| Wed 27 Feb 2008, 17:04 | | MUR - Murray & Roberts Holdings Limited - Unaudite |
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MUR
MUR
MUR - Murray & Roberts Holdings Limited - Unaudited interim results for the six
months ended 31 December 2007
Murray & Roberts Holdings Limited
(Registration number: 1948/029826/06)
("Murray & Roberts" or "Group")
Share Code: MUR & ISIN code: ZAE000073441
Unaudited Interim Results for the six months ended 31 December 2007
Highlights
- Order book up 69% to R38 billion
- Revenue up 55% to R12,8 billion
- Operating Profit up 79% to R1,0 billion
- Operating cash inflow R1,6 billion
- Headline earnings up 60% to 216 cents per share
- Interim dividend up 71% to 77 cents per share
- 7,9% Operating margin
- 37% Return on Average Shareholder Funds
Condensed consolidated income statement
for the six months ended 31 December 2007
Unaudited Unaudited Audited
6 months 6 months Annual
R millions 31.12.07 31.12.06 30.6.07
Revenue 12 765 8 214 18 037
Earnings before interest, 1 289 718 1 803
exceptional items,
depreciation and
amortisation
Depreciation (265) (144) (290)
Amortisation of intangible (19) (11) (23)
assets
Earnings before interest and 1 005 563 1 490
exceptional items
Exceptional items (note 5) 104 (43) (161)
Earnings before interest and 1 109 520 1 329
taxation
Net interest expense (11) (25) (18)
Earnings before taxation 1 098 495 1 311
Taxation (249) (139) (360)
Earnings after taxation 849 356 951
Share of profit/(loss) from 3 31 (107)
associates
Earnings from continuing 852 387 844
operations
Earnings from discontinued - 13 (48)
operations (note 2)
Earnings for the period 852 400 796
Attributable to:
Shareholders of the holding 699 360 702
company
Minority shareholders 153 40 94
852 400 796
Earnings per share (cents)
- Diluted 230 121 235
- Basic 235 123 239
Total dividend per ordinary 77 45 116
share (cents)*
Operating cash flow per 471 146 583
share (cents)
* Based on period to which
dividend relates
Supplementary income
statement information
Reconciliation of weighted
average number of shares in
issue (000)
Ordinary shares in issue 331 893 331 893 331 893
Less: Weighted average (5 448) (9 889) (8 335)
number of shares held by The
Murray & Roberts Trust
Less: Weighted average (676) (676) (676)
number of shares held by
Murray & Roberts Limited
Less: Weighted average (28 953) (28 953) (28 953)
number of shares held by the
Letsema BBBEE trusts
Weighted average number of 296 816 292 375 293 929
shares used for basic per
share figures
Add: Dilutive adjustment for 7 545 6 311 4 326
share options
Weighted average number of 304 361 298 686 298 255
shares used for diluted per
share figures
Headline earnings per share
(cents) (note 6)
- Diluted 216 135 325
- Basic 221 138 329
Condensed consolidated segmental analysis
Unaudited Unaudited Audited
6 months 6 months Annual
R millions 31.12.07 31.12.06 30.6.07
Revenue
Construction & Engineering 9 502 5 308 11 822
Construction Materials & Services 2 528 2 264 4 727
Fabrication & Manufacture 676 556 1 324
Corporate & Properties (note 4) 59 86 164
Continuing operations 12 765 8 214 18 037
Discontinued operations (note 2) - 453 715
12 765 8 667 18 752
Earnings before interest,
exceptional items and taxation
Construction & Engineering 667 286 756
Construction Materials & Services 369 298 763
Fabrication & Manufacture 44 21 83
Corporate & Properties (note 4) (75) (42) (112)
Continuing operations 1 005 563 1 490
Discontinued operations (note 2) - 28 26
1 005 591 1 516
Condensed consolidated balance sheet
as at 31 December 2007
Unaudited Unaudited Audited
Annual
R millions 31.12.07 31.12.06 30.6.07
ASSETS
Non-current assets 4 847 3 924 4 175
Property, plant and 2 900 1 920 2 011
equipment
Investment property 516 258 526
Goodwill 564 158 206
Other intangible assets 82 63 74
Deferred taxation assets 15 53 15
Investment in associate 32 1 054 885
companies
Other investments 558 375 440
Other non-current assets 180 43 18
Current assets 11 434 6 751 8 836
Trade receivables and 3 297 2 660 2 625
other current assets
Net amounts due from 3 719 2 338 3 402
contract customers
Cash and cash equivalents 4 418 1 753 2 809
TOTAL ASSETS 16 281 10 675 13 011
EQUITY AND LIABILITIES
Total equity 4 602 3 524 3 815
Attributable to 3 931 3 377 3 637
shareholders of the
holding company
Minority shareholders` 671 147 178
interest
Non-current liabilities 1 376 1 178 1 103
Long-term provisions 55 10 64
Obligations under finance 71 151 78
headleases*
Other long-term loans* 938 622 617
Other non-current 120 32 67
liabilities
Deferred taxation 192 363 277
liabilities
Current liabilities 10 303 5 973 8 093
Trade payables and other 8 728 5 536 7 423
current liabilities
Bank overdrafts* 720 222 181
Short-term loans* 855 215 489
TOTAL EQUITY AND 16 281 10 675 13 011
LIABILITIES
* Interest-bearing borrowings.
Supplementary balance
sheet information
(R millions)
Net asset value per share 1 185 1 017 1 096
(cents)
Commitments
Capital expenditure
- Spent 698 401 1 009
- Authorised but unspent 1 350 640 1 537
Operating lease 367 107 460
commitments
Contingent liabilities** 1 866 119 88
Financial institution 7 751 3 522 4 359
guarantees**
** Increase mainly due to the first time consolidation of Clough Limited.
Condensed consolidated cash flow statement
for the six months ended 31 December 2007
Unaudited Unaudited Audited
6 months 6 months Annual
R millions 31.12.07 31.12.06 30.6.07
Cash generated by operations 1 361 676 1 691
before working capital
changes
Cash outflow from headlease (59) (30) (115)
and other property activities
Decrease/(increase) in 436 (100) 637
working capital
Cash generated by operations 1 738 546 2 213
Interest and taxation (176) (61) (278)
Operating cash flow 1 562 485 1 935
Dividends paid to (211) (121) (249)
shareholders of the holding
company
Dividends paid to minority (36) (11) (31)
shareholders
Cash flow from operating 1 315 353 1 655
activities
Cash flow from investing (683) (451) (851)
activities
Property, plant and equipment (625) (377) (968)
and intangible assets (net)
Acquisition/disposal of 50 (11) 93
business (net)
Other investments (net) (116) (138) 10
Other (net) 8 75 14
Cash flow from financing 458 (4) 181
activities
Net movement in borrowings 452 (4) 159
Treasury share disposals 6 - 22
Net increase/(decrease) in 1 090 (102) 985
cash and cash equivalents
Net cash and cash equivalents 2 628 1 642 1 642
at beginning of period
Effect of foreign exchange (20) (9) 1
rates
Net cash and cash equivalents 3 698 1 531 2 628
at end of period
Condensed consolidated statement of changes in equity
for the six months ended 31 December 2007
Unaudited Unaudited Audited
6 months 6 months Annual
R millions 31.12.07 31.12.06 30.6.07
Opening balance 3 815 3 194 3 194
Earnings attributable to 699 360 702
shareholders of the holding
company
Movement in treasury shares 6 - 22
Recognition of hedging 5 - (5)
instrument on financial
instruments
Earnings attributable to 153 40 94
minority shareholders
Minority interest on 387 - -
consolidation of Clough
Limited
Other movements in minority (49) 9 7
interest
Movement in share-based 20 3 20
payment reserve
Foreign currency translation (223) 50 61
movement on investments
Dividend declared and paid (211) (132) (280)
4 602 3 524 3 815
Notes:
1. Basis of preparation
This preliminary unaudited interim report has been prepared and presented
in accordance with IAS34: Interim Financial Reporting, and Schedule 4 of
the Companies Act, No. 61 of 1973 (as amended).The accounting policies used
in the preparation of these results are in accordance with International
Financial Reporting Standards (IFRS) and consistent in all material
respects with those used in the annual financial statements for the year
ended 30 June 2007. The condensed financial statements have been prepared
under the historic cost convention, except for the revaluation of certain
investments and investment property.
There are no standards that are currently in issue but not yet effective
which would result in a change in accounting results.
2. Earnings from discontinued operations
In the current period there were no discontinued operations. The prior year
discontinued operations relate to the disposal of the Group`s Foundries
business on 31 March 2007.
R millions 30.12.07 30.12.06 30.6.07
Earnings from discontinued
operations are analysed as
follows:
Loss on disposal - - (61)
Earnings after taxation for the - 13 13
period
- 13 (48)
Earnings after taxation for the
period is analysed as follows:
Revenue - 453 715
Earnings before interest and - 52 68
depreciation
Depreciation - (24) (42)
Earnings before interest, - 28 26
exceptional items and taxation
Exceptional items - - -
Earnings before interest and - 28 26
taxation
Net interest expense - (7) (9)
Earnings before taxation - 21 17
Taxation - (8) (4)
Earnings after taxation for the - 13 13
period
3. Acquisition of subsidiary
Clough Limited (Clough), which was previously accounted for as an
associate, is consolidated for the first time as the Group acquired control
over the company on 1 July 2007. The impact of consolidating Clough for the
first time is as follows:
R millions 31.12.07 31.12.06 30.6.07
Net assets 3 167 - -
Net liabilities (2 787) - -
Clough minorities (111) - -
Fair value of assets consolidated 269 - -
Minority interest on consolidation (136) - -
Foreign currency translation reserves on 54 - -
acquisition
Decrease in investment in associates (623) - -
Exchange rate adjustments recorded in 116 - -
prior years
Goodwill recorded on consolidation (320) - -
During the period the Group increased
its investment in Clough from 49,1% to
56,2%. The impact of shareholding
increase is as follows:
Increase in goodwill (48) - -
Increase in minorities (140) - -
The goodwill is attributable to the high
profitability of the acquired business.
The acquisition accounting is still on a
provisional basis.
4. Reclassification
During the year the Group reclassified
the accounting for its property division
from exceptional items to normal trading
activities as a result of settlement of
the headlease structured liability that
existed over the properties. The impact
of the property reclassification is as
follows:
R millions 31.12.07 31.12.06 30.6.07
Revenue 59 86 164
Earnings before interest, exceptional 25 31 53
items and taxation
Exceptional items (18) (8) (14)
Interest expense (14) (21) (39)
Taxation 6 (2) -
5. Exceptional items
R millions 31.12.07 31.12.06 30.6.07
Profit on disposal of subsidiary 130 - -
Profit on disposal of land and buildings 60 - -
Impairment of investment in associate (13) - (115)
Impairment of goodwill (10) - -
Impairment of unlisted investments (63) (48) (48)
Other - 5 2
104 (43) (161)
6. Reconciliation of headline earnings
R millions 31.12.07 31.12.06 30.6.07
Earnings attributable to shareholders of 699 360 702
the holding company
Profit on disposal of subsidiary (130) - -
Profit on the disposal of land and (60) - -
buildings
Loss on disposal of discontinued - 6 61
operation
Impairment of investment in associate 13 - 163
Reversal of impairments - (15) -
Impairment of goodwill 10 - -
Impairment of unlisted investments 63 48 -
Revaluation of investment properties - - (253)
Remeasurement of liability on investment - - 272
properties
Other - 4 (2)
Taxation effect on above adjustments 5 - 25
Minority interest on above adjustments 56 - -
Headline earnings 656 403 968
Executive Summary
The directors are pleased to announce half-year results at the top end of recent
market guidance and a 71% increase in the interim ordinary dividend to 77 cents
per share for the six months to 31 December 2007 (2006: 45 cents per share).
Attention is drawn to the formal dividend announcement contained herein.
Fully diluted headline earnings per share increased 60% to 216 cents for the
period (2006: 135 cents). The consolidation of Clough from 1 July 2007 plus
improved market conditions and increased performance from all core business
segments resulted in a 79% increase in operating profit (EBIT) to R1,0 billion
(2006: R0,56 billion).
Revenue for the period is up 55% to R12,77 billion (2006: R8,21 billion) which
includes organic growth of R2,44 billion (up 30%) and a maiden contribution of
R2,12 billion from Clough.
The interim operating margin of 7,9% (2006: 6,9%) continues the performance
trend set in the previous financial year and includes a margin of 6,8% in
Clough.
Construction & Engineering revenue including Clough increased 79% to R9,5
billion (2006: R5,3 billion) with EBIT up 133% to R667 million (2006: R286
million), including a fair value adjustment on concession investments comparable
to the prior half-year.
Revenue in Construction Materials & Services increased 12% to R2,5 billion
(2006: R2,3 billion) with EBIT up 24% to R369 million (2006: R298 million). This
follows disposal of the Foundries Group and reallocation of Hall Longmore and
Genrec to Fabrication & Manufacture where revenue is R676 million (2006: R556
million) with EBIT at R44 million (2006: R21 million).
Corporate costs for the half-year are R75 million (2006: R43 million adjusted)
including a charge of R20 million relating to share-based payments accounted for
in terms of IFRS 2 and income on property assets held at Corporate (see note 4).
The effective tax rate reduced to 23% (2006: 28%) with increased profitability
in the Group`s zero tax rated markets and an increase in capital profits on
disposal of subsidiaries. The tax charge increased 79% to R249 million (2006:
R139 million).
Operating cash inflow improved significantly to R1,56 billion (2006: R485
million) with working capital inflow at R436 million (2006: R100 million
outflow). Subsequent to year end the Group received its 40% share of a AED300
million payment for on schedule delivery of phase 1 of the Dubai International
Airport project.
Cash in hand increased 152% to R4,4 billion including receipt of advance
payments totalling about R1,9 billion for the capital funding of significant
startup expenses on long-term major projects. Some of this cash is restricted in
various joint ventures.
Shareholder funds increased to R3,9 billion at 31 December 2007, representing a
net asset value (NAV) of 1185 cps. The after tax return on average shareholder
funds for the period moved well above the Group hurdle of 20% to 37% (2006:
22,3%).
Order Book and Market
The total Construction & Engineering order book increased 69% in the period
under review to R38 billion, with the 3-year backlog at R24,5 billion (June
2007: R22,5 billion).
Construction Middle East accounts for R2,8 billion of order book (up 25%) with
Construction SADC at R9,2 billion (up 8%), Engineering at R2,9 billion (up 88%),
Mining Contracting at R5,5 billion (up 11%) and Clough at R6,1 billion (up 22%).
The remaining R11,5 billion relates to the balance of long-term power generation
projects for the period between 2010 and 2015.
The regional composition of total order book is SADC 70% (58%); Middle East 8%
(13%) and Rest of World 22% (29%). The amounts in brackets are comparative
levels at 30 June 2007.
Murray & Roberts and its partners are in contention for further work associated
with South Africa`s power station build program. In all cases the competition is
foreign contractors with limited or no previous experience in the country.
Following a thorough evaluation of its options, the Group selected Westinghouse
and Shaw Group of the United States as its technology and implementation
partners for the proposed Nuclear Power Program in South Africa. The tender
proposal has been submitted and will be followed by an intensive evaluation
process to select the preferred contractor group.
The Group is in advanced negotiation for, or has subsequently secured a number
of major building projects in South Africa and Middle East. Mining contracting
markets in Australia and Canada remain buoyant, with the South African market
impacted in the short term by power supply concerns.
The Group has minor exposure to the slowdown in demand for home building
services and materials. However, the infrastructure and industrial construction
markets continue to offer good growth potential to the Construction Materials &
Services operations.
The South Africa Electricity Situation
The state of electricity supply in South Africa is well documented and its
effect has been felt throughout the Group`s domestic business environment and by
its many customers and clients. It is not possible to determine an accurate cost
of disruption but it is expected the situation will impact domestic operations
through to at least 2013.
Further to the announcement released through SENS on 28 January 2008, the Group
is pleased to advise that its domestic underground mining contracting operations
are back to full production and that its CISCO steel mill resumed operations at
85% of previous capacity. All operations and offices throughout the Group have
embarked on a program of sustainable energy efficiency to reduce base load and
peak power consumption.
However, the Group foresees future supply constraints and price volatility in
other critical performance inputs, particularly fuel and steel products.
Clough Limited
Murray & Roberts consolidated Clough into its accounts from 1 July 2007 and
underwrote a recapitalisation of the business in November 2007, including
support for the acquisition of new specialist deepwater construction vessels.
The Group held 56,2% of the issued shares in Clough at 31 December 2007 at a
cost per share of AUD 48 cents compared to a ruling market price above AUD 70
cents.
The company has stabilised its core performance over the past year and disposed
of most of its non-core businesses and assets for an exceptional profit of R130
million in the period under review.
Settlement of the legacy G1/GS15 project in India has proved a challenge to the
company, but the possibility has increased following recent direct engagement by
Murray & Roberts with the client ONGC. The Group and Clough remain committed to
resolution of this matter through direct personal engagement.
Industry Competitiveness
Shareholders will be aware that in light of increased public sector fixed
investment in South Africa, the competition authorities have initiated a high-
profile program of investigation into all aspects of the construction industry.
It would be incorrect to assume, however, that corrupt practices are endemic to
the industry and its associates.
As construction industry leader, Murray & Roberts is providing support to the
authorities where appropriate.
Exceptional Items
During the period under review, Clough disposed of subsidiary Sheddon UHDE for a
capital profit of R130 million. Various assets in South Africa have been
revalued at a net loss of R86 million. (refer note 5).
Prospects and Trading Statement
Despite the threat of recession in the United States and electricity supply
challenges in South Africa, the directors are of the considered view that fixed
capital formation will continue to develop in all the Group`s markets over the
foreseeable future.
Murray & Roberts is the leading South African construction and engineering group
and its global presence and reputation has enabled access to significant market
opportunity and the leadership, partners, resources and skills needed to meet
this expected increase in demand.
The primary challenge facing the Engineering & Construction Industry worldwide
is the availability of sufficient skilled leadership and human resource needed
to deliver the major projects and investment programs currently underway and
planned for the years ahead. Murray & Roberts continues to prioritise the
recruitment and development of new capacity into the Group and industry.
Capital expenditure by the Group increased 74% to R698 million (2006: R401
million) in the half-year, including R180 million in Clough. It is expected that
this will almost treble for the full-year.
The directors expect fully diluted headline earnings for the full year to 30
June 2008 to grow between 50% and 60% compared with the comparable period to 30
June 2007.
This trading statement has not been audited or reviewed.
Roy Andersen Brian Bruce Roger Rees
Chairman of Group Chief Group Financial
the Board Executive Director
Bedfordview
27 February 2008
Notice to shareholders
Declaration of interim ordinary dividend (No. 112)
Notice is hereby given that an interim ordinary dividend No. 112 of 77 cents per
share (2007: 45 cents per share) in respect of the financial year ending 30 June
2008 has been declared payable to shareholders recorded in the register at the
close of business on Friday 11 April 2008.
The salient dates for the interim ordinary dividend are as follows:
Last day to trade cum the dividend Friday 4 April 2008
Trading ex dividend commences Monday 7 April 2008
Record date Friday 11 April 2008
Payment date Monday 14 April 2008
Share certificates may not be dematerialised or re-materialised between Monday 7
April 2008 and Friday 11 April 2008, both days inclusive.
On Monday 14 April 2008 the interim dividend will be electronically transferred
to the bank accounts of all certificated shareholders where this facility is
available. Where electronic fund transfer is not available or desired, cheques
dated 14 April 2008 will be posted on that date.
Shareholders who have dematerialised their shareholder certificates will have
their accounts at their CSDP or broker credited on Monday 14 April 2008.
By order of the Board
Y Karodia
Group Secretary
Bedfordview
27 February 2008
Murray & Roberts Holdings Limited Registration No. 1948/029826/06
Directors:
RC Andersen* (Chairman) BC Bruce (Managing & Chief Executive)
SJ Flanagan SE Funde* NM Magau* JM McMahon* IN Mkhize* RW Rees1
AA Routledge* MJ Shaw* SP Sibisi KE Smith2 JJM van Zyl* RT Vice*
1 British 2 Irish *Non executive
Secretary:
Y Karodia
Registered office:
Douglas Roberts Centre,
22 Skeen Boulevard, Bedfordview
PO Box 1000
Bedfordview 2008
Registrar:
Link Market Services South Africa (Pty) Limited
11 Diagonal Street, Johannesburg 2001
Our commitment to sustainable earnings growth and value creation is
non-negotiable.
www.murrob.com
Date: 27/02/2008 17:04:08 Produced by the JSE SENS Department.
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employees and agents accept no liability for (or in respect of) any direct,
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howsoever arising, from the use of SENS or the use of, or reliance on,
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