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71st 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
(“Murray & Roberts” or “Group” or “Company”)
71st ANNUAL GENERAL MEETING: BUSINESS UPDATE
The Group is a multinational provider of specialised engineering and construction services,
primarily in the metals and minerals, oil & gas and power & water market sectors.
Following several acquisitions in the prior financial year, FY2020 will be a year of consolidation
for all three business platforms, with the focus on growing the order book and on successful
project delivery.
The Group issued its 2019 annual financial results on 28 August 2019 and Annual Integrated
Report to stakeholders on 30 September 2019. Full details of the Group’s financial results and
Annual Integrated Report have been published on the website at www.murrob.com.
The Group is pleased to have maintained annual dividend payments for the past five years
and aims to be consistent in this regard going forward.
BUSINESS PLATFORM UPDATE
Underground Mining – The platform’s order book decreased to R20,9 billion as at 31 October
2019 (June 2019: R22,8 billion), while the platform continues to perform well.
As one of the largest underground mining contractors in the world and against the background
of the recovery in commodity markets over the past few years, the platform has done well to
capitalise fully on its growth potential by substantially increasing its share of the regional
markets in which it operates.
Commodity prices have generally been stable in the last two years, however, it appears as if
the global mining cycle has reached a plateau. Capital expenditure in the mining and mining
services markets is expected to level off over the next three years. The Group believes there
are still sizable opportunities for the platform, but expects short to medium term earnings to
show measured growth from current levels.
Oil & Gas – The platform is recovering from a low base and client timeframes for the award of
new projects continue to be highly variable. However, the order book increased substantially
to R33,0 billion as at 31 October 2019 (June 2019: R23,1 billion). The increase since June
2019 is primarily due to the award of a R9,4 billion petrochemical EPC project in the United
States to Clough USA, for which the notice to proceed was received in November 2019. This
award is expected to substantially increase revenue during the second half of FY2020.
The platform’s strategy of diversification into the Australian infrastructure and mining markets
and expanding its oil and gas business internationally is delivering positive results. The
Australian infrastructure and mining markets present significant opportunity and there are early
signs of a medium-term recovery in the oil and gas markets. The platform is targeting oil and
gas projects in Australia, Canada, USA, Mozambique, Kazakhstan and Papua New Guinea.
Power & Water – The platform order book remained stable at R0,9 billion as at 31 October
2019 (June 2019: R0,9 billion), mainly due to the inclusion of transmission orders following the
acquisition of Optipower. Due to a lack of project opportunities in South Africa, it will take time
to re-establish the business post completion of the Medupi and Kusile power projects.
Substantial investment in the short to medium term is expected in the transmission and
distribution subsector of the power market and the platform is targeting maintenance contracts
from Eskom’s aging fleet of power stations. Investment in the local water sector continues to
be fragmented and limited, notwithstanding the increasing pressure to upgrade dysfunctional
municipal wastewater treatment plants. However, the City of Cape Town’s drought resilience
plan is being implemented with several wastewater treatment plant improvement and
expansion projects coming to market.
The platform has extended its service offering to complementary markets, including
petrochemicals, metals and minerals, and paper and pulp. Gas projects in Mozambique are
gaining momentum and will provide potential project work opportunities as from FY2021.
Furthermore, investment in new fuel storage terminals should also present opportunities in the
medium term.
Closure of business in the Middle East - Exiting the Middle East remains a complex
challenge with many risks to be managed and longstanding commercial matters to be resolved.
However, the accounting position taken to book for this business is considered to be prudent.
As all remaining construction work on the residual projects has been completed, this business
is expected to be reclassified as a discontinued operation for FY2020.
The arbitration outcome of the Dubai Airport claim was inconclusive and claims will have to be
finally settled by agreement between the parties. The final account for this project will be
submitted before the end of December 2019, following which the parties will endeavour to
reach an agreement.
REPORT ISSUED – INQUIRY INTO THE GRAYSTON TEMPORARY WORKS COLLAPSE
On 19 November 2019, Murray & Roberts and other parties who participated in the inquiry,
received a copy of the administrative report issued by the Department of Labour relating to the
collapse of the Grayston pedestrian bridge temporary works in October 2015.
The Department of Labour Presiding Inspectors have made findings regarding alleged
transgressions of health and safety statutory obligations by various parties, including Murray
& Roberts Construction (Pty) Limited, a former subsidiary of Murray & Roberts. The Company
and its advisers do not agree in many respects with the analyses, conclusions and
recommendations contained in the report.
The report was prepared for and addressed to the Director of Public Prosecutions and the
Chief Inspector of the Department of Labour for their consideration and is confidential.
All costs relating to this matter have been previously accounted for and no further financial
impact is expected.
ATON GMBH (“ATON”) UPDATE
On 30 September 2019, ATON released an announcement on SENS indicating that it had
elected not to extend the long-stop date for their mandatory offer, being 30 September 2019.
Accordingly, the offer has lapsed in accordance with its terms.
Murray & Roberts notes ATON's intent to remain invested in and provide support to the Group
as a significant shareholder.
PROSPECTS STATEMENT
The New Strategic Future plan is gathering momentum and bearing results. The Group has
built a quality order book of R54,8 billion with near orders of R5,1 billion as at 31 October 2019.
The Group is confident that its growth plans over the medium term are achievable and it has
the necessary financial capacity to support these plans.
The information contained in this Business Update has not been reviewed and reported on by
the Group’s external auditors.
Bedfordview
28 November 2019
Sponsor
The Standard Bank of South Africa Limited
Date: 28-11-2019 02:00:00
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