Murray & Roberts

The Group operates in the mining, engineering and construction environment and as a result the revenue is not seasonal in nature but is influenced by the nature of the contracts that are currently in progress. Refer to commentary for a more detailed report on the performance of the different operating platforms within the Group.

The provisional summarised consolidated financial statements for the year ended 30 June 2015 have been prepared in compliance with the Listings Requirements of the JSE Limited, the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (“IFRS”), the minimum requirements of the International Accounting Standards (“IAS”) 34, Interim Financial Reporting, SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee and the Financial Pronouncements as issued by the Financial Reporting Standards Council and the Companies Act, No. 71 of 2008 ("Act"). These summarised consolidated financial statements were compiled under the supervision of Mr AJ Bester (CA)SA, Group financial director and have been audited in terms of Section 29 (1) of the Act.

The accounting policies used in the preparation of these results are in accordance with IFRS and are consistent in all material respects with those used in the audited consolidated financial statements for the year ended 30 June 2014. There have been no new or revised Standards and Interpretations applied in the current financial year.

The external auditors, Deloitte & Touche, have issued their opinion on the Group’s consolidated financial statements for the year ended 30 June 2015. The audit was conducted in accordance with International Standards on Auditing. The auditor responsible for the audit is AJ Zoghby. They have issued an unmodified audit opinion on the consolidated financial statements and provisional summarised consolidated financial statements. These provisional summarised consolidated financial statements have been derived and are consistent in all material respects with the Group’s consolidated financial statements. A copy of their audit reports on the consolidated financial statements and the summarised consolidated financial statements are available for inspection at the Company’s registered office. Any reference to future financial performance included in this announcement has not been audited and reported on by the Group’s external auditors. The auditor’s report does not necessarily report on all of the information contained in this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s engagement they should obtain a copy of that report together with the accompanying financial information from the issuer’s registered office.

The Group disposed of the majority of it’s Tolcon businesses’ assets and liabilities, effective 31 August 2014 for a gross consideration of R186 million (R132 million net of working capital adjustment, transaction costs and other adjustments). Of the total consideration, R112 million was received on the effective date and R20 million was deferred; and is receivable within 24 months from closing date. Earlier payment of the deferred consideration is subject to certain contractual conditions. To date R10 million of the deferred consideration has been received in payments of R5 million each during November 2014 and January 2015 respectively. R10 million of the deferred consideration is still payable within 24 months from closing date; the timing of which is dependent on the meeting of certain contractual obligations.

The disposal excludes the Group’s investment in Bombela Concession Company Proprietary Limited and 23,9% investment in Bombela Operating Company Proprietary Limited.

The agreements for the disposal of the remaining Tolcon businesses, comprising of Cape Point Partnership, Entilini Operations Proprietary Limited and the investment in Entilini Concession Proprietary Limited, are only subject to final conditions precedent.

3.1 Profit from discontinued operations

3.2 Profit before interest and taxation

3.3 Cash flows from discontinued operations include the following:

The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, short term investments, derivatives, accounts receivable and payable and interest bearing borrowings.

6.1 Financial assets designated as fair value through profit or loss

Contingent liabilities relate to disputes, claims and legal proceedings in the ordinary course of business. The Group does not account for any potential contingent liabilities where a back-to-back arrangement exists with clients or subcontractors, and there is a legal right to offset.

Gautrain Water Ingress Dispute

During November 2013, in the dispute between Gauteng Province and Bombela Concession Company (“BCC”), the arbitration panel ruled in favour of Gauteng Province. The Company raised a provision of about R300 million in the prior financial year for its share of potential construction costs to be incurred by the Bombela Civils Joint Venture (“BCJV”) (Murray & Roberts shareholding of 45%). The extent of any other potential financial impact, if any, related to the matter cannot be determined. Various matters between the parties, relating to the arbitration award, remain unresolved will be heard in court. The timing of any future work is uncertain.

The Group disposed of the majority of it’s Tolcon businesses’ assets and liabilities effective on 31 August 2014 for a gross consideration of R186 million (R132 million net of working capital adjustments, transaction costs and other adjustments). Refer to note 3 for additional information.

Murray & Roberts completed the acquisition of 100% of the shares of CH-IV International LLC (“CH-IV”) on 6 August 2014, a boutique engineering company based in the United States of America for a consideration of R57 million. The fair value of the net assets acquired at the date of acquisition was R34 million. The goodwill of R23 million is attributable mainly to the expertise of the CH-IV workforce and accessibility to the contracts in the United States of America engineering market. The goodwill is expected to be deductible for tax purposes.

Murray & Roberts completed the acquisition of 100% of the shares of BWA (Holdings) Limited (“Booth Welsh”) on 4 September 2014, a privately owned engineering services company based in Ayrshire, Scotland for a consideration of R79 million. The fair value of the net liabilities acquired at the date of acquisition was R17 million. The goodwill of R96 million is attributable mainly to the expertise of the Booth Welsh workforce and accessibility to the contracts in the European engineering market. None of the goodwill is expected to be deductible for tax purposes.

Murray & Roberts completed the acquisition of the assets, liabilities and business of Aquamarine Water Treatment (“Aquamarine”) on 1 October 2014, a company that designs, manufactures and installs water treatment solutions, and offers a complete customised solution, including support for and maintenance of its installations for a consideration of R28 million. Of the total consideration, R26 million was paid on the effective date and payment of the remaining R2 million is contingent on certain contractual obligations being satisfied. Should the contractual obligations be satisfied, R1 million is payable during October 2016 and the remaining R1 million is payable during October 2017. The fair value of the net liabilities acquired at the date of acquisition was R1 million. The goodwill of R29 million is attributable mainly to the expertise of Aquamarine’s key management personnel and the synergies expected to be achieved from integrating the company into the Group’s water business. None of the goodwill is expected to be deductible for tax purposes.

Impact of acquisitions on the results of the Group

The profit for the year includes an amount of R23 million (CH-IV: R9 million, Booth Welsh: R12 million and Aquamarine: R2 million) that relates to the businesses acquired during the year. The revenue includes R390 million (CH-IV: R93 million, Booth Welsh: R272 million and Aquamarine: R25 million) in respect of the businesses acquired during the year.

The effect on revenue of the Group from continuing operations would have been R470 million (CH-IV: R98 million, Booth Welsh: R342 million and Aquamarine: R30 million) if businesses had been acquired on 1 July 2014, and the profit for the year from continuing operations would have been R27 million (CH-IV: R10 million, Booth Welsh: R15 million and Aquamarine: R2 million).

In terms of the dividend policy the Board declared a gross dividend of 50 cents per share on 26 August 2015 for the year ended 30 June 2015. The dividends will be declared out of income reserves. The dividend will be subject to dividend tax. The local dividends tax rate is 15% for South African shareholders, except where shareholders are exempt for tax purposes. The gross dividend will be 50 cents and dividend net of dividend tax will be 42,5 cents. The Group’s income tax reference number is 9000203712.

There have been no significant changes to the nature of related party transactions since 30 June 2014.

The directors are not aware of any matter or circumstance arising after the period ended 30 June 2015, not otherwise dealt with in the Group’s annual consolidated financial statements, which significantly affects the financial position at 30 June 2015 or the results of its operations or cash flows for the period then ended.