taxation7 3 21 19
Net interest income - 1 -
Profit before taxation 3 22 19
6 Revenue is disclosed net of inter-segmental revenue. Inter-segmental revenue for the Group is R18 million
(2014: R60 million and June 2015: R168 million).
7 The chief operating decision maker utilises profit before interest and taxation in the assessment of a
segment’s performance.
SEGMENTAL ASSETS
at 31 December 2015
Reviewed Reviewed Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
R millions 2015 2014 2015
Infrastructure & Building 5 597 4 953 5 535
Power & Water 1 628 1 823 1 864
Construction Products Africa 41 48 60
Underground Mining 3 883 3 134 3 403
Oil & Gas 4 206 3 932 3 675
Corporate & Properties 521 735 716
15 876 14 625 15 253
Reconciliation of segmental assets
Total assets 19 560 17 824 18 803
Deferred taxation assets (649) (420) (596)
Current taxation assets (120) - (63)
Cash and cash equivalents (2 915) (2 779) (2 891)
15 876 14 625 15 253
SEGMENTAL LIABILITIES
at 31 December 2015
Reviewed Reviewed Audited
6 months to 6 months to 12 months to
31 December 31 December 30 June
R millions 2015 2014 2015
Infrastructure & Building 4 393 4 291 4 869
Power & Water 1 171 1 158 1 188
Construction Products Africa 15 24 26
Underground Mining 1 744 1 534 1 779
Oil & Gas 3 130 3 105 2 808
Corporate & Properties 1 527 1 590 1 330
11 980 11 702 12 000
Reconciliation of segmental liabilities
Total liabilities 12 395 11 788 12 280
Deferred taxation liabilities (245) (47) (133)
Current taxation liabilities (30) (22) (103)
Bank overdrafts (140) (17) (44)
11 980 11 702 12 000
NOTES
1. Basis of preparation
The Group operates in the oil & gas, mining, engineering and construction 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
Standards (“IFRS”), IAS 34 Interim Financial Reporting, the SAICA Financial Reporting guides as issued by the Accounting Practices
Committee and the Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the
Companies Act, No. 71 of 2008. These statements were compiled under the supervision of Mr AJ Bester (CA)SA, Group financial
director.
The accounting policies used in the preparation of these results are in accordance with IFRS and are consistent in all material
respects with those used in the audited consolidated financial statements for the year ended 30 June 2015, with the exception of
the adoption of amendments to IFRS 7 Financial Instruments: Disclosures and IAS 39 Financial Instruments: Recognition and
Measurement.
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 auditor’s report does not necessarily report on all of the
information contained in this announcement/financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditors engagement they should obtain a copy of the auditors report together with the
accompanying financial information from the registered office.
The information presented in the notes below represent audited results for 30 June 2015 and reviewed results for 31 December 2015
and 31 December 2014.
2. Profit before interest and taxation
R millions 31 December 2015 31 December 2014 30 June 2015
Items by nature
Cost of sales (13 868) (14 430) (27 559)
Distribution and marketing expenses (3) (2) (11)
Administration expenses (1 323) (1 316) (2 578)
Other operating income 450 257 705
(14 744) (15 491) (29 443)
3. Profit from discontinued operations
The Group disposed of its interest in the Cape Point Partnership, effective 16 October 2015, for a gross consideration of
R18 million (R13 million net of transaction costs and other adjustments). The total consideration of R13 million was received
on the effective date.
The agreements for the disposal of the remaining Tolcon business, comprising of Entilini Operations Proprietary Limited and the
investment in Entilini Concession Proprietary Limited, are subject to final conditions precedent.
3.1 Profit from discontinued operations
31 December 31 December 30 June
R millions 2015 2014 2015
Revenue 6 74 88
Profit before interest, depreciation and
amortisation 3 21 19
Depreciation and amortisation - - -
Profit before interest and taxation (note 3.2) 3 21 19
Net interest income - 1 -
Profit before taxation 3 22 19
Taxation (expense)/credit (1) 9 12
Profit after taxation 2 31 31
Income from equity accounted investments - 1 1
Profit from discontinued operations 2 32 32
Attributable to:
- Owners of Murray & Roberts Holdings Limited 2 28 22
- Non-controlling interests - 4 10
2 32 32
3.2 Profit before interest and taxation
Profit before interest and taxation includes
the following significant items:
Profit on disposal of businesses
(net of transaction and other costs) 6 11 11
3.3 Cash flows from discontinued operations
include the following:
Cash flow from operating activities 16 98 87
Cash flow from investing activities 12 129 225
Cash flow from financing activities - 30 66
Net increase in cash and cash equivalents 28 257 378
4. Reconciliation of headline earnings
31 December 31 December 30 June
R millions 2015 2014 2015
Profit attributable to owners of
Murray & Roberts Holdings Limited 376 359 881
Profit on disposal of businesses (net) (6) (11) (11)
Profit on disposal of property, plant and
equipment (net) (54) (6) (36)
Impairment of assets 46 - 11
Fair value adjustments and net (profit)/loss
on disposal of assets held-for-sale - (1) 7
Loss on sale of other investments - - 2
Fair value adjustment on investment properties (3) - (17)
Other (net) - - 1
Non-controlling interests effects on
adjustments - 7 7
Taxation effects on adjustments (3) 5 11
Headline earnings 356 353 856
Adjustments for discontinued operations:
Profit from discontinued operations (2) (32) (32)
Non-controlling interests - 4 10
Profit on disposal of businesses (net) 6 11 11
Fair value adjustments and net profit/(loss)
on disposal of assets held-for-sale - 1 (7)
Non-controlling interests effects on
adjustments - (7) (7)
Taxation effects on adjustments (1) (3) (1)
Headline earnings from continuing operations 359 327 830
5. Contracts-in-progress and contract receivables
31 December 31 December 30 June
R millions 2015 2014 2015
Contracts-in-progress (cost incurred plus
recognised profits, less recognised losses) 3 194 2 165 2 793
Uncertified claims and variations (recognised
in terms of IAS 11: Construction Contracts) 2 090 2 040 2 158
Amounts receivable on contracts (net of
impairment provisions) 3 307 2 852 3 224
Retentions receivable (net of impairment
provisions) 368 328 288
8 959 7 385 8 463
Amounts received in excess of work completed (2 046) (1 929) (2 121)
6 913 5 456 6 342
Disclosed as:
Amounts due from contract customers - non-current8 2 661 2 194 2 259
Amounts due from contract customers - current 6 298 5 191 6 204
Amounts due to contract customers - current (2 046) (1 929) (2 121)
6 913 5 456 6 342
8 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 2015 2014 2015
Categories of financial instruments
Financial assets
Financial assets designated as fair value
through profit or loss (level 3) 718 696 709
Loans and receivables 7 842 7 752 7 880
Available-for-sale financial assets carried
at fair value (level 1) - 1 -
Financial liabilities
Loans and payables 9 379 9 204 9 179
Derivative financial instruments (level 2)9 - - 3
9 The derivative financial instruments’ value has been determined by using forward looking market rates until the realisation
date of the relevant instruments obtained from the relevant financial institutions.
6.1 Financial assets designated as fair value through profit or loss
Investment in infrastructure service
concession (level 3)10
At the beginning of the year 709 669 669
Realisation of investment (54) (63) (132)
Fair value adjustment recognised in the
statement of financial performance 63 90 172
718 696 709
10 The fair value of the Bombela Concession Company Proprietary Limited is calculated using discounted cash flow models and a
market discount rate of 18,5% (2014: 19,5%). The discounted cash flow models are based on forecast patronage, operating costs,
inflation and other economic fundamentals, taking into consideration the operating conditions experienced in the current
financial year. The future profits from the concession are governed by a contractual agreement and is principally based on
inflationary increases in the patronage revenue and operating costs of the current financial year. Revenue based on patronage
is underpinned by the Gauteng Province. The Patronage Guarantee is the difference between the Minimum Required Total Revenue
and the Actual Total Revenue in each month. A decrease of 1% in the discount rate would result in an increase in the value of
the concession investment of approximately R33 million.
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.
R millions 31 December 2015 31 December 2014 30 June 2015
Operating lease commitments 1 913 1 571 1 640
Contingent liabilities 2 226 1 610 1 650
Financial institution guarantees 9 286 8 196 8 018
Gautrain Water Ingress Dispute
In November 2013, in the dispute between Gauteng Province and BCC, the arbitration panel ruled in favour of Gauteng Province.
The Company raised a provision of about R300 million in financial year 2014 for its share of potential construction costs to be
incurred by the BCJV. The extent of any other potential financial impact related to the matter is yet to be determined. Various
matters between the parties, relating to the arbitration award, remain unresolved and will be heard in court. Heads of Argument
was filed in February 2016 and the court hearing will proceed in June 2016. While this matter lies in the jurisdiction of the
courts, the date on which remedial work will commence remains uncertain.
Grayston Pedestrian Bridge
The formal investigation into this incident led by the DoL is currently ongoing and it is a priority for the Company to understand
what the possible cause/causes of this incident was/were. It is too early to speculate on any preliminary findings and the Company
will continue to fully cooperate with the DoL. All expenses incurred to date have been fully accounted for in the reported
financial information. No provision has been raised to date as the quantum of future potential costs related to the incident
cannot be reliably estimated at this stage. The Group has comprehensive insurance cover in place.
8. Business disposals/acquisitions
The Group disposed of its interest in the Cape Point Partnership, effective 16 October 2015, for net consideration of R13 million.
Refer to note 3 for additional information.
Clough Limited established a new entity, Clough Enercore Limited (“CEL”), in the current financial year. On 8 October 2015, CEL
executed an Asset Purchase and Sale Agreement with Enercore Projects Limited (“Enercore”) to purchase the business (as carried on
by Enercore) and the Purchased Assets, in exchange for the assumption of the Assumed Liabilities, of Enercore. Enercore also
obtained 25% shareholding in CEL. No goodwill arose on acquisition.
Cementation Canada Inc. completed the acquisition of the assets of Merit Consultants International Inc. (“Merit”) on 30 November
2015, for a consideration of R22 million. Based in Vancouver, Canada, Merit has helped deliver successful projects for mining
companies around the world. The goodwill of R21 million is mainly attributable to the Merit Consultants International name,
expertise, contacts and key management staff along with the experience of the former owner.
R millions Enercore Merit
The carrying value and fair value of net assets
acquired at the date of acquisition:
Property, plant and equipment 4 1
Other intangible assets 2 -
Trade and other receivables 10 -
Trade and other payables (3) -
Long term loans (13) -
Fair value of net assets acquired - 1
Goodwill - 21
Consideration paid in cash and cash equivalents - 22
Impact of acquisitions on the results of the Group
The financial performance for the six months ended 31 December 2015 includes a loss for the period of R7 million
(Enercore: R6 million and Merit: R1 million) and revenue of R8 million (Enercore: R7 million and Merit: R1 million)
in relation to the businesses acquired.
The effect on revenue of the Group from continuing operations would have been R28 million (Enercore: R20 million and
Merit: R8 million) if the business had been acquired on 1 July 2015 and the loss for the period from continuing operations
would have been R14 million (Enercore: R10 million and Merit: R4 million).
9. Goodwill
R millions 31 December 2015 31 December 2014 30 June 2015
At the beginning of the year 636 486 486
Additions through business combinations 21 147 148
Foreign exchange movements 41 (1) 4
Impairment - - (2)
698 632 636
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.
Based on the assessment performed as at 31 December 2015, no impairment was recorded.
10. Dividend
A gross annual dividend, relating to the 30 June 2015 financial year, of 50 cents per share was declared in August 2015 and paid
during the period.
In line with the approved dividend policy, the board of directors will only consider paying an annual dividend.
11. Related party transactions
There have been no significant changes to the nature of related party transactions since 30 June 2015.
12. Events after reporting date
The directors are not aware of any matter or circumstance arising after the period ended 31 December 2015, not otherwise dealt
with in the Group’s interim results, which significantly affects the financial position at 31 December 2015 or the results of its
operations or cash flows for the period then ended.
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.
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 & Chief Executive)
DD Barber*
AJ Bester
R Havenstein*
SP Kana*
NB Langa-Royds*
JM McMahon1*
XH Mkhwanazi*
KW Spence2*
RT Vice*
¹British *Independent non-executive
Secretary: L Kok
WEBSITE: WWW.MURROB.COM
MOBISITE: HTTP://MURROB.MOBI
E-MAIL: CLIENTSERVICE@MURROB.COM
24 February 2016
Date: 24/02/2016 03:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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