Murray & Roberts Holdings Limited (MUR) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Murray & Roberts annual results for the year ended 30 June 2021. Welcome to all our stakeholders on both the call as well as on the webcast. For any of our stakeholders on the call that would like to join via the webcast, all those details is on via link via our homepage, murrob.com. You'll find the link there to the webcast as well as to the presentation and our results. This is a virtual presentation. So we are coming to you from our office in Johannesburg. The format for today's presentation will be our CEO, Henry Laas, he will be starting the presentation for us and then thereafter, Daniël Grobler, who will take us through the financial results. Just in terms of your opportunity to ask questions, there will be an opportunity for questions after the presentation. May I please ask you on the webcast to please log your questions throughout the presentation, so we can have a constructive session towards the end? [Operator Instructions] With that in mind, I'd like to ask our CEO, Henry Laas, to kick off for us. Thank you, Henry.

Thank you very much, Ed, and welcome, ladies and gentlemen, to our results presentation. As Ed has said, this is a virtual presentation. There's a few people in the auditorium. And I really do hope next time this year, when we do the results of financial year 2022, that we can have a full auditorium with investors and shareholders and analysts participating and being present in person. People talk about this new normal under COVID-19, working remotely. To me, there's nothing normal about that. My preference is to have face-to-face engagement with people. And I think that is so important in the business to keep the momentum going and to keep people energized and to feed off each other. So I really do hope that we can get back to normal very soon, where we can have people in this auditorium when we discuss our results. This results presentation, there's a lot of it that's sort of looking in the rearview mirror, talking about the results of the past financial year. And Daniël, our CFO, will take us through that in a lot more detail. What I would like to do as part of my presentation is to shine the light a bit more on the future prospects of Murray & Roberts as a group. And it is creating a lot of excitement amongst the executive team and also the Board of Murray & Roberts. And hopefully, you will share that excitement with us after the presentation. But to start off by putting the results in context, I think it is important to realize that the group has or is recovering from the initial impact of COVID-19. And what you see at the top table on this slide is, over the past 2 years, the 6 months' performance. In financial year 2020, the first half, we had earnings before interest and tax from continuing operations of ZAR 419 million. And then in the second half of that year to June 2020, a material loss of ZAR 436 million. That was when the world basically went into a hard lockdown, where many of our projects were just unable to proceed and we recorded that significant loss. However, in the first 6 months of the current financial year, earnings before interest and tax returned to a profit of ZAR 117 million. And as you can see in the second half of the past financial year to June 2021, a profit of ZAR 423 million, so very much back to the levels where we were pre COVID-19. But with that said, in the year that's just gone by, there was still quite a substantial impact on Murray & Roberts as a group. However, what is important, and this is now if we look forward, is that one forms an opinion and a view about the group's order book. And as you can see on that second table on the slide, as from June 2018, over a 3-year period, every 6 months that we reported our results, there was an increase in the order book. And the order book has now reached a point of ZAR 60.7 billion. And that is an all-time high order book for Murray & Roberts as a group. Never in the past at the reporting date has Murray & Roberts recorded an order book as high as this. So we are extremely excited about the ZAR 60.7 billion order book and more so also because of the quality of this order book. And I will say a little bit more about that later on. So this leaves us with a lot of excitement about the new financial year to June 2022 and beyond because we believe that we are blessed with a very, very good order book that provides us with the opportunity to experience strong revenue growth but also earnings growth in financial year 2022 and beyond. And that growth, ladies and gentlemen, will predominantly come from our 2 multinational businesses, the Energy, Resources & Infrastructure platform and our Mining platform. Just a few words about discontinued operations. We were disappointed with the loss that was reported for discontinued operations in the past year, and I think the investment community as well. But it is important that we give context and that we explain that in a bit more detail. You will recall that the group took a strategic decision way back to withdraw from the civil construction market sector. And that sort of culminated in the sale of the Infrastructure & Building platform, our business in South Africa. And that sale went through in March 2017. The business in the Middle East, which is a building business at that time, was part of the Infrastructure & Building platform. That business in the Middle East was excluded from the sale because the purchaser was not interested to acquire that business, which had liabilities greater than its assets. So since that time, the group was working very hard to extract ourselves from the Middle East. And it took us 4 years to reach that point. So in the discontinued cost that we recorded in the previous financial year, there's cost associated with our final exit from the construction sector per se. In our business that we sold, the Infrastructure & Building business in 2017, there were quite a lot of retained liabilities and assets that we had to manage through. And all of that came to a close in the past financial year. And we have also now reached a point that we think that we've made sufficient progress exiting the Middle East to say that we've achieved a point of closure. We will unpack it a little bit more. But in the Middle East, we had four operating companies: one in Qatar, that company is currently being deregistered; a company in Oman, which is to be deregistered in the immediate future; and then a company in Abu Dhabi; and a company in Dubai. And the group has entered into a process to sell these two companies to a UAE investor. If I say we have entered a process, I am pleased to say that we have actually yesterday signed a sale and purchase agreement. It is still subject to certain regulatory approvals. And we are optimistic that, that will be concluded by the end of September. That will give us then a complete and a final exit from all our historic construction-related businesses. However, the sale of the two companies in the Middle East, the one in Abu Dhabi and the one in Dubai, there are certain potential contingent liabilities that we will retain, and we will manage those diligently. And we don't believe that, that presents any material risk to the group. The table at the bottom of the slide just indicates the extent of the noise that the discontinued operational results introduced to our results every year that we report to the market. In 2019, we had contribution at an EBIT level from continuing operations of ZAR 847 million. But we had a loss of ZAR 146 million in discontinued operations. In the year after that, financial year 2020, that loss turned into a profit. And that profit is essentially due to quite a significant foreign exchange gain that was recorded on intercompany loans into the Middle East. And now in the reporting period to June 2021, as I said, the disappointment is that loss of ZAR 256 million. It is sort of nonrecurring extraordinary type of loss. Of that, I think only about ZAR 120 million was a cash loss, the rest of that not. But Daniël will explain a little bit more where that comes from. But the good news is that we do expect that as of financial year 2023 that the cost impact of discontinued operations will really be insignificant. And as I say from financial year 2023 because due to the sale of the two companies in the current financial year, the one in Abu Dhabi and the one in Dubai, there will be an accounting entry relating to a foreign currency translation reserve, which Daniël will explain a bit better, which will find its way through the income statement as a cost. Important to understand that, that is not a cash -- will not be a cash cost. It will not impact equity, and therefore also, it will not impact the net asset value of the company. It is just a final accounting entry that we have to do. And we will record that in financial year 2022. And for that reason, as for financial year 2023, it will really be only very insignificant numbers that you will see under the discontinued line. So with us being able to say to you today that the impact of discontinued operations, the impact that, that has had on Murray & Roberts as a group over the past number of years, that is now coming to an end, finality. And considering our order book, it really positions us well for good growth in financial year 2022 and beyond. And that is what we are so excited about. There's been quite a few changes on your shareholder register, especially in the top 10 shareholders, and have decided to include this slide just to give some context, especially for our new shareholders, and I would like to welcome them, those that are on this call. We still have ATON as our largest shareholder at 44%, circa 44%. And that shareholding has not changed from the time that ATON acquired the stake in the group. We do meet with them regularly, at least twice a year, where we discuss our results. And we will do so again sometime next week, I think, the call is scheduled to meet with ATON. But there's been quite a lot of movement in the top 10 shareholders, not only local shareholders but also international shareholders. And I want to start off by saying that one point that is very important to understand for all the investors in Murray & Roberts, Murray & Roberts is not a typical construction company. The market and investors associate a construction company with companies that work in the construction sector, predominantly in heavy civil construction building work. That's not the work that we do as Murray & Roberts. We are an engineering and construction company. But the services that we provide are in specific targeted market sectors and not the typical construction sector. We are not a heavy civil construction and building company. We apply our speciality of engineering and construction in certain market sectors. And those market sectors are targeted through specific business platforms. And the business platforms are named after the market sectors. So we've got three business platforms. From an operational point of view, we're structured into three business platforms. And each of these business platforms are managed independently by a CEO and further supporting organogram structures. Energy, Resources & Infrastructure, as I said, the name defines the market sectors which are being targeted by those platforms. The Energy, Resources & Infrastructure is a multinational business. The Mining business is a multinational business. And in the Power, Industrial & Water business, it's a business which is focused on South Africa and sub-Sahara Africa. Our purpose. What is our purpose? What is it that we wish to achieve as an organization? It's not about only making money. I think that is very important, so it is about that as well. But ultimately, our higher purpose that we see as a group is to enable fixed capital investment that support the advancement of sustainable human development. The projects that we build, the assets that we create and the infrastructure that we built have got life expectancies of 20, 30, 50 years-plus. So we're actually building monuments which are there for the benefit of human development for decades to come. Whether it's a mine that we built that will provide employment for people maybe for 30 years-plus or whether it is a renewable energy power plant, which will provide electricity to economies and people for many, many years, these are monuments that we are building to support the advancement of sustainable human development. And as a multinational engineering and construction company, our area of special -- of specialty is that we provide our services across the project life cycle. And that really enables us, through the broad expertise that we do have within the group, that enables us to optimize fixed capital investments. So when we work on projects for clients and when we build new infrastructure, we believe we can optimize that fixed capital investment. And by that, we mean we can deliver these projects at a lower cost and over a shorter duration than our competitors. Importantly, our values within the group, across the group, in all the jurisdictions where we operate, these values are not negotiable. The values of integrity, respect, care, accountability and commitment. And together with our values, we've got an engineering or an operating philosophy of Engineered Excellence, which combined with our values, actually defines the culture of Murray & Roberts as an organization. So this is a bit of background, especially for the new shareholders that have joined Murray & Roberts. And again, welcome to all our new shareholders. Just a bit of detail about each of these business platforms, firstly, Energy, Resources & Infrastructure. As I mentioned, it is a multinational business. It is structured from an operational point of view in three regions, the North America region, EMEA and APAC. And you can see, there's quite a number of offices that we have globally, specifically also in the three regions. And each of these regions are managed by an executive team that is responsible for managing and delivering our plans in each of those regions. This business or this platform has got a market focus globally in the energy sector. So our primary focus area globally for this platform is in energy. But in APAC, we also provide services and specialized infrastructure and in the resources sector, metals and minerals. We are currently busy with developing a strategy to expand our service offering in the U.S. to mirror the service offering that we have in the APAC region, in other words, to expand it also into the metals and minerals space and the specialist infrastructure markets. The order book for this platform was ZAR 37 billion as of the end of June. I mentioned earlier on that the order book as at the end of June for the group at ZAR 60.7 billion was an all-time high for Murray & Roberts as a group. The order book of ZAR 37 billion for this platform, which is trading under the main brand, Clough, that is the highest order book ever recorded by Clough. So that should give you some sense of the success that the group has achieved over time in implementing our strategy, which is currently bearing fruit and starting to manifest in this order book that we have built up over the period of time. If I move on to the Mining platform, again this is a multinational business. We've got three separate regional businesses in the Americas, sub-Sahara Africa and APAC. And you can see globally quite a number of offices, and we trade predominantly under the Cementation brand. The CEO of that platform, Mike da Costa, is in the room. And the focus area for this business is globally, it's underground but also open pit mining. Currently, we don't undertake any open pit mining work. It is part of our aspiration to diversify into open pit mining. We're waiting for the right opportunity. But as far as the underground mining market is concerned, I think it is fair to say that Cementation of this platform is one of the leaders in the world when it comes to underground mining. Our order book at ZAR 23,2 billion. That's up from ZAR 19,4 billion at the end of the previous financial year. We've been carrying a project in that order book to the value of about ZAR 2.5 billion. For a few years, that's a project that was awarded to us. But the client picked up some issues from a financing point of view. And to date, we haven't received a notice to proceed. So what we decided to do in the current financial year is to exclude that order from our order book. So the ZAR 23.2 billion that you see as at the end of June, reflects the growth that we had in the order book. But that's net of that specific project of ZAR 2.5 billion that we have excluded from the order book. We are very excited about this business. This business has for many, many years been a top performer in the group. The past financial year, a reasonable result. But having said that, the Americas really were impacted by prolonged impact of COVID. Our revenue started to come a bit under pressure. Our order book in the Americas started to come a little bit under pressure. So the results from the Americas is not as good as we hoped for. But I can tell you, towards the end of the financial year, we had quite a few sizable awards in the Americas and is part of the reason why the order book closed at ZAR 23.2 billion at the end of the year. Very, very good position for this business. We think that the prospects are very good. People are talking about super-cycling commodities. We talk about a super cycle for a few commodities, those commodities that support the efforts to decarbonize the economies of the world. But although we expect strong growth in financial year 2022, we think that the real opportunity for this platform to perform strongly will be in financial year 2023. And then finally, the third platform in the group is the Power, Industrial & Water business. It is focused on sub-Sahara Africa. It is a platform that does not have the similar opportunity as we have in our two multinational businesses. As I said, the two multinational businesses are really well positioned with a global footprint. And they've got very attractive opportunities to pursue that will translate into earnings growth for the group. The opposite applies to Power, Industrial & Water. It operates in the local market, predominantly South Africa, and we haven't seen investment in the Power, Industrial & Water sector to the extent that is really necessary for this company or for this platform to make a contribution to our results. In the power space, there's a lot happening in the renewable sector and we're well positioned for that. But the companies that will benefit most from the new solar plants or the wind farms that will be built in South Africa are the international companies, which are the technology owners, which are the OEMs. But we will also get our share of the deal. And that will be on the electrical balance of plant and the transmission lines that have to be built to connect those power plants with Eskom's network grid. But this business is struggling for -- and we question the viability from time-to-time. We've been through quite a strong restructuring again in the current financial year. And unfortunately, the project has been completed. That started pre COVID, still suffered from the consequences of that, so not a good result for this business in the past financial year. The Board has debated extensively what the best future for this platform would be. Whether it should be closed, whether it should be reorganized, whether it should be refocused, various, various scenarios were explored. And we decided on one specific scenario, which also meant that we decided to retain this business. And it is essentially there because of the promise that we see with infrastructure spend in South Africa. If you consider the water infrastructure in South Africa, which is in a terrible state, significant investment is required at a municipal level, wastewater treatment plants. And that's the work that we do within this business. So we're readying ourselves for that opportunity. As I said, in the power sector, there's opportunity coming in the renewable space. But we also believe with Eskom, there is significant opportunity. There's a lot of new transmission lines which need to be built for Eskom and we are positioned for that. So yes, it's a business that's struggling. But we believe there's sufficient prospects in the mid-term, mid- to near term, for us to maintain this business for now and to target those opportunities and see how successful we can be. I think this slide puts in contrast the two multinational platforms, Energy, Resources & Infrastructure and Mining in contrast with Power, Industrial & Water, which has got no order book to really talk to. But in Energy, Resources & Infrastructure and Mining collectively, that's where our order book of ZAR 60,7 billion comes from. And as I said, that is a phenomenal order book for a business such as Murray & Roberts. And especially that we were able to achieve this order book as we work ourselves through the past 2 years, impact of COVID. And I don't need to explain to anyone on the call how businesses have been impacted by this pandemic. So to have gotten to a point of ZAR 60.7 billion order book, to us, that is something that we are really very, very proud about. Now I said at the beginning, when you talk about our results, a lot of it is looking in the rearview mirror. And I will leave a lot of that to Daniël. But this slide is a bit looking into the future. And I want to spend some time to take you through the slide, which looks a bit busy, but it's actually a very good slide, not because I designed it, because I think it's a good slide, but let me take you through it. On the left-hand side, you will see the three platforms: Energy Resources & Infrastructure, Mining and Power, Industrial & Water, and to the right of that, what we try to indicate in the columns to the right, a split between the SADC region, which is Southern Africa region, and international, in other words, the order book within that platform, how much of that order book is in the SADC region, how much of that order book is international. And for Energy, Resources & Infrastructure, you will see 100% of that order book is outside of SADC, it's in the international market. In our Mining platform, 49% of the order book is in the international market, 51% is Murray & Roberts Cementation, which is our mining company in South Africa, which is part of the Mining platform. And in Power, Industrial & Water, which is focused only on South Africa, the order book of ZAR 500 million, all of that is in South Africa. The column to the right is just contrasting the June 2020 order book position with June 2021. And you can see how the order book moved -- order book position moved from the previous year-end or the 2020 year ended at June 2021 year-end and totaling up to ZAR 60.7 billion compared to the ZAR 54.2 billion of the previous year. But I think the most important part of this slide is the information which is presented on the far right-hand side of the slide. What we try to depict here is the time distribution of the order book. So if we take the Energy, Resources & Infrastructure platform as an example, that order book of ZAR 37 billion, of that, if you look at the way in which the projects have been scheduled, ZAR 16,8 billion of that revenue should be earned in financial year 2022, ZAR 11,3 billion in financial year 2023 and then the remainder is beyond financial year 2023. So we've done that for each of the three platforms. And just below the totals, you can see we've totaled it up for financial year '22. That gives you ZAR 26,8 billion, financial year 2023, already ZAR 17.5 billion secured and then the balance beyond financial year 2023. Now the significance of this slide is that the financial year to June 2021, we had total revenue in the group of ZAR 21,8 billion. And we have already, at this stage, secured in our current order book, ZAR 26,8 billion for the new financial year. So our expectation is that the revenue for financial year 2022 will comfortably exceed ZAR 30 billion, which would be a 50% improvement on the revenue for the year to June 2021. On the right-hand side, on the bottom, you can see two tables, one for financial year 2019 with totals to the right and one for financial year '20 with totals to the right. And what we try to show there is the same information, that order book distribution, what it was in June 2019, what it was in June 2020 and we now know what it is in June 2021. And you can see, starting off from financial year 2019, at that time, we had ZAR 14 billion secured for financial year 2020. Moving forward to June 2020, we had ZAR 16 billion secured for financial year 2021. And we know the revenue of financial year 2021 was ZAR 21,8 billion or make it ZAR 22 billion, so ZAR 6 billion up on what the order book was at the beginning of that financial year. And today, we have an order book of -- or ZAR 26,8 billion is already secured for financial year to June 2022. It's rounded up to ZAR 27 billion. We should comfortably achieve another ZAR 6 billion on top of that. So we've got an expectation as the executive team within this group that our revenue for the new financial year should exceed ZAR 30 billion. And that is quite exciting. To have that level of revenue and without the burden of discontinued operations really sets us up nicely for the future. I don't want to spend too much time on this slide because it's just presenting the information differently for the order book. And near orders is really work that we have secured, but it hasn't been signed yet because it's subject to commercial close or other reasons that we are not able to take it into the order book yet. But the near orders have got a 99% chance or 95% chance of translating into the order book. Category 1, the standards that we have already submitted that are under adjudication, so there's ZAR 84 billion of tenders that we have submitted and which are under adjudication. And we cannot say that we're going to win all of it because there's also other people in the market that compete with us. And we don't -- we're not always successful with every tender that we submit. But the important thing is that of that ZAR 84 billion, ZAR 30 billion is being negotiated on a sole-source basis, which meaning we're not competing with other competitors on that ZAR 30 billion of work. There's three projects in that space, one is a project in Zimbabwe and two projects in Australia, which collectively make up the ZAR 30 billion, which is in -- on a sole-source basis. So there, we are the preferred bidder. We work with a client to a point that they're ready to proceed with the project. And all three projects are subject to final investment decisions. And we can't time that exactly, but we are confident that some of them will find its way into the order book, if not by December, certainly very early in the second half of the current financial year. So the pipeline, the pipeline, which is defined as near orders Category 1, Category 2 and Category 3, is a healthy pipeline. And we don't go on to the Internet to just look at what investment opportunities are available in the market and put it in the pipeline. The pipeline comprise specific opportunities that we have identified as a group and that we are targeting and which we believe we've got a reasonable chance of securing. So it is a subset, a very small subset of the universe of projects that are out in the market. The pipeline represents the opportunities that we have identified and that we have selected and that we are targeting to secure for the group. Just a word on our safety performance. And I think that by now, the market will know how important safety is for Murray & Roberts as a group. And the slide on the left shows you the improvement in our lost time injury frequency rate. That was as high as 1.3 in 2011. For the past financial year, it was 0.9. But as you can see in that area that's been circled, we have reached a plateau with our lost time injury frequency rate. It's very difficult to improve on this rate because it is almost best-in-class compared to the peer group of companies in the relevant market sectors where we operate. But we are really working very hard to find a way to improve that result further. On the right-hand side, the bar graph on the right-hand side shows you the improvement that we had when it comes to fatal incidents in the group. In 2011, we had 12 fatal incidents, which is very, very regrettable. And that has come down. In 2019, we had 0; in 2020, we had 0. But the 2021 financial year on the 1st of July, the first day of the financial year, one of your employees, Wilfred Moleofi, was injured on site and he passed on following those injuries. And it's a very, very regrettable incident. And again, we want to extend our condolences to Wilfred's family and to his friends. As far as the pandemic is concerned, Murray & Roberts employs about 9,500 people globally, of which about 1,120 to date have been infected by the virus. It's about 11%, 11.5% of all our employees. 98% of those have recovered. But regrettably, 12 of our employees have lost their lives to COVID-19. As far as vaccinations are concerned, it's very, very important that we continue to encourage our employees to be vaccinated. Together with our clients, we make facilities available for employees to be vaccinated. And each and every employee that works for Murray & Roberts anywhere in the world, if he or she wants to be vaccinated, they can be vaccinated. So we are encouraging our people to be vaccinated. We believe it is very, very important that this effort continues globally so that we can get to a point where we can develop some defense against this virus and that life can return to normal and we can start to travel again and visit our operations offshore and have things to return to normality. So vaccinations are very, very important. And we are encouraging our employees to get vaccinated. Before I hand over to Daniël, just a snapshot of the salient features. Revenue, ZAR 21,9 billion, or make it ZAR 22 billion, ZAR 1 billion up on the previous year. Continuing operations moved from a loss of ZAR 17 million to a profit of ZAR 540 million, quite a strong turnaround for continuing operations. And as I mentioned earlier on, the disappointment in the year's result was that the discontinued operation loss of ZAR 250 million, which Daniël will unpack a bit more. But the continuing operations translated into diluted HEPS of ZAR 0.16 compared to a loss of ZAR 0.88 in the prior year. We've spoken about the order book. And we have spoken -- I haven't spoken about it, but I will do so now. Our net cash position is ZAR 0,7 billion compared to a net debt position at the end of the previous financial year of ZAR 0,1 billion, so an ZAR 800 million improvement in our net cash position. So ladies and gentlemen, with that, I would like to hand over to Daniël, And as I said, Daniël is going to unpack the results in a lot more detail. Thank you, Daniël.

So throughout the course of Henry's presentation, he mentioned a number of areas that Daniël will unpack and Daniël will explain, putting a bit of pressure on me to make sure I get that right. But the flip side was explain the number of items I would have explained in a lot more detail. So I guess, on a pressure point, we almost equal out on those points. Now normally, the financial section is a section where a lot of people have interest in. So without further ado, I'm going to jump straight into the income statement. So we've explained revenue is up by ZAR 1 billion. And in further slides, we're going to unpack those segmental elements that make this up, so we'll get into the detail. EBITDA is up considerably compared to prior year, net interest, in line with prior year. But you can still see we've got a very high tax rate. But there's three elements baked into this tax rate that we are managing. The first element is withholding tax. So whenever you have operations that generate profit in parts of the world, like Indonesia, Namibia, Zambia, when you make profit on those jobs, you have to record a withholding tax, even if you don't bring the dividends back. So that contributed a significant amount to the tax. The second element is we have entities where we have overhead costs and we incur costs in those entities, but we don't have sufficient generating income to enable us to create a deferred tax asset and lower the tax rate. Those two alone, of the ZAR 243 million, make up close to ZAR 200 million of ZAR 243 million tax, so -- and the third element is, of course, at the moment, we've got a low earnings base. So if that earnings base was double or 3x what it should have been, the tax rate would have come down. Now we are doing quite a lot of work to lower the tax rate. So Henry mentioned in FY 2022, the tax rate will come down. But it should normalize in the financial year 2023 going forward to a much lower rate than we currently experience in the current year. If we go a bit lower down, we get to discontinued operations. Now I've got a separate slide, where Henry said we need to unpack that. So we'll unpack that on a different slide. Segmental reporting, so we start with the ERI platform, which we now report in a way that we manage the business. Henry mentioned that each of the areas, North America, EMEA as well as APAC, has their own managing directors. They manage their own balance sheets and P&L. So I'm going to start with North America. We can see an increase in revenue and we can see a decrease in order book. That was the execution of the Next Wave project. And I can gladly say that project is currently tender margin and that project is doing well. Henry mentioned that we are exploring opportunities elsewhere in the U.S. to tap and enter into other areas in the U.S. market to announce to expand our services. If we go to EMEA, they were faced not only Brexit but also pandemic challenges. And we expect both of those to dissipate in the near-term future. So we expect an increase in order book as well as in earnings within that sector. APAC, unfortunately, had an overhang of loss-making projects coming over from 2020 to 2021. Those loss-making projects brought operating profit for the current year down. What we do see is an increase in order book from ZAR 23 billion to ZAR 31.5 billion. Now as we stand here today, within the entire ERI platform, there are no more loss-making contracts in the platform and the platform is performing according to tender margins. So we monitor that on a monthly basis, quarterly basis. But as we sit here today, there's no more loss-making projects in this platform. If we go to Mining, a comment Henry made, it's always been a good contributor to the group. If we look at Africa, another very steady performance, strong order book and a strong team. They've delivered good results. In Australia, we can see a reduction in revenue obviously led to a higher idle fleet depreciation. We can, however, again see an increase in order book. Now I can't tell you what the project name is. But the project was a significant project and the revenue basis for that project was a cost-plus, low-risk basis. So we do expect an improved performance in Australia in the new financial year. In the Americas, I think that's probably the area in the business where we carry the biggest impact of COVID. There were project delays. There were projects that were being delayed in terms of being awarded. But that's a very well-run unit. They've got no loss-making projects within that unit. They've managed their overheads. They've managed what they had to do. And as you can see in the order book, they've had some late orders coming in. And we do expect a better performance for this platform in the new financial year. But quite pleasingly, we can see the order book went up -- in the right of the picture, we can see the order book went up from ZAR 19 billion to ZAR 23.2 billion, so a reasonable performance by this platform in the current year. In the PIW sector, Henry said quite a lot in terms of what the Board has deliberated. What I'm not going to do is give an excuse for the results. I just want to give you some context as to why this result came here and what the various segment's challenges were in the current year. So we can see the turnover in power came down from ZAR 1 billion to ZAR 465 million. That's your Medupi and Kusile power plants that were coming to an end. We are still doing some outage work on those projects. The margin on outage works are higher. So we are doing better there. And we were also in a position where we could release some of our risk revisions on the Medupi and Kusile projects once those risks have been managed. And we can still see an order book of ZAR 200 million, which is mainly our outage work for these projects on Medupi and Kusile. Water, you can see in the order book, we've still got Athlone in the order book, it's ZAR 124 million. Now one of the obvious observations is we haven't got enough revenue to generate margin in this segment within PIW to cover overheads. The ZAR 32 million also includes a slight inventory impairment. Henry went into the details as why we're hanging on to this platform. And the hope is that in the whole country, there is a water crisis. And we are expecting, not in the short term but in the medium to longer term that, that sector will turn. Transmission and distribution, we can see a reduction in revenue. There's a number of tenders that were submitted to both [ wind farms ] as well as Eskom. These tenders have not yet been rewarded. Now we are talking about a number of tenders. So once these tenders are awarded, we obviously won't win all of them, but we do expect to win some of them. So we expect this division within the platform to become profit-making again. And traditionally, they've done well. This is a strong division within the platform, and we do think that they will do well going forward. Under other, we've included electrical, instrumental and resources and industrial. We showed a loss in the current year. I can say here that, that loss was predominantly, not everything, but predominantly pandemic-driven. We did a large contract down in Natal. The contract was tendered with Thai welders coming in to do the work, a very labor-intensive project. COVID hit, the Thais had to go back to their country and we had to complete the project with local welders. Now if you compare productivity from Thai welders to local welders, it's like chalk and cheese. And that added a number of not days but months to us completing this project. Hence, we recorded a loss within that platform. So all in all, we ended with a loss of ZAR 175 million and we've still got ZAR 470 million in the order book. In Bombela, when the pandemic hit the country in the prior financial year, we assessed what we think would be the economic impact on the concession going forward. And we said that on a continuous basis, we will continuingly reassess what the pandemic impact will be. So in the current year, two things happened. One is we engaged with an independent consultant to try and give us a forecast as to what the riderships will be and when we will see normality, including vaccinations and a number of other elements coming into play. And we think that during the earlier part of 2023, we will see some normality in the non-airport link. And later on in the year, we'll see some normality being restored in the airport link. The second element was we did submit a business disruption claim. We were successful in that claim. And we utilized proceeds to pay off a huge amount of debt within the concession company. Now by doing that, that allows you to change your model, your interest elements are going down, consultancy fees, a number of elements came down, so we could rerun the number to forecast what dividends we're going to receive. And as you know, we then discount those dividends to get to a fair value adjustment in the current year. In the current year, our fair value adjustment was ZAR 209 million. So discontinued operations, and I'm going to spend a minute more explaining this slide. So in the Middle East, you will see we made a profit of ZAR 120 million in the prior year. A large element of that was linked to foreign exchange gains made on intercompany loans. And those were recycled through the income statement, masking a lot of other things in the income statement. In the current year, we had a loss of ZAR 110 million. Now when we decided that the assets as well as the liabilities of the Middle East entities had to be reclassified as held for sale, according to the accounting standard, you have to fair value them. And a ZAR 17 million loss, which is a noncash loss, was recorded due to the revaluation of these assets and liabilities. The rest of the ZAR 93 million was made up of salary costs, legal costs. And we also had a ZAR 38 million foreign exchange loss recorded in the current year, again, a noncash loss. Under other, as Henry mentioned, when we sold our I&B platform, Infrastructure & Building, we retained a number of liabilities. Over the period of 4 years, we managed those liabilities against Murray & Roberts as best we could. These were the two last liabilities, which we managed to reach a settlement on. Unfortunately, the settlement was higher than what was recorded as provisions in our books and we had to take a final cost in this. Henry did mention that in the next financial year, FY 2022, that when we sell these entities, we are going to record a financial currency translation loss in the income statement. And if you take our balance sheet, you've got assets minus liabilities, that gives you equity. There's a number of elements within equity, which encourage your distributable reserves, in other words, your income statement as well as your foreign currency translation reserve. Accounting-wise, what happens, if you close an entity, if there are any losses or profits in your foreign currency translation reserve, those need to be recycled through your income statement. It's got no impact on the NAV as a company. There's no cash related to the outflow of this. But it's an accounting entry that we have to put through discontinued operations in the new financial year. Once that is done though, we foresee the discontinued operations to be negligent expenses, minimal cash in and outflows. And I think on that line, we will return to normality. On the balance sheet, we can see cash increased from ZAR 3.4 billion to ZAR 3.697 billion. In the current year, we had a foreign exchange loss on cash. So in other words, $10 was worth less than it was in the prior year. So despite that foreign currency loss of about ZAR 440 million, we still ended up with a strong cash balance of ZAR 3.697 billion. We can see under assets and liabilities held for sale, those mainly relate to the Middle East entities. And what we can see, shareholders' equity reduced by ZAR 634 million. That's made up of two elements. One is ZAR 180 million of attributable loss that we recorded and your foreign currency translation reserve sitting equity also reduced by ZAR 440 million. So those two combined got you to the ZAR 634 million. We can see in terms of short-term and long-term debt, we did a good job in repaying about ZAR 500 million in debt. Now a question we do get asked is, "Guys, you've got a big order book. Will you be able to -- working capital -- or use your working capital to finance these new projects?" So just some information as to how we bid these projects, especially in the ERI platform, where the bulk of the projects have been won. We do not bid on projects that are cash negative. And they either have to be cash positive or very cash positive going forward. So what we could see on Snowy, what we could see on Next Wave, once we started those projects, we've been cash positive going forward. So I'm not concerned seeing that the projects coming through in the order book and the projects that we secured, that they will utilize any of the working capital facilities. We've got ample working capital facilities to support the growth of the order book going forward. And as I said, no concerns on those. On my last slide, I just want to give some perspective in terms of how the group looks at our gearing and what we do when we look at gearing. So we divide our debt into corporate debt, self-servicing debt as well as IFRS 16. So the corporate debt is debt that we have to use company profits or claims, monies that we want to reduce the debt and bring that down back to 0. So of that ZAR 3 billion debt, that was ZAR 1.755 billion. Self-servicing debt, it relates mainly to asset-based finance, and there's some Bombela preference share debt in there. So your asset-based finance facilities, I don't care if that figure increases twofold. Those facilities are limited to a specific project. If I'm going to buy an LHD for a project, that project revenue services the debt, not the profit earned on that project. So self-servicing debt, yes, we keep an eye on it, but that's not driving the gearing level for us as a company and as a group. IFRS 16, it's important to bring in. A lot of banks when they develop covenants, they look at IFRS 16 as the new accounting standard, and we add that back when we talk about total debt. So if we look at the bottom of the slide, at the group's gearing ratios, despite the reduction in equity, the corporate debt still maintains a level of 35%. And we're comfortable at a level of 35% to 40% in terms of gearing for corporate debt. So if I include self-servicing debt, it goes up to 50%. If I include IFRS 16, that goes up to 60%. So Henry, I think I've addressed most of the tough questions. Back to you.

Thank you very much, Daniël. Ladies and gentlemen, this brings us towards the end of this presentation. And what I would like to do is just leave you with a few presentation takeaways. First of all, the return to profitability for our continuing operations, you will recall a loss of ZAR 17 million in the prior year, which turned into a profit of ZAR 540 million in the current financial year. There's still impact of COVID in the business, but we believe that initial impact, that we've worked that off now. Significantly is the order book of ZAR 60,7 billion, which is a material order book. And Daniël did refer to working capital and their order book. And I didn't mention it earlier on in the presentation, when it comes to dividends, the Board has resolved not to declare a dividend for the past financial year, essentially because of the order book and potential working capital requirements. So let's see how it goes in financial year 2022, which we're really optimistic about. And we will take a decision around dividends at the end of the next financial year. As you know, we only declared full year dividends and not at the half year stage. A robust cash position, ZAR 1,6 billion unrestricted cash. I must say all that cash, it's predominantly offshore. That's where our cash is. The proposed sale of the two companies in the Middle East, which is now in a regulatory approval process, this brings a close to our woes in discontinued operations that we've been managing for the past 4 years. And it is now a final exit, the final exit from the Infrastructure & Building platform and the remnants of the business that we've sold 4 years ago. So this is quite a milestone for us to have achieved this point. The ERI platform, significant revenues secured for next year, strong pipeline of opportunities. It is well managed. And we're very pleased with the position of that business, equally so for the Mining business. But as I said, although we expect a much improved result in financial year 2022, it's really financial year 2023 where we're going to excel. Is that correct, Mike? Mike says yes. The CEO of that platform, just confirmed 2023 will be the year. Ladies and gentlemen, Power, Industrial & Water, as you can see from the results and what I said earlier on, facing significant challenges but focused on creating a sustainable base for this business. And we are pursuing credible opportunities in renewable energy and with transmission. And then finally, as far as the group is concerned, we've defined our strategy, our new strategic future, way back. We started with its implementation in 2015. We stayed true to our strategy. Part of that was to exit the civil construction and building market, which we did in 2017. We had to retain the business in the Middle East. That has now finally come to a close. But the order book during this period, that we had ups and downs on discontinued operations as we were managing those liabilities that we had, the order book continued to grow every 6 months. And that is reflective of the fruits -- our strategy is starting to bear fruit. So we're very, very pleased about that. And also the markets that we are targeting as a group, these are growth markets. And we know that there's a lot of initiatives underway globally to get the post-pandemic global economy going again. So there will be a lot of investment in the market sectors that we are targeting. In the commodity market, resources market, metals and minerals, there is a strong commodity cycle. So I think we've cleaned out the past as far as discontinued operations are concerned. As Daniël explained, there will be a foreign currency translation reserve accounted for in financial year 2022. Don't be concerned about it, it's purely an accounting thing. It's in the order of ZAR 250 million if you base it on the end of June exchange rate. But it is not cash, it will not impact equity. It's a movement within equity and it will not impact the net asset value. But beyond that, discontinued operations will be insignificant. And we have the strong order book. The pressure is on us, the leadership team at the corporate level but as well as the three operating platforms or business platforms, to make sure that we deliver our projects well. The risk in the group today is project delivery. Our strategy has translated into a strong order book. We now need to deliver this order book profitably and earn good profits as we have tendered. It's a quality order book. We've tendered at the GP level not below 10%, not below 10% at the GP level. So it is a quality order book. And then before you ask questions, let me ask a question. Are the planets starting to align for Murray & Roberts? So I'll leave you with that question, ladies and gentlemen. We're now going to hand over to Ed. Ed will join us in front here, and we will take some questions. And I will just get my mask quickly, Ed.

Henry, Daniël, thank you very much for the presentation. Just one or two questions that's come across the webcast. The first one is please update any kind of further growth plans, including acquisitions in the United States.

Yes. Well, thank you for that question. When we decided on the press release and the disclosure in the press release, I was tempted to put in an acquisition in the U.S.A., but the Board felt that it is premature and we can't say too much about it now, which is correct. But if you ask me the question, are we pursuing an opportunity in the U.S.? The answer is yes, we are. And as I said in my presentation, the objective is to diversify our service offering in the U.S. so that it actually mirrors what we are doing in Australia and the APAC region. It is not going to be a substantial acquisition. If we can get it over the line, I would think it's probably going to be in the order of ZAR 300 million. That is what we are targeting. But it is too early to say whether we will be successful. It is part of our plans and due diligence is underway.

Thank you, Henry. On Bombela, the business interruption claim that was -- that we achieved success through, was that part of the results that has come to you?

No, it's not part of the result. The business disruption claim was capped at a certain amount. It certainly did not cover the extent of the financial impact of the pandemic on the investment. So it was capped. But what we decided to do is to apply the proceeds from that claim to make a down payment on debt. The impact of that is that the interest charge going forward reduced. And because of the interest charge reducing, it kicks out a different cash stream in the financial model. And by doing a DCF on the expected dividends, you come to the fair value that Daniël has explained. So it doesn't feature directly in the results but indirectly as it was utilized to reduce debt, which translated into a reduced interest expense into the future. Was that correct, Daniël?

That's correct. So the cash streams going forward gets turned into dividends and the dividend payments then gets discounted. And by doing that, you've got to [ censure ] the same amount.

Sticking with Bombela, let's assume post COVID and passenger numbers are coming up again, what is a normalized contribution? What can the market expect as a normalized contribution out of the investment?

Historically, we were able to do about ZAR 210 million to ZAR 220 million per annum. Is that correct? As Daniël explained, the impact that we accounted for in the previous financial year, that impact was, on a DCF basis, taken into consideration in the valuation of the investment. So that full impact was recorded in the 2020 financial year, when we had ZAR 119 million, what was it, 1-1-9, I can't remember the exact number. In the past financial year, it was just over ZAR 200 million. So the only way in which that result may be changed a bit is if the actual ridership is more than the forecast ridership, which is currently based on the analysis that an independent consultant did for us, but around about ZAR 200 million sort of a number.