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2013 dbACCESS SOUTH AFRICA CONFERENCE
CREATING VALUE THROUGH A NEW STRATEGIC FUTURE
RECOVERY & GROWTH
19 & 20 June 2013
CREATING VALUE THROUGH A NEW STRATEGIC FUTURE
Safety Performance
Overview, Historical
Performance & Capabilities
Order Book andMarket Prospects
Key Investment Margins &
Aspirations
2RECOVERY & GROWTH
Market Concerns StrategyPhase 1 : FY12
StrategyPhase 2 : FY13/14
StrategyPhase 3 : FY15
and Beyond
4.65
3.05
2.442.86 3.00
3.50
4.00
4.50
5.00
10
12
14
16
18
SIX MONTHS TO 31 DECEMBER 2012
3RECOVERY & GROWTH
10 11 16 9 9 12 4 0
2.07
1.281.14
0.85
0.00
0.50
1.00
1.50
2.00
2.50
0
2
4
6
8
10
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 2013 H1
Fatalities L.T.I.F.R. (per 1 million man hours) Target L.T.I.F.R.
1902 TO PRESENT – A PROUD HERITAGE
1902 James Stewart arrives in South Africa and together with John Murray forms Murray & Stewart
1920s Douglas Murray, John Murray’s son, meets Andrew and Douglas Roberts while studying civil engineering
1951Roberts Construction Holdings lists on the Johannesburg Stock Exchange
1970sMurray & Roberts starts diversifying its fields of interest, moves into different industries and defines itself as anindustrial holding company
1990sMurray & Roberts commits to its major markets in South Africa and remains a highly diversified industrial Group
2011 –A three year Recovery & Growth strategy is launched and Murray & Roberts commits to the delivery of infrastructure to enable economic and social development in a sustainable way
4RECOVERY & GROWTH
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
1906John Murray buys out James Stewart and continues trading as Murray & Stewart
1934 Douglas Murray and Douglas Roberts enter into a partnership and form Roberts Construction
1967Murray & Stewart merges with Roberts Construction to form Murray &Roberts under the chairmanship ofDouglas Roberts
1980’sThe group’s activities in the field of process engineering, project management and design continues to develop
2000 Murray & Roberts undergoes a fundamental strategic change and defines itself as a group of world-class companies with a focus on the construction economies of the developing world
a sustainable way
MARKET VOLATILITY
1 – Global Financial Crisis
2 – New Leadership
3 – Rights Issue
5RECOVERY & GROWTH
• >2005 - The Group experienced significant growth in its order book and share price up until the Global Financial Crisis
• 2009 - Deepening GFC brings volatility to the Group’s order book (down 27% YoY), impacting capital projects, primarily
in Dubai and the global commodity resources sector
• >2009 - Post-GFC the Group encountered significant challenges mainly on three major projects: Gautrain Rapid Rail,
Dubai International Airport and GPMOF, highlighting profitability and liquidity concerns
• 2011 - New Group leadership is appointed and a three year Recovery & Growth plan is developed
EngineeringAfrica
Construction Africaand Middle East
Companies Geography Segments Value chain Contracts**• MUR Construction
• MUR Marine• MUR Middle East• Concessions• Tolcon
• REGIONAL- Africa- Middle East
• Metals & Minerals(surface)
• Energy,Industrial• Infrastructure • Building
• Project Dev. & Design• Planning and Eng.• Construction works• Operations • Maintenance
104
• MUR Projects• Wade Walker• Concor Engineering• Genrec
• REGIONAL- Africa
• Metals & Minerals
• Energy (Oil & Gas, Power)
• Industrial
• Project Dev. & Design • Planning and Eng.• Construction works• Maintenance
67
6RECOVERY & GROWTH
Construction Australasia Oil
& Gas and Minerals
Construction Global Underground Mining
• MUR Cementation• Cementation Canada• RUC Cementation• Cementation Sud Am.
• INTERNATIONAL- Africa- South East Asia- Australasia- Americas
• Metals & Minerals
• Project Dev. & Design• Planning and Eng.• Construction works• Operations
67
• Clough • INTERNATIONAL- Australasia- South East Asia- Africa
• Industrial• Metals & Minerals(surface)
• Energy (Oil & Gas)
• Project Dev. & Design• Planning and Eng.• Construction works• Maintenance
59
• Industrial
•
Contracts: As at April 2013
Construction Africa and Middle East (Regional Platform)
7RECOVERY & GROWTH
• Project: Portside• Location: Cape Town, South Africa• Client: Eris Property Group and Old Mutual Property• Capability: Building a AAA-grade commercial office t ower
which will be Cape Town’s tallest building
• Project: Medupi Power Station• Location: Lephalale, South Africa• Client: Eskom and Hitachi Power Africa• Capability: Power generation – mechanical, electrical and
civil construction, structural steel fabrication,erection and mechanical installation
Engineering Africa (Regional Platform)
8RECOVERY & GROWTH
• Project: Pilanesberg Platinum Concentrator• Location: Pilanesberg, South Africa• Client: Boynton Investments (DRA Mineral Projects)• Capability: Detailing, supply, erection of structura l
steelwork, platework sheeting, installation offree issue mechanicals and commissioning
• Project: Hillendale to Fairbreeze Relocation• Location: KwaZulu-Natal, South Africa• Client: Exxaro• Capability: Pre-feasibility and feasibility studies, detailed
logistics, plant layout and engineering, complete new electrical and instrumentation design
Construction Global Underground Mining (International Platform)
9RECOVERY & GROWTH
• Project: Diavik Diamond Mine• Location: Northwest Territories, Canada• Client: Diavik Diamond Mines Inc.• Capability: Underground decline and drift developmen t
• Project: Picadilly Project• Location: New Brunswick, Canada• Client: PotashCorp • Capability: Shaft surface plant, construction manage ment
of surface facilities and engineering and sinking of two 5.5 m diameter shafts
Construction Australasia Oil & Gas and Minerals (International Platform)
10RECOVERY & GROWTH
• Project: Gorgon Downstream LNG• Location: Barrow Island, Western Australia• Client: Kellogg Joint Venture Gorgon (KJVG)• Capability: Front End Engineering Design (FEED),
Engineering, Procurement and ConstructionManagement (EPCM)
• Project: Pluto LNG Jetty• Location: Karratha, Western Australia• Client: Woodside Energy Limited• Capability: Construction of 300m approach LNG jetty
berth, includes a 40 x 50m platform, breasting and mooring dolphins and navigational aids
Order book Rbn
FY Time Distribution
3.2
4.6
0.8
2013
2014
>2014
2.9
3.4
2.8
2013
2014
>2014
Construction Africa and Middle East
Construction Global Underground Mining
Order book % split
SADC Int.
80 20
50 50
Order book Rbn
Dec 2012 Jun 2012
9.0
8.8
8.6
9.1
SIX MONTHS TO 31 DECEMBER 2012PER PLATFORM WITH TIME DISTRIBUTION
11RECOVERY & GROWTH
2.8>2014
6.1
9.0
6.9
2013
2014
>2014
2.1
2.9
2.7
2013
2014
>2014
0.5
0.4
0
2013
2014
>2014
2013: R14.8bn 2014: R20.3bn >2014: R13.2bn
Construction Australasia Oil & Gas and Minerals
EngineeringAfrica
ConstructionProducts Africa
100
100
100
0
0
0
100
100
100
40 60
19.4
6.8
1.3
45.3
22.0
7.7
0.9
48.3
Construction Africa and Middle East
• Will in the short term be marginally profitable• Participation in SA Government’s major infrastructur e development programme
(roads, dams, power stations, railway lines, sea po rts, schools and hospitals)• Well positioned to take advantage of infrastructure opportunities in South Africa
and the rest of Africa (private clients)
Construction Global Underground Mining
• SA mining industry suffered increased industrial ac tion• Ongoing commodity price volatility has increased de mand uncertainty • Despite short to medium term uncertainty, long term commodity demand from
industrialised countries is projected to increase• Based on the commodities outlook will target projec ts in Copper, Platinum, Gold
and Coal sectors• Cementation Africa awarded its single largest proje ct by De Beers valued at >R8
PER PLATFORM
12RECOVERY & GROWTH
• Cementation Africa awarded its single largest proje ct by De Beers valued at >R8 billion (Venetia - not included in December 2012 ord er book)
• Growth in underground mining expected in Australia and Asia Pacific region, as well as in North America, Africa and South America in the medium to long term
Construction Australasia Oil & Gas
and Minerals
• Murray & Roberts has a 62% shareholding in Clough• Strong LNG project capital spend in Australia to co ntinue for at least the next
two years• Significant ongoing capital spend expected in LNG plant asset support and
maintenance for which Clough is very well positione d – a new opportunity• Minimum EBIT margin (ex Forge) FY13 and FY14: 5.5%• Longer term EBIT margin target: 7%
EngineeringAfrica
• Focus on engineering and construction opportunities (petrochemical, power, oil & gas, metals & minerals and industrial) in Sub- Saharan Africa
• Established a presence in the water sector – good opp ortunity• Power programme order book (Medupi & Kusile) has pe rformed well
Criteria Method Range
Margin EBIT Revenue 5% - 7.5%
Gearing Total Interest Bearing DebtOrdinary Shareholders Equity 20% - 25%
Return on Equity (ROE)
Net Profit Attributable to Ordinary ShareholdersAverage Ordinary Shareholders Equity
17.5%through
cycle
13RECOVERY & GROWTH
Return on InvestedCapital Employed (ROICE)
(Taxed EBIT + Income from Associates)Total Capital Employed *
WACC plus
3% - 4%
Free Cash Flow Per Share
Operating Cash Flow – CAPEX + Proceeds on disposal of PPENumber of shares
CashPositive
Return on Net Assets (RONA)
Taxed EBIT + Income from AssociatesTotal Net Assets (Excl Tax and Cash)
18% after Taxed EBIT
Total Shareholders Return (TSHR)
(Increase in share price year on year + Dividend pe r share)Share price (PY)
Relative to others
TBD
For FY2013
MITIGATION PLANS WELL MANAGED
South African Operations • In the short term marginally profitable
Competition Commission• Fine quantum (end June 2013) and the threat of
potential civil claims (?)
Major Claims• Slow resolution of claims and uncertainty about
recoverability of R1.8bn uncertified revenues (Gautrain, Dubai Airport and GPMOF – Dec 2015)
14RECOVERY & GROWTH
(Gautrain, Dubai Airport and GPMOF – Dec 2015)
Gautrain Water Ingress• Risk of potential future cost to address water
ingress issue (8 Nov 2013)
South African Labour Situation• Impact of increasing deterioration of labour
situation in South Africa – exposure on major power projects
DSE Claim• Uncertainty about the potential financial impact of
Aveng’s DSE claim against Genrec( no risk to MUR - Hitachi liability, not MUR)
MUR Investment Case • Clarity regarding Strategy and Investment Case
Phase 1 – FY2012 – The Recovery year• No structural strategic changes• Group alignment – Purpose, values & vision• New structures : company and management
• Address liquidity challenge • Operational performance and culture shift• Develop a growth strategy
Phase 2 – FY2013/14 – The two growth years• Return to profitability and resume dividend • Construction and Engineering focus
15RECOVERY & GROWTH
Phase 3 – FY2015 and beyond – A New Strategic Future• Implement the new strategic future
• Return to profitability and resume dividend payments – enhancing shareholder value
• Deliver operational, risk and contract management excellence
• Selective market segment re-positioning in support of long term growth objective
• Construction and Engineering focus• Increase offshore revenue base in support of
long term growth objective• Enhance attraction , retention , performance
and diversity of our people• Develop the New Strategic Future plan
THE RECOVERY YEAR & CURRENT FAMILY PORTRAIT
A Group of world class companies and brands aligned to the same purpose and vision, and guided by the same set of values with a common owne r, Murray & Roberts Holdings Ltd
Stop.Think.Act.24/7: Safety first in everything we do
ConstructionEngineering Construction
Australasia Oil & Construction Global Construction Africa
During the Recovery Year Murray & Roberts has defin ed its position in the market with a ‘Family Portrait’ which includes 5 operating platforms
16RECOVERY & GROWTH
Murray & Roberts Purpose
Delivery of infrastructure to enable economic and s ocial development in a sustainable way
Murray & Roberts Vision
By 2020 we will be the leading diversified engineer ing and construction group
• in the global underground mining market, and• selected emerging market natural resources and infr astructure sectors
Murray & Roberts Values
• Accountability• Care• Respect • Commitment• Integrity
Products AfricaAfricaAustralasia Oil & Gas and Minerals
Underground Miningand Middle East
THE TWO GROWTH YEARS
Continue to build on Phase 1, implement Phase 2 and develop Phase 3
Phase 2 is primarily about disposals and acquisitio ns with the objective to• Enhance shareholder value and resume dividend payme nts• Return focus to core competence of Engineering and Construction• Align portfolio of subsidiary companies with identi fied growth sectors; focus on
energy (oil & gas, power) and mining (metals & mine rals)
First, disposals to be concluded
17RECOVERY & GROWTH
Then, acquisitions to be made
• Project Y• Engineering business in Australia• Offshore mining contracting company
First, disposals to be concluded
• Steel business• UCW• Project X
• Construction Products Platform• Clough’s investment in Forge
STRATEGIC OBJECTIVES - ALL IN PROGRESS
• Enhance shareholder value – rerating and growth beyond
• Resume dividend payments
• Selective market segment re-positioning in support of
18RECOVERY & GROWTH
long term growth objective
• Increase offshore revenue base in support of long t erm growth objective
• Deliver operational, risk and contractual managemen t excellence
• Enhance the attraction, retention, performance and diversity of our people
RETURN TO PROFITABILITY EARNINGS TREND
Recovery Growth
576 522 17884
175 160
-52
64
0
100
200
300
500
1 000
1 500
CentsRm
?
19RECOVERY & GROWTH
576 522
-636 -1 099 -528 -208178
-194
-334
-162
-52
-400
-300
-200
-100
-1 500
-1 000
-500
0
H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013
Attributable earnings Discontinued Diluted EPS (Adjusted for Rights Issue)
AT THE END OF THE GROWTH PHASE
A Group of world class companies and brands aligned to the same purpose and vision, and guided by the same set of values with a common owne r, Murray & Roberts Holdings Ltd
Stop.Think.Act.24/7: Safety first in everything we do
Construction Australasia Oil & Gas and Minerals
Construction Global Underground Mining
Engineering Africa
Construction Africa and Middle East
Murray & Roberts will have re-defined its position in the market with a
‘Family Portrait’ which reflects only 4 operating p latforms
20RECOVERY & GROWTH
Murray & Roberts Purpose
Delivery of infrastructure to enable economic and s ocial development in a sustainable way
Murray & Roberts Vision
By 2020 we will be the leading diversified engineer ing and construction group
• in the global underground mining market, and• selected emerging market natural resources and infr astructure sectors
Murray & Roberts Values
• Accountability• Care• Respect • Commitment• Integrity
Oil & Gas and MineralsUnderground MiningAfricaMiddle East
Group to be restructured accordingly - mainly in an international structure and a regional structure
A business with increasing international focus
IMPLICATIONS FOR THE NEW STRATEGIC FUTURE
Focus on 4 strategic platforms
• Regional : Construction Africa & Middle East; Engineering Africa
• International : Construction Global Underground Mining;
21RECOVERY & GROWTH
• International : Construction Global Underground Mining; Construction Australasia Oil & Gas and Minerals
Primary Growth initiatives• Regional : Market consolidation and organic • International : Strategic Acquisitions and organic
Expecting EBIT from international platforms to grow faster than EBIT from regional platforms
MUR – a leading international engineering and construction Group of companies focussing on selected market sectors underpinned by emerging market demand, presenting growth and long term value to shareholders
2013 dbACCESS SOUTH AFRICA CONFERENCE
CREATING VALUE THROUGH A NEW STRATEGIC FUTURE
RECOVERY & GROWTH
19 & 20 June 2013
CREATING VALUE THROUGH A NEW STRATEGIC FUTURE