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

Good afternoon, ladies and gentlemen. Welcome to the Murray & Roberts results for the 6 months ended 31 December 2023. Before we start with the housekeeping and with our CEO and CFO presenting, I'd just like to ask the hotel's HEC rep to give us a quick safety briefing. [ Sean ], please.

Good afternoon, ladies and gentlemen. Welcome to the Radisson Blu Gautrain Hotel. I really hope you enjoy the day with us. I'm not going to take a lot of your time. Just a few important things before you start your event. I think the toilets is the most important. A couple of people ask me when they entered. So as you exit on your right-hand side, there's a hole in the wall, which is called the door. You just walked through there, ladies to the right and gents to the left. We do not have any planned evacuation drills for the day. So if the alarm signed, which will be via a public address system, please evacuate the building. In your case in this room, at the back of the room, there's a door, you calmly and orderly walked through to that door. There's a stair case, and it will lead to the outside of the building, which is the assembly point to the parking where most of you probably drove in this morning, and you can just gather there. This is also a nonsmoking building. So please use the designated smoking areas if you need to smoke, which is on the outside of the building, on the ground level or you can go up to a hotel level. There is a pool deck area, which is on the outside, which you can also use. In the case that you get stuck in a lift, do not stress. We have people 24/7 on call that can come quite quickly and remove you from the lift. We also do not have any planned load shedding for the day, so we should be okay. If we do, we've got to generators and backup. Then lastly, ladies and gentlemen, this is Sandton, this is Johannesburg. There are crime activities in the area. So if you wait for your Uber, rather wait on the inside of the building, let security assist you by identifying your vehicle when it comes closer. So just give them your registration for your Uber, they will let you know and they will help you into your car as well. If you walk in the area to the [indiscernible] area, just hide all of your personal belongings or valuables and walk quickly, do not entertain any people that approach you with any help or assistance. Okay. Hopefully, we'll have a good event free day. Thank you very much. Enjoy.

Thank you, [ Sean ]. You covered 50% of my speech already. So thanks for it. Just from a process this afternoon, our CFO is going to kick the presentation off for us, our CFO, Daniel will follow and Henry will close off the presentation for us. There will be an opportunity for Q&A towards the end of the presentation. We'll start in the room to answer any questions you may have. For any of the stakeholders on the webcast, you'll see that there's a question button, should be on the left side of your screen. We encourage you to please ask questions throughout the presentation and then also towards the end as well. We'll start with questions in the room, and then we'll move to the webcast. I'll facilitate the questions into the room to our CEO and CFO. And then after the presentation, we still have some food and drinks available, and we encourage you to stay for a bit and enjoy yourselves as well. But with that, I'd like to ask Henry to please kick off for us. Thank you, Henry.

Thank you, Ed, and good afternoon, ladies and gentlemen. Thank you for your attendance. Unfortunately, our Chairman, Dr. Suresh Kana, cannot be here with us today. But I am very pleased to introduce Alexandra Muller. She is the Chair of our Audit and Risk Committee; and next to her, Jesmane Boggenpoel, a member of that committee. And on the call, we have Ralph Havenstein, who is the Lead Independent Director. Quite a while ago, I was driving home one evening, and I had the radio on and there were market commentators discussing the results of companies that presented the results on the day. And they were talking about one of the top 40 companies and apparently, it was a very, very long presentation, but they were saying that -- during the presentation, many, many things were discussed, but they hardly touched on the financials. And that was a results presentation. So today, I will be discussing many, many things as well, but I can assure you that Daniel will go through the financials in quite a lot of detail. I think it is important to start off this presentation by looking at Murray & Roberts Group as we see it today. And I need to give you the context again, although we've covered it in a lot of detail over the past 12 to 18 months, we need to talk about what happened to the group and the devastating impact that COVID had on Clough in Australia. So as you know, in December 2022, we deconsolidated Clough and [ RUC ] from our accounts. And we've lost those 2 businesses due to the impact of COVID, specifically on Clough. The background to that is at the time when Murray & Roberts acquired Clough, Clough was a specialist oil and gas company. And in 2014 -- in November 2014, the oil price collapsed. And all of a sudden, investment in the oil and gas sector really became almost nothing, and we had to make a different plan for Clough and decided to change in strategic direction and to move back into the market that it used to serve prior to becoming a specialist oil and gas company. And that happened from about 2015, 2016. And we were quite successful with that strategy over the period 2017, 2018, 2019, we accumulated a very, very strong order book. I think at the time, it was between ZAR 35 million or ZAR 40 billion. And all those projects were secured on a lump sum basis. As we all know, it is a more risky type of commercial model, but it is a risk that you can manage. But it is very difficult to manage that risk if you are impacted by severe circumstances, which are beyond your control. So over 2020 and 2021, was a very difficult period, not only for Murray & Roberts, but for the entire world, as we had to deal with the impact of COVID on families and people, but also on business. Lump sum projects are normally your revenue is earned on a progress basis, on a milestone basis. In other words, you progress your work to a certain point. If you reach that point of progress, you get paid, a milestone payment. If you cannot progress your work as planned, as was the case with us during COVID, 2020 and '21, your milestones move out. You can't progress the work to get to that point where you get payment, but you still have your cost. So all of a sudden, you start to develop quite a significant working capital issue. So we went through 2020 and through 2021, and we were hopeful that we will be able to manage that working capital pressure on the group. But unfortunately, the impact of the supply chain and bottlenecks in supply chain continued for the period beyond COVID. We couldn't get our equipment that were manufactured in other parts of the world into Australia, into the U.S., wherever the project was. And at the end of the day, the working capital pressure became so severe that the directors on the Clough Board had no option but to place the business in voluntary administration. So that had a ripple-on effect. We didn't only lose Clough, we only lose -- we also lost their mining company in Australia called RUC and that has left Murray & Roberts today as a much smaller group compared to what we were prior to COVID. I must say, as far as our client base is concerned, we were making good progress on COVID-related claims, to have these claims considered and discussed and agreed. But it takes time to get that done. You don't settle a claim in 6 months or in 9 months. Many times, it takes more than a year. And unfortunately, before we got to the point, where these claims could have been settled, and we've been compensated for the COVID impact, we couldn't continue trading. So that was quite a devastating blow for Murray & Roberts. So the group today, as we sit here, Murray & Roberts is still an engineering and contracting company, but our market focus is purely underground mining in Africa and the Americas. And then secondly, in sub-Sahara Africa, the renewable energy sector and then also power infrastructure work. That's what we do. But by far, the largest part of the group, it is our mining business, and it is diversified across the northern and southern hemisphere and segmented brand under which we trade is the Cementation brand in the Americas, Cementation Americas is the leading brand in the U.S. or in North America. And then Africa, I think Murray & Roberts Cementation is the leading brand for underground mining contracting. OptiPower, we'll talk a little bit more about it shortly, but OptiPower is the company that we use -- the operating company for servicing the renewable energy market and the power infrastructure markets in sub-Sahara Africa. So something that we had to deal with over the past 18 months, as the earnings base of the group reduced significantly following the loss of Clough and RUC, we had to agree at deleveraging plan with our consortium of South African banks and they asked that we repay all the debt that we had with them. And that debt had to be repaid by the end of June this year, 2023. So a little bit more detail about that. But most of your time over the past 12 months or so was occupied by dealing with the deleveraging plan and implementing the deleveraging plan. From a focus point of view, as the deleveraging is basically done from a focus point of view, the focus is now shifting again to how do we grow this business. And I think our growth is going to be easier obtained in the mining sector, where we are still highly recognized -- actually globally with all international mining houses, we are recognized as the premier underground mining contractor. So that is our focus. And I think from the current base, we are hopeful that we will be able to generate returns that will please our shareholders. So when the deconsolidation of Clough and RUC happened, there were questions asked about the sustainability of Murray & Roberts. And many people were concerned whether this group is sustainable or not. And there were many, many considerations that we had to deal with. And what I have on the screen is just 3 main considerations. Looking historically or pre the deconsolidation of Clough and RUC and then looking forward, first of all, if we look at our balance sheet, the balance sheet was highly geared. At the time that Clough and RUC were still part of the group, the gearing was within acceptable levels. But having lost those 2 businesses, all of a sudden, the balance sheet in South Africa was not good, and it was over geared, and we sat with actually a lot of debt for the size of the company at the time. Question was how then to deal with it. Where we are today, we are rightsizing our capital structure. We've done a lot of work as far as the deleveraging plan is concerned, and we are in the process of putting a new funding structure in place for the group, and that funding structure will be more aligned to what our requirements are for Murray & Roberts at this point in time. Capital allocation, I just need to give you a context there again. Whilst we still had Clough as part of the group, the biggest part of our order book was with Clough. And in Clough, we had 90% of the orders were on a lump sum basis. A lump sum project, as I explained earlier on, you achieve your payments on a milestone basis, which means there's working capital that goes into your project before you reach your next milestone and before you get paid. So it is more capital intensive. And as we had a big proportion of our order book tied up in lump sum projects, the capital allocation in terms of working capital was quite high and the returns that we got on those projects, especially look, thinking what happened during the COVID period, those returns were not there to justify the capital that we allocated to them. Today, the scenario was completely different. Biggest part of your order book, you'll see it later on. The biggest part of the order book is in the mining business. And there, we don't have lump sum projects. So those projects are not as capital intensive as what the lump sum projects are. But OptiPower is still part of the group. It's a much smaller part of the group compared to the mining business, and there, we do lump sum projects. You cannot undertake any work in the renewable energy space in South Africa, unless you do it on a lump sum basis. That's only commercial model that is available in this market. So we still have lump sum work. It is on OptiPower, but it is significantly less than what we had previously. So capital allocation also be a lot more effective going forward. And then we had an operating structure within the business. and we had an overhead structure within the business, which was appropriate for the business at the time. But following the loss of Clough and RUC, we had to do something about it. And also with a view to enhance our profitability. So we performed a detailed cost analyses. We looked at many -- from many, many angles of what we can do and what we can't do. And you will see a little bit later on, significant work has gone into restructuring and reducing the overhead cost base. And I think all of that is positive from a looking forward point of view. But let's talk about the deleveraging plan and the refinancing of Murray & Roberts. When the voluntary administration happened in the deconsolidation of Clough and of RUC, at that time in December 2022, we had ZAR 2 billion of debt in South Africa. And when we talk about debt and the deleveraging, we're talking about the debt that we have with our banks in South Africa. We're not talking about small amounts of debt that we have outside of South Africa in your mining companies. But we had ZAR 2 billion of debt, and that reduced to 30 June last year, end of the previous financial year, that came down to ZAR 1 billion. And as you know, we've sold our investment in the Bombela Concession Company and there was ZAR 1 billion that came through that process and all of it went to the banks and to reduce our South African debt from ZAR 2 billion to ZAR 1 billion. The next milestone in terms of the deleveraging plan was to reduce the debt further in November of last year, and we achieved that milestone. So we renegotiated some of the terms on one of your large mining projects here in South Africa and some cash was released with that process. We sold our investment in a nonstrategic solar distribution company, Aarden Solar and other smaller initiatives. But collectively, those initiatives enabled us to reduce the debt from the ZAR 1 billion to about ZAR 770 million, and that was in November. The next milestone came in January of this year, where we had to reduce our debt further. And that was achieved through our mining company in Canada, Cementation Canada renewing its financing agreements with a Canadian bank. And in terms of that agreement, there was approval that they could pay dividends to Murray & Roberts and to its parent. And that with the purpose of using that cash in support of our deleveraging initiatives in South Africa. So that dividend was received in January as was planned, and the debt was further reduced to circa ZAR 400 million. So the debt that we have in South Africa today is ZAR 400 million. We can quite easily repay this debt over the next 18 months, 2 years. But our banks have requested us to settle that debt by June -- by June of that -- of this year. And we cannot, through normal trading, achieve that. And we don't have assets that we want to sell at this stage. So we're looking at the refinancing process. That remaining debt of ZAR 400 million we are in a refinancing process to refinance it with other financial institutions. And through that, we will settle that debt. And we would have repaid all the debt that we had with our current consortium of banks. And that is by June 2024. Implementing a sustainable capital structure. Obviously, the new funding structure that I've just spoken about, the refinancing that is happening will be aligned to the business's requirements. It's an important requirement. Other than the refinancing of the existing debt, the ZAR 400 million, we need to put proper arrangements in place for working capital, for asset-based finance or additional bonding capacity to enable us to grow the business and to take the opportunity that's in front of us and benefit from that. I must be honest with you, during the past 12, 18 months, we have lost work in South Africa, where we had difficulty in raising the necessary asset-based finance facilities because although we had facilities with our consortium of banks, those facilities were frozen, and we weren't able to draw down on those facilities. And also from a liquidity point of view, as we are deleveraging the business, the cash that becomes available goes towards settling the debt, which is making liquidity tight, very tight at this stage. But by the end of June, once the refinancing have been implemented and the new package is available to us that would address working capital or liquidity, asset-based finance, bonding requirements, we should be able to trade freely again. And that's a very important part of the sustainable capital structure. But we had to do a lot of rationalization and cost cutting. You will now recall previously from an operating point of view, we had 3 operating or business platforms within the group, one of which was the ERI platform, which was essentially Clough. That was lost to the group. But what we decided to do is to do away with the platform structure and that then made at the CEO and CFO positions that we previously had at the platform level, those levels became redundant. And as a result, the mining platform, the CEO and CFO left us at the end of February of this year. OptiPower is the only operating company that will emerge from the previous PIW platform. There will only be OptiPower. And Steve Harrison that's in the room, he used to be the CEO of the PIW platform, and he's been appointed as the MD in OptiPower. So we've got 4 operating companies within Murray & Roberts. The MDs of those operating companies have now been appointed to the Murray & Roberts Limited Board which is now the executive committee of the group. They report directly to myself. And as I said, OptiPower is Steve Harrison, who's in the room. Murray & Roberts Cementation, Japie du Plessis. Japie is also in the room here. Cementation Americas is Eric Smith, I think they're still sleeping at this stage, and so is Steve Kou, who is the MD of TNT. Headcount at the corporate office reduced from 33 to 19. We will achieve that 19 position by June of this year, and we will then move forward with 19 people. And then we also entered into a new lease agreement with our landlord, the building that we're operating from in Bedfordview as you know, it's not owned by Murray & Roberts. It's a multi-tenanted building, and we entered into a new lease agreement, and we reduced the office space to 2.5 floors. And that's part of the reason why we're here today are not doing your results at -- in Bedfordview because the ninth floor has been returned to the landlord. And another reason we hear is analysts and business people mentioned to us, it's a little bit inconvenient for them to travel over to Bedfordview to attend the results presentation there. But the main reason is the facility that we had on the ninth floor is -- had been return to the landlord. So we're here today. Looking at the overhead cost and the headcount, it's about a 40% reduction, which we think is quite significant. And it really is an optimal level considering the size of the group and what we have to do to make sure that we can still manage the group effectively in a responsible way. We talk about the overhead costs. And before we look at the numbers, let me just explain how this slide works. So '22 and '23, those are the actual positions for the financial year '22 and '23. And then I have an estimate for 2024 and an estimate for 2025. And I actually want us to compare the actual for 2022 with the estimate for 2025 because in 2023 and 2024, there were extraordinary costs that we didn't have in '22 and that we won't have in 2025. So for comparison purposes, really, you must look at 2022 and 2025. So the corporate office, the cost there, salaries, external order fees. I won't say that the order fees as a majority of that, [indiscernible] I'm pulling your leg. And then obviously, insurance cost is in there and then costs associated with being a listed company. Group shared services is IT, internal audit, forensic consultants, office rental, external consulting services, mainly commercial and tax and extraordinary fees of fees relating to the work that we had to do for delivering -- developing a deleveraging plan and working with our banks through this period. Now the note at the bottom of the slide says extraordinary cost associated with the voluntary administration in Australia. It's not a direct cost with the voluntary administration because that direct cost is in the discontinued operations. It's the cost really that we had to incur as a consequence of that voluntary administration and that is mainly the deleveraging plan. So between 2023 and 2024, you're looking at about ZAR 70 million of extraordinary fees, which will not be recurring in 2025. Just another point I would like to make, if you want to compare these numbers with what you will see in the booklet. There are 2 other elements of overhead cost, which is not reflected in this slide. The one is, there's a small element of international cost. That international cost will not be in 2025, so we didn't include it in the prior periods as well just for comparing apples with apples. And there's IFRS 2 costs associated with share schemes, which is not really big. But yes, that cost us about ZAR 20 million. So when you look at the estimate for 2024 it's ZAR 161 million on the screen. It's going to be about ZAR 185 million in that range, including the international overhead and the IFRS 2 charge. But as I said, that international cost is not repeating for next year. So next year, you're looking at a total cost of about ZAR 112 million. And if you compare that to the ZAR 169 million, which is a little bit understated because international is not in the ZAR 169 million, but that's a 40% reduction. And so is the head count from 33 down to 19. All right. I did say we will talk a little bit about the results as well, and Daniel will go through the detail. So revenue for the 6-month period is up [indiscernible] what we had last year, and so is earnings, up from ZAR 89 million to ZAR 103 million. And just want to highlight that ZAR 89 million include ZAR 17 million, I think it was, ZAR 17 million, which was associated with our investment, the income associated with the investment that we had in the Bombela Concession Company. So stripping that out it's actually moving from about ZAR 72 million to ZAR 103 million. The change came mainly due to the improvement that we saw in OptiPower. In the prior period, it was loss-making. It's marginally profitable at this stage, our mining business had a small increase in revenue, but they sustained the earnings at the same level that we had last year. The attributable loss, it looks like it's a massive movement from a loss of ZAR 2.5 billion to ZAR 0.1 billion, which is back. But last year, we had all the costs associated with the voluntary administration of Clough and the deconsolidation of Clough and RUC from the group. Diluted continuing HEPS is still in a low position of ZAR 0.16. It is an improvement on what we had last year, and we are confident that, that will, in a new financial year turn into a profit. We still have high interest charges in the group, tax is still high. And we had the extraordinary fees which I've explained associated with our deleveraging plan. None of that will repeat in the next year. And as I said, interest will be down and tax also. And Daniel, when he talks to the detailed financial slides, can maybe give a bit more color, Daniel, around the tax and the interest deductibility, the way in which the debt is now held within the group, how the benefit will be derived. The order book, 14.7%, I would say it's more or less the same level as it was last year. As you know, with an order book and with the business of our nature, you submit tenders. You don't get the tenders that get awarded on a weekly basis, maybe every 2 months or 3 months, you're going to tender, then you get ZAR 1 billion or ZAR 2 billion in to the order book again. So the order book being at ZAR 14.7 billion is really not something to be concerned about. And the debt, Daniel, is here a problem on this slide. Is that all right? I'm discussing here. I was just wondering whether I said something wrong, but everything is okay. Thank you. So the net debt in the group, I'm not talking about the debt in South Africa, I'm talking about the net debt in the group, total debt and total cash, the net position is -- I think it's 248 , ZAR 248 million net debt position. Now I think it'd be fair to say, yes, we don't want to be in a net debt position, but the net debt position of ZAR 248 million is not something to be overly concerned about, taking into consideration it was ZAR 2 billion this time last year. Just a little bit more about where we operate our mining business. As you can see, there's Americas, sub-Sahara Africa and the Asia Pacific region. We've got no activity there. But Cementation Canada operates out of North Bay, Cementation U.S.A. out of Salt Lake City, which is in Utah, and Terra Nova Technologies is in Santee, which is in California. And Murray & Roberts Cementation based in Johannesburg, office in Kitwe in Zambia and in Accra, in Ghana. And our intention is, as soon as this refinancing is behind us, to get a presence again in the Asia Pacific region that we have announced previously that we've established a company there called Cementation APAC. Unfortunately, due to the current financial pressures that we are experiencing, we don't want to be in a position that we need to move working capital into Australia or fund that business until we get it going, but we will do so after the refinancing that's been implemented. We will reestablish our presence in Cementation APAC, and we will start to grow that business from there. Market conditions -- and I think we're going to have still good conditions for our business over the next 5 years. And I'll say that based on the activity that we see in our order book. But when you look at what the headlines in the newspapers, mining companies under pressure, which is correct. Predominantly the platinum sector, which is going through a very difficult period. I think as far as the gold mining companies are concerned, they are starting to invest again. The other day, Harmony announced I think it's a Mponeng mine, Japie, something like a ZAR 7 billion project that they've approved. And we have actually, from a technical point of view, most like the design work we did on a subcontract basis for another business. So we are cautiously optimistic that there might be an opportunity for us at Harmony. The copper region in Zambia is starting to boom again, there's a lot of activity. We've worked in Zambia for a number of years. Over the past couple of years, we haven't done any work in Zambia. But we are hopeful, Japie, when will you get your first project in Zambia?

In the next couple of months.

Within the next couple of months. It's not me, it was Japie. Put you on the spot, my friend. Yes. But we are optimistic about the opportunities in Zambia. And yes, in the U.S. and Canada, especially in Canada, our business in Canada is doing exceptionally well. In the Americas, our operating profit, you'll see a bit later on was down on what it was last year. We had 2 contracts that are complete now. And those contracts are at almost a disproportionate margin relative to the other projects. And they've now been complete, so it's no longer part of the mix. Cementation, Murray & Roberts Cementation in South Africa. We had a tough first 6 month period, specifically on 2 projects. And on one of these projects, the client is in business rescue. So that had an impact on cash. It had an impact on earnings. And hopefully, we can work through that. You're meeting with them on Friday again, Japie. Tomorrow, hopefully, we'll get a resolution on that in the not too far future. The business that we -- the revenue that we're forecasting for the rest of the year is 92% secured. And I think that's a very good percentage. So I'm really confident that what we have in our financial plan from a revenue point of view, we will be able to achieve that revenue. And yes, near orders of ZAR 9.5 billion. I'll talk about that a little bit later and Category 1 opportunities of ZAR 16.6 billion. OptiPower business, Steve's business, based in Johannesburg, operates out of the office in Bedfordview. We've got a small -- very small office in Cape Town. From a market condition point of view, we know that there's a lot of activity in the renewable energy space, and there will be a lot of activity as far as the transmission lines are concerned in South Africa. Our transmission network is not capable to really accommodate all the expansion that is happening in the renewable energy sector. And some of the renewable energy sector projects have been put on hold because there's no capacity, there's no growth capacity. But for some of the reason, Eskom has been slow and it's still very slow to get these projects into the market. I think it is a funding constraint on Eskom side. So we'll see when that happens. But at some stage, there is master spend that will follow on transmission lines. There's more than 1,500 kilometers per year of 400 kv overhead power lines that need to be built in South Africa. So when that will happen, we don't know, but hopefully, it's not too far out. The projects that we have in Steve's business, as I said, it turned a small profit from previously having been in a loss-making position. Profits -- the projects are performing in line with expectation. And there also revenue is 92% secured. A real challenge for us in the renewable energy market at this stage is, you get told that a project will -- financial close will be achieved today. In reality, it's going to be 6 months or 9 months later. So these projects are not moving through the pipeline as quickly as they should. And secondly, the commercial terms that we are -- are really forced on to us. We don't have a choice. There's not much room to negotiate, the commercial terms are onerous. So it is tough and commercial terms are onerous. So it's a lot of opportunity, but it's not an opportunity that comes without risk. So we need to be right away how we develop these projects and how we participate in this sector. The order book on the mining side, ZAR 13.5 billion. As I said, we're happy with that level of order book. In Steve's business, it's a little bit down to [ ZAR 1.2 billion ]. There was quite a large wind farm that had to be in the order book by now already, but the award has moved out by 3 to 4 months. If it was in the order book, it would have been more than ZAR 2 billion, but it's ZAR 1.2 billion. So that is now in new orders, that specific project. And the total order before the group at ZAR 14.7 billion, quite comfortable. I think we can grow it from this level. Quite a busy slide, and I think it's still an important one. So what we try to show here on the first set of information on the far left, as we try to indicate what part of the order book is in the international market and what percentage of the order book is in SADC. And you can see the split there for mining and OptiPower. So overall, 56% of the order book is in the SADC region and 44% is international. And then the column to the right, that's just how the order book moved from -- for those 2 businesses and for the group as a whole between December 2022 and December 2023. And then on the far right-hand side, that is for the following financial years. What is the time distribution of that order book? So for mining, at the end of December, we set ZAR 13.5 billion, of which ZAR 5.1 billion is in 2024. So that will come through in the second half of the year, ZAR 4.7 billion in 2025 and ZAR 3.7 billion after 2025. But looking at all of that, we believe that we will do revenue for the current year, circa ZAR 14 billion. That's where we should be. And as I mentioned earlier on, I think we're getting to a point now that we really would expect to see earnings growth coming through as from FY 2025 revenue and earnings growth. Just on the order book, again, a bit more detail, but I think it's important, especially for people that may be attending for the first time. So the order book is defined as work which has been secured and for which you've got a signed contract and that you are busy executing. New orders is really the preferred bidder. So essentially, it's our work, but we haven't achieved financial close with the client. We haven't signed the agreement yet. The official award hasn't been placed on us. So it's a near order. And in that category, we've got ZAR 10.2 billion worth of projects that with the preferred bidder, which currently is in the process of commercial close and then it moves into the order book. We always say there should be 90% to 95% of that must find its way into the order book. It's unlikely at this very late stage that you cannot achieve commercial closure with the client on a project. But ZAR 10.2 billion is a nice figure for us to have. Category 1 is active tenders that we are tendering. So it is projects that have advanced to a stage that clients want to invest, and they're asking market for tenders, so they can do the adjudication and the project can be built. So there's ZAR 21.2 billion of tender that we are working on, all tenders that we have submitted that is under adjudication. Category 2 is projects that are further into the future. There, we're working on feasibility studies or we do budget estimates for clients. And category 3, are opportunities that we are aware of, but it hasn't progressed to a point that clients are engaging us to do a feasibility or to do with tenders. So they further out. And I'm not concerned, I heard the other day people commenting after our results yesterday. I look at category 1, it's down from ZAR 28 billion to ZAR 21 billion. Look at category 2, it's down from ZAR 77 billion to ZAR 51 billion. I mean that's not analytical approach to all of this. That full ZAR 77.8 billion that we had in June 2023. Those were feasibility studies, budget estimates at that time. It doesn't mean that those projects have disappeared. They're still out there. Some of them might have moved into category 1. But over and above that, there's another ZAR 51 billion of category 2 opportunities. So it's not a linear thing, but it gives you a feel of the volume of work that is out there and it's available to us that we are tendering on. Health and safety. Many times, when you look at graphs, if there's an upward trend, it is good. And when you look at safety, if you have an upward trend, it's not good. So on the left-hand side, you see 1.52, which was our lost time injury frequency rate for the 6-month period to December and that is expressed per million man hours of work. So how many injuries happened in that 6 months expressed per million man hours work, and that's 1.52. It is quite up on last year, but there's a reason for that. In the prior period, we had -- most of the hours worked were worked in Clough, and Clough had a very, very low injury rate. So by stripping those hours out, all of a sudden, the frequency rate increased quite a bit. The number of incidents, we had 1 more incident in the previous 6 months compared to the first 6 months of the prior year. But the 1 incident that -- one of the incidents that we had resulted in 3 injuries. What essentially happened it was out at Bentley Park facilities close to Carletonville, where a subcontractor was doing some sheeting on some of our buildings, and they moved a scaffold from the one side of an overhead line -- power line to the other side, and they got close to the power line and there was a flash. They didn't make contact with the power line, but there was a flash from the power line to the scaffolding and 3 people were busy moving the scaffolding and they were injured. All released from hospital, everything is fine. But that is 1 incident, but 3 injuries. And that's the reason why we see the increase in that rate. And fortunately, we didn't have any fatal incidents in the business. The one in 2023 was an RUC in Australia and our business in South Africa, our mining business in South Africa, how many years without a fatality now?

9 million fatality-free shifts.

9 million fatality-free shifts, but that must be 5 years?

About 6 years.

About 6 years. I mean that's a phenomenal performance in the South African mining sector to have been able to work for so long without a fight or injury. So you'll be -- well done to you and your guys. And then I just want to comment again -- make a comment on the incident which happened, the bus accident that happened late last year. I think it was 17th of September. People were traveling on a public road, traveling to work in a bus. And the bus was involved in a head-on collision. 20 people lost their lives, 17 of them were employees of Murray & Roberts Group. So we just want to recognize that and acknowledge that again. It was a very difficult period for the group, as you can imagine, and for the project as well. But yes, that's something I just wanted to touch on again. So with that said, Daniel, over to you for the detail.

Thanks, Henry. I just want to go back to Slide 8, which is where almost up side to Henry. We talked about net debt of ZAR 0.2 billion versus ZAR 2 billion. Now I've got no glasses, I read that ZAR 0.2 billion versus ZAR 0.2 billion, and that was completely misleading. So that was my mistake. I said to -- two of these numbers, they don't compete, but the numbers are correct. And as where we sit today, the net debt is ZAR 0.2 billion. So luckily, the numbers compute and I understand the numbers. So getting into the segmental analysis, Murray & Roberts today consists of the mining platform and the OptiPower company or platform. OptiPower previously was known as Power, Industrial & Water. The mining platform consists of Africa and the Americas. In terms of earnings, we can see Africa at a consistent revenue base of ZAR 2 billion with almost exactly the same operating loss and operating margin of 2%. Now Henry spoke about the incident at Venetia. Venetia accounts for almost 50% of the margin and the revenue in the Africa platform. So we lost a lot of productivity in the month of September, October, November and December in Africa, which reduced our margins. So I believe that margin can -- up to between 3% to 4% in the next 6 months in the financial year. But the unfortunate incident did cost us in terms of margin in the first 6 months. In the Americas, we can see revenue is almost the same as in the previous 6 months. Henry did mention we had 2 very lucrative contracts that came to an end, and those contracts reduced our margin from 6% to 4%. I believe the 4% can go up again, depending on the size of the contracts and the quality of the contracts we earn going forward. The important element to note going forward, is in Others. So Other is our platform overhead cost, which due to the rightsizing and restructuring of Murray & Roberts, those won't be repeated going forward. So going forward, we will only have an Africa column, Americas column and the overhead structure in the other column will fall away going forward. If we go to OptiPower on the left-hand side, so OptiPower going forward will focus solely on solar transmission distribution. What we've had is we've had contracts in the Power & Industrial elements, Water, Solar & Distribution than Other. Now if we had to combine them into 1 column being Solar & Distribution and other, to [indiscernible] a restatement of our financial statements, which we didn't want to do in this financial year. So in December as well as in June, we're still going to use these categories because we still have contracts in these platforms. Now Power & Industrial in 2022, we can see operating margin of 27%. That has been inflated based on the fact that we renegotiated or settled the power program with Mitsubishi Hitachi. And some of our risk provisions that we raised against Mitsubishi Hitachi, were no longer required, so we could release some of those provisions. So the 27% has been inflated by the provision release in these entities. If you look at Water, it's insignificant, that's coming to an end in the current financial year, Solar Transmission Distribution. The operating margin should be between 5% and 7%. So the projects at the moment, we've got 4, 5 main projects at the moment that are operating against tender margins, so they are operating well. Going forward, that's where the future of this platform lies. That's where the future is seen for this platform, and it is wind turbines, PV plants, transmission and distribution in the energy sector. In terms of Other, we see the overheads came down from ZAR 78 million to ZAR 43 million. Included in the ZAR 43 million is commercial and legal cost. Once we've settled the power program, and there were about -- correct me if I'm wrong, then there were about 22 disputes running where we had to incur legal costs to find each of those disputes. All of those have now been settled. So we do see a reduction in overhead cost from ZAR 78 million to ZAR 43 million. That's a combination of commercial and legal fees as well as overhead costs by coming down to 1 division being OptiPower. In discontinued operations, in Australia in the prior year, we had the deconsolidation of Clough and RUC, and that was both an operating loss so the deconsolidation on the NAV of the company, it was ZAR 2.2 billion. In the current year, we've got ZAR 34 million loss that we incurred. So we were still trying to regain control of the RUC entity for Murray & Roberts. So those costs spill into 2023. That's expected to come to an end in this financial year. In the Middle East, we had -- well, small admin fees and legal costs amounting to ZAR 26 million. Again, as Henry mentioned, by the end of June, we expect it to be exiting the Middle East. So either through a sale of the Middle East companies or other means. But by June, hopefully, the Middle East cost will be coming to an end. In the Other column, we've got a ZAR 94 million revenue and the ZAR 19 million profit. Now to put that into context, we did execute works for Mitsubishi Hitachi from our generic entity and the work was done at a cost basis with no markup. So the ZAR 94 million was revenue we generated, and they paid us the ZAR 94 million. But we also have an investment in the Bombela Civil's joint venture company. And in there, we made certain provisions for enough site costs that we expect to incur, which is 2026 when the contract is -- well, should be handed over to province. Now according to the accounting standards, you can only provide for costs going forward if the liability has incurred. And we made a provision saying that we expect the following cost incurred but we didn't have the current obligation. So we had to release those provisions going forward. And hence, the Other column shows a profit of ZAR 19 million. In the new financial year, we don't expect discontinued operations to contribute significantly towards any losses or profits in FY 2025. So this culminates into an income statement. So the increase in revenue we see is ZAR 666 million and that is in the OptiPower division and mainly in the wind farms that we secured. We see an increase in EBIT. We see a decrease in the interest expense, and that's because we repaid some of the debt with the proceeds of the investment in Bombela. We see a significant reduction in discontinued operations. So attributable loss in the first 6 months is ZAR 95 million. So what can improve in the new financial year? So operational improvement in Cementation Africa and Americas could improve your EBIT. Your net interest expense because as Henry mentioned, in January, we refinanced ZAR 400 million from Canada, repay the debt in South Africa. Canada, we pay interest at 8%. In Africa, we pay interest at 13%. So there's going to be a reduction in interest expense. The interest in Canada is tax deductible, whereas in South Africa, it's not tax deductible. So we do -- we will see a decrease in tax expense going forward. And discontinued operations, we should see reducing very close to 0% in the next financial year. In terms of our balance sheet, so we can see property, plant and equipment. It's hard assets, yellow metal. So it's not intangible. So ZAR 1 billion of that is sitting in Cementation Americas, about ZAR 560 million is sitting in Cementation Africa. So those are hard current assets in terms of cash. Cash equivalents all of that cash at the moment, unfortunately, he's sitting abroad. He's sitting in the Americas. And we're starting to address the imbalance of having all the debt in South Africa and the cash sitting abroad. We do make a comment that because the debt is sitting in South Africa and the cash sitting abroad, it does place a significant liquidity constraints on the SA operations and that is being addressed and that will be the case up until we refinance the loss outstanding debt according to Henry's slide of ZAR 400 million by the end of June. So liquidity in SA is extremely tight, and we're grateful with suppliers and clients working with us in this process to get to refinance them. That should be done at the latest by the end of June. And while then we should restore the imbalance of cash setting abroad versus debt sitting in South Africa. Then shareholders' equity is sitting at ZAR 1.6 billion, ZAR 1.7 billion, that's around ZAR 4 per share. And the share price today -- last I looked to sitting at ZAR 1.32 which is a lot less in the group book value of the share price. The last slide is our gearing level. So we distinguish between corporate debt, self-servicing debt IFRS 16, IFRS 16 for the nonaccountants or operating leases as signing a lease on a building and nonoperating assets, it's a small amount, and the bulk of that sits in the Americas as well as South Africa. Asset-based finance is self-servicing debt. When you buy an asset for a mining contract that is serviced by the mining contract. It's not serviced by operating profit in the contract but it's serviced by a revenue line in the mining contract. So our gearing level in terms of corporate debt, which is the TNT outstanding amounts as well as overdraft and term debt and sundry loans is 53%. So 53% is not out of proportion. Where we stand today, that 53% is reasonable, that's expected to come down. And some of the models that we run shows the SA debt remaining, which is about ZAR 400 million should be repaid by June 2026. So that percentage is expected to come down significantly. Henry, that's very quick detailed financials.

Managing the time very well. I think we've got for the presentation between 12:00 and 1:00. There's 4 minutes to go. And just enough for me to do the presentation takeaways. Thank you, Daniel. So I think you will agree with me that the Group has changed significantly as we are emerging from this challenging period, which followed the deconsolidation of the Australian businesses in December 2022. We've gone through deepwater since then, and we almost have our feedback on dry land again. So we can't wait for that to happen. Again, defining the Group, it's an engineering and contracting services company, focused on underground mining in Africa and the Americas. And then in the renewable energy sector and power infrastructure here in sub-Sahara Africa. Meaningful progress with the implementation of a sustainable capital structure, significant cost reductions as we have shared with you, but also then concluding the debt refinancing by the end of June. And as we said during the presentation, we will end up with financial facilities that are aligned to our business requirements in South Africa. Interest and tax expected to reduce as from next year and no further extraordinary costs. We had ZAR 70 million over the last year and the first 6 months of this year. So it is substantial. That won't happen again. Now discontinued operations, Murray & Roberts has for many, many years, I think -- let me rather put it this way. I think it was difficult for analysts to really gauge what was happening in discontinued operations because we had substantial movements happening in discontinued operations year-on-year. We are hopeful that by the end of this year that the discontinued operations will be out of the system. The Middle East, we're aiming to have the Middle East out of our system by the end of June and the costs associated with that as well. The only remaining matter that we are dealing with is the contingent liability that we've discussed as well previously, where there's a claim that's been brought against Murray & Roberts, which we believe is spurious and we're defending it here in South Africa. So there might be some legal costs associated with that into the next year, but cost directly in the UAE, that will no longer continue. One thing that I just want to emphasize, when we exit the Middle East before the end of June, that's what we're aiming for. Remember, there is that foreign currency translational reserve of about ZAR 480 million that we have to account for. So it will come through the income statement. It's got no cash impact, no impact on equity. It's purely an accounting entry. And if you ask me, I would have loved to not even talk about it, but [indiscernible] our auditor won't allow me to do that. Fortunately, we will have to account for the ZAR 486 million. But as I said, it's a meaningless thing. There's no cash associated with it, and it doesn't impact equity. Growing the business, I mentioned earlier on, is high on our agenda. And if we do so in the mining business, I think it's probably the easiest way for us to do it. And to get back into the APAC region is probably also for us the easiest way to do it. So after the refinancing has been concluded, we will start to pick up momentum to capacitate Cementation APAC and to get traction in that region again. And we believe that there is sufficient market opportunity, considering our order book, considering our pipeline that we should be able to report earnings growth as from the next year, not only in the mining business, but also in OptiPower. And as Daniel has explained, we won't have that big discontinued charge next year again. So it will end in the current financial year, Interest is -- we expect interest to come down. Interest, as Daniel said, is deductible for tax in Canada. Our portion of interest in South Africa, not because we can't raise a tax asset in South Africa against that interest. So all in all, all of those items below earnings before interest and tax should improve, but we also expect earnings before interest and tax from the operations to improve. So ladies and gentlemen, thank you for your patience. I can carry on but it's 1:00. And we've scheduled the presentation for 12:00 to 1:00. We got to take questions now, Ed, you're going to facilitate that for us.

Thank you, Henry. Perhaps like we said at the start of the presentation, let's perhaps start with questions in the room. Sam over there has got a microphone towards the back. I can handle any questions in the front. Can we please ask that you wait for the microphone to get to you before asking the question, just so those on the webcast -- the stakeholders on webcast can listen as well. Any questions in the room for Henry or Daniel?

Marc Ter-Mors from SBG. A question on the restructuring. In the Power, Water, industrials division, the focus on OptiPower, does that imply Murray & Roberts is exiting the water markets in South Africa as well as mechanical and industrial engineering competencies?

Yes. That's exactly what that means. It is unfortunate because we believe that the solution that we had for our water challenges in South Africa is just so unique and so fantastic and knowing what the need is for our type of services. But we can't hold on to resources if there's no projects, and that's the difficulty that we have. Our only activity currently in water is the Organica Water treatment plant in the V&A in Cape Town. And we've got an operating contract on that and the intention is to hand it over to the V&A that let them then operate it. From the mechanical construction point of view. If we get an opportunity that drips with Honey, we will again possibly think about it, but Steve tells me those opportunities are not there. And again, market comes back to the same situation. It is a capacity that you carry within the business, it comes with a cost, but it doesn't give you the return for that cost. So it is unfortunate. But I think it is best for the Group considering your current circumstances.

Follow-up question perhaps North American mining, particularly the engineering and design business, TNT, it sounded like reducing losses and an increase in order book. Can you talk about the profitability outlook for that business?

Yes. TNT, a business that operates out of Santee, it's a logistics company. So what they essentially do, they both large crusher, overland conveyor systems, loading facilities -- load-out facilities, that is what they do. When we acquired the business, I don't remember now when it was 2017, '18, must have been around about there, 2019, 2018. At one stage, it might -- just before we entered COVID, I can't remember now, but ZAR 90 million contribution that we had from that business. And then when COVID came, all the projects just dried up. We didn't have an order book. We made losses, post-COVID, low order book, but some work that we're forecasting or estimating. We can't -- people tell me when you do a results presentation, you're not allowed to do a forecast. So we estimate. Our estimate is that TNT should be profitable this year, around about ZAR 20 million, ZAR 25 million. It had a small loss in the first 6 months, but the order book is starting to come together. It's a fantastic business. It's very -- I think it's one of the few, globally, that can do the type of engineering design and execution of the type of work that OptiPower is doing -- I'm sorry not OptiPower, TNT.