| 02-03--06 |
| FULL STEAM AHEAD FOR MURRAY & ROBERTS |
Executive Summary Murray & Roberts has achieved excellent growth in all core business activities during the six months to 31 December 2005 and is contracted to play a key future role in recently awarded major infrastructure projects. “Together with our partners, we have been awarded a key role in major projects valued at more than R100 billion over five years as the South African Government renews its commitment to invest in primary infrastructure,” said CE Brian Bruce. “Rebuilding Murray & Roberts has established the platform for our Group to participate successfully in these new opportunities. “As an expression of confidence in our own prospects and those of the South African economy, Murray & Roberts has declared a 33% increase in the interim ordinary dividend to 20 cents per share. Furthermore, the Group will proceed with a dividend policy of between 2,8 and 3,2 times cover on full-year headline earnings.” Murray & Roberts expects earnings for the full year to June 2006 to show real growth compared to the IFRS restated result for the previous year. Performance Operating profits grew by 50% to R301 million, as all business segments delivered improved contributions. Headline earnings include an expense of R95 million for the Group’s Broad-Based BEE transaction. Excluding this expense, headline earnings have been maintained at the same level as the previous half-year. Other changes in the income statement reflect the disposal of the Group’s minority interest in Unitrans and the impact of new acquisitions including Oconbrick and associate Clough. The Construction & Engineering sector recorded strong growth in operating profits as construction activities in the Middle East and engineering activities, supported by solid growth in mining contracting, achieved a turnaround. However, some problems were experienced on two building projects in Tanzania and Botswana and there have been ongoing market difficulties in the Western Cape. The Group’s Construction Materials & Services operations have continued to benefit from steady investment into infrastructure projects and the acquisition of Oconbrick boosted the half-year performance in a buoyant building materials market. A slight decline in the performance of the Fabrication & Manufacture segment was attributed to closure and disposal of non-core businesses and the impact of a strong currency. A net loss of R13 million at the associate level relating to project losses in Clough was recorded. In November 2005 Murray & Roberts increased its investment in Clough to 46% and expects a significant improvement in Clough’s results for the second half of the financial year. Net interest income of R21 million in the half-year will be reversed in the second half of the year due to cash outflows of more than R1 billion to fund the Oconbrick, Clough, Concor and BEE transactions. Order book The Group continued to secure important project opportunity and the Construction & Engineering order book increased to R9,6 billion at 31 December 2005, up 13% from R8,5 billion at 30 June 2005. This excludes the Group’s estimated R4,5 billion share of the Gautrain project over a 54 month period from financial closure. In addition, the UCW Partnership has secured a key involvement in the recently announced Spoornet locomotive project for South Africa’s coal export system. The value of this project to the Group is approximately R1 billion over five years. Construction activities in the Middle East and SADC account for 29% and 28% respectively of the order book, while mining contracting accounts for 35% and engineering 8%. Geographically, 64% of the order book is in SADC, 29% in the Middle East and 7% in other regions of the world. Empowerment Murray & Roberts concluded its primary Broad-Based BEE transaction of 19 December 2005. In terms of the transaction, four independent trusts own 10% of the Group’s shares. Almost 14000 employees have become shareholders in the Group and the structure of the transaction ensures that they and designated community beneficiaries will receive dividend payments with immediate effect. Acquisitions and Disposals The Group has continued its strategy of new business acquisition and non-core disposals through the first half-year.
Prospects Murray & Roberts has played a leadership role over more than 100 years in the development and construction of South Africa’s social and economic infrastructure. The renewed commitment by the South African government to invest in primary infrastructure has delivered new opportunity to the Group and its partners over the past six months. In this respect the PBMR Nuclear Demonstration Plant, Vresap Pipeline, Gautrain Rapid Rail Link, Coalink Locomotives and Eskom’s expansion program are five initiatives in which the Group is contracted to play a key partnership role. In total these projects and programs represent more than R100 billion of gross fixed capital formation over the next five to ten years. For further information contact: Murray & Roberts Client Services |
