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 |