Murray & Roberts — FY2015 Earnings Presentation
70 slides from Murray & Roberts's earnings presentation, 2015
Slide 1: Report to Stakeholders for the year ended 30 June 2015
REPORT TO STAKEHOLDERS FOR THE YEAR ENDED 30 JUNE 2015 ENGINEERED EXCELLENCE
Slide 2: Engineered Excellence
© Murray & Roberts 2015 | 2 ENGINEERED EXCELLENCE
Slide 3: Agenda and presenters
Henry Laas • Key presentation takeaways Slide 4 • Salient features Slide 5 • Safety performance Slide 6 • Historic financial results Slide 7 • A New Strategic Future Slides 9 to 10 • Business model Slide 11 • Project value chain Slide 12 • FY15 bolt-on acquisitions Slide 13 • Profitability of acquis
Slide 4: Key presentation takeaways
Murray & Roberts is transforming from being predominantly a SA engineering and construction company, to an international group focussed on the natural resources market sectors The declining order book over the past 2 years reflects the reality of a subdued global economy and weak demand for commodit
Slide 5: Salient features FY2015 compared to FY2014
FY2015 COMPARED TO FY2014 Revenue1 HEPS (Diluted continuing) Attributable earnings2 Net cash3 R30,6bn 201 cents R881m R1.4bn R36bn (FY14) 205 cents (FY14) R1 261m (FY14) R1.8bn (FY14) NAV Order book4 Dividend Health & Safety R15 p/share R38.3bn 50 cents LTIFR – 0.79 R13 p/share (FY14) R40.9bn (FY14)
Slide 6: Together to Zero Harm
TOGETHER TO ZERO HARM Fatalities LTIFR* • Regrettably, four 5 1.14 1.20 fatalities • Record low LTIFR of 0.79 1.00 4 0.82 0.80 0.79 0.80 3 0.60 2 0.40 1 0.20 4 2 4 4 0 0.00 FY2012 FY2013 FY2014 FY2015 Fatalities L.T.I.F.R. (per 1 million hours) L.T.I.F.R. Target (0.8) * Lost Time Injury Frequency Ra
Slide 7: Attributable earnings and diluted continuing HEPS
ATTRIBUTABLE EARNINGS AND DILUTED CONTINUING HEPS R’m Cents • Fourth consecutive year 1 000 300 of growth in attributable earnings from continuing operations. • For FY15, operating income was down on 0 0 prior year, but offset by lower tax charge. (1 000) (300) (2 000) (600) 2011 2012 2013 2014 2015
Slide 8: Engineered Excellence
© Murray & Roberts 2015 | 8 ENGINEERED EXCELLENCE
Slide 9: The Group's 2020 vision
The Group’s 2020 vision is that of a diverse international engineering & construction group focused on the natural resource market segments A Group of world class companies and brands aligned to the same purpose and vision, and guided by the same set of values with a common owner, Murray & Roberts H
Slide 10: Strategic objectives and priorities
A LEADING DIVERSIFIED INTERNATIONAL PROJECT ENGINEERING, PROCUREMENT AND CONSTRUCTION GROUP BY 2020 Strategic objectives Strategic priority • Resolve Gautrain and Dubai claims and Gautrain water ingress Grow profitability and cash flows • Enhanced EBT, free cash flow and ROICE performance Focus on i
Slide 11: Service offering across project value chain
ENGINEERING AND CONSTRUCTION SERVICE OFFERING ACROSS PROJECT VALUE CHAIN IN SELECTED NATURAL RESOURCES MARKET SECTORS Platform Capabilities Geography Project value chain • Detailed engineering • Australasia • Procurement • Asia Design and Oil & Gas • Construction • Americas Engineering / • Commissio
Slide 12: Improved returns through business model diversification
IMPROVED RETURNS THROUGH BUSINESS MODEL DIVERSIFICATION INCREASE CONTRIBUTION OUTSIDE CLASSIC CONSTRUCTION Typical return and margin range per value chain segment 50 % Classic Development Engineering Operations Services construction 40 % 30 % 15-45% 20 % 0-40% 0-30% 0-30% 10-20% 10 % 0-15% 5-15% 0-5
Slide 13: Changing business model through bolt-on acquisitions
CHANGING BUSINESS MODEL THROUGH BOLT-ON ACQUISITIONS • Value: R57m • Location: Hanover and Houston, United States • Description: - CH·IV International has been providing LNG engineering and consulting services to a wide base of clients encompassing the entire LNG value chain since 1991. - CH·IV’s em
Slide 14: Profitability of acquisitions
Rm e2o 1 500 1 383 1 200 900 600 614 268 144 300 46 - 81 FY13 FY14 FY15 Turnover Revenue EBIT Includes results for full financial year for comparison purposes. Rm FY15 Performance 7% 280 272 240 200 10% 160 8% 120 93 80 18 25 40 9 2 - Booth Welsh CH-IV Acquamarine Revenue EBIT % Margin Includes resu
Slide 15: International diversification
INTERNATIONAL DIVERSIFICATION • International diversification approach: Geographic positioning – permanent presence (offices) in regions with Glasgow North Bay major opportunity in selected market Salt Lake segments City Houston Dubai Major clients – follow major clients on project- Accra by-project
Slide 16: Engineered Excellence
© Murray & Roberts 2015 | 16 ENGINEERED EXCELLENCE
Slide 17: Statement of financial performance
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) EBITDA 1 742 2 241 (499) EBIT 1 125 1 533 (408) Net interest expense (72) (58) (14) Taxation (194) (499) 305 Income from equity accounted investments 3 1 2 Discontinued operations* 32 423 (391) Non-controlling int
Slide 18: Statement of financial position
STATEMENT OF FINANCIAL POSITION Rm 2015 2014 Variance Total assets 18 803 19 811 (1 008) Property, plant and equipment 3 021 3 248 (227) Other non-current assets 4 622 4 075 547 Current assets 8 185 7 781 404 Cash and cash equivalents 2 891 4 301 (1 410) Assets classified as held-for-sale 84 406 (32
Slide 19: Earnings underpinned by international platforms
EARNINGS UNDERPINNED BY INTERNATIONAL PLATFORMS AS AT 30 JUNE 2015 • Internationally-focused Revenue EBIT (Before Corporate Cost) platforms (Oil & Gas and Underground Mining) contribute 63% of revenue and 94% of 16% EBIT (Before Corporate 23% costs). (10%) • Increased contribution 38% expected from
Slide 20: Services across project lifecycle
SERVICES ACROSS PROJECT LIFECYCLE REFLECTS GROUP’S CHANGING BUSINESS MODEL Value chain EBIT • Construction activity Value chain turnover contributes 66% to turnover and 32% to EBIT. 3% 13% 7% • Planning & 32% Engineering, 8% (1%) Commissioning and Maintenance & Refurbishment attract 17% highest marg
Slide 21: Group is transforming to be an international player
GROUP IS TRANSFORMING TO BE AN INTERNATIONAL PLAYER Geographic EBIT • 38% of turnover and Geographic turnover 11% of EBIT from South Africa. • No contribution from 2% 2% 3% 3% 1% 6% 11% the ‘Rest of Africa’. (2%) 8% • Oceania (Oil & Gas) and 38% the Americas 10% 18% (Underground Mining) are the domi
Slide 22: Oil & Gas
OIL & GAS Oil Oil & & Gas* Gas Underground Mining Power & Water Infrastructure & Building Construction Commissioning Corporate Rm Engineering & Fabrication Global Marine & Brownfields & Other Total 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Revenue 4 679 4 794 705 7 096 2 085 2 466
Slide 23: Underground Mining
UNDERGROUND MINING Oil & Gas Underground Mining Power & Water Infrastructure & Building Rm Africa Australasia The Americas Total 2015 2014 2015 2014 2015 2014 2015 2014 Revenue 3 770 3 111 830 699 2 965 2 818 7 565 6 628 Operating profit 117 57 61 49 233 152 411 258 Operating margin (%) 3% 2% 7% 7%
Slide 24: Power & Water
POWER & WATER Oil & Gas Underground Mining Power & Water Infrastructure & Building Rm Power programme* Engineering** Total 2015 2014 2015 2014 2015 2014 Revenue 3 154 3 685 1 084 1 070 4 238 4 755 Operating profit / (loss) 189 238 (323) (94) (134) 144 Operating margin (%) 6% 6% (30%) (9%) (3%) 3% Or
Slide 25: Infrastructure & Building
INFRASTRUCTURE & BUILDING Oil & Gas Underground Mining Power & Water Infrastructure & Building Rm Construction Africa Marine Middle East Total 2015 2014 2015 2014 2015 2014 2015 2014 Revenue 6 019 5 740 - 496 940 940 6 959 7 176 Operating profit / (loss) 177 (189) - 302 28 83 205 196 Operating margi
Slide 26: Disposal of non-core assets
DISPOSAL OF NON-CORE ASSETS Disposal of non-core assets Steel Clough Marine Reinforcing Services & Construction Rm Tolcon Products Properties Properties SA Products* Total 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Revenue 89 414 2 113 3 12 - 2 (6) 1 484 88 2 025 Operating profit /
Slide 27: Investment margins and aspirations
Criteria Method Aspiration FY15 Result Margin EBIT 5% - 7.5% 3.7% Revenue Gross Gearing Total Interest Bearing Debt 20% - 25% 22.7% (Net gearing is nil) Ordinary Shareholders Equity Return on Equity Net Profit Attributable to Ordinary Shareholders 17.5% through 14.2% (ROE) Average Ordinary Sharehold
Slide 28: Engineered Excellence
© Murray & Roberts 2015 | 28 ENGINEERED EXCELLENCE
Slide 29: Decreasing order book reflective of subdued market
DECREASING ORDER BOOK REFLECTIVE OF SUBDUED MARKET Underground Infrastructure & Oil & Gas Power & Water Total Mining Building 40.9bn 37.8bn 38.3bn 16.7bn 16.8bn 13.8bn 12.2bn 9.9bn 8.4bn 8.1bn 6.2bn 6.0bn 6.4bn 7.1bn 5.4bn Jun Dec Jun Jun Dec Jun Jun Dec Jun Jun Dec Jun Jun Dec Jun 2014 2014 2015 20
Slide 30: Strong pipeline but timing uncertain
STRONG PIPELINE BUT TIMING UNCERTAIN Pipeline R’bn Order Book Near orders Category 1 Category 2 Category 3 Infrastructure & Building 7.1 2.0 12.0 61.6 40.0 Power & Water 6.0 - 14.0 12.7 21.2 Underground mining 16.8 5.2 29.2 11.8 22.5 Oil & Gas 8.4 0.7 20.1 7.6 163.9 Total 38.3 7.9 75.3 93.7 247.6 PI
Slide 31: Geography & time distribution
GEOGRAPHY & TIME DISTRIBUTION 2015 Order book Order book Order book Margin Platform % split Rbn Rbn Aspiration SADC Int. 2014 2015 FY Time Distribution % 2016 6.8 Oil & Gas 100 16.7 8.4 2017 1.6 5 - 7.5 >2018 0.0 2016 5.8 Underground 70 30 9.9 16.8 2017 3.7 5 - 7.5 Mining >2018 7.3 2016 3.0 Power &
Slide 32: Commodity order book breakdown
COMMODITY ORDER BOOK BREAKDOWN % Total Platform Total Platform The Americas Australasia Africa R9,9bn R16,8bn R3,1bn R1,8bn R11,9bn June 2014 June 2015 11% 13% 27% 19% 41% 4% Copper 18% 9% Gold Copper-Gold 13% 13% Diamonds 23% 3% Silver 9% 80% Platinum 18% 16% 6% Coal 1% 2% Nickel & Copper 30% Potas
Slide 33: Engineered Excellence
© Murray & Roberts 2015 | 33 ENGINEERED EXCELLENCE
Slide 34: Major claims update: GPMOF, Gautrain, Dubai Airport
GPMOF Gautrain Rapid Rail Link Dubai International Airport • Claims settled. • Sandton Cavern • Arbitration process continuing. • The certificate for - Ruled in BCJV’s favour, quantum award expected • Process of amicable engagement final completion is by end Sep 15. running in parallel with the lega
Slide 35: Platform outlook: Oil & Gas
SUPPORTS LONG-TERM NATURAL RESOURCES FOCUS Oil & Gas • Market very uncertain due the low oil price – investment decisions being delayed / deferred. • Strong short to medium term growth in Australasian LNG commissioning, operations & maintenance market – Clough has largest share of Australasian commi
Slide 36: Platform outlook: Power & Water, Infrastructure & Building
SUPPORTS LONG-TERM NATURAL RESOURCES FOCUS Power & Water • Medupi & Kusile to provide baseload work for the next 4/5 years, although declining year-on-year. • Opportunity in maintenance and refurbishment of older Eskom thermal power stations. • Power sector to see increased levels of private investm
Slide 37: Full project lifecycle service offering
Full project lifecycle service offering, exposure to select natural resources market sectors, and international diversification. © Murray & Roberts 2015 | 37 ENGINEERED EXCELLENCE
Slide 38: Forward-looking statements
This presentation includes certain various “forward-looking statements” within the meaning of Section 27A of the US Securities Act 10 1933 and Section 21 E of the Securities Exchange Act of 1934 that reflect the current views or expectations of the Board with respect to future events and financial a
Slide 39: Report to Stakeholders
REPORT TO STAKEHOLDERS FOR THE YEAR ENDED 30 JUNE 2015 This presentation is available on www.murrob.com ENGINEERED EXCELLENCE
Slide 40: Appendix
REPORT TO STAKEHOLDERS FOR THE YEAR ENDED 30 JUNE 2015 APPENDIX ENGINEERED EXCELLENCE
Slide 41: Engineered Excellence
© Murray & Roberts 2015 | 41 ENGINEERED EXCELLENCE
Slide 42: Statement of financial performance
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) EBITDA 1 742 2 241 (499) EBIT 1 125 1 533 (408) Net interest expense (72) (58) (14) Taxation (194) (499) 305 Income from equity accounted investments 3 1 2 Discontinued operations* 32 423 (391) Non-controlling int
Slide 43: Statement of financial performance: revenue
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) Revenue EBITDAdecreased by 15%. 1 742 2 241 (499) 1. Decrease relates mainly to capital projects coming to an end in the Oil & Gas platform and new work not materialising EBIT 1 125 1 533 (408) outside the power p
Slide 44: Statement of financial performance: EBITDA
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) EBITDA 1 742 2 241 (499) EBITDA EBIT is reflected before: 1 125 1 533 (408) 1. Lower depreciation of R575m (2014: R685m), due to lower capital spend in Underground Mining. Net interest expense (72) (58) (14) 2. Am
Slide 45: Statement of financial performance: EBIT
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) EBITDA 1 742 2 241 (499) EBIT 1 125 1 533 (408) The decrease Net in EBIT from the prior year is mainly attributable to: interest expense (72) (58) (14) 1. Reversal of R278m due to loss making projects in Power & W
Slide 46: Statement of financial performance: net interest
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) EBITDA 1 742 2 241 (499) EBIT 1 125 1 533 (408) Net interest expense (72) (58) (14) Increase in net interest expense attributable to: Taxation (194) (499) 305 1. Full year effect of Clough minority transaction in
Slide 47: Statement of financial performance: taxation
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) EBITDA 1 742 2 241 (499) EBIT 1 125 1 533 (408) Net interest expense (72) (58) (14) Taxation (194) (499) 305 The effective Income fromtax rate accounted equity of 18.4% (2014: 33.8%) is attributable to: investment
Slide 48: Statement of financial performance: equity accounted income
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) EBITDA 1 742 2 241 (499) EBIT 1 125 1 533 (408) Net interest expense (72) (58) (14) Taxation (194) (499) 305 Income from equity accounted investments 3 1 2 Increase in equity Discontinued income is attributable to
Slide 49: Statement of financial performance: discontinued operations
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) EBITDA 1 742 2 241 (499) EBIT 1 125 1 533 (408) Net interest expense (72) (58) (14) Taxation (194) (499) 305 Income from equity accounted investments 3 1 2 Discontinued operations* 32 423 (391) Profit on disposal
Slide 50: Statement of financial performance: non-controlling interests
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) EBITDA 1 742 2 241 (499) EBIT 1 125 1 533 (408) Net interest expense (72) (58) (14) Taxation (194) (499) 305 Income from equity accounted investments 3 1 2 Discontinued operations 32 423 (391) Non-controlling inte
Slide 51: Statement of financial performance: attributable profit
STATEMENT OF FINANCIAL PERFORMANCE Rm 2015 2014 Variance Revenue 30 568 36 039 (5 471) EBITDA 1 742 2 241 (499) EBIT 1 125 1 533 (408) Net interest expense (72) (58) (14) Taxation (194) (499) 305 Income from equity accounted investments 3 1 2 Discontinued operations 32 423 (391) Non-controlling inte
Slide 52: Engineered Excellence
© Murray & Roberts 2015 | 52 ENGINEERED EXCELLENCE
Slide 53: Statement of financial position
STATEMENT OF FINANCIAL POSITION Rm 2015 2014 Variance Total assets 18 803 19 811 (1 008) Property, plant and equipment 3 021 3 248 (227) Other non-current assets 4 622 4 075 547 Current assets 8 185 7 781 404 Cash and cash equivalents 2 891 4 301 (1 410) Assets classified as held-for-sale 84 406 (32
Slide 54: Statement of financial position: property, plant and equipment
STATEMENT OF FINANCIAL POSITION Rm 2015 2014 Variance Total assets 18 803 19 811 (1 008) Property, plant and equipment 3 021 3 248 (227) Decrease in property, Other non-current plant and equipment due to: assets 4 622 4 075 547 1. Current Capex assets of R425m is lower than prior year (R961m) mainly
Slide 55: Statement of financial position: non-current assets
STATEMENT OF FINANCIAL POSITION Rm 2015 2014 Variance Total assets 18 803 19 811 (1 008) Property, plant and equipment 3 021 3 248 (227) Other non-current assets 4 622 4 075 547 Increase Currentinassets non-current assets attributable to: 8 185 7 781 404 1. Increase in deferred taxation assets (+R16
Slide 56: Statement of financial position: held-for-sale
STATEMENT OF FINANCIAL POSITION Rm 2015 2014 Variance Total assets 18 803 19 811 (1 008) Property, plant and equipment 3 021 3 248 (227) Other non-current assets 4 622 4 075 547 Current assets 8 185 7 781 404 Cash and cash equivalents 2 891 4 301 (1 410) Assets classified as held-for-sale 84 406 (32
Slide 57: Statement of financial position: interest bearing debt
STATEMENT OF FINANCIAL POSITION Rm 2015 2014 Variance Total assets 18 803 19 811 (1 008) Property, plant and equipment 3 021 3 248 (227) Other non-current assets 4 622 4 075 547 Current assets 8 185 7 781 404 Cash and cash equivalents 2 891 4 301 (1 410) Assets classified as held-for-sale 84 406 (32
Slide 58: Engineered Excellence
© Murray & Roberts 2015 | 58 ENGINEERED EXCELLENCE
Slide 59: Net cash reconciliation: dividends received
NET CASH RECONCILIATION Rm 4 000 167 122 139 162 1 575 46 509 3 500 3 000 125 425 2 500 720 2 000 1 782 107 1 413 1 500 1 000 500 0 30 June EBITDA Dividends Disposal Other Acquisition Additional Working Acquisition Capex Interest, Treasury 30 June 2014 cash received Tolcon cash of investments capita
Slide 60: Net cash reconciliation: Tolcon disposal
NET CASH RECONCILIATION Rm 4 000 167 122 139 162 1 575 46 509 3 500 3 000 125 425 2 500 720 2 000 1 782 107 1 413 1 500 1 000 500 0 30 June EBITDA Dividends Disposal Other Acquisition Additional Working Acquisition Capex Interest, Treasury 30 June 2014 cash received Tolcon cash of investments capita
Slide 61: Net cash reconciliation: acquisitions
NET CASH RECONCILIATION Rm 4 000 167 122 139 162 1 575 46 509 3 500 3 000 125 425 2 500 720 2 000 1 782 107 1 413 1 500 1 000 500 0 30 June EBITDA Dividends Disposal Other Acquisition Additional Working Acquisition Capex Interest, Treasury 30 June 2014 cash received Tolcon cash of investments capita
Slide 62: Net cash reconciliation: working capital
NET CASH RECONCILIATION Rm 4 000 167 122 139 162 1 575 46 509 3 500 3 000 125 425 2 500 720 2 000 1 782 107 1 413 1 500 1 000 500 0 30 June EBITDA Dividends Disposal Other Acquisition Additional Working Acquisition Capex Interest, Treasury 30 June 2014 cash received Tolcon cash of investments capita
Slide 63: Net cash reconciliation: capex
NET CASH RECONCILIATION Rm 4 000 167 122 139 162 1 575 46 509 3 500 3 000 125 425 2 500 720 2 000 1 782 107 1 413 1 500 1 000 500 0 30 June EBITDA Dividends Disposal Other Acquisition Additional Working Acquisition Capex Interest, Treasury 30 June 2014 cash received Tolcon cash of investments capita
Slide 64: Net cash reconciliation: interest, tax and dividends
NET CASH RECONCILIATION Rm 4 000 167 122 139 162 1 575 46 509 3 500 3 000 125 425 2 500 720 2 000 1 782 107 1 413 1 500 1 000 500 0 30 June EBITDA Dividends Disposal Other Acquisition Additional Working Acquisition Capex Interest, Treasury 30 June 2014 cash received Tolcon cash of investments capita
Slide 65: 1902 to present
1902 TO PRESENT 1902 1920s 1951 1970s 1990s 2011 – 2014 2015 John Murray Douglas Murray, Roberts Murray & Roberts Murray & Roberts A 3-year Recovery A New Strategic arrives in South John Murray’s Construction starts diversifying commits to its & Growth strategy Future. The Group’s Africa and togethe
Slide 66: Group platforms
Infrastructure & Building Power & Water Underground Mining Oil & Gas © Murray & Roberts 2015 | 66 ENGINEERED EXCELLENCE
Slide 67: Experienced management team
EXPERIENCED MANAGEMENT TEAM HENRY LAAS COBUS BESTER BEng (Mining) MBA BCom (Acc) Hons CA(SA) 31 years in sector 26 years in sector GROUP CHIEF EXECUTIVE GROUP FINANCIAL DIRECTOR Henry joined in 2001 and was Cobus joined in 2006 and appointed to the Board and appointed to the Board as as Group chief
Slide 68: Sponsored Level 1 ADR programme
Murray & Roberts has a sponsored Level 1 ADR programme (Since 2009) Bloomberg ticker: MURZY CUSIP: 626805204 Ratio: 1 ADR: 1 Ordinary Share Exchange Traded: Over-the-counter (OTC) market Depositary bank: Deutsche Bank Trust Company Americas Depositary bank contact: Jane Taylor ADR broker helpline: +
Slide 69: Engineered Excellence
© Murray & Roberts 2015 | 69 ENGINEERED EXCELLENCE
Slide 70: Report to Stakeholders
REPORT TO STAKEHOLDERS FOR THE YEAR ENDED 30 JUNE 2015 This presentation is available on www.murrob.com ENGINEERED EXCELLENCE
Murray & Roberts Holdings — FY2015 Earnings Presentation on 6ix