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Murray & Roberts Announces Full Year Financial Results
Johannesburg, 23 August 2017 – Murray & Roberts today announced its annual results for the year ended 30 June 2017.
Revenue from continuing operations, excluding the Middle East, decreased by 15% to R20,8 billion
Diluted continuing HEPS, excluding Middle East, increased by 8% to 212 cents
Attributable earnings of R48 million (FY2016: R753 million)
Cash, net of debt, maintained at R1,8 billion
Dividend maintained at 45 cents per ordinary share
Order book for continuing operations of R26,9 billion in a tough environment
Attributable earnings were impacted by the following exceptional items:
R570 million loss incurred in the Middle East
R160 million profit realised in Bombela Civils Joint-Venture, following settlement of Gautrain claim
R170 million net present value charge of the cash contribution over 12 years in terms of the Voluntary Rebuilding Programme with the South African Governmen
Record-low lost time injury frequency rate of 0.52 (FY2016: 0.68). Regrettably, one fatal incident was suffered
Settlement of all Gautrain development period disputes in December 2016
Sale of Southern African Infrastructure & Building businesses concluded with effect from 1 April 2017
Transfer of Company’s sub-sector listing on the JSE from Heavy Construction to Diversified Industrials in March 2017
FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017
Henry Laas, Murray & Roberts Group Chief Executive, comments: “Murray & Roberts has transformed itself into a multinational engineering and construction Group, with a focused portfolio of businesses providing services primarily in the natural resources market sectors of metals & minerals, oil & gas, and power & water. The significant reshaping and alignment of the organisation is the most evident feature of the progress we have made over the past few years to redirect the strategic focus of the Group.”
The Group reported revenue from continuing operations, excluding the Middle East, of R20,8 billion (FY2016: R24,4 billion), or R21,4 billion (FY2016: R26,1 billion) including the Middle East. Attributable earnings were R48 million (FY2016: R753 million). Diluted continuing HEPS, excluding the Middle East, increased to 212 cents (FY2016: 197 cents), or decreased to 72 cents (FY2016: 175 cents) including the Middle East. The Group maintained its strong cash position with cash, net of debt, of R1,8 billion (30 June 2016: R1,8 billion). Attributable earnings were impacted by the following exceptional items:
R570 million loss incurred in the Middle East, recorded as part of continuing operations;
R160 million profit realised in Bombela Civils Joint-Venture, following settlement of Gautrain claim; and
R170 million net present value charge of the cash contribution over 12 years in terms of the Voluntary Rebuilding Programme with the South African Government.
Capital expenditure for the year was R564 million (FY2016: R431 million) of which R405 million (FY2016: R332 million) was for expansion and R159 million (FY2016: R99 million) for replacement. The capital expenditure was largely incurred in the Underground Mining platform.
The order book for continuing operations reduced marginally to R26,9 billion (30 June 2016: R28,7 billion).
The Board resolved to maintain a gross annual dividend of 45 cents per ordinary share for FY2017. The dividend will be subject to the dividend tax rate of 20%, which will result in a net dividend of 36 cents per share to those shareholders who are not exempt from paying dividend’s tax. The dividend has been declared from income reserves.
Notwithstanding the losses incurred in the Middle East, the Board took into consideration the Group’s strong cash position, partly as a result of the Gautrain settlement, as well as the view that FY2018 will be the start of a new EBIT growth period, supported by analyst and third party research citing mainly the current turn in the metals and minerals cycle.
ACQUISITION OF A FURTHER INTEREST IN BOMBELA CONCESSION COMPANY
Shareholders are referred to the announcement released on SENS on 22 August 2017, regarding the acquisition of a further 17% in Bombela Concession Company (RF) (Proprietary) Limited (“BCC”) by Murray & Roberts Limited for a total consideration of R405 million. The cash position of the Company and its subsidiaries is sufficiently robust to undertake the acquisition. BCC holds the 15-year concession for operating and maintaining the Gautrain system until March 2026. We expect this low-risk investment in BCC to continue providing strong returns, given that we know the business well and have representation on its board. The implementation of the transaction remains subject to BCC lenders’ and regulatory approvals.
HEALTH AND SAFETY
The Board deeply regrets the death of Ditebogo Phuduhudu (27), an employee of the former Infrastructure & Building platform, who sustained fatal injuries whilst on duty on the Noupoort Wind Farm Project in the Northern Cape on 12 July 2016.
The Group’s overall lost time injury frequency rate (“LTIFR”) reduced to a record-low level of 0.52 (FY2016: 0.68). The Group-wide implementation over the last year of the Major Accident Prevention programme, which empowers supervisors and the workforce to plan and take ownership of safety outcomes, has delivered excellent results and supported a record-low LTIFR for the Group.
The Group has introduced and embedded several key initiatives, including a focus on lead indicators and improved incident reporting and analysis. Our goal is zero harm to our employees, service providers and communities where we operate.
The Group’s strategy and business model is now clearly defined and the focus is on optimising business performance and growing shareholder value. The Group’s strong financial position and improving financial performance expectations will support its organic and acquisitive growth plans.
The Group’s low order book is reflective of current market conditions, but of a high quality given the prudent approach we apply to mitigate project risk at tendering stage. Whilst there is some cause for apprehension, near orders are looking robust and the medium-term project pipeline is strong, specifically in both the Underground Mining and the Oil & Gas businesses.
Notwithstanding persistently trying market conditions and the possibility for potential future losses from the Group’s remaining non-core businesses, the business in the Middle East and Genrec, we believe an improvement in the Group’s financial performance can be expected in the next financial year.
“The natural resources market sector is cyclical and leading researchers are of the opinion that the metals and minerals cycle has already turned – and our assessment is that the Group is well positioned for the upcycle,” concludes Laas.