FINANCIAL RESULTS
Murray & Roberts Group reported revenue of US$3.2bn (June 2013: us$3.09bn) and attributable earnings of US$117.6m (June 2013: US$ 90.5m). Diluted earnings per share was 305 cents (rands) (June 2013: 245 Rand cents). Diluted continuing headline earnings per share was 205 cents (June 2013: 123 Rand cents), representing growth of 67%, compared to the last year. At 30 June 2014, the net cash position was R1,8 billion (June 2013: R4,3 billion), after the Group acquired the minority shareholding in Clough for R4,4 billion in December 2013. A full year dividend of 50 cents was declared.
Murray & Roberts Group’s order book reduced to R40,9 billion (June 2013: R46,1 billion). The reduction is primarily due to the run-off in Clough’s order book as the nature of its work is changing from longer term greenfields liquefied natural gas (“LNG”) projects to shorter term brownfields projects.
Henry Laas, Murray & Roberts Group Chief Executive comments: “Over the last three years, during which it delivered its Recovery & Growth strategy, the Group restored financial stability and returned to profitability, re-organised and re-energised the businesses and resumed the dividend payment. The Group is now proceeding with its longer term plan to build a New Strategic Future.”
HEALTH AND SAFETY
The safety of employees remains a top priority. Murray & Roberts Group’s safety performance improved to a record-low lost time injury frequency rate (“LTIFR”) of 0.80 (2013: 0.82), by driving the application of its health and safety framework and commitment to zero harm. Tragically, four fatal incidents were recorded in FY2014, and the Board extends its condolences to the families of the deceased.
“Fatal workplace incidents are unacceptable and the Group remains committed to the prevention of all serious safety incidents. We will continue to focus on operational discipline and entrenching safety management practices and procedures in order to prevent the occurrence of such tragedies,” comments Laas.
OPERATIONAL OVERVIEW
“The Board is pleased with the R4,4 billion acquisition of the minority shareholding in Clough in December 2013 and the strong financial results delivered in the period under review,” comments Laas. The Oil & Gas platform continued to deliver strong operational and financial results. Clough recorded an excellent financial result. Revenues increased by 18% to R17,5 billion (June 2013: R14,8 billion) and operating profit reached R1 026 million (June 2013: R1 502 million – which include R681 million profit on the disposal of Clough’s investment in Forge). In Australia, the investment boom in new LNG projects is slowing down, and the market is transitioning to a sustaining brownfields operations and maintenance market, creating opportunities for Clough to secure new contracts for services on the projects it helped build. Although Clough’s order book has reduced, the outlook remains promising. Clough is also expanding its service offering globally.
Considering the recent subdued state of the commodity cycle, the Underground Mining platform is performing well, and is showing strong growth potential in developing its order book in all main geographic areas, off a relatively low base. Revenues decreased by 16% to R6,6 billion (June 2013: R7,9 billion) and operating profit of R258 million (June 2013: R318 million) was also down from the previous year. The platform expects an improvement in the global mining projects market, and there is a large investment pipeline of underground projects in regions where the platform has a presence.
The Energy & Industrial platform continues to be largely dependent on the Kusile and Medupi power station projects, whilst it is establishing a position in the broader local petrochemical, industrial engineering and renewable energy sectors. Revenues decreased by 6% to R4,8 billion (June 2013: R5,0 billion) and operating profit improved to R144 million (June 2013: R137 million). The platform is also targeting the industrial water sector. The key prospects in the short term lie in the renewable energy programme, and good relationships have been established to access a fair share of work on available projects. The power programme on Medupi and Kusile also continues to offer new opportunities.
The Infrastructure & Buildings platform has returned to profitability, albeit at low margins as the South African construction sector continues to be extremely competitive. The platform seeks to create value through operational excellence. Revenues increased by 11% to R7,2 billion (June 2013: R6,5 billion) and operating profit of R196 million (June 2013: R85 million loss) was recorded. In the Middle East, the platform secured two new building projects in the year under review. The South African market in general remains subdued, with pockets of activity in buildings and infrastructure work. The platform has achieved preferred bidder status for civil infrastructure work on three wind farms to be developed in the new financial year.
A NEW STRATEGIC FUTURE
“We are pleased with the Murray & Roberts improved financial position and expect the earnings growth trend to continue in the medium-to long term. By 2020, Murray & Roberts aims to be a leading international diversified project engineering, procurement and construction group in selected natural resources market sectors. Specifically, we are targeting the oil and gas, mining, energy and industrial markets, where we are able to leverage our current capabilities,” concludes Laas.
