Prelim Results 2011: Recovery & Growth

31 August 2011

Murray & Roberts today announced its annual results for the year ended 30 June 2011.

Revenues from continuing operations increased by 10% to R30,5 billion (2010: R27,9 billion). A loss for the year of R1 735 million (2010: profit R1 098million) was recorded after accounting for significant charges and contract completion costs. Excluding the significant charges, the Group's normalised earnings before interest and tax for the year amounted to R1,3 billion (2010: R2,2 billion).

Henry Laas, group chief executive, comments: "The 2011 financial year has been one of almost unprecedented challenge for Murray & Roberts. Aside from the difficult trading conditions, the Group's profitability was impeded largely due to challenges experienced on major projects. However, a new leadership team has been appointed that has developed a Recovery & Growth plan which aims to return the Group to profitability in the 2012 financial year, with an improved liquidity position and growth thereafter. "

The Group's liquidity position improved substantially from the net debt position at 31 December 2010 of R1 billion to a net cash position at 30 June 2011 of R759 million, excluding cash and interest bearing borrowings within discontinued operations. Whilst future revenue flows are anticipated, funding required to complete the Gautrain and Gorgon Pioneer Materials Offloading Facility projects over the next six months is likely to again place the Group in a net debt position by 31 December 2011.

"The Group has committed to full co-operation with the Competition Commission to eradicate anti-competitive behaviour within the construction industry. Regrettably, and due mainly to late notifications by former subsidiary company executives, a limited number of projects were identified where possible transgressions may have occurred", continues Laas. As a consequence, the Group lodged its applications for these projects in the Competition Commission's Fast Track settlement process. A provision has now been made for potential penalties for these identified possible transgressions.

The Group reported the loss of 12 employees while at work in the Group's operations during the year under review. Executive leadership has taken decisive action to address safety in the work place with an initiative primarily focussed on attitudes to safety and safe behaviour across the organisation.

Laas continues: "The actions taken in this critical area underscore the importance that Murray & Roberts attaches to safety. We are determined to increase our efforts across the Group to keep our people safe and to weave safety considerations into the fabric of the business."

The Group reported a healthy order book of R55 billion (2010: R44 billion) at year end. The operating margin contained in the order book is within the Group's strategic range of 5,0% to 7,5%.

"Our strength lies in our diversity, in terms of the breadth of the services and products offered across the engineering and construction value chain, as well as market spread and exposure to different economic cycles. We expect to return to an acceptable level of profitability in the year ahead and forecast to experience improved trading conditions. The level of this profitability will depend on economic conditions, order book development and conversion, particularly in South Africa and reduction of working capital", concludes Laas.

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