Our domestic market leadership is enhanced through the
acquisition of new business capacity in the construction economy
and our preferred bidder status on both the Gautrain Rapid Rail
Link and the PBMR Nuclear Power Programme.
Commercial fixed investment has improved in Middle East and
new project awards such as Dubai International Airport offer
Murray & Roberts a platform for sustainable expansion
following two years of market realignment.
Finally, a major benefit of Rebuilding Murray & Roberts has
materialised in the form of an empowerment strategy that will
see broad-based community and staff participation in the
equity of the Group into the future, combined with value-based
empowerment partnerships in the Groups various operating
markets.
Executive summary
I am pleased to report our financial and performance results for
the year to 30 June 2005, providing stakeholders with insight
into how Rebuilding Murray & Roberts has established a new
platform for the future development of the Group.
This final year of Rebuilding Murray & Roberts has been
characterised by further change and transformation as all the
preparation throughout the five year process has been
crystallised into a new performance platform for the future.
While operating profits increased by 29% to R543 million off a
27% increase in revenues to R10,7 billion, a significant increase
in taxation and reduced contribution from associates resulted in
diluted headline earnings per share of 140 cents compared
with 155 cents in the previous reporting period.
We included a pro forma summary income statement and
balance sheet in last years annual report highlighting the potential
impact of the acquisition of 100% of Cementation and a 30%
stake in Clough and disposal of our 45% shareholding in Unitrans.
Had we adjusted for the normalisation of taxation, benchmark
headline earnings per share would have reduced from 143 cents
to 123 cents. This implies growth of 14% in the year.
This final year of Rebuilding Murray & Roberts has seen a fundamental reshaping of
our Group in line with our strategic engagement of the global construction economy.
The acquisition of Cementation and a strategic partnership with Clough has established
a global engineering and contracting platform serving selected natural resource markets
in Southern Africa, Middle East, Southeast Asia and North America.
Disposal of the Groups 45% shareholding in non-core
investment Unitrans created the opportunity for acquisition of
100% of the Cementation business in South Africa and Canada
and a control shareholding over time in Clough Limited in
Australia. Both companies operate within our strategic focus
and are expected to deliver attributable earnings from the 2007
financial year at least in line with what could have been expected
had the Group remained invested in Unitrans.
The prospects statement included in the 2004 annual report
was written at a time of significant corporate activity.
Acquisition of the Cementation mining contracting assets in
South Africa and Canada had been effected from 1 July 2004.
Disposal of our 45% shareholding in Unitrans was in play and
we had entered an agreement to acquire a strategic
shareholding in Clough, an Australian oil & gas contractor.
Resolution of a number of problem contracts meant that
approximately R750 million of revenues in the year would
offer no contribution. It is therefore pleasing that we have
performed ahead of the prospects update included in the
2004 annual report and the half-year report for the period to
31 December 2004.
We have maintained our operating margin at 5,1% (2004: 5,0%).
This incorporates the substantial break-even order book carried
through from the prior year and unbudgeted project losses,
mainly in Middle East. The Group remains committed to a
sustainable operating margin of between 5,0% and 7,5% which
reflects both the opportunity and risk profile of our target market.
Our year-end net cash position improved to R1,74 billion from
R1,0 billion at 30 June 2004. This includes capital expenditure
of R303 million and a net acquisition inflow of R350 million.
We experienced a peak in working capital demand during the
year, fuelled primarily by delayed funding of losses booked
in previous years and some intra-year stock build-up primarily
in the steel business sector. R339 million in interest-bearing
long-term liabilities relates primarily to a loan facility arranged to
fund a portion of the Groups shares in Clough.