Wrap Text
Reviewed Interim Results for the six months ended 31 December 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")
ENGINEERED
EXCELLENCE
OIL & GAS • UNDERGROUND MINING • POWER & WATER
REVIEWED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
Salient features
Financial results:
- Revenue from continuing operations,
increased by 10% to R11,8 billion
- Diluted continuing HEPS,
increased by 104% to 55 cents
- Attributable earnings increased
by 283% to R110 million
- Cash, net of debt,
increased by 18% to R1,3 billion
- Order book for continuing operations
declined by 10% to R22,1 billion
- Strong performance and earnings growth reported by the Underground Mining platform, which is the largest
contributor to Group earnings.
- Acquisition of a further 17% interest (total shareholding now at 50%) in the Bombela Concession Company
(RF) (Proprietary) Limited ("BCC") - an investment yielding strong returns.
- Improvement in Group financial performance is mainly due to a reduced loss in the Middle East and the
one-off charge relating to the Voluntary Rebuild Programme incurred in the prior period, not repeated
in the current period.
- Lost time injury frequency rate ("LTIFR") deteriorated to 1.19 (FY2017 H1: 0.56). Regrettably, one
fatal incident occurred.
STAKEHOLDER REPORT - SIX MONTHS TO DECEMBER 2017#
POSITIONED FOR GROWTH AND VALUE CREATION
Murray & Roberts is a multinational engineering and construction group, with a focused portfolio of businesses
providing services primarily to the natural resources market sectors of metals & minerals, oil & gas and power
& water. The Group is listed under the Diversified Industrials subsector of the JSE Limited ("JSE").
The Group's Statement of Financial Position and robust cash position provide capacity for growth initiatives
to bolster the Group's earnings potential. The Group's organic and acquisitive growth plans are focused on
positioning its businesses in key growth sectors in developed markets, as well as higher-margin segments of
the project life cycle.
FINANCIAL REPORT
FINANCIAL RESULTS
Revenue from continuing operations increased by 10% to R11,8 billion (FY2017 H1: R10,7 billion) and
attributable earnings increased by 283% to R110 million (FY2017 H1: loss of R60 million). Diluted
continuing headline earnings per share ("HEPS") increased by 104% to 55 cents (FY2017 H1: 27 cents).
Cash, net of debt, increased to R1,3 billion (FY2017 H1: R1,1 billion).
Capital expenditure for the six months was R178 million (FY2017 H1: R371 million) of which R151 million
(FY2017 H1: R235 million) was for expansion and R27 million (FY2017 H1: R136 million) for replacement.
The order book for continuing operations declined by 10% to R22,1 billion (FY2017 H1: R24,5 billion).
The reducing order book is reflective of current market conditions and ongoing project delays in the
oil & gas and power & water sectors.
DIVIDEND UPDATE
In terms of the Group's dividend policy, the board of directors of the Company ("Board") will consider
a full-year dividend post year-end with a cover of between three and four times earnings.
OPERATIONAL REPORT
ORDER BOOK, NEAR ORDERS AND PROJECT PIPELINE
The Group's order book is of a high quality given the stringent processes applied at tendering stage to
mitigate project risk. The lower order book in the Oil & Gas and Power & Water platforms is reflective of
market conditions. The increase in Category 1 and 2 values is a leading indicator that market conditions
may be improving with more projects being tendered.
Pipeline
R billions Order book Near orders Category 1 Category 2 Category 3
Oil & Gas 3,8 - 21,6 83,2 355,6
Underground Mining 15,3 10,6 20,4 43,4 15,8
Power & Water 2,7 - 4,1 12,9 18,8
Middle East* 0,3 - - - -
Continuing operations totals 22,1 10,6 46,1 139,5 390,2
Discontinued operations totals - 0,1 1,4 7,4 -
31 December 2017 totals** 22,1 10,7 47,5 146,9 390,2
30 June 2017 totals** 27,0 7,0 38,4 61,5 539,7
* Closing of the business in the Middle East - remaining projects expected to be completed by end FY2018
** Total for continuing and discontinued operations
# 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 six months ended 31 December 2016.
- 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 submitted or 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 win probability
- Category 2: Budgets, feasibilities and prequalification the Group is currently working on - project planning
underway, not at a stage yet 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
OIL & GAS PLATFORM
Corporate
Construction Commissioning overheads
R millions Engineering & Fabrication Global Marine & Brownfields and other Total
December 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Revenue 536 733 118 116 - 258 3 963 1 790 76 134 4 693 3 031
Operating
profit/(loss) 48 45 (44) (23) (21) 22 293 229 (177) (170) 99 103
Margin (%) 9% 6% (37%) (20%) - 9% 7% 13% - - 2% 3%
Order book 283 1 011 992 952 - 151 2 540 2 820 - - 3 815 4 934
Segment assets 2 656 2 540
Segment liabilities 2 411 1 677
LTIFR (fatalities) 0.30(0) 0.00(0)
Revenue increased to R4,7 billion (FY2017 H1: R3 billion), predominantly due to scope growth on the Wheatstone and
Ichthys commissioning projects, which are nearing completion. Notwithstanding revenue growth, operating profit reduced to
R99 million (FY2017 H1: R103 million), reflective of lower margins in a very competitive market. The order book decreased
to R3,8 billion (FY2017 H1: R4,9 billion), comprising smaller value and shorter duration orders, as all large value
orders have been delivered. The platform regularly reviews and adjusts its cost structures.
The platform is expanding its international footprint, although earnings are still largely derived from Australasia.
The Group is pleased to note the stabilisation in the crude oil price around US$60 per barrel and the improved market
outlook for LNG demand. However, earnings growth from project services to the Australasian oil and gas market is only
expected in the medium term, whilst brownfields developments will be the main source of earnings from this sector
for the next few years.
In the context of a slow oil and gas market, greater emphasis is placed on complementary growth markets such as
Australia's metals & minerals and infrastructure markets, previously well serviced by Clough. The platform is
positioned to pursue selected opportunities in these markets.
The platform's international operations outside Australasia comprise small niche engineering and consulting
businesses. Progress is being made with a potential small acquisition of an oil and gas engineering and construction
company in the USA, which will serve as a basis for the platform to extend its construction services to the growing
oil and gas sector in the USA.
UNDERGROUND MINING PLATFORM
R millions Africa Australasia The Americas Total
December 2017 2016 2017 2016 2017 2016 2017 2016
Revenue 1 874 1 718 926 901 1 325 1 483 4 125 4 102
Operating profit 101 41 70 99 68 58 239 198
Margin (%) 5% 2% 8% 11% 5% 4% 6% 5%
Order book 9 307 9 162 2 694 1 212 3 287 2 544 15 288 12 918
Segment assets 1 101 1 129 977 906 1 572 1 725 3 650 3 760
Segment liabilities 999 931 331 328 433 608 1 763 1 867
LTIFR (fatalities) 2.47(0) 1.09(0) 3.29(1) 0.92(0) 1.89(0) 2.83(0) 2.51(1) 1.31(0)
The Underground Mining platform delivered a strong financial performance and is the largest contributor to Group
earnings for the period under review. Revenue was maintained at R4,1 billion (FY2017 H1: R4,1 billion) but
operating profit increased to R239 million (FY2017 H1: R198 million). The order book also increased to
R15,3 billion (FY2017 H1: R12,9 billion) against the background of improving market conditions.
Based on market research guidance, the Group expects the improvement in commodity prices and increased
investment by mining companies to present long-term growth potential for this business. Tendering teams in
all geographies are currently experiencing high levels of activity. Market conditions are improving in all
jurisdictions, including the USA and Canada, which have been lagging compared to Australia and Africa.
Murray & Roberts Cementation has been notified by Northam Platinum that it will take over the mining operations
as an owner-miner at Booysendal, when the current contract runs out at the end of June 2018. The Kalagadi
contract mining project has commenced and will partly offset the loss of income from Booysendal.
There are substantial near orders and a large pipeline of underground mining projects in regions where the
platform operates.
POWER & WATER PLATFORM
Corporate
Electrical & overheads
R millions Power1 Water Oil & Gas Instrumentation and other Total
December 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Revenue 2 358 2 471 26 34 178 373 81 83 - - 2 643 2 961
Operating profit/(loss) 150 98 7 4 (19) 31 11 57 (98) (124) 51 66
Margin (%) 6% 4% 27% 12% (11%) 8% 14% 69% - - 2% 2%
Order book 2 387 5 567 - 9 287 189 23 2 - - 2 697 5 767
Segment assets 1 438 1 515
Segment liabilities 1 039 1 210
LTIFR (fatalities) 0.40(0) 1.05(0)
1 Power programme contracts.
Financial results and order book are declining as the Medupi and Kusile power station projects near completion.
Revenue decreased to R2,6 billion (FY2017 H1: R3 billion) and operating profit to R51 million (FY2017 H1: R66 million).
The order book decreased to R2,7 billion (FY2017 H1: R5,8 billion). The platform regularly reviews and adjusts its cost
structures.
The platform's financial results continued to be underpinned by Medupi and Kusile, where work is expected to be
largely completed towards the end of calendar year 2018. The power sector in South Africa is presenting very little
opportunity as new power station projects have all been delayed, with no other large alternative opportunities
identified for the short to medium term.
While the water treatment sector in South Africa is presenting increasing opportunity, it is not yet of sufficient
scale to materially and positively impact the platform's financial performance. Our service offering includes
desalination, municipal wastewater treatment technologies, industrial modular water treatment plants and acid
mine drainage.
Overall, market conditions remain challenging and highly competitive. Smaller maintenance opportunities are expected
at Medupi and Kusile in the short to medium term and efforts are ongoing to replenish the order book with a particular
focus on prospects in complementary markets such as mining, pulp and paper, chemicals and energy. Opportunities are
emerging in refined product terminals in South Africa, Ghana and Mozambique, which the platform is actively
pursuing in collaboration with the Oil & Gas platform. The platform is also providing structural, mechanical, electrical,
instrumentation and piping construction services to Sasol.
INVESTMENTS
The acquisition of an additional 17% in BCC was concluded on 8 December 2017 and a subsequent increase in the fair
value of this investment was recorded. This investment is yielding strong returns and the Group continues to explore
investment opportunities that could secure project work for its three business platforms.
BOMBELA & MIDDLE EAST
Bombela
R millions Investments Middle East Total
December 2017 2016 2017 2016 2017 2016
Revenue - 120 347 439 347 559
Operating profit/(loss) 139 171 (67) (173) 72 (2)
Margin (%) - 143% (19%) (39%) 21% -
Order book - - 267 906 267 906
Segment assets 1 376 717 1 577 1 770 2 953 2 487
Segment liabilities 32 149 1 367 1 556 1 399 1 705
MIDDLE EAST BUSINESS
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. The four residual projects are expected to be completed by the end of
FY2018. No further material project losses are envisaged from this business. Costs during FY2018 should be
limited to a significantly reduced overhead cost and legal fees on the Dubai Airport dispute, for which an
award is anticipated in early November 2018.
DISCONTINUED OPERATIONS
I&B Businesses Clough Genrec
R millions and other2 Properties Engineering Total
December 2017 2016 2017 2016 2017 2016 2017 2016
Revenue 145 2 411 3 6 189 135 337 2 552
Operating loss (43) (139) (1) (2) (90) (23) (134) (164)
2 Includes Tolcon and Construction Products Africa.
Genrec recorded an operating loss of R90 million, primarily due to its high fixed cost base and low levels
of revenue. The sale of Genrec is well advanced and should be concluded by the end of the third quarter of
FY2018. The Infrastructure & Building businesses disposed of in FY2017 recorded an operating loss of
R42 million, due to an updated view on the forecast cost to close out the retained assets and liabilities.
HEALTH AND SAFETY
The Board deeply regrets the death of Hendry Munardi (49), a RUC Cementation (Australia) employee, on
17 October 2017. Hendry passed on due to asphyxiation while performing his duties at the Big Gossan mine in
Freeport (Indonesia). The Group's LTIFR deteriorated to 1.19 (FY2017 H1: 0.56). This is largely attributable
to the exclusion of statistics from the business in the Middle East, which is in the process of closure and
a less than satisfactory performance in a now completed underground mining project in South Africa.
UPDATE ON THE GROUP'S CLAIMS PROCESSES
The Group's uncertified revenue as at the end of December 2017 remained at R1 billion (FY2017 H1: R1 billion),
largely represented by claims on projects in the Middle East. All claims are diligently pursued and stakeholders
will be kept informed as to their progress.
Further to the update shared on SENS on 2 February 2018, the Dubai International Arbitration Centre extended
its deadline for the award on the Dubai Airport dispute from May to November 2018. This is a large and complex
dispute and the arbitration Tribunal requested more time within which to deliver its award.
GRAYSTON PEDESTRIAN BRIDGE TEMPORARY WORKS COLLAPSE - UPDATE
The Department of Labour instituted a Section 32 Inquiry ("the Inquiry") in November 2015 into this incident
to determine the cause or causes of the collapse of the temporary works structure. The Inquiry was recently
paused, but is due to resume again in July 2018. The Board is disappointed by the slow progress that is
delaying closure of this distressing incident for all parties involved.
CHANGES TO THE BOARD
Emma Mashilwane and Diane Radley have been appointed to both the audit & sustainability and the risk committees, with
Diane assuming chairmanship of the audit & sustainability committee. Alex Maditsi has been appointed to the health, safety &
environment, remuneration and social & ethics committees. Xolani Mkhwanazi has been appointed to the social & ethics committee
and Ntombi Langa-Royds to the nomination committee with effect from 2 November 2017.
PROSPECTS STATEMENT
The New Strategic Future plan was designed with two phases in mind:
- optimising the Group's portfolio of businesses; and
- positioning the Group for sustainable growth and value creation.
The first phase of this strategy has been largely completed and the Board is now focused on enhancing business
performance and growing shareholder value. The Group's robust financial position provides the capacity to
support its organic and acquisitive growth plans.
The sustainable growth and value creation aspiration is based on the long-term demand for natural resources.
The drivers of such growth include a growing global population, global economic growth and ever increasing
urbanisation.
The Group is experiencing improved trading conditions in the Underground Mining platform, but the current
market outlook for the Oil & Gas and Power & Water platforms remains challenging. In this context,
the Group continues to focus on cost reduction and operational excellence to maintain and improve margins.
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:
Suresh Kana Henry Laas Daniël Grobler
Chairman of the Board Group Chief Executive Group Financial Director
Bedfordview
28 February 2018
REGISTERED OFFICE: REGISTRAR:
Douglas Roberts Centre, Link Market Services South Africa Proprietary
22 Skeen Boulevard, Limited
Bedfordview 2007 13th Floor, Rennie House, 19 Ameshoff
Street, Braamfontein, 2001
PO Box 1000 PO Box 4844
Bedfordview 2008 Johannesburg 2000
SPONSOR
Deutsche Securities (SA) Proprietary Limited
DIRECTORS
SP Kana^ (Chairman) HJ Laas (Managing & Chief Executive) DF Grobler R Havenstein^ NB Langa-Royds^
AK Maditsi^ E Mashilwane^ XH Mkhwanazi^ DC McCann (Radley)^ KW Spence^˜
SECRETARY
L Kok
˜Australian
^ Independent non-executive
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.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
for the six months ended 31 December 2017
Reviewed Reviewed3 Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2017 2016 2017
Continuing operations
Revenue 11 809 10 653 21 397
- Continuing operations excluding Middle East 11 462 10 214 20 789
- Middle East 347 439 608
Profit before interest, depreciation and amortisation 589 498 963
Depreciation (218) (224) (431)
Amortisation of intangible assets (22) (22) (45)
Profit before interest and taxation (note 2) 349 252 487
- Continuing operations excluding Middle East 416 425 1 055
- Middle East (67) (173) (568)
Net interest expense (17) (27) (42)
Profit before taxation 332 225 445
Taxation (126) (112) (161)
Profit after taxation 206 113 284
Income from equity accounted investments 15 5 7
Profit from continuing operations 221 118 291
Loss from discontinued operations (note 3) (114) (178) (253)
Profit/(loss) for the period 107 (60) 38
Attributable to:
- Owners of Murray & Roberts Holdings Limited 110 (60) 48
- Non-controlling interests (3) - (10)
107 (60) 38
Earnings per share from continuing and
discontinued operations (cents)
- Diluted 27 (15) 12
- Basic 28 (15) 12
Earnings per share from continuing operations (cents)
- Diluted 55 29 74
- Basic 56 30 76
Supplementary information
Net asset value per share (Rands) 14 14 15
Dividends per share (cents) - - 45
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 (10) (30) (30)
Less: Weighted average number of shares held
by the Letsema BBBEE trusts (31 696) (31 697) (31 697)
Less: Weighted average number of shares held by
the subsidiary companies (15 988) (15 912) (15 373)
Weighted average number of shares used for basic per
share calculation 397 042 397 097 397 636
Add: Dilutive adjustment 7 026 19 615 8 013
Weighted average number of shares used for diluted
per share calculation 404 068 416 712 405 649
Earnings per share from continuing operations (cents)
- Diluted 55 29 74
- Adjusted diluted earnings per share excluding Middle East 72 71 214
- Diluted earnings per share contributed by Middle East (17) (42) (140)
- Basic 56 30 76
- Adjusted basic earnings per share excluding Middle East 74 75 218
- Basic earnings per share contributed by Middle East (18) (45) (142)
Headline earnings per share from continuing and
discontinued operations (cents) (note 4)
- Diluted 28 (4) 26
- Basic 28 (4) 27
Headline earnings per share from continuing operations
(cents) (note 4)
- Diluted 55 27 72
- Adjusted diluted headline earnings per share excluding
Middle East 72 69 212
- Diluted headline earnings per share contributed by Middle East (17) (42) (140)
- Basic 56 28 74
- Adjusted basic headine earnings per share excluding Middle East 74 73 216
- Basic headline earnings per share contributed by Middle East (18) (45) (142)
3 A 38% investment in Forum SA Trading 284 (Pty) Ltd (Property development) was not included in the sale of the
Southern African Infrastructure and Building businesses and has therefore been reclassified from discontinued
operations in the prior period and included as continuing operations for all periods presented.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 December 2017
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2017 2016 2017
Profit/(loss) for the period 107 (60) 38
Items that will not be reclassified subsequently to
profit or loss:
Effects of remeasurements on retirement benefit obligations - - (5)
Items that will be reclassified subsequently to
profit or loss:
Exchange differences on translating foreign operations
and realisation of reserve (160) (423) (488)
Total comprehensive loss for the period (53) (483) (455)
Attributable to:
- Owners of Murray & Roberts Holdings Limited (50) (524) (421)
- Non-controlling interests (3) 41 (34)
(53) (483) (455)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2017
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2017 2016 2017
ASSETS
Non-current assets 5 168 4 939 5 049
Property, plant and equipment 1 877 2 105 2 058
Investment property 19 - 19
Goodwill (note 5) 601 607 607
Deferred taxation assets 538 540 585
Investments in associate companies 23 15 8
Investment in joint venture 73 - 73
Amounts due from contract customers (note 6) 513 586 542
Other non-current assets 1 524 1 086 1 157
Current assets 8 770 8 792 8 757
Inventories 318 288 280
Trade and other receivables 939 1 209 1 167
Amounts due from contract customers (note 6) 5 223 5 118 4 914
Current taxation assets 26 9 23
Derivative financial instruments - - 2
Cash and cash equivalents 2 264 2 168 2 371
Assets classified as held for sale 351 2 190 397
TOTAL ASSETS 14 289 15 921 14 203
EQUITY AND LIABILITIES
Total equity 6 310 6 556 6 605
Attributable to owners of Murray & Roberts Holdings Limited 6 269 6 414 6 541
Non-controlling interests 41 142 64
Non-current liabilities 548 1 258 665
Long-term liabilities4 191 697 220
Long-term provisions 132 157 145
Deferred taxation liabilities 68 183 121
Other non-current liabilities 157 221 179
Current liabilities 7 313 6 448 6 791
Amounts due to contract customers (note 6) 1 625 1 435 1 571
Accounts and other payables 4 882 4 647 4 819
Current taxation liabilities 58 14 39
Bank overdrafts4 523 64 118
Short-term loans4 225 288 244
Liabilities classified as held for sale 118 1 659 142
TOTAL EQUITY AND LIABILITIES 14 289 15 921 14 203
4 Interest-bearing borrowings.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 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 2016 (Audited) 2 552 1 538 3 111 7 201 63 7 264
Total comprehensive (loss)/income
for the period - (464) (60) (524) 41 (483)
Treasury shares acquired (net) (14) - - (14) - (14)
Recognition of share-based payment - 26 - 26 - 26
Utilisation of share-based payment reserve - (50) - (50) - (50)
Transfer from retained earnings - 2 (2) - - -
Realisation of non-controlling interests - (24) (14) (38) 38 -
Dividends declared and paid to owners
of Murray & Roberts Holdings Limited - - (187) (187) - (187)
Balance at 31 December 2016 (Reviewed) 2 538 1 028 2 848 6 414 142 6 556
Total comprehensive (loss)/income
for the period - (5) 108 103 (76) 27
Treasury shares disposed (net) 28 - - 28 - 28
Recognition of share-based payment - 7 - 7 - 7
Realisation of non-controlling interests - - 2 2 (2) -
Utilisation of share-based payment reserve - (5) - (5) - (5)
Transfer to retained earnings - (28) 28 - - -
Dividends declared and paid5 - - (8) (8) - (8)
Balance at 30 June 2017 (Audited) 2 566 997 2 978 6 541 64 6 605
Total comprehensive (loss)/income
for the period - (160) 110 (50) (3) (53)
Treasury shares disposed (net) 10 - - 10 - 10
Recognition of share-based payment - 10 - 10 - 10
Utilisation of share-based payment reserve - (48) - (48) - (48)
Repayment of equity loans from
non-controlling interests - - - - (20) (20)
Dividends declared and paid to owners of
Murray & Roberts Holdings Limited - - (194) (194) - (194)
Balance at 31 December 2017 (Reviewed) 2 576 799 2 894 6 269 41 6 310
5 Dividends relate to distributions made by entities that hold treasury shares.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 December 2017
Reviewed Reviewed6 Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2017 2016 2017
Cash generated by operations 400 279 1 055
Interest received 31 52 88
Interest paid (50) (79) (138)
Taxation paid (106) (111) (210)
Operating cash flow 275 141 795
Dividends paid to owners of Murray & Roberts Holdings Limited (194) (187) (194)
Net cash inflow/(outflow) from operating activities 81 (46) 601
Dividends received from associate companies - 9 19
Investment in joint venture held for sale - (1) (2)
Purchase of intangible assets other than goodwill (6) (11) (24)
Purchase of property, plant and equipment by entities
classified as held for sale (1) - (53)
Purchase of property, plant and equipment (82) (168) (264)
- Replacements (27) (136) (116)
- Expansions (151) (235) (395)
- Capitalised finance leases raised (non-cash) 96 203 247
Proceeds on disposal of property, plant and equipment 76 23 45
Net outflow on disposal of business - - (323)
Proceeds on disposal of intangible assets other than goodwill - 14 7
Proceeds on disposal of assets held for sale - 8 37
Cash related to assets held for sale (26) (303) 259
Proceeds from realisation of investment 106 122 170
Purchase of additional investment in Bombela Concession Company (357) - -
Other (net) (2) (1) 2
Net cash outflow from investing activities (292) (308) (127)
Net movement in borrowings (163) 30 (661)
Net acquisition of treasury shares (37) (64) (41)
Net cash outflow from financing activities (200) (34) (702)
Total decrease in net cash and cash equivalents (411) (388) (228)
Net cash and cash equivalents at beginning of period 2 253 2 737 2 737
Effect of foreign exchange rates (101) (245) (256)
Net cash and cash equivalents at end of period 1 741 2 104 2 253
Net cash and cash equivalents comprises:
Cash and cash equivalents 2 264 2 168 2 371
Bank overdrafts (523) (64) (118)
Net cash and cash equivalents at end of period 1 741 2 104 2 253
6 In the 2017 financial half year results, the non-cash element of capitalised finance leases was in error
included under investing cash flows as purchase of property, plant and equipment (R203 million). Therefore
the 2017 financial half year cash flow has been restated with the resulting impact being that the cash inflow
from financing activities decreased by R203 million and the cash outflow from investing activities decreased
by R203 million.
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
for the six months ended 31 December 2017
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2017 2016 2017
Revenue7
Bombela & Middle East 347 559 729
Power & Water 2 643 2 961 5 908
Underground Mining 4 125 4 102 8 046
Oil & Gas 4 693 3 031 6 714
Corporate & Properties 1 - -
Continuing operations 11 809 10 653 21 397
Discontinued operations 337 2 552 3 674
12 146 13 205 25 071
Continuing operations
Profit/(loss) before interest and taxation8
Bombela & Middle East 72 (2) (149)
Power & Water 51 66 171
Underground Mining 239 198 464
Oil & Gas 99 103 217
Corporate & Properties (112) (113) (216)
Profit before interest and taxation 349 252 487
Net interest expense (17) (27) (42)
Profit before taxation 332 225 445
Discontinued operations
Loss before interest and taxation8 (134) (164) (281)
Net interest expense (2) - (9)
Loss before taxation (136) (164) (290)
7 Revenue is disclosed net of inter-segmental revenue. Inter-segmental revenue for the Group is R70 million
(FY2017 H1: R39 million).
8 The chief operating decision maker utilises profit/(loss) before interest and taxation in the assessment
of a segment's performance.
SEGMENTAL ASSETS (CONTINUING & DISCONTINUED)
at 31 December 2017
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2017 2016 2017
Bombela & Middle East 2 953 2 487 2 767
Power & Water 1 438 1 515 1 527
Underground Mining 3 650 3 760 3 615
Oil & Gas 2 656 2 540 2 528
Corporate & Properties9 237 1 120 412
Continuing operations 10 934 11 422 10 849
Discontinued operations10 527 1 782 375
11 461 13 204 11 224
Reconciliation of segmental assets
Total assets 14 289 15 921 14 203
Deferred taxation assets (538) (540) (585)
Current taxation assets (26) (9) (23)
Cash and cash equivalents (2 264) (2 168) (2 371)
11 461 13 204 11 224
SEGMENTAL LIABILITIES (CONTINUING & DISCONTINUED)
at 31 December 2017
Reviewed Reviewed Audited
6 months to 6 months to Annual
31 December 31 December 30 June
R millions 2017 2016 2017
Bombela & Middle East 1 399 1 705 1 528
Power & Water 1 039 1 210 1 341
Underground Mining 1 763 1 867 1 909
Oil & Gas 2 411 1 677 1 978
Corporate & Properties9 381 890 422
Continuing operations 6 993 7 349 7 178
Discontinued operations10 337 1 755 142
7 330 9 104 7 320
Reconciliation of segmental liabilities
Total liabilities 7 979 9 365 7 598
Deferred taxation liabilities (68) (183) (121)
Current taxation liabilities (58) (14) (39)
Bank overdrafts (523) (64) (118)
7 330 9 104 7 320
9 Corporate segmental assets and liabilities include the inter-segment eliminations of group balances and transactions.
10 Discontinued operations include Genrec Engineering, Southern African Infrastructure & Building businesses and
Construction Products Africa.
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 condensed consolidated interim financial statements for the period ended 31 December 2017 have been prepared
in accordance with and containing the information required by the International Financial Reporting Standards (IFRS)
(IAS 34), Interim Financial Reporting, the SAICA Financial Reporting Guides, as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and
the requirements of the Companies Act of South Africa. The condensed consolidated financial information was
compiled under the supervision of DF Grobler (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 2017. There have been no new Standards and Interpretations applied in the current financial year.
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 auditor. 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 auditor's
engagement they should obtain a copy of the auditor's report together with the accompanying financial information
from the registered office.
The information presented in the notes below represent audited results for 30 June 2017 and reviewed results
for 31 December 2016 and 31 December 2017.
2. PROFIT BEFORE INTEREST AND TAXATION
31 December 31 December 30 June
R millions 2017 2016 2017
Items by function
Cost of sales (10 695) (9 392) (19 552)
Distribution and marketing expenses (3) (2) (11)
Administration costs (990) (1 257) (2 104)
Other operating income 228 250 757
3. LOSS FROM DISCONTINUED OPERATIONS
Discontinued operations for the current period include Genrec operations, where an active process is in place
to sell the business as well as Southern African Infrastructure & Building businesses not part of the sale
completed in the prior year. 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
31 December 31 December3 30 June
R millions 2017 2016 2017
Revenue 337 2 552 3 674
Loss before interest, depreciation and amortisation (134) (162) (279)
Depreciation and amortisation - (2) (2)
Loss before interest and taxation (note 3.2) (134) (164) (281)
Net interest expense (2) - (9)
Loss before taxation (136) (164) (290)
Taxation credit/(expense) 22 (14) 37
Loss after taxation (114) (178) (253)
Income from equity accounted investments - - -
Loss from discontinued operations (114) (178) (253)
Attributable to:
- Owners of Murray & Roberts Holdings Limited (114) (178) (253)
- Non-controlling interests - - -
(114) (178) (253)
3.2 LOSS BEFORE INTEREST AND TAXATION
Loss before interest and taxation includes the
following significant items:
Loss on disposal of businesses (net of transaction
and other costs) - - (28)
Fair value adjustment on disposal group classified as held for sale (8) (79) (96)
Voluntary Rebuild Programme charge - (170) (170)
3.3 CASH FLOWS FROM DISCONTINUED OPERATIONS INCLUDE THE FOLLOWING:
Cash flow from operating activities (67) 199 (110)
Cash flow from investing activities (27) (20) (78)
Cash flow from financing activities 49 32 25
Net (decrease)/increase in cash and cash equivalents (45) 211 (163)
3 A 38% investment in Forum SA Trading 284 (Pty) Ltd (Property development) was not included in the sale of the
Southern African Infrastructure and Building businesses and has therefore been reclassified from discontinued
operations in the prior period and included as continuing operations for all periods presented.
4. RECONCILIATION OF HEADLINE EARNINGS
31 December 31 December3 30 June
R millions 2017 2016 2017
Profit/(loss) attributable to owners of
Murray & Roberts Holdings Limited 110 (60) 48
Loss on disposal of businesses (net) - - 28
Profit on disposal of property, plant and equipment (net) (2) (18) (30)
Profit on sale of assets held for sale (net) - - (17)
Impairment of assets (net) - - 11
Reversal of impairment of property, plant and equipment (net) (2) (1) (1)
Fair value adjustment on disposal group classified as held for sale 8 79 96
Fair value adjustments on investment property - - (7)
Taxation effects on adjustments (1) (17) (22)
Headline earnings 113 (17) 106
Adjustments for discontinued operations:
Loss from discontinued operations 114 178 253
Loss on disposal of businesses (net) - - (28)
Profit on disposal of property, plant and equipment (net) - - 8
Profit on sale of assets held for sale (net) - 10 17
Fair value adjustment on disposal group classified as held for sale (8) (79) (96)
Fair value adjustments on investment property - - 7
Taxation effects on adjustments 2 19 26
Headline earnings from continuing operations 221 111 293
3 A 38% investment in Forum SA Trading 284 (Pty) Ltd (Property development) was not included in the sale of the
Southern African Infrastructure and Building businesses and has therefore been reclassified from discontinued
operations in the prior period and included as continuing operations for all periods presented.
5. GOODWILL
31 December 31 December 30 June
R millions 2017 2016 2017
At the beginning of the year 607 642 642
Foreign exchange movements (6) (35) (35)
601 607 607
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 2017, no impairment was recorded.
6. CONTRACTS-IN-PROGRESS AND CONTRACT RECEIVABLES
31 December 31 December 30 June
R millions 2017 2016 2017
Contracts-in-progress (cost incurred plus recognised
profits, less recognised losses) 2 082 2 184 1 903
Uncertified claims and variations less payments received
on account of R438 million (FY2017: R445 million)
(recognised in terms of IAS 11: Construction Contracts) 1 026 945 914
Amounts receivable on contracts (net of impairment provisions) 2 372 2 215 2 343
Retentions receivable (net of impairment provisions) 256 360 296
5 736 5 704 5 456
Amounts received in excess of work completed (1 625) (1 435) (1 571)
4 111 4 269 3 885
Disclosed as:
Amounts due from contract customers - non-current11 513 586 542
Amounts due from contract customers - current 5 223 5 118 4 914
Amounts due to contract customers - current (1 625) (1 435) (1 571)
4 111 4 269 3 885
11 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.
31 December 31 December 30 June
R millions 2017 2016 2017
Categories of financial instruments
Financial assets
Financial assets designated as fair value
through profit or loss (level 3) 1 283 806 893
Loans and receivables 5 803 6 105 6 148
Derivative financial instruments (level 2)12 - - 2
Financial liabilities
Loans and payables13 5 196 4 972 4 566
12 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.
13 The prior period amounts reflected in financial liabilities have been adjusted due to the incorrect inclusion
of provisions.
7.1 FINANCIAL ASSETS DESIGNATED AS FAIR VALUE THROUGH PROFIT OR LOSS
31 December 31 December 30 June
R millions 2017 2016 2017
Investment in infrastructure service concession
(level 3)14
At the beginning of the year 893 811 811
Additions 357 - -
Realisation of investment (106) (122) (170)
Fair value adjustment recognised in the statement
of financial performance 139 117 252
1 283 806 893
14 The Group concluded the acquisition of a further 17% in the Bombela Concession Company (RF) (Proprietary)
Limited ("BCC") for an adjusted purchase price of R357 million in December 2017 (Original purchase price
of R405 million adjusted for dividends declared and interest from 1 October 2017). The Group's investment
in BCC has therefore increased to 50% (FY2017: 33%). Post the transaction, the investment is still reflected
at fair value through profit or loss, as the investment meets the requirement of IAS 28.18 with regards to
venture capital organisations or similar entities, as the transaction does not result in a change of control.
The fair value of the BCC is calculated using discounted cash flow models and a market discount rate of 18,5%
(FY2017: 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 period. 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 period. A decrease of 1% in the discount rate would result in an increase in the value of the
concession investment of approximately R44,9 million (FY2017: R31,2 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 R9 million (FY2017: R17,7 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 R301 million (FY2017: R191 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 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.
31 December 31 December 30 June
R millions 2017 2016 2017
Operating lease commitments 1 159 1 463 1 314
Contingent liabilities 2 210 2 034 1 943
Financial institution guarantees 6 203 6 410 5 881
Update on the Group's claim processes
The Group's uncertified revenue as at the end of December 2017 remained at R1 billion (FY2017 H1: R1 billion),
largely represented by claims on projects in the Middle East. All claims are diligently pursued and stakeholders
will be kept informed as to their progress.
Further to the update shared on SENS on 2 February 2018, the Dubai International Arbitration Centre extended
its deadline for the award on the Dubai Airport dispute from May to November 2018. This is a large and complex
dispute and the arbitration Tribunal requested more time within which to deliver its award.
Grayston Pedestrian Bridge Temporary Works Collapse - Update
The Department of Labour instituted a Section 32 Inquiry ("the Inquiry") in November 2015 into this incident to
determine the cause or causes of the collapse of the temporary works structure. The Inquiry was recently paused,
but is due to resume again in July 2018. The Board is disappointed by the slow progress that is delaying closure
of this distressing incident for all parties involved.
9. DIVIDEND
A gross annual dividend, relating to the 30 June 2017 financial year, of 45 cents per share was declared in August
2017 and paid during the period. In line with the approved dividend policy, the board of directors will consider
paying an annual dividend.
10. RELATED PARTY TRANSACTIONS
There have been no significant changes to the nature of related party transactions since 30 June 2017 or any
transactions outside the normal course of business.
11. EVENTS AFTER REPORTING DATE
The directors are not aware of any matter or circumstance arising after the period ended 31 December 2017,
not otherwise dealt with in the Group's interim results, which significantly affects the financial position at
31 December 2017 or the results of its operations or cash flows for the period then ended.
website: www.murrob.com
e-mail: clientservice@murrob.com
Date: 28/02/2018 03:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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