The Group has been 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 Group’s three business platforms (Underground Mining, Oil & Gas and Power & Water) provide portfolio diversification. Core market segments and selected complementary market segments are of strategic importance to each of the three platforms, as these segments collectively mitigate the impact of market cyclicality.


Considering current expectations and changing conditions for the Group’s target market sectors, organic growth has to be supplemented by acquisitive growth. Since the start of the second half of the financial year, the Group concluded an acquisition in each of the Oil & Gas and Power & Water platforms respectively:

Oil & Gas – acquired a USA-based engineering, procurement and construction (“EPC”) business from Saulsbury Industries. This is a strong organisation, staffed by experienced people with full EPC capability for projects up to US$500 million. Although a small acquisition, valued at US$5,2 million, it is strategically significant. This acquisition of an oil and gas EPC contractor based in Houston, gives the platform the ability to deliver projects into a strongly growing market in the USA.

Power & Water – acquired South Africa-based Optipower for a purchase consideration of R37 million. This acquisition takes the platform firmly into the transmission, distribution and substation sectors of the power market. Eskom requires extensive transmission work in South Africa, with 300km of 400KV overhead line currently out on enquiry. Several other transmission opportunities are being actively pursued in sub-Saharan Africa – specifically Mozambique, Kenya, Ghana, Angola and Uganda.


Implementation of ATON’s mandatory offer (“Mandatory Offer”) to acquire up to 100% of the issued ordinary shares of Murray & Roberts, not already owned by ATON, remains subject to certain suspensive conditions, specifically receipt of the required regulatory approvals in relevant jurisdictions. Conditional merger approval was obtained in Zambia and unconditional approval in Namibia, whilst merger approval is still under consideration by the relevant authorities in South Africa and Canada.

The long-stop date for the Mandatory Offer is 31 March 2019, a date which may be extended by ATON. In the event of ATON announcing that the Mandatory Offer has become unconditional in all respects prior to the long-stop date, Murray & Roberts’ shareholders will have 10 business days from the date of such announcement to accept the Mandatory Offer, should they choose to accept the offer. In the event that the Mandatory Offer does not become unconditional prior to the long-stop date and ATON elect not to extend the long-stop date, the Mandatory Offer will terminate in accordance with its terms.

Shareholders are reminded that ATON’s cash offer price of ZAR17.00 per Murray & Roberts’ ordinary share remains below the view of the independent board (“Independent Board”) that a fair value price range for control of Murray & Roberts is between ZAR20.00 and ZAR22.00 per ordinary share. The Independent Board has refreshed its valuation of the Group, taking into account the latest market developments, and maintains its view that a fair value price range for control is between ZAR20.00 and ZAR22.00 per ordinary share.

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

The Independent Board will continue to update shareholders on all relevant matters pertaining to the Mandatory Offer.



Revenue from continuing operations decreased by 17% to R9,8 billion (FY2018 H1: R11,8 billion) and attributable earnings increased by 69% to R186 million (FY2018 H1: R110 million). Diluted continuing headline earnings per share (“HEPS”) decreased by 2% to 54 cents (FY2018 H1: 55 cents). Cash, net of debt, decreased to R1,0 billion (FY2018 H1: R1,3 billion; FY2018: R2,0 billion).

Capital expenditure for the six months under review was R357 million (FY2018 H1: R178 million), predominantly in the Underground Mining platform, of which R340 million (FY2018 H1: R151 million) was for expansion and R17 million (FY2018 H1: R27 million) for replacement.

The order book for continuing operations increased to R31,7 billion (FY2018 H1: R22,1 billion; FY2018: R30,1 billion).

The effective taxation rate of 38% (FY2018 H1: 38%) is high, in the main due to withholding tax in foreign jurisdictions, profits earned in high tax rate jurisdictions, losses incurred in low tax jurisdictions and tax losses not applied.


In terms of the Group’s dividend policy, the board of directors of the Company (“Board”) will consider a full-year dividend post year-end.



The Group’s order book is of a high quality. Significant growth has been recorded in the Underground Mining platform order book. The lower order book in the Oil & Gas and Power & Water platforms is reflective of current market conditions. Based on near orders, a substantial increase in the Oil & Gas platform is expected during FY2019 H2.

R billions  Order book     Near orders     Category 1     Category 2     Category 3    
Oil & Gas  4,4     14,2     33,2     73,0     298,7    
Underground Mining  25,7     8,1     20,5     31,3     22,0    
Power & Water  1,6     —     4,2     9,3     26,3    
31 December 2018 totals  31,7     22,3     57,9     113,6     347,0    
30 June 2018 totals  30,1     7,9     63,8     125,9     417,4    
  • 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 projects 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 market in the next 36 months – identified opportunities that are likely to be implemented, but still in pre-feasibility stage.


R millions   Engineering   Construction   Global Marine   Commissioning
& Maintenance
& Other
December   2018   2017   2018   2017   2018   2017   2018   2017   2018   2017   2018   2017  
Revenue   430   536   1 049   118   —   —   1 667   3 963   210   76   3 356   4 693  
Operating profit/(loss) 23   48   (40) (44) (9) (21) 281   293   (255) (177) —   99  
Margin (%) 5%   9%   (4%) (37%) —   —   17%   7%   —   —   —   2%  
Order book   507   283   2 747   992   —   —   1 122   2 540   —   —   4 376   3 815  
Segment assets                                           2 525   2 656  
Segment liabilities                                           2 019   2 411  
LTIFR (fatalities)                                         0.24(0) 0.30(0)

Revenue decreased to R3,4 billion (FY2018 H1: R4,7 billion). In a competitive market with high pressure on margins, the platform recorded a break-even in earnings before interest and tax for FY2019 H1 (FY2018 H1: R99 million operating profit). The order book increased to R4,4 billion (FY2018 H1: R3,8 billion).

Large oil and gas projects under execution by this platform will be completed in FY2019 H2. The current financial year has been characterised by the delay in the award of new projects. Tenders for several of these projects are expected to be adjudicated mid to-late calendar 2019. This set of circumstances is expected to have a considerable negative impact on FY2019 revenue and earnings of this platform.

New opportunities in the Liquefied Natural Gas (“LNG”) market in Australia remain limited, although globally, new supply capacity must be developed to meet LNG forecast demand as from 2021/22. The platform is targeting potential LNG projects in the USA, Canada, Mozambique and Papua New Guinea.

Target opportunities are being pursued in complementary growth markets, such as the metal & minerals and infrastructure sectors in Australia, in which this platform has experience and capability.

Recently, the Clough-Salini joint venture was selected as the preferred tenderer for the civil work packages on the multi-billion dollar Snowy 2.0 project in Australia. Clough has a 35% share in the joint venture. Formal award of this project is expected during FY2019 H2. The platform also secured the AU$130 million BHP Billiton Ore Handling Plant project in Australia. The project scope includes structural, mechanical, piping, electrical and instrumentation work, as well as interconnecting conveyors and transfer stations. These two projects are expected to contribute towards earnings in FY2020.


R millions   Africa       Australasia       The Americas       Total  
December   2018      2017      2018      2017      2018      2017      2018      2017 
Revenue   1 340      1 874      1 378      926      2 231      1 325      4 949      4 125 
Operating profit   107      101      77      70      162      68      346      239 
Margin (%) 8%      5%      6%      8%      7%      5%      7%      6% 
Order book   12 177      9 307      4 627      2 694      8 866      3 287      25 670      15 288 
Segment assets   835      1 101      1 423      977      2 523      1 572      4 781      3 650 
Segment liabilities   883      999      740      331      1 079      433      2 702      1 763 
LTIFR (fatalities) 2.14(0)     2.47(0)     0.00(0)     3.29(1)     0.00(0)     1.89(0)     1.08(0)     2.51(1)

This global business is performing extremely well and continues to experience increasing demand for its services. Commodity prices in general have increased and there is a positive change in sentiment towards investment in the industry. Revenue and operating profit increased to R4,9 billion (FY2018 H1: R4,1 billion) and R346 million (FY2018 H1: R239 million) respectively. The platform order book increased to R25,7 billion (FY2018 H1: R15,3 billion), with project awards across all jurisdictions.

The platform is engaged in projects in Australia, Indonesia, Mongolia, the USA, Canada, Mexico, South Africa and Zambia. Current projects include 18 vertical shaft sinking and equipping projects, 21 decline shaft and mine development projects, 8 contract mining projects and 13 support and construction services projects. The platform also has 37 raise drilling machines deployed in various locations across the globe.

Its global reach, broad range of services and reputation for safe and successful project delivery, has positioned the platform favourably to capitalise on the underground mining market’s large project investment pipeline. It is expected that the platform will continue to make a significant contribution to Group earnings.


R millions  Power1  Water  Oil & Gas  Electrical &
& Other 
December  2018  2017  2018  2017  2018   2017  2018 2017  2018   2017  2018  2017  
Revenue  1 143  2 358  14  26  231   178   20  81  —   —   1 408   2 643  
Operating profit/(loss) 131  150  (79) (19) 11  (55) (98) 3   51  
Margin (%) 11%  6%  7%  27%  (34%) (11%) 25%  14%  —   —   —   2%  
Order book  968  2 387  —  —  21   287   23  592   —   1 585   2 697  
Segment assets                                775   1 438  
Segment liabilities                                873   1 039  
LTIFR (fatalities)                               0.24(0) 0.40(0)

1 All power sector projects, including Power Programme (Medupi & Kusile).

Revenue, operating profit and order book decreased to R1,4 billion (FY2018 H1: R2,6 billion), R3 million (FY2018 H1: R51 million) and R1,6 billion (FY2018 H1: R2,7 billion) respectively. The platform has one loss making project which will be completed in FY2019.

The platform’s scope of work on the Medupi power station has been completed and its work on the Kusile power station will continue into FY2020. For several years platform earnings were underpinned by the contribution from these two projects. The lack of meaningful work to replace Medupi and Kusile will result in reduced platform revenue and earnings.

The Baseload Coal Independent Power Producer Procurement Programme in South Africa continues to be delayed. As a result, the platform is targeting opportunities in other sectors of the power market, such as power plant repair and maintenance work in South Africa, as well as high voltage transmission infrastructure projects in South Africa and sub-Saharan Africa. Several tenders have been submitted, although adjudication is not expected imminently.

Investment in the local water sector continues to be limited and fragmented, notwithstanding increasing pressure to upgrade dysfunctional municipal wastewater treatment plants.

Two projects were recently secured in complementary markets, at a combined value of R600 million; work on a sulphur dioxide abatement facility for Anglo Platinum and the erection of a recovery boiler for Sappi. These were two of the larger project opportunities available, which is indicative of current market conditions.


The Group’s investment in the Bombela Concession Company yielded earnings of R114 million (FY2018 H1: R139 million). FY2018 H1 included a one-off fair value gain of R25 million following an amendment in the operating company fee structure, which resulted in a reduction in the fee payable to the operator.


R millions   Bombela
    Middle East       Total  
December   2018       2017       2018       2017       2018       2017  
Revenue   —       —       66       347       66       347  
Operating profit/(loss) 114       139       11       (67)      125       72  
Margin (%) —       —       17%       (19%)     189%       21%  
Order book   —       —       46       267       46       267  
Segment assets   1 295       1 376       1 206       1 577       2 501       2 953  
Segment liabilities   361       32       1 295       1 367       1 656       1 399  


In FY2016 the Board decided to close the business in the Middle East. Due to exchange rate movements, this business recorded a half-year marginal operating profit of R11 million (FY2018 H1: R67 million operating loss). Takeover certificates for the final four projects now completed should be received by end-April 2019. The Dubai Airport arbitration panel is expected to make its award by 31 March 2019.


R millions  I&B Businesses
& Other2
Clough Properties  Genrec Engineering  Total 
December  2018  2017  2018  2017  2018  2017  2018  2017 
Revenue  —  145  —  45  189  45  337 
Operating loss  (24) (43) (1) (1) (12) (90) (37) (134)

2 Includes Construction Products Africa.


The operating loss from discontinued operations for the six months was R37 million (FY2018 H1: R134 million).


The Group’s LTIFR remains industry leading at 0.63 (FY2018 H1: 1.19). No fatal injuries occurred. We remain firm in the belief that Zero Harm is possible, notwithstanding the risk conditions in which projects are being built.


Uncertified revenue decreased to R650 million (FY2018: R1,3 billion). This reduction includes an adjustment following the implementation of the new revenue recognition standard, IFRS 15. In terms of IFRS 15, revenue can only be recognised to the extent that it is “highly probable” that a significant reversal will not occur in future. This new standard increases the threshold for revenue recognition, as the previous threshold was “probable”. The total adjustment to uncertified revenue and revenue previously recognised, reflected as an adjustment to equity, came to R1,1 billion. The Group remains confident that all uncertified revenue and revenue previously recorded as such, will be recognised once attendant commercial matters have been settled.


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 Inquiry has been concluded and it is expected that the presiding officer will submit his report to the National Director of Public Prosecution, by April 2019.


The Underground Mining platform is operating in a buoyant market and is well positioned to achieve strong growth over the next few years. The Oil & Gas and Power & Water platforms continue to face challenging market conditions, with low levels of client investment and new projects experiencing delays and deferrals. Globally, the oil and gas market is showing definite signs of recovery. Opportunities are being pursued in selected complementary market segments, which mitigates the impact of down cycles in core market segments.

The Group is committed to drive sustainable growth and remains confident that its growth plans over the medium term are achievable, factoring in the constraints of current market dynamics.

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

Daniël Grobler
Group Financial Director


6 March 2019

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

The Standard Bank of South Africa Limited

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

L Kok

^ Australian
* Independent non-executive
# The operating performance information disclosed has been extracted from the Group’s operational reporting systems. The Corporate & Properties segment has been excluded from the operational narrative. Unless otherwise noted, all comparisons are to the Group’s performance as at and for the six months ended 31 December 2017.