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Seventy-Fifth Annual General Meeting - Business Update
MURRAY & ROBERTS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1948/029826/06
JSE Share Code: MUR
ADR Code: MURZY
ISIN: ZAE000073441
("Group" or "Murray & Roberts" or "Company")
SEVENTY-FIFTH ANNUAL GENERAL MEETING
The Group released its FY2023 annual financial results on 30 August 2023 and annual
integrated report on 29 September 2023. Full details of the Group's financial results and annual
integrated report have been published on its website at www.murrob.com.
REFLECTION ON FINANCIAL YEAR 2023
The financial year ended 30 June 2023 has been the most challenging period for Murray &
Roberts since the 2008 global financial crisis. The pandemic created an exceptionally difficult
operating environment, impacting to different degrees the Group's entire multibillion rand
project portfolio, a material outcome of which was a significant increase in working capital.
Exacerbating this outcome was that the Company did not receive any dividends from its
investment in the Bombela Concession Company (RF) Proprietary Limited ("Bombela") or its
international businesses, for the entire period of the pandemic.
Ultimately, the Group's balance sheet and funding facilities could not sustain the increased
working capital requirements and Murray & Roberts Pty Ltd ("MRPL"), the Group's holding
company in Australia, was placed under voluntary administration by the directors of MRPL on
5 December 2022. In consequence, the Group's ownership in MRPL and its two subsidiary
companies (Clough Limited ("Clough") and RUC Cementation Mining Contractors Pty Ltd
("RUC")) terminated.
These developments, combined with the Company's level of prevailing debt, let to stakeholder
concern regarding the sustainability of Murray & Roberts.
BUSINESS UPDATE
GROUP LIQUIDITY AND DELEVERAGING
At 30 June 2023 the Company reported a manageable net debt position of R300 million.
Although the serviceability and amortisation of this level of debt is not a cause for concern, the
Company's total debt in South Africa amounted to circa R1 billion (down from circa R2 billion
following the sale of the Company's 50% shareholding in Bombela in April 2023), and its cash
was predominantly held in its international operations where the majority of the Group's cash
is being generated.
This imbalance in local debt and international cash was a source of some concern to the
Company's South African lending banks, and the Company embarked on a plan to deleverage
the South African debt. Meaningful progress has been made and the primary actions include
the following:
• Cementation Canada and Cementation USA renegotiated their facility agreement with
their Canadian lender, and the revised facility provides for dividends to be paid to the
Company of circa R410 million in January 2024 and circa R140 million in June 2024,
which will be applied to reduce debt in South Africa.
• The Group concluded new commercial terms on one of its largest projects, which
together with other actions within its project operations, will allow for circa R180 million
of debt reduction in South Africa by November 2023.
It is expected that the Group's remaining debt with the South African lending banks will reduce
to circa R300 million by June 2024, from the high of circa R2 billion in March 2023. The Group
has also meaningfully reduced corporate overhead costs and will continue to focus on
operational efficiencies and liquidity management.
Considering the deleveraging progress outlined above, the Board is not considering a rights
issue for purposes of debt reduction in South Africa but is working towards implementing a
sustainable capital structure over the next six months, which will include the refinancing of the
remaining debt.
MAINTAINING A PRESENCE IN THE ASIA-PACIFIC REGION
Over the past few months, the Group has been working with the administrators of MRPL to
agree a Deed of Company Arrangement ("DOCA"), which would have provided for MRPL to
come out of administration, and for the Group to regain ownership and control of MRPL and
RUC.
Shareholders are referred to the SENS announcement released on 4 October 2023, where the
Company announced that at the MRPL creditors' meeting at that date, a MRPL secured
creditors' DOCA was approved. The result of this is that the Group was not able to regain
control of RUC.
As a provider of specialist mining services, it is the Group's intent to maintain a presence in
the Asia-Pacific ("APAC") region, which is the region formerly serviced by RUC. Murray &
Roberts has recently established a subsidiary company in Australia, Cementation APAC Pty
Ltd, which is being developed and resourced to provide engineering and contracting services
to mining clients in the APAC region, a key region in the global mining sector. The Cementation
brand is well known and respected, and the Group will target project opportunities in Australia,
leveraging the capabilities of our existing mining businesses in North America (Cementation
Canada and Cementation USA) and in Sub-Saharan Africa (Murray & Roberts Cementation).
MINING PLATFORM
The Mining platform always was and is expected to continue to be the main contributor to
Group earnings, and it retains its position as a leading mining services provider.
As reported in the annual integrated report, the platform is currently engaged on mining
projects in Canada, USA, Chile, Argentina, South Africa and elsewhere in Sub-Saharan Africa.
This includes work on nine vertical shafts, equipping and rehabilitation projects, eight decline
shafts and mine lateral development projects, five production mining projects, 32 support and
construction projects and five major ore handling infrastructure construction projects. In
addition, 30 raise drilling machines are deployed on projects around the world.
The platform is performing to management's expectation and its order book and near-term
project pipeline is robust. As at 30 September 2023, the order book was R14,0 billion (June
2023: R13,6 billion), with near orders of R8,6 billion (June 2023: R9,1 billion).
The platform is expected to continue to deliver strong growth and earnings as the emphasis
on energy transition gains pace, with increased demand for related commodities and, in turn,
the diverse range of services provided by the platform.
POWER, INDUSTRIAL & WATER ("PIW") PLATFORM
The PIW platform provides project services to the power generation (mainly renewable
energy), power transmission & distribution, wastewater, and resources & industrial market
sectors, primarily in South Africa, but also in Sub-Saharan Africa.
The short-term objective is for this platform to return to profitability in FY2024, and it is expected
that this objective will be achieved.
In the renewable energy and power sectors, new projects are starting to be unlocked, albeit
slowly, as developers reach financial close on their projects. As at 30 September 2023, the
platform's order book was R1,5 billion (June 2023: R1,8 billion), with no near orders, consistent
with the 30 June 2023 position.
The Group is of the view that project opportunities, specifically in the renewable energy and
power transmission & distribution sectors, will be sufficient to enable the platform to continue
profitably.
PROSPECTS
Following the loss of its businesses in Australia, Murray & Roberts emerged as a smaller group.
The Group has made good progress with the implementation of initiatives to reduce its debt in
South Africa and is committed to creating shareholder value from its current low base.
Murray & Roberts will continue to excel as a leading engineering and contracting services
provider in its chosen market sectors.
The information contained in this announcement has not been reviewed or reported on by the
Company's external auditors.
Bedfordview
2 November 2023
Sponsor
The Standard Bank of South Africa Limited
Date: 02-11-2023 10:15:00
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