Murray & Roberts — H1 FY2018 Earnings Presentation
66 slides from Murray & Roberts's earnings presentation, Mar 1, 2018
Slide 1: Report to Stakeholders: Six Months to 31 December 2017
REPORT TO STAKEHOLDERS SIX MONTHS TO 31 DECEMBER 2017 01 March 2018 ENGINEERED EXCELLENCE
Slide 2: Henry Laas Daniël Grobler Henry Laas
Henry Laas The Murray & Roberts Group Slide 3 New Strategic Future – growth and value Slide 4 2025 Vision: Strategic roadmap Slide 5 Global demand for natural resources Slide 6 Salient features Slide 7 Comparative financial performance Slide 8 Safety performance Slide 9 Daniël Grobler Statement of f
Slide 3: Multinational specialist engineering and construction group focused on natural resources
A MULTINATIONAL SPECIALIST ENGINEERING AND CONSTRUCTION GROUP FOCUSED ON THE NATURAL RESOURCES MARKET SECTOR STOP.THINK.ACT.24/7: SAFETY FIRST IN EVERYTHING WE DO BUSINESS PLATFORMS OIL & GAS UNDERGROUND MINING POWER & WATER PURPOSE VISION VALUES By 2025, to be a Integrity Enabling fixed leading mul
Slide 4: Support for earnings growth view
SUPPORT FOR EARNINGS GROWTH VIEW • To be a multinational specialised engineering and • To achieve Engineered Excellence in all construction Group focused on the natural resources aspects of the business (health & safety, risk Clearly Defined sector (oil & gas, metals & minerals and power & water) &
Slide 5: Following portfolio optimisation, focus on value creation
FOLLOWING PORTFOLIO OPTIMISATION, FOCUS ON VALUE CREATION Value Drivers Corporate Actions Key Considerations FY18 FY19 FY20 • Focus on the strategic framework within which X X X the business platforms design their plans • Strategic Focus • Continue to expand internationally X X X Strategy Execution
Slide 6: Bullish medium term view
BULLISH MEDIUM TERM VIEW © Murray & Roberts 2018 | 6 ENGINEERED EXCELLENCE
Slide 7: Six months to December: salient features
SIX MONTHS TO DECEMBER FY2018 H1 FY2017 H1 Improvement in financial performance, Revenue R11,8 billion R10,7 billion mainly due to • No further project losses incurred in the Middle East • Improved contribution by Underground Diluted continuing HEPS Mining 72 cents 69 cents • Decrease in loss from d
Slide 8: Comparative financial performance
FY2018 H1 VS. FY2017 H1 RESULT COMMENTS Acquisition of additional 17% in BCC and subsequent increase in the INVESTMENTS fair value of this investment was recorded MIDDLE EAST No further project losses incurred in the Middle East Results are in-line with prior period, in the context of a slow oil and
Slide 9: Together to zero harm
TOGETHER TO ZERO HARM Regrettably, one fatal incident occurred • Hendry Munardi (49), RUC Cementation (Australia), Big Gossan mine in Freeport (Indonesia) Deterioration of LTIFR to 1.19 (FY2017 H1: 0.56) • exclusion of statistics from the business in the Middle East; and • less than satisfactory 1.1
Slide 10: Project photos
Kalgoorlie 400ML Reservoir Project - Water Corporation Gorgon LNG Project - Chevron Hook-up & Commissioning Project - Wheatstone Boddington Gold Mine Project - Newmont © Murray & Roberts 2018 | 10 ENGINEERED EXCELLENCE
Slide 11: Statement of financial performance
STATEMENT OF FINANCIAL PERFORMANCE Rm FY2018 H1 FY2017 H1 Variance Revenue 11 809 10 653 1 156 EBITDA 589 498 91 EBIT 349 252 97 Continuing operations excluding Middle East 416 425 (9) Middle East (67) (173) 106 Net interest expense (17) (27) 10 Taxation (126) (112) (14) Income from equity accounted
Slide 12: Statement of financial position
STATEMENT OF FINANCIAL POSITION Rm Dec 2017 Jun 2017 Variance Total assets 14 289 14 203 86 Property, plant and equipment 1 877 2 058 (181) Other non-current assets 3 291 2 991 300 Current assets 6 506 6 386 120 Cash and cash equivalents 2 264 2 371 (107) Assets classified as held for sale 351 397 (
Slide 13: Oil & Gas: six months to December
SIX MONTHS TO DECEMBER Oil & Gas Underground Mining Power & Water Bombela & Middle East Corporate Construction & Commissioning Overheads Rm Engineering Fabrication Global Marine & Brownfields & Other Total 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 Revenue 536 733 118 116 - 258 3 96
Slide 14: Underground Mining: six months to December
SIX MONTHS TO DECEMBER Oil & Gas Underground Mining Power & Water Bombela & Middle East Rm Africa Australasia The Americas Total 2017 2016 2017 2016 2017 2016 2017 2016 Revenue 1 874 1 718 926 901 1 325 1 483 4 125 4 102 Operating profit 101 41 70 99 68 58 239 198 Operating margin (%) 5% 2% 8% 11% 5
Slide 15: Power & Water: six months to December
SIX MONTHS TO DECEMBER Oil & Gas Underground Mining Power & Water Bombela & Middle East Corporate Electrical & Overheads Rm Power Water Oil & Gas Instrumentation & Other Total 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 Revenue 2 358 2 471 26 34 178 373 81 83 - - 2 643 2 961 Operatin
Slide 16: Bombela & Middle East: six months to December
SIX MONTHS TO DECEMBER Oil & Gas Underground Mining Power & Water Bombela & Middle East Rm Bombela Investments Middle East Total 2017 2016 2017 2016 2017 2016 Revenue - 120 347 439 347 559 Operating profit / (loss) 139 171 (67) (173) 72 (2) Operating margin (%) - 143% (19%) (39%) 21% - Order book -
Slide 17: Continuing revenue and EBIT by platform
CONTINUING REVENUE AND EBIT Revenue EBIT • Meaningful contributions (excluding Corporate, Middle (excluding Corporate Cost, from all three platforms East and Bombela Civils Joint Middle East and Bombela Civils and investments Venture) Joint Venture) • Investments include the Bombela Concession 41% 2
Slide 18: Continuing revenue and EBIT by geography
CONTINUING REVENUE AND EBIT • A multinational business Geographic Revenue Geographic EBIT with 64% of revenue and (excluding Corporate, Middle (excluding Corporate Cost, East and Bombela Civils Joint Middle East and Bombela Civils 53% of EBIT generated Venture) Joint Venture) outside of South Africa
Slide 19: Continuing revenue and EBIT by project life cycle
CONTINUING REVENUE AND EBIT Life Cycle Revenue Life Cycle EBIT • Contribution from (excluding Corporate, Middle (excluding Corporate Cost, construction activities - East and Bombela Civils Joint Middle East and Bombela Civils revenue (49%) and EBIT Venture) Joint Venture) (44%) 2% • Meaningful contr
Slide 20: Project photos
Freeport Gold and Copper Project - Freeport-McMoRan Lucky Friday Shaft Project - Hecla Mining Venetia Diamond Mine Project – De Beers Diavik Diamond Mine Project, Rio Tinto © Murray & Roberts 2018 | 20 ENGINEERED EXCELLENCE
Slide 21: Order book per platform
COMMODITY CYCLE DEPENDENT Underground Oil & Gas Power & Water Middle East* Total Mining 28,7 26,9 24,5 22,1 17,5 15,3 14,2 12,9 6,4 6,7 5,8 4,9 5,2 3,8 3,7 2,7 1,4 0,9 0,5 0,3 Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 16 16 17 17 16 16 17 17 16 16 17 17 16 16 17
Slide 22: Geography and time distribution
GEOGRAPHY & TIME DISTRIBUTION Order book Order book Order book Platform % split Rbn Rbn SADC Int. Dec 2017 Dec 2016 FY Time Distribution 2018 1,7 Oil & Gas 100 3,8 4,9 2019 1,0 >2019 1,1 2018 3,5 Underground 61 39 15,3 12,9 2019 4,2 Mining >2019 7,6 2018 1,9 Power & Water 100 2,7 5,8 2019 0,8 >2019
Slide 23: Strong pipeline but timing uncertain
STRONG PIPELINE BUT TIMING UNCERTAIN Pipeline Rbn Order book Near orders Category 1 Category 2 Category 3 Oil & Gas 3,8 - 21,6 83,2 355,6 Underground mining 15,3 10,6 20,4 43,4 15,8 Power & Water 2,7 - 4,1 12,9 18,8 Middle East* 0,3 - - - - Continuing Operations Totals 22,1 10,6 46,1 139,5 390,2 Dis
Slide 24: Project photos
Marine Gas Oil Bulk Storage – Ghana Oil Organica Wastewater Treatment Plant - Le Lude Acid Plant Project - SWAKOP Uranium Volatile Organic Compounds Project - Sasol © Murray & Roberts 2018 | 24 ENGINEERED EXCELLENCE
Slide 25: Platform outlook: supports long-term natural resources focus
SUPPORTS GROUP’S LONG-TERM NATURAL RESOURCES FOCUS Oil & Gas • Stabilisation in the crude oil price above US$60 per barrel and an improved market outlook for LNG demand, especially demand from China • Wheatstone and Ichthys commissioning projects are nearing completion • Brownfields operations and m
Slide 26: Platform outlook: Power & Water
SUPPORTS GROUP’S LONG-TERM NATURAL RESOURCES FOCUS Power • The platform’s financial results continue to be underpinned by Medupi and Kusile. Work is expected & Water to be largely completed towards the end of calendar year 2018. Smaller maintenance opportunities are expected at Medupi and Kusile in
Slide 27: Key presentation takeaways
Murray & Roberts is a multinational engineering and construction group, providing services primarily to the natural resources market sectors of metals & minerals, oil & gas, and power & water The Group is well positioned for sustainable growth and value creation, with its growth aspiration based on
Slide 28: Engineered Excellence
1. This presentation includes certain various “forward-looking statements” within the meaning of Section 27A of the US Securities Act 10 1933 and Section 21E of the Securities Exchange Act of 1934 that reflect the current views or expectations of the Board with respect to future events and financial
Slide 29: Report to Stakeholders
REPORT TO STAKEHOLDERS SIX MONTHS TO 31 DECEMBER 2017 01 March 2018 ENGINEERED EXCELLENCE
Slide 30: Appendix
REPORT TO STAKEHOLDERS SIX MONTHS TO 31 DECEMBER 2017 APPENDIX 01 March 2018 ENGINEERED EXCELLENCE
Slide 31: Statement of financial performance
STATEMENT OF FINANCIAL PERFORMANCE Rm FY2018 H1 FY2017 H1 Variance Revenue 11 809 10 653 1 156 EBITDA 589 498 91 EBIT 349 252 97 Continuing operations excluding Middle East 416 425 (9) Middle East (67) (173) 106 Net interest expense (17) (27) 10 Taxation (126) (112) (14) Income from equity accounted
Slide 32: Statement of financial performance: revenue
STATEMENT OF FINANCIAL PERFORMANCE Rm FY2018 H1 FY2017 H1 Variance Revenue 11 809 10 653 1 156 Revenue increased by 11% EBITDA 962 1 774 (812) 1. Higher revenue mainly due to the delivery of the new Ichthys LNG project within the Oil & Gas platform EBIT 487 1 275 (788) Continuing operations excludin
Slide 33: Statement of financial performance: EBITDA
STATEMENT OF FINANCIAL PERFORMANCE Rm FY2018 H1 FY2017 H1 Variance Revenue 11 809 10 653 1 156 EBITDA 589 498 91 EBIT EBITDA is reflected before 487 1 275 (788) Continuing operations 1. Depreciation excluding charge of R218m (FY2017 H1: R224m) 1 055 1 343 (288) 2. Amortisation Middle East of intangi
Slide 34: Statement of financial performance: EBIT
STATEMENT OF FINANCIAL PERFORMANCE Rm FY2018 H1 FY2017 H1 Variance Revenue 11 809 10 653 1 156 EBITDA 589 498 91 EBIT 349 252 97 Continuing operations excluding Middle East 416 425 (9) Middle East (67) (173) 106 The increase Net interest in EBIT from the prior period is mainly attributable to expens
Slide 35: Statement of financial performance: net interest
STATEMENT OF FINANCIAL PERFORMANCE Rm FY2018 H1 FY2017 H1 Variance Revenue 11 809 10 653 1 156 EBITDA 589 498 91 EBIT 349 252 97 Continuing operations excluding Middle East 416 425 (9) Middle East (67) (173) 106 Net interest expense (17) (27) 10 Lower net interest expense, mainly attributable to the
Slide 36: Statement of financial performance: taxation
STATEMENT OF FINANCIAL PERFORMANCE Rm FY2018 H1 FY2017 H1 Variance Revenue 11 809 10 653 1 156 EBITDA 589 498 91 EBIT 349 252 97 Continuing operations excluding 416 425 (9) Middle East (67) (173) 106 Net interest expense (17) (27) 10 Taxation (126) (112) (14) The decrease Income fromin the effective
Slide 37: Statement of financial performance: equity accounted income
STATEMENT OF FINANCIAL PERFORMANCE Rm FY2018 H1 FY2017 H1 Variance Revenue 11 809 10 653 1 156 EBITDA 589 498 91 EBIT 349 252 97 Continuing operations excluding Middle East 416 425 (9) Middle East (67) (173) 106 Net interest expense (17) (27) 10 Taxation (126) (112) (14) Income from equity accounted
Slide 38: Statement of financial performance: discontinued operations
STATEMENT OF FINANCIAL PERFORMANCE Rm FY2018 H1 FY2017 H1 Variance Revenue 11 809 10 653 1 156 EBITDA 589 498 91 EBIT 349 252 97 Continuing operations excluding 416 425 (9) Middle East (67) (173) 106 Net interest expense (17) (27) 10 Taxation (126) (112) (14) Income from equity accounted investments
Slide 39: Statement of financial position
STATEMENT OF FINANCIAL POSITION Rm Dec 2017 Jun 2017 Variance Total assets 14 289 14 203 86 Property, plant and equipment 1 877 2 058 (181) Other non-current assets 3 291 2 991 300 Current assets 6 506 6 386 120 Cash and cash equivalents 2 264 2 371 (107) Assets classified as held for sale 351 397 (
Slide 40: Statement of financial position: total assets
STATEMENT OF FINANCIAL POSITION Rm Dec 2017 Jun 2017 Variance Total assets 14 289 14 203 86 Property, plant and equipment 1 877 2 058 (181) Movement in property, Other non-current plant and equipment assets 3 904 4 622 (718) 1. Current Decrease is attributable to capex (R178m) being offset by deprec
Slide 41: Statement of financial position: non-current assets
STATEMENT OF FINANCIAL POSITION Rm Dec 2017 Jun 2017 Variance Total assets 14 289 14 203 86 Property, plant and equipment 1 877 2 058 (181) Other non-current assets 3 291 2 991 300 The increase Current in non-current assets is primarily attributable to assets 6 722 8 185 1. Cash A further 17% equiva
Slide 42: Statement of financial position: current assets
STATEMENT OF FINANCIAL POSITION Rm Dec 2017 Jun 2017 Variance Total assets 14 289 14 203 86 Property, plant and equipment 1 877 2 058 (181) Other non-current assets 3 291 2 991 300 Current assets 6 506 6 386 120 Current assets Cash and cashcomprise of equivalents 2 813 2 891 (78) 1. Assets Contracts
Slide 43: Statement of financial position: cash
STATEMENT OF FINANCIAL POSITION Rm Dec 2017 Jun 2017 Variance Total assets 14 289 14 203 86 Property, plant and equipment 1 877 2 058 (181) Other non-current assets 3 291 2 991 300 Current assets 6 506 6 386 120 Cash and cash equivalents 2 264 2 371 (107) Movement in cash as Assets classified and ca
Slide 44: Statement of financial position: held for sale
STATEMENT OF FINANCIAL POSITION Rm Dec 2017 Jun 2017 Variance Total assets 14 289 14 203 86 Property, plant and equipment 1 877 2 058 (181) Other non-current assets 3 291 2 991 300 Current assets 6 506 6 386 120 Cash and cash equivalents 2 264 2 371 (107) Assets classified as held for sale 351 397 (
Slide 45: Statement of financial position: equity
STATEMENT OF FINANCIAL POSITION Rm Dec 2017 Jun 2017 Variance Total assets 14 289 14 203 86 Property, plant and equipment 1 877 2 058 (181) Other non-current assets 3 291 2 991 300 Current assets 6 506 6 386 120 Cash and cash equivalents 2 264 2 371 (107) Assets classified as held for sale 351 397 (
Slide 46: Statement of financial position: liabilities
STATEMENT OF FINANCIAL POSITION Rm Dec 2017 Jun 2017 Variance Total assets 14 289 14 203 86 Property, plant and equipment 1 877 2 058 (181) Other non-current assets 3 291 2 991 300 Current assets 6 506 6 386 120 Cash and cash equivalents 2 264 2 371 (107) Assets classified as held for sale 351 397 (
Slide 47: Net cash reconciliation
NET CASH RECONCILIATION 4 000 3 500 3 000 2 500 106 153 116 247 R millions 319 2 000 1 789 357 178 1 500 1 325 1 000 500 0 30 June EBITDA – Dividends Working Other Interest, Additional Capex 31 December 2017 cash received capital movements tax & investment 2017 items dividends in BCC paid 1. Dividen
Slide 48: Discontinued operations
SIX MONTHS TO DECEMBER Discontinued Operations I&B Businesses & Genrec Rm Other* Clough Properties Engineering Total 2017 2016 2017 2016 2017 2016 2017 2016 Revenue 145 2 411 3 6 189 135 337 2 552 Operating loss** (43) (139) (1) (2) (90) (23) (134) (164) Trading (loss) / profit & other (43) 37. (1)
Slide 49: Corporate & Properties
SIX MONTHS TO DECEMBER Corporate & Properties Rm Total 2017 2016 Operating loss (112) (113) Corporate overheads (82) (69) Forex loss (6) (11) Share-based payments (11) (20) Properties (13) (13) The Corporate and Properties expense is in-line with prior period © Murray & Roberts 2018 | 49 ENGINEERED
Slide 50: Commodity order book breakdown
COMMODITY ORDER BOOK BREAKDOWN % Total Platform Total Platform The Americas Australasia Africa R12,9bn R15,3bn R3,3bn R2,7bn R9,3bn Dec 2016 Dec 2017 12% 6% 12% 8% Copper 42% 39% 16% 15% 32% Gold Diamonds 1% Silver 74% 23% 6% 12% 10% Platinum 11% 6% 2% Nickel 16% 3% Manganese 14% 5% Salt 9% 53% Copp
Slide 51: Engineered Excellence
© Murray & Roberts 2018 | 51 ENGINEERED EXCELLENCE
Slide 52: Strategy and objectives
To be a multinational specialised engineering and construction Group focused on the natural resources sector (oil & gas, metals & minerals and power & water) To provide services across the project life cycle To achieve Engineered Excellence in all aspects of the business (health & safety, risk & com
Slide 53: A new strategic future unfolding
A NEW STRATEGIC FUTURE UNFOLDING 4 Robust near orders and project pipeline – Diversified business model has resulted in a better quality order 3 Robust balance sheet allows book M&R to navigate through the – Despite the Oil & Gas and commodity down cycle Power & Water order book – Low gross gearing
Slide 54: International diversification into main geographic markets
INTERNATIONAL DIVERSIFICATION INTO MAIN GEOGRAPHIC MARKETS • International diversification approach - Permanent presence (offices) in regions with major opportunity in Calgary North Bay Ayrshire Vancouver selected natural Rouyn-Noranda resources market Salt Lake Sudbury Busan segments City Houston -
Slide 55: Business model: service offering across project life cycle
BUSINESS MODEL: COMPREHENSIVE SERVICE OFFERING ACROSS PROJECT LIFE CYCLE IN SELECTED NATURAL RESOURCES MARKETS Geography Business Platform Capabilities(Project Life Cycle) Project Life Cycle (Multinational) • Detailed engineering • Americas Design and • Procurement • Asia Engineering / Oil & Gas • C
Slide 56: Improved returns through project life cycle diversification
IMPROVED RETURNS THROUGH PROJECT LIFE CYCLE DIVERSIFICATION & INCREASED CONTRIBUTION FROM PHASES OTHER THAN CONSTRUCTION Typical return and margin range per life cycle phase 50 % Development Engineering Construction Operations Services 40 % 30 % 15-45% 20 % 0-40% 0-30% 0-30% 10-20% 10 % 0-15% 5-15%
Slide 57: Oil & Gas, Underground Mining, Power & Water
Oil & Gas Underground Mining Power & Water © Murray & Roberts 2018 | 57 ENGINEERED EXCELLENCE
Slide 58: Oil & Gas
OIL & GAS The Oil & Gas platform works with some of the world’s largest energy and resources companies to engineer, construct, commission and maintain a comprehensive range of infrastructure for energy, chemical, mining and mineral projects. The platform operates from offices in Australia, South Afr
Slide 59: Oil & Gas businesses: Clough, Enercore, e2o
Clough works with some of the world’s largest companies to engineer, construct, commission and maintain a comprehensive range of facilities for oil and gas, metals and minerals, and infrastructure projects. The company’s full project lifecycle delivery model reduces risk and optimises safety, produc
Slide 60: Underground Mining
UNDERGROUND MINING The Underground Mining platform provides specialist engineering, construction and operational services in the underground mining environment to the global mining and metals sector. The platform comprises the following businesses: Murray & Roberts Cementation (Johannesburg); Cement
Slide 61: Cementation Canada & USA, Cementation Africa, RUC
Cementation Canada & USA is a leading provider of underground mining contracting and engineering services throughout North and South America. The company specialises in the design and construction of underground facilities including shaft, ramp accesses, mine development and raises, as well as large
Slide 62: Power & Water
POWER & WATER The Power & Water platform, which is focused on engineering, procurement, construction and maintenance services, is playing a major role in building two of the world’s largest coal-fired power stations in South Africa, Eskom’s Medupi and Kusile Projects. The platform comprises three bu
Slide 63: Power & Energy and Water businesses
Murray & Roberts Power & Energy is the platform’s engineering, procurement and construction ("EPC") projects implementer, adding unique value to the constructability, integration and ultimate performance of the projects it undertakes. Murray & Roberts Power & Energy offers the full spectrum of multi
Slide 64: Background: relationship with ATON
Background Relationship with ATON • 16 February 2017 – Murray & Roberts experiences • ATON initially acquired a 4.49% shareholding between unusually high trading volumes in its ordinary shares June and September 2015 traded on the JSE • The underground mining contractor J.S. Redpath Holding, • Accor
Slide 65: 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: James Eaves ADR broker helpline: +
Slide 66: Report to Stakeholders
REPORT TO STAKEHOLDERS SIX MONTHS TO 31 DECEMBER 2017 01 March 2018 ENGINEERED EXCELLENCE
Murray & Roberts Holdings — H1 FY2018 Earnings Presentation on 6ix