The Group’s New Strategic Future, which the board of directors of Murray & Roberts (“Board”) approved in 2014, has by design brought about a significant change in Murray & Roberts. The Group has transformed from being a predominantly South African civil and building contractor, to a multinational engineering and construction Group focused on the natural resources market sectors.

The progress made over the recent past years in de-risking the Group, refining its business model and optimising its portfolio of businesses has allowed focus to shift towards enhancement of the strategic positioning and earnings potential of the Group’s three business platforms for the longer term. The evolution of the Group’s strategy in anticipation and response to market dynamics, specifically the cyclicality of the natural resources market sectors in which the Group operates, has provided a clear roadmap for shareholder value growth in the years ahead.

This is the first completed financial year of a fundamentally redesigned Murray & Roberts. Earlier in the year, an independent assessment of the Group’s New Strategic Future was commissioned to consider the long-term viability of the Group’s strategic direction. The assessment confirmed the Group’s strategic plan and clarified the growth priorities for the three business platforms, in support of the Group’s market leadership and performance aspirations as set out in the Group’s Vision statement.


Murray & Roberts’ strategic direction and portfolio of businesses have made it an attractive investment. During the financial year an offer was made by ATON to procure control of Murray & Roberts, through its formal offer to the remaining shareholders to acquire all their shares in Murray & Roberts at R15 per share. An independent committee of the Board was constituted to respond to the ATON offer (“Independent Board”), and recommended that shareholders reject the offer as it was below the fair price range for control, which was considered to be in the range of R20 to R22 per share, as determined by the Independent Board.

ATON increased its investment in the Group to some 44% from around 30%. Exceeding 35% triggered the Companies Act requirement to make a mandatory offer to all shareholders. This offer was made on 2 July 2018 at R17 per share, subject to certain conditions. The offer will remain open to shareholders for acceptance for no less than 10 business days after the offer is declared unconditional in all respects.

The Group’s strategic aspirations and ATON’s investment objectives in relation to Murray & Roberts are not aligned. This has resulted in the Group’s aspirations, which includes making strategic acquisitions and repurchasing its own shares, being impeded. The Group remains open to engage with ATON to clarify its intentions with Murray & Roberts and to seek alignment on the Group’s strategic direction.


The potential combination of Murray & Roberts and Aveng, an opportunity which the Group was considering since the fourth quarter of 2017, was announced in May 2018. The proposed combination of Murray & Roberts’ Oil & Gas and Underground Mining platforms with Aveng’s McConnell Dowell (infrastructure) and Moolmans (mining) businesses was compelling and would have established Murray & Roberts as a significant multinational engineering and construction group.

The Group obtained the requisite approvals from the Takeover Regulation Panel and our shareholders to further develop this transaction. The Takeover Special Committee then overturned the Takeover Regulation Panel approval and ruled that Murray & Roberts may not develop the potential transaction whilst the ATON mandatory offer remains in place.

As part of Aveng’s recent rights offer, ATON acquired 25.42% of Aveng’s equity, thereby establishing negative control of Aveng. ATON was not supportive of the combination of Murray & Roberts and Aveng, and with its shareholding in Aveng it has the ability to block any such combination.

Following these developments, the Murray & Roberts Board withdrew from the potential Aveng transaction in early August 2018.

# The operating performance information disclosed has been extracted from the Group’s operational reporting systems. The Corporate & Properties segment is excluded from the operational analysis. Unless otherwise noted, all comparisons are to the Group’s performance as at, and for the year ended, 30 June 2017.



Revenue from continuing operations increased by 2% to R21,8 billion (FY2017: R21,4 billion) and attributable earnings increased by 456% to R267 million (FY2017: R48 million). Diluted continuing headline earnings per share (“HEPS”) increased by 56% to 112 cents (FY2017: 72 cents). Cash, net of debt, increased to R2 billion (30 June 2017: R1,8 billion).

Capital expenditure for continuing operations for the year was R436 million (FY2017: R511 million) of which R358 million (FY2017: R395 million) was for expansion and R78 million (FY2017: R116 million) for replacement. The order book for continuing operations increased by 12% to R30,1 billion (30 June 2017: R26,9 billion).

The high effective taxation rate of 36% (FY2017: 36%) is due to profits earned in higher tax jurisdictions, foreign withholding taxes and losses incurred in the Middle East, a tax free jurisdiction.

The Group continues to focus on cost reduction and operational excellence to improve profitability.


Considering the Group’s strong cash position, the Board resolved to increase the gross annual dividend to 50 cents per ordinary share (FY2017: 45 cents). The dividend will be subject to the dividend tax rate of 20%, which will result in a net dividend of 40 cents per share to those shareholders who are not exempt from paying tax on dividends. The dividend has been declared out of income reserves.

The number of shares in issue as at the date of this declaration is 444 736 118 and the Company’s tax reference number is 9000203712.

The relevant dates are:

Event Date
Last day to trade (cum-dividend) Tuesday, 2 October 2018
Shares to commence trading (ex-dividend) Wednesday, 3 October 2018
Record date (date shareholders recorded in books) Friday, 5 October 2018
Payment date Monday, 8 October 2018

No share certificates may be dematerialised or rematerialised between Wednesday, 3 October 2018 and Friday, 5 October 2018, both dates inclusive.

On Monday, 8 October 2018, the dividend will be electronically transferred to the bank accounts of all certificated shareholders where this facility is available. No dividend will be paid to shareholders who have not provided their banking details to the transfer secretaries: Link Market Services South Africa Proprietary Limited. Accordingly, the cash dividend will remain unpaid until such time as the non-compliant shareholder has provided relevant banking details to the transfer secretary. No interest will be paid on unpaid dividends.

Shareholders who hold their shares in dematerialised form will have their accounts held by the Central Securities Depository Participant or broker credited on Monday, 8 October 2018.



R billions Order
Category 1 Category 2 Category 3
Oil & Gas 6,4 39,7 97,8 368,4
Underground Mining 22,1 7,9 19,4 19,8 17,4
Power & Water 1,5 4,7 8,3 31,6
Middle East* 0,1
30 June 2018 totals 30,1 7,9 63,8 125,9 417,4
30 June 2018 totals** 27,0 7,0 38,4 61,5 539,7
  • Near orders: Tenders where the Group is the preferred bidder and final award is subject to financial/commercial close – there is more than a 95% chance that these orders will be secured
  • Category 1: Tenders submitted or tenders the Group is currently working on (excluding near orders) – projects developed by clients to the stage where firm bids are being obtained – chance of being secured as firm orders a function of final client approval as well as bid win probability
  • Category 2: Budgets, feasibilities and prequalification the Group is currently working on – project planning underway, not at a stage yet where projects are ready for tender
  • Category 3: Opportunities which are being tracked and are expected to come to the market in the next 36 months – identified opportunities that are likely to be implemented, but still in pre-feasibility stage

*   Middle East projects substantially completed.
** Including continuing and discontinued operations. Discontinued includes Genrec


R millions Engineering Construction Global Marine Commissioning
& maintenance
& other
June 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
Revenue 971 1 297 504 30 425 6 894 4 862 173 100 8 542 6 714
Operating profit/(loss) 77 28 4 (52) (26) 71 466 576 (312) (406) 209 217
Margin (%) 8% 2% 1% (173%) 17% 7% 12% 2% 3%
Order book 639 492 3 552 1 070 2 245 3 589 6 436 5 151
Segment assets                     2 808 2 528
Segment liabilities                     2 334 1 978
LTIFR (fatalities)                     0.14(0) 0.25(0)

Revenue increased to R8,5 billion (FY2017: R6,7 billion), primarily due to scope growth on the Ichthys and Wheatstone projects. In a competitive market with extreme pressure on margins, operating profit came in at R209 million (FY2017: R217 million) notwithstanding the increase in revenue. The order book increased to R6,4 billion (30 June 2017: R5,2 billion), comprising a diverse portfolio of new work, mainly in complementary markets. Meaningful growth off this low base is expected as market confidence gradually returns and global energy producers start investing in new projects.

The crude oil price has stabilised above US$70 per barrel and global Liquid Natural Gas (“LNG”) markets are expected to remain in oversupply until 2021. Currently, there is limited immediate opportunity for new LNG developments in Australia. However, new supply capacity must be developed in the near term to meet LNG forecast demand as from 2021/22. The platform is targeting potential LNG projects in Australia, Canada, Mozambique and Papua New Guinea.

The hook-up and commissioning (“HUC”) works for the Chevron-operated Wheatstone project were extended during FY2018, with successful close-out in June 2018. Strong execution continued on the central processing facility and floating production, storage and offloading facility for the INPEX-operated Ichthys LNG project. Projects are expected to extend into the first half of FY2019 as Ichthys moves towards first gas.

Considering the soft oil and gas market, Clough has extended their services into complementary growth markets such as Australia’s metals & minerals and infrastructure markets. In FY2018, the platform secured significant projects with BHP and Alcoa in Australia and with Rio Tinto in Mongolia. These projects confirm the platform’s ability to secure projects in complementary markets, due to its large project execution capability.

Extending the platform’s service offering to complementary markets with active investment programmes is critical for growing earnings and mitigating exposure to the cyclicality of the resources sector. The capital expenditure on infrastructure in Australia is forecast to be more than 10 times the oil and gas spend over the next five years (a funded project portfolio of A$370 billion over the next 10 years). An office has been established in Sydney, to pursue these opportunities on a selective basis.

The platform’s international operations outside Australasia comprise small niche engineering and consulting businesses. Progress is being made with a potential acquisition of a relatively small oil and gas engineering and construction company in the USA, which will enable the platform to extend its services to the growing oil and gas sector in the USA.


R millions Africa Australasia The Americas Total
June 2018 2017 2018 2017 2018 2017 2018 2017
Revenue 3 524 3 565 1 779 1 727 2 701 2 754 8 004 8 046
Operating profit 215 124 109 217 147 123 471 464
Margin (%) 6% 3% 6% 13% 5% 4% 6% 6%
Order book 10 738 11 021 4 799 3 117 6 533 3 368 22 070 17 506
Segment assets 879 1 139 1 167 982 1 711 1 494 3 757 3 615
Segment liabilities 1 007 1 093 484 377 504 439 1 995 1 909
LTIFR (fatalities) 1.75(0) 1.15(0) 1.49(1) 0.96(0) 3.0(0) 1.97(0) 1.89(1) 1.23(0)

Revenue and operating profit came in at R8,0 billion (FY2017: R8,0 billion) and R471 million (FY2017: R464 million) respectively. Excellent performance by Cementation Africa, was largely offset by a decline in margins in Australasia as a result of the non-extension of a contract on a major project. The platform order book increased to R22,1 billion (30 June 2017: R17,5 billion), with project awards across all jurisdictions during the second half of the year.

The financial performance was impacted by mining companies continuing to focus on cash preservation, which limited the number of new mine project opportunities. This result was largely underpinned by the platform’s success in securing ongoing infrastructure replacement and development projects (a function of ‘stay-in-business’ capital spending by mining companies), as well as contributions from contract mining work.

Recently completed and current projects include the construction or rehabilitation of 20 vertical shafts and some 30 decline shaft projects in Australia, Canada, Indonesia, Mongolia, South Africa, USA and Zambia. The platform has contract mining projects in Australia, Canada, Indonesia, South Africa and the USA and is pursuing new contract mining opportunities primarily in South Africa and the USA.

Competitive advantage is gained through the collaboration between Group companies. RUC Cementation Mining in joint venture with Clough from the Group’s Oil & Gas platform were supported by Cementation Canada and Murray & Roberts Cementation in the recent award of the 1 000m deep twin shafts at Rio Tinto’s Oyu Tolgoi copper mine in Mongolia.

Exploration is at its highest level in six years and mining equipment delivery times are extending. These key lead indicators suggest that the industry has moved into an upturn. In countries and regions where current mining activity is high, there is a large investment pipeline of underground mining projects which is expected to expand. The platform is well positioned to take advantage of these opportunities and most key commodities are represented in the current portfolio of projects.


R millions Power1 Water Oil & Gas Electrical &
Corporate &
June 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
Revenue 4 180 5 063 95 56 412 669 138 106 4 14 4 829 5 908
Operating profit/(loss) 287 243 (8) (20) (87) 5 32 35 (90) (92) 134 171
Margin (%) 7% 5% (8%) (36%) (21%) 1% 23% 33% 3% 3%
Order book 1 278 3 198 188 483 13 26 1 479 3 707
Segment assets                     1 292 1 527
Segment liabilities                     956 1 341
LTIFR (fatalities)                     0.12(0) 0.43(0)

1 Including power programme contracts.

Revenue, operating profit and the order book decreased to R4,8 billion (FY2017: R5,9 billion), R134 million (FY2017: R171 million) and R1,5 billion (30 June 2017: R3,7 billion) respectively. This overall reduction is due to the phased completion of the Medupi and Kusile mega projects, which for the last seven years underpinned the platform’s financial performance.

In anticipation of the completion of Medupi and Kusile, the platform’s overhead function was restructured to prepare it for a lower revenue base, without compromising its capacity to deliver on its strategic objectives and to pursue new work.

The power sector in South Africa is presenting limited opportunity and the Baseload Coal Independent Power Producer Procurement Programme continues to be delayed. In response to the limited opportunities in the power plant Engineering, Procurement and Construction (“EPC”) sector, the platform is proactively targeting the broader power sector by pursuing power plant repair and maintenance work in South Africa and high voltage transmission and distribution projects in South Africa and sub-Saharan Africa.

In the complementary oil and gas market, the primary focus is to support Sasol’s operations at Secunda with structural, mechanical and piping construction services. The successful completion of an EPC fuel storage project in Takoradi Port, Ghana, has created opportunities in refined products storage facilities. During the year, Murray & Roberts Ghana Limited obtained its petroleum commission licence, which will provide access to projects in Ghana’s developing upstream sector.

Murray & Roberts Water is in its sixth year of operation but remains sub-scale, although it is well positioned to service the water and wastewater treatment sector. During the year, an Organica Water Reclamation Demonstration Plant was erected and commissioned at the Verulam Wastewater Treatment Plant, to showcase this innovative technology. As growth in the water sector is expected to flow from the wastewater treatment sub-sector, it is expected that this technology could bring the necessary scale to this business. During the year the Aquamarine business performed well with supply of containerised water treatment plants to hospitals, industrial and agricultural users specifically in response to the water crisis in the Western Cape.


Murray & Roberts increased its investment in the Bombela Concession Company to 50%, by acquiring an additional 17% during the first half of the year. This investment yields strong cash returns and the fair value adjustment for the year increased to R278 million (FY2017: R253 million). The prior period included a profit of R166 million in the Bombela Civils Joint Venture, following the Gautrain dispute resolution. Income from equity accounted investments increased to R21 million (FY2017: R7 million), largely from the Group’s minority shareholding in the Bombela Operating Company which was sold in the current financial year.

The Group continues to explore similar opportunities that could secure project work for its three business platforms.

R millions Bombela investments Middle East Total
June 2018 2017 2018 2017 2018 2017
Revenue 121 468 608 468 729
Operating profit/(loss) 277 419 (34) (568) 243 (149)
Margin (%) 346% (7%) (93%) 52% (20%)
Order book 141 500 141 500
Segment assets 1 379 1 643 1 682 1 124 3 061 2 767
Segment liabilities 36 178 1 290 1 350 1 326 1 528


In FY2016 the Board decided to close the business in the Middle East as part of the Group’s strategic decision to exit the civil engineering and building market. Current year losses in the Middle East of R34 million (FY2017: R568 million) relate to overhead costs and legal fees associated with the Dubai Airport claim. All projects are substantially completed and are expected to be handed over by December 2018. The arbitration ruling for the Dubai Airport claim has been delayed to no later than 4 November 2018.


R millions I&B businesses
and other2
Clough Properties Genrec Engineering Total
June 2018 2017 2018 2017 2018 2017 2018 2017
Revenue 269 3 364 3 7 253 303 525 3 674
Operating loss (143) (209) (2) (4) (128) (68) (273) (281)

2 Includes Construction Produts Africa.

The loss from discontinued operations for the year was R278 million (FY2017: R253 million). This includes an operating loss of R128 million incurred by Genrec, prior to its disposal on 1 May 2018. The balance of the loss includes a R141 million reduction on retained assets and liabilities associated with the disposal of the Infrastructure & Building business in FY2017, mainly due to an unfavourable claim settlement.


The Board deeply regrets the passing away of Hendry Munardi (49), a RUC Cementation (Australia) employee, on 17 October 2017. Hendry passed on due to asphyxiation while performing his duties at the Big Gossan mine in Freeport (Indonesia).

The Group’s LTIFR, which remains industry leading, deteriorated to 0.86 (FY2017: 0.52). The Oil & Gas platform reported LTIFR of 0.14 (FY2017: 0.25), the Underground Mining platform reported 1.89 (FY2017: 1.23) and the Power & Water platform reported 0.12 (FY2017: 0.43).

The Group is encouraged by the positive trends noted in a number of areas of its safety programme, including improvements on many of the lead indicators and record safety performances by a number of its businesses.


Uncertified revenue as at the end of the financial year increased to R1,3 billion (FY2017: R0,9 billion), largely represented by claims on projects in the Middle East and the remainder in the Power & Water platform.


The Department of Labour instituted a Section 32 Inquiry (“Inquiry”) in November 2015 into this incident to determine the cause or causes of the collapse of the temporary works structure. The Board would welcome an expeditious conclusion to this Inquiry.


Considering current market expectations, the Group is confident that its growth plans for the next three-year planning period are achievable. Cost management will continue to be a focus and all platforms are targeting levels of overhead costs of about 6% of revenue, through the commodity cycle.

Each of the Group’s three business platforms are at different stages in their strategic development and they continue to diversify their specialist service offerings, to increase growth and margin opportunity and to mitigate risk across different international regions and phases of the project life cycle.

With a well-refined business model and strategy, and a focused portfolio of quality business assets, the Group is committed to drive sustainable growth and earnings improvement. The Group’s robust financial position provides the capacity to support its growth plans.

Any forward-looking information contained in this announcement has not been reviewed and reported on by the Group’s external auditors.

On behalf of the directors:

Suresh Kana
Chairman of the Board

Henry Laas
Group Chief Executive

Daniel Grobler
Group Financial Director


29 August 2018


The Board accepts responsibility for the information contained in this announcement and certifies that, to the best of their knowledge and belief, the information contained in this announcement is true and nothing has been omitted which is likely to affect the importance of the information.

Douglas Roberts Centre,
22 Skeen Boulevard,
Bedfordview 2007

PO Box 1000
Bedfordview 2008

Link Market Services South Africa
Proprietary Limited
13th Floor, Rennie House,
19 Ameshoff Street,
Braamfontein, 2001

PO Box 4844
Johannesburg 2000

Deutsche Securities (SA) Proprietary Limited



SP Kana* (Chairman) HJ Laas (Managing & Chief Executive)
DF Grobler R Havenstein* NB Langa-Royds* AK Maditsi*
E Mashilwane* XH Mkhwanazi* DC McCann (Radley)*
KW Spence*^


^ Australian
* Independent non-executive