Murray & Roberts — Merrill Lynch Investor Conference 2015
30 slides from Murray & Roberts's conference presentation, Mar 17, 2015
Slide 1: Merrill Lynch Investor Conference
MURRAY & ROBERTS MERRILL LYNCH INVESTOR CONFERENCE 17 & 18 March 2015 ENGINEERED EXCELLENCE
Slide 2: Agenda
• Murray & Roberts investment case Slide 3 • A focused international engineering and construction group Slides 6 – 8 • Strategy Slides 10 –11 • Growth drivers (Resources recovery, business model, international Slides 13 – 20 expansion) • Historical financial analysis Slides 22 – 24 • Order book and
Slide 3: Focusing on maximising shareholder value
FOCUSING ON MAXIMISING SHAREHOLDER VALUE • A focused international engineering and construction group • Experienced management team with proven ability to execute on strategy • Strong balance sheet post implementation of Recovery & Growth plan • Clearly defined growth strategy and business model (A
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
Slide 5: Agenda
• Murray & Roberts investment case Slide 3 • A focused international engineering and construction group Slides 6 – 8 • Strategy Slides 10 –11 • Growth drivers (Resources recovery, business model, international Slides 13 – 20 expansion) • Historical financial analysis Slides 22 – 24 • Order book and
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
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 • Europe Design and Oil & Gas • Construction • United States Engineering / • Co
Slide 8: International diversification
INTERNATIONAL DIVERSIFICATION • Presence & projects on five continents • Offices in six African countries Glasgow North Bay • Globally employing Salt Lake more than 24 000 City Houston people Dubai Accra PNG Kitwe Gaborone Maputo Kalgoorlie Brisbane Windhoek Johannesburg Santiago Cape Town Perth Off
Slide 9: Agenda
• Murray & Roberts investment case Slide 3 • A focused international engineering and construction group Slides 6 – 8 • Strategy Slides 10 –11 • Growth drivers (Resources recovery, business model, international Slides 13 – 20 expansion) • Historical financial analysis Slides 22 – 24 • Order book and
Slide 10: 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
Slide 11: 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
Slide 12: Agenda
• Murray & Roberts investment case Slide 3 • A focused international engineering and construction group Slides 6 – 8 • Strategy Slides 10 –11 • Growth drivers (Resources recovery, business model, international Slides 13 – 20 expansion) • Historical financial analysis Slides 22 – 24 • Order book and
Slide 13: Oil price collapse Dec 14 and World Bank forecasts modest recovery in 2016
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
Slide 14: Global LNG supply from pre-FID projects will be required to meet demand 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 Deficit to be filled by pre-FID1 projects FID – Final Investment Decision. Pre-FID capacity refers to capac
Slide 15: Will require global capital expenditure of ~US$355bn over 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
Slide 16: Regional break-up of global capex and opex on LNG projects
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
Slide 17: 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
Slide 18: 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
Slide 19: 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
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 − Greenfield opportunities in PNG by FY17 and medium term in USA • Underground Mining (International focus) − Growing
Slide 21: Agenda
• Murray & Roberts investment case Slide 3 • A focused international engineering and construction group Slides 6 – 8 • Strategy Slides 10 –11 • Growth drivers (Resources recovery, business model, international Slides 13 – 20 expansion) • Historical financial analysis Slides 22 – 24 • Order book and
Slide 22: Earnings and HEPS
EARNINGS AND HEPS • Strong action during Recovery Growth New Strategic Future Recovery year restored profitability 399 485 800 600 200 • Historically H2’s stronger than H1’s 44 79 148 28 100 400 57 117 • 39% increase in 197 (1 020) 79 continuing HEPS for FY15 (327) (612) 0 H1 result 0 (73) 162 326 2
Slide 23: ROE & ROICE
ROE & ROICE 30.0% 30.0% • Target returns achieved 27.0% − ROE (FY14) 25.0% 25.0% − ROICE (FY14 & FY13) 22.0% 19.5% 20.0% 20.0% 17.1% 17.0% 15.0% 15.0% 15.5% 10.0% 10.0% 5.7% 5.0% 5.0% 2.0% 0.0% 0.0% 2011 2012 2013 2014 ROE (Actual) ROICE (Actual) ROE (Target of 17.5%) ROICE (Target of WACC [12.5%] +
Slide 24: Earnings underpinned by international platforms
EARNINGS UNDERPINNED BY INTERNATIONAL PLATFORMS • 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 potential 43% International –
Slide 25: Agenda
• Murray & Roberts investment case Slide 3 • A focused international engineering and construction group Slides 6 – 8 • Strategy Slides 10 –11 • Growth drivers (Resources recovery, business model, international Slides 13 – 20 expansion) • Historical financial analysis Slides 22 – 24 • Order book and
Slide 26: Geography & time distribution
GEOGRAPHY & TIME DISTRIBUTION 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 2016 3.9 2 5-7 Mining
Slide 27: Robust near orders and project pipeline as at December 14
ROBUST NEAR ORDERS AND PROJECT PIPELINE AS AT 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 Booy
Slide 28: Long term outlook supports Murray & Roberts growth strategy
LONG TERM OUTLOOK SUPPORTS MURRAY & ROBERTS GROWTH STRATEGY • Oil price is expected to recover from its current lows • Growing Australasian LNG commissioning, operations & maintenance market. Clough has largest share of Australasian commissioning market Oil & Gas • New geographies – strategic acquis
Slide 29: 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
Slide 30: Murray & Roberts
MURRAY & ROBERTS MERRILL LYNCH INVESTOR CONFERENCE 17 & 18 March 2015 This presentation is available on www.murrob.com ENGINEERED EXCELLENCE
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