Wrap Text
Provisional Reporting for the 12 months ended 30 June 2017
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")
MURRAY & ROBERTS PROVISIONAL REPORT
for the 12 months ended 30 June 2017
OIL & GAS UNDERGROUND MINING POWER & WATER
SALIENT FEATURES
Financial results:
- Revenue from continuing operations, excluding the Middle East, decreased by 15% to R20,8 billion
- Diluted continuing HEPS, excluding the Middle East, increased by 8% to 212 cents
- Attributable earnings of R48 million (FY2016: R753 million)
- Cash, net of debt, maintained at R1,8 billion
- Dividend maintained at 45 cents per ordinary share
- Order book for continuing operations of R26,9 billion in a tough environment
Attributable earnings were impacted by the following exceptional items:
- R570 million loss incurred in the Middle East
- R160 million profit realised in Bombela Civils Joint-Venture, following settlement of Gautrain claim
- R170 million net present value charge of the cash contribution over 12 years in terms of the
Voluntary Rebuilding Programme with the South African Government
- Record-low lost time injury frequency rate of 0,52 (FY2016: 0,68). Regrettably, one fatal
incident was suffered
- Settlement of all Gautrain development period disputes in December 2016
- Sale of Southern African Infrastructure & Building businesses concluded with effect from
1 April 2017
- Transfer of Company's sub-sector listing on the JSE from Heavy Construction to Diversified
Industrials in March 2017
STAKEHOLDER REPORT - FOR THE YEAR ENDED 30 JUNE 2017#
POSITIONED FOR GROWTH AND VALUE CREATION
Murray & Roberts has transformed itself into a multinational engineering and construction group, with a focused
portfolio of businesses providing services primarily in the natural resources market sectors of underground
mining, oil & gas, and power & water. The significant reshaping and alignment of the organisation is the most
evident feature of the progress we have made over the past few years to redirect the strategic focus of the Group.
The Group has largely achieved the business portfolio optimisation envisaged in the first phase of its New Strategic
Future plan. Closing the business in the Middle East after completing the remaining projects there, which is expected
to be achieved by the end of FY2018, and concluding the sale of Genrec, which is strategically non-core, are the last
remaining steps in this regard. The financial year to 30 June 2018 will essentially be the first year as a
fundamentally reshaped Murray & Roberts.
Underpinning the Group's strong year-end cash position, after several years of difficult trading conditions, is the
work done to strengthen the Group's statement of financial position. This has supported the Group's resilience to the
commodity down-cycle and the collapse in the oil price in November 2014, and simultaneously enhanced its ability to
create value for shareholders.
FINANCIAL REPORT
Financial results
The Group took a strategic decision to exit the civil engineering and building market and to sell its Infrastructure
& Building businesses. As this sale excluded the building business in the Middle East, the Board of directors ("the
Board”) decided to close this business. In terms of International Financial Reporting Standards, the business in the
Middle East is to be abandoned and is not yet a discontinued operation. Its financial results are hence reported as
continuing operations.
As the business in the Middle East recorded a substantial loss of R570 million for the year under review, Group
revenue, earnings before interest and tax ("EBIT"), headline earnings and earnings per share ("HEPS") and earnings
per share for FY2017 is reported as ‘including and excluding' the Middle East. This is to enable a clear
understanding of the negative impact of the Middle East business on the continuing operations' earnings profile.
It is anticipated that future losses in the Middle East will be limited to a reduced overhead cost and legal fees
associated with pursuing the Dubai Airport claim, as all known project losses have been accounted for in FY2017.
The Group reported revenue from continuing operations, excluding the Middle East, of R20,8 billion
(FY2016: R24,4 billion), or R21,4 billion (FY2016: R26,1 billion) including the Middle East. Attributable
earnings were R48 million (FY2016: R753 million). Diluted continuing HEPS, excluding the Middle East,
increased to 212 cents (FY2016: 197 cents), or decreased to 72 cents (FY2016: 178 cents) including the
Middle East. The Group maintained its strong cash position with cash, net of debt, of R1,8 billion
(30 June 2016: R1,8 billion).
Attributable earnings were impacted by the following exceptional items:
- R570 million loss incurred in the Middle East, recorded as part of continuing operations;
- R160 million profit realised in Bombela Civils Joint-Venture, following settlement of Gautrain claim; and
- R170 million net present value charge of the cash contribution over 12 years in terms of the
Voluntary Rebuilding Programme with the South African Government.
Capital expenditure for the year was R564 million (FY2016: R431 million) of which R405 million (FY2016: R332 million)
was for expansion and R159 million (FY2016: R99 million) for replacement. The capital expenditure was largely incurred
in the Underground Mining platform.
The order book for continuing operations reduced marginally to R26,9 billion (30 June 2016: R28,7 billion).
Dividend
The Board resolved to maintain a gross annual dividend of 45 cents per ordinary share for FY2017. The dividend will be
subject to the dividend tax rate of 20%, which will result in a net dividend of 36 cents per share to those shareholders
who are not exempt from paying dividends tax. The dividend has been declared from income reserves.
Notwithstanding the losses incurred in the Middle East, the Board took into consideration the Group's strong cash
position, partly as a result of the Gautrain settlement, as well as the view that FY2018 will be the start of a new
EBIT growth period, supported by analyst and third-party research citing mainly the current turn in the metals and
minerals cycle.
The number of shares in issue as at the date of this declaration is 444 736 118 and the Company's tax reference number
is 9000203712.
The relevant dates are:
Event Date
Last day to trade (cum-dividend) Tuesday, 3 October 2017
Shares to commence trading (ex-dividend) Wednesday, 4 October 2017
Record date (date shareholders recorded in books) Friday, 6 October 2017
Payment date Monday, 9 October 2017
No share certificates may be dematerialised or rematerialised between Wednesday, 4 October 2017 and
Friday, 6 October 2017, both dates inclusive.
On Monday, 9 October 2017, the dividend will be electronically transferred to the bank accounts of all certificated
shareholders where this facility is available. No dividend will be paid to shareholders who have not provided
their banking details to the transfer secretaries: Link Market Services. Accordingly, the cash dividend will remain
unpaid until such time as the non-compliant shareholder has provided relevant banking details to the transfer
secretary. No interest will be paid for unpaid dividends.
OPERATIONAL REPORT
Order Book, Near Orders and Project Pipeline
The Group's order book and project pipeline is presented in the table below.
Pipeline
R billions Order book Near orders Category 1 Category 2 Category 3
Oil & Gas 5,2 - 18,7 14,8 494,9
Underground mining 17,5 6,3 17,5 27,6 20,2
Power & Water 3,7 0,7 1,2 12,6 24,6
Middle East* 0,5 - - - -
Continuing operations totals 26,9 7,0 37,4 55,0 539,7
Discontinued operations totals 0,1 - 1,0 6,5 -
30 June 2017 totals** 27,0 7,0 38,4 61,5 539,7
30 June 2016 totals** 33,4 10,6 40,0 101,2 505,5
- Near orders: Tenders where the Group is the preferred bidder and final award is subject to financial/commercial
close - there is more than a 95% chance that these orders will be secured
- Category 1: Tenders the Group is currently working on (excluding near orders) - projects developed by clients
to the stage where firm bids are being obtained - chance of being secured as firm orders a function of final
client approval as well as bid strike rate
- Category 2: Budgets, feasibilities and prequalification the Group is currently working on - project planning
underway, not yet at a stage where projects are ready for tender
- Category 3: Opportunities which are being tracked and are expected to come to the market in the next 36 months
- identified opportunities that are likely to be implemented, but still in pre-feasibility stage
* Closing the business in the Middle East after completing the remaining projects there, which is expected to be
achieved by the end of FY2018.
** Including continuing and discontinued operations.
Oil & Gas Platform
Corporate
Construction Global Commissioning overheads
R millions Engineering & Fabrication Marine & Brownfields and other Total
June 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Revenue 1 297 2 707 30 87 425 936 4 862 7 016 100 466 6 714 11 212
Operating
profit/(loss) 28 329 (52) (16) 71 (4) 576 738 (406) (522) 217 525
Margin (%) 2% 12% (173%) (18%) 17% - 12% 11% - - 3% 5%
Order book 492 1 574 1 070 - - 341 3 589 4 514 - - 5 151 6 429
Segment assets 2 528 2 919
Segment
liabilities 1 978 2 072
People 1 895 1 464
LTIFR (fatalities) 0.25(0) 0.18(0)
As was expected, Clough recorded reduced revenues and operating profit in FY2017. The major greenfields LNG
projects in Australia into which Clough contracted reached completion and strategies are in place to secure
work on brownfields LNG projects, operations & maintenance works, and public infrastructure projects.
The platform's composition of earnings is changing rapidly and currently excludes large contributions from
construction work, with income from commissioning work on LNG projects dominating. In response to prevailing
market conditions, the platform continued to reduce its cost base to preserve margins and be competitive in
pursuing smaller brownfields and maintenance project opportunities.
Revenue reduced to R6,7 billion (FY2016: R11,2 billion) and operating profit to R217 million (FY2016: R525 million)
reflecting lower margins on a reduced revenue base. The order book decreased to R5,2 billion (30 June 2016: R6,4 billion)
as all large construction orders have been delivered and the order book now largely comprises smaller value and shorter
duration orders.
In Australia, the Wheatstone Hook-Up and Commissioning project performed well and strong operational performance has
been rewarded with significant scope growth. This project was a major contributor to Clough's earnings during the
financial year and is nearing completion. Project resources were mobilised to support hook-up and pre-commissioning
work for INPEX Corporation on its offshore Ichthys LNG project, which will largely replace Wheatstone in terms of
project income. Clough AMEC secured its first onshore petrochemical maintenance contract in Australia, a
five-year contract, with an option to extend for a further five years, to provide maintenance services to
Norwegian company Yara International.
Meaningful earnings growth from this current low base is only expected in the medium term, as global energy producers'
confidence returns and they start investing in new projects. Brownfields operations and maintenance opportunities are
expected to be the main source of earnings from the Australian region for the next few years. The first new major
greenfields opportunities are expected to be in Papua New Guinea, as energy producers are progressing work associated
with new LNG facilities, to be ready for production by 2022.
Complementary markets such as Australia's mining and infrastructure markets, which have historically been serviced by
Clough, present significant opportunities. East coast Australian state governments, particularly New South Wales, are
developing many large infrastructure projects. Clough is well positioned to pursue selected opportunities and has
developed partnering strategies for delivering these projects.
The platform's international operations are relatively small but continue to perform to management's expectations.
As part of its geographic expansion plans, Clough is actively pursuing a potential acquisition in the USA, as this
is a growth market that presents new opportunity for the Oil & Gas platform.
Underground Mining Platform
R millions Africa Australasia The Americas Total
June 2017 2016 2017 2016 2017 2016 2017 2016
Revenue 3 565 3 640 1 727 1 392 2 754 3 756 8 046 8 788
Operating profit 124 86 217 125 123 295 464 506
Margin (%) 3% 2% 13% 9% 4% 8% 6% 6%
Order book 11 021 9 731 3 117 1 924 3 368 2 603 17 506 14 258
Segment assets 1 139 955 982 809 1 494 1 867 3 615 3 631
Segment liabilities 1 093 944 377 205 439 724 1 909 1 873
People 5 616 5 407 1 008 919 826 1 048 7 450 7 374
LTIFR (fatalities) 1.15(0) 2.39(1) 0.96(0) 0.51(0) 1.97(0) 2.08(0) 1.23(0) 2.11(1)
The Underground Mining platform recorded a strong financial performance, against the background of mining companies'
continued focus on preserving capital, which limited the number of project opportunities associated with new mines.
The platform's success in securing projects associated with mining companies' ongoing infrastructure replacement and
development spend (‘stay-in-business capital') underpinned its performance.
Revenues decreased to R8,0 billion (FY2016: R8,8 billion) and operating profit to R464 million (FY2016: R506 million).
The order book is R17,5 billion (30 June 2016: R14,3 billion). The order book includes R4,8 billion for the Kalagadi
manganese project, which is expected to commence in September.
In South Africa, the De Beers Venetia project performed below expectation, affected by community unrest, Section 54
stoppages and low productivity. Various initiatives are underway to improve progress, specifically on the vertical
shafts where the Canadian method of shaft sinking has proved challenging under South African conditions. The Booysendal
project delivered a much improved performance compared to the prior year as production volumes exceeded target.
Murray & Roberts Cementation was awarded Phase 1 of the project to develop the new Booysendal Central Mine.
Murray & Roberts Cementation continued to progress its Africa strategy through its Kitwe office in Zambia. It
successfully completed the Bulk Air Cooler ventilation project at Mopani Copper's Synclinorium mine. The business
continued to perform well on the shaft sinking and mine development projects at the Mufulira mine, with additional
development work recently awarded.
After several years of strong growth, the North American operations delivered a mixed set of results. Cementation
Canada and Cementation USA recorded reduced revenue and earnings as market conditions remain challenging. A limited
number of larger projects are expected to come to market where prevailing market conditions are characterised by
delays in or postponement of new projects.
RUC Cementation Mining had an excellent year. It exceeded expectations and achieved results well above the previous
financial year. The business significantly increased its order book due to the recent award of the Dacian Gold project,
the largest award in its history. Following good project delivery, scope growth on existing projects in Australia and
Indonesia, together with geographic diversification into new regions, such as Mongolia, contributed to this performance.
Earnings from raise boring activity was significantly up on the prior year with excellent fleet utilisation and a large
pipeline of significant near-term opportunities.
Various research reports indicate that the commodity cycle has bottomed out and demand for commodities is anticipated
to grow in the short term on the back of supply and demand dynamics. There is a large investment pipeline of underground
mining projects in countries and regions where the platform is established and it is well positioned to rise to any
upturn in the commodity cycle.
Power & Water Platform
Corporate
Electrical & overheads
R millions Power2 Water Oil & Gas Instrumentation and other Total
June 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Revenue 5 063 3 733 56 42 669 367 106 189 14 (55) 5 908 4 276
Operating
profit/(loss) 243 272 (20) (9) 5 (18) 35 36 (92) (254) 171 27
Margin (%) 5% 7% (36%) (21%) 1% (5%) 33% 19% - - 3% 1%
Order book 3 198 6 326 - 25 483 283 26 47 - 2 3 707 6 683
Segment assets 1 527 1 468
Segment
liabilities 1 341 1 284
People 6 936 5 354
LTIFR (fatalities) 0.43(0) 0.70(0)
2 Power programme contracts.
The platform's financial results for FY2017 continued to be underpinned by the boiler erection work on the
mega power station projects at Medupi and Kusile, where Murray & Roberts Power & Energy ("MRPE") is the main
boiler subcontractor to Mitsubishi Hitachi Power Systems Africa.
Revenues increased to R5,9 billion (FY2016: R4,3 billion) and operating profit to R171 million
(FY2016: R27 million). The order book decreased to R3,7 billion (30 June 2016: R6,7 billion), reflecting
the reducing order book value for Medupi and Kusile.
During the year, boiler construction at the Medupi and Kusile power stations advanced significantly.
At Medupi, Units 5 and 4 were synchronised on a test basis to the grid and have joined Unit 6, which is
now permanently synchronised to the grid. Unit 3 has been hydro tested and is ready for chemical clean.
At Kusile, Unit 1 was successfully synchronised to the grid on a test basis in December 2016 and Unit 2
has been hydro tested and is ready for chemical clean. Unit 3 has been successfully hydro tested.
Other significant work in the power sector carried out by MRPE during the year included the Morupule
A power station refurbishment project in Botswana and the construction of two Wet Flue Gas Desulphurisation
units at Kusile. Electrical and instrumentation services are being provided on projects in South Africa
and Ghana. A new service offering in this sector is high voltage transmission and distribution infrastructure,
which will be provided via a cooperation agreement with the Shanghai Electric Group.
MRPE engages in the complementary market sector of oil and gas in sub-Saharan Africa. The MRPE operation in
Secunda, supporting Sasol, has been executing structural, mechanical, electrical, instrumentation and piping
construction services, and was awarded the CTF East construction contract in May 2017. Successful shutdown work
was executed during the year, with new shutdown work secured for FY2018. Murray & Roberts Ghana successfully
executed the engineering, procurement and construction of a 13.5 million litre marine gas oil facility for
GOIL in the Takoradi Port.
Murray & Roberts Water is a relatively new business, and its service offering includes desalination, innovative
municipal wastewater treatment technologies, industrial modular water treatment plants and acid mine drainage.
Opportunity is expected to come from the wastewater treatment subsector as there is increasing environmental
pressure to upgrade failing wastewater treatment plants and to reuse treated effluent, as well as the industrial
sector as industry looks to water security through reuse and recycling to save water and reduce costs. The City
of Cape Town launched its new water resilience plan in August 2017 and its capital expenditure and operating
expenses are expected to be approximately R2 billion and R1,3 billion respectively over the next two financial years.
Medupi and Kusile, once fully operational, will provide opportunity for maintenance services through MRPE's skilled
and experienced workforce that has worked on these projects for close to a decade. This capacity and capability is
also transferable to South Africa's new build base-load coal Independent Power Producer projects such as the
Thabametsi and Khanyisa projects, which have reached preferred bidder status. MRPE is engaged with the selected
engineering, procurement and construction contractors on both projects.
The platform is committed to securing an order book to replace work on Medupi and Kusile, which will be completed
in FY2019. However, competition in this market continues to be fierce.
Gautrain-related businesses
The Group's Gautrain-related businesses include its investments in the Bombela Concession Company, Bombela Civils
Joint Venture and the Bombela Operating Company. The Bombela Concession Company continues to perform well and
delivers meaningful value.
All Gautrain development-period claims have been settled with the Gauteng Provincial Government. This was an
all-inclusive settlement arrangement and the settlement value achieved supported the revenue previously taken to
account against these claims, net of the provision for potential future Gautrain tunnel water ingress work that
could be written back on the basis of the settlement reached. In terms of this agreement no further work is
required to be undertaken in the tunnel.
R millions Bombela Investments Middle East Total
June 2017 2016 2017 2016 2017 2016
Revenue 121 169 608 1 703 729 1 872
Operating profit/(loss) 419 74 (568) (68) (149) 6
Margin (%) 346% 44% (93%) (4%) (20%) -
Order book - 42 500 1 331 500 1 373
Segment assets 1 643 1 553 1 124 249 2 767 3 628
Segment liabilities 178 568 1 350 11 1 528 2 387
People 22 23 4 272 7 870 4 294 7 893
LTIFR (fatalities) 0.0(0) 0.0(0) 0.0(0) 0.07(0) 0.0(0) 0.07(0)
Abandoned Business - Middle East Entities
In line with the Group's strategy to exit the civil engineering and buildings market, the Board resolved to
close the business in the Middle East. A substantial loss of R570 million was recorded in the year under
review, associated with: an unfavourable arbitration ruling on the Zayed University project that was
completed in 2011; losses on the remaining four building projects; and redundancy costs to be incurred as
part of the business closure process. The remaining projects are scheduled to be completed by the end
of FY2018. Close-out of the business in the Middle East continues to present major risk, but all known
project losses have been fully provided for in FY2017. Costs during FY2018 should be limited to a
significantly reduced overhead cost, and ongoing legal fees on the Dubai Airport dispute.
Discontinued Operations
I&B
Businesses Clough Genrec
R millions and Other3 Properties Engineering Total
June 2017 2016 2017 2016 2017 2016 2017 2016
Revenue 3 364 4 369 7 1 303 288 3 674 4 658
Operating (loss)/profit (209) 31 (4) (28) (68) (108) (281) (105)
3 Includes Tolcon and Construction Products Africa.
The disposal of the Southern African Infrastructure & Building businesses was effective 1 April 2017, and
the Group recorded R71 million of retained liabilities on the sale of these businesses and other historical
items. Genrec recorded a loss before taxation of R68 million for the year, primarily due to low levels of
revenue. The sale of Genrec is underway, targeted for completion in the first half of FY2018.
The R170 million charge representing the net present value of the annual cash contributions to be made over
12 years in terms of the Voluntary Rebuilding Programme arrangement was also recorded under discontinued
operations. This arrangement was concluded between the listed construction companies and the South African
Government, as previously announced on the Stock Exchange News Service ("SENS") of the JSE Limited.
ACQUISITION OF A FURTHER INTEREST IN BOMBELA CONCESSION COMPANY
Shareholders are referred to the announcement released on SENS on 22 August 2017, regarding the acquisition
of a further 17% in Bombela Concession Company (RF) Proprietary Limited ("BCC") by Murray & Roberts Limited
for a total consideration of R405 million. The cash position of the Company and its subsidiaries is sufficiently
robust to undertake the acquisition. BCC holds the 15-year concession for operating and maintaining the
Gautrain system until March 2026. We expect this low-risk investment in BCC to continue providing strong
returns, given that we know the business well and have representation on its board. The implementation of
the transaction remains subject to BCC lenders' and regulatory approvals.
SHARE REPURCHASE PROGRAMME
Shareholders are referred to the announcement released on SENS on 30 June 2017 regarding the Company's
decision to approve an on market share repurchase programme to the value of R250 million. As at close of
the market on 22 August 2017, shares to the value of R9,3 million had been bought.
HEALTH AND SAFETY
The Board deeply regrets the death of Ditebogo Phuduhudu (27), an employee of the former Infrastructure
& Building platform, who sustained fatal injuries while on duty on the Noupoort Wind Farm Project in the
Northern Cape on 12 July 2016.
The Group's overall lost time injury frequency rate ("LTIFR") reduced to a record-low level of 0.52
(FY2016: 0.68). The Group-wide implementation over the last year of the Major Accident Prevention programme,
which empowers supervisors and the workforce to plan and take ownership of safety outcomes, has delivered
excellent results and supported a record-low LTIFR for the Group.
The Group has introduced and embedded several key initiatives, including a focus on lead indicators and
improved incident reporting and analysis. Our goal is zero harm to our employees, service providers and
communities where we operate.
UPDATE ON THE GROUP'S CLAIMS PROCESSES
Following the settlement of the Gautrain development period claims, the Group's uncertified revenue as
at the end of June 2017 reduced to R0,9 billion (FY2016: R2 billion). Current uncertified revenue is
primarily represented by the Group's claims on projects in the Middle East, after taking into
consideration a R445 million loan paid on account by a client. All claims are diligently pursued
and stakeholders will be kept informed as to their progress. After a protracted legal process,
the Dubai Airport claim is finally in arbitration, with an award expected in May 2018. Where in
the past uncertified revenue had been taken to account on certain claims, the settlement of those
claims in the recent past has been at revenue levels no lower than what had been taken to account
in respect of those claims.
GRAYSTON PEDESTRIAN BRIDGE TEMPORARY WORKS COLLAPSE - UPDATE
In November 2015, the Department of Labour instituted a Section 32 Inquiry ("the Inquiry") into this incident
to determine the cause or causes for the collapse of the temporary works structure. This formal Inquiry currently
underway, is conducted in terms of the provisions of the Occupational Health and Safety Act, 1993. The Inquiry
was recently paused, but is due to resume again in September 2017. The Board is disappointed at the slow pace
that is delaying closure of this distressing incident for all parties involved.
All costs incurred to date have been expensed as and when incurred. This incident is one of the retained liabilities
following the disposal of the Southern African Infrastructure & Building businesses, and the direct financial
impact of this incident on the Group is not expected to be material considering the comprehensive insurance cover
in place. The project is expected to be completed during the latter part of the 2017 calendar year, and the date
by which the Inquiry will be concluded remains uncertain.
CHANGES TO THE BOARD
Michael McMahon and Royden Vice retired from the Board, effective 30 September 2016 and 30 November 2016 respectively,
having reached the mandatory retirement age for Board members. The Group thanks Michael and Royden for their
contribution to the Board since 2004 and 2005 respectively.
Shareholders are also referred to the announcements released on SENS on 30 November 2016 and 9 March 2017
respectively, regarding the retirement of Cobus Bester as Group Financial Director and the appointment of
Daniël Grobler as Group Financial Director effective 1 April 2017.
Subsequent to year end, Suresh Kana was appointed as independent non-executive chairman to succeed Mahlape Sello,
who will retire as chairman and director of the Group at the conclusion of the 2017 annual general meeting ("AGM").
Furthermore, Dave Barber, who has served as an independent non-executive director since June 2008, will also step
down from the Board at the AGM.
As announced on SENS on 17 August 2017, Ralph Havenstein was appointed as Lead Independent director, and three
new directors, Diane Radley, Emma Mashilwane and Alex Maditsi, were appointed to the Board. Emma Mashilwane and
Diane Radley have been appointed to both the audit & sustainability and risk committees, with Diane assuming
chairmanship of the audit & sustainability committee after the AGM. Alex Maditsi has been appointed to the
health, safety & environment, remuneration and social & ethics committees respectively. In addition,
Xolani Mkhwanazi has been appointed to the social & ethics committee and Ntombi Langa-Royds will be appointed
to the nomination committee after the AGM.
ACQUISITION BY ATON OF A BENEFICIAL INTEREST IN MURRAY & ROBERTS
Shareholders are referred to the SENS announcement released by the Company on 22 February 2017, relating to the
acquisition by ATM Holding GmbH ("ATON"), a company registered in accordance with the laws of Germany, of a material
beneficial interest in Murray & Roberts. As at 30 April 2017, ATON's beneficial interest in Murray & Roberts
increased to 29.998% according to the Group's analysis. The Group has not received any further correspondence
or communication from ATON regarding its intentions in relation to its investment in the Company.
PROSPECTS STATEMENT
The Group's strategy and business model is now clearly defined and the focus is on optimising business performance
and growing shareholder value. The Group's strong financial position and improving financial performance expectations
will support its organic and acquisitive growth plans.
The Group's low order book is reflective of current market conditions, but of a high quality given the prudent
approach we apply to mitigate project risk at tendering stage. While there is some cause for apprehension, near
orders are looking robust and the medium-term project pipeline is strong, specifically in both the Underground
Mining and the Oil & Gas businesses.
Notwithstanding persistently trying market conditions and the possibility for potential future losses from the
Group's remaining non-core businesses, the business in the Middle East and Genrec, we believe an improvement
in the Group's financial performance can be expected in the next financial year. The natural resources market
sector is cyclical and leading researchers are of the opinion that the metals and minerals cycle has already
turned - and our assessment is that the Group is well positioned for the upcycle.
Any forward-looking information contained in this announcement has not been reviewed and reported on by the
Group's external auditors.
On behalf of the directors:
Mahlape Sello Henry Laas Daniel Grobler
Chairman of the Board Group Chief Executive Group Financial Director
Bedfordview
23 August 2017
# The operating performance information disclosed has been extracted from the Group's operational reporting systems.
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 year ended 30 June 2016.
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
for the year ended 30 June 2017
Audited Audited4
Annual Annual
30 June 30 June
R millions 2017 2016
Continuing operations
Revenue 21 397 26 148
- Continuing operations excluding Middle East 20 789 24 445
- Middle East 608 1 703
Profit before interest, depreciation and amortisation 963 1 774
Depreciation (431) (448)
Amortisation of intangible assets (45) (51)
Profit before interest and taxation (note 2) 487 1 275
- Continuing operations excluding Middle East 1 055 1 343
- Middle East (568) (68)
Net interest expense (42) (71)
Profit before taxation 445 1 204
Taxation (161) (296)
Profit after taxation 284 908
Income from equity accounted investments 7 18
Profit from continuing operations 291 926
Loss from discontinued operations (note 3) (253) (136)
Profit for the year 38 790
Attributable to:
- Owners of Murray & Roberts Holdings Limited 48 753
- Non-controlling interests (10) 37
38 790
Earnings per share from continuing and
discontinued operations (cents)
- Diluted 12 182
- Basic 12 189
Earnings per share from continuing operations (cents)
- Diluted 74 215
- Basic 76 223
Supplementary statement of financial performance information
Net asset value per share (Rands) 15 16
Dividends per share (cents) 45 45
Number of ordinary shares in issue ('000) 444 736 444 736
Reconciliation of weighted average number of
shares in issue ('000)
Weighted average number of ordinary shares in issue 444 736 444 736
Less: Weighted average number of shares held by
The Murray & Roberts Trust (30) (30)
Less: Weighted average number of shares held by
the Letsema BBBEE trusts (31 697) (31 711)
Less: Weighted average number of shares held by
the subsidiary companies (15 373) (14 341)
Weighted average number of shares used for basic
per share calculation 397 636 398 654
Add: Dilutive adjustment 8 013 13 865
Weighted average number of shares used for diluted
per share calculation 405 649 412 519
Earnings per share from continuing operations (cents)
- Diluted 74 215
- Adjusted diluted earnings per share excluding Middle East 214 234
- Diluted earnings per share contributed by Middle East (140) (19)
- Basic 76 223
- Adjusted basic earnings per share excluding Middle East 218 242
- Basic earnings per share contributed by Middle East (142) (19)
Headline earnings per share from continuing and discontinued
operations (cents) (note 4)
- Diluted 26 153
- Basic 27 158
Headline earnings per share from continuing
operations (cents) (note 4)
- Diluted 72 178
- Adjusted diluted headline earnings per share excluding Middle East 212 197
- Diluted headline earnings per share contributed by Middle East (140) (19)
- Basic 74 185
- Adjusted basic headline earnings per share excluding Middle East 216 204
- Basic headline earnings per share contributed by Middle East (142) (19)
4 A 38% investment in Forum SA Trading 284 (Pty) Ltd (Property development) was not included in the
sale of the Southern African Infrastructure & Building businesses and has therefore been reclassified
from discontinued operations in the prior year and included as income from continuing operations for
all periods presented.
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2017
Audited Audited
Annual Annual
30 June 30 June
R millions 2017 2016
Profit for the year 38 790
Items that will not be reclassified subsequently
to profit or loss:
Effects of remeasurements on retirement benefit obligations (5) (3)
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations
and realisation of reserve (488) 226
Total comprehensive (loss)/income for the year (455) 1 013
Attributable to:
- Owners of Murray & Roberts Holdings Limited (421) 975
- Non-controlling interests (34) 38
(455) 1 013
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2017
Audited Audited
Annual Annual
30 June 30 June
R millions 2017 2016
ASSETS
Non-current assets 5 049 6 095
Property, plant and equipment 2 058 2 189
Investment property 19 -
Goodwill (note 5) 607 642
Deferred taxation assets 585 604
Investments in associate companies 8 18
Investment in joint venture 73 -
Amounts due from contract customers (note 6) 542 1 514
Other non-current assets 1 157 1 128
Current assets 8 757 9 535
Inventories 280 241
Trade and other receivables 1 167 1 490
Amounts due from contract customers (note 6) 4 914 4 965
Current taxation assets 23 26
Derivative financial instruments 2 -
Cash and cash equivalents 2 371 2 813
Assets classified as held-for-sale 397 2 335
TOTAL ASSETS 14 203 17 965
EQUITY AND LIABILITIES
Total equity 6 605 7 264
Attributable to owners of Murray & Roberts Holdings Limited 6 541 7 201
Non-controlling interests 64 63
Non-current liabilities 665 1 117
Long-term liabilities5 220 650
Long-term provisions 145 187
Deferred taxation liabilities 121 179
Other non-current liabilities 179 101
Current liabilities 6 791 7 694
Amounts due to contract customers (note 6) 1 571 1 522
Accounts and other payables 4 819 5 723
Current taxation liabilities 39 60
Bank overdrafts5 118 76
Short-term loans5 244 313
Liabilities classified as held-for-sale 142 1 890
TOTAL EQUITY AND LIABILITIES 14 203 17 965
5 Interest-bearing borrowings.
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2017
Audited Audited6
Annual Annual
30 June 30 June
R millions 2017 2016
Cash generated by operations 1 055 1 089
Interest received 88 77
Interest paid (138) (148)
Taxation paid (210) (256)
Operating cash flow 795 762
Dividends paid to owners of Murray & Roberts Holdings Limited (194) (211)
Net cash inflow from operating activities 601 551
Acquisition of businesses - (22)
Dividends received from joint venture classified as held-for-sale - 2
Dividends received from associate companies 19 18
Investment in joint venture - (24)
Investment in joint venture held-for-sale (2) -
Purchase of intangible assets other than goodwill (24) (62)
Purchase of property, plant and equipment by entities classified as
held-for-sale (53) -
Purchase of property, plant and equipment (264) (338)
- Replacements (116) (99)
- Additions (395) (332)
- Capitalised finance leases raised (non-cash) 247 93
Proceeds on disposal of property, plant and equipment 45 160
Net (outflow)/inflow on disposal of business (323) 15
Proceeds on disposal of intangible assets other than goodwill 7 -
Proceeds of disposal of assets held-for-sale 37 -
Cash related to assets held-for-sale 259 (257)
Proceeds from realisation of investment 170 54
Other (net) 2 (3)
Net cash outflow from investing activities (127) (457)
Net movement in borrowings (661) (467)
Net acquisition of treasury shares (41) (78)
Net cash outflow from financing activities (702) (545)
Total decrease in net cash and cash equivalents (228) (451)
Net cash and cash equivalents at beginning of year 2 737 2 847
Effect of foreign exchange rates (256) 341
Net cash and cash equivalents at end of year 2 253 2 737
Net cash and cash equivalents comprises:
Cash and cash equivalents 2 371 2 813
Bank overdrafts (118) (76)
Net cash and cash equivalents at end of year 2 253 2 737
6 In the 2016 financial year the non-cash element of capitalised finance leases was in error included
under investing cash flows as purchase of property, plant and equipment (R93 million). Therefore
the 2016 cash flow has been restated with the resulting impact being that the cash outflow from
financing activities increased by R93 million and the cash outflow from investing activities
decreased by R93 million.
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2017
Attributable
to owners
of Murray
& Roberts Non-
Stated Other Retained Holdings controlling Total
R millions capital reserves earnings Limited interests equity
Balance at 30 June 2015 (Audited) 2 586 1 343 2 569 6 498 25 6 523
Total comprehensive income for the year - 224 751 975 38 1 013
Treasury shares acquired (net) (34) - - (34) - (34)
Recognition of share-based payment - 17 - 17 - 17
Utilisation of share-based payment reserve - (44) - (44) - (44)
Transfer to retained earnings - (2) 2 - - -
Dividends declared and paid7 - - (4) (4) - (4)
Dividends declared and paid to owners
of Murray & Roberts Holdings Limited - - (207) (207) - (207)
Balance at 30 June 2016 (Audited) 2 552 1 538 3 111 7 201 63 7 264
Total comprehensive (loss)/income
for the year - (469) 48 (421) (35) (456)
Treasury shares disposed (net) 14 - - 14 - 14
Recognition of share-based payment - 33 - 33 - 33
Realisation of minority interest reserve - (24) (12) (36) 36 -
Utilisation of share-based payment reserve - (55) - (55) - (55)
Transfer to retained earnings - (26) 26 - - -
Dividends declared and paid7 - - (8) (8) - (8)
Dividends declared and paid to owners of
Murray & Roberts Holdings Limited - - (187) (187) - (187)
Balance at 30 June 2017 (Audited) 2 566 997 2 978 6 541 64 6 605
7 Dividends relate to distributions made by entities that hold treasury shares.
SUMMARISED CONSOLIDATED SEGMENTAL ANALYSIS
for the year ended 30 June 2017
Audited Audited
Annual Annual
30 June 30 June
R millions 2017 2016
Revenue8
Bombela & Middle East 729 1 872
Power & Water 5 908 4 276
Underground Mining 8 046 8 788
Oil & Gas 6 714 11 212
Continuing operations 21 397 26 148
Discontinued operations 3 674 4 658
25 071 30 806
Continuing operations
Profit/(loss) before interest and taxation9
Bombela & Middle East (149) 6
Power & Water 171 27
Underground Mining 464 506
Oil & Gas 217 525
Corporate & Properties (216) 211
Profit before interest and taxation 487 1 275
Net interest expense (42) (71)
Profit before taxation 445 1 204
Discontinued operations
Loss before interest and taxation9 (281) (118)
Net interest expense (9) -
Loss before taxation (290) (118)
8 Revenue is disclosed net of inter-segmental revenue. Inter-segmental revenue for the Group is
R70 million (2016: R98 million).
9 The chief operating decision maker utilises profit/(loss) before interest and taxation in the
assessment of a segment's performance.
SEGMENTAL ASSETS (CONTINUING AND DISCONTINUED)
at 30 June 2017
Audited Audited
Annual Annual
30 June 30 June
R millions 2017 2016
Bombela & Middle East10 2 846 5 454
Power & Water11 1 813 1 702
Construction Products Africa12 10 19
Underground Mining 3 615 3 631
Oil & Gas 2 528 2 919
Corporate & Properties13 412 797
11 224 14 522
Reconciliation of segmental assets
Total assets 14 203 17 965
Deferred taxation assets (585) (604)
Current taxation assets (23) (26)
Cash and cash equivalents (2 371) (2 813)
11 224 14 522
SEGMENTAL LIABILITIES (CONTINUING AND DISCONTINUED)
at 30 June 2017
Audited Audited
Annual Annual
30 June 30 June
R millions 2017 2016
Bombela & Middle East10 1 605 4 195
Power & Water11 1 406 1 346
Construction Products Africa12 - 2
Underground Mining 1 909 1 873
Oil & Gas 1 978 2 072
Corporate & Properties13 422 898
7 320 10 386
Reconciliation of segmental liabilities
Total liabilities 7 598 10 701
Deferred taxation liabilities (121) (179)
Current taxation liabilities (39) (60)
Bank overdrafts (118) (76)
7 320 10 386
10 Bombela & Middle East platform includes amounts for discontinued operations Tolcon
& Southern African Infrastructure & Building businesses.
11 Power & Water platform includes amounts for Genrec Engineering that is classified as
part of discontinued operations.
12 Construction Products Africa operating platform is classified as discontinued operations.
13 Corporate segmental assets include the inter-segment eliminations of group loans and receivables.
NOTES
1. BASIS OF PREPARATION
The Group operates in the mining, oil & gas and power & water markets 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 provisional summarised consolidated financial statements for the year ended 30 June 2017 have
been prepared in compliance with the Listings Requirements of the JSE Limited, the framework concepts
and the measurement and recognition requirements of International Financial Reporting Standards ("IFRS"),
the minimum requirements of the International Accounting Standards ("IAS") 34, Interim Financial Reporting,
SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee and the Financial
Pronouncements as issued by the Financial Reporting Standards Council and the Companies Act, No 71 of 2008
("Act"). These summarised consolidated financial statements and the consolidated annual financial statements
were compiled under the supervision of DF Grobler CA)SA, Group financial director and have been audited in
terms of section 29(1) of the Act and signed by the directors on 23 August 2017.
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 2016. There have been no new Standards and Interpretations applied in the
current financial year.
The external auditors, Deloitte & Touche, have issued their opinion on the Group's consolidated financial
statements for the year ended 30 June 2017. The audit was conducted in accordance with International Standards
on Auditing. The auditor responsible for the audit is G Berry. They have issued an unmodified audit opinion
on the consolidated financial statements and provisional summarised consolidated financial statements.
These provisional summarised consolidated financial statements have been derived and are consistent in all
material respects with the Group's consolidated financial statements. A copy of their audit report on the
consolidated financial statements is available for inspection at the Company's registered office.
Any reference to future financial performance included in this announcement has not been audited and
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. Shareholders are therefore advised that in order to obtain
a full understanding of the nature of the auditor's engagement they should obtain a copy of that report
together with the accompanying financial information from the issuer's registered office.
The information presented in the notes below represent audited results for 30 June 2017 and for 30 June 2016.
2. PROFIT BEFORE INTEREST AND TAXATION
Audited Audited
Annual Annual
30 June 30 June
R millions 2017 2016
Items by function
Cost of sales (19 552) (23 199)
Distribution and marketing expenses (11) (9)
Administration costs (2 104) (2 461)
Other operating income 757 796
3. LOSS FROM DISCONTINUED OPERATIONS
Discontinued operations includes the Southern African Infrastructure & Building businesses that were sold
during the current financial year and Genrec operations, where an active process is in place to sell
the business. These operations have met the requirements in terms of IFRS 5 Discontinued Operations
and have been presented as discontinued operations in the Group's statement of financial performance.
3.1 LOSS FROM DISCONTINUED OPERATIONS
Audited Audited4
Annual Annual
30 June 30 June
R millions 2017 2016
Revenue 3 674 4 658
Loss before interest, depreciation and amortisation (279) (8)
Depreciation and amortisation (2) (110)
Loss before interest and taxation (note 3.2) (281) (118)
Net interest expense (9) -
Loss before taxation (290) (118)
Taxation credit/(expense) 37 (18)
Loss after taxation (253) (136)
Income from equity accounted investments14 - -
Loss from discontinued operations (253) (136)
Attributable to:
- Owners of Murray & Roberts Holdings Limited (253) (136)
- Non-controlling interests - -
(253) (136)
3.2 LOSS BEFORE INTEREST AND TAXATION
Loss before interest and taxation
includes the following significant items:
(Loss)/profit on disposal of businesses
(net of transaction and other costs) (28) 6
Fair value adjustment on disposal group held-for-sale (96) (44)
Impairment of property, plant and equipment (net) - (36)
Voluntary Rebuilding Programme charge (170) -
3.3 CASH FLOWS FROM DISCONTINUED OPERATIONS INCLUDE THE FOLLOWING:
Cash flow from operating activities (110) (92)
Cash flow from investing activities (78) (55)
Cash flow from financing activities 25 (29)
Net decrease in cash and cash equivalents (163) (176)
4 A 38% investment in Forum SA Trading 284 (Pty) Ltd (Property development) was not included in
the sale of the Southern African Infrastructure & Building businesses and has therefore
been reclassified from discontinued operations in the prior year and included as income from
continuing operations for all periods presented.
14 Amount is less than R1 million.
4. RECONCILIATION OF HEADLINE EARNINGS
Audited Audited4
Annual Annual
30 June 30 June
R millions 2017 2016
Profit attributable to owners of
Murray & Roberts Holdings Limited 48 753
Loss/(profit) on disposal of
businesses (net) 28 (6)
Profit on disposal of property, plant
and equipment (net) (30) (63)
Profit on sale of assets held-for-sale (net) (17) -
Impairment of assets (net) 11 49
Reversal of impairment of property,
plant and equipment (net) (1) -
Fair value adjustment on disposal group
classified as held-for-sale 96 44
Fair value adjustments and net loss on
disposal of assets held-for-sale - 26
Fair value adjustments on investment property (7) (5)
Fair value adjustments on investment property
(equity accounted investments) - (13)
Realisation of foreign currency translation reserve - (223)
Taxation effects on adjustments (22) 69
Headline earnings 106 631
Adjustments for discontinued operations:
Loss from discontinued operations 253 136
(Loss)/profit on disposal of businesses (net) (28) 6
Profit on disposal of property, plant and
equipment (net) 8 57
Profit on sale of assets held-for-sale (net) 17 -
Fair value adjustment on disposal group
classified as held-for-sale (96) (44)
Fair value adjustments on assets held-for-sale - (26)
Fair value adjustments on investment property 7 5
Fair value adjustments on investment property
(equity accounted investments) - 13
Impairment of property, plant and equipment (net) - (36)
Taxation effects on adjustments 26 (6)
Headline earnings from continuing operations 293 736
4 A 38% investment in Forum SA Trading 284 (Pty) Ltd (Property development) was not included in the
sale of the Southern African Infrastructure & Building businesses and has therefore been
reclassified from discontinued operations in the prior year and included as income from continuing
operations for all periods presented.
5. GOODWILL
Audited Audited
Annual Annual
30 June 30 June
R millions 2017 2016
At the beginning of the year 642 636
Additions through business combinations - 21
Foreign exchange movements (35) 29
Transfer to assets classified as held-for-sale - (44)
607 642
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 30 June 2017, no impairment
was recorded.
6. CONTRACTS-IN-PROGRESS AND CONTRACT RECEIVABLES
Audited Audited
Annual Annual
30 June 30 June
R millions 2017 2016
Contracts-in-progress (cost incurred plus recognised
profits, less recognised losses) 1 903 1 943
Uncertified claims and variations (recognised in
terms of IAS 11: Construction Contracts) 914 2 020
Amounts receivable on contracts (net of
impairment provisions) 2 343 2 241
Retentions receivable (net of impairment provisions) 296 275
5 456 6 479
Amounts received in excess of work completed (1 571) (1 522)
3 885 4 957
Disclosed as:
Amounts due from contract customers - non-current15 542 1 514
Amounts due from contract customers - current 4 914 4 965
Amounts due to contract customers - current (1 571) (1 522)
3 885 4 957
15 The non-current amounts are considered by management to be recoverable.
7. 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.
Audited Audited
Annual Annual
30 June 30 June
R millions 2017 2016
Categories of financial instruments
Financial assets
Financial assets designated as fair value through
profit or loss (level 3) 893 811
Loans and receivables 6 148 6 720
Available-for-sale financial assets carried
at fair value (level 1)14 - -
Derivative financial instruments (level 2)16 2 -
Financial liabilities
Loans and payables 5 146 6 447
14 Amount is less than R1 million.
16 The derivative financial instruments' value has been determined by using forward looking market rates
until the realisation date of the relevant financial institutions.
7.1 FINANCIAL ASSETS DESIGNATED AS FAIR VALUE THROUGH PROFIT OR LOSS
Investment in infrastructure service concession
(level 3)17
At the beginning of the year 811 709
Realisation of investment (170) (54)
Fair value adjustment recognised in the statement
of financial performance 252 156
893 811
17 The fair value of the Bombela Concession Company Proprietary Limited investment is calculated using discounted
cash flow models and a market discount rate of 18,5% (2016: 18,5%). 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 are principally based on inflationary increases in the patronage
revenue and operating costs of the current financial year. A decrease of 1% in the discount rate would result
in an increase in the value of the concession investment of approximately R31,2 million (2016: R34,5 million).
Operating cost includes an operating fee that is payable to the Bombela Operating Company Proprietary Limited
("BOC"), the company responsible for the operation and maintenance of Gautrain. The fee payable to BOC is
subject to annual inflationary increases. The contract is subject to review every fifth year where increases
of more than inflation are considered. An annual operating fee increase of 1% above inflation will result in
a decrease in the value of the concession investment of approximately R17,7 million (2016: R16,1 million).
Operating cost also includes a Railway Usage Fee ("RUF") which constitutes a fee for the use of the system
owned by Gauteng Province. The fee is 50% of the concessionaires excess free cash flow above an 18% real
rate of return. The fee reduces to 35% should the concessionaire comply with certain Socio Economic
Development ("SED") obligations. Historically the SED obligations have been achieved and the valuation is
based on the SED obligations being achieved. If these obligations are not achieved, then the result would
be a decrease in the value of the concession investment of R191 million (2016: R159 million).
Revenue based on patronage is underpinned by the Gauteng Province. The Patronage Guarantee is the difference
between the Minimum Required Total Revenue ("MRTR") and the Actual Total Revenue ("ATR") in each month.
Due to the predictable nature of revenue it is not considered to be a significant unobservable input and
therefore no quantitative information is provided.
8. CONTINGENT LIABILITIES
The Group is from time to time involved in various disputes, claims and legal proceedings arising in the
ordinary course of business. The Group does not account for any potential contingent liabilities where a
back-to-back arrangement exists with the clients or subcontractors and there is a legal right to offset
(R2,4 billion). The Board does not believe that adverse decisions in any pending proceeding or claims
against the Group will have a material adverse effect on the financial condition or future of the Group.
Audited Audited
Annual Annual
30 June 30 June
R millions 2017 2016
Operating lease commitments 1 314 1 703
Contingent liabilities 1 943 2 734
Financial institution guarantees 5 881 8 199
Update on the Group's claim processes
Following the settlement of the Gautrain development period claims, the Group's uncertified revenue as
at the end of June 2017 reduced to R0,9 billion (2016: R2 billion). Current uncertified revenue is
primarily represented by the Group's claims on projects in the Middle East, after taking into
consideration a R445 million loan paid on account by a client. All claims are diligently pursued
and stakeholders will be kept informed as to their progress. After a protracted legal process,
the Dubai Airport claim is finally in arbitration, with an award expected in May 2018.
Grayston Pedestrian Bridge Temporary Works Collapse - Update
In November 2015, the Department of Labour instituted a section 32 Inquiry (the Inquiry") into this incident
to determine the cause or causes for the collapse of the temporary works structure. This formal Inquiry
currently underway, is conducted in terms of the provisions of the Occupational Health and Safety Act, 1993.
The Inquiry was recently paused, but is due to resume again in September 2017. The Board is disappointed at
the slow pace that is delaying closure of this distressing incident for all parties involved.
All costs incurred to date have been expensed as and when incurred. This incident is one of the retained
liabilities following the disposal of the Southern African Infrastructure & Building businesses, and the
direct financial impact of this incident on the Group is not expected to be material considering the
comprehensive insurance cover in place. The project is expected to be completed during the latter part of
the 2017 calendar year, and the date by which the Inquiry will be concluded remains uncertain.
9. BUSINESS DISPOSALS
The Group disposed of its interest in the Southern African Infrastructure & Building businesses, effective
1 April 2017, for a gross consideration of R564 million (R397 million net of transaction costs (R28 million)
and purchase price adjustment (R139 million)).
The gross cash consideration of R314 million was received on 12 May 2017.
The gross deferred consideration of R250 million mainly relates to working capital assets on contracts that
have achieved practical completion as at the effective date, Grayston Pedestrian Bridge and Lonmin receivables.
The amount is payable within five days of recovery, after which interest is calculated at bank deposit rates.
An amount of R56,8 million relating to the deferred consideration has been written off to profit and loss in
the 2017 financial year.
The Group has exposure on the items listed below, should further cost be incurred, which were not sufficiently
provided for as at the effective date, or that are not covered by additional revenue post the effective date:
- Contracts that have achieved practical completion as at effective date;
- Grayston Pedestrian Bridge;
- Lonmin;
- Platinum Toll Highway.
Where the exposure to these items did not meet the recognition criteria for provisions, they have been included
under contingent liabilities, where deemed appropriate.
Analysis of assets and liabilities, classified as assets and liabilities held-for-sale in the previous financial
year, which were sold during the year.
2017
Property, plant and equipment (570)
Investment property (11)
Other investments (6)
Non-current receivables (208)
Inventories (5)
Trade receivables (96)
Contracts-in-progress and contract debtors (359)
Amounts due from contract customers (100)
Cash and cash equivalents (470)
Other intangible assets (4)
Deferred taxation assets (24)
Long-term loans 248
Provisions for obligations 61
Trade and other payables 525
Short-term loans 77
Subcontractor liabilities 314
Amounts due to contract customers 203
Net assets disposed of (425)
Net consideration 397
Consideration received in cash and cash equivalents
(proceeds (R314 million) net of transaction costs (R28 million)
and purchase price adjustment (R139 million)) 147
Deferred consideration recognised as an asset 250
Loss on disposal of business (28)
Net cash outflow on disposal of business
Consideration received in cash and cash equivalents 147
Less: Cash and cash equivalent balances disposed of (470)
(323)
10. DIVIDEND
In terms of the dividend policy, the Board declared a gross dividend of 45 cents per share on 23 August 2017
for the year ended 30 June 2017. The dividends will be declared out of income reserves. The dividend will
be subject to dividend tax. The local dividends tax rate is 20% for South African shareholders, except
where shareholders are exempt for tax purposes. The gross dividend will be 45 cents and dividend net of
dividend tax will be 36 cents. The Group's income tax reference number is 9000203712.
11. RELATED PARTY TRANSACTIONS
There have been no significant changes to the nature of related party transactions since 30 June 2016 or
any transactions outside the normal course of business.
12. EVENTS AFTER REPORTING PERIOD
On 29 June 2017 the board of directors of Murray & Roberts (the 'Board') approved a share repurchase
programme of up to R250 million through Murray & Roberts Limited, a wholly-owned subsidiary of
the Company (the "Share Repurchase"). The cash position of the Company and its subsidiaries is
sufficiently robust to undertake the Share Repurchase. The Share Repurchase is being undertaken
as part of Murray & Roberts' broader capital allocation strategy and specifically in light of
price performance in the Company's shares, which in the Board's view, continues to undervalue
the Company and its prospects.
On 22 August 2017 the Group announced the conclusion of a memorandum of understanding between
all parties, whereby Murray & Roberts Limited ("MRL"), a wholly owned subsidiary of the Company,
will increase its effective shareholding in Bombela Concession Company (RF) (Proprietary) Limited
("BCC") by 17%, through an acquisition of shares from Bouygues Travaux Publics S.A.S ("Bouygues")
and Bombardier Transportation UK Limited ("Bombardier"). The consideration payable in terms of
the Transaction is R405 million. This acquisition is being undertaken as part of Murray & Roberts'
broader capital allocation strategy, as the investment in BCC provides strong returns in the short
to medium term, whilst the Group continue to look for potential acquisitions that would complement
its three operating platforms. Post the Transaction, the investment will still be reflected at
fair value through profit or loss, as the investment will still meet the requirement of IAS28.18
with regards to venture capital organisations or similar entities, and this does not result in a
change of control. The cash position of the Company and its subsidiaries is sufficiently robust
to undertake the acquisition. The implementation of the transaction remains subject to approval
from the Gauteng Management Agency, Competition Authorities and BCC's funders.
The directors are not aware of any other matter or circumstance arising since the end of the
financial year, not otherwise dealt with in the Group and Company annual financial statements,
which significantly affects the financial position at 30 June 2017 or the results of its
operations or cash flows for the year then ended.
ADMINISTRATION
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* DF Grobler R Havenstein* SP Kana*
NB Langa-Royds* AK Maditsi* E Mashilwane* XH Mkhwanazi*
DC Mc Cann* KW Spence*¹
Secretary:
L Kok
¹Australian *Independent non-executive
Website: www.murrob.com
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: 23/08/2017 04:39:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.