Murray & Roberts Holdings Ltd

Murray & Roberts — dbAccess South Africa Conference 2015

61 slides from Murray & Roberts's conference presentation, Jun 18, 2015

  1. Slide 1: dbAccess South Africa Conference

    MURRAY & ROBERTS dbAccess South Africa Conference 18 & 19 June 2015 ENGINEERED EXCELLENCE

  2. Slide 2: • Murray & Roberts investment case Slide 3 - 4 • A focused international

    • Murray & Roberts investment case Slide 3 - 4 • A focused international engineering and construction group Slides 6 – 8 • Historical financial analysis and order book Slides 10 –13 • Strategy Slides 15 – 17 • Growth drivers – natural resources Slides 19 – 27 • Platform market appendices Slides 30 –

  3. Slide 3: Focusing on maximising shareholder value

    FOCUSING ON MAXIMISING SHAREHOLDER VALUE • A focused international engineering and construction group • Strong balance sheet post implementation of Recovery & Growth plan • Clearly defined growth strategy and business model (A New Strategic Future) • Murray & Roberts differentiator – natural resourc

  4. Slide 4: 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

  5. Slide 5: • Murray & Roberts investment case Slide 3 - 4 • A focused international

    • Murray & Roberts investment case Slide 3 - 4 • A focused international engineering and construction group Slides 6 – 8 • Historical financial analysis and order book Slides 10 –13 • Strategy Slides 15 – 17 • Growth drivers – natural resources Slides 19 – 27 • Platform market appendices Slides 30 –

  6. Slide 6: A focused international engineering & construction group

    A FOCUSED INTERNATIONAL ENGINEERING & CONSTRUCTION GROUP 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 Holdings Ltd Stop.Think.Act.24/7: Safety first in everything we do Operating Platfor

  7. Slide 7: Engineering and construction 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

  8. Slide 8: International diversification

    INTERNATIONAL DIVERSIFICATION International diversification approach: Glasgow Geographic positioning. North Bay Permanent presence (offices) Salt Lake in regions with major City Houston opportunity in selected Dubai market segments Major clients. Accra Follow major clients on PNG project-by-project

  9. Slide 9: • Murray & Roberts investment case Slide 3 - 4 • A focused international

    • Murray & Roberts investment case Slide 3 - 4 • A focused international engineering and construction group Slides 6 – 8 • Historical financial analysis and order book Slides 10 –13 • Strategy Slides 15 – 17 • Growth drivers – natural resources Slides 19 – 27 • Platform market appendices Slides 30 –

  10. Slide 10: Earnings and HEPS

    EARNINGS AND HEPS Recovery Growth New Strategic Future • Strong action during Recovery year restored 399 485 profitability 800 600 200 44 • Historically H2’s stronger 79 148 28 100 than H1’s 400 57 117 197 (1 020) (612) 79 • 39% increase in (327) 0 continuing HEPS for FY15 0 (73) 162 326 239 331 H1

  11. Slide 11: Earnings underpinned by international platforms

    EARNINGS UNDERPINNED BY INTERNATIONAL PLATFORMS AS AT END-DECEMBER 14 • International platforms Revenue EBIT (Before Corporate Cost) (Oil & Gas and Underground Mining) contribute 65% of revenue and 93% of EBIT (Before Corporate 11% costs) 22% -4% • Africa-focused platforms 15% present growth potenti

  12. Slide 12: Geography & time distribution

    GEOGRAPHY & TIME DISTRIBUTION AS AT END-DECEMBER 14 Order book Order book Order book FY15 H1 % % EBIT margin Platform Rbn % split Rbn EBIT margin aspiration Dec 2014 Jun 2014 SADC Int. FY Time Distribution 2015 5.1 Oil & Gas 12.2 16.8 100 2016 5.9 7 5-7 >2017 1.2 2015 5.6 Underground 13.8 9.9 60 40

  13. Slide 13: Robust near orders and project pipeline

    ROBUST NEAR ORDERS AND PROJECT PIPELINE AS AT END-DECEMBER 14 • Decrease in order book from R40,9bn (Jun 14) mainly due to Oil & Gas orders transitioning to smaller, shorter term contracts Order Book – Near Orders - Pipeline – • Underground Mining order book R37.8bn R15.0bn R102.9bn includes R3,0bn

  14. Slide 14: • Murray & Roberts investment case Slide 3 - 4 • A focused international

    • Murray & Roberts investment case Slide 3 - 4 • A focused international engineering and construction group Slides 6 – 8 • Historical financial analysis and order book Slides 10 –13 • Strategy Slides 15 – 17 • Growth drivers – natural resources Slides 19 – 27 • Platform market appendices Slides 30 –

  15. Slide 15: Progressing towards our vision

    PROGRESSING TOWARDS OUR VISION Recovery Year (FY12) Two Growth Years (FY13 & FY14) New Strategic Future (FY15+) Disposal of Clough Reports strong Negotiated debt Clough’s 36% becomes a FY15 H1 39% Settled GPMOF FY14 financial package investment in wholly-owned growth in claim realising results and F

  16. Slide 16: A leading diversified international project engineering, procurement and construction group by 2020

    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

  17. Slide 17: 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 Classic Development Engineering Operations Services 50 % construction 40 % 30 % 15-45% 0-40% 20 % 0-30% 0-30% 10-20% 10 % 0-15% 5-15% 0-5

  18. Slide 18: • Murray & Roberts investment case Slide 3 - 4 • A focused international

    • Murray & Roberts investment case Slide 3 - 4 • A focused international engineering and construction group Slides 6 – 8 • Historical financial analysis and order book Slides 10 –13 • Strategy Slides 15 – 17 • Growth drivers – natural resources Slides 19 – 27 • Platform market appendices Slides 30 –

  19. Slide 19: Long term outlook supports natural resources focus

    LONG TERM OUTLOOK SUPPORTS NATURAL RESOURCES FOCUS • Oil price is expected to recover from its current lows • Growing Australasian LNG commissioning, operations & maintenance market. Clough has largest share of Oil & Gas Australasian commissioning market • 3 additional train LNG opportunity in PNG f

  20. Slide 20: Positioned for growth in target geographies

    POSITIONED FOR GROWTH IN TARGET • Oil & Gas (International focus) GEOGRAPHIES − Australasia commissioning over next 3 years followed by substantial O&M and brownfields opportunities (Accenture Australia LNG Readiness Report) − Greenfield opportunities in PNG by FY17 and medium term in USA • Undergro

  21. Slide 21: Oil price collapse and World Bank forecasts modest recovery

    OIL PRICE COLLAPSE DEC 14 AND WORLD BANK FORECASTS MODEST RECOVERY IN 2016 Energy Prices (US$/mmbtu) • The oil market fluctuated within a tight band around $105/bbl between 2011 and 2013, one of the least volatile three-year periods in recent history • OPEC’s decision to abandon targeting of prices

  22. Slide 22: Global LNG supply from pre-FID projects required post 2019

    GLOBAL LNG SUPPLY FROM PRE-FID PROJECTS WILL BE REQUIRED TO MEET DEMAND POST 2019 By 2020, pre-FID capacity is required to balance the market and growth in Asian demand could pull this forward Aus Brownfield & Maintenance Market Develops Aus Commissioning Phase Supply/demand gap starts to open FID –

  23. Slide 23: Global capital expenditure of ~US$355bn 2015 to 2025

    WILL REQUIRE GLOBAL CAPITAL EXPENDITURE OF ~ US$355BN OVER THE PERIOD 2015 TO 2025 LNG Supply – Demand Dynamics Drive CAPEX Strong LNG demand • Global LNG demand is estimated to grow from 240 mmtpa in 2014 to 440 mmtpa by 2025 growth in Pacific (6% growth p.a.). Pacific Basin countries will account

  24. Slide 24: Regional break-up of global LNG capex and opex

    REGIONAL BREAK-UP OF GLOBAL CAPITAL EXPENDITURE (US$355BN) & OPERATING EXPENDITURE (US$172BN) ON LNG PROJECTS Australasia, North America and Europe presents best short to medium term opportunity Europe & West Russia East Russia 15 10 20 16 8 14 10 North America 6 8 5 10 48 0 50 35 0 Short-term Mid-t

  25. Slide 25: Diverse underground mining platform commodity portfolio

    DIVERSE UNDERGROUND MINING PLATFORM COMMODITY PORTFOLIO ORDER BOOK BREAKDOWN Total Platform Total Platform Americas Australasia Africa R9,5bn R13,8bn R4,5bn R1,0bn R8,3bn Dec 2013 Dec 2014 6% 23% 24% 22% 42% 43% 10% 21% 4% Copper 33% Gold 11% 20% 10% Copper-Gold 3% Diamonds 14% 16% Silver 12% 49% 22

  26. Slide 26: Growth opportunity from medium term cycle upturn

    GROWTH OPPORTUNITY FROM MEDIUM TERM CYCLE UPTURN Average cycle runs 3 to 6 years Strong demand Demand Market back in Strong supply High stocks. Stocks Supply push or deficit destruction. balance. Capex growth. Stocks Strong supply drawing. constraint. market Capex peaking building reaction Limited n

  27. Slide 27: Green fields and brown fields

    100% 80% 60% 40% 20% 0% Australia RUCC Americas Africa Total Green Fields Brown Fields © Murray & Roberts 2015 | 27 ENGINEERED EXCELLENCE

  28. Slide 28: Engineered Excellence

    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

  29. Slide 29: Appendix: Oil & Gas Platform – International Focus

    MURRAY & ROBERTS dbAccess South Africa Conference Appendix 1 Oil & Gas Platform – International Focus ENGINEERED EXCELLENCE

  30. Slide 30: Global - engineering, procurement and construction

    GLOBAL - ENGINEERING, PROCUREMENT AND CONSTRUCTION Operational Remit: ► Global engineering, from concept and feasibility studies through design and delivery including EPC & EPCM Capabilities include: ► Full spectrum of multidiscipline engineering services – concept, FEED, detailed design ► Global ne

  31. Slide 31: Australia & PNG - engineering, procurement and construction

    AUSTRALIA & PNG - ENGINEERING, PROCUREMENT AND CONSTRUCTION Operational Remit: ► Deliver fully integrated engineering, procurement and construction services to the Australia and Papua New Guinea (APNG) oil and sectors Capabilities include: ► Full spectrum of multidiscipline engineering services – co

  32. Slide 32: Global - near shore marine infrastructure

    GLOBAL - NEAR SHORE MARINE INFRASTRUCTURE Marine Operational Remit: ► Design and construct world-class near shore marine infrastructure supporting the resources and government sectors. ► Delivery models - BAM Clough in Australia & PNG, CMR Marine Globally Capabilities include: ► Import and Export St

  33. Slide 33: Global - commissioning and brownfields

    GLOBAL - COMMISSIONING AND BROWNFIELDS Operational Remit: ► Global pre-commissioning, commissioning and brownfield services for the oil and gas sector Capabilities include: ► Hook-up and Commissioning ► Maintenance Management and Execution ► Shutdowns and Turnarounds ► Operational Readiness ► Supply

  34. Slide 34: Crude oil production by country

    Countries in the table highlighted Yellow have highest annual growth Mt Top Countries: Crude Oil Production Country CAGR 2013 2035e Saudi Arabia 538 513 -0.22% Russia 524 448 -0.71% United States 439 601 1.44% China 213 209 -0.09% Canada Russia Iran 208 413 3.17% Canada 200 289 1.68% United States K

  35. Slide 35: Natural gas production by country

    Countries in the table highlighted Yellow have highest annual growth Top Countries: Natural Gas Production Country bcm CAGR 2013 2035e USA 690 1 001 1.7% Norway Russia 669 765 0.6% Africa total 200 428 3.5% Russia Qatar 162 269 2.3% Canada Holland Iran 161 246 2.0% Canada 156 190 0.9% United States

  36. Slide 36: ENGINEERED EXCELLENCE

    © Murray & Roberts 2015 | 36 ENGINEERED EXCELLENCE

  37. Slide 37: Australian brownfield expenditure forecast to increase by 300%

    A$m 3 500 3 000 2 500 2 000 1 500 1 000 500 - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Uncommitted - Brownfield Engineering Uncommitted - Maintenance Committed - Brownfield Engineering Committed - Maintenance Australian brownfield expenditure is forecast to increase by 300% © Murray &

  38. Slide 38: Increase market share in brownfield & commissioning

    Increase market share from <2% to be within top 3 Source: Clough internal analysis of Brownfield & Commissioning contractors in Australia by 2020 © Murray & Roberts 2015 | 38 ENGINEERED EXCELLENCE

  39. Slide 39: 49 LNG projects proposed or approved in the region

    USA LNG Market Snapshot Canada ► 32 development approval applications received for Non-FTA ► 10 projects with export approval (totaling over 100 MTPA) export (circa 200 MTPA) ► 9 of the 10 are in BC ► Only 7 approved to date for Non-FTA (~100 MTPA) ► Only 2 have Environmental Approval (Kitimat & Pie

  40. Slide 40: Marine market by product type and region

    Product A$ By Product Type Jetties $4,751M Ports & Harbour $4,390M Nearshore Pipeline $392M MOF $350M Intake / Outfall $210M Supply Base $33M Tug Pens $13M Other $60M Region A$ By Region Africa (EMEA) $4,286M Middle East (EMEA) $2,569M Australia $1,526M SE Asia $1,186M North America $632M © Murray &

  41. Slide 41: A secondary market for the Oil & Gas platform

    A SECONDARY MARKET FOR THE OIL & GAS PLATFORM Expenditure Expected Infrastructure Spend by Sector Sectors 2015 to 2019 Water & Sewerage $12b Main Roads $32b Rail Infrastructure $38b Ports and Marine $11b Power $4b Airports $8b More than $100bn expenditure on Infrastructure Projects © Murray & Robert

  42. Slide 42: Appendix: Underground Mining Platform – International Focus

    MURRAY & ROBERTS dbAccess South Africa Conference Appendix 2 Underground Mining Platform – International Focus ENGINEERED EXCELLENCE

  43. Slide 43: Underground mining platform companies and positioning

    M&R RUC Cementation (CSA) Cementation Cementation Canada MRC RUCC CCI* Specialist Engineering – Platform complement 140 (107 in 2014) Service Mine Development: Shaft sinking, raise boring, underground development & equipping Offering Contract Mining • Africa’s leading underground • Manufactures own

  44. Slide 44: Global Underground Mining Platform

    Global Underground Mining Platform Boom Decline Consolidation Growth 2007 - 2012 2013 - 2014 2015 2016 - 2018 • Platform rode the commodity boom up until 2012 which has stalled for now with commodity prices struggling • Arguably 2015 was a tougher year for the mining industry than the previous year

  45. Slide 45: More stable growth forecast at 3-4%

    MORE STABLE GROWTH FORECASTED AT 3-4% GDP Growth Forecast 2010-2020F (%) Key Observations Brazil India China Russia World USA • US economy remains the most important 12 engine in driving global growth in 2015, with a GDP growth rate of 3% 10 India’s GDP growth to surpass China • Emerging market grow

  46. Slide 46: Annual global mineral capital investment

    Annual Global Mineral Capital Investment ($Bn) 2012-14 • Project deferments, cancellations, scope reductions, care/maintenance • Client focus on cost saving & capital preservation (not tons at all cost) 2015-25 110 105 215 • M&A activity amongst miners has decreased by 72% from $162bn in 2011 to $45

  47. Slide 47: Emerging market demand to drive prices upwards

    EMERGING MARKET’S DEMAND TO DRIVE PRICES UPWARDS Commodity Price Index Forecast 2010 -2019 (World Bank) Key Observations Index (2010-100) Copper Zinc Iron Ore Aluminium Nickel Coal Gold Platinum Metal prices expected to drop >5% in 2015 160 due to weaker demand from China, who 140 consume ~47% of gl

  48. Slide 48: Production forecasts by country

    Canada Production Forecast Commodity 2013 2017e CAGR Platinum (Mt) 7 000 10 000 9% Indonesia Production Forecast Commodity 2013 2017e CAGR Copper (Mt) 504 000 1 100 000 22% Gold (Kg) 87 600 140 000 12% Zambia Production Forecast Commodity 2013 2017e CAGR Copper (Mt) 760 000 1 600 000 21% Mexico Prod

  49. Slide 49: Relationships with top tier clients

    Kennecott (USA) – 4* Freeport Grasberg RELATIONSHIPS WITH TOP TIER CLIENTS STRATEGY TO DEVELOP LIFE-OF-MINE Diavik (Canada) - 6 (Indonesia) - 5 Resolution (USA) - 9 Oyu Tolgoi (Mongolia) - 4 Totten (Canada) - 9 Wessels (RSA) - 5 Lubambe (Zambia) - 5 Kutala (RSA) - 4 Resolution (USA) - 9 South Deep (

  50. Slide 50: Appendix: Power & Water Platform – Africa Focus

    MURRAY & ROBERTS dbAccess South Africa Conference Appendix 3 Power & Water Platform – Africa Focus ENGINEERED EXCELLENCE

  51. Slide 51: Southern Africa key projects

    Southern Africa • Power and Energy made up 44% of all projects in 2014 • REIPP and base load is key driver; followed co-gen and gas (2017-18) • Nuclear expected to rollout in the next 5 years • At the end of 2014, there were 96 energy projects in Africa; 37 of these are in Southern Africa. • 39% of

  52. Slide 52: Value of key opportunities in the SADC region

    Value of Key Opportunities in the SADC Region 100 000 90 000 80 000 73 731 70 000 O&M R '000 000 60 000 50 000 Coal Base Load, 40 000 Co-Gen and GtP 30 000 20 572 22 522 20 000 16 633 REIPP Projects 10 304 10 000 3 700 - 2016 2017 2018 2019 2020 Total Value 2016-2020 Total Value 2016 2017 2018 2019

  53. Slide 53: Power projects round and timing schedule

    2016 2016 2017 2018 2019 2020 Total Round I Round Round Round Alloc. II III IV H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 Base 2 600 1 000 Load 600 Coal 1000 800 200 200 Co-Gen 200 200 GtP* >2 000 1 000 1000 *Gas to Power Tender by developer Approved as preferred bidder Financial close Implementation © Mur

  54. Slide 54: Growth drivers in industrial water

    1. Water Source Development Sector Capex (US$ Mn) 2018 Top 5 Market Growth Drivers 2013-2018 2. City Sanitation CAGR Food & Beverage 5 346 7.1% 3. Water Utility Performance 4. Resource Industry Effluents Oil & Gas 3 646 17% water treatment will be a growing theme in the mining and oil & gas industri

  55. Slide 55: Constructors, utilities and suppliers looking to provide full services

    Constructors, utilities and suppliers are looking to provide full services with financial involvement Engineering, Operation and Technology, Design Procurement, Ownership Maintenance Construction Project development Construction Engineering consulting Asset management Service Technology and design E

  56. Slide 56: Appendix: Infrastructure & Building Platform – Africa Focus

    MURRAY & ROBERTS dbAccess South Africa Conference Appendix Infrastructure & Building Platform – Africa Focus ENGINEERED EXCELLENCE

  57. Slide 57: A subdued construction climate and outlook

    A SUBDUED CONSTRUCTION CLIMATE AND OUTLOOK Construction Confidence(1)(2)(4) Key Trends 90 15% Building & Civil Confidence Index Subdued Confidence and Investment 80 GFCF % Change Private sector fixed investment contracting by 3.4 percent, 10% 70 despite some recovery in the final quarter of last yea

  58. Slide 58: Major infrastructure projects underway across Africa

    A TOTAL OF 257 MAJOR INFRASTRUCTURE PROJECTS ARE UNDERWAY ACROSS AFRICA, DOWN FROM 322 Top Sectors by Region Energy & 75% Power Transport 29% US$ 9bn 35% growth Transport 25% Energy & Power 21% in value from 2013 US$75bn (50% Mining 14% growth in value form Transport 59% 2013) US$61bn (10% Energy &

  59. Slide 59: GDP growth in the region subdued but investment expected to proceed

    GDP GROWTH IN THE REGION IS SUBDUED COMPARED TO PREVIOUS YEARS, BUT INVESTMENT IS EXPECTED TO PROCEED Real GDP Growth (%) 70 14 60 60 50 12 40 40 $Bn 28 29 30 10 20 15 10 3 8 0 Bahrain Kuwait Oman Qatar KSA UAE 6 5.0 Sport & Leisure Commercial Retail Education Public (Civic & 1% 1% 1% 1% 4 4.3 Defen

  60. Slide 60: Platform adjusting positioning along the value chain

    IN THE MEDIUM TERM, THE PLATFORM IS ADJUSTING ITS POSITIONING ALONG THE VALUE CHAIN Maintain Asset Develop Finance Design Contract Operate Asset Concept Own Property M&R Core Focus Support Development Services Gross Margin 10-20% 15% 25% 10% 6-8% 3-5% 2-3% Roles Developers Build, Own, Engineering Ci

  61. Slide 61: Murray & Roberts

    MURRAY & ROBERTS dbAccess South Africa Conference 18 & 19 June 2015 This presentation is available on http://www.murrob.com/fin_presentations.asp ENGINEERED EXCELLENCE

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