News
Murray & Roberts announces Full Year Results and pursues its New Strategic Future through Strategic Disposals
24 August 2016
Johannesburg, 24 August 2016 – Murray & Roberts today announced its annual results for the year ended 30 June 2016.
SALIENT FEATURES
The Infrastructure & Building platform's Southern African operations and Genrec were reclassified to discontinued operations and the comparative financial results have been restated.
• Lost time injury frequency rate improved to a record-low of 0.68 (June 2015: 0.79). Regrettably, two fatal incidents were recorded, compared to four in the prior year.
• Decision to dispose of the Infrastructure & Building businesses and Genrec.
• Revenue from continuing operations increased by 9% to R26,1 billion (June 2015: R24 billion).
• Diluted continuing HEPS decreased by 10% to 175 cents (June 2015: 195 cents).
• Attributable earnings decreased by 15% to R753 million (June 2015: R881 million).
• Dividend of 45 cents per ordinary share (June 2015: 50 cents per ordinary share).
• Cash, net of interest bearing debt, increased by 26% to R1,8 billion (June 2015: R1,4 billion).
• NAV increased by 7% to R16 per share (June 2015: R15 per share).
• Order book decreased by 13% to R33,4 billion (June 2015: R38,3 billion).
• Continued resilient financial performance from the Underground Mining platform.
• The low oil price has impacted the financial performance of the Oil & Gas business platform. Business optimisation initiatives already effected, will reduce platform overhead costs by A$40 million per annum.
PROPOSED DISPOSAL OF THE INFRASTRUCTURE & BUILDING BUSINESSES AND GENREC
Henry Laas, Murray & Roberts Group Chief Executive, comments: “The decision to dispose of the Infrastructure & Building businesses, supports the Group’s long-term strategy to focus its business on the global natural resources markets, and follows an extended period of careful planning and consideration. The proposed transaction is in the best interests of the long-term sustainability of both the Group and the Infrastructure & Building businesses.”
This transaction excludes the Group’s investment in the Bombela Concession Company (“BCC”), Bombela Civil Joint Venture (“BCJV”) and Bombela Operating Company, as well as the operations in the Middle East, where current projects are expected to be completed by December 2017 and no new projects are being pursued. The board of directors of Murray & Roberts (“Board”) has also decided to dispose of Genrec, the only remaining manufacturing business in its portfolio of businesses. Negotiations with prospective buyers for these businesses are at an advanced stage.
THE NEW STRATEGIC FUTURE
The Group continues to implement its New Strategic Future plan and the three multinational business platforms provide a strong base for future growth.
The three key strategic drivers are: global economic growth, global population growth, and continued urbanisation, which will provide the basis for sustainable growth in natural resources markets over the long term.
It is the Group’s vision, by 2025, to be a leading multinational group that applies its project lifecycle capabilities to optimise fixed capital investment. The Group will achieve this by focusing its expertise and capacity on selected oil & gas, metals & minerals and power & water market sectors.
Continues Laas, “Growing our capability in specialist engineering, commissioning and asset support & maintenance services in these market sectors, should yield higher margins and carry lower risk than services only provided in the construction segment of the project value chain, enhancing return to shareholders.”
FINANCIAL REPORT FOR YEAR ENDED 30 JUNE 2016
“FY2016 has been a difficult year in pursuit of the Group’s New Strategic Future plan. Murray & Roberts is largely exposed to the global natural resources sector and is continuing to steer its way through challenging trading conditions, especially in the oil & gas sector” says Laas.
The Infrastructure & Building and Genrec businesses have been classified as discontinued operations, and results for FY2015 have accordingly been restated. The Group recorded revenue from continuing operations of R26 billion (June 2015: R24 billion) and attributable earnings of R753 million (June 2015: R881 million). Diluted continuing headline earnings per share decreased to 175 cents (June 2015: 195 cents). The net cash position at 30 June 2016 increased to R1,8 billion (June 2015: R1,4 billion).
The Group order book was R33,4 billion (June 2015: R38,3 billion). The order book for continuing operations was lower at R28,7 billion (June 2015: R33,3 billion) , primarily due to a reduced order book for the Underground Mining platform in Africa, and the Oil & Gas platform reflecting a lower order book due to the depressed market.
Capital expenditure for the year was R431 million (June 2015: R425 million) of which R332 million (June 2015: R290 million) was for expansion and R99 million (June 2015: R135 million) for replacement. The Underground Mining platform incurred the bulk of the capital expenditure.
Health and safety
The Board deeply regrets the death of two employees who sustained fatal injuries whilst on duty, compared to four employees in the prior year.
The Group’s overall lost time injury frequency rate reduced to a record-low level of 0.68 (June 2015: 0.79).
DIVIDEND UPDATE
The Board has declared a gross annual dividend of 45 cents (June 2015: 50 cents) per ordinary share in respect of the year ended 30 June 2016.
PROSPECTS STATEMENT
It is expected that difficult macro-economic conditions will persist. The Group expects a decline in operational earnings for FY2017, when compared to FY2016, mainly due to the lack of opportunity for the Oil & Gas platform, as the full impact of the oil price collapse and global oversupply is felt in this market.
“All platforms will continue to focus on cost reduction and operational excellence to preserve margins. The Group will continue to implement its New Strategic Future plan. The natural resource market sectors are cyclical and the Group will trade through this difficult period whilst implementation of this plan will position the Group well for the upturn” concludes Laas.
