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Business Update, Trading Statement and Cautionary Announcement
MURRAY & ROBERTS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1948/029826/06
JSE Share Code: MUR
ADR Code: MURZY
ISIN: ZAE000073441
("Group" or "Murray & Roberts" or "Company")
SEVENTY-SIXTH ANNUAL GENERAL MEETING, BUSINESS UPDATE, TRADING
STATEMENT AND CAUTIONARY ANNOUNCEMENT
The Group released its FY2024 results on 11 September 2024 and annual integrated report
on 30 September 2024. Full details of the Group's FY2024 results, and annual integrated
report, have also been published on its website at www.murrob.com.
REFLECTION ON FINANCIAL YEAR 2024
The Group achieved an improvement in its financial performance in FY2024, which saw it
transition from a net debt position at the start of the year to a net cash position at the end and
reducing its attributable loss significantly from R3.18 billion in FY2023 to R138 million in
FY2024.
Revenue and earnings before interest and tax from continuing operations increased, despite
the South African operations being severely impacted by liquidity constraints, which resulted
in delays in procurement and project progress, especially at OptiPower's projects in the
renewable energy sector.
Despite these headwinds, the Group's order book expanded, reflecting operational quality and
client trust in the Group's core service offering.
RIGHTSIZING THE GROUP'S COST AND MANAGEMENT STRUCTURES
Following the loss of Clough and RUC in Australia in December 2022, which were both strong
cash contributors, the Group's highly geared balance sheet and high cost structures in South
Africa, relative to the reduced size of the Group, required urgent attention.
Murray & Roberts was required to navigate extreme liquidity constraints in its South African
operations, and considerable effort went into rightsizing its cost structures. The Group's
operating model and management structure was redesigned, and overhead costs were
appropriately reduced across the Company, including in the corporate office.
The business platform operating model was discontinued as it was no longer appropriate in a
truncated Group, thereby removing a layer of executive management and associated costs.
The redesigned structure incorporates four operating companies, each under the leadership
of a managing director reporting directly to the Group CEO. The four managing directors are
also members of the Group's executive committee.
Besides the direct cost savings from its rightsizing, the Group entered into a new lease
agreement for its office in Johannesburg, with effect from September 2024. The Company now
occupies only 50% of the floor space previously rented, which has given rise to a 33% saving
in the annual lease cost.
IMPLEMENTATION OF THE GROUP'S DELEVERAGING PLAN
The board of directors of the Company ("the Board") agreed to a deleveraging plan with the
Group's consortium of South African banks ("Banking Consortium"), which entailed several
measures to repay the debt due to the Banking Consortium, which peaked at approximately
R2 billion in April 2023.
Through the implementation of the deleveraging plan, debt with the Banking Consortium
reduced to R409 million as at 30 June 2024.
As reported on SENS on 30 August 2024, the Board reached an agreement with its Banking
Consortium with regard to the remaining R409 million debt, which provides for the remaining
quantum to be repaid by 31 January 2026.
The Board has further resolved to commence a process of disposing of non-core assets to
meet the Group's obligations to its Banking Consortium and restore liquidity to the Group. If
required, shareholder approval for asset sales will be sought at the appropriate time.
BUSINESS UPDATE
Efforts are continuing to refinance the Group's debt with the Banking Consortium and to raise
a working capital facility for its South African businesses. In the absence of a working capital
facility, the Group continues to experience liquidity constraints, which are having an impact on
its operations, giving rise to unnecessary and substantial losses, especially in OptiPower, as
a result of delays in procurement and project progress. The Group is in discussion with
financial institutions regarding a working capital facility, to mitigate the continuing impact of the
lack of liquidity on its operations.
The Group's mining business in the Americas had a slow start to the new financial year, mainly
due to a later than expected and slow ramp-up of new work in Mexico and the USA.
This business, in joint-venture with Cementation APAC, a new company that was established
in Australia to extend the Group's mining services to the Asia-Pacific region, is actively bidding
for projects in Indonesia, and if successful, is expected to commence work during the final
quarter of the current financial year.
The Group's mining business in South Africa, Murray & Roberts Cementation, has for more
than a decade been working with De Beers on its Venetia project. Recently, De Beers informed
the Group that it is reviewing its operational plans at Venetia Mine, and that a significant portion
of the works under Murray & Roberts Cementation's contract will imminently be descoped.
Negotiations in this regard are underway and the impact on the Group's financial results for
FY2025 are yet to be determined. This impact will be material considering that the contract
represented more than 50 percent of Murray & Roberts Cementation's business in South
Africa.
TRADING STATEMENT AND CAUTIONARY ANNOUNCEMENT
In terms of the Listings Requirements of the JSE Limited ("JSE"), companies are required to
publish a trading statement as soon as they are reasonably certain that the financial results
for the period to be reported on will differ by more than 20% from that of the previous
corresponding period.
Accordingly, shareholders are advised that consolidated earnings per share and headline
earnings per share for the six-month period ending 31 December 2024 is expected to
decrease by at least 20% over the prior corresponding period, as a result of the information
set out in the Business Update paragraph above. The Company is not yet able to provide a
range, but shareholders will be kept informed in this regard as soon as the reasonable
certainty exists in order to provide a further update.
Shareholders are accordingly advised to exercise caution when dealing in the Company's
securities until a further announcement in this regard is made.
PROSPECTS
The Group has significantly reduced its debt with the Banking Consortium and has been
conducting its business in South Africa with constrained working capital facilities for an
extended period, which is unsustainable. It is important for the Group to find a solution for its
constrained liquidity position, and negotiations in this regard are progressing.
Considering the losses in OptiPower, and the descoping of the Venetia contract, the Group is
guiding that its financial results for FY2025 is expected to be at least 20% down on that of the
prior year. There is, however, sufficient opportunity in the global mining sector for the Group's
core mining businesses to do well into the future.
The Group is positioned for substantial new work in relation to the copper mines in Zambia,
which could replace part of the lost Venetia contract revenue, but the timing of this work is
such that it will not have much of an impact on the FY2025 financial results.
The information contained in this announcement has not been reviewed or reported on by the
Company's external auditors.
Bedfordview
5 November 2024
Sponsor: The Standard Bank of South Africa Limited
Date: 05-11-2024 02:15:00
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