| Wed 26 Feb 2003, 17:01 | | Murray & Roberts Holdings Limited - Interim Report |
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Murray & Roberts Holdings Limited - Interim Report For The Six Months Ended 31
December 2002
Murray & Roberts Holdings Limited
(Registration number 1948/029826/06)
("Murray & Roberts" or "the Group")
Share Code: MUR
ISIN code: ZAE00008983 A11B67DCAAC97C32EB8A1CC1D03FF7A8
Rebuilding Murray & Roberts
"Our change strategy for sustainable value continues to unlock the inherent
value in the Group. The resilience of our Group in the face of current economic
and market uncertainty is evidence of balance sheet strength, broad leadership
team quality and the strategic robustness of our market choices to date."
INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2002
Highlights
- Operating profit up 102%
- Core earnings up 86%
- Operating margin up to 5%
- Ongoing revenues up 25%
- Interim dividend resumed
The unaudited consolidated results for the six months to 31 December 2002 are
set out below:
Summarised consolidated income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
R millions to 31.12.02 to 31.12.01 to 30.6.02
Revenue 5 177 4 401 9 027
Earnings before interest, 379 254 619
exceptional items
depreciation and
amortisation (EBITDA)
Depreciation (116) (123) (227)
Amortisation of goodwill (2) (2) (6)
Earnings before interest 261 129 386
and exceptional items
(EBIT)
Exceptional items - (27) (2)
Earnings before interest 261 102 384
and taxation
Interest (51) 86 71
Net interest paid (2) (12) (10)
Unrealised currency (loss) (49) 98 81
gain on offshore treasury
funds
Earnings before taxation 210 188 455
Taxation (29) (12) (36)
Earnings after taxation 181 176 419
Income from associate 50 45 90
Minority shareholders` (1) (1) (4)
interest
Earnings attributable to 230 220 505
ordinary shareholders
Reconciliation of headline
earnings
Attributable earnings 230 220 505
Exceptional items as above - 27 2
Amortisation of goodwill 2 2 6
Headline earnings 232 249 513
Headline earnings 232 249 513
Currency movement on 49 (98) (81)
offshore treasury funds
Headline earnings excluding 281 151 432
currency movement on
offshore treasury funds
Average number or ordinary 331 893 331 893 331 893
shares in issue (`000)
Earnings per share 69c 66c 152c
- attributable
- headline 70c 75c 155c
- headline excluding - - -
currency movement on
offshore treasury funds 85c 45c 130c
Dividend per share 15c - 35c
Operating cash flow per (7c) 51c 215c
share
Summarised consolidated balance sheet
Unaudited Unaudited Audited
R millions 31.12.02 31.12.01 30.6.02
ASSETS
Non-current assets 1 930 1 991 2 007
Property, plant and equipment 1 253 1 362 1 339
Associate company - Unitrans 524 460 503
Limited
Other investments 153 169 165
Current assets 4 036 4 173 4 351
Accounts receivable and other 2 634 2 521 2 372
Bank balances and cash 1 402 1 652 1 979
Total tangible assets 5 966 6 164 6 358
Goodwill 13 14 15
TOTAL ASSETS 5 979 6 178 6 373
EQUITY AND LIABILITIES
Permanent capital 2 546 2 485 2 657
Ordinary shareholders` funds 2 538 2 476 2 648
Minority shareholders` interest 8 9 9
Non-current liabilities 478 708 609
Long-term provision 260 306 293
Long-term loans 165 328 263
Deferred taxation 53 74 53
Current liabilities 2 955 2 985 3 107
Bank overdrafts and short-term 185 191 239
loans
Accounts payable and other 2 770 2 794 2 868
TOTAL EQUITY AND LIABILITIES 5 979 6 178 6 373
Net asset value per share 765c 746c 798c
SUPPLEMENTARY INFORMATION (Rm)
Commitments
Capital expenditure
- spent 119 229 456
- authorised but unspent 246 296 384
Operating lease commitments 88 84 107
Contingent liabilities 10 37 11
Summarised consolidated CASHFLOW statement
Unaudited Unaudited Audited
6 months 6 months 12 months
R millions to 31.12.02 to 31.12.01 to 30.6.02
Cash generated by 367 189 592
operations before working
capital changes
(Increase) decrease in (359) (3) 135
working capital
Cash generated by 8 186 727
operations
Interest and taxation (31) (18) (15)
Operating cash flow (23) 168 712
Dividends paid (116) - -
Dividends paid to minority - - (3)
shareholders
Cash (utilised in) retained (139) 168 709
in operations
Net investment activities (90) (136) (247)
Net funds flow (229) 32 462
Unrealised currency (loss) (49) 98 81
gain on offshore treasury
funds
Net funds flow, including (278) 130 543
unrealised currency (loss)
gain on offshore treasury
funds
Summarised statement of changes in equity
Unaudited Unaudited Audited 12
6 months 6 months months
R millions to 31.12.02 to 31.12.01 to 30.6.02
Opening balance 2 648 1 982 1 982
Earnings attributable to 230 220 505
ordinary shareholders
Foreign currency (215) 274 169
translation movement on
investments
Change in cost of shares (9) - (8)
held by The Murray &
Roberts Trust
Dividends declared and paid (116) - -
2 538 2 476 2 648
Segmental analysis
Unaudited Unaudited Audited
6 months 6 months 12 months
R millions to 31.12.02 to 31.12.01 to 30.6.02
REVENUE
Building and civil 1 777 1 546 3 076
engineering
Industry and mining 878 692 1 447
Fabrication and manufacture 789 546 1 229
Supplies and services 1 698 1 307 2 700
Corporate 22 26 60
Ongoing operations 5 164 4 117 8 512
Discontinued operations 13 284 515
Revenue as reported 5 177 4 401 9 027
EBIT
Building and civil 55 43 117
engineering
Industry and mining 64 32 80
Fabrication and manufacture 60 35 104
Supplies and services 120 70 188
Corporate (42) (42) (91)
Ongoing operations 257 138 398
Discontinued operations 4 (9) (12)
EBIT as reported 261 129 386
Note:
1. The accounting policies and methods of computation for the six months ended
31 December 2002 are in all material respects consistent with those applied in
prior years and are in accordance with South African Statements of Generally
Accepted Accounting Practice.
Comments
The directors of Murray & Roberts are pleased to record another strong
performance by the Group, with operating profit (EBIT) of R261 million, an
increase of 102% on the comparative period last year. Core earnings (headline
earnings excluding currency loss on offshore treasury funds) of 85 cents per
share is a 86% improvement on the same period last year. A stronger rand at 31
December 2002 has resulted in a R49 million reversal of a previously reported
gain of R81 million on the translation of the Group`s offshore treasury funds.
All business clusters recorded increased revenues and profitability compared
with the same period last year. Improved efficiencies throughout the business
have resulted in an operating margin improvement to 5,0%, compared with 2,9% in
the same period last year.
Performance review
Rebuilding Murray & Roberts continues to unlock the inherent value in the Group.
The resilience of the Group in the face of current economic and market
uncertainty is evidence of balance sheet strength, broad leadership team quality
and the strategic robustness of market choices to date.
Negative operating cash flow of R23 million is the result of an increase in
working capital, primarily caused by debtor and stock build in the steel
business and the funding of new activity in construction. Working capital is
being tightly managed in the funding of revenue growth.
The projects market in South Africa is buoyant, with strong activity in
infrastructure, mining and industrial development. Commercial building, however,
remains an unattractive proposition. Construction markets in the rest of Africa
have delivered good growth, although payment delays have impacted on working
capital. The Middle East has experienced a relatively lean period but new
projects are now starting to contribute to the bottom line.
Road building activities have continued to disappoint, reflecting a capacity
problem in the industry that seems endemic. Provisions against known losses
taken at 30 June 2002 appear adequate to cover problem contracts to completion.
New leadership and targeted investment underpinned a strong turnaround in
Foundries Group. Improved market conditions and tighter management drove Consani
to its best first-half performance for a number of years. UCW continued to
deliver good value from its volatile market.
Companies forming the supplies and services cluster continue to benefit from
increased expenditure in the regional construction economy. Further growth will
stimulate demand for new production capacity for the first time in more than a
decade.
The process of streamlining corporate costs has continued, with much of the
capacity required for performance risk management now integrated into the
operational leadership teams.
No additional provision has been considered necessary for property headleases at
the half-year. A further review will be undertaken at 30 June 2003 to establish
the adequacy of the long-term provision for the property headleases.
The Group continues to hold a significant portion of its cash balances
denominated in hard currencies, which are required to support the performance
bond and guarantee requirements of international activities.
Unitrans
This associate reported a 20% increase in headline earnings off a 23% increase
in revenues compared with the same period last year. Attributable earnings for
the six months under review are R112 million which translates into R50 million
of attributable earnings for Murray & Roberts. Full details are available in the
Unitrans interim report published on 25 February 2003.
Disposals
A loss of R33 million was incurred on the disposal of Gearings Foundry and
closure of the Cosmar business. These losses have been charged against the
impairment provision raised in respect of these businesses in the 2000 financial
year.
Johnson Access was sold as part of the Group`s exit strategy from non-core
operations.
The manufacturing business of AWI (UK) was sold with effect from 30 June 2002
and certain protective rights in favour of the Group and its customers have been
satisfied. Completion of the sale of the associated property company awaits
environmental clearance.
Prospects
The directors are conscious of the potential impact of current political and
economic volatility on the Group`s markets and activities.
A project order book of R5,9 billion was available at 31 December 2002, a 15%
improvement in the six months since 30 June 2002 if adjusted for the exchange
rate differential. A number of major project opportunities are being pursued in
South Africa, Africa and the Middle East.
Order books and market demand in the products and services activities are at
satisfactory levels. Many of these businesses are prominent either in their
South African or global markets and will continue to pursue expansion of their
activity and reach.
The directors are confident that the Group will deliver the material increase in
earnings per share, real growth in revenues and further improvement in profit
margins that were forecast in the 2002 annual report and confirmed at the annual
general meeting.
Dividend
The directors have decided to resume the policy of interim dividends and have
declared an interim dividend of 15 cents per share in respect of the year ending
30 June 2003. Attention is drawn to the formal dividend announcement opposite.
Directorate
Mr Martin Shaw was appointed a non-executive director on 18 February 2003.
On behalf of the Board
David Brink, Chairman
Brian Bruce, Chief Executive
Roger Rees, Financial Director
Bedfordview 26 February 2003
NOTICE TO SHAREHOLDERS
Declaration of Interim Ordinary Dividend No. 102
Notice is hereby given that interim dividend No. 102 of 15 cents per share in
respect of the year ending 30 June 2003 has been declared payable to ordinary
shareholders recorded in the register at the close of business on Friday, 11
April 2003 in accordance with the following timetable:
Last day to trade cum the dividend Friday, 4 April 2003
Shares commence trading ex the dividend Monday, 7 April 2003
Record date Friday, 11 April 2003
Payment date Monday, 14 April 2003
Share certificates may not be dematerialised or rematerialised between Monday, 7
April 2003 and Friday, 11 April 2003, both days inclusive.
On Monday, 14 April 2003, the dividend will be electronically transferred to the
bank accounts of all certificated shareholders where this facility has been
mandated. Where this has not been mandated, cheques dated 14 April 2003 will be
posted on that date. Shareholders who have dematerialised their share
certificates will have their accounts, which are held at their CSDPs or brokers,
credited on 14 April 2003.
By order of the Board
Bedfordview LJ Lindsay
26 February 2003 Secretary
Directors: DC Brink (Chairman), BC Bruce* (Chief Executive), BN Bam, WP
Esterhuyse, SE Funde, PG Joubert, SJ Macozoma, AJ Morgan, RW Rees*, AA
Routledge, MJ Shaw, KE Smith*, JJM van Zyl *Executive
Secretary: LJ Lindsay
Registered office
Douglas Roberts Centre, Skeen Boulevard, Bedfordview
Transfer secretaries
Computershare Investor Services Limited, 70 Marshall Street, Marshalltown 2001
"Our commitment to sustainable earnings growth and value creation is not
negotiable."
Date: 26/02/2003 04:34:53 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
