Murray & Roberts — JP Morgan Investor Conference 2007
28 slides from Murray & Roberts's conference presentation, 2007
Slide 1: JP Morgan Investor Conference 2007
JP Morgan Investor Conference 2007 “WE HAVE BUILT A FORMIDABLE PERFORMANCE PLATFORM TO MEET THE FUTURE POTENTIAL OF ALL OUR MARKETS” 2007 Interim Report GlobalisingCapacity to Deliver Murray & Roberts
Slide 2: Introduction
Introduction • This presentation offers no detail on Murray & Roberts • Everything is available in the Annual Report or www.murrob.com • All economic data is available through various public sources • Information is used to establish trends rather than provide fact • Construction is a dog-eat-dog &
Slide 3: South African Construction Works Investment
South African Construction Works Investment OPPORTUNITY TIMELINE 1946 to 2006 2000 = 100 1951 1967 1984 2000 Source: SAFCEC GlobalisingCapacity to Deliver Murray & Roberts
Slide 4: South African Construction Economy
South African Construction Economy GFCF vs GDP 1946 to 2006 2000 = 100 29% 21% 20% 15% Source: BER GlobalisingCapacity to Deliver Murray & Roberts
Slide 5: Rebuilding Murray & Roberts
Rebuilding Murray & Roberts 2000 TO 2007 1996 2850 cents GlobalisingCapacity to Deliver Murray & Roberts
Slide 6: Critical Mass in the Market
Critical Mass in the Market RISK RELATIVE TO RATING Company Market Capitalisation P:E MUR R 33,0 billion 30,0 AEG R 25,0 billion 18,5 PPC R 25,0 billion 18,0 WBO R 8,5 billion 25,5 GRF R 7,5 billion 23,0 RBX* R 6,0 billion 43,0 SFB* R 4,0 billion - BSR R 3,0 billion 31,0 JSE-ALSI 40 16,0 JSE-CONM 22
Slide 7: South Africa's Leading Construction & Engineering Group
105 Years of Experience & Growth Murray & Roberts is South Africa’s Leading Construction & Engineering Group and has chosen to lead the market with sector guidance GlobalisingCapacity to Deliver Murray & Roberts
Slide 8: 2007 AGM Business Update
2007 AGM Business Update “The South African construction economy continues to grow faster than GDP and based on macro-economic commitments • from government through ASGISA, • state enterprise and public sector investment programs, and • the unabated global demand for natural resources, is in our opi
Slide 9: Future Construction Works: 1995 Scenario
Future Construction Works : 1995 Scenario ECONOMIST CONSENSUS 2000 = 100 2002 to 2006 2000=100 Stress for the unprepared 1994 - 2002 CIDB 60 63 66 69 72 75 78 81 84 87 90 93 96 99 2 5 8 11 14 17 20 Optimistic Pesimistic Reality Source: SAFCEC GlobalisingCapacity to Deliver Murray & Roberts
Slide 10: Future Construction Works: 2006 Scenario
Future Construction Works : 2006 Scenario ECONOMIST CONSENSUS 2010 to 2024 2000 = 100 ? GDP - 6% pa CFCF - 8% 2000=100 pa Const - 10% pa 60 63 66 69 72 75 78 81 84 87 90 93 96 99 2 5 8 11 14 17 20 Optimistic Pesimistic Reality Source: SAFCEC GlobalisingCapacity to Deliver Murray & Roberts
Slide 11: Clough in Australia
CLOUGH IN AUSTRALIA “------- was consolidated into the Group’s accounts from 1 July 2007 and we are pleased to report that the company has delivered its budget performance for the first quarter to 30 September 2007. The new chief executive has set out a clear strategy for the company that primarily
Slide 12: Globally, Resource Constraints
GLOBALLY, RESOURCE CONSTRAINTS “-------- now play a key role in the planning, procurement and implementation of capital projects. This challenge is significantly enhanced in South Africa where the Group has a number of initiatives to ensure it remains capable of meeting its contracted and performanc
Slide 13: Unpredictable Increases
UNPREDICTABLE INCREASES “-------- in most cost inputs into the construction process over the past four years have increased financial risks for clients and contractors alike. While global demand for construction skills and equipment is likely to intensify, we believe that new capacity investments wi
Slide 14: However
HOWEVER “-------- the increasing costs of transportation logistics between fixed source and variable utilisation will remain unabated until the country’s road and rail networks are substantially improved.” [Logistics cost represents between 15% and 35% of revenues] Logistics cost increases averaged
Slide 15: Shareholders Are Cautioned
SHAREHOLDERS ARE CAUTIONED “-------- that significant delays are evident in the time taken by most clients to convert feasibility studies into tenders and then tenders into contracts. Many contracts commence with inadequate design information to allow optimum performance. These factors delay the dev
Slide 16: The Group Project Order Book
THE GROUP PROJECT ORDER BOOK “-------- was stable at about R 22 billion at 30 September 2007, including AUD 750 million in Clough. The current reservoir of project opportunity registered within the Group’s Opportunity Risk Management pipeline amounts to more than R 85 billion in about 120 projects.
Slide 17: Including
INCLUDING “-------- work associated with South Africa’s power generation program for which no major contracts have yet been awarded.” Power opportunities will be won or lost within November 2007 GlobalisingCapacity to Deliver Murray & Roberts
Slide 18: There Is Increased Activity
THERE IS INCREASED ACTIVITY “-------- evident in the Group’s construction materials, and fabrication and manufacturing operations, while a general slowdown in consumer demand has dampened performance in the building materials operations.” Significant growth possible in Fabrication & Manufacture Glob
Slide 19: Major Projects
MAJOR PROJECTS GlobalisingCapacity to Deliver Murray & Roberts
Slide 20: Major Projects: Gautrain Rapid Rail Link
MAJOR PROJECTS GAUTRAIN RAPID RAIL LINK • Progress essentially on schedule for Phase 1 • TBM under assembly at Rosebank for 1 January 2008 • Zonki-zizwe (Midrand) substantially delayed • Phase 2 (North Section) EIA troublesome • Material prices OK, but subcontractors ahead of inflation • Labour rest
Slide 21: Major Projects: Greenpoint Stadium
MAJOR PROJECTS GREENPOINT STADIUM • Progress delayed by design review • FIFA seeking October 2009 completion (February 2010 contracted) • Project fully resourced • Roof subcontract award imminent • Substantial price variation on cards • Labour restless and testy • Design inefficiency causing time an
Slide 22: Major Projects: Dubai International Airport
MAJOR PROJECTS DUBAI INTERNATIONAL AIRPORT • Substantial completion scheduled for December 2007 • Final commission and handover scheduled for April 2008 • Facility is awesome! • Satisfied Client (DCA) and Customer (Emirates) • Significant working capital being resolved • Value has increased 50% • Co
Slide 23: Major Projects: Coega Aluminium Smelter
MAJOR PROJECTS COEGA ALUMINIUM SMELTER • First metal scheduled for May 2010 • Front-end Engineering & Design underway in Montreal • South African establishment (Bedfordview) in March 2008 • Eskom constructing Transmission System to E Cape • Commencement of construction April 2008 • Significant train
Slide 24: Regional & Resource Markets
REGIONAL & RESOURCE MARKETS GlobalisingCapacity to Deliver Murray & Roberts
Slide 25: Regional Market: Middle East
REGIONAL MARKET MIDDLE EAST • Free cash flow petro-dollars ensures no shortage of opportunity • Key clients negotiating all work following prequalification • Murray & Roberts increasingly managing design on behalf of client • Sama Contracting established and developing steadily (Al Salaam) • Johnson
Slide 26: Regional Market: Rest of Africa
REGIONAL MARKET REST OF AFRICA • No place for sissies • Bribery & corruption endemic in many countries • Government funded infrastructure sporadic and risky • Privately funded construction continental vs national • Resource extraction and sometimes beneficiation is key market • China and India domin
Slide 27: First Quarter Trading
FIRST QUARTER TRADING “-------- in the Group has continued from the benchmark set through the previous financial year. There is, however, some weakness in the industrial engineering market and the strong SA Rand is impacting the translation of international earnings. ” Margin > 7,5% but 2002 to 2003
Slide 28: Revenue Scenario to 2010
Revenue Scenario to 2010 Average R 32 billion 2008 to 2010 Margin 5,0% to 7,5% (Strategic) 7,5% to 10,0% (Short-term) Clough consolidated but excluding further acquisition GlobalisingCapacity to Deliver Murray & Roberts
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