| Wed 27 Feb 2002, 0:00 | | Murray & Roberts Holdings Limited - Interim Report |
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Murray & Roberts Holdings Limited
(Registration number 1948/029826/06) ("Murray & Roberts" or "the Group")
Share code: MUR ISIN code: ZAE00008983
"Our commitment to sustainable earnings
growth and value creation is
not negotiable" Brian Bruce
Interim report for the six months to 31 December 2001
Rebuilding Murray & Roberts
The Group's "change strategy for sustainable value" remains a principal
leadership focus, with a number of core operations being consolidated into
focused business units with the critical mass to be global market leaders.
The executive team has been strengthened throughout, with a new generation
of leaders taking up the strategic challenge in operations and knowledge
management. These results indicate that our strategy is on track.
Salient features
- Operating profit improves 65% to R129 million
- Operating margin improves further to 3,0%
- Strong operating cash flow
The challenges in 2002
- Extend the cultural transformation throughout the group
- Establish targets that stretch our performance
- Embrace risk management within our culture
- Enhance our business model for leverage
The unaudited consolidated results for the six months to 31 December 2001
are set out below:
Summarised consolidated income statement
Unaudited Audited
6 months to 12 months to
R millions 31.12.01 31.12.00 30.6.01
Revenue 4 401 4 477 8 535
Earnings before interest,
exceptional items,
depreciation and
amortisation (EBITDA) 254 188 454
Depreciation (123) (110) (232)
Amortisation of goodwill (2) (2) (4)
Earnings before interest and
exceptional
items (EBIT) 129 76 218
Exceptional items (27) 1 (2)
Earnings before interest
and taxation 102 77 216
Interest 86 (17) (6)
Interest paid (12) (17) (21)
Currency gain on offshore
treasury funds 98 - 15
Earnings before taxation 188 60 210
Taxation (12) (6) (28)
Earnings after taxation 176 54 182
Income from associates 45 38 71
Outside shareholders' interest (1) (1) (1)
Earnings attributable to ordinary
shareholders 220 91 252
Reconciliation of headline earnings
Attributable earnings 220 91 252
Adjust: Exceptional items as above 27 (1) 2
Amortisation of goodwill 2 2 4
Headline earnings 249 92 258
Average number of ordinary shares
in issue (`000) 331 893 345 968 340 103
Earnings per share
- attributable* 66c 26c 74c
- headline* 75c 26c 76c
Operating cash flow per share* 80c 2c 164c
*includes currency gain on
offshore treasury funds.
Summarised consolidated balance sheet
Unaudited Unaudited Audited
R millions 31.12.01 31.12.00 30.6.01
ASSETS
Property, plant and equipment 1 362 1 295 1 227
Associate company -
Unitrans Limited 460 404 391
Investments 169 164 143
Current assets 3 994 3 529 3 898
Accounts receivable and other 2 521 2 639 2 606
Cash 1 473 890 1 292
Total tangible assets 5 985 5 392 5 659
Goodwill 14 18 16
TOTAL ASSETS 5 999 5 410 5 675
EQUITY AND LIABILITIES
Permanent capital 2 485 1 867 1 990
Ordinary shareholders' funds 2 476 1 858 1 982
Outside shareholders' interest 9 9 8
Non-current liabilities 708 860 700
Long-term provision 306 373 316
Long-term loans 328 370 327
Deferred taxation 74 117 57
Current liabilities 2 806 2 683 2 985
Overdraft and short-term loans 12 159 103
Accounts payable and other 2 794 2 524 2 882
TOTAL EQUITY AND LIABILITIES 5 999 5 410 5 675
Net asset value per share 746c 537c 597c
Net asset value per share with
associate company at market value 811c 620c 730c
SUPPLEMENTARY INFORMATION (Rm)
Capital expenditure
- spent 229 112 252
- authorised but unspent 296 140 475
Operating lease commitments 22 16 7
Contingent liabilities 37 37 39
Summarised consolidated cash flow statement
Unaudited Audited
6 months to 12 months to
R millions 31.12.01 31.12.00 30.6.01
Cash generated by operations
before working
capital changes 189 145 480
(Increase)/decrease in working
capital (3) (113) 103
Cash generated by operations 186 32 583
Interest and taxation 80 (25) (25)
Operating cash flow* 266 7 558
Dividends received 17 15 24
Cash retained in operations 283 22 582
Net investment activities (153) (67) (83)
Net funds flow 130 (45) 499
*includes currency gain on
offshore treasury funds.
Summarised statement of changes in equity
Unaudited Unaudited Audited
R millions 31.12.01 31.12.00 30.6.01
Opening balance 1 982 1 717 1 717
Earnings attributable to
Shareholders 220 91 252
Foreign currency
translation movement
on investments 274 50 57
Repurchase and cancellation
of shares - - (43)
Change in cost of shares held by
The Murray & Roberts Trust - - (1)
2 476 1 858 1 982
Notes:
1. The accounting policies and methods of computation for the financial
statements for the six months to 31 December 2001 are in all material
respects consistent with those applied in the annual financial statements
for the year ended 30 June 2001.
Segmental analysis
Unaudited Audited
6 months to 12 months to
R millions 31.12.01 31.12.00 30.6.01
REVENUE
Building and civil engineering 1 546 1 592 2 917
Industry and mining 823 632 1 383
Engineered products 765 699 1 423
Supplies and services 1 240 1 069 2 198
Corporate 27 14 62
Ongoing operations 4 401 4 006 7 983
Discontinued operations - 471 552
4 401 4 477 8 535
EBIT
Building and civil engineering 46 45 84
Industry and mining 41 25 77
Engineered products 15 12 42
Supplies and services 75 48 120
Corporate (48) (52) (109)
Ongoing operations 129 78 214
Discontinued operations - (2) 4
129 76 218
Integral to the Rebuilding Murray & Roberts Strategy, divisional head
offices have been disbanded and the corporate overhead has been aggregated
and is reflected as such in the segmental analysis.
The analyses for the prior periods have been restated.
Comments
The Directors of Murray & Roberts are pleased to announce that the Group has
continued its turnaround in the six months to 31 December 2001, recording a
65% improvement in ongoing operating profit (EBIT) to R129 million (2000:
R78 million) on a 10% improvement in turnover to R4,4 billion (2000: R4,0
billion). Operating margin has improved to 3,0% compared with 2,7% for the
full year to 30 June 2001.
Operating cash flow in the period was R266 million (2000: R7 million), which
exceeded net investment activities of R153 million (2000: R67 million). Net
asset value per share at 31 December 2001 has increased by 25% to 746 cents
compared with 597 cents at 30 June 2001.
Operations
An improvement from Building and Civil Engineering activity in South Africa
and the SADC region in general was tempered by further losses on two road
contracts being constructed in joint venture.
Despite a problem contract in South Africa, regional activity in Industry
and Mining continues to improve, particularly for the increased demand in
platinum and aluminium.
The demand for Engineered Products from the increasingly competitive
domestic manufacturing sector is starting to deliver value. Refurbishment of
the national rolling stock asset continues but the tank container market
remains slow. Supply problems to the automotive sector impacted performance
in the period.
The Supplies and Services activities continued to build on last year's
turnaround and have delivered a substantially improved performance. Market
activity is successfully being expanded into the rest of Africa.
Corporate
Corporate costs continue to be reduced through consolidation of services.
New investment contracts have been pursued through concession management and
the property headlease portfolio remains under tight control.
Pursuit of a strategic solution for AWI suffered a setback following the
events of September 11 in the United States. The business is being held at
breakeven and a new initiative is underway to ensure the future of this
business.
The Group's investment in Unitrans remains under review.
Translation gains
An exchange gain of R98 million was realised on the Group's offshore
treasury funds as at 31 December 2001. The exchange gain for the twelve
months to 30 June 2002 will be determined on the basis of the currency
exchange rates at that date. It is considered unlikely that a further
adjustment of this significance will be available.
The translation of the Group's investment in foreign operations has
increased shareholders' funds by R274 million which has been taken directly
to reserves.
Exceptional items
A further R25 million has been provided to cover an expected deterioration
in four headlease properties as a result of the regular review of the
ongoing assumptions of the variable factors that affect these activities.
Income from associate
Unitrans has reported a 17% increase in attributable earnings for the six
months to 31 December 2001. Full details are available from their interim
report.
Prospects
The non-negotiable commitment to sustainable earnings growth and value
creation remains the priority of Rebuilding Murray & Roberts. The concept of
a unitary Murray & Roberts based on an integrated knowledge strategy is the
principal driver of transformation in the Group.
Consolidation of the Group's general construction activities has created a
focused global business with annual revenues in excess of R2,0 billion.
Further consolidation of the Group's engineering interests, as well as the
manufacturing businesses focused on the automotive sector, will be completed
before the end of the financial year.
The order book in the contracting operations was R5,1 billion at 31 December
2001, a 35% increase compared to the R3,8 billion at 30 June 2001. The Group
has been awarded further significant work in the period since 31 December
2001. With the exception of tank containers, the manufacturing order book is
excellent and the global demand for specialised automotive components from
the Group's domestic facilities will require further allocations of capital
expenditure.
Despite current uncertainties in the global economy, investment expenditure
in our chosen markets offers good prospects. The Directors are satisfied
that increased levels of activity justify the decision to increase capital
expenditure significantly in the current financial year.
Unitrans has reported separately on their prospects for the full year.
The Directors are confident that all business segments will deliver improved
performances in the second half of the financial year resulting in a
meaningful growth in earnings for the full year.
Dividend
The results for the half year to 31 December 2001, underpinned by strong
cash flows and an expected improvement in attributable earnings for the full
year, should enable the Directors to declare a dividend concurrent with the
preliminary announcement of the annual results at the end of August 2002.
At this stage of the Group's turnaround the Board has determined that it
would be appropriate to consider only one dividend this year.
Directorate
The Board has today accepted the resignation of Mr Jo Grove as a director of
the Company.
On behalf of the Board
DC Brink Chairman BC Bruce Chief Executive RW Rees Financial Director
Bedfordview
27 February 2002
DIRECTORS: DC Brink (Chairman), BC Bruce* (Chief Executive), BN Bam,
AJ de Nysschen*, WP Esterhuyse, SE Funde, PG Joubert, SJ Macozoma,
AJ Morgan, RW Rees*, AA Routledge,
KE Smith*, JJM van Zyl, *Executive
SECRETARY: LJ Lindsay
Registered office
Douglas Roberts Centre, Skeen Boulevard, Bedfordview
Transfer secretaries
Mercantile Registrars Limited, 11 Diagonal Street, Johannesburg 2001
Further information available at www.murrob.com
