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MUR
MUR
MUR - Murray & Roberts Holdings Limited - Unaudited Condensed Consolidated
Results for the six months to 31 December 2006
Murray & Roberts Holdings Limited
(Registration No. 1948/029826/06)
("Murray & Roberts" or "the Group")
Share code: MUR & ISIN code: ZAE000073441
Unaudited Condensed Consolidated Results for the six months to 31 December 2006
website: www.murrob.com e-mail: clientservice@murrob.com
Highlights
Interim dividend up 125% to 45 cents per share
Headline earnings up 108% to 135 cents per share
Order book up 54% to R15,4 billion
Revenue up 55%
6,5% Operating margin
22,3% Return on Average Shareholder Funds
R485 million Operating Cash inflow
Condensed consolidated income statement
for the six months ended 31 Audited
December 2006 Annual
R millions 31.12.06 31.12.05 30.6.06
Revenue 8 581 5 528 11 920
Earnings before interest,
exceptional items,
depreciation and amortisation 739 416 1 044
Depreciation (168) (111) (228)
Amortisation of intangible (11) (4) (16)
assets
Earnings before interest and 560 301 800
exceptional items
Exceptional items (35) (96) (85)
Headlease and other property 8 - 4
activities 1
Broad-based black economic
empowerment
(BBBEE) expense - (95) (87)
Loss on disposal of (48) - -
investment
Income on liquidation of 15 - -
Consani
Other (10) (1) (2)
Earnings before interest and 525 205 715
taxation 2
Net interest (expense) income (11) 21 22
Earnings before taxation 514 226 737
Taxation (145) (58) (189)
Earnings after taxation 369 168 548
Share of profit (loss) of 31 (13) 1
associates
Earnings from continuing 400 155 549
operations
Earnings from discontinued - 14 12
operations (note 2)
Earnings for the period 400 169 561
Attributable to:
Shareholders of the holding 360 148 512
company
Minority shareholders 40 21 49
400 169 561
Earnings per share (cents)
- Diluted 121 46 165
- Basic 123 47 168
Earnings per share from
continuing
operations (cents)
- Diluted 121 42 162
- Basic 123 42 164
Total dividend per ordinary 45 20 60
share (cents)
Operating cash flow per share 146 - 180
(cents)
1 The headlease and other
property activities include
the following:
Rental income 86 71 144
Interest expense (21) (26) (49)
2 Includes interest expense
of R21 million (2005: R26
million) in respect of the
headlease and other property
activities
SUPPLEMENTARY INCOME
STATEMENT INFORMATION
Reconciliation of weighted
average number of shares in
issue (000)
Weighted average number of 331 893 331 893 331 893
ordinary shares in issue
Less: weighted average number (9 889) (13 455) (12 139)
of shares held by The Murray
& Roberts Trust
Less: weighted average number (676) - -
of shares held by Murray &
Roberts Limited
Less: weighted average number (28 953) (1 840) (14 917)
of shares held by the Letsema
BBBEE trusts
Weighted average number of 292 375 316 598 304 837
shares used for basic per
share figures
Add: dilutive adjustment for 6 311 5 864 5 081
share options
Weighted average number of 298 686 322 462 309 918
shares used for diluted per
share figures
Reconciliation of headline
earnings
Earnings attributable to 360 148 512
shareholders of the holding
company
Non-headline exceptional 43 1 2
items
Profit on disposal of - (18) (16)
discontinued operations
Taxation on above adjustments - 4 4
Headline earnings 403 135 502
Headline earnings per share
(cents)
- Diluted 135 42 162
- Basic 138 43 165
Reconciliation of headline
earnings excl BBBEE expense
Headline earnings as above 403 135 502
BBBEE expense - 95 87
Taxation effect on BBBEE - (22) (20)
expense
Headline earnings excluding 403 208 569
BBBEE expense
Headline earnings per share
excluding BBBEE expense
(cents)
- Diluted 135 65 184
- Basic 138 66 187
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31 Audited
December 2006 Annual
R millions 31.12.06 31.12.05 30.6.06
Cash generated by operations 676 370 1 063
before working capital
changes
Cash outflow from exceptional - (74) (70)
items relating to BBBEE
Cash outflow from headlease (30) (39) (82)
and other property activities
Increase in working capital (100) (217) (195)
Cash generated by operations 546 40 716
Interest and taxation (61) (39) (118)
Operating cash flow 485 1 598
Dividends paid to (121) (96) (154)
shareholders of the holding
company
Dividends paid to minority (11) (22) (29)
shareholders
Cash flow from operating 353 (117) 415
activities
Cash flow from investing (451) (540) (356)
activities
Property, plant and equipment (377) (179) (307)
and intangible assets (net)
Business acquisitions / (11) (344) (126)
disposals (net)
Other investments (net) (138) (10) 73
Realisation of investment 75 - -
Other (net) - (7) 4
Cash flow from financing (4) (204) (183)
activities
Net movement in borrowings (4) 207 228
Treasury share acquisition - (411) (411)
Net decrease in cash and cash (102) (861) (124)
equivalents
Net cash and cash equivalents 1 642 1 733 1 733
at beginning of period
Effect of foreign exchange (9) (23) 33
rates
Net cash and cash equivalents 1 531 849 1 642
at end of period
CONDENSED CONSOLIDATED BALANCE SHEET
Audited
as at 31 December 2006 Annual
R millions 31.12.06 31.12.05 30.6.06
ASSETS
Non-current assets 3 924 3 039 3 589
Property, plant and equipment 1 920 1 414 1 714
Investment property 258 257 278
Goodwill 158 93 147
Other intangible assets 63 65 68
Deferred taxation assets 53 21 52
Associate companies 1 054 766 877
Other investments 375 423 435
Other non-current receivables 43 - 18
Current assets 6 751 3 776 6 796
Accounts receivable and other 2 660 1 695 2 110
Net amounts due from contract 2 338 968 2 878
customers
Bank balances and cash 1 753 1 113 1 808
TOTAL ASSETS 10 675 6 815 10 385
EQUITY AND LIABILITIES
Total equity 3 524 2 793 3 194
Attributable to equity 3 377 2 700 3 086
holders of the holding
company
Minority shareholders` 147 93 108
interest
Non-current liabilities 1 178 859 1 027
Long-term provisions 10 4 22
Obligations under finance 151 253 155
headleases*
Other long-term liabilities* 622 355 517
Other non-current liabilities 32 - 36
Deferred taxation liabilities 363 247 297
Current liabilities 5 973 3 163 6 164
Accounts payable and other 5 536 2 533 5 509
Bank overdrafts* 222 264 166
Short-term loans* 215 366 489
TOTAL EQUITY AND LIABILITIES 10 675 6 815 10 385
* Interest-bearing borrowings
SUPPLEMENTARY BALANCE SHEET
INFORMATION (R millions)
Net asset value per share 1 180 882 1 031
(cents)
Commitments
Capital expenditure
- spent 401 185 294
- authorised but unspent 640 248 862
Operating lease commitments 107 209 136
Contingent liabilities 119 124 131
Financial institution 3 522 2 061 1 945
guarantees
SEGMENTAL ANALYSIS
EBIT
before
exceptional
R millions Revenue items
31 December 2006
Construction & engineering 5 308 286
Construction materials & services 2 739 319
Fabrication & manufacture 534 28
Corporate - (73)
Continuing operations 8 581 560
Discontinued operations (note 2) - -
8 581 560
31 December 2005
Construction & engineering 3 124 94
Construction materials & services 1 983 226
Fabrication & manufacture 421 39
Corporate - (58)
Continuing operations 5 528 301
Discontinued operations (note 2) 46 1
5 574 302
30 June 2006
Construction & engineering 6 966 324
Construction materials & services 3 986 537
Fabrication & manufacture 968 86
Corporate - (147)
Continuing operations 11 920 800
Discontinued operations (note 2) 46 1
11 966 801
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 Issued Other Hedging and
December 2006 capital translation
R millions capital reserves reserves
Balances at 30 June 2005 1 425 33 17
Earnings attributable to
shareholders of the holding
company
Recognition of financial
instruments on acquisition of
businesses
Deferred taxation recognised
directly in equity
Earnings attributable to
minority shareholders
Purchase of minorities
Other movements in minority
interest
Movement in share-based 24
payment reserve
Foreign currency translation 82
movement on investments
Movement in treasury shares (411)
Dividend declared and paid
Balances at 30 June 2006 1 014 57 99
Earnings attributable to
shareholders of the holding
company
Earnings attributable to
minority shareholders
Other movements in minority
interest
Movement in share-based 3
payment reserve
Foreign currency translation 50
movement on investments
Dividend declared and paid
Balances at 31 December 2006 1 014 60 149
for the six months ended 31 Retained Minority
December 2006
R millions earnings interest Total
Balances at 30 June 2005 1 592 97 3 164
Earnings attributable to 512 512
shareholders of the holding
company
Recognition of financial (29) (29)
instruments on acquisition of
businesses
Deferred taxation recognised (1) (1)
directly in equity
Earnings attributable to 49 49
minority shareholders
Purchase of minorities (5) (14) (19)
Other movements in minority 6 6
interest
Movement in share-based 24
payment reserve
Foreign currency translation 82
movement on investments
Movement in treasury shares (411)
Dividend declared and paid (154) (29) (183)
Balances at 30 June 2006 1 915 109 3 194
Earnings attributable to 360 360
shareholders of the holding
company
Earnings attributable to 40 40
minority shareholders
Other movements in minority 9 9
interest
Movement in share-based 3
payment reserve
Foreign currency translation 50
movement on investments
Dividend declared and paid (121) (11) (132)
Balances at 31 December 2006 2 154 147 3 524
Notes
1. Basis of preparation
This interim report has been prepared and presented in accordance with
IAS34: Interim Financial Reporting, the Companies Act 1973 (amended) and is
in accordance with International Financial Reporting Standards (IFRS). The
accounting policies used in the preparation of these results are consistent
in all material respects with those used in the annual financial statements
for the year ended 30 June 2006.
2. Earnings from discontinued operations
There were no disposals of business in the current period. The comparative
numbers include businesses that were closed or disposed of in the prior
year, being its forklift truck distribution business Criterion Equipment.
R millions 31.12.06 31.12.05 30.6.06
Earnings from the
discontinued operation is
analysed as follows:
Profit on disposal / closure - 18 16
Earnings after taxation for - (4) (4)
the period
- 14 12
Earnings after taxation for
the period is analysed
as follows:
Revenue - 46 46
EBITDA - 2 2
Depreciation - (1) (1)
EBIT - 1 1
Net interest expense - (1) (1)
Earnings before taxation - - -
Taxation - (4) (4)
Loss after taxation - (4) (4)
3 Reclassification of comparatives
The group reclassified an amount of R225 million from net amounts due from
contract customers to accounts payables and other for the comparative
period ended 31 December 2005. This relates to amounts payable to contract
customers that were previously netted of against the amount receivable from
contract customers. This was correctly reflected for the period ended 30
June 2006. The above reclassification had no impact on the net assets or
total equity of the Group.
Commentary
The directors are pleased to announce a 125% increase in the interim ordinary
dividend to 45 cents per share for the half-year ended 31 December 2006 (2005:
20 cents per share). This follows a 108% increase in fully diluted headline
earnings per share to 135 cents for the period (2005: 65 cents excluding the
BBBEE transaction expense). Improved contributions from all core business
segments resulted in an 86% increase in operating profit (EBIT) to R560 million
(2005: R301 million).
Attention is drawn to the formal dividend announcement contained herein.
Revenue for the period is up 55% to R8,58 billion (2005: R5,52 billion) which
includes organic growth of R1,85 billion (33%) and a maiden contribution of R1,2
billion from Concor which was consolidated on acquisition from 1 July 2006.
The interim operating margin of 6,5% (2005: 5,4%) reflects the early-stage
turnaround in Construction SADC and solid performances from other core
operations. In this respect, Construction & Engineering increased turnover by
70% to R5,3 billion (2005: R3,1 billion) and EBIT by 204% to R286 million (2005:
R94 million). This includes a fair value adjustment on concession investments at
a similar level to the prior half-year. Construction Materials & Services
increased turnover by 38% to R2,7 billion (2005: R2,0 billion) and EBIT by 41%
to R319 million (2005: R227 million).
Corporate costs for the half-year are R73 million (2005: R58 million) with the
increase largely attributed to investment initiatives in Health and Safety, Risk
Management and Leadership Development. The weaker SA Rand has also impacted
translation of the Group`s international corporate cost.
The effective tax rate remained constant at 26%, but increased profitability has
resulted in a 150% increase in the interim tax charge to R145 million (2005: R58
million).
Operating cash inflow was R485 million (2005: R1 million) while working capital
outflow improved to R100 million (2005: R217 million). Cash management remains a
focus throughout the Group, although we continue to experience delayed progress
payments in some markets and longer final account settlements, particularly in
Middle East.
Shareholder funds increased to R3,4 billion at 31 December 2006, representing a
net asset value (NAV) of 1180 cps. The after tax return on average shareholder
funds for the period increased above the Group target of 20,0% to 22,3% (2005:
11,7%).
Order Book and Market
The Gautrain Project was finally secured in September 2006 followed by financial
close in January 2007. The Construction & Engineering order book has increased
by 54% in the period to R15,4 billion, up from R10,0 billion at 30 June 2006.
This is marginally down on the R16,5 billion reported at the annual general
meeting. The Group in joint venture has been confirmed as the contractor for
both the Cape Town and Polokwane stadiums for the 2010 Soccer World Cup.
Of the order book, Construction Middle East accounts for R2,4 billion (up 2,2%),
Construction SADC for R8,4 billion (up 122%), Engineering for R1,2 billion (up
77%) and Mining Contracting for R3,4 billion (up 8,2%). The regional composition
of order book is SADC 78% (71%); Middle East 15% (23%); and Rest of World 7%
(6%). The amounts in brackets are the comparative levels at 30 June 2006.
The UCW Partnership (70% Murray & Roberts) was confirmed as a participant in the
Spoornet Orex system locomotive project which combined with the Coalink system
project awarded earlier in the year, brings the total value to the Group to R1,6
billion over 6 years, which amount is not recorded in the order book.
The South African construction economy continues to offer significant growth
potential to the Group`s Construction Materials & Services operations.
There is evidence of strong industrial investment on the horizon, with power
stations, rolling stock and an aluminium smelter at Coega examples of major
public sector driven investment programmes that are still to impact on the
market and the Group. These will specifically benefit the Group`s engineering
and fabrication operations in the future and consolidate demand for high-value
construction services.
The Group`s Middle East markets remain strong, with a number of new major
projects under contract negotiation. This is a competitive and demanding market
where various Group operations have established strong brand presence based on
delivery and service performance.
Associate
With projected future losses on its two India contracts provided at 30 June
2006, associate company Clough delivered a turnaround profit for the half-year.
Subsequent to the period under review, the Panna contract achieved substantial
completion on revised schedule and the BassGas arbitration is awaiting
judgement. Negotiations continue on an equitable way forward for the troubled G1
contract.
Mr Michael Harding was appointed independent non-executive chairman of the board
of the company at its annual general meeting in November 2006. Mr John Cooper
was appointed chief executive and managing director in January 2007, having
served as deputy chairman since August 2006 as a nominee director of Murray &
Roberts.
In its half-year review, the board of Clough has informed its shareholders that
it "expects the second half performance to be similar to that of the first
half".
Black Economic Empowerment
Murray & Roberts has committed to a development process that will ensure it
meets all the objectives required of it to achieve broad-based black economic
empowerment status within its South African listed company and local subsidiary
operations. An audit of empowerment within the Group was completed in the
reporting period, which forms the foundation for future action in this respect.
The Group`s ground-breaking broad-based black economic empowerment (BBBEE)
transaction concluded in December 2005 ensures that the Group has almost 15%
empowerment ownership across all its South African operations. This is
specifically enhanced through additional empowerment ownership of between 15%
and 30% in companies where charter, legislative or market requirements demand.
Based on the Group`s current share price and dividend payments, significant
value has accrued in just one year to the community trusts, 14000 employees and
executives included in the BBBEE structures.
Acquisitions and Disposals
The Group underwrote a further recapitalisation of Clough in December 2006,
injecting A$23,3 million into the company and through the process, secured the
right to an additional 0,7% shareholding. A further 3,0% shareholding was
acquired on the market for A$5,1 million in the period, bringing the Group`s
total current shareholding to 49,0%. On conversion of all existing rights, the
Group`s shareholding will increase to 53,0% at an average cost of A$0,54 per
share.
The Clough share price has risen steadily over the past two months, trading as
high as A$0,59 per share. The Group plans to raise its shareholding in Clough
above 50% and consolidate the company effective 1 July 2007.
Concor Limited was consolidated effective 1 July 2006 and its performance is
included in the financial results for the half-year. All regulatory hurdles were
cleared in January 2007 for the acquisition of 80% of Wade Walker in South
Africa. The company is a leading electrical and instrumentation engineering
contractor in the SADC region and will join the engineering sub-cluster.
The Group disposed of its remaining shareholding in Borbet South Africa in the
period and has reached an advanced stage in the disposal process of the
Foundries Group.
Prospects
The directors are of the considered view that private and public capital
formation in South Africa is set to increase further before stabilising above
existing levels over a number of years into the future. There is high demand for
new investments into power and energy, water and sanitation, transport and
communications infrastructure to meet the socio-economic development agenda for
South Africa. The Group`s Middle East and resources-linked markets also show
strong growth and sustainability potential.
Murray & Roberts is the leading construction and engineering group in South
Africa and has initiated a number of programs and initiatives to maintain its
share of this market and secure the leadership, partners, resources and skills
needed to meet this expected increase in demand.
Capital expenditure by the Group increased 116% to R401 million (2005: R185
million) in the half-year, including R100 million in Concor. This is expected to
more than double for the full-year with Gautrain and the South African mining
contracting operations largely pre-funded though advance payments from clients.
The directors expect fully diluted headline earnings for the full year to 30
June 2007 to grow between 50% and 70% compared with comparable period to 30 June
2006, excluding the Group`s BBBEE transaction expenses.
This prospects statement has not been audited or reviewed.
Roy Andersen Brian Bruce Roger Rees
Chairman of the Group Chief Group Financial
Board Executive Director
Bedfordview
28 February 2007
Notice to shareholders
Declaration of interim ordinary dividend (No. 110)
Notice is hereby given that an interim ordinary dividend No 110 of 45 cents per
share (2006: 20 cents per share) in respect of the financial year ending 30 June
2007 has been declared payable to shareholders recorded in the register at the
close of business on Friday 13 April 2007.
Salient dates
Last day to trade cum the dividend Wednesday 4 April 2007
Trading ex dividend commences Thursday 5 April 2007
Record date Friday 13 April 2007
Payment date Monday 16 April 2007
Share certificates may not be dematerialised or re-materialised between
Thursday 5 April 2007 and Friday 13 April 2007 both days inclusive.
On Monday 16 April 2007 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 16 April 2007 will be posted on that date.
Shareholders who have dematerialised their share certificates will have their
accounts at their CSDP or broker credited on Monday 16 April 2007.
By order of the Board
MW Arnold
Acting Company Secretary
Bedfordview
28 February 2007
Murray & Roberts Holdings Limited
(Registration number 1948/029826/06)
Directors:
RC Andersen* (Chairman) BC Bruce (Managing & Group Chief Executive) SJ
Flanagan SE Funde* N Jorek3 NM Magau* JM McMahon* IN Mkhize* RW Rees1 AA
Routledge* MJ Shaw* KE Smith2 JJM van Zyl* RT Vice*
1British 2Irish 3German *Non-executive
Secretary:
MW Arnold (acting)
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
website: www.murrob.com e-mail: clientservice@murrob.com
"Our commitment to sustainable earnings growth and value creation is not
negotiable"
Date: 28/02/2007 17:15:00 Produced by the JSE SENS Department.
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