· 02 snapshot of the year 04/ pg group overview strategy for recovery & growth 07 structure...

DIAVIK DIAMOND MINE The Diavik Diamond Mine, owned by Rio Tinto and Harry Winston Diamond Corporation, is located in the Northwest Territories of Canada. Our mining business continues to secure significant contracts globally with major international mining houses, on the strength of its innovative application of new methods and experience in challenging locations.

ANNUAL INTEGRATEDREPORT 2012

02 Snapshot of the year

04/PG GROUP OVERVIEWStrategy for Recovery & Growth

07 Structure & capability

08 Overhead initiatives & management capacity

10 Claims on major projects, cash from operations and

sale of discontinued operations

13 Purpose, values & vision

14 Looking to growth

16/PG LEADERSHIP REVIEW

18 Chairman’s statement

20 Group directorate

22 Group chief executive’s and financial director’s report

28 Group executive

30/PG GROUP PERFORMANCE REVIEW34 Stakeholder engagement

36 Social performance

48 Environmental performance

52 Ethical performance

54 Economic performance

Financial performance

56 Statement of value created

58 Ten-year financial review

59 Ratios and statistics

60 Segmental information

62/PG OPERATIONAL PERFORMANCE REVIEW

64 Construction Africa and Middle East

70 Construction Global Underground Mining

76 Construction Australasia Oil & Gas and Minerals

80 Engineering Africa

86 Construction Products Africa

92/PG GOVERNANCE, RISK & REMUNERATION REVIEW94 Governance report

98 Risk management report

106 Remuneration report

112 Board committee reports

124/PG ANNUAL FINANCIAL STATEMENTS

220/PG SHAREHOLDERS’ INFORMATION220 Notice of annual general meeting

232 Shareholders’ diary

232 Administration

233 Form of proxy

236/PG CONTACTS

236 International offices

TABLE OF CONTENTSTHIS REPORT

Our consolidated introductory pages bring together relevant information such as risk and

opportunity, linking it more tightly to strategy.

This year our snapshot of performance is plotted against

our material issues.

We have combined the Group chief executive’s and financial

director’s reports.

This section provide an integrated assessment of how

the Group creates and sustains value for all its

stakeholders.

The remuneration report details the various

enhancements made to the Group’s remuneration policy

during the year, to further comply with the King III

governance principles and best practice.

01

SNAPSHOT OF THE YEAR

02 MURRAY & ROBERTS ANNUAL INTEGRATED REPORT ’12

2MATERIALISSUE

4MATERIALISSUE

GPMOFCommitments on Gorgon Pioneer Materials Offloading Facility discharged at a cash outlay of more than R2 billion

GAUTRAIN Operating Commencement Date 2 achieved

1MATERIALISSUE

LTIFR OF 1.14The lowest rate ever recorded by the Group

TOGETHER TO ZERO HARMDuPont safety initiatives implemented at all operations

FATALITIESRegrettably sustained four fatalities

PROFITABILITY Group more solidly positioned to achieve profitability and returns expected by shareholders

ORDER BOOK R45 BILLION Despite termination of Aquarius agreement and de-scoping of power programme

3MATERIALISSUE

DEBT RESTRUCTURING New debt package of R4,3 billion (previously R3,4 billion) created better alignment between debt repayment tenure and timing of anticipated proceeds of claims

RIGHTS ISSUE Successful conclusion of R2,0 billion oversubscribed rights issue

STRONG YEAR-END NET CASH BALANCE Group’s net cash position improved to R1,2 billion at 30 June 2012

CE & FD REPORT 22/PG


STATEMENT OF VALUE CREATED 56/PG

INVESTMENT MARGIN AND ASPIRATION TARGETS 27/PG


CONSTRUCTION AFRICA AND MIDDLE EAST 64/PG

REPORT OF DIRECTORS 129/PG


SOCIAL PERFORMANCE – HEALTH AND SAFETY 37/PG

SAFETY PERFORMANCE RETURN TO PROFITABILITY

COMPLETION OF CHALLENGING PROJECTS

IMPROVED LIQUIDITY

03

7MATERIALISSUE 8

MATERIALISSUE

6MATERIALISSUE5

MATERIALISSUE

MEDUPI AND KUSILE POWER STATIONSResolution of major commercial issues with Eskom and Hitachi

GPMOF ARBITRATION UNDERWAYFavourable ruling on first three disputes


SOCIAL PERFORMANCE – OUR EMPLOYEES 39/PG

SOCIAL PERFORMANCE – COMMUNITY DEVELOPMENT 45/PG

REMUNERATION REPORT 106/PG

SOCIAL PERFORMANCE – TRANSFORMATION AND LOCAL ECONOMIC DEVELOPMENT 42/PG

SOCIAL PERFORMANCE – COMMUNITY DEVELOPMENT 45/PG


CONSTRUCTION AFRICA AND MIDDLE EAST 64/PG

CHAIRMAN’S REVIEW 18/PG


ABILITY TO IMPLEMENT STRATEGY

SUCCESSFUL IMPLEMENTATION OF RECOVERY PROCESS LARGELY COMPLETE

Growth strategy formulated and approved by the Board in June 2012

RETURN TO PROFITABILITY AS SOON AS PRACTICALLY POSSIBLE

ALIGNING PORTFOLIO OF BUSINESSES WITH MARKET SEGMENTS AND GEOGRAPHY

Expanding offshore revenue base

REDUCED COMMERCIAL RISK

ECONOMIC TRANSFORMATION IN THE SOUTH AFRICAN CONTEXT

BROAD-BASED BLACK ECONOMIC EMPOWERMENT LEVEL 3 contributor status maintained

Preferential procurement as a percentage of total procurement spend increased to 68%

CORPORATE SOCIAL INVESTMENT SPEND OF R14 MILLION

ABILITY TO ATTRACT, DEVELOP AND RETAIN TOP TALENT

EXECUTIVE REMUNERATION LINKED TO STRINGENT PERFORMANCE CONDITIONS, ENSURING GREATER ALIGNMENT WITH SHAREHOLDERS’ EXPECTATIONS

R133 million spent globally on training

Increased focus on leadership development

MEDUPI POWER STATIONMedupi’s Boiler 6 was hydraulically tested in June 2012 and was prepared for its chemical clean during August. The first fire of Boiler 6 is scheduled to take place towards the end of 2012. This is a test fire of the boiler with oil, to be followed by the initial full fire with pulverised coal.

Despite the many potential hazards involved in such mega projects, Murray & Roberts Projects has passed the mark of three million hours worked without any lost time injuries at Medupi and Kusile.


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GROUP OVERVIEW

Strategy for Recovery & Growth

07 Structure & capability

08 Overhead initiatives & management capacity

10Claims on major projects, cash from operations

and sale of discontinued operations

13 Purpose, values & vision

14 Looking to growth

CONSTRUCTION GLOBAL UNDERGROUND MINING

AFRICA // AUSTRALASIA // AMERICASConstruction Global Underground Mining

develops underground mine infrastructure.

Its clients’ commodity exposure include

gold, copper, diamonds, platinum and

various other minerals.

28% OF GROUP TURNOVER IN THE 2012 FINANCIAL YEAR.COMPANIESMURRAY & ROBERTS CEMENTATIONCEMENTATION CANADA & USARUC CEMENTATIONCEMENTATION SUDAMÉRICASEGMENTS Metals & minerals

VALUE CHAIN Planning and engineering

Construction works

Operations and facility management

02CONSTRUCTION AFRICA AND MIDDLE EAST

AFRICA // MIDDLE EASTConstruction Africa and Middle East has

participated in some of the largest and

most significant construction projects in

the two regions. These include the Gautrain

Rapid Rail Link and Cape Town Stadium

in South Africa, as well as the Burj al Arab

Hotel and Dubai International Airport in

the Middle East.

22% OF GROUP TURNOVER IN THE 2012 FINANCIAL YEAR.COMPANIESMURRAY & ROBERTS CONSTRUCTIONMURRAY & ROBERTS MARINEMURRAY & ROBERTS MIDDLE EASTMURRAY & ROBERTS CONCESSIONSTOLCONSEGMENTS Metals & minerals // Industrial //

Infrastructure // Building

VALUE CHAIN Project development and design

Planning and engineering

Construction works

Maintenance and refurbishment

Operations and facility management

01 64/PG 70/PG

STRATEGY FOR RECOVERY & GROWTH

RE-ORGANISE AND RE-ENERGISE CHANGES TO BUSINESS AREAS

100% STRENGTHEN OPERATIONAL LEADERSHIP AND OPERATIONAL FOCUS

REDUCE OVERHEADS

IMPROVE LIQUIDITY AND RESUME DIVIDEND PAYMENT CASH FROM OPERATIONS

CLAIMS ON MAJOR PROJECTS

SALE OF DISCONTINUED OPERATIONS

RE-ALIGN MURRAY & ROBERTS PURPOSE

VISION

VALUES

DEVELOP GROWTH STRATEGY AFRICA ENGAGEMENT STRATEGY

GROWTH THROUGH ACQUISITION

CLOUGH STRATEGY


ENGINEERING AFRICA

AFRICA Engineering Africa, which is focused on

engineering, procurement and construction

management projects, is playing a major

role in building two of the world’s largest

coal-fired power stations, Eskom’s Medupi

and Kusile.

15% OF GROUP TURNOVER IN THE 2012 FINANCIAL YEAR.COMPANIESMURRAY & ROBERTS PROJECTSWADE WALKERCONCOR ENGINEERINGGENREC

SEGMENTS Metals & minerals // Industrial

VALUE CHAIN Project development and design

Planning and engineering

Construction works


04

STRUCTURE & CAPABILITY THE BUSINESSES HAVE BEEN SUCCESSFULLY

REORGANISED INTO FIVE OPERATING PLATFORMS, EACH WITH A CLEARLY DEFINED GEOGRAPHIC, SEGMENTAL

AND VALUE CHAIN FOCUS

CONSTRUCTION AUSTRALASIA OIL & GAS AND MINERALS

AFRICA // SOUTHEAST ASIA // AUSTRALASIAConstruction Australasia Oil & Gas and

Minerals consists of the Group’s direct

(62%) investment in Clough and its indirect

investment in Forge Group Limited. Clough

is an integrated engineering, procurement

and construction contractor focused on oil

and gas in Australia and Southeast Asia.

Forge provides engineering and construction

services to the Australian mining and

minerals-processing sectors.

24% OF GROUP TURNOVER IN THE 2012 FINANCIAL YEAR.COMPANIESCLOUGHFORGE

SEGMENTS Metals & minerals // Industrial

(oil and gas)

VALUE CHAIN Planning and engineering

Construction works


0503 76/PG 80/PG 86/PG

22/PG

CONSTRUCTION PRODUCTS AFRICA

AFRICA Construction Products Africa consists of

a number of companies that manufacture

and supply a range of construction

products. These include asphalt, steel

piping, manufactured concrete products,

building and paving cement and clay

bricks. It also assembles locomotives

and passenger rail cars.

11% OF GROUP TURNOVER IN THE 2012 FINANCIAL YEAR.COMPANIESHALL LONGMOREMURRAY & ROBERTS BUILDING PRODUCTSMUCH ASPHALTROCLAUCWSEGMENTS Metals & minerals // Industrial //

Infrastructure // Building

VALUE CHAIN Construction products

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STRATEGY FOR RECOVERY & GROWTH CONTINUED

MANAGEMENT CAPACITY THE GROUP HAS SUCCESSFULLY INTRODUCED NEW MANAGEMENT CAPACITY INTO THE OPERATING PLATFORMS AND ENHANCED CORPORATE CAPABILITIES WITH A NUMBER OF KEY APPOINTMENTS

NEW PLATFORM CAPACITY

Extensive change and new capacity has been introduced into the platforms. This includes the appointment of:

� Platform executives supported by

financial/commercial executives

� New Engineering Africa and

Construction Africa and Middle

East platform executives

� New chief executive in Clough

CORPORATE CAPABILITIES

In the corporate office, the integrated assurance team has been established under the leadership of Ian Henstock, with appointments of:

� Internal audit executive

� Regulatory compliance executive

� Two commercial executives

� Head of legal

� A corporate finance executive and

head of remuneration and benefits

In addition, the Murray & Roberts Limited Board has been re-organised with responsibilities defined



100%REDUCE OVERHEADS

100%IMPROVE LIQUIDITY AND RESUME DIVIDEND PAYMENT CASH FROM OPERATIONS

CLAIMS ON MAJOR PROJECTS

SALE OF DISCONTINUED OPERATIONS

RE-ALIGN MURRAY & ROBERTS PURPOSE

VISION

VALUES



CLOUGH STRATEGY


22/PG

OVERHEAD INITIATIVES A NUMBER OF OVERHEAD

INITIATIVES WILL CONTRIBUTE TO

COST REDUCTION

ESTIMATED SAVINGS IN EXCESS OF

R60 MILLION A YEAR

ISLE OF MAN CLOSUREFEBRUARY 2012

UK OFFICE CLOSUREJUNE 2013

ENGINEERING AFRICACONSOLIDATIONS

CONSTRUCTION AFRICA AND MIDDLE EAST

CONSOLIDATIONS

CORPORATE OFFICEHEADCOUNT OPTIMISATION

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CASH FROM OPERATIONS THE GROUP COMPLETED THE YEAR

WITH A SUBSTANTIALLY IMPROVED NET

CASH POSITION OF

R1,2 BILLIONCash generated from operations

was adversely impacted as a

consequence of increased losses

at the Gorgon Pioneer Materials

Offloading Facility and closure of

legacy contracts in the Middle East

Successful restructuring

of debt facilities

Successful rights issue





80% CLAIMS ON MAJOR PROJECTS

50% SALE OF DISCONTINUED OPERATIONS

95% RE-ALIGN MURRAY & ROBERTS PURPOSE

VISION

VALUES



CLOUGH STRATEGY


SALE OF DISCONTINUED OPERATIONS MURRAY & ROBERTS HAS SUCCESSFULLY

SOLD IDENTIFIED ASSETS

THE STEEL BUSINESS, INCLUDING CISCO, WAS DISPOSED OF AT BOOK VALUE SUBSEQUENT TO YEAR-END

MURRAY & ROBERTS STEEL BUSINESS

CLAIMS ON MAJOR PROJECTS (REPRESENTING UNCERTIFIED REVENUE OF R2 BILLION)

THREE MAJOR CLAIMS ARE BEING PURSUED, WITH THE COLLECTION OF PROCEEDS BEING A

CHALLENGING AND PROTRACTED PROCESS

GAUTRAIN DELAY AND DISRUPTION CLAIM

� Claims recovery team is making

steady progress

� Resolution through arbitration is

expected by DECEMBER 2014

GORGON PIONEER MATERIALS OFFLOADING FACILITY CLAIMS

� A favourable arbitration ruling on

the first three disputes, related

primarily to scope changes from

the tendered design

� The commercial process

is progressing

� Resolution through arbitration is

expected by DECEMBER 2013

DUBAI INTERNATIONAL AIRPORT CLAIM

� Tribunal has ruled that the ultimate

respondent is Government of Dubai

� UAE supreme court to determine which

government department is actual respondent

� Resolution through arbitration expected by

DECEMBER 2013

±R2 BILLION

CLOUGH MARINE

JOHNSON AND BRC ARABIA

VARIOUS PROPERTIES

RSC EKUSASA MINING

FREYSSINET POSTEN

ALERT STEEL POLOKWANE

MURRAY & ROBERTS ZIMBABWE

GRYPHON LOGISTICS

R0,9 BILLION

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MURRAY & ROBERTS IS A GROUP OF WORLD-CLASS COMPANIES AND BRANDS ALIGNED TO THE SAME

PURPOSE AND VISION, GUIDED BY THE SAME SET OF VALUES WITH A COMMON OWNER,

MURRAY & ROBERTS

HOLDINGS LTD








100% VISION

100% VALUES

100% DEVELOP GROWTH STRATEGY AFRICA ENGAGEMENT STRATEGY


CLOUGH STRATEGY


22/PG

PURPOSE, VISION AND VALUES “...THE LEADERSHIP TEAM REALIGNED EMPLOYEES BY

CREATING A NEW COMMITMENT TO OUR PURPOSE, VISION AND VALUES...”

VALUESCare Integrity Respect Accountability Commitment

PURPOSEDelivery of infrastructure to enable economic and social development in a sustainable way

STOP.THINK: SAFETY FIRST IN EVERYTHING WE DO

01CONSTRUCTION AFRICA AND MIDDLE EAST

02CONSTRUCTION GLOBAL UNDERGROUND MINING

03CONSTRUCTION AUSTRALASIA OIL & GAS AND MINERALS

04ENGINEERING AFRICA

05CONSTRUCTION PRODUCTS AFRICA

VISIONBy 2020 we will be the leading diversified engineering and construction group:

in the global underground mining market, and selected emerging market natural resources and infrastructure sectors

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100% VISION

100% VALUES

100% DEVELOP GROWTH STRATEGY AFRICA ENGAGEMENT STRATEGY

75% GROWTH THROUGH ACQUISITION

100% CLOUGH STRATEGY

100%


LOOKING TO GROWTH THE FINANCIAL YEARS 2013 AND 2014 HAVE

BEEN DEFINED AS MURRAY & ROBERTS’ GROWTH

YEARS WITH KEY OBJECTIVES IN THIS PHASE

GROWTH PHASE OBJECTIVES:

AFRICA ENGAGEMENT STRATEGY

� Organic growth focus in individual

markets from regional hubs

� Presence in Ghana, Zambia and

Mozambique being established

� Africa growth to be accelerated

during the 2013 financial year


� Opportunities identified include

alternative energy and water

� Acquisitions will aim to align

Group asset base with

opportunities to maximise

shareholder value

� Acquisitions being explored in

Construction Global Underground

Mining and Construction

Australasia Oil & Gas and

Minerals

CLOUGH STRATEGY

� Increase strategic alignment

and positioning

� Investigate organic expansion

opportunities

� Enhance synergies with

Murray & Roberts (e.g. Marine)

and look to Africa

� Expand EPCM capacity with

acquisition

01 CONSTRUCTION AFRICA AND MIDDLE EAST

02CONSTRUCTION GLOBAL UNDERGROUND MINING

03CONSTRUCTION AUSTRALASIA OIL & GAS AND MINERALS

04ENGINEERING AFRICA

05CONSTRUCTION PRODUCTS AFRICA


Enhance shareholder value

Resume dividend payments

Selective market segment re-positioning in support of long term growth objective

Increase offshore revenue base in support of long term growth objective

Deliver operational, risk and contractual management excellence

Enhance the attraction, retention, diversity and performance of our people

HISTORICAL FINANCIAL PERFORMANCE

5 YEAR MARKET OUTLOOK

GROWTH OPPORTUNITIES

Due to slow local market and significant project losses, performance has been poor

Local market to recover in the medium to long term with higher growth in certain segments

� Expansion into Africa � Segmental expansion and growth � Select Middle East opportunities

Well executed capitalisation on growth markets and a challenge to maintain growth

Global move from opencast to underground mines and growth in active regions

� Geographic growth – Australia, Africa, Canada, USA and South America

Poor historical results have been followed by steadily improving performance

Strong growth expected in the Australian and South Asia market

� Increase exposure � Segmental expansion

and Southeast Asia growth

Power programme impacted EBIT but recently platform performing well

Growth expected in certain key segments; power, water, mining and operations & maintenance

� Segmental positioning and value chain expansion

Strong contributor to EBIT and revenue but margins and key ratios under pressure

Slow and competitive local market which may pick up on committed government spend

� Exports and new products � Africa expansion

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PORTSIDEMurray & Roberts was awarded the contract for what will be Cape Town’s tallest building. The Portside development will be home to FirstRand Bank and Old Mutual and is scheduled for completion in December 2013. The site occupies the city block between Buitengracht, Hans Strijdom, Bree and Mechau Streets in the financial district on the foreshore.

The design methodology is strongly focused on durability, low maintenance, energy and water efficiency, material resource management and indoor air quality to meet the Green Building Council of South Africa’s specifications for a 4-star building.


LEADERSHIP REVIEW

18 Chairman’s statement

20 Group directorate

22 Group chief executive’s and financial director’s report

28 Group executive

17

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CHAIRMAN’S STATEMENT DEAR STAKEHOLDER source opportunities in their target sectors. Similarly, the Board is

heartened by management’s progress in improving the Group’s

risk-management model and procedures across both the project

portfolio and the various operations.

Whereas the Group suffered 12 fatalities in the previous year, this

reduced to four in the 2012 financial year. Obviously this is four

deaths too many. We deeply regret the loss of life but take heart from

the fact that decisive safety interventions are bearing fruit, especially

when measured in terms of lost time injuries.

The health of our workforce enjoyed particular attention this year

as various initiatives to combat HIV/AIDS, tuberculosis and noise-

induced hearing loss were implemented.

The Group’s term debt was successfully restructured, extending

the average repayment tenure. The success of the rights issue was

another highlight. Its proceeds have been used to reduce the Group’s

debt and improve financial flexibility, while providing adequate funding

for a robust order book.

CREATING SHAREHOLDER VALUEAt the heart of Murray & Roberts’ Recovery & Growth strategy

is the desire of both the Board and management to swiftly restore

shareholder value. While the various restructuring initiatives

implemented in the past year point to the likelihood of this key

objective being achieved soon, regrettably the Board does not

consider it advisable at this stage of the Group’s recovery to declare

a dividend. Shareholders will be updated on the prospects of a

dividend being declared for the next financial year at the time that

interim results are announced in February 2013.

The process of extracting value from our various contract claims,

which represent a total of some R2 billion in uncertified revenue,

is ongoing. By the very nature of the complex processes involved,

however, the successful resolution of significant portions of the

amounts being claimed is unlikely in the short term.

Further to the applications lodged in terms of the Competition

Commission’s (“Commission”) Fast-Track process in April 2011,

the Commission presented unreported projects where previously

unknown transgressions may have occurred. The Group has not yet

reached finality with the Commission regarding these transgressions

and potential penalty relating to historical anti-competitive practices.

The Board continues to set the vision for and commitment to a

morally and ethically sound culture within Murray & Roberts.

While an improvement in the return we deliver to our shareholders is

of paramount importance, we are equally aware that being responsive

to the needs and expectations of all stakeholders is the bedrock of

sustainable value. Murray & Roberts’ contribution to society is not

limited to paying wages, suppliers and taxes. The infrastructure we

A year ago we committed ourselves to a far-reaching recovery process

to lead the Group to a new path of sustainable growth. The past year

has not been without its challenges and disappointments, but I can

confirm that the recovery is well under way and that Murray & Roberts

is far more solidly positioned to achieve the profitability and returns

expected by our shareholders.

Challenges this year included our widening exposure on the Gorgon

Pioneer Materials Offloading Facility (“GPMOF”), a worse than

expected performance from our Middle East construction operation

and a flat South African construction market.

HIGHLIGHTSHowever, there was no shortage of highlights. The work we were

contracted to do on GPMOF and various large projects in the Middle

East has been completed successfully, and the final phase of the

Gautrain Rapid Rail Link was opened to the public. Also, new

contractual arrangements reached in the year mean that the Medupi

civils project will proceed with greater predictability and returns.

The Board is satisfied that

the restructuring of the

Group’s operating

platforms, implemented

towards the end of the

2011 financial year,

has progressed well

and that these are

now appropriately

positioned to

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apply our skills to building is of lasting benefit to the communities in

which we operate, and our investments in skills development and

training improve the lives and employment prospects of thousands.

In South Africa, R115 million was spent this year on training and

development, 74% of that amount on black employees. The training

and development spend includes funding for bursars and graduates,

as well as technical and leadership development.

While Murray & Roberts becomes an increasingly significant

contender in some of the world’s construction and engineering

markets, we remain a proudly South African company. Beyond the

tangible assets we build and the value we seek to create for

shareholders, employees and suppliers, we take great pride in the

contributions we make to society.

BOARD OF DIRECTORSHaving previously decided that the time had come for me to make

way for a fresh perspective at the helm, I agreed to remain as

chairman to oversee the transition to a new executive leadership

team. This I did gladly, believing that continuity was of the greatest

importance at the time. The transition has now been successfully

concluded with an executive team that enjoys the Board’s full trust

and support. As such, I am preparing to vacate the chair and retire

from the Board in March 2013.

The Board has unanimously endorsed Mahlape Sello as my

successor. Mahlape has served on the Board and as a member of

the audit & sustainability committee for three and a half years. She

knows the business intimately, including having a specialist’s insight

into the legal aspects of the claims process. She has consistently

proven herself to be a director of rare dedication and insight, and she

has my full confidence and support during the handover process.

Non-executive director Tony Routledge has indicated his intention to

retire from the Board at the Annual General Meeting in October 2012

after serving for nearly 19 years. Namane Magau, who is approaching

nine years as a non-executive director of Murray & Roberts, also

plans to retire from the Board, as will Sibusiso Sibisi, who wishes to

limit his non-executive directorships to institutions focused on science

and technology. During the year, Alan Knott-Craig resigned to take

up the role of new chief executive of Cell C. My sincere thanks are

extended to all of these directors for their outstanding commitment

and valuable expertise. In June 2012, Thenjiwe Chikane joined the

Board as a non-executive director, member of the audit &

sustainability committee and risk management committee.

Shareholders are reminded that the Annual General Meeting of the

Company will be held on 31 October 2012. The order of business

is set out on pages 220 to 222 in this report.

OUTLOOKThe Group embarks on the new financial year with a generally

buoyant order book, improved liquidity and a management team that

has a well-defined focus on managing risk and on creating long term

value for all of our stakeholders.

As mentioned, our involvement in Eskom’s power build programme

has been put on a firmer footing and will account for a significant

proportion of both the Construction Africa and Middle East and the

Engineering Africa platforms’ income for at least the next three years.

Across the world, economic expectations remain uncertain and

circumstances, particularly in Europe, continue to impact emerging

markets including South Africa. The outlook for commodities is largely

tied to the weakening ability of China and India – as well as some of

the more resilient emerging economies – to maintain growth rates at

least approximating the impressive gains of recent years.

At the time of writing, all indications were that commodity prices in

general were holding up well, and that demand for minerals and

oil & gas would underpin investment in their extraction. In this regard,

the Group’s Construction Global Underground Mining platform, as

well as its oil and gas investments in Australia and the Far East, are

expected to continue contributing meaningfully to revenues and

profits over at least the medium term.

Today, not only does the Group enjoy a wide geographic spread, it is

also succeeding in diversifying into commodities and sectors to which

it and its clients are exposed. All of these factors contribute, I believe,

to a growing confidence in Murray & Roberts’ ability to resume robust

and sustained growth.

Within South Africa, many hopes are now pinned on government

plans, as stated in the Medium Term Expenditure Framework, to

spend some R845 billion on infrastructural development. That this

expenditure is inevitable and much needed is acknowledged by all,

but it remains unclear how and when such a programme will be rolled

out. Whatever the timing and extent of public-sector investment,

Murray & Roberts is well placed and equipped to contribute positively

and significantly to create infrastructure that will hold lasting value for

all South Africans.

I believe the effective implementation of any infrastructural investment

programme and the avoidance of delays, unforeseen over-runs and

fruitless litigation requires a new compact between both the awarding

and contracting partners to design projects that can be delivered

on time, on budget and to maximum benefit. I have no doubt

Murray & Roberts would eagerly participate in any dialogue between

the public sector and the construction and engineering industry

leading to such mutually beneficial outcomes.

While continuing to invest in capacity – most especially in our human

resources – so that we are well positioned for any upturn in demand,

our businesses focused primarily on southern Africa will be tasked

with growing profitable businesses both in their traditional markets and

elsewhere in Africa. The Group continues to pursue opportunities in the

rest of Africa, outside of SADC, with some progress during the year.

Finally, I will take my leave of Murray & Roberts with many fond

memories of outstanding people and an exceptional organisation that

has added value to individuals and communities in South Africa and,

increasingly, to many parts of the world. I have no doubt that the

return to more acceptable financial returns and the sustainable

success of the Group into the future are assured.

at

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ROY ANDERSEN GROUP CHAIRMAN

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GROUP DIRECTORATE

ROY CECIL ANDERSEN (64)CA(SA) CPA (Texas)

INDEPENDENT NON-EXECUTIVE CHAIRMAN

Roy was appointed to the Board in 2003 and became chairman in 2004. He is chairman of the nomination committee, a member of the remuneration & human resources committee the health, safety & environment committee and the social & ethics committee and a trustee of The Murray & Roberts Trust. Roy is a director of Aspen Pharmacare Holdings, Nampak and Sasfin Bank and a member of the King Committee on Corporate Governance.

SIBUSISO PATRICK SIBISI (57) BSc Physics (Hons) PhD (Cambridge) INDEPENDENT NON-EXECUTIVE DIRECTOR

Sibusiso was appointed to the Board in 2007. He is chairman of the risk management committee and a member of the nomination committee. Sibusiso is president and CEO of the CSIR, director of Liberty Group, Telkom SA and a member of the Roedean School Board of Governors.

ROYDEN THOMAS VICE (65) BCom CA(SA)

INDEPENDENT NON-EXECUTIVE DIRECTOR

Royden was appointed to the Board in 2005. He is chairman of the remuneration & human resources committee and a member of the risk management committee and the nomination committee. He is also a trustee of The Murray & Roberts Trust. Royden is chairman of Hudaco Industries and a Governor of Rhodes University.

DAVID (DAVE) DUNCAN BARBER (59)FCA (England & Wales) AMP (Harvard)INDEPENDENT NON-EXECUTIVE DIRECTOR

Dave was appointed to the Board in 2008. He is chairman of the audit & sustainability committee and a member of the risk management committee. Dave is a director of AFGRI.

THENJIWE CLAUDIA PAMELA CHIKANE (46)BCom BCompt (Hons)


Thenjiwe was appointed to the Board on 15 June 2012. She is a member of the audit & sustainability committee and the risk management committee. Thenjiwe is a director at Nedbank Group, Nedbank Limited, Datacentrix Holdings and the Institute of Directors and a trustee of AfricaRice.

NAMANE MILCAH MAGAU (60)BA EdD (Harvard) MEd BEd


Namane was appointed to the Board in 2004. She is a member of the remuneration & human resources committee and the health, safety & environment committee and trustee of The Murray & Roberts Trust. Namane is a director of AON South Africa, Crowie Holdings, Enza Construction and the National Research Foundation and a member of the University of Cape Town Business School Advisory Board.

NON-EXECUTIVE DIRECTORS EXECUTIVE DIRECTORS GROUP SECRETARY

FOR ADDITIONAL INFORMATION ON DIRECTORS 118/PG


ANDRIES JACOBUS (COBUS) BESTER (52)BCom (Acc) Hons CA(SA)

GROUP FINANCIAL DIRECTOR

Cobus first joined the Group in 2006 following the acquisition of Concor and was appointed to the Board in 2011. Cobus is the chairman of Murray & Roberts International Holdings and a director of Clough.

ORRIE FENN (57)BSc (Hons) Eng MPhil Eng DEng

GROUP EXECUTIVE DIRECTOR

Orrie joined the Group and was appointed to the Board in 2009. He is the executive director responsible for the Group’s Construction Products Africa operating platform.

HENRY JOHANNES LAAS (52)BEng (Mining) MBA

GROUP CHIEF EXECUTIVE

Henry first joined the Group in 2001 and was appointed to the Board and as Group chief executive in 2011. He is a member of the health, safety & environment committee. Henry is a director of Murray & Roberts International Holdings and a director of Clough.

EMMARENTIA (RENTIA) JOUBERT (33)BCom (Acc) Hons CA(SA) GTP(SA)

GROUP SECRETARY

Rentia joined the Group in March 2010, when she was appointed as the financial manager at Murray & Roberts Cementation. She was appointed Group secretary on 1 August 2012.

JOHN (MICHAEL) MCMAHON (65)PrEng BSc Eng (Glasgow)


Michael was appointed to the Board in 2004. He is a member of the health, safety & environment committee and the remuneration & human resources committee. Michael is a director of Central Rand Gold and Impala Platinum Holdings.

WILLIAM (BILL) ALAN NAIRN (67)PrEng BSc Eng (Mining)


Bill was appointed to the Board in 2010. He is chairman of the health, safety & environment committee and a member of the risk management committee. Bill is a director of AngloGold Ashanti and non-executive chairman of MDM Engineering Group and of the Procurement Committee for MTN Group.

ANTHONY (TONY) ADRIAN ROUTLEDGE (64)BCom CA(SA)


Tony was appointed to the Board in 1994. He is a member of the audit & sustainability committee, the remuneration & human resources committee and the social & ethics committee and a trustee of The Murray & Roberts Trust.

MAHLAPE SELLO (50)LLB, Master of Arts and Law (Russia) INDEPENDENT NON-EXECUTIVE DIRECTOR

Mahlape was appointed to the Board in 2009. She is chairman of the social & ethics committee, a member of the audit & sustainability committee, the nomination committee and the remuneration & human resources committee. Mahlape serves on some of the committees of the Johannesburg Bar Council and the General Council of the Bar and is a member of the South African Law Reform Commission and the chairperson of the Advertising Industry Tribunal of the Advertising Standards Authority of South Africa.

Yunus Karodia stepped down as Group Secretary effective 1 August 2012 to take up a financial leadership role at Murray & Roberts Cementation

and was succeeded by Emmarentia Joubert.

Alan Knott-Craig resigned as an independent non-executive director on 17 January 2012.

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One year ago we shared the Group’s Recovery & Growth strategy

with stakeholders. The year to June 2012 was defined as the

Recovery year and the following two years as the Growth years.

The past year, our Recovery year, has been an exceptional one for

the Group in the context of the Recovery year objectives. It was

a year in which we took difficult decisions and made substantial

progress in establishing a firmer financial footing for the Group

and laying a solid basis for growth.

Our strategy for Recovery & Growth is aimed at establishing

Murray & Roberts as the leading construction and engineering group

in its selected markets. This strategy is underpinned by maintaining

integrity through disciplined leadership and a focus on financial,

operational and governance excellence as well as establishing

and maintaining sound relationships with all stakeholders, winning

the confidence of the investment community and establishing positive

energy throughout the Group. Our commitment to these principles

stood us in good stead in the year, despite the complex issues

and difficulties that we faced.

REORGANISING, RE-ENERGISING AND REALIGNINGThe transition to the new leadership team has been successful.

The leadership team realigned employees by creating a new

commitment to our purpose, vision and values, and also worked

hard to enhance operational focus and engage openly and proactively

with stakeholders. We have been encouraged by the level of

endorsement received and will continue to deepen our partnerships

with all of those with an interest in our business.

The reorganisation of Murray & Roberts into five operating platforms

and the strengthening of their financial and commercial leadership

have created clear strategic focus in each of the platforms. Furthermore,

the reorganisation has improved decision-making and risk management,

while ensuring that the appropriate capacity is in place to grow our

business. The net result of these actions has been an improvement

in morale and an enhanced team spirit. This reorganisation has also

assisted those within Murray & Roberts, as well as many of our

stakeholders, to develop a greater understanding of the Group.

DEBT RESTRUCTURING AND LIQUIDITYLandmark achievements this year included the successful

restructuring of the Group’s debt. The new debt package of

R4,3 billion (previously R3,4 billion) created better alignment between

our debt repayment tenure and the timing of anticipated proceeds

from the settlement of the Group’s major claims.

Another important achievement was the successful conclusion of the

oversubscribed R2,0 billion rights offer in April, which represents a

great vote of confidence in the Group, management and our strategy.

We appreciate the confidence and support of our shareholders and

the broader investment community.

As was communicated at the time of the offer, the proceeds of

the rights issue were earmarked to reduce the Group’s debt. In

June 2012, R1 billion of long term debt was repaid, with the balance

of the R1,9 billion net proceeds being used to reduce short term

debt. Long term debt will be reduced by a further R500 million

and R650 million in September 2012 and March 2013 respectively.

Cash generated from operations this year was negatively impacted

by increased losses sustained at the Gorgon Pioneer Materials

Offloading Facility (“GPMOF”) in Western Australia and the closure

of legacy contracts in the Middle East, whereas the sale of various

discontinued operations and assets identified for disposal realised

approximately R0,9 billion.

Initiatives to reduce overhead costs included consolidations within

both the Construction Africa and Middle East and Engineering Africa

operating platforms, Corporate Head Office headcount optimisation

and the closure of the Isle of Man and London offices (the latter

scheduled for June 2013). Together these are expected to result

in overhead savings in excess of R60 million a year.

DEVELOPMENTS ON MAJOR PROJECTSThis year our commitments on GPMOF were discharged, although

later and at a greater cost than had been anticipated. The cash

outlay of more than R2,0 billion on GPMOF over the past 16 months

represents one of the Group’s largest single cash losses in recent

times. Completing the work under extreme conditions to a revised

specification underscored the fact that Murray & Roberts honours

its obligations, and underlined a costly learning experience. We are

pleased to announce that the arbitration ruling on the first three

disputes on this project, relating primarily to scope changes from the

tendered design, has been awarded in the Group’s favour. The value

of these claims will be determined through a second-stage arbitration

scheduled for the final quarter of this calendar year. It is expected

GROUP CHIEF EXECUTIVE’S AND FINANCIAL DIRECTOR’S REPORT DEAR STAKEHOLDER


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that the commercial process on this project will be closed out by

December 2013.

Closer to home, the achievement of Operating Commencement Date 2

(“OCD2”) on the Gautrain Rapid Rail Link (“Gautrain”), with the opening

on 7 June 2012 of the final section of the system between Rosebank

and Park Stations was profoundly important, removing substantial

risks associated with a delayed OCD2. OCD2 was certified by the

Independent Certifier after the remedial work to address water ingress

in the Rosebank to Park Station section of tunnel was completed.

However, disputes around Gautrain are by no means resolved, with

the Gauteng Provincial Government (“Province”) disputing the terms

and proper interpretation of the concession agreement and the

resultant completion of the water ingress remedial work (if any). This

dispute is scheduled to be heard in arbitration during the final quarter

of this calendar year. Depending on the outcome, further costs may

have to be incurred in the Rosebank to Park Station section of tunnel.

Resolution through arbitration of the major delay and disruption claim

against Province is expected by December 2014. The fact that this

world-class transport system is now fully functional is of great credit

to Murray & Roberts and its partners.

An equally pleasing achievement this year was the resolution of all major

commercial issues with Eskom relating to the civil engineering contract

at the Medupi power station. The agreement settled all commercial

disputes on the project to date, with the remaining R3,0 billion of civils

work on this project carrying no more than normal construction risks at

acceptable margins. The agreement clearly signals a much improved

relationship with the national power utility.

PRIORITISING SAFETY AND PRODUCTIVITYIn the previous year, 12 employees lost their lives in

work-related incidents whereas this year we record,

with the utmost sadness, four fatalities. Mr Monyemane

Molotha, Mr David Sebulela and Mr Tomas Ubisse died

in fall-of-ground incidents at Impala 20 Shaft, Everest

Platinum Mine and Kroondal Simunye Shaft respectively,

and Mr Brandon Gray was fatally injured in an

equipment-related incident at Hecla’s Lucky

Friday mine in the United States of America.

To the loved ones of the deceased we

extend our heartfelt sympathy.

We shall not celebrate our safety

performance until such time as we are able

to report zero fatalities, but we must

acknowledge the hard work that has gone

into ingraining a safety culture at all of our

operations. We believe the improvement

in our safety performance is in no small

degree due to the visible and committed

involvement of senior management in

achieving our ultimate objective of Zero

Harm in the conduct of our business.

Our human resources are, in every

respect, our greatest asset and we

fully appreciate the importance of

investing in our people. This year

Group spend on training and

development totalled R133 million

– a 15% increase on the previous year. Of particular significance is

the very real contribution the Group has made in addressing South

Africa’s potentially crippling shortage of artisan skills.

MANAGING OUR RISKSAmong our major achievements are the significant strides made on risk

management. This year, the internal audit function was strengthened

and a regulatory compliance function established, which together with

risk management form the three pillars of integrated assurance. This will

enhance policies, procedures and controls to minimise risk exposures

in pursuit of Group objectives and to avoid or mitigate the impact of

unforeseen events.

After the 2008 global financial and economic downturn, dispute

resolution became much more difficult, requiring us to adapt our risk

tolerance and contracting principles to address a new, often more

adversarial or even litigious contracting environment. Shortcomings in

our control systems are now being rectified with a strong integrated

assurance team and governance processes.

The Murray & Roberts Limited risk committee has witnessed a

considerable increase in activity, meeting more regularly during this

past year than in previous years. This is consistent with the enhanced

risk management culture in the Group.

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GROUP CHIEF EXECUTIVE’S AND FINANCIAL DIRECTOR’S REPORT CONTINUED

OBJECTIVES NOT MET WITHIN THE RECOVERY YEARThe Group failed to achieve two of its objectives for the

Recovery year.

The first of these was that we did not achieve the disposal of the

discontinued Steel Business by the proposed deadline of December

2011. The disposal has now been accomplished, after year-end,

through two separate transactions.

Secondly, the Group did not reach finality with the Competition

Commission regarding the transgressions and potential penalty

relating to historical anti-competitive practices. We are of the view

that the provision held at the end of the financial year is adequate.

We are also confident that with the new culture prevailing throughout

the organisation, as well as with improved controls, the risk of such

behaviour being repeated in future has been significantly reduced.

REALISING UNCERTIFIED REVENUESIt became apparent during the year that we would not achieve

substantial closure of the large project claims processes within the

initial timeframes. These are drawn-out processes and a favourable

outcome is an important element in our Recovery as it will realise

some R2 billion of uncertified revenues. Principally, this uncertified

revenue was taken against major claims on GPMOF, the Dubai

International Airport and Gautrain.

The claims resolution process is ongoing and, while it is being

pursued with vigour by all concerned, is clearly going to be more

protracted than was previously envisaged. The favourable ruling

received on the initial arbitration gives us confidence that at least the

uncertified revenue portion of the total GPMOF claims will be settled

in our favour.

A possible UAE Supreme Court decision by December 2012 on

the question of which Dubai Government entity is the contracting

party, settlement through arbitration on both the airport final account

and the Gautrain delay and disruption claims is not expected before

the end of calendar year 2013 and 2014 respectively.

OPERATIONAL OVERVIEWTwo of the five operating platforms which largely depend on

the South African construction sector, continued to experience

challenging market conditions. However, the diversity of the

Group’s operations and markets underpinned its resilience.

CONSTRUCTION AFRICA AND MIDDLE EASTDepressed markets in both South Africa and the Middle East

constrained the operating platform’s ability to win work at reasonable

margins. Adding further financial strain, significant losses incurred on

GPMOF and losses on completed projects in the Middle East were

fully accounted for.

In the year, the operations of Concor and Murray & Roberts

Construction were successfully merged and two chief operating

officers were appointed, one to oversee the Civil Engineering

businesses and another for the Building businesses. Performance

on safety was uniformly excellent.

The Group was pleased to announce the appointment of Jerome

Govender as the new platform executive for the Construction Africa

and Middle East operating platform. Jerome has been the managing

director of Bombela Concession Company (“BCC”) since 2007,

having joined Murray & Roberts in 2002. Jerome has successfully

led BCC through challenging processes, including the successful

negotiation of the concession agreement with Province, the

successful delivery of the system and currently the successful

operation of Gautrain. We wish Jerome every success in leading

the Construction Africa and Middle East operating platform.

The Civil Construction businesses performed most creditably but

a lack of projects and heightened competition negatively impacted

Concor Roads & Earthworks, Murray & Roberts Buildings and

Murray & Roberts Marine. Concor Opencast Mining’s good

performance was impacted by one loss-making project.

While most businesses performed well, despite depressed market

conditions, the effects of GPMOF and a deterioration of the financial

position in the Middle East accounted for the year’s loss. The

contractual loss on GPMOF reached R1,8 billion at completion, of

which R582 million was accounted for the previous year. The Middle

East had to account for losses of R454 million related to the

close-out of subcontractor accounts on completed projects, an

increase in costs to complete a project in Abu Dhabi and weak

market conditions.

CONSTRUCTION GLOBAL UNDERGROUND MININGThis operating platform reported solid financial results. The mining

business continues to secure significant contracts globally with major

international mining houses. Operations in Australasia, the Pacific

Rim, Canada and the United States of America all achieved

exceptional growth and overall, margins were in excess of the

Group’s strategic target range. However, the local platinum sector is

being impacted by the declining platinum price and industrial unrest.

A significant development during the financial year was the mutual

decision to terminate the contract mining agreement between

Aquarius Platinum South Africa (“Aquarius”) and Murray & Roberts

Cementation. Murray & Roberts Cementation agreed to provide the

necessary support to Aquarius with the take-over of all resources

to ensure a smooth transition to the owner-operator model. This

support could extend to December 2012. The termination of this

agreement will entail a decline in revenue of some R2,5 billion per

annum for our African operations but will have the positive effect

of improving the operating platform’s overall operating margin.

Despite the loss of income resulting from the end of our contract

mining agreement with Aquarius, the platform will continue to pursue

opportunities globally, which may include acquisitions to further

accelerate revenue growth in key markets, such as Western Australia.

We are also optimistic that the introduction of the Canadian

shaft-sinking methodology in the South African market will have

positive implications for our safety record, further differentiating

Murray & Roberts from its competitors.


CONSTRUCTION AUSTRALASIA OIL & GAS AND MINERALS Clough, in which Murray & Roberts has a 62% share, reported

another solid operational, financial and safety performance. The new

leadership of the company implemented a successful restructuring

process, which will position Clough to maintain and extend its market

share of infrastructure projects in Australasia’s energy, chemicals,

mining and minerals sectors.

Execution of current projects delivered solid results, and several

landmark contract wins meant that, at year-end, Clough’s order book

for the current financial year and beyond was extremely strong.

The sale of Clough’s Marine business was concluded in December

2011, realising net proceeds of R591 million. Forge Limited returned

another strong performance and, during the year, Clough’s investment

in Forge increased from 33% to 36%, following the exercise of a put

option by previous executives.

ENGINEERING AFRICAThe operating platform returned a very pleasing result, having

disappointed the year before. This improvement is primarily as a result

of the new commercial arrangement with Hitachi on the Medupi and

Kusile power stations boiler contract. Work at Medupi progressed

exceptionally well with the successful and well-publicised pressure

testing of Boiler 6, reflecting the quality of work being done on the

coal-powered power station programme. This year project execution

at the Kusile power station gathered momentum after being consistently

delayed by factors beyond our control. Agreements concluded with

Hitachi and the cementing of an improved relationship with ultimate

client Eskom place our power programme contracts on a much firmer

footing. This will mean greater predictability to work that will continue

until 2018.

Genrec operated at full capacity this year, fabricating steel for the

power programme. Murray & Roberts Projects was similarly kept busy

on boiler erection work at Medupi and increasingly Kusile. Both

companies achieved most commendable safety records. A key

achievement for Murray & Roberts Projects was the successful delivery

of Transnet’s New Multi-Product Pipeline (“NMPP”) tank farm at

Heidelberg, Gauteng. Wade Walker enjoyed a successful year

and began to cement its entry into the West African market.

CONSTRUCTION PRODUCTS AFRICAOverall, the operating platform had a successful year although,

operational performances were divergent given the variety of

products and sectors. Most businesses depend heavily on public

sector work, which continued to be of limited scale.

Much Asphalt managed the increasing bitumen shortage exceptionally

well, while Rocla continued to report reasonable results, although

it did not achieve historical margins. Technicrete and Ocon Brick

succeeded in containing costs and, despite some rationalisation,

marginally increased market share.

UCW performed well in the face of scarce opportunities, but remains

well positioned to benefit from Transnet’s and the Passenger Rail

Agency of South Africa’s (“PRASA”) capital renewal programmes.

Hall Longmore under-achieved, primarily due to intense competition

and a shortage of orders, especially for its electric resistance

welded products.

Notably, Rocla began the process of establishing a presence in Tete,

Mozambique this year. It is envisaged that other businesses within

the platform will use this infrastructure and market presence to

cement opportunities in the petrochemicals and mining sectors in

northern Mozambique.

FINANCIAL PERFORMANCERevenue from continuing operations increased by 16% to

R35,4 billion (2011: R30,5 billion). An attributable loss of R736 million

(2011: R1 735 million) was incurred, of which R208 million was

recorded for the second half of the year.

This result is after accounting for the following losses:

� R1 189 million GPMOF contract completion costs

� R454 million in the Middle East, of which R387 million primarily

related to close-out costs on legacy projects

On discontinued operations, R55 million in respect of impairment

of assets held in businesses to be sold or closed was recorded, net

trading profits of R38 million for these businesses.

The Group recorded a diluted headline loss per share of 246 cents

(2011: 454 cents) and a diluted loss per share of 214 cents

(2011: 528 cents) for the year to 30 June 2012, representing a

material reduction of the loss reported for the previous financial year.

Notwithstanding significant funding requirements for the completion

of the GPMOF project, the Group completed the year with a

substantially improved net cash position of R1,2 billion (June 2011:

R0,8 billion).

A total of R959 million was invested in capital expenditure for

continuing operations (2011: R832 million). Some R390 million

was spent on expansion and R569 million on replacement.

Cash utilised in operations was R1 580 million (2011: R872 million

generated from operations) and operating cash outflow was

R2 290 million (2011: R334 million cash inflow).

The Group’s order book declined to R45,3 billion (2011: R55,4 billion),

mainly due to the termination of the Aquarius agreement at year-end,

which reduced the order book by R7,5 billion, as well as the

de-scoping provisions in the settlement agreement reached with

Hitachi in June 2011, resulting in an additional reduction of some

R6,2 billion. The order book for the Australian-based entities

increased by R8,2 billion or 66% year on year.

The Group’s order book is inclusive of R1,7 billion from the Middle

East and R7,6 billion from the civils and mechanicals major contracts

on Eskom’s power programme. There are no other major projects

remaining in the order book. The average margin in the order book is

within the Group’s strategic range of 5,0% to 7,5%.

ON COURSE FOR GROWTHWe are pleased with the Group’s overall performance given the

extremely demanding conditions most operating platforms faced,

and the scarcity of infrastructural projects in our main southern

African markets.

We are satisfied that the Recovery process has been largely and

successfully concluded. Towards the end of the year the Board

approved the Group’s growth strategy, which we look forward to sharing

with all stakeholders during the 2013 financial year.

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GROUP CHIEF EXECUTIVE’S AND FINANCIAL DIRECTOR’S REPORT CONTINUED

The Group’s focus on growth aims to enhance shareholder value

through a return to profitability as soon as practically possible.

It envisages aligning the Group’s portfolio of businesses selectively

with market segments and geographies that present sustainable

growth potential and simultaneously expanding its offshore

revenue base.

Any growth in the next year resulting from a turnaround in the

South African construction economy, which we do not anticipate

at present, would come as a welcome boost. We take the view

however that significant fixed investment in South African

infrastructure is sorely needed and work is being undertaken

to position the appropriate operating platforms to engage in

such opportunities.

Our strategy for expanding into Africa is a cautious one, but it is

on track and will be accelerated during the coming year. The first

steps have been taken to establish a presence in Ghana (through

the Engineering Africa operating platform), Zambia (utilising the

capacity of the Construction Global Underground Mining operating

platform) and Mozambique (through the Construction Products

Africa operating platform). Growth into Africa will be pursued

organically, using the model of first establishing hubs – a process

that is already well underway – and then exploring opportunities in

neighbouring countries via these hubs. African penetration will be

guided by the understanding that each country is unique, with its

own specific risks and opportunities.

In the engineering and construction sectors, significant new

opportunities exist within alternative energy, the water sector and

operations and maintenance primarily in the power sector. Entry to

the water sector will better equip Murray & Roberts to contribute

to finding solutions to South Africa’s looming water shortage, one

of the country’s key sustainability risks, as well as the challenging

question of acid mine drainage. Potential acquisitions being

considered are aimed at aligning the Group’s asset base with

opportunities to maximise shareholder value. To this end,

acquisitions are being actively explored in sectors including mining

and oil & gas.

APPRECIATION AND CLOSINGWe thank the leadership team and our colleagues across the

Group for their support and commitment to making this a year

of effective Recovery.

Our thanks are also due to our Board of directors and especially

to our chairman Roy Andersen, who takes his leave of

Murray & Roberts in March 2013, after nine years of inspirational

leadership. We have valued Roy’s counsel and wish him well in his

future endeavours, and look forward to working with his successor,

Mahlape Sello.

Finally, we acknowledge our stakeholders whose faith in our business

has been most gratifying. This faith we fully intend repaying as we

cement the gains of the past and build a thriving Group that is

the recognised leader in the fields in which it operates.

HENRY LAAS COBUS BESTER GROUP CHIEF EXECUTIVE GROUP FINANCIAL DIRECTOR


LOOKING TO GROWTH INVESTMENT MARGINS AND ASPIRATIONS

CRITERIA RANGEMETHOD

KEY RATIOS USED BY ANALYSTS TO COMPARE MURRAY & ROBERTS TO ITS PEERS

MARGINEBIT1

REVENUE 5% – 7,5%

GEARINGTOTAL INTEREST BEARING DEBT

ORDINARY SHAREHOLDERS’ EQUITY 20% – 25%

RETURN ON EQUITY (ROE)

NET PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS

AVERAGE ORDINARY SHAREHOLDERS’ EQUITY

17,5%THROUGH CYCLE

RETURN ON INVESTED CAPITAL EMPLOYED (ROICE)

TAXED EBIT + INCOME FROM ASSOCIATES

TOTAL CAPITAL EMPLOYED*

WACC2 plus

3% – 4%

FREE CASH FLOW PER SHARE

OPERATING CASH FLOW – CAPEX3 + PROCEEDS ON DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT

NUMBER OF SHARESCASH POSITIVE

RETURN ON NET ASSETS (RONA)

TAXED EBIT + INCOME FROM ASSOCIATES

TOTAL NET ASSETS (EXCLUDING TAX AND CASH)18%AFTER TAXED EBIT

TOTAL SHAREHOLDERS’ RETURN (TSR)

INCREASE IN SHARE PRICE YEAR ON YEAR + DIVIDEND PER SHARE

SHARE PRICE AT START OF PERIODRELATIVE TO OTHERS

* Total capital employed = total equity + interest bearing debt – assets-held-for-sale – cash + advance payments.

1 Earnings before interest and tax.

2 Weighted average cost of capital.

3 Capital expenditure.

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GROUP EXECUTIVE

PETER ADAMS (63)Fellow of the Royal Institution of Chartered Surveyors

OPERATIONS EXECUTIVE

Peter joined the Group in 2004 and was appointed to the executive committee in 2011. He has over 32 years of experience with a major British contracting company. Peter was initially responsible for Cementation Canada following the Cementation acquisition, together with the construction operations in the Middle East. In 2009 he was appointed executive responsible for Construction Global Underground Mining. Peter is a director of Murray & Roberts International Holdings.

Cementation Canada

Cementation Sudamérica

Murray & Roberts Cementation

RUC Cementation

Committee participation:

� Health, safety & environment

COBUS BESTER (52)BCom (Acc) Hons CA(SA)

CHIEF FINANCIAL OFFICER

Cobus first joined the Group in 2006 and was appointed to the executive committee in 2007. He became Group financial director in 2011 and is the chairman of Murray & Roberts International Holdings and a director of Clough.

Corporate office finance & payroll

Financial control & reporting

Information management & technology

Murray & Roberts Properties

Secretarial

Taxation

Treasury


� Audit & sustainability

� Remuneration & human

resources

� Risk management

� Social & ethics



Orrie joined the Group and was appointed to the executive committee in 2009. He is the executive director responsible for the Construction Products Africa operating platform, excluding UCW.

Hall Longmore

Much Asphalt

Murray & Roberts Building Products

Rocla



IAN HENSTOCK (57)BCompt (Hons) CA(SA) HDip Tax Law MBA

COMMERCIAL EXECUTIVE

Ian joined the Group and was appointed to the executive committee in 2008. He is the corporate executive responsible for the assurance, commercial, legal and risk portfolios. Ian is the chairman of UCW, a director of Murray & Roberts International Holdings and a director of Clough.

Commercial

Forensics

Internal audit

Legal, compliance & ethics

Risk and insurance



� Risk management

� Social & ethics


Rob Noonan resigned from the executive committee on 29 June 2012 and retired from the Group on 31 July 2012.

Nigel Harvey resigned from the executive committee and Group on 6 July 2012.

HENRY LAAS (52)BEng (Mining) MBA

GROUP CHIEF EXECUTIVE

Henry first joined the Group in 2001 and was appointed to the executive committee in 2007. He became Group chief executive in 2011. Henry is a director of Murray & Roberts International Holdings and a director of Clough.

Sustainable delivery of Group strategy and Group performance




� Nomination


resources

� Risk management

� Social & ethics

FRANK SAIEVA (52)BEng (Mech)


Frank joined the Group and was appointed to the executive committee on 1 July 2011. He is the executive responsible for the Engineering Africa operating platform, which includes the power programme.

Concor Engineering

Genrec

Murray & Roberts Projects

Wade Walker



JEROME GOVENDER (40) BSc (QS) MSc MBA


Jerome joined the Group in 2002 and was appointed to the executive committee on 1 August 2012. He is responsible for the Construction Africa and Middle East operating platform.

Concor Civils

Concor Roads & Earthworks

Concor Opencast Mining

Murray & Roberts Botswana

Murray & Roberts Buildings

Murray & Roberts Marine

Murray & Roberts Middle East

Murray & Roberts Namibia

Murray & Roberts Plant

Murray & Roberts Western Cape

Tolcon



ANDREW SKUDDER (42) BSc PDM MBA

SUSTAINABILITY EXECUTIVE

Andrew joined the Group in 2004 and was appointed to the executive committee in 2008. He is responsible for the Group’s sustainability strategy, including health, safety & environment and talent management.

Corporate Social Investment & Letsema BBBEE

Branding & Communications

Health, safety & environment

Remuneration and benefits

Strategy support

Sustainability

Talent management




resources

� Social & ethics

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MELROSE ARCHMurray & Roberts Construction has been responsible for all hotel, residential and piazza developments at the Melrose Arch precinct.

The Melrose Arch precinct is renowned for creating new and cutting edge spaces that fulfil both professional and personal

requirements. Melrose Arch is a mixed-use development that provides retail, commercial and residential space, creating a unique urban experience.

The third phase of the residential component is almost complete.


GROUP PERFORMANCE REVIEW

34 Stakeholder engagement

36 Social performance

48 Environmental performance

52 Ethical performance

54 Economic performance


56 Statement of value created

58 Ten-year financial review

59 Ratios and statistics

60 Segmental information

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The sustainability of Murray & Roberts is dependent on our ability to

fulfil our core purpose of delivering infrastructure that enables

economic and social development in a sustainable way. To secure

access to the capital resources we are required to maximise our

contribution to the built environment – financial, manufactured,

human, social and environmental capital – we need to maintain the

trust of our stakeholders and thereby our licence to operate, and to

conduct our operations in an ethical way while minimising our

negative impact on the societies and the natural environment within

which we operate. The ability to apply the appropriate resources to

achieve all of this enables us to remain sustainably profitable.

OUR SUSTAINABILITY FRAMEWORK Murray & Roberts’ sustainability framework guides our approach to

sustainable performance, shown below.

The framework sets out our aspiration to operate in an ethical and

sustainable way by:

� Considering the views and concerns of our stakeholders in our

strategic and operational decision-making

� Understanding and mitigating our risks in relation to our

opportunities

� Applying best practice corporate governance beyond minimum

requirements

� Managing world-class operations that are able to create and

sustain value for clients, employees, shareholders, partners and

suppliers, as well as the countries and communities in which

we operate

� Managing all our impacts according to the principle of Zero Harm

and the precautionary principle

Integrated reporting links back to our stakeholders and completes

the cycle of accountability and inclusivity that ultimately underpins

our sustainability.

SUSTAINABILITY FRAMEWORK

INTEGRATED REPORT

SOCIAL ENVIRONMENTAL ETHICAL

Health and safety Resource efficiency and carbon footprint Human rights

Employees Emissions, releases and waste management Unfair discrimination and equality

Transformation and local economic

development

Fraud, corruption and anti-competitive

behaviour

Community development Unfair business practices

FINANCIAL AND ECONOMIC SUSTAINABILITY

GOVERNANCE STRUCTURE

RISKS & OPPORTUNITIES AND STAKEHOLDER ENGAGEMENT

ANDREW SKUDDER SUSTAINABILITY EXECUTIVE

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STAKEHOLDER ENGAGEMENT

CEMENTING SUSTAINABLE RELATIONSHIPS WITH STAKEHOLDERSMurray & Roberts communicates constantly with its stakeholders and

engages in a constructive and transparent manner. Key stakeholders

are generally identified as groups or individuals impacted by our

operations, with an interest in what we do or the ability to influence

our activities, in proximity to our operations or dependent on

Murray & Roberts. Mutual trust and understanding with our

stakeholders is imperative.

In 2011 Murray & Roberts developed a stakeholder engagement

framework for use by all Murray & Roberts entities. It is a framework

which the various operations now employ to meet the unique

concerns of their respective stakeholders.

Various methods are used across the Group to engage with

stakeholders. These methods, amongst others, are grouped into

the following categories:

� Face-to-face engagement (one-on-one meetings, citizen panel/

public meetings, including “town hall” meetings)

� Technological engagement (website, intranet, email and SMS)

� Printed engagement (media releases, leaflets, internal magazines,

annual integrated report)

The top ten concerns for our key stakeholder groups, as currently identified by management, are shown in the table below:

RANK CLIENTS EMPLOYEESMURRAY & ROBERTS

OPERATING COMPANIESSHAREHOLDERS AND

INVESTMENT COMMUNITY

01Quality of work/product

(Including timeous delivery)

Remuneration Financial performance Financial performance

02Cost of services/products Health and safety Leadership and strategic

direction

Leadership and strategic

direction

03Health and safety Continued supply and

demand for work and

products

Health and safety Continued supply and

demand for work and

products

04Reputation/brand/credibility Leadership and strategic

direction

Reputation/brand/credibility Risk management

05Capacity/capability Human and labour rights

issues

Continued supply and

demand for work and

products

Corporate governance/ethics

06Compliance with laws/

regulations/industry

standards

Skills, training and education Compliance with laws/


standards

Market environment

07Transformation and Broad-

Based Black Economic

Empowerment (“BBBEE”)

Financial performance Quality of work/product

(including timeous delivery)

Health and safety

08Risk management Transformation and BBBEE Risk management Compliance with laws/


standards

09Environmental impact Reputation/brand/credibility Remuneration Reputation/brand/credibility

10Corporate governance/ethics Compliance with laws/


standards

Market environment Corporate Social Investment


FINANCIAL INSTITUTIONS

JV PARTNERS, SERVICE PROVIDERS/SUPPLIERS/

SUBCONTRACTORS UNIONS COMMUNITIES

Financial performance Continued supply and demand

for work and products

Human and labour rights issues Skills, training and education


direction

Cost of services/products Transformation and BBBEE Corporate Social Investment

Reputation/brand/credibility Financial performance Remuneration Transformation and BBBEE

Risk management Capacity/capability Health and safety Human and labour rights issues

Continued supply and demand


Quality of work/product

(Including timeous delivery)



Environmental impact

Corporate governance/ethics Reputation/brand/credibility Skills, training and education Health and safety

Market environment Health and safety Compliance with laws/

regulations/industry standards



Compliance with laws/



direction

Financial performance Compliance with laws/


Cost of services/products Transformation and BBBEE Corporate Social Investment Remuneration

Capacity/capability Compliance with laws/



direction

Corporate governance/ethics

The Group continuously interacts with a diverse group of stakeholders.

Our stakeholders are grouped into the following categories:

� Clients

� Employees

� Shareholders and investment community

� Financial institutions

� Murray & Roberts operating entities

� JV partners/service providers/suppliers/subcontractors

� Unions

� Communities

� Special and other interest groups

Measures are in place to monitor client satisfaction. A Group client

service centre assists to bridge the knowledge gap between

Murray & Roberts and its people, potential clients, existing clients and

the general public. This facility processes about 2 800 calls and email

queries per month.

Murray & Roberts strives to communicate and engage more openly,

effectively and inclusively with all stakeholder groups. Our ongoing

engagement process seeks to ensure that interaction with

stakeholders in all our markets is effective and ongoing.

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SOCIAL PERFORMANCE

KEY INDICATORS Performance

Performance dimension 2012 2011 2010 Movement

Fatalities 4 12 9 Down

FIFR (per million hours worked for the year) 0,02 0,06 0,05 Down

LTIFR (per million hours worked for the year) 1,1 1,3 2,2 Down

TRCR (total recordable case rate) 4,6 4,0 N/A Up

OHSAS 18001 Management System implementation

(percentage coverage ) 71% ±52%* N/A Up

Health

Voluntary HIV/AIDS tests 7 976 12 404 8 063 Down

HIV/AIDS Prevalence of employees tested About 12% About 14% About 14% Down

New cases of tuberculosis 21 37 82 Down

Noise induced hearing loss (NIHL) 36 104 103 Down

Alcohol random tests 130 141 83 041 271 460 Up

% positive alcohol random tests 0,4% 0,7% 0,2% Down

Drug random tests 5 220 9 998 7 012 Down

% positive drug random tests 0,6% 2,2% 3,0% Down

Employees

Spending on formal employee training and development (Rm) 133 116 117 Up

Skills development on black employees as % of SA skills

development spend 74% 78% 71% Down

Total number of bursars 94 133 167 Down

% of bursars who are black 66% 62% 57% Up

% of bursars who are female 23% 32% 32% Down

Graduate Recruitment 27 18 53 Up

% of graduates who are black 59% 61% 62% Down

% of graduates who are female 19% 17% 23% Up

Leadership Development Programme 207 185 220 Up

% of participants who are black 38% 40% 45% Down

% of participants who are female 23% 16% 16% Up

Transformation & Local Economic Development

BBBEE rating based on the Construction Sector Charter Level 3 Level 3 Level 3 Stable

Wealth created through Letsema BBBEE share ownership

transaction (Rm) 682 799 988 Down

Bursaries awarded by the Letsema Employee Benefits Trust (Rm) 8,9 8,0 12,0 Up

% of South African based employees who are female 14,6 15,6 13,9 Down

% of South African based employees who are black 86,4 84,1 82,8 Up

% of South African based employees designated as management

who are female 11,4 11,5 11,1 Down

% of South African based employees designated as management

who are black 57,6 49,4 44,3 Up

Capital expenditure (3 year cumulative amount; Rm) 2 920 4 295 5 201 Down

% Preferential procurement spend South Africa 67,9% 61,2% 45,7% Up

% Local procurement spend South Africa 83,0% N/A N/A N/A

Enterprise development contribution South Africa (Rm) 246,8 135,7 45,7 Up

Community Development

Corporate social investment in community programs (Rm) 14,4 15,5 22,2 Down

Letsema broad-based community commitments (Rm) 1,2 16,3 22,0 Down

* Currently, 71% of the Group’s operations are OHSAS 18001 certified, based on number of employees and subcontractor employees under our control. We last

year reported that approximately 75% of operations had ISO14001 accreditation, which incorrectly assumed that all of the employees in two of our largest operations

were covered by the certification, however only certain sites in these operations were accredited. The correct level of certification was approximately 52% for FY2011

and the FY2010 comparitive number is not reported.


HEALTH AND SAFETYGood progress was made in implementing the Group’s Zero Harm

through Effective Leadership programme. Highlights for the year

include a continuation of the positive trend in the lost time injury

frequency rate (“LTIFR”), significant reduction of fatal incidents and

achievement of OHSAS 18001 certification by the majority of our

businesses. While this performance is encouraging, our ultimate goal

is to achieve Zero Harm at all our operations.

SAFETY PERFORMANCEThe Group ended the 2012 financial year with a LTIFR of 1.14

(2011: 1.28), which is the lowest recorded rate since statistics were

kept. Two operations, Technicrete and Concor Engineering, achieved

12 months without a lost time injury during this period.

These positive developments were unfortunately overshadowed by

the tragic death of four employees (2011:12) who sustained fatal

injuries while working for us. All four incidents occurred at underground

mining operations and the hazards involved were fall of ground

and equipment & machinery. We are saddened by these incidents

and continue to take action to prevent similar incidents from

occurring again. We have extended our deepest condolences and

support to the families of the deceased. The graph below illustrates

the Group’s historical lost time injury frequency rate against our target

of less than 1.

ANNUAL LTIFR (per 1 million man hours)

2005

2006

2007

2008

2009

2010

2011

2012

5

4

3

2

1

0

— Target

The LTIFR is in line with the international norm which excludes restricted work day

cases and is calculated per million hours worked. Including restricted work day

cases the Group’s LTIFR is 2.2.

In 2011 financial year we introduced the total recordable case rate

(“TRCR”), a broader indicator of safety performance that includes all

injuries except first aid cases. The TRCR deteriorated to 4.6

(2011: 4.0) following an increase in the number of injuries of

lesser severity.

OUR HEALTH AND SAFETY APPROACHMurray & Roberts’ health and safety vision is “Together to Zero

Harm”. Our short term goal is to eliminate all fatalities and major

incidents while creating an environment that fosters the belief and

mindset among our employees that it is possible to work injury free,

regardless of where they are in the world.

As indicated in our last report to stakeholders, in 2011 we contracted

DuPont Sustainable Solutions to undertake a comprehensive

evaluation of our operations and help us in crafting a plan to achieve

our Zero Harm goals. The culture assessment brought about an

increased level of health and safety awareness in the organisation

and has helped in establishing a common appreciation of where we

are and what we need to do to achieve our goals. Following this

assessment, operating entities reviewed their safety improvement

plans to address deficiencies identified. The implementation of these

plans is progressing well.

At Group level the following key focus areas were incorporated in our

Zero Harm through Effective Leadership programme:

� Strengthening and expanding of the STOP.THINK programme

� Aligning and formalising of the Visible Felt Leadership (“VFL”)

and behavioural observation programmes to ensure Group-wide

consistency and focused leadership action

� Integrating health and safety structures and developing Centres of

Excellence to ensure visibility, alignment of the total Group health

& safety effort and accelerated learning and best practice sharing

� Identifying and implementing appropriate leading indicators serving

as real-time business and cultural health indicators

� Capacitating our leadership in support of our purpose, vision

and values

� Ensuring operational excellence by adopting a common

disciplinary standard across the Group and rolling out a common

set of Life Saving Rules

� Implementing a human resource strategy to improve employees’

skills and morale at operating entity and project level

� Implementing a focused risk awareness programme across

the Group

� Optimising contractor safety management to ensure alignment of

client and/or subcontractor standards

� Developing and implementing a systematic, structured, layered

review system of the health and safety improvement drive

We have since reviewed and aligned our health and safety framework

to reflect these developments. Our health and safety framework,

depicted on the next page, articulates the roles, responsibility

and accountability of the corporate office versus our operations in

delivering our health and safety commitments. The framework seeks

to implement a risk-based approach to better understanding and

treating risks facing Murray & Roberts, and continually improving in

this regard.

The key thrust of the Zero Harm through Effective Leadership

programme is to entrench compliance and build commitment across

the organisation.

During the year, we rolled out to operations our new health and

safety vision, policy, principles and standards. These set the tone in

terms of Group requirements and standards and also guide

operations towards achievement of our Zero Harm goals. Our aim is

to achieve a consistent standard that will bring sustainable

improvement across the organisation.

Our major safety risks arise from underground mining operations,

working at elevated heights, lifting operations, mobile plant and

vehicles, falling and rolling objects, machinery & equipment

and hazardous materials. These risks have been associated with

the majority of our fatal and serious incidents. To this end, we have

rolled out fatal risk control protocols (“FRCP”) to all operations, to

help them in managing these risks. Effective implementation and

embedment of the fatal risk control programme remains one of

the key priorities going forward.

We also developed and implemented STOP.THINK Life Saving Rules

to support the roll out and entrenchment of FRCP. These are

absolute rules since violation of anyone of them could result in

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MURRAY & ROBERTS OPERATIONS

MURRAY & ROBERTS OPERATIONS

HEALTH AND SAFETY

TARGETS & OBJECTIVES

RISK MANAGEMENT

STOP.THINKSAFETY,

AWARENESS & MOTIVATION

1 Values

2 Health and safety vision & principles

3 HSE policy

4 Bill of rights

5 HSE standards

6 STOP.THINK fatal risk control protocols

7 STOP.THINK rules

8 HSE governance

9 Health and wellness framework

POLICIES & PROCEDURES

INCIDENT INVESTIGATION

INDUCTION & TRAINING

INSPECTION, OBSERVATIONS, AUDITS

& AWARENESS

MURRAY & ROBERTS CORPORATE 1ST, 2ND

& 3RD

PARTY AUDITS

ZERO HARM THROUGH EFFECTIVE LEADERSHIP PROGRAMME

1 Expand STOP.THINK

2 VFL & behaviour observations

3 Integrated structures

4 Lead indicators

5 World-class leadership thinking

6 Operational discipline

7 People capacity & morale

8 Training modules

9 Contractor safety management

10 Audit protocols

a fatality or serious injury. The main purpose of introducing Life

Saving Rules is to provide a clear framework to guide employees’

behaviour in every operation and activity.

Implementing robust health and safety systems remains one of the

key elements of our Zero Harm through Effective Leadership

programme. It is pleasing to report an increase in the number of

operating entities that are certified under OHSAS 18001, an

international standard for health and safety management. To this end,

71% of our workforce (including subcontractors under our control) is

covered by OHSAS 18001 certification. In the prior year we reported

a 75% coverage which incorrectly assumed that all of the employees

in two of our largest operations were covered by the certification,

however only certain sites and corporate offices in these operations

were certified. The correct level of certification was approximately

52% for FY2011.

INSTIL A CULTURE OF LEARNING AND SHARINGActive learning is one of our key health and safety principles which

encourages continuous improvement through sharing of lessons

learned and good practices across the organisation. Our diverse

operations and exposure to various clients present us with an

enormous opportunity to learn and improve. We continuously

encourage and facilitate sharing of good practices across businesses.

Where we have experienced failures we thoroughly investigate the

causes and communicate lessons learned across the organisation.

For example, the executive committee reviews investigation reports

on all high potential incidents and lessons learned are widely

communicated in the organisation to raise awareness and prevent

re-occurrence.

Other sharing forums implemented include various task teams that

work on common health and safety challenges and ideas, cross site

audits and health and safety forums. These help create a platform for

businesses to share good practices and ideas. More work is planned

to enhance the culture of sharing in the Group going forward.

Keeping everyone’s mind focused on health and safety is a

continuous challenge which requires a relentless focus on providing

new and relevant safety messages. Our STOP.THINK programme

introduced in 2006 has been the major driver in achieving this.

STOP.THINK is a widely recognised Murray & Roberts health and

safety brand aimed at educating and motivating employees to take

responsibility for their own and their colleagues’ safety and the work

environment. It consists of various communication media used on

work sites, including STOP.THINK awareness videos, newsletters,

safety clothing and signage.

In line with the changing mindset and new vision, we are reviewing

and strengthening the STOP.THINK brand by introducing the

“ACT.24/7” dimension. The new brand to be launched in 2013 is

STOP.THINK.ACT.24/7. “ACT” emphasises the importance of taking

action to correct unsafe conditions and behaviours as well as

recognising positive behaviour while “24/7” highlights the need to be

safety aware at all times both at work and at home.

Part of our employee motivation programme includes a focus on

providing a clean and healthy work environment. During the year we

launched a housekeeping improvement programme based on the

5S methodology (sort and discard, shine, signpost and order, simplify

work and sustain) and we are pleased with the response from

employees. We have observed innovative ideas where employees

implemented various solutions to simplify their work and improve

housekeeping.

Rolled out to operations Approved for implementation or partially rolled out

Not yet rolled out

SOCIAL PERFORMANCE CONTINUED


We also reviewed and improved our health and safety recognition

programme for behaviour that is aligned with our health and safety

objectives. Recognition will be given to employees and operations

that have demonstrated commitment towards our health and safety

vision and goals.

FOCUS GOING FORWARDImplementing key recommendations from the culture assessment

remains the focus area going forward. We have since prioritised

the following key initiatives for implementation during the 2013

financial year:

� Expansion and strengthening of the STOP.THINK approach to

STOP.THINK.ACT.24/7

� Implementation of a custom-built leadership engagement

programme focusing on safety interactions based on the

principles of VFL

� Aligning HSE structures across the Group and establishing

Centres of Excellence

� Implementing lead indicators to proactively measure the

effectiveness of our programmes

� Improving the capabilities of our leaders to deliver on our vision,

values and objectives

OCCUPATIONAL AND SOCIAL HEALTHOCCUPATIONAL HEALTHNoise-induced hearing loss (“NIHL”) remains the major prevalent

occupational disease at our mining, construction and manufacturing

businesses. During the past year, 36 (2011:104) new NIHL cases

were recorded resulting in an occupational disease frequency rate of

0.18, measured over a million man hours (2011: 0.47).

We have instituted plans to improve our hearing conservation

programmes to effectively respond to this challenge. More emphasis

is placed on implementing engineering solutions to eliminate or

manage noise risk, providing employees with knowledge and skills

to protect themselves against noise exposure and ensuring

adherence to wearing of hearing protection equipment in areas where

noise levels cannot be reduced to within acceptable limits. Our aim is

to have a consistent standard towards hearing conservation across

the organisation. The graph below illustrates the Group’s historical

occupational disease frequency rate, which only measures NIHL.

CUMULATIVE OCCUPATIONAL DISEASE FREQUENCY RATE (ODFR)

2011

2011

2011

2011

2011

2011

2012

2012

2012

2012

2012

2012

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

JUN

0,5

0,4

0,3

0,2

0,1

0

104 NIHL cases reported in 2011 financial year include confirmed cases plus

those that were under investigation. The 2012 figure only includes cases that

have been confirmed by medical specialists as work related NIHL cases.

Tuberculosis (“TB”) remains a health risk to employees working in

environments with silica dust and is often compounded by HIV/AIDS.

A total of 21 (2011: 37) TB cases were reported during the financial

year. Plans are being reviewed as part of the integrated employee

wellness programme to mitigate this challenge.

EMPLOYEE WELLNESSFollowing an evaluation conducted by an outside service provider on

our employee wellness programmes, a need was identified to

enhance these programmes by implementing an integrated strategy

to consistently deal with all wellness challenges facing our workforce.

We are in the process of developing a holistic wellness strategy that

addresses the following key aspects:

� HIV/AIDS

� Tuberculosis

� Substance abuse

� Psychosocial wellbeing

� Chronic diseases

The current approach to employee wellness includes various

programmes at different levels of maturity at operational level including

random substance abuse tests, voluntary HIV/AIDS testing and the

Employee Wellness Programme. The HIV/AIDS prevalence among our

employees who have been tested is estimated at 12% (2011: 13,6%).

The overall prevalence is however likely to be much higher given

the estimated 18% prevalence rate for the working population in

South Africa.

We are excited and looking forward to the implementation of the new

wellness programme during 2013. Our aim is to achieve a consistent

standard across the organisation.

OUR EMPLOYEESWE ARE ONLY AS GOOD AS OUR PEOPLEMurray & Roberts is built on our values of care, integrity, respect,

accountability and commitment, and we expect our people to live

these values every day. We are committed to respecting human

rights and providing a safe and healthy working environment free of

discrimination and where employees have the right to freedom of

association. The Group’s policies and procedures comply with the

Constitution and the laws of the relevant countries.

At FY2012, Murray & Roberts had a total of 39 122 employees. This

comprises 34 218 employees in our South African operating entities

and 4 904 employees in our international operating entities.

The capacity and capability of our employees is a cornerstone of

Murray & Roberts’ sustainability. The Group aims to be an employer

of choice in the engineering and construction sectors within which it

operates and its world-class delivery of products and services is a

reflection of the capability of its diverse and experienced workforce.

39

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DEVELOPING OUR PEOPLE

OUR PEOPLE ARE EXTREMELY IMPORTANT TO US, AND WE OFFER THEM THE OPPORTUNITY OF AN EXCITING CAREER SUPPORTED BY CONTINUOUS DEVELOPMENT AND TRAINING As a leading organisation, Murray & Roberts recognises that our

strength lies in our people and that we will only attain our purpose

if we continue to attract, develop, retain and motivate talented and

diverse people. It is for this reason that we have continued to invest

in the development of our people despite the tough economic

conditions. R133 million (2011: R116 million) was spent globally on

training and development which equates to a healthy 2% of payroll.

In South Africa R115 million was spent on training and development,

74% of which was spent on black employees. The training and

development spend includes bursar costs, graduate development

as well as technical and leadership development.

ATTRACTING ENGINEERING BURSARSBUILDING SKILLS FOR THE FUTUREWe currently have 94 technical bursars studying at various tertiary

institutions in South Africa – 66% are black and 23% are women.

Even though the bursars belong to the various operating entities, they

are recruited via a centralised online process. Selection includes

individual psychometric assessment, group assessment and role play

as well as a behavioural interview. This process is designed to ensure

that we not only recruit for potential, but also for fit with our culture.

Bursars keep in touch via the Murray & Roberts Bursar page on

facebook and attend a bursor camp each year. During May our

bursars went on a Medupi site visit where they had the opportunity to

interact with senior managers. One of the bursars said: “The site visit

was an opportunity of a lifetime. Spending time with professionals

and fellow bursars was motivational and gave us hope for the future.”

Bursars are encouraged to become “Brand Ambassadors”

and assist Murray & Roberts to attract fellow students onto our

bursar programme.

A further platform through which we aim to make a positive,

broad-based contribution to skills development in society is through

the Letsema Khanyisa Black Employee Benefits Trust (“Letsema

Khanyisa”), a 2,2% shareholder in Murray & Roberts established as

part of the Group’s Letsema BBBEE shareholding transaction in

2005. The word Khanyisa means ‘benefiting others besides yourself’.

Letsema Khanyisa focuses exclusively on education and creates

opportunities for employees’ children to access better quality

secondary school and tertiary education. A total of 238 bursaries

have been awarded since the introduction of the benefit.

For the period under review, education bursaries were awarded to

158 beneficiaries – 88 secondary school and 70 tertiary bursaries.

Of these, 51 bursaries were new awards: 29 new secondary

bursaries and 22 new tertiary bursaries. During the period between

1 July 2011 and 30 June 2012, bursary payments were made for

149 bursars, with the remaining nine bursaries on hold due to late

registration or suspension.

The projected value of the bursaries for the 51 new awards is

R8,9 million over the next five years, with the average secondary

school bursary amounting to R18 000 and the average tertiary

bursary at R70 000 per annum. The bursaries provide comprehensive

support including payments for school fees and tuition, stationery and

textbooks, uniforms and transport as well as accommodation costs

where necessary.

GRADUATE DEVELOPMENT PROGRAMMEMURRAY & ROBERTS EMPLOYER OF CHOICE FOR GRADUATES

The Murray & Roberts Graduate Development Programme focuses

primarily on the softer skills to develop leadership competencies

which engineering graduates would not necessarily have been

exposed to during their tenure at university. In addition, this

programme helps with the transition from a learning environment

to a working environment. We currently have 27 graduates on the

programme – 59% are black and 19% are women.

Every year the South African Graduate Recruiters Association

(“SAGRA”) conducts a graduate survey to help organisations

understand the key motivators and drivers of their new graduates.

Murray & Roberts was once again voted the Top Graduate employer

in the Engineering and Industrial Sector for 2012.

We are proud of this achievement and are committed to continuously

improving our Graduate Development Programme. We believe this

programme forms a learning foundation for our future leaders.



PIPELINE ALIGNED LEADERSHIP DEVELOPMENT

MURRAY & ROBERTS SUPPORTS LONG TERM PEOPLE DEVELOPMENT THROUGH THE DELIVERY OF TRAINING PROGRAMMES ALIGNED TO OUR LEADERSHIP PIPELINEOur Leadership Pipeline philosophy is in its fifth year of

implementation and is now well entrenched in Murray & Roberts.

This integrated, yet simple model, has created a common language

for performance management, development and succession to be

managed. All our Leadership Development programmes have been

aligned to the Leadership Pipeline performance standards thus

ensuring “just in time” training for the different layers of the pipeline.

Senior leaders participate as guest lecturers or panel members during

the programme ensuring that topics remain relevant to our business,

while getting to know the delegates better. All programmes include

an action learning project which creates a platform for delegates

to apply their learning in the business. This year 207 individuals

participated in the various leadership programmes at a cost of

R3,6 million. Of the delegates 38% are black and 23% women.

WORLD-CLASS TECHNICAL TRAINING

TECHNICAL EXPERTISE IS OUR COMPETITIVE ADVANTAGEThe majority of our training and development spend continues to be

on technical programmes that are fundamental to our competitive

advantage, as well as to the improvement of the broader skills pool.

Every operating company conducts core technical training, with many

having large scale specialised training facilities on site.

One such facility is the Murray & Roberts Projects’ Accelerated

Artisan Training Programme (“AATP”) as endorsed by the

Manufacturing, Engineering and Related Services Sector Education

and Training Authority. This facility has already delivered 315 artisans

who are currently gainfully employed on the Medupi project site in

Lephalale. A further 219 artisans are currently being developed.

This training programme is split into two phases. First, the selected

candidates complete a 26 week course which covers all the training

modules in theory and simulated practice for the trade. Then the

programme moves to the second phase, based on site where all the

modules for the trade are covered in practical workplace experience

for a period of 54 weeks. The Trade Test is completed at the end of

the total 80 week period. The majority of artisans are black, with the

number of woman increasing.

A significant achievement for the AATP is the appointment of their

first Foreman. Lincon Mohlaka, a Boilermaker from Marapong started

his tenure as an apprentice. He later qualified as an artisan and has

now been promoted to Foreman.

Another world-class training facility is the Murray & Roberts

Cementation Training Academy which continues to introduce

innovative training enhancements to support the business.

One enhancement was to design and develop an electronic Training

Management System (“TMS”), a single system that takes cognisance

of our ISO 9001: 2008, 14001:2004 and OHSAS 18001:1999

management systems as well as the requirements of the Mining

Qualifications Authority (“MQA”).

The TMS provides access to information such as the structure,

qualifications and roles and responsibilities of Training Academy staff,

including the products and services offered. Other important

information is made available on relevant MQA systems and

processes, provider service level agreements and safety, health,

environment, as well as quality systems and processes.

E-LEARNINGThe Training Academy has also expanded its e-learning offering to

more than 28 e-learning modules, ranging from soft skills to technical

skills with the objective of accelerating the foundational training

process without jeopardising the quality of training. The process of

e-learning stimulates the mind, increases knowledge and improves

performance through the application of video, sound, reading,

pictures, formative and summative assessments.

41

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SIMULATIONA suite of virtual simulated training modules was introduced this year.

Simulated training lends itself to safer and more productive training as

80% of the required skill can be acquired in this environment.

Simulation equips employees with the necessary knowledge and skills

to perform the technical work required of them, as well as the

interpersonal skills to manage company objectives safely.

PERFORMANCE AND REMUNERATIONValue adding performance happens when people are in the right jobs,

spend time doing the right things, and receive feedback and

recognition for their work.

Murray & Roberts has an integrated performance and development

management process which drives performance to deliver on our

purpose, values and vision. This performance is measured against

five dimensions that creates common direction for all:

� Financial results

� Leadership results

� Relationship results

� Operational excellence results

� Risk results

Performance evaluation outcomes drive individual remuneration and

participation in incentive schemes as well as feed into our annual talent

reviews where talent pools and succession is reviewed. This process

also directly supports individual development and career planning.

TRANSFORMATION AND LOCAL ECONOMIC DEVELOPMENTMurray & Roberts has embraced the philosophy that while broad-

based transformation and employment equity are moral, social and

legal imperatives, they are also economic imperatives that will shape

our Group’s sustainable future within the South African context.

DIVERSITY AND EMPLOYMENT EQUITYDue to historical factors, there are demographic categories that still

experience inequality and disadvantage due to gender, disability and

other forms of diversity. The labour market still lacks an adequate

supply of appropriately qualified and skilled people, particularly

among previously disadvantaged groups. Furthermore the impact of

increased transformation pressure has created challenges to the

retention of experienced black executives, engineers and other built

environment professionals. Murray & Roberts is committed to

continually redress these anomalies in order to strengthen the

capacity of its entire workforce.

We are cognisant that our top and senior management needs to

transform, and are pleased to announce that Jerome Govender has

been appointed to the Group executive committee from 1 August 2012.

Of South African-based employees, 86,4% are black, while 14,6% of

all employees are women. Approximately 57,6% (2011: 49,4%) of all

levels designated as management in the domestic market are black,

and 11,4% (2011: 11,1%) are women.

A revised Employment Equity Standard was approved by the Board

in May this year, ensuring that a consistent approach is implemented

across the Group. A strategy is in place to continue to transform our

current profile and to promote diversity management in the Group.

A holistic approach aimed at both supply side initiatives (growing the

pool, diversifying the source and attracting better than the

competition) and demand side activities (retention plans, accelerated

development and reconsidering job designs) are required across the

South African operations to ensure that they attract, develop and

retain the talent they require to meet their transformation objectives.



Each of the Group’s South African business operations compiles

employment equity plans and reports for the Department of Labour.

Employment equity forums representing employees contribute to the

pursuit of employment equity targets and objectives.

Non-South African operating companies are required to achieve a

diverse representation of the people within their geographic location and

comply with relevant legislation in the country in which they operate.

BROAD-BASED BLACK ECONOMIC EMPOWERMENTMurray & Roberts is committed to Broad-Based Black Economic

Empowerment (“BBBEE”) in our South African business and

addresses the full range of empowerment requirements across its

diverse operations. We follow the provisions of the Broad-Based

Black Economic Empowerment Act No. 53 of 2003 and the

principles embodied in the Codes of Good Practice on Broad-Based

Black Economic Empowerment (“BBBEE Codes”) and the

Construction Sector Charter. As a leading South African enterprise,

Murray & Roberts and its business entities have adopted a holistic

BBBEE strategy, which aims to achieve:

� Appropriate BBBEE ownership at all its operations through a

tiered approach from Murray & Roberts Holdings Limited and from

within selected operating subsidiaries

� A meaningful number of black senior executives throughout

the Group

� An employee complement that reflects the diversity of South

Africa’s demographic profile

� A core complement of black professionals

� Comprehensive skills development to enhance individual and

organisational capability and capacity

� Preferential procurement policies that leverage the broad-based

principles of BBBEE and support local procurement where

appropriate

� Enterprise and social development programmes aimed at

accelerating the development, empowerment and access to the

economy of previously disadvantaged individuals and groups

Due to the Group’s diversity, individual business entities are

encouraged to tailor their BBBEE strategies to their specific needs

and the Group monitors their performance.

The Group achieved a consolidated BBBEE rating of level 3

when measured on the Construction Sector Charter through an

independent verification process undertaken by EmpowerLogic (Pty)

Limited, a South African National Accreditation System accredited

BBBEE verification agency. Individual operating company BBBEE

ratings range from level 2 to level 7. All operating entities are

encouraged to improve their ratings in order for the Group to maintain

a level 3 rating.

A review of the Group’s current empowerment criteria confirms that

the Group’s empowerment status is compliant with various industry

charters and current legislation. The key areas for improvement are

management control and employment equity. We acknowledge that

BBBEE remains a priority challenge for the Group and that there is

much to be done to ensure we meet our expectations as well as

maintain our commitment to meritocracy as the basis for appointment

and reward.

The Letsema BBBEE shareholding scheme offers previously

disadvantaged employees, their families and some of the

communities in which Murray & Roberts operates a stake in the

company and its future. Since Letsema was launched in 2005, wealth

of approximately R680 million has been created for participants and

total dividends of R230 million have been paid to the trusts. Wealth

creation is primarily determined by the share price value and dividend

payments by Murray & Roberts.

The Group’s BBBEE share ownership was not negatively impacted

by the rights issue concluded in April 2012. The total BBBEE share

ownership has remained steady at 31,7% (2011: 32,4%), above the

Construction Sector Charter target of 27,5% and above the BBBEE

Codes target of 25%. The Group’s BBBEE share ownership,

calculated with reference to the Construction Sector Charter, may

however be impacted by reduced international revenues and

CONSOLIDATED SUMMARY OF THE MURRAY & ROBERTS EMPLOYMENT EQUITY PROFILE IN SOUTH AFRICA

Male Female Total

excluding foreigners

Foreign

TotalEE Level African Coloured Indian White African Coloured Indian White Male Female

Top Management 0 0 0 27 0 0 0 0 27 6 0 33

Senior Management 10 3 8 166 2 1 1 15 206 9 0 215

Professionally qualified and

experienced specialists

and mid-management 129 59 50 727 33 9 11 84 1 102 29 1 1 132

Skilled technical and

academically qualified

workers 2 753 325 587 1 918 330 46 41 301 6 301 91 1 6 393

Semi-skilled and

discretionary decision

making 11 397 207 66 296 1 448 109 31 197 13 751 4 046 12 17 809

Unskilled and defined

decision making 5 027 180 11 114 1 360 21 4 14 6 731 378 5 7 114

Total permanent 19 316 774 722 3 248 3 173 186 88 611 28 118 4 559 19 32 696

Temporary employees 927 60 5 116 224 5 1 24 1 362 158 2 1 522

Grand total 20 243 834 727 3 364 3 397 191 89 635 29 480 4 717 21 34 218

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earnings. The calculation of our BBBEE ownership percentage is

based on the value of Murray & Roberts’ South African operations,

where our South African revenue, EBIT and assets are considered.

LOCAL ECONOMIC DEVELOPMENTMurray & Roberts is committed to the principle of supporting local

economic development in the economies within which it operates

with the aim of supporting Government and client localisation

strategies. We have made a significant investment in our plant and

equipment over the past three years with a cumulative capital

expenditure of R2,9 billion. R1,6 billion has contributed to the

expansion of our productive base.

CAPITAL EXPENDITURE (R millions)

2010

2011

2012

1 200

1 000

800

600

400

200

0

� Replacement � Additions

This investment has created more jobs both directly and indirectly

and provides a platform for future growth and economic

development in the economies in which we operate.

Verified preferential procurement as a percentage of total

procurement spend increased to 68% (2011: 61%) of the South

African operations’ procurement expenditure of approximately

R12,9 billion. This represents an 11% increase in preferential

procurement and is above the Construction Sector Code target

of 50%.

VERIFIED PREFERENTIAL PROCUREMENT (as % of total procurement spend)

2010

2011

2012

80

70

60

50

40

30

20

10

0

— Target

We also increased our percentage procurement from small and micro enterprises and more than 50% black-owned businesses as shown below.

Preferential procurement as % of total procurement 2012 2011 2010 Target

Qualifying small enterprise & exempted micro enterprises 16,6% 12,9% 10,6% 10,0%

Suppliers that are >50% black-owned 14,0% 11,2% 7,7% 9,0%

Suppliers that are >30% black women-owned 2,6% 3,0% 1,7% 6,0%


GRADUATES GIVE MURRAY & ROBERTS

TOP MARKS

Every year the South African Graduate Recruiters Association

surveys recent graduates to help organisations understand what

motivates university leavers.

This year 1 689 graduates were surveyed by the association on a

number of issues, including which companies they believed had the

best graduate programmes. Murray & Roberts was voted the top

graduate employer in the engineering and industrial sector for 2012.

It is not only in South Africa that the Murray & Roberts culture

appeals to young job-seekers. This year the Financial Post named

Cementation Canada one of the ten best companies to work for in

that country across all sectors.

CASESTUDY


WOMEN IN THE DRIVING SEAT

Tolcon Lehumo, formed after a women-empowered group joined

Murray & Roberts, is South Africa’s leading traditional tolling

operator. It is also the most gender-empowered company in

the country’s transport, infrastructure and logistics sectors

according to the judges of the ninth annual Top Women awards,

announced in August 2012 at a ceremony in Ekurhuleni. Tolcon

Lehumo, which operates the N3, N1 North, N17, Mariannhill and

Oribi routes, empowers its people with a specific focus on women,

many of whom live in rural communities.

Tolcon Lehumo’s CEO is female, as are two-thirds of all employees,

more than half of management and Board representatives and more

than a quarter of shareholders in a predominantly male sector. The

company’s focus on empowerment and upliftment has earned it a

level 2 BBBEE rating.

CASESTUDY

The improvements are partly attributable to better recording of

preferential procurement but primarily to our commitment to

supporting local empowered suppliers.

Procurement from black-women-owned suppliers remains a

challenge. The target procurement spend outlined in the Construction

Sector Charter for this category of supplier is 6% of total procurement

spend. The Group currently achieves 2,6%. The constraint is the

number of potential suppliers in this category.

The Group’s preferential procurement policy requires each operating

entity to verify its suppliers and alternatively to source empowered

suppliers, should the existing suppliers not be appropriately

empowered.

Murray & Roberts has supported organised business’ (represented by

Business Leadership South Africa) commitments to the South African

Government’s New Growth Path Local Procurement Accord of

analysing and reviewing company-level procurement strategies. This

is to support domestic manufacturing sectors and to see how

business can progressively increase their level of local procurement

where possible, reporting annually on the attainment of local

procurement targets. On initial evaluation we estimate that 83% of

our South African procurement spend is local. This local content may

be overstated because a South African subcontractor, as an example,

may have mobile plant in their cost base, and while we may look at

such a subcontractor as 100% South African content, there may be

elements of their input cost that are not local. This level of detail is

however difficult to ascertain.

We undertake various enterprise development activities through our

operating companies. Activities include the procurement of

subcontractors from small, medium and micro enterprises (“SMME”),

early payment to SMME suppliers, preferential credit terms for

buyers and administration support for certain contractors, suppliers

and clients.

The total value of enterprise development initiatives across the Group

has increased significantly over the last three years to R246,8 million

as shown on the following graph.

COMMUNITY DEVELOPMENTCorporate Social Investment (“CSI”), the Letsema Sizwe Broad-Based

Community Trust (“Letsema Sizwe”) and the Letsema Khanyisa Black

Employee Benefits Trust (“Letsema Khanyisa”) programmes serve as

the conduits through which we engage in community development

and realise our goal of positively impacting on individuals, our

employees and the communities in which we operate.

Murray & Roberts has a long track record as a good corporate

citizen. For over 50 years, we have engaged in social upliftment

activities aimed at redressing inequalities of the past, while

simultaneously influencing the development of quality engineering

professionals needed to sustain infrastructure development and

economic growth in the future.

CSI STRATEGY Murray & Roberts recognises education as the key driver in

addressing issues of poverty, unemployment and more specifically

the shortage of critical skills needed in the engineering and

construction industry. As such CSI within Murray & Roberts is

embedded as a core business function needed to redress inequalities

of the past and to simultaneously influence the development of quality

engineering professionals needed to sustain infrastructure

development and economic growth in the future.

ENTERPRISE DEVELOPMENT CONTRIBUTIONS (R millions)

2008

2009

2010

2011

2012

250

200

150

100

50

0

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TAKING SCIENCE WHERE IT’S

NEEDED MOSTOnce a week, a car pulling a trailer winds its way to the Mazwe

High School in Seleka, Limpopo.

The school is set in a deeply rural area where jobs are few and

poverty is endemic, but the mobile science laboratory packed inside

the trailer could represent the ticket out of poverty that many of

Mazwe’s learners desperately need.

The laboratory is managed by a qualified science teacher who visits

Mazwe – and seven other high schools in the region – to give Grade

10, 11 and 12 learners practical hands-on science training. The

mobile lab contains a fully-equipped laboratory with state-of-the-art

equipment which is used by learners to capture, analyse and

discuss scientific data.

The mobile lab visiting Mazwe High is just one of 31 laboratories

run by a non-profit organisation called Technology Research Activity

Centre (“TRAC”). Twenty-four of the laboratories, like the one

that serves Limpopo, are mobile, while seven are at fixed locations,

mostly in urban areas.

TRAC works with education departments to identify schools where

the need is greatest – and where there is the commitment to

actively support its work. It also liaises with relevant department

officials to ensure that the tuition offered is aligned with the curriculum.

Where schools have laboratories, TRAC brings the equipment they

almost always lack. Where there is no laboratory, TRAC will bring

that too.

Not only do almost 300 000 learners get the first-class hands-on

training that is so essential to grasping physical science concepts

but hundreds of their teachers get in-service training at the same

time. TRAC assists learners who show particular promise to pursue

tertiary education in science, engineering and technology, often

finding them bursaries.

Murray & Roberts is a proud TRAC sponsor, each year paying for

the operation of three mobile and three fixed laboratories. The fixed

laboratories are in Port Elizabeth, northern KwaZulu-Natal and

Johannesburg. The mobile laboratories serve communities near

the Medupi power station in Lephalale and Kusile in Delmas as well

as northern KwaZulu-Natal. Between them, the Murray & Roberts

sponsored laboratories reached more than 7 700 learners.

Donique de Figueiredo, Murray & Roberts CSI manager, says the

TRAC sponsorship is the Group’s flagship CSI project. “Since 2007

our CSI strategy has focused more deliberately on education,” she

explains. Murray & Roberts wants to invest in the youth of our

country and it also wants to cultivate technical and engineering

skills. Hopefully those who emerge from the education system with

the best engineering skills will come to work for us. By bringing

top-class science education to schools around Medupi and Kusile

we are doing our bit to invest in the future of communities where

we work.”

TRAC is making a difference, proven by statistics from all over the

country. In just one year the matric science pass rate at Mazwe rose

from 4% to 52% and the overall pass rate at the schools served by

the Murray & Roberts sponsored Lephalale mobile laboratory

increased from 11% to 32%.

Donique says the Group’s relationship with TRAC has grown over

the past six years, as has the organisation’s impact. “TRAC gives

learners great science education and also emphasises relationships

and mentoring. Despite interacting with thousands of children, each

lab manager quickly recalls anecdotes from specific schools and

can recite individual results for individual learners.

“Our TRAC sponsorship costs Murray & Roberts millions of Rands

each year,” she says, “but it is impossible to put a price tag on the

life-changing value of education.”

CASESTUDY



A targeted CSI strategy has enabled Murray & Roberts to invest

almost exclusively in education. This investment is divided between

three areas of education: mathematics, science and technology

education; numeracy and literacy in early childhood development and

environmental education. Each of these focus areas are closely

aligned with the Group’s core business.

I) MATHEMATICS, SCIENCE AND TECHNOLOGY EDUCATION:

An investment in mathematics, science and technology education

helps to ensure a ready pipeline of talent to meet Murray & Roberts’

own business needs and furthers the interests of the engineering and

construction sector in general.

II) NUMERACY AND LITERACY DEVELOPMENT IN EARLY CHILDHOOD:

Numeracy and literacy education in early childhood helps to develop

sound numerical foundations in very young children. This improves

their chances of excelling in mathematics at primary and secondary

school, which in turn paves the way for a range of mathematically-

oriented careers, many of which serve the engineering and

construction industry.

III) ENVIRONMENTAL EDUCATION:Environmental education is closely aligned to Murray & Roberts’

commitment to sustainability, of which responsible management of

environmental impact is a significant component. Murray & Roberts

recognises that sensitising future generations to the importance of

environmental conservation is critical for the sustainable success of

‘green’ objectives.

2012 BUDGET EXPENDITUREMurray & Roberts is deeply invested in the transformation of the

education sector and dedicates the greater share of its annual CSI

budget to education projects. The total budget expenditure for the

2012 financial year was R14,4 million (2011: R15,5 million), including

CSI overheads and salaries. A total of 77% (R11 million) of this

budget was allocated to education projects, 8% was allocated to

discretionary projects which include strategic relationships with

Business Against Crime, the National Business Initiative and other

pertinent membership organisations and 15% was allocated to

departmental overheads.

A further breakdown of the budget allocated to education projects

indicates that 57% of the funds were allocated to mathematics,

science and technology education at secondary schools, 31% was

committed to universities and 6% to numeracy and literacy in early

childhood development and environmental education.

EXPENDITURE ON EDUCATION PROJECTS (%)

57% � Mathematics, science and technology31% � University expenditure6% � Early childhood development 6% � Environment education

2012

LETSEMA SIZWE COMMUNITY TRUSTThe Letsema Sizwe Community Trust forms one element of the

Murray & Roberts BBBEE shareholding structure initiated in 2005.

Murray & Roberts invested R494 million to extend its black economic

empowerment ownership to a broad base and has already impacted

the lives of close to a million women, children, youth and people living

with disabilities. Through partnerships with reputable development

organisations, individuals and communities have been empowered

around issues of financial literacy, HIV/AIDS awareness and

prevention, food security and leadership. The Trust also supports the

development of sport among able bodied people and people with

disabilities through the annual Jack Cheetham and Letsema Awards.

2011 JACK CHEETHAM AND LETSEMA AWARDSFor the period under review, R1,2 million was disbursed to

beneficiaries of the Jack Cheetham and Letsema Awards. Four

of the beneficiaries were nominated in 2012 and the remaining

eight beneficiaries were nominated between 2009 and 2011. The

12 beneficiaries include the 2011 winners who were announced

at the annual gala awards ceremony.

The 2011 Jack Cheetham Award was allocated to Johannesburg

Gymnastics Centre, while the Chaeli Sports and Recreation Centre

scooped the Letsema Award. Central Gauteng Squash and the

Nelson Mandela Township Sports Federation were nominated as

the first and second runners up for the Jack Cheetham Award.

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ENVIRONMENTAL PERFORMANCEThis year we embarked on a project to improve both environmental data reporting and environmental risk management. The status of the

various actions is shown below. Results from this process are expected to be visible in FY2013.

Action Status

Determine material environmental issues through a combination of

benchmarking and internal engagement with operating entities

The most material environmental issues have been identified

and agreed

Define an appropriate governance structure for environmental risk

and reporting, aligned to health and safety

A draft governance structure defining roles and responsibilities has

been compiled and is in the process of being formalised with the

operating entities

Conduct environmental status reviews at selected operations to

capture and report on the most material environmental risks

Environmental status reviews conducted at 16 sites

Develop a consistent environmental risk management framework

and process

A draft environmental risk and incident reporting framework has

been compiled and is being formalised with businesses

Develop an environmental data reporting standard to ensure

consistent and complete reporting of environmental data across

the businesses

A draft environmental data reporting standard has been compiled

and is being formalised with the operating entities

Build capacity on environmental data reporting across the

operating entities

Formal training to be rolled out in the first quarter of FY2013

DETERMINING OUR MATERIAL ISSUESThrough engagement with the operating entities it was determined that the most material environmental issues are: energy and climate change;

environmental compliance and incidents; and waste and water management.

For the Construction Products Africa operating platform raw materials were also identified as being of particular significance.

The process of determining materiality has informed the development of an environmental data reporting standard. It is expected that the

operating entities will report on these material issues in the next year.

2012 PERFORMANCEThe 2012 environmental performance with respect to energy, carbon footprint and ISO 14001 is shown below.


Performance dimension 2012 2011 2010 Movement

Environmental

Energy usage (MWh) 1 717 120 1 319 329 1 327 327 �

Carbon footprint (tonnes of carbon dioxide equivalent) 565 034 515 5061 633 643 �

ISO 14001 implementation (percentage coverage) 40% ±30%2 N/A �

1 This figure differs from the figure reported in our latest CDP response (427 273 tonnes CO2e) because Much Asphalt’s Heavy Fuel Oil figures had originally been

misstated in the carbon footprint. These figures have since been corrected.

2 Murray & Roberts requires that operating companies adopt the most stringent standards, whether they are imposed by client environmental management plans, local

and national legislation, or the Group itself. Our operations are required to implement and comply with ISO 14001, a standard that addresses environmental

management systems. Currently, 40% of the Group’s operations are ISO 14001 certified, based on number of employees and subcontractor employees under our

control. We last year reported that approximately 70% of operations had ISO14001 accreditation, which incorrectly assumed that all of the employees in two of our

largest operations were covered by the certification, however only certain sites in these operations were accredited. The correct level of certification was approximately

30% for FY2011 and the FY2010 number is not reported. We will be tracking progress towards full compliance as part of our internal assurance plan.


RESOURCE EFFICIENCY AND CARBON FOOTPRINTENERGY USAGEDuring FY2012, the Group consumed approximately 1,7 million megawatt hours (MWh) of energy from a variety of fuel sources, with diesel

(both stationary and mobile) and bituminous coal accounting for 80% of the Group’s energy usage. The table below indicates the different fuel

sources utilised across the Group.

Fuel source MWh % of total Major user

Diesel oil 703 225 41 Murray & Roberts Contractors Middle East – 50%

Bituminous coal 662 051 39 Ocon Brick – 99%

Heavy fuel oil 134 738 8 Much Asphalt – 99%

Petrol 108 639 6 Technicrete – 67%

Electricity 68 839 4 Hall Longmore – 22%

LPG 39 409 2 Technicrete – 70%

CARBON FOOTPRINTMurray & Roberts has participated in the Carbon Disclosure Project

(“CDP”) since 2008, measuring and reporting on its carbon emissions

since then.

Between FY2010 and FY2011 the Group’s absolute emissions

(Scope 1 and 2) decreased by 26,6%, largely due to the mothballing

of CISCO during FY2011. In FY2010, CISCO contributed 203 856

tonnes CO2e to the Group’s absolute emissions; 66 604 tonnes CO2e

in FY2011 and zero in FY2012. Between FY2011 and FY2012,

absolute emissions increased by 10%. Ocon Brick accounts for

approximately 40% of the Group’s carbon footprint.

Murray & Roberts’ carbon footprint is affected by the number and

size of projects. This varies year to year, making accurate carbon

footprint comparisons difficult.

Several operating companies have introduced energy-efficiency/

saving measures and this has positively affected our carbon footprint.

These measures include:

� Improving power factor correction systems and monitoring within

Building Products operating companies

� Improving machine efficiencies (including set ups and

maintenance) and replacing old machinery within the Building

Products platform

� New technology to improve energy efficiency (such as installing

new oil-fired burners) at Much Asphalt

� Energy-saving initiatives within head offices, such as introducing a

‘switch off at night’ campaign, installing energy-saving light bulbs

and installing sensors to control lighting and air conditioning

TOTAL GREENHOUSE GAS EMISSIONS (tonnes CO2e)

2010

2011

2012

� Scope 1

� Scope 2� Scope 3

800 000

700 000

600 000

500 000

400 000

300 000

200 000

100 000

0

The Group’s South African operations account for approximately

73% of the Group’s absolute emissions. Carbon emissions have

potentially been under-reported within some of the countries in

which Murray & Roberts operates.

CARBON FOOTPRINT BY REGION (tonnes CO2e)

2012

2012

2011

2011

Scope 1 Scope 2 Scope 1 Scope 2

350 000

300 000

250 000

200 000

150 000

100 000

50 000

0

� SA� Non-SA

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CARBON TAX IMPLICATIONSThe South African Government’s 2012/13 budget review outlined

elements of a carbon tax. These include the tax starting at R120 per

tonne of CO2, increasing at 10% per year and limited to Scope 1

emissions. Basic free allowances for businesses across certain

sectors to the amount of 60% of their annual Scope 1 emissions will

also be introduced, and an emissions benchmark per unit of output

will be defined for each sector.

Murray & Roberts will be exposed to the carbon tax on its South

African Scope 1 emissions. It is unclear whether Murray & Roberts

will qualify for the 60% free allowance. Should Murray & Roberts

qualify for the allowance, only 40% of Scope 1 emissions would be

liable for a carbon tax at R120 per tonne of CO2e. This would result

in a tax liability of some R16,5 million based on FY2012 figures.

Should Murray & Roberts not be liable for the allowance, it will be

taxed on 100% of Scope 1 emissions. This could result in a tax

liability of some R41,3 million a year.

Additionally, Murray & Roberts may face an increase in the price of

electricity as a result of Eskom passing the cost of the carbon tax on

to its consumers. This may be in the region of R0,04/kWh which

would result in an increase of R2,7 million a year based on FY2012

consumption.

The Australian Government has implemented a carbon pricing

scheme in July 2012. Based on their current emissions, the Group’s

Australian operations (Clough and RUC Cementation) will not be

subject to the carbon pricing scheme.

WATER USAGEThe estimated water usage for the Group is approximately

630 000 kilolitres, mainly supplied by local municipal systems.

Water data is possibly underreported across the Group. Data for

municipal water consumed is provided quarterly by some operations.

Mine contracting operations and entities in the Construction platform

do not report on water used as the client concerned accounts for

it on site. Training will be rolled out during FY2013 to assist with

the reporting process.

ENVIRONMENTAL RISK AND COMPLIANCE Environmental status reviews were conducted at 16 sites across the

Construction Products Africa, Engineering Africa, Construction Africa

and Middle East and Construction Global Underground Mining

operating platforms.

Site visits were conducted at each of the sites by an independent

team of environmental consultants and the environmental status of

each operation was reviewed against environmental best practice.

The most significant environmental risks identified were:

� Poor waste management, including the inadequate disposal of

hazardous waste and insufficient management of appointed waste

contractors

� Authorisations, such as water and waste licences, not being in place

� Conditions of authorisations and client authorisations not being

met and/or reviewed to verify compliance

� Soil and groundwater contamination from potential leaks of

underground fuel storage tanks

� Wastewater discharged to the soil or storm water drains and

industrial effluent discharges having exceeded effluent limits

REPORTED CONTRAVENTIONS, SPILLS AND FINES � Murray & Roberts Cementation reported that both the Impala 20

hostel and Pandora hostel are located on agricultural ground and

neither site carries the required environmental, town planning and

water use licence authorisations. However, these incidents did not

result in any fines or penalties

� Concor Roads and Earthworks reported two non-conformances,

one involving a water pipe and the second relating to the dumping

of waste. Neither incident resulted in a fine

� UCW reported that its iron, zinc and suspended solids levels in

their industrial effluent were above the required limits

� A pre-compliance and compliance notice was issued in 2011 by

the Gauteng Department of Agriculture and Rural Development

(“GDARD”) provincial environmental authority to Much Asphalt for

contravening the conditions of the Environmental Impact

Assessment Record of Decision for the new Benoni plant. All

issues have been addressed, except for the storm water plan

which is awaiting approval from GDARD

� The operating entities reported approximately 150 spills in

FY2012, the majority of which were minor spills. The spills were

remediated immediately and accordingly

Murray & Roberts requires that operating companies adopt the most

stringent standards, whether they are imposed by client environmental

management plans, local and national legislation, or the Group itself.

Our operations are required to implement and comply with ISO

14001, a standard that addresses environmental management

systems as well as the ISO 9001 quality management standard.

Currently, 40% of the Group’s operations are ISO 14001 certified,

based on number of employees and subcontractors under our

control. We last year reported that approximately 70% of operations

had ISO 14001 accreditation, which incorrectly assumed that all

employees in two of our largest operations were covered by the

certification, however only certain smaller sites and corporate offices

in these operations were certified. The correct level of certification

was approximately 30% for FY2011. ISO 9001 coverage was at 68%

at the end of the financial year. We will be tracking progress towards

full compliance as part of our internal assurance plan.

WASTE MANAGEMENTWASTE GENERATION AND DISPOSALWaste generated is measured and monitored at an operational level

but the data is currently inconsistent and incomplete so aggregation

of data is not possible at present. Reporting on waste will take place

from the first quarter of FY2013. Non-hazardous waste (concrete,

brick, paper) is recycled or reused where possible. Hazardous

hydrocarbons and plastic waste is removed and recycled

where possible.

ENVIRONMENTAL PERFORMANCE CONTINUED


OUTLOOKThe following strategic objectives and actions will form the basis of our focus during the next year:

Strategic objective Key action

Establish credible, auditable baselines for

energy, water and waste

Implement environmental reporting guidelines and roll out training and implement an electronic

reporting system for environmental data

Develop environmental incident and risk

reporting processes

Develop Group standards on environmental incidents and risks and roll out training

Establish environmental reduction targets Once accurate baselines are established, Murray & Roberts will consider setting reduction targets

Ensure ongoing legal compliance with

environmental legislation and Record of

Decision (“RoD”) requirements

Roll out environmental risk and incident standard and strengthen environmental and legal

compliance reviews across the Group

LEADING THE WAY

IN RECYCLING

Rehabilitating roads does not have to mean that the “tar” being

replaced should be discarded. Today, more and more asphalt is

being recycled without compromising the quality of the end product.

Locally Much Asphalt is the leader in asphalt recycling, in the past

year processing some 85 000 tonnes of recycled asphalt (“RA”).

In 2011, Much Asphalt’s Benoni operation commissioned mobile

crushing and screening equipment costing R4 million for the

processing of recycled asphalt materials. In 2012 a second unit was

acquired as demand grew. The new equipment, an impact crusher

and a mobile screen, were immediately put to work processing

a 100 000 tonne stockpile of RA for recycling.

Much Asphalt has big plans for recycling which, in the United States

of America, accounts for around 30% of all asphalt production.

RA is rapidly gaining market acceptance for its “green” properties.

The bitumen and aggregates used in asphalt are non-renewable

resources that are becoming increasingly scarce. In South

Africa, most RA is generated through milling machines which

remove the layers of asphalt requiring replacement. Using

milling machines means that the asphalt is fragmented to a

uniform grading and can be removed without disturbing the

edges or underlying pavement materials. Pavement materials

that are still useable can then be left as is, while edges of the

road are not disturbed.

A further advantage of recycling asphalt is that it can be used

in warm mix asphalt – which uses a production process that

utilises 30% less energy, than that used in hot mix asphalt,

thus saving cost and the environment.

Much Asphalt, who is currently using RA at seven of its facilities,

has plans to extend it to its remaining operations. This initiative

is evidence of Much Asphalt’s support for one of Murray & Roberts’

key values “care”, which in this case relates to care for the

environment.

CASESTUDY

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ETHICAL PERFORMANCE


MANAGEMENT FRAMEWORKSThe “tone at the top” set by the Board and executive committee

continued to drive a vision for and commitment to a morally and

ethically sound culture within Murray & Roberts.

STATEMENT OF BUSINESS PRINCIPLESOur Statement of Business Principles was widely distributed across

the Group, both to existing staff and new recruits, and its message

was disseminated in forums designed to reaffirm its importance as

the standard bearer of the moral and ethical culture we are striving to

embed at Murray & Roberts.

We continue to conduct our business within the framework set by the

regulatory requirements applicable to our industries in every territory

in which we operate. In this, we conduct our business in compliance

with both the letter and the spirit of the law, our Group policies, and

our Statement of Business Principles.

REGULATORY COMPLIANCERegulatory compliance became a key focus during the year, and our

Compliance Officer implemented our regulatory compliance strategy

through the latter part of the financial year. In adopting a risk-based

approach, there was a continued focus on existing and anticipated

high risk regulations in the South African market, which include:

� Occupational Health and Safety Act No. 85 of 1993

� Mine Health and Safety Act No. 29 of 1996

� National Environmental Management Act No. 107 of 1998

� Prevention and Combating of Corrupt Activities Act No. 12

of 2004

� Competition Act No. 89 of 1998

� Labour Relations Act Amendment Bill 2012

� Basic Conditions of Employment Act Amendment Bill 2012

Each operating company is developing and implementing its own risk

management strategies that identify and implement the controls

required to comply with all applicable laws and regulations.

Monitoring procedures were actively carried out, and this activity will

increase in intensity in the months ahead. Risk areas of potential

non-compliance were identified and earmarked for the implementation

of immediate preventative measures. No significant fines or instances

of material or often repeated instances of non-compliance were

identified in the 2012 financial year. The only material instance

of non-compliance pending a penalty in respect of prior periods is

the Competition Commission matter referred to in the next section

of this report.

FRAUD, CORRUPTION, ANTI-COMPETITIVE BEHAVIOUR AND UNFAIR BUSINESS PRACTICESMurray & Roberts subscribes to good corporate governance, good

corporate citizenship and ethical business practices. The Group is a

signatory to the World Economic Forum Partnering Against Corruption

Initiative (PACI). The Group is also a member of Business Leadership

South Africa and supports their Code of Good Corporate Citizenship.

All executives involved in preparing and authorising each specific

project bid, sign a Declaration that they have not committed, and are

not aware that anyone else affiliated with the bid has committed,

whether directly or indirectly, any unethical or unlawful practices in the

preparation and submission of the tender or resultant project delivery.

We do not condone anti-competitive or collusive conduct in any

shape or form by our employees in every jurisdiction in which we

operate, whether or not there are anti-competitive or anti-collusive

laws in place. We are also committed to compliance with the South

African Competition Act.

The issue as to what actions the Group takes against perpetrators

is guided by the Group’s Anti-Competitive and Collusive Conduct

Consequence Matrix. In accordance with the Matrix, no actions have

been taken or are required to be taken against any employee of

the Group.

The Group still awaits finalisation of the Fast Track Settlement

application lodged with the Competition Commission on 15 April

2011, which related to infringements of past employees of subsidiary

companies. The Commission is in the process of reviewing the

application and it is anticipated that the Fast Track Settlement

process should be concluded by the end of September 2012.

In 2010 we launched a dedicated series of educational campaigns

comprising seminars, workshop discussions and online training,

aimed at instilling a culture of compliance within the Group, and

raising the awareness and understanding of the requirements of and

obligations imposed by the Competition Act.

These initiatives were extended to all new employees in senior

management roles and those who may be exposed to anti-competitive

or collusive conduct by nature of their position within the Group. Over

and above the 1 058 individuals who completed the online training in

previous campaigns, approximately 332 additional individuals had

completed the online programme by the end of July 2012. Refresher

training will be offered to all relevant employees during October 2012.

TRANSPARENCYIn our commitment to encourage concerned employees to report

observed unethical behaviour taking place in the Group, we

continued to promote our “Tip-Offs Anonymous” hotline service that

supports reporting of workplace dishonesty and unethical behaviour,

including discrimination, theft, fraud and corruption.

During the year under review, 58 cases were reported and

investigated, of which 46 were closed out and 12 remain under

investigation.

A professional firm of forensic consultants and investigators

appointed by the Group assists with investigations into the reported

cases. Appropriate disciplinary and legal action has been taken in all

cases of dishonest conduct.

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TIP-OFFS ANONYMOUSTo support our commitment to conducting business honestly

and with integrity, we subscribe to a service that allows all employees

to report anonymously any unethical behaviour or dishonesty in

the workplace. The hotline is managed by Deloitte & Touche

and is completely independent of Murray & Roberts. All reports

are investigated.

In the year under review, the hotline received 59 contacts,

of which 24 reports were generated (the breakdown of reports

is provided below).

Approximately 22% of the reports related to grievances, concerns

and allegations requiring human resource and management

interventions. A further 21% of the reports focused on preferential,

discriminatory and unfair treatment in the workplace.

OFFENCE PROFILE BREAKDOWN

2% � Accounting fraud 3% � Conflict of interest 22% � HR issues/grievances 2% � Identity fraud 3% � Illegal activity: drugs 3% � IR/unfair labour practices 5% � Job selling 2% � Misrepresentation of Murray & Roberts identity 21% � Preferential, discriminatory and unfair treatment 2% � Property damage 3% � Qualification and CV fraud 2% � Reckless driving 2% � Request for information 12% � Tender fraud/bribery 9% � Theft 7% � Unethical conduct

2012

HUMAN RIGHTS Murray & Roberts endorses the employee rights enshrined in the

Constitution of the Republic of South Africa 1996, including the right

to collective bargaining and other labour rights under constitutional

laws, wherever we operate. Murray & Roberts acknowledges the right

of individuals to freedom of association and rejects child and forced

labour. Approximately 56% of the Group’s employees, particularly

those in the South African mining activities, are represented by trade

unions and by collective bargaining agreements.

Murray & Roberts respects the rights of indigenous people and where

appropriate, partners with indigenous and local communities.

UNFAIR DISCRIMINATION AND EQUALITYDiscrimination of any form is viewed in a very serious light by

Murray & Roberts and appropriate disciplinary action is taken against

offenders. We do not condone unfair discrimination and expect

everyone who works for or acts on our behalf to adhere to the

highest ethical standards. We expect all employees and service

providers to treat those with whom they come in contact with dignity

and respect. As a South African domiciled company, we believe that

it is not unfair discrimination to promote affirmative action consistent

with the Employment Equity Act or to prefer any person on the basis

of an inherent job requirement.

ECONOMIC PERFORMANCE



Performance dimension 2012 2011 Movement

Economic contribution

Value added to employees 14 148 9 824 �

Value added to providers of finance (net) 542 578 �

Value added to Government 245 196 �

Value added to maintain and expand the Group (52) (1 150) �

Total value added 14 883 9 448 �

Value added is the measure of wealth the Group creates through its

operations by adding value to the cost of raw materials, products and

services purchased. The chart summarises total wealth created and

how it was shared between the stakeholders.

14 1

48

14 8

83

(52)

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of fi

nanc

e (n

et)

TOTAL WEALTH CREATED (R millions)

Value added to employees through payroll payments increased by

44%, while operating covering lease costs and net interest expense

paid to providers of finance decreased by 6%. Company tax paid to

Governments increased by 25% due to profitability in tax paying

jurisdictions. As a consequence of the losses incurred by the Group,

value added to maintain and expand the Group reduced due to a

decline in reserves available to ordinary shareholders.

The Group did not receive any significant financial assistance from

Government during the reporting period.

Everything that is not the natural or agricultural environment is the

built environment. This is where Murray & Roberts has played a

significant role throughout its history, delivering the infrastructure

and facilities required for sustainable growth of the economies in

which it operates.

Some of the greatest challenges we face as humankind are to satisfy

the growing global demand for transport and logistics, power and

energy, water and sanitation, telecommunications, health and

education, accommodation and facilities, and mineral extraction and

beneficiation infrastructure. Our economic contribution centres on the

delivery of this infrastructure, without which no economic and social

development is possible.

Infrastructure owners rely on the various stakeholders within the built

environment to develop, finance, design, engineer, construct, operate

and supply inputs for delivery of infrastructure. We support

infrastructure delivery through our core competency of engineering

and construction, and through the provision of selected construction

products and operations.

The quantifiable benefits of our contribution to society are not easily

identified, but considering the positive impact of an adequate built

environment on socioeconomic development and the scale required

to make the difference measurable, the significance Murray & Roberts

has attained in its market over more than 100 years, offers some

testimony in this respect.

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Performance dimension 2012 2011 Movement


Revenue 35 406 30 535 �

Operating costs 35 567 31 213 �

Cash and cash equivalents 3 388 3 101 �

Operating cash (outflow)/inflow (before dividends) (2 290) 334 �

Order book relative to order book related revenues 1,4 times 2,0 times �

Opportunities in the active pipeline (R billion) 74 86 �

FINANCIAL SUSTAINABILITYThe financial sustainability of engineering and construction

businesses hinges on the following value drivers:

� Financial position strength which impacts the Group’s credit

rating for performance bonds and working capital

� Sound cash flows to support investment and growth

� A formalised project procurement system which defines our

risk appetite

� The project order book relative to revenues.

The Group’s year-end cash and cash equivalents position was

R3,4 billion (2011: R3,1 billion) after the operating cash outflow of

R2 290 million (2011: R334 million cash inflow) and proceeds

received on the rights issue to shareholders of R1,9 billion net of

transaction costs. The primary contributors to the operating cash

outflow was GPMOF, with operating losses of R1,2 billion in the

current year, as well as contractor costs relating to legacy contracts

in the Middle East.

Procurement of projects is the primary source of risk for the Group.

The Group risk appetite sets the operational parameters for risk.

Prospects are filtered against criteria such as value, country, legal

system and scope, and the level of authorisation required is specified.

The opportunity management system (OMS) supports the evaluation

and approval of project opportunities in the context of the risk

appetite. At 30 June 2012, opportunities in the active pipeline

amounted to R74 billion (2011: R86 billion).

The Group’s order book declined by 18% to R45 billion due to

termination of the Aquarius contract and the de-scoping of work on

the power programme by Hitachi. The order book for Australian-

based entities has increased by R8,2 billion year on year. The

average margin on the order book is within the Group’s strategic

range of 5,0% to 7,5%. The order book is located in markets that

have been determined to be sustainable going forward.

Financial year Order book Relative to revenues

30 June 2010 R44 billion 1,8 times 2010 revenues



SUMMARY OF ANNUAL FINANCIAL STATEMENTSThe following pages provide an overview of the Group’s financial

performance, ahead of the audited annual financial statements that

start on page 124.

STATEMENT OF VALUE CREATEDFOR THE YEAR ENDED 30 JUNE 2012

58% � Southern Africa 4% � Middle East 29% � Australasia and Southeast Asia 9% � North America and Other

2012

GEOGRAPHIC REVENUE

49% � Southern Africa (4)% � Middle East 29% � Australasia and Southeast Asia 26% � North America and Other

2012

GEOGRAPHIC PBIT*

53% � Southern Africa 8% � Middle East 31% � Australasia and Southeast Asia 8% � North America and Other

2012

GEOGRAPHIC TOTAL ASSETS

84% � Southern Africa – � Middle East 12% � Australasia and Southeast Asia 4% � North America and Other

2012

GEOGRAPHIC PEOPLE

23% � Construction Africa and Middle East 15% � Engineering Africa 11% � Construction Products Africa 27% � Construction Global Underground Mining 24% � Construction Australasia Oil & Gas and Minerals

2012

SEGMENTAL REVENUE


2012

SEGMENTAL PBIT*

29% � Construction Africa and Middle East 10% � Engineering Africa 13% � Construction Products Africa 17% � Construction Global Underground Mining 28% � Construction Australasia Oil & Gas and Minerals 3% � Corporate and Properties

2012

SEGMENTAL TOTAL ASSETS


2012

SEGMENTAL PEOPLE

* PBIT is based on normalised profits, and excludes losses on GPMOF of R1 189 million, Middle East of R387 million, other impairments of R25 million and corporate

costs of R132 million.

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS 2012 % 2011 %

Revenue 35 405,9 30 534,8

Less: Cost of materials, services and subcontractors (20 523,2) (21 087,3)

Value created 14 882,7 9 447,5

Distributed as follows: To employees

Payroll costs 14 148,8 95,1 9 824,0 104,0

To providers of finance

Lease costs and net interest on loans 541,7 3,6 577,1 6,1

To Government

Company taxation 244,6 1,6 196,3 2,1

To maintain and expand the Group

Reserves available to ordinary shareholders (735,6) (1 735,1)

Depreciation 658,7 562,0

Amortisation 24,5 23,2

(52,4) (0,3) (1 149,9) (12,2)

14 882,7 100,0 9 447,5 100,0

Number of people* 44 710 42 422

State and local taxes charged to the Group or collected on behalf of Governments by the Group

Company taxation 244,6 196,3

Indirect taxation 1 175,1 1 022,8

Employees’ taxation 1 311,8 1 136,3

Rates and taxes 6,7 6,5

Government grants (8,9) (9,5)

Withholding taxation – 0,3

2 729,3 2 352,7

* “People” include all employees, temporary employees and contractors (excluding the Middle East).


CREATION OF VALUE** (R millions)

2008

2009

2010

2011

2012

PEOPLE PRODUCTIVITY (value ratio)

2008

2009

2010

2011

2012

RETURN ON AVERAGE TOTAL ASSETS (%)

2008

2009

2010

2011

2012

12

10

8

6

4

2

0

PRODUCTIVITY OF ASSETS (assets per R1 000 turnover)

2008

2009

2010

2011

2012

1 000

800

600

400

200

0

20 000

15 000

10 000

5 000

0

400

350

300

250

200

150

100

50

0

DILUTED HEPS AND DIVIDENDS per share (cents)

� Diluted headline earnings per share — Dividend per share

� Value of shares traded

— Volume of shares traded� High – low

— Closing� Market capitalisation

— Ordinary shares

2008

2009

2010

2011

2012

SHARES TRADED (R millions)

2008

2009

2010

2011

2012

MARKET CAPITALISATION (R millions)

2008

2009

2010

2011

2012

SHARE PRICE MOVEMENT (cents)

2008

2009

2010

2011

2012

35 000

30 000

25 000

20 000

15 000

10 000

5 000

0

30 000

25 000

20 000

15 000

10 000

5 000

0

12 000

10 000

8 000

6 000

4 000

2 000

0

600

500

400

300

200

100

0

800

700

600

500

400

300

200

100

0

–100

–200

–300

–400

–500

2012

ORDER BOOK TIME DISTRIBUTION

53% � 2013 29% � 2014 18% � Thereafter


ORDER BOOK SECTOR DISTRIBUTION

2012

42% � Southern Africa 4% � Middle East 45% � Australasia and Southeast Asia 9% � North America and other

2012

ORDER BOOK GEOGRAPHIC DISTRIBUTION

** Includes continuing and discontinued operations.

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TEN-YEAR FINANCIAL REVIEW30 JUNE 2012


ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS

IFRS restated* SA GAAP

2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

SUMMARISED STATEMENTS OF FINANCIAL PERFORMANCE*Revenue 35 406 30 535 27 851 30 006 23 290 15 364 9 289 8 083 8 424 10 111

(Loss)/profit before interest and taxation (161) (678) 1 535 2 557 1 792 1 128 515 356 405 628

Net interest (expense)/income** (248) (194) (122) 111 87 38 34 16 10 (66)

(Loss)/profit before taxation (409) (872) 1 413 2 668 1 879 1 166 549 372 415 562

Taxation expense (245) (196) (414) (575) (482) (299) (168) (120) (27) (76)

(Loss)/profit after taxation (654) (1 068) 999 2 093 1 397 867 381 252 388 486

Income/(loss) from equity

accounted investments 143 86 15 2 9 (107) 1 78 114 97

(Loss)/profit from discontinued operations (81) (666) 215 243 657 36 179 163 - -

Non-controlling interests (144) (87) (131) (320) (349) (94) (49) (30) (25) (9)

(Loss)/profit attributable to owners of

Murray & Roberts Holdings Limited (736) (1 735) 1 098 2 018 1 714 702 512 463 477 574

SUMMARISED STATEMENTS OF FINANCIAL POSITION Non-current assets 7 323 4 658 5 268 5 464 4 835 3 953 3 389 2 547 2 422 2 082

Current assets 14 048 13 997 14 960 17 235 16 118 8 836 6 797 5 475 3 671 4 211

Goodwill 437 435 554 490 488 206 147 48 5 10

Deferred taxation assets 634 470 343 305 208 16 52 34 33 –

Total assets 22 442 19 560 21 125 23 494 21 649 13 011 10 385 8 104 6 131 6 303

Equity attributable to owners of

Murray & Roberts Holdings Limited 5 887 4 221 6 203 5 581 4 865 3 637 3 086 3 067 2 603 2 485

Non-controlling interests 1 215 1 100 974 1 053 960 178 108 97 54 13

Total equity 7 102 5 321 7 177 6 634 5 825 3 815 3 194 3 164 2 657 2 498

Non-current liabilities 1 596 1 873 2 383 1 447 1 290 1 103 1 028 890 734 713

Current liabilities 13 744 12 366 11 565 15 413 14 534 8 093 6 163 4 050 2 740 3 092

Total equity and liabilities 22 442 19 560 21 125 23 494 21 649 13 011 10 385 8 104 6 131 6 303

* IFRS restated numbers are only for continuing operations whereas SA GAAP numbers are for both continuing and discontinued operations.

** Includes currency conversion effects on offshore treasury funds in 2003.

RATIOS AND STATISTICS30 JUNE 2012

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IFRS restated* SA GAAP

2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

EARNINGS (Loss)/earnings per share (cents)**

– Basic (214) (530) 336 618 521 216 152 131 135 163

– Diluted (214) (528) 335 612 510 212 149 129 133 159

Headline (loss)/earnings

per share (cents)**

– Basic (246) (456) 308 616 507 297 149 134 143 168

– Diluted (246) (454) 307 609 496 293 146 132 140 163

Dividends per share (cents) – – 105 218 196 116 60 45 45 53

Dividend cover – – 2,9 2,8 2,5 2,5 2,4 2,9 3,1 3,1

Interest cover*** 4,1 4,4 7,6 7,2 6,7 10,2 6,7 6,5 8,2 7,0

PROFITABILITY PBIT on revenue (%)*** 4,1 4,2 8,1 8,5 7,7 7,3 5,5 4,4 5,0 6,3

PBIT on average total assets (%)*** 6,9 6,4 10,1 11,3 10,3 9,6 5,6 5,0 6,8 9,9

Attributable profit on average ordinary

shareholders’ funds (%)*** 17,1 5,7 29,1 38,6 40,3 20,9 16,7 16,0 19,0 22,4

PRODUCTIVITY Per R1 000 of revenue:

Payroll costs (Rand) 395 317 291 314 330 287 316 336 216 188

Total average assets (Rand) 593 666 801 752 744 761 995 881 738 634

Value created (Rm)**** 15 202 10 076 11 665 13 699 10 996 6 073 4 129 3 600 2 606 2 913

Value ratio**** 1,05 1,00 1,33 1,39 1,40 1,31 1,30 1,33 1,43 1,53

FINANCE As a percentage of total equity

Total interest bearing debt 31 44 45 54 35 36 40 32 30 38

Total liabilities 216 268 194 254 272 241 225 156 133 153

Current assets to current liabilities 1,02 1,13 1,29 1,12 1,11 1,10 1,10 1,35 1,34 1,36

Operating cash flow (Rm) (2 290) 334 691 1 559 3 116 1 935 598 663 289 356

Operating cash flow per share (cents) (515) 101 208 470 939 583 180 200 87 107

OTHER Weighted average ordinary shares in issue

(millions)** 382,7 367,8 367,8 367,8 367,8 367,8 367,8 367,8 367,8 367,8

Weighted average number of treasury

shares (millions)** 39,2 40,3 41,3 42,1 38,7 42,0 30,0 15,2 15,3 15,6

People – 30 June**** 44 710 42 422 40 413 38 981 45 654 33 466 23 867 23 904 13 149 15 827

DEFINITIONSDividend cover Diluted headline (loss)/earnings per share

divided by dividend per share

Value ratio Value created as a multiple of payroll cost

PBIT Profit before interest and taxation Net asset value (NAV) Ordinary shareholders’ equity

Interest cover PBIT divided by interest expense Average Arithmetic average between consecutive

year-ends

* IFRS restated numbers are only for continuing operations, whereas SA GAAP numbers are for both continuing and discontinued operations. ** Weighted average ordinary shares in issue have been adjusted in the prior years due to the rights offer made to shareholders in April 2012.*** The above calculations are based on normalised profits of R1,4 billion (2011: R1,3 billion; 2010: R2,2 billion). **** Includes continuing and discontinued operations.

SEGMENTAL INFORMATION30 JUNE 2012



Group

Discontinuedoperations excluded

from ongoingoperations*

Construction Africaand Middle East

2012 2011 2012 2011 2012 2011

SUMMARISED STATEMENT OF FINANCIAL PERFORMANCERevenue 35 406 30 535 1 738 2 646 8 108 9 108

(Loss)/profit before interest and taxation (161) (678) (17) (710) (1 317) (1 399)

Net interest (expense)/income (248) (194) (32) (58) (69) (44)

(Loss)/profit before taxation (409) (872) (49) (768) (1 386) (1 443)

Taxation (expense)/credit (245) (196) (33) 118 (79) (106)

(Loss)/profit after taxation (654) (1 068) (82) (650) (1 465) (1 549)

Income/(loss) from equity accounted investments 143 86 1 (16) 9 (2)

Loss from discontinued operations (81) (666) – – – –

Non-controlling interests (144) (87) – – (9) (6)

(Loss)/profit attributable to holders of

Murray & Roberts Holdings Limited (736) (1 735) (81) (666) (1 465) (1 557)

SUMMARISED STATEMENT OF FINANCIAL POSITIONNon-current assets 7 957 5 128 142 145 3 271 1 208

Current assets** 14 048 13 997 949 2 692 3 158 4 872

Goodwill 437 435 – – 52 44

Total assets 22 442 19 560 1 091 2 837 6 481 6 124

Equity attributable to owners of Murray & Roberts

Holdings Limited 5 887 4 221 1 019 1 198 1 062 659

Non-controlling interests 1 215 1 100 35 425 6 18

Total equity 7 102 5 321 1 054 1 623 1 068 677

Non-current liabilities 1 596 1 873 – 30 891 689

Current liabilities** 13 744 12 366 37 1 184 4 522 4 758

Total equity and liabilities 22 442 19 560 1 091 2 837 6 481 6 124

SUMMARISED STATEMENT OF CASH FLOWSCash generated by/(utilised in) operations before working

capital changes 535 646 (25) (103) (1 314) (384)

Discontinued property activities – (6) – (6) – –

Change in working capital (2 115) 232 (83) 39 (957) (676)

Cash (utilised in)/generated by operations (1 580) 872 (108) (70) (2 271) (1 060)

Interest and taxation (710) (538) 33 (59) 7 (56)

Operating cash flow (2 290) 334 (75) (129) (2 264) (1 116)

* Includes the Group’s properties divisions, interest in Steel reinforcing bar manufacture and trading operations, Johnson Arabia crane hire and Clough’s marine operations.** Includes assets/liabilities classified as held-for-sale.

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EngineeringAfrica

Construction ProductsAfrica

Construction GlobalUnderground

Mining

ConstructionAustralasia Oil &Gas and Minerals

Corporate andProperties

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

5 213 4 094 3 738 4 157 9 859 7 789 8 484 5 387 4 –

200 (51) 197 192 605 602 286 269 (132) (291)

(71) (19) (122) (189) (1) 14 28 29 (13) 15

129 (70) 75 3 604 616 314 298 (145) (276)

(61) 98 (15) (1) (177) (189) (53) (17) 140 19

68 28 60 2 427 427 261 281 (5) (257)

– – – (12) – – 134 91 – 9

– – – – – – – – – –

(4) (4) (1) 6 1 3 (131) (86) – –

64 24 59 (4) 428 430 264 286 (5) (248)

672 737 877 857 1 196 870 1 558 1 053 241 258

1 494 586 1 197 1 315 2 613 1 978 4 250 2 005 387 549

52 52 – – 37 35 296 304 – –

2 218 1 375 2 074 2 172 3 846 2 883 6 104 3 362 628 807

404 150 931 992 1 451 1 047 1 987 1 322 (967) (1 147)

8 4 22 26 12 1 1 132 626 – –

412 154 953 1 018 1 463 1 048 3 119 1 948 (967) (1 147)

158 134 20 83 382 304 105 78 40 555

1 648 1 087 1 101 1 071 2 001 1 531 2 880 1 336 1 555 1 399

2 218 1 375 2 074 2 172 3 846 2 883 6 104 3 362 628 807

439 32 327 441 861 737 422 229 (175) (306)

– – – – – – – – – –

(408) (71) (13) 646 (172) 94 (168) 164 (314) 36

31 (39) 314 1 087 689 831 254 393 (489) (270)

(127) 49 (113) (209) (286) (101) 15 (5) (239) (157)

(96) 10 201 878 403 730 269 388 (728) (427)

CAPE TOWN STADIUM

Cape Town Stadium was built for the 2010 FIFA World Cup™. During the

planning stage, it was known as the Green Point Stadium. Construction

began in March 2007 and took 33 months to complete. The stadium height

is 55 metres with a fabric façade, has a steel cable tensioned glazed roof

and seating capacity for approximately 64 000 fans. On completion, the

project employed approximately 10 500 people, with 13,5 million hours

worked. The stadium was officially handed over to the City of Cape Town

on schedule on 14 December 2009.


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OPERATIONAL PERFORMANCE REVIEW

64 Construction Africa and Middle East

70 Construction Global Underground Mining

76 Construction Australasia Oil & Gas and Minerals

80 Engineering Africa

86 Construction Products Africa

JEROME GOVENDER OPERATING PLATFORM EXECUTIVE

CONSTRUCTION AFRICA MARINE MIDDLE EAST TOTAL

R MILLIONS* 2012 2011 2012 2011 2012 2011 2012 2011

Revenue* 5 848 5 597 903 1 031 1 357 2 480 8 108 9 108

Operating profit/(loss)* 321 (653) (1 184) (582) (454) (164) (1 317) (1 399)

Ongoing construction activities* 69 237 (1 184) (582) (67) – (1 182) (345)

PPP Investments and Services* 252 260 – – – – 252 260

Competition Commission penalties/Gautrain* – (1 150) – – – – – (1 150)

Additional contract completion and impairments* – – – – (387) (164) (387) (164)

Segment assets* 3 447 2 926 658 358 1 578 1 605 5 683 4 889

People 7 393 8 891 131 511 199 318 7 723 9 720

LTIFR (Fatalities) 1.0 (0) 1.6 (1) 0.6 (0) 4.2 (0) 0.5 (0) 0.3 (0) 0.7 (0) 0.9 (1)

Order Book* 7 163 6 929 178 606 1 654 2 430 8 995 9 965


CONSTRUCTION AFRICA AND MIDDLE EAST A KEY ACHIEVEMENT WAS

THE AMALGAMATION OF THE CONSTRUCTION BUSINESSES

INTO A UNIFIED PLATFORM. THIS INTEGRATION IS ALREADY

PAYING DIVIDENDS IN TERMS OF GREATER SYNERGIES, SHARING

OF EXPERTISE AND MARKET KNOWLEDGE AS WELL

AS COST SAVINGS.There were positive developments on realising uncertified revenue

claims relating to GPMOF. While there was little progress on

arbitration of the Dubai International Airport claim, we are optimistic

that this will be settled in our favour while remaining open to the

possibility of reaching an amicable settlement.

Within the South African civil engineering and construction sectors,

conditions remained challenging and margins were extremely low.

Concor Opencast Mining recorded an overall satisfactory performance

but challenges experienced at a single project caused it to post a net

loss of R27 million.

Building work disappointed with orders falling well short of budget,

most notably in Gauteng.

Positives for the year were solid performances by Murray & Roberts

Botswana, Concor Civils and Concor Roads & Earthworks.

During the year the St Regis resort development in Abu Dhabi was

delivered on time and to widespread acclaim. In the Western Cape,

the Aurecon office development became the first local building to be

awarded a Green Building Council of South Africa five-star green

rating, its construction boosting Murray & Roberts’ green building

credentials and expertise. Also in the Western Cape, the awarding

of the high-rise Portside building to Murray & Roberts Western Cape

was a notable highlight.

On the power project the value of the Medupi civils contract grew

exponentially to over R8 billion.

Some solid performances in extremely trying conditions were entirely

overshadowed by the substantial losses sustained on the Gorgon

Pioneer Materials Offloading Facility (“GPMOF”) at Barrow Island,

Australia, and a disappointing performance by the Middle East.

LEADERSHIPSeveral key executive appointments were made in order to

strengthen the platform and its various entities. Jerome Govender

was appointed as the new platform executive. Jerome has been

the managing director (“MD”) of Bombela Concession Company

since 2007, having joined Murray & Roberts in 2002. Chris Botha,

previously MD of Concor Roads & Earthworks, was appointed chief

operating officer overseeing the civils companies and Gavin Taylor

was recruited from VINCI Construction UK to become the chief

operating officer heading up the Building and Africa operations.

Mark Andrews was appointed MD Middle East, Cobus Snyman

was promoted to the position of MD Concor Roads and Earthworks

and Alex Boyazoglu was appointed MD of Buildings. Andy Fanton

assumed the position of MD Marine and Dave Heron was named

MD Western Cape, with Mark Johnston focusing on Namibia.

PERFORMANCELosses sustained on fulfilling Marine’s contractual GPMOF obligations

amounted to some R1,2 billion this year while the Middle East

recorded a loss of R454 million.

The Group’s commitments on GPMOF were discharged, although

later and at a greater cost than had been anticipated. Similarly in the

Middle East, cost overruns on projects largely completed in previous

years, were accounted for this year.

CONSTRUCTION AFRICA AND MIDDLE EAST

2008

2009

2010

2011

2012

15 000

12 000

9 000

6 000

3 000

0

1 200

1 000

800

600

400

200

0

� Revenue — PBIT*

* Excludes losses from Gautrain/Competition Commission penalties Rnil (2011: R1 150 million; 2010: R619 million), Middle East R387 million (2011: R164 million;

2010: R89 million) and GPMOF of R1 189 million (2011: R582 million; 2010: Rnil).

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A resolution of all major commercial issues with Eskom relating to the

civil engineering contract at the Medupi power station was reached

during the year. The agreement settled all commercial disputes

on the project to date, with the remaining R3,0 billion of civils work

on this project carrying no more than normal construction risks at

acceptable margins.

The platform did not suffer any fatalities during the year and

the lost time injury frequency rate (“LTIFR”) improved slightly

from 0.90 to 0.71.

Operating loss for the platform was R1,3 billion (2011: R1,4 billion)

on turnover of R8,1 billion – which represents a 11% decline on the

previous year. Excluding losses on GPMOF and in the Middle East,

the platform returned a small profit.

MURRAY & ROBERTS MIDDLE EASTIn a most challenging year, the company had to account for losses

on projects that had either been completed in previous years or

which were substantially completed this year. This was because the

costs involved in seeing these projects through to completion and the

defects liability periods were found to have been underestimated.

At the same time the construction sector in Abu Dhabi ground to a

virtual standstill. This was after the company had ended the previous

year with serious prospects of securing work worth at least R5 billion

in the following year, none of which materialised. After construction

activity in Dubai collapsed in 2008, the Abu Dhabi standstill highlighted

the company’s over-reliance on UAE capital.

The net result of these developments was that stated revenue for

the year was less than half of that budgeted for, and a net loss of

R454 million was incurred. The only major contract being executed

at year-end was the R6,5 billion Mafraq Hospital for the Abu Dhabi

health authority. Arbitration of Murray & Roberts Middle East’s

claims relating to the Dubai International Airport work, completed

in 2008, was suspended earlier this year. This was after an issue

around the identity of the contracting entity within the Dubai

Government was disputed. Despite this, efforts continue to reach

an amicable settlement.

Developments this year also revealed Murray & Roberts Middle East’s

over-reliance on its relationship with joint-venture partner, the

Al Habtoor Leighton group. A significant investment is now being

made by the company in Qatar where work ahead of that country’s

hosting of the 2022 FIFA World Cup™ is expected to begin in earnest

in FY2013. In Qatar, Murray & Roberts Middle East has established

a local joint-venture company but will retain management control.

The company performed well on safety, achieving a LTIFR rate

of 0.53, better than other parts of the Group. Senior HSE

managers with responsibility and the authority to ensure

compliance with Murray & Roberts systems and standards

are appointed to all projects.

Work opportunities will be followed up in various North African and

Middle East countries and even some in the Far East where the

company’s expertise translates into reasonable prospects of securing

and executing work at acceptable margins. Such opportunities could

include, in addition to the Middle East’s traditional building projects,

civils and roads work and will not be restricted to the company’s

typical profile of only working on so-called mega projects.

Prospects at the end of the year were at least as good as those at

the same time a year previously, with several projects, notably in

Qatar, expected to be announced shortly.

CONCOR CIVILSConcor Civils returned satisfactory operational, financial and safety

performances this year.

The Eskom power generation work runs until 2015, ensuring a

secured income stream. A major achievement this year was the

settling of all outstanding commercial issues relating to work at

Medupi, a landmark development that will have lasting benefit for

the Group. The successful Ngqura Container Terminal contract has

grown significantly in scope, and will continue in FY2013.

The impact of lower margins, experienced on a majority of projects,

was offset by an excellent performance on the Medupi chimneys and

Coega contracts.

Excluding Medupi, revenue rose by a third over the previous year.

However, a notable trend is that whereas in the past most work was

sourced from the mining sector, today Concor Civils is

overwhelmingly dependant on public-sector projects, which carries

some risk. Opportunities in the private sector remain scarce and

several of those awarded to our competitors were undertaken at

unsustainable prices.

In the immediate future Concor Civils will remain focused on power

generation, water and waste water treatment. There are however

significant opportunities in mining, including opportunities in Zambia

and Mozambique. In addition to traditional coal-fired energy, Concor

Civils is well positioned to secure work in the fields of wind and solar

power. An increased focus in the short term will be on concrete

repair, a market in which Concor Civils currently has no presence but

which has the potential to contribute to turnover with good margins.

Safety performance was satisfactory, with no lost time injuries being

reported at Coega, Kusile or the Zeekoegat Waste Water Treatment

Works. A LTIFR for the year of 1.23 was commendable.

CONCOR ROADS & EARTHWORKSThe division performed satisfactorily this year, posting pleasing

turnover and profits in a depressed market.

Public sector projects remained few and far between with no large

contracts being put out to tender and the impasse over urban tolling

casting a pall over the sector. At the same time, private sector

spending slowed significantly. The bitumen shortage impacted

negatively on road construction work and fierce competition

translated into pressure on margins, raising the risk profile of several

projects. Mining infrastructure contracts continued to deliver better

than expected.

Towards the end of the reporting period there were indications of an

upturn in public sector spending with a healthy order book reflecting

a 40% rise in projected turnover for FY2013. Almost half of this

budgeted income however, will be derived from South African road

contracts where margins remain tight. An increasing proportion of

next year’s work is expected to come from the rest of Africa, an area

which remains buoyant and very promising.

Concor Roads & Earthworks performed well on a number of

non-financial indicators, notably on human resource development.

Seventeen bursaries and 56 learnerships were awarded this year.

Two employees were enrolled for BCom degrees in operational risk

management. Performance on enterprise development was

particularly pleasing with no fewer than 18 initiatives being supported

within the platform during the year. On safety the business is driving

towards a 0.5 LTIFR using the 1 million hour benchmark.

CONSTRUCTION AFRICA AND MIDDLE EAST CONTINUED


MURRAY & ROBERTS BUILDINGSMarket conditions continued to be extremely difficult this year with

limited opportunities becoming available and Murray & Roberts

Buildings succeeding in securing only a small proportion of these.

Several tendered and negotiated opportunities envisaged at the

beginning of the year failed to materialise. These included a number of

projects for which Murray & Roberts Buildings had been identified as

the preferred contractor. Two significant loss-making projects in the

petrochemicals sector impacted negatively on the division.

On a more positive note however, several key projects were

completed in the year for premium clients whose satisfaction has

already translated into the successful award of new work.

While revenue was 36% down on budget, towards the end of the

financial year, two important projects worth more than R650 million

were secured. In addition, it is expected that key negotiated projects

will materialise in the first half of the new financial year. Business won

towards the end of the year was furthermore at improved rates relative

to those achieved earlier in the year, giving further reason for guarded

optimism. Towards the end of the year, recruitment of talented staff

began in earnest, in anticipation of an upturn in orders.

One response to the constrained market conditions of recent years

has been to seek and execute work in geographic areas in which

Murray & Roberts Buildings has not recently operated. This is

expected to have the effect of diversifying the division’s risk and

revenue sources. In addition to operating in more outlying areas

within South Africa, opportunities in neighbouring states are being

actively pursued.

Murray & Roberts Buildings’ LTIFR was 0.73 which is in line with the

Group standard of less than 1.

MURRAY & ROBERTS MARINEFollowing the large losses sustained on the GPMOF in Western

Australia, a new management team, headed by Andrew Fanton, was

appointed at Murray & Roberts Marine in late 2011. Subsequently the

company was restructured to support its engineering, procurement

and construction (“EPC”) focus and to support the goal of doubling

its size within three years to a R1 billion business. Apart from

organisational restructuring, new business processes were put in

place while a project control department, focused on providing

management with detailed and dynamic project information, was

established.

To achieve the objective of doubling turnover, Murray & Roberts

Marine will prioritise Southeast Asia and West and East Africa.

A dedicated office headed by a general manager was established

in Kuala Lumpur and relationships in key markets will be either

established or cemented, in some cases leveraging off the local

presence of other members of the Construction platform. While there

are few prospects within South Africa, considerable opportunity, from

a variety of customers and sectors, is seen in the new target markets

as well as in the traditional markets of Australia and the Middle East.

A key future focus will be on forging joint-venture partnerships with

companies that have proven resources and expertise in marine work

which complements the EPC strengths of Murray & Roberts Marine.

In FY2012 a dedicated safety, health, environment and quality team

was established. This team will be tasked with developing detailed

safety, health, environmental and quality (“SHEQ”) protocols and

reporting matrixes for the company.

The company’s financial performance in the past year was

disappointing, with only 50% of budgeted revenue being achieved.

This was largely ascribable to the deferral or even cancellation of

several tenders. Excluding GPMOF, gross profit margins remained

healthy. Management remains extremely focused on vigorously

pursuing a substantial GPMOF commercial recovery schedule.

Towards the end of the year, the arbitration process ruled in favour

of Murray & Roberts Marine’s position on Change Order 18.

At year-end, only 25% of the budgeted order book had been

secured. However, bids for six projects with a total value of

R2,5 billion and due to commence in FY2013 had been or were in

the process of being submitted.

CONCOR OPENCAST MININGThe business continued to experience strong growth but returned a

disappointing profit. This was the result of challenges experienced at

a single project, without which Concor Opencast Mining would have

recorded a satisfactory profit.

Overall performance on safety improved from the previous year,

however several injuries contributed to an LTIFR of 1.72 compared to

2.02 the year previously. The division has prioritised safety in line with

Group policy and its own commitment to keeping employees and

subcontractors safe. While strong growth potential exists both within

South Africa and, especially, elsewhere in southern Africa (for coal,

platinum, diamonds, copper and uranium projects), the business has

done little to market itself. This will be rectified as Concor Opencast

Mining positions itself to achieve revenue of R1 billion by 2015.

Another key objective will be to reduce the company’s dependence

on South African platinum, a sector which is experiencing well-

documented stresses at present.

Management depth and access to market intelligence will be

bolstered in the new year to enable Concor Opencast Mining to

realise its ambitious expansion plans. At year-end the order book

showed a substantial increase on FY2011.

MURRAY & ROBERTS NAMIBIADramatically increased competition resulted in a disappointing

performance by Murray & Roberts Namibia after the record

achievements of 2011.

The operation only achieved breakeven but the outlook for FY2013 is

considerably more promising. Material risks include the heightened

level of competition, especially from Chinese contractors, with

resulting pressure on margins.

While there is much expectation around uranium investment and an

upswing in civil engineering work, the bulk of Murray & Roberts

Namibia’s income in the near term is likely to be derived from the

building sector, where there are some promising prospects.

MURRAY & ROBERTS WESTERN CAPEThe regional market remained flat, even deteriorating during the year

with calls for tender declining by some 50%.

A major breakthrough for Murray & Roberts Western Cape was

winning the tender to build FirstRand and Old Mutual’s landmark

Portside building in the Cape Town CBD. This boosted turnover

by 50% over projections and resulted in a small operating profit.

The budgeted order book for the next year was 90% secured at

the end of the year. However, margins remain extremely low and,

at about 2.9%, are expected to be at around the same levels

recorded in FY2012.

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THE FUTURE: SOME CONCRETE FACTS

Concrete is not what it used to be – not since Murray & Roberts

scientists set about changing almost everything we all thought we

knew about this basic building material.

The strength of concrete is measured in megapascals (MPa). In

theory, a cubic metre of concrete that is rated 30 MPa (a typical

standard for structural concrete) is able to withstand the weight of

six bull elephants.

Traditionally, 30 MPa concrete requires between 300 kg and 350 kg

of ordinary cement per cubic metre. But now scientists working for

Murray & Roberts have developed a technology that meets the

30 MPa standard using just 25 kg of cement or even less. Not only

does it meet the standard, it far exceeds it. To date strengths of up

to 52 MPa have been achieved using Murray & Roberts’ patented

ARC (“Advanced Recrystallisation”) technology and only 25 kg of

cement per cubic metre.

Best of all, the ARC process uses large amounts of recycled waste

products. The most common recycled ingredient is slag from the

steel manufacturing process. However, at the 102 Rivonia Road

project, now under construction in Johannesburg, Murray & Roberts

Buildings is using up to 64% fly ash, a recycled by-product from

coal-burning power stations for which there is usually no use.

Research scientist and head of Murray & Roberts’ Concrete Centre

for Excellence, Cyril Attwell, says: “Not only does the process

require less ordinary cement and is environmentally friendly, but

also, because the concrete can gain higher strengths, we can build

faster; sometimes a lot faster.”

Cyril, whose official job title is Group Concrete and Research

Manager, adds that the typical specification for waste water

treatment plants requires concrete that uses 420 kg of binder per

cubic metre. His team of scientists has now developed techniques

that can meet the specification but use only 330 kg. “This gives a

distinct cost saving advantage to our clients.”

Cyril and his two colleagues at the Concrete Centre for Excellence

in Amalgam on the West Rand, Warren McKenzie (Group Concrete

Technologist) and Andries Magale (Laboratory Technician) have

developed some remarkable concrete technologies, several of

which are world firsts. Just one is a smart concrete involving the

introduction of a particular type of bacteria into the mix. “Under

certain conditions of chemical attack, which are usually bad for the

concrete, these bacteria thrive, reproducing rapidly and consuming

the chemicals that attack the concrete. In addition, as they eat

up the threat, the bacteria defecate calcrete. These deposits fill

up cracks that would normally weaken the structure.”

The team is also investigating an ingenious electrochemical system

that makes marine concrete more resilient to both wave action and

chemical degradation. The system draws carbon dioxide from the

sea water, encouraging the growth of a layer of coral that protects

the undersea concrete. Such is the effectiveness of the coral that

the concrete does not have to be treated with expensive chemicals

– and it is almost completely maintenance free.

In 2010 Murray & Roberts’ southern Africa operations used some

1,8 million tonnes of concrete. The benefits derived from the

advances being pioneered by Cyril and his colleagues are

significant. For example, through the use of ARC processes, cement

consumption on the Gautrain Rapid Rail Link was cut by about

110 000 tonnes.

However, such benefits are not just measured in monetary terms.

Cape Town’s Portside development, Cyril believes, will be the first

building project to receive a full three-star Green Star eco-friendly

rating for construction materials. The concrete being poured

contains up to 70% waste materials and as much as 10% of

the aggregates consumed (typically sand and stone) are

waste materials.

“Recently the consulting engineer working on Portside asked us

to supply even more waste material because it just makes such a

strong concrete,” says Cyril. “This technology means we can save

money and time, deliver a superior result and at the same time,

do our bit to save the environment.”

CASESTUDY

CONSTRUCTION AFRICA AND MIDDLE EAST CONTINUED


Controlling costs remains a key management concern in an exceptionally

low-margin environment. There has been no significant increase in

overheads since the restructuring exercise carried out in 2010.

MURRAY & ROBERTS BOTSWANAA satisfactory year saw revenue approach the R500 million mark

(a 34% increase on the previous year) while the operation also

performed well on profit and cash generation.

At 0.8 Murray & Roberts Botswana’s LTIFR was largely unchanged

from FY2011. Tragically, one employee, supervisor Gosekamang

Kheru, was killed by lightning while working at De Beers’ Jwaneng

Diamond Mine where the business is raising the walls of a slimes dam.

Significant work undertaken during the year included the Rail Park

Shopping Mall for key clients where Eris Properties is a shareholder,

FNB’s Gaborone office block for Eris Properties and various

construction projects for De Beers including the first phase of the

two-tower i-Towers development for City Skypes, Botswana’s tallest

buildings.

With R300 million of the order book secured at year-end and another

R100 million at an advanced stage of negotiation, all indications are

that FY2013 will be a record year for the business. Driving this will

be an expected upsurge in office building in the Gaborone CBD.

However, building activity in the capital is expected to slow down

in FY2014.

To offset this, management of Murray & Roberts Botswana intend

targeting civils and infrastructure work for the country’s booming

mining and minerals sector. This is expected to mean that, whereas

80% of revenue is currently generated from building work and 20%

from civil and related contracts, in future the mix may be in the region

of 70/30 in favour of the latter. In the new year, opportunities in

Zambia will also be explored.

MURRAY & ROBERTS PLANTThis division provides plant and equipment to the Civils Construction

and Building Africa businesses. The business has successfully

concluded the merging of the old Concor Plant and Murray & Roberts

Plant and Equipment businesses.

With a turnover exceeding R400 million, the division’s spread of

internal clients ensured that Murray & Roberts Plant had the best

utilisation rates and the most superior technical backup service in

its sector. The business was also comfortably ahead of its peers

in terms of the safety of the plant and equipment it supplies.

An initiative launched last year was the creation of a special cost

code for safety. In this way it should be possible to measure the

direct financial costs involved in supplying, maintaining and operating

safe plant and equipment.

TOLCON GROUPThe Tolcon Group performed to expectations in the past year,

securing the tolling operations-and-maintenance contracts for

the N1 North, the N2 South (Oribi) and the N17 (Leandra plaza).

Tolcon and the rest of the tolling industry face various challenges

including mooted changes to labour legislation, more onerous

contracting terms, high labour turnover and increased competition

resulting from the advent of several new entrants to the market.

ISO 9001 quality accreditation with regard to toll collection processes

was achieved by Tolcon Lehumo and PT Operational Services.

With its extensive portfolio now bedded down, the Tolcon Group is

well positioned to explore additional opportunities within the transport

infrastructure management arena.

MURRAY & ROBERTS CONCESSIONSThe Group’s 33% investment in Bombela Concession Company

performed well with the service enjoying growing support from the

travelling public and the Rosebank Station to Park Station link being

successfully opened during the year. By the end of June 2012

passenger numbers had reached 800 000 per month, 65% growth in

patronage in the 11 months since the Tswane-Rosebank service was

opened. Arbitration rulings relating to water ingress and the Group’s

delay and disruption claims are expected by the end of calendar year

2013, and calendar year 2014 respectively.

Entilini Concessions responsible for the operations at Chapman’s

Peak attracted negative attention over local concerns about the visual

impact of the toll plaza, now under construction. Legal challenges

failed however and work is on schedule for completion in the second

quarter of FY2013.

Murray & Roberts Concessions is the designated standby bidder on

the N1/N2 Winelands toll route but no decision has been taken on

awarding this contract. The R300 route redevelopment, for which the

Group was the scheme developer, has yet to be put out to tender.

Similarly no decision has been taken on public-private partnership

bids to build and operate prisons. The Request for Quotation (“RFQ”)

to build, finance and operate the long-awaited upgrade of Chris Hani

Baragwanath Hospital is eagerly anticipated.

PROSPECTSThe significant losses incurred on the GPMOF Project and in the

Middle East have now been taken to book, allowing the platform to

focus strongly in the new year on its continuing recovery. Measures

are in place to accelerate this process and to prepare for growth,

including stabilising operations, securing a quality order book and

strengthening risk management processes.

Proceeds from the large-project claims processes are unlikely to

provide a significant windfall during the new financial year but the

process of pursuing these claims will be prioritised by the platform

leadership.

At year-end almost 75% of budgeted order book had been secured

– a satisfactory achievement – but at margins that were generally

lower than those secured a year previously. The Buildings business

(which recorded a number of pleasing project wins late in the year)

will explore creative methods of engaging with clients to achieve

solutions that will address the historically low margins achievable on

most projects.

Co-operation between Buildings businesses within the platform

will be emphasised to exploit opportunities.

Across the platform, rail and oil & gas have been identified as

particularly promising growth opportunities while the business is

increasingly positioning itself as a leader in environmentally-friendly

building solutions.

In the Middle East opportunities in Qatar ahead of that country’s

hosting of the 2022 FIFA World Cup™ will be explored with new

joint-venture partners as will opportunities in other markets within

the region.

The platform’s expansion into sub-Saharan Africa will be accelerated,

building on the strength of the Murray & Roberts brand, particularly in

the SADC region. Closer liaison with other Group platforms will be

prioritised.

Management will lead various safety initiatives in the new year

including Visible Felt Leadership.

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PETER ADAMS OPERATING PLATFORM EXECUTIVE

AFRICA AUSTRALASIA THE AMERICAS TOTAL

R MILLIONS* 2012 2011 2012 2011 2012 2011 2012 2011

Revenue* 5 687 4 789 958 714 3 214 2 286 9 859 7 789

Operating profit* 250 307 90 99 265 196 605 602

Segment assets* 1 508 1 288 639 409 1 459 1 011 3 606 2 708

People 16 650 15 265 469 313 1 494 1 374 18 613 16 952

LTIFR (Fatalities) 2.6 (3) 2.1 (10) 2.9 (0) 6.9 (0) 1.7 (1) 1.1 (0) 2.5 (4) 2.2 (10)

Order Book* 3 529 12 035 1 184 959 4 095 3 724 8 808 16 718


CONSTRUCTION GLOBAL UNDERGROUND MINING THE PLATFORM HAS

RECOVERED WELL FROM THE EFFECTS OF THE 2008 GLOBAL

FINANCIAL CRISIS AND MAINTAINED SATISFACTORY

OPERATING MARGINS OF BETWEEN THE TARGET

RANGE OF 5% TO 7,5%.experienced by Murray & Roberts Cementation, notably as a result

of its contract-mining agreement with Aquarius Platinum SA

(“Aquarius”) ending.

Although the operating margin showed a decline compared to these

levels in 2012, the outlook for margins is positive.

MURRAY & ROBERTS CEMENTATIONPerformance this year was challenging both in terms of safety and

profitability.

Three fatalities were recorded from 10 in the previous year.

The division’s LTIFR rate showed an improvement to 2.57 but fell well

short of the targeted 1.2. Interventions to improve safety were

however decisive and far-reaching. The First Choice programme aims

to materially change the business culture to improve safety

performance. Furthermore, the Cementation Way mechanised

shaft-sinking methodology is being systematically rolled out at

operations and is expected to have a fundamental impact on keeping

our people safer, as will a greater investment in equipping supervisors

to be more systematic in enforcing safe production methods.

The approach to investigating safety incidents has changed from

focusing on the severity of the injury to the incident’s potential to

cause harm. Murray & Roberts Cementation participates in the Global

Mining Industry Risk Management programme and the lessons learnt

from this initiative will, we believe, move the division towards a level

of meaningful safety interdependence (where colleagues actively

consider each other’s safety) as envisaged by the DuPont safety

intervention undertaken last year.

The Construction Global Underground Mining platform had a mixed

year. On the positive side, it lifted turnover. On the downside, it

suffered four fatalities and an increase in the rate of serious injuries,

and profitability came under pressure. Work execution continued to

be of the highest calibre. Client relationships in many of its markets

were strengthened and several new business wins were achieved.

In the new financial year the platform plans to build a more

unified brand.

LEADERSHIPThe Construction Global Underground Mining platform is led by

London-based chairman Peter Adams.

PERFORMANCEOur safety performance remained unacceptable given the Group’s

commitment to zero harm. Murray & Roberts Cementation recorded

three fatalities in three separate incidents and North America

experienced its first death in almost a decade. The overall lost time

injury frequency rate (“LTIFR”) for the platform deteriorated from 2.21

in the 2011 financial year to 2.5.

A great deal of senior management’s time and attention was spent

on improving safety and we are satisfied that the incisive interventions

being implemented at all operations will translate into safer working

environments in the near future. Moreover, work is being done on

identifying the next “quantum leap” forward in safety performance.

Revenue grew strongly this year to just shy of the R10 billion mark

with a minimal negative impact on margins. Strong contributions by

the Canadian and USA operations mitigated the pressure on margins

CONSTRUCTION GLOBAL UNDERGROUND MINING

2008

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2011

2012

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THE CEMENTATION WAY

CASESTUDY

Given all of these interventions, the division intends to report a much

improved safety performance this time next year.

An improved financial performance is however not anticipated.

This relates principally to the termination of Murray & Roberts

Cementation’s underground contract mining agreement with

Aquarius. Following a particularly challenging year for Aquarius with

a new support methodology, a challenging regulatory environment,

a new labour union and a generally depressed platinum sector,

Aquarius and Murray & Roberts Cementation agreed revised

contractual terms in the third quarter. These included specific

termination provisions which were acceptable to the company.

No agreement could be reached however, on targets for FY2013,

resulting in the contract being terminated. An orderly handover

process is under way. This will result in a cash-flow benefit in the

new year but will have a negative impact on operating income.

Because of operational and production difficulties encountered at

Aquarius, earnings came in below budget while revenue was largely

in line with budget expectations. In FY2013 however a substantial

decrease in both revenue and operating income is expected as a

result of the cessation of the Aquarius contract.

The business has succeeded in reducing its dependence on platinum

and significant new orders point to a growing diversification of

revenue streams. Non-contract mining income grew 20% in the past

year. Opportunities for Murray & Roberts Cementation to exploit its

expertise in contract mining remain and the division is continuing to

explore these.

Apart from the drop in operating income related to Aquarius, two

projects did not perform to expectations.

More positively, the Zambian operations performed better than

anticipated. This underscores the importance the division attaches

to Africa and the opportunities sub-Saharan Africa present for

diversifying into minerals including copper, diamonds, base metals

and thermal coal. The successes achieved in Zambia will be

consolidated in the next year and the country used as a springboard

for expansion into other territories. In achieving a greater, profitable

African penetration, co-operation with other Group companies will be

prioritised.

CEMENTATION CANADA AND USAThe North American operations delivered a sterling operational and

financial performance, which was unfortunately undermined by a

safety performance below the industry leading standard the business

is accustomed to. It recorded its first fatality since becoming part of

the Murray & Roberts Group eight years ago.

Not only are a culture of shared values and open, effective

communication essential to safety, they are vital to retaining and

developing skills and to promoting innovation. Cementation Canada

and USA sees innovation as a key competitive advantage and this

year set achieving greater innovation as a corporate goal. That the

business is becoming an employer of choice was borne out by

independent surveys.

CONSTRUCTION GLOBAL UNDERGROUND MINING CONTINUED

In Africa no-one does mine-shaft sinking as well as Murray & Roberts

Cementation. But the way Murray & Roberts Cementation develops mines

on the continent is about to change completely – using international best

practice to mechanise operations and most importantly, much safer than

before.

Working closely with colleagues in North America, Murray & Roberts

Cementation has begun implementing what it calls the Cementation Way.

Allan Widlake, Murray & Roberts Cementation’s business development

executive, says the company has “completely abandoned” shaft-sinking

methods traditionally used in South African mining.

“The Cementation Way is radically different to the methods used in South

Africa but it has been tried and tested over many years in Canada and

the United States of America. In future we will only use this methodology

for deep shaft systems in Africa. It is the future of mine development and

we are pleased that our clients share our excitement about the huge

benefits it holds for all concerned,” says Widlake.


The continuing resurgence of both the Canadian and USA mining

sectors helped Cementation Canada and USA to post earnings that

were 35% above budget, on revenues that were up 41% and

amounting to R3,2 billion. A particularly noteworthy contribution was

made by the USA operation, which has increased income 57% over

three years and now accounts for a third of the North American

business.

Revenue was distributed across commodity classes, with copper and

potash accounting for a combined 48% of turnover. The engineering

component of the company is a substantial business and a key

differentiator of the North American operations. It is structured to

deliver design-build shaft projects, a number of which are in the

construction phase. The company’s progress in offering an

engineering, procurement and construction (“EPC”) solution was

demonstrated by the strong execution of two EPC shaft-sinking

contracts in the year.

Performance on project delivery remained exceptional, including

the Diavik Diamond Mine, located in remote territory within the

Arctic Circle, and Piccadilly, a twin-shaft EPC contract for the

Potash Corporation of Saskatchewan. In the USA, a key project at

the Resolution copper mine includes sinking a shaft with a nine

metre diameter to a depth of 2 050 metres and the rehabilitation

of another shaft.

The strength of the order book at year-end indicated that an increase

in revenue of at least 10% would be achieved in 2013. Such is the

company’s track record and the growing strength of the brand that

by 2016 significant growth is expected to come from existing projects.

RUC CEMENTATION MINING CONTRACTORSThe highlight of an excellent all-round performance by RUC

Cementation Mining Contractors (“RUCC”) was a dramatic

improvement in safety, with the LTIFR reducing from 6.9 (per million

shifts worked) to 2.9.

This was achieved through a heightened focus on training, improved

methods of hazard identification and increased audits to ensure

compliance with the company’s safety management plan. It was also

realised despite an increase in employee numbers from 313 to 469.

The improved safety record is now better than the sectoral average.

In Rand terms revenue approached R1 billion, reflecting the

company’s standing as a serious mining contractor in Australia with

an increasingly significant international footprint.

A key development this year was a change in the mix of business

won. While RUCC has typically derived 60% or more of its income

from raise drill contracts, this percentage declined in the year, to the

point that only around 40% of revenue is expected to be from raise

drilling in the year ahead. Typically, margins on raise drilling are

generally higher than those for non-raise drilling. Non-raise bore work

will continue to drive the company’s expansion but at a lower

operating margin.

The Australian and regional shaft sinking and mine development

markets remain buoyant and are expected to be even stronger in

the new financial year. Important wins this year included off shaft

development and raise drilling for Newmont Asia Pacific’s Callie mine

Very crudely put, digging a mine shaft involves drilling holes and

detonating the rock. The resulting debris is then “mucked” out using grabs

and carried to the surface. As the shaft gets deeper, the sides are

reinforced with concrete and steel. Traditionally, a Jumbo drill rig sat

at the bottom of the shaft. With the Cementation Way, the drill rig is

suspended in the stage used as an operating platform above the bottom

of the shaft. Conventional South African drilling resulted in a wedge cut

which funnelled flying debris up the shaft damaging equipment and

slowing the process. With the new method a “burn cut round” is drilled

and detonated, without the hazards of flying rock. The cactus grab has

been replaced with more efficient “clam shell” muckers.

Instead of all the shaft-sinking activities being carried out concurrently,

with the Cementation Way they are done in line. “Conventional wisdom

would dictate that this would slow things down,” says Widlake “but the

reality is that we can work faster, more productively and as we keep

stressing, much safer.”

The new approach to shaft sinking also entails significant improvements

to the preparation of explosives and to the manner in which concrete

is conveyed to the shaft bottom.

Murray & Roberts Cementation is investing millions in equipment and

most importantly, transferring skills from North America to the local

workforce. “We will have a number of our Canadian colleagues working

in South Africa, training and passing on their insights and understanding.

This will not be inexpensive but it is an investment that will pay handsome

dividends in future,” says Widlake. To ensure that training is as effective

as possible, the Canadian experts will be deployed at

Murray & Roberts Cementation’s world-class Bentley Park training

facility which has been specially configured to replicate real-life

shaft-sinking conditions and new equipment and processes.

The Cementation Way reduces the number of people required for

any particular job but it calls for a significantly enhanced set of skills.

“We are recruiting and training people who are team players and

who can multi-task,” explains Allan. “The exciting prospect for people

selected for the Cementation Way is that they will have skills they

can use anywhere in the world; Africa, North America, Australia,

Mongolia, wherever underground mines are being developed.

They will have had experience in state-of-the-art shaft sinking and

will have great careers ahead of them.”

In August 2012 Murray & Roberts Cementation had bids worth

several billion Rand being adjudicated, all of them submitted on the

basis of being highly mechanised. Recently Murray & Roberts

Cementation was identified by De Beers as its preferred bidder to

construct the underground phase of its Venetia diamond mine in

Limpopo. “De Beers has emphasised safety as their top priority and,

we believe, has identified the Cementation Way as the best

methodology to ensure that everyone is kept as safe as possible,”

says Widlake.

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in the Northern Territory and the development of a trial mine for

Integra Mining in Western Australia.

In the year RUCC bought Incycle Shotcrete and Civil to add specialist

shotcreting and civil construction capabilities to its suite of services.

An office was opened in Hong Kong to cement relationships and

opportunities with clients based in that territory, Indonesia, Mongolia

and the Philippines.

In the new financial year, while non-raise drill work will account for

the bulk of income, it is significant that mine development will

contribute almost a quarter of total revenue whereas previously this

was negligible. At the end of the year RUCC had an order book of

R1,2 billion (2011: R1,0 billion). Important prospects included shaft

sinking, mine development and raise drilling work at Callie at PTFI’s

Grasberg copper and gold mine in Indonesia.

CEMENTATION SUDAMÉRICA A major disappointment this year was the failure to secure shaft sinking

and tunnel construction work at Codelco’s Chuquicamata copper mine

in Chile. A relative newcomer to the South American market,

Cementation Sudamérica continued this year to garner widespread

interest but struggled to secure orders. The Terracem disposal was

under final negotiation at year-end. It is envisaged that a new general

manager, to be appointed early in the new financial year, will help take

the business to a level of sustained and significant growth.

PROSPECTSDemand for commodities is almost universally expected to continue

growing. Chinese economic growth, although flattening out from the

unsustainable levels experienced in recent years, will continue to drive

demand as an increasingly urbanised, more affluent population

demands access to goods and amenities which require large

amounts of commodities. Similar demand is expected from other

industrialising states.

Worldwide some 3 400 mining projects are either in the pre-feasibility,

feasibility or actual construction phases. All of the world’s mining

majors have announced significant growth pipelines although ongoing

commodity price volatility will inevitably bring some of these investments

into question. The fastest growing region for underground mining will

be Asia-Pacific, most notably Australia, China and Mongolia. North

and South America are seen to contribute strongly to worldwide

mining growth while mine development in Africa is likely to also grow

strongly, mainly because of increased demand for iron ore, copper

and coal.

It is worth noting that in each of the top three countries for future

mining development – Australia, Canada and the United States of

America – the operating platform has well-established, well-resourced

operations.

The termination of contract mining at Aquarius will negatively impact

on turnover in FY2013 but will have the effect of improving operating

margins. In Australia margins will inevitably decrease because of

a more mixed mining profile. Expanding African operations beyond

South Africa will be a key priority in the new financial year with

a number of opportunities already being followed up.

Apart from a strong management focus on organic growth,

acquisitions, notably in Australia, North and South America, are

considered essential to exploiting the market opportunities and

growth potential that exists within the operating platform and to

realise the goal of a R1 billion operating profit by 2015.

The widespread rollout of our Cementation Way mining technology

and the sharing of expertise and experience within the platform will

further differentiate the platform in the near future while significantly

improving our safety performance, especially in Africa.

CONSTRUCTION GLOBAL UNDERGROUND MINING CONTINUED


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KEVIN GALLAGHER CHIEF EXECUTIVE, CLOUGH

CLOUGH FORGE1

R MILLIONS* 2012 2011 2012 2011

Revenue* 8 484 5 387 6 204 2 926

Operating profit* 286 269 584 396

Segment assets* 3 810 2 056

People 4 785 3 527

LTIFR (Fatalities) 0.1 (0) 0.2 (0)

Order Book* 19 444 11 467

1 Reflected at 100%. Forge is equity accounted at 36% (2011:33%) within the consolidated results.



A SOLID ALL-ROUND PERFORMANCE RESULTED IN

TURNOVER RISING 58% TO R8,5 BILLION. OPERATING

PROFIT FROM CONTINUING OPERATIONS WAS R286 MILLION,

A 6% IMPROVEMENT ON FY2011.

LEADERSHIPKevin Gallagher succeeded John Smith as CEO in November 2011.

Leadership and oversight were strengthened with the appointment of

executive and operating committees

PERFORMANCEClough’s drive to continuously improve safety paid dividends this year

with the overall lost time injury frequency rate (“LTIFR”) declining for

the fifth consecutive year, from 0.21 in FY2011 to 0.13. Notable

safety successes were achieved in Papua New Guinea where the

PNG LNG upstream infrastructure and EPC4 projects – both being

executed for ExxonMobil – respectively surpassed 12 million and

4 million hours worked without a lost time injury.

The company continues to lead the Australian oil and gas engineering

and infrastructure construction sectors on safety and its record in this

regard is an increasingly important differentiator for the company.

This will become particularly significant as Clough ramps up its

involvement in Australia’s mining and minerals sector where clients

look for suppliers that can replicate the oil and gas industry’s safety

standards.

Operating in a competitive high-cost environment, there is

considerable on-going pressure on suppliers, including Clough,

to constantly address their cost base. Restructuring initiatives this

year resulted in sustainable savings of more than R85 million a year.

Combined with a sharper company-wide focus on margins,

this achievement was reflected in a net profit after taxation of

R335 million.

Following an extensive evaluation of the company’s strengths and

opportunities for improvement undertaken by the new management,

an internal restructuring exercise was carried out and is now well

embedded across Clough. This was considered necessary given the

company’s extensive range of services and the variety of work carried

out. Clough now has in place the appropriate management resources

to exploit its leadership in four well-defined business lines:

Engineering, Capital Projects, Jetties and Near-Shore Marine and

Commissioning and Asset Support.

Project execution highlights in the past year included the ExxonMobil

PNG LNG upstream infrastructure project in Papua New Guinea

which, at its peak, employed some 2 500 workers. This demanding,

large construction project is on track for completion in December

2012. Elsewhere in Papua New Guinea, work on ExxonMobil’s gas

conditioning plant (EPC4) was similarly on track with engineering

completed and piling and procurement largely finished by year-end.

Work on the downstream engineering, procurement and construction

management (“EPCM”) project at Chevron Australia’s giant Gorgon

LNG project progressed well with the first pipe-racks being received

on the island in June 2012. Clough now has over 700 employees

working in the Kellogg Joint Venture to execute the EPCM contract.

In February 2012 Clough was awarded the coveted AUD$350 million

hook-up and commissioning contract for Chevron’s Wheatstone

processing platform offshore of north-western Australia. Upon

appointment, Clough immediately began assembling the project

management team, appointing commissioning engineers and

undertaking preparatory tasks and planning ahead of the onshore

commissioning work. Project duration is some three years. (This year

Clough also won an AUD$400 million jetty-construction contract for

Wheatstone).


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CONSTRUCTION AUSTRALASIA OIL & GAS AND MINERALS CONTINUED

Other significant new business wins this year included EPC work

for CSBP’s nitric acid and ammonium nitrate plant number 3 at

Kwinana in Western Australia, worth some AUD$100 million, and

AUD$250 million integrated project management support contract

from INPEX for its Ichthys offshore project. Clough’s Jetties and

Near-Shore Marine business won a further two contracts for

the Ichthys LNG project later in the year, encompassing the Jetty

and Module Offloading Facility.

In Queensland, Clough entered the Coal Seam Gas industry and

secured its first significant win, the K128 contract for Santos’

Gladstone LNG project in Fairview. To be executed in joint-venture

with Downer Australia, the AUD$600 million contract entails the

construction of over 400 km of gas and water transmission pipelines,

two compression facilities and an 800-person camp.

The disposal of Clough’s Marine Construction business, effected in

December 2011, strengthened the company’s balance sheet which

at 30 June 2012 reflected cash holdings of R1 945 million. This will

provide Clough with the required flexibility to expand its business and

to take advantage of continuing strong investment in both the energy

and chemicals and mining and minerals sectors.

This year Clough increased its 33% shareholding in Forge to 36% as

this investment continued to deliver solid value. The Clough Forge

Joint Venture completed its work on Hancock Prospecting’s Roy Hill

Package 3 project, receiving a variation order in February for

approximately R130 million, an extension to its initial early contractor

involvement work.

PROSPECTSDespite ongoing commodity price volatility, investment in the Australian

energy and resource sectors is set to continue testing record levels

over the medium term. This bodes well for Clough with its wealth of

experience and well-established brand and is reflected in an order

book which stood at R19,4 billion at the end of the year. Of this, some

R8,8 billion (excluding Forge) had been secured for FY2013. The order

book at year-end was up 82% compared to FY2011.

The business will remain focused on its foundation market sectors of

energy and chemicals and mining and minerals and target three

geographical regions: Western Australia and the Northern Territory;

Queensland and Papua New Guinea.

Current capital investment in Australian LNG projects amounts to

some AUD$170 billion. It is noteworthy however that this is confined

to no more than seven projects. While a large proportion of Clough’s

current revenue is today derived from capital projects, this revenue

stream will inevitably decline as projects are built and production

comes on stream. Over the medium term it is envisaged that such

work will account for no more than 30% of the company’s income.

To address this inevitable trend, Clough management has emphasised

commissioning and asset support, a field that will become a growing

source of business and that will demand more of Clough’s skills sets.

While such contracts tend to be lower risk and therefore generally

offer lower margins, they are typically of longer duration than

engineering and construction projects.

Continuing access to skills remains the single biggest challenge

facing Clough – and its competitors. The Australian oil and gas sector

has an estimated shortfall of some 30 000 to 40 000 employees. This

situation is being exacerbated by the strong growth of investment in

the minerals and mining sector and the relatively easy transferability of

skills between the sectors. During the past year Clough’s total

employment rose by more than 1 200 people to 4 785. To ensure a

continuous supply of talented engineers (the skills that are in the

greatest demand and that largely define the company’s value offering)

the Clough Scholarship Programme was reactivated this year.

While capital investment in Australian energy is set to peak over the

medium term, the country’s investment in mining and minerals

processing is approaching AUD$150 billion. Whereas energy spend

is concentrated among a few developers, there are more than

40 significant investors in new Australian resources developments.

In the new year a management priority will be to grow the Clough

brand across a range of resource segments, notably iron ore, coal,

precious and other metals projects. Clough has more than 30 years

of experience in mining and minerals and will aim to capitalise on its

reputation in the oil and gas space, most notably its enviable safety

record. Achieving a sustainable stream of EPC and EPCM mining

and minerals work will diversify earnings, mitigate risk and raise

overall margins.

Excluding Forge, management is confident of sustaining a minimum

EBIT margin of 5% in FY2013, increasing this to 7% over the

longer term.

Participating in an expected, significant increase in demand for EPC

oil and gas work in various regions of Africa will be prioritised. In

particular, Clough will identify opportunities to expand into Africa’s

burgeoning LNG sector by working with blue-chip Australasian clients

with whom the company has solid track records.

Sustained growth in recent years underscores the belief that Clough is

well placed to continue its leadership in engineering, procurement and

construction in the fields of energy and chemicals, water and mining

and minerals. Vision2017 focuses on giving shareholders superior

value and ensuring that the company can compete globally. This will

be achieved by consistently delivering excellence in project delivery,

improving cost efficiency, diversifying earnings and growing the

business by successfully and systematically implementing strategy.


12.3 MILLION HOURS – NO LOST TIME

INJURIES

CASESTUDY

The numbers associated with the work that the Clough/Curtain Joint

Venture (“CCJV”) team are executing in Papua New Guinea are

mind-boggling: 1 500 employees, 200 kilometres of roads, ten bridges,

two wharves and eight work sites hundreds of kilometres apart.

But the statistic that everyone at Clough is most interested in, is

12,3 million. That is the number of hours the joint venture’s employees

have clocked up on Esso Highlands Ltd’s LNG Upstream Infrastructure

project since 2009 – without a single lost time injury (“LTI”).

The terrain the team members are working on is diverse and

challenging, stretching across various landowner boundaries. The

workforce is culturally as diverse as the landscape and the work is

often hazardous. Yet the fact that in June 2012 CCJV could celebrate

the magical mark of 10 million LTI-free hours, and continued this

performance to exceed 12 million, shows what can be achieved if

everyone takes safety to heart.

Joining the team for a celebration in June, Clough chief executive and

managing director Kevin Gallagher commented: “It is outstanding to

think we have achieved this safety milestone when we have people

ahead of the construction crews felling tall trees and clearing jungle,

people drilling and blasting as we cut our way through the mountains,

and then constructing roads. These are high risk activities; it is an

absolute credit to every team member that there have been no

lost-time injuries on this project. They have put in a world-class effort.”

This project entailed working from eight dispersed worksites, from the

River Port at Kopi in the Gulf of Papua New Guinea, through Gobe,

Kantobo, and Mendi, to Hides in the Southern Highlands of the country.

Recent project activities included construction of facilities and waste

management areas and approximately nine kilometres of the well pad

access road. Currently bulk earthworks for the Spineline Road and the

completion of the cellars are being carried out. A gradual demobilisation

is about to start as these activities conclude. The 650-person camp is

due to be handed over to Esso Highlands in December, with some

personnel remaining beyond to finish the last of the roadworks.

CCJV’s safety achievements reflect the disciplined safety culture that is

promoted at each of the worksites. It is the result of effective team

work, collaboration and communication between all employees to

complete the job safely.

Elsewhere in Papua New Guinea, CBI Clough’s EPC4 contract

to build the Hides Gas Conditioning Plant has achieved a similarly

impressive safety milestone: 4 million LTI-free hours.

As with CCJV, EPC4 has a culturally and linguistically diverse

workforce, one that has grown from fewer than 600 in January 2012

to more than 1 600 today. Every new employee takes part in a

rigorous safety induction programme complemented by cultural

awareness sessions that strengthen the “one team” approach. At site

incident review committee meetings workers and supervisors openly

discuss incidents while a stop work authority covers the whole

workforce. Visible supervision is strongly emphasised and potential

risks are identified and mitigated at fatal risk workshops conducted

with LNG project operator, Esso Highlands.

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FRANK SAIEVA OPERATING PLATFORM EXECUTIVE

POWER PROGRAMME1 ENGINEERING2 TOTAL

R MILLIONS* 2012 2011 2012 2011 2012 2011

Revenue* 4 327 3 337 886 757 5 213 4 094

Operating profit/(loss)* 237 (34) (37) (17) 200 (51)

Segment assets* 1 556 901 546 340 2 102 1 241

People 6 222 4 362 2 061 831 8 283 5 193

LTIFR (Fatalities) 0.8 (0) 1.5 (0) 0.2 (0) 1.0 (0) 0.7 (0) 1.3 (0)

Order Book* 6 121 13 411 647 800 6 768 14 211

1 Murray & Roberts Projects power programme contracts and Genrec.

2 Includes Wade Walker, Concor Engineering and Murray & Roberts Projects non–power programme projects.


ENGINEERING AFRICA

THIS OPERATING PLATFORM CONTINUED TO FOCUS ON THE ESKOM POWER PROGRAMME,

PERFORMING WELL ON CONTRACT DELIVERY. MOST OPERATIONS POSTED GOOD

PERFORMANCES.Genrec continued to operate at full capacity, producing and installing

product for Medupi and Kusile. Concor Engineering returned

disappointing results but changes at senior management levels

should result in an improved performance.

Much of the focus this year was on the successful creation and

functioning of an integrated operating platform. The objective is

to position the platform as a centre of engineering excellence and

capability. Leveraging the experience, expertise and talent of senior

executives within the platform will be key to ensuring the platform’s

ongoing ability to create value for all its stakeholders.

People management issues, including low morale in some instances

and friction with organised labour, revealed the extent of the

platform’s human resources challenges and the need to bolster skills

in this most important area.

MURRAY & ROBERTS PROJECTSIn the past year, work at Medupi passed 3 million man hours worked

without a lost time injury. Murray & Roberts Projects’ overall lost time

injury frequency rate (“LTIFR”) in June 2012 declined from 1.18 to

0.75, testimony to the success achieved in ingraining a safety culture

across the company.

The business recorded a significant improvement in operating profit

in the year, mainly due to its Medupi and Kusile mechanicals projects

and the successful delivery of a tank farm for Transnet’s New

Multi-Product Pipeline (“NMPP”) at Heidelberg.

LEADERSHIPAlistair Neely was appointed as commercial and financial executive

at the operating platform level and Steve Harrison became

the managing director of Murray & Roberts Projects, joining from

Aveng in November 2011. Mile Sofijanic was appointed managing

director of Concor Engineering.

PERFORMANCEA much improved safety performance was the result of an increased

focus on both employee and subcontractor safety, implementing

several Group-level recommendations including Visible Felt

Leadership and World-class Leadership Thinking.

Operating platform EBIT for the year was R200 million compared to

a R51 million loss last year. Revenue of R5 213 million was up from

R4 094 million. This improved performance was marginally below

the industry average.

The platform’s order book reduced by some R6,2 billion in terms of

de-scoping provisions in the settlement agreement reached with

Hitachi in June 2011 on the Medupi and Kusile mechanical contract.

However, the effect of the project de-scoping was countered by the

terms of the agreement, which stipulate that Hitachi will reimburse

Murray & Roberts Projects for all agreed costs plus a performance

related fee, effectively de-risking the balance of the contracts.

A number of milestones were reached in the work at Medupi. The

work at Kusile attained a more predictable rate of implementation

after significant delays.

ENGINEERING AFRICA

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On the Eskom power project, the new commercial arrangement

with lead contractor Hitachi was bedded down. At both Medupi

and Kusile a new working arrangement, in terms of which

Murray & Roberts Projects and Hitachi management operate in an

integrated team, bodes well for the successful execution of

outstanding work.

Medupi’s Boiler 6 (the first boiler to be completed) was successfully

hydraulically tested in June 2012 and should deliver power to the

national grid in 2013. Boiler 5 is scheduled for hydro testing in

October 2012. With project work at Kusile ramping up in the new

financial year, Murray & Roberts Projects will be involved in the

construction of no fewer than six boilers at the same time, four at

Medupi and two at Kusile.

The massive scale of the work being undertaken at Medupi and

Kusile (involving more than 6 500 employees and contractors) and

the experience and skills gained, put Murray & Roberts Projects well

ahead of its competitors in terms of proven capability to execute new

power projects of various types as envisaged in the South African

Government’s Integrated Resource Plan 2010.

The cementing of relations with joint-venture partners (in the case of

the NMPP work with CB&I) positions the company well for work

expected to be announced soon on government’s clean fuels

programme.

Skills shortages remain a material risk for the company. Mitigating this

risk through concerted investments in skills development was a major

achievement in the year. At Medupi, 541 of 700 apprentices have

already been trained while 167 of another 700 have so far received

recognised artisan training at Kusile. At both sites the transfer of skills

from expatriates to locals is constantly emphasised. In addition,

17 bursaries were awarded this year while total training spend

increased 155% over the previous year.

External consultants conducted a culture value assessment in the

year. The results of this extensive surveying and mapping of individual

and company values are being used to create a company culture and

value set that are aligned with employees’ values and the desired

company culture.

In the past year the company’s overriding concern with delivering the

power programme meant that there was insufficient focus on general

project opportunities. This will be rectified in the new financial year.

Key targets include growing the power projects business and

penetration of the mining and minerals and oil & gas markets as well

as developing a significant presence in the operations and

maintenance sector.

Strong prospects for the 2013 financial year exist in independent

power projects (also working with joint-venture partners), oil and gas,

petrochemicals and the relocation of Exxaro’s Hillendale mineral

sands processing plant to Fairbreeze in northern KwaZulu-Natal.

This R300 million engineering, procurement and construction (“EPC”)

implementation project involves detailed technical design and

planning, and the deployment of super loads on a scale not

previously seen in South Africa.

In future project delivery will be according to the EPC model, which

gives Murray & Roberts Projects access to world-class technology

partners and strong joint-venture relationships. This construction-

driven model of EPC implementation will ensure greater certainty

around delivering projects on time, within budget and to

specifications. A strategy for expansion into sub-Saharan Africa

is well advanced with a focus, as is the case with the rest

of the Engineering Africa platform, on using Ghana as a launch pad

and hub.

During the year, Murray & Roberts Projects improved its Broad-Based

Black Economic Empowerment (“BBBEE”) rating from Level 5 to Level 4.

CONCOR ENGINEERINGA significant improvement in safety performance was the highlight

of the year.

The division returned a weak financial performance on revenues that

rose from the year before. A number of under-performing projects

limited Concor Engineering’s earnings ability. It also became apparent

that internal management capabilities needed to be improved.

Experience gained through the first venture into Africa, the ARM/Vale

Konkola copper development in Zambia, will be used as a basis from

which to grow business in Africa, as will synergies with other

companies in the operating platform.

Concor Engineering’s new management will continue to focus on

minerals processing but target a greater range of potential clients and

sectors than in the past. Apart from winning new contracts and

improving systems and processes, a key determinant of future

success will be the extent to which management succeeds in

securing organised labour’s buy-in to the business vision.

GENRECA record safety performance was achieved with a LTIFR of 0.65

compared to 1.83 the year before. In July 2012 a milestone of

2 million lost time injury free hours was achieved.

Genrec did well this year with turnover at over R1 billion and EBIT

according to budget. Output was maintained at over 2 000 tonnes

a month from September 2011 while a product reject rate of 0% was

achieved over the last seven months of the year, whereas a year

previously this figure was 3,5% and, a year prior to that, 35%.

Cost of sales and overheads were both reduced. In the new financial

year efforts will be made to reduce the cost of steel – the one input

cost on which the company failed to achieve significant savings in the

year. To this end, alternative suppliers will be investigated. Reductions

in headcount – from 1 800 to below 1 400 at the end of the year –

and increased mechanisation (achieved despite a capital

expenditure of under R10 million) improved productivity and

quality while reducing costs.

This year the quality of engineering competence was consolidated

with the appointment of several senior structural engineers and the

recruitment and on-site mentoring by these veterans of younger

engineering graduates. Working with the Department of Labour,

12 unemployed individuals were recruited and given three-month

intensive on-the-job training during which they were able to contribute

to the fabrication of end product in the main works. The unruly

labour disruptions of the previous year are unlikely to be

repeated after management secured a three-year wage settlement

with union NUMSA.

ENGINEERING AFRICA CONTINUED


In 2013 the N2 highway in northern KwaZulu-Natal will be shut

down for a whole week. Bridges and power lines will be torn down

and bypasses built.

A national road is being closed and bridges removed to make way

for the transit of super-heavy loads, a massive operation that would

not be out of place on TV show Mega Moves. It will in fact

be the biggest, heaviest and most complicated industrial relocation

in South African history.

Mining giant Exxaro is moving its mineral sands processing plant

at Hillendale to Fairbreeze 32 km away near the town of Mtunzini

because the ore body in the vicinity of the plant’s current location

has been mined out and has to be moved closer to resources that

will be mined in future.

Murray & Roberts Projects has been involved in the ambitious plan

to move the plant almost since inception, undertaking the

pre-feasibility and feasibility studies and then, in the past year,

engineering the big move. This year a Murray & Roberts Projects

design team was formed to undertake the project. This involved

breaking the very large, very complex Hillendale plant into large

components which will be dismantled and trucked – in loads of up

to 800 tonnes at a time – to Fairbreeze.

Dividing up the plant was done by 3D laser scans of the entire

structure which were then transferred to CAD drawings. In total,

more than 16 000 design hours were spent on the project, the work

including a detailed logistics plan, plant layout and engineering and

a completely new electrical and instrumentation design.

The actual relocation will entail the temporary removal of seven

bridges on the N2 (and then replacing them after the enormous

loads have passed through). Seven high-voltage Eskom lines will be

removed and relocated and some 2 km of bypasses will have to be

built. The route taken during the relocation exercise will cross rivers

which will entail propping a large multi-span bridge by means of a

sunk barge.

Murray & Roberts Projects managing director Steve Harrison says

the successful engineering of the Hillendale/Fairbreeze relocation

demonstrates his company’s ability to win and deliver complex work

other than Eskom’s Medupi and Kusile power project. “The fact that

the client has entrusted us with the engineering phase shows the

merit of being involved from an early stage,” Harrison says, adding

that Murray & Roberts Projects is now positioned to undertake the

implementation phase.

CASESTUDY

The Eskom power programme work was changed this year from

a cost-plus agreement, to a pure contracting model, which has

resulted in the securing of 16 months’ work at current output levels.

While this work is carried out, a key objective will be to identify

and secure non-power work. The dependence on a single client

is the company’s biggest strategic risk. To reduce the risk, a senior

business development executive was employed and senior

management have all been involved in securing new business.

Some 150 customers were identified this year and the company has

registered itself on more than 40 potential customers’ vendor lists.

Obtaining work elsewhere in Africa will be pursued in tandem with

companies in the Engineering Africa platform and elsewhere in

the Group.

The addition of value-added services this year resulted in additional

income amounting to more than 10% of total revenue. These services

included the deployment of some 40 to 50 Genrec personnel at each

of the Medupi and Kusile sites where they are engaged in logistics,

pre-planning and aspects of fabrication work.

EXXARO HILLENDALE/FAIRBREEZE RELOCATION

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ENGINEERING AFRICA CONTINUED

84 MURRAY & ROBERTS

WADE WALKERWade Walker’s LTIFR improved from 0.62 to 0.43 in the year, with

one lost time injury.

In a difficult market the business returned an almost 70% increase in

turnover compared to the previous year. However margins were

under pressure in the face of stretched and delayed contracts.

A number of senior management changes added to the challenges.

Although the business remains a small contributor to profits, its

performance was commendable in the face of intense competition.

Integration within the Engineering Africa platform opens up additional

markets in the combined mechanical/electrical construction market,

previously inaccessible unless in joint venture.

At the end of the year orders worth some R250 million had been

secured. These include a number of significant contract wins.

A key challenge however remains the need to obtain a base load

of smaller but still profitable projects so as to retain skills within

the business between major projects. Condition assessment

and maintaining electrical infrastructure on behalf of clients are seen

as important opportunities, as are petrochemicals, water and

renewable energy.

Wade Walker continued to succeed in the face of serious skills

challenges. Chief among these is retaining skilled staff on South

African projects in an environment of active poaching for work

elsewhere in Africa. Scarce skills within the sector include not only

technical but also project, contract management and supervision

skills. A keen focus on adding depth in contract management will

enable the business to win more work while protecting and even

growing margins. Offering a greater suite of technical services is

considered essential to growing the business.

The Ghana operation succeeded in obtaining the main gold plant

electrical and instrumentation construction contract, following the

award of the early works at Newmont’s Akyem and is projected to

have a sustainable regional order book by the end of the 2013

financial year. This will link with the Engineering Africa platform’s

initiative to set up a Murray & Roberts regional office servicing the rest

of the Group.

The company achieved OHSAS 18001 accreditation to complement

the ISO 9001 accreditation achieved in the previous year.

PROSPECTSLessons learnt in recent years in the areas of cost containment and

project management will need to be applied rigorously to support

profitability.

Minerals processing is expected to display sustained but slow growth

both in South Africa and elsewhere in Africa, where the potential to

secure work at more satisfactory margins is greater than in the

crowded, low-margin local market. Wade Walker and Concor

Engineering will require concerted marketing efforts to show growth

in this area.

In the short term, the operating platform will co-operate extensively

with other Group operations to accelerate our African penetration,

prioritising mining and minerals processing as well as power, an area

in which public sector spending of over $62 billion is anticipated in

Africa and more investment is expected in South Africa.

Substantial opportunities exist across Africa for the operating platform

in water infrastructure, waste water, acid mine drainage and

desalination with an estimated South African public sector spend of

some R230 billion over the next decade. Another area for potentially

significant growth is in operating and managing infrastructure

for clients, again both within South Africa and elsewhere on

the continent.

To align management focus and resources more closely to the

opportunities identified, it is envisaged that a revised functional

operating model will be implemented in the new financial year. This

new model will emphasise the need for companies in the operating

platform to work together to present clients with holistic solutions and

single points of contact.

85

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ORRIE FENNOPERATING PLATFORM EXECUTIVE

CONSTRUCTION PRODUCTS1

INDUSTRIAL PRODUCTS2 TOTAL

R MILLIONS* 2012 2011 2012 2011 2012 2011

Revenue* 3 203 3 147 535 1 010 3 738 4 157

Operating profit* 156 75 41 117 197 192

Ongoing activities* 181 154 41 117 222 271

Asset impairment* (25) (79) – – (25) (79)

Segment assets* 1 682 1 663 324 438 2 006 2 101

People 3 530 3 808 962 1 122 4 492 4 930

LTIFR (Fatalities) 2.6 (0) 2.6 (1) 2.5 (0) 7.6 (0) 2.6 (0) 3.9 (1)

Order Book* 406 587 928 2 421 1 334 3 008

1 Includes Hall Longmore, Rocla, Much Asphalt, Ocon Brick and Technicrete.

2 UCW



OPERATING CONDITIONS REMAINED CHALLENGING

WITH LITTLE UPTURN IN INFRASTRUCTURAL SPEND.

COMPETITION IN ALL MARKETS INTENSIFIED.

a satisfactory operating margin of 5% was maintained across

the platform. EBIT of R156 million compared favourably with

the R75 million reported in FY2011.

On the industrial products side, as a result of the completion of

the Transnet coal-line and iron-ore locomotive contracts, UCW

experienced a reduction in revenue and operating profit for the year.

Notwithstanding this, UCW managed to generate an 8% operating

margin.

Individual businesses maintained leadership in their respective

markets. The disposal of the Steel Business was achieved after

year-end. The bitumen shortage impacted on Much Asphalt’s results

but was mitigated to an extent by alternative sourcing of material

and recycling.

Technicrete and Rocla were successful in launching new value-added

products.

The ongoing turmoil in the roads sector, resulting from public and

political opposition to the Gauteng Freeway Improvement Project

(“GFIP”), impacted on a number of entities within the platform. The

anticipated go-ahead for the N1/N2 Winelands toll road project failed

to materialise and sentiment towards road and related infrastructural

investment worsened markedly.

MUCH ASPHALTMuch Asphalt’s LTIFR improved to 4.3 (2011: 5.2).

The company performed well during the year, marginally growing

revenue despite a 10% reduction in volumes, in the process

producing a number of environmental achievements.

In the prevailing economic climate the focus remained on cost

containment and efficiency improvements, resulting in an improved

profit performance compared to the previous year.

LEADERSHIPThere were few changes in leadership under platform executive Orrie

Fenn, with Phillip Hechter, Paul Deppe, Trevor Barnard and Albert

Weber responsible for Much Asphalt, Hall Longmore, Rocla and

Building Products (Technicrete & Ocon Brick) respectively. Rob

Noonan retired as managing director of the Steel Business and from

Murray & Roberts Limited, while Roy Robins was appointed platform

finance/commercial executive. Gary Steinmetz continued to lead

UCW under the chairmanship of Ian Henstock.

PERFORMANCEHealth and safety was again a key focus area for the platform

as it fully adopted the DuPont safety mantra that “every incident

is preventable”.

At the end of the reporting period all entities, with the exception

of UCW, had qualified for OHSAS 18001 accreditation. There were

no fatalities and the overall lost time injury frequency rate (“LTIFR”)

improved from 3.9 to 2.6 with Technicrete achieving a zero LTIFR.

Construction Products Africa returned an EBIT of R197 million

(2011: R192 million).

On the construction products side, revenue increased marginally to

R3,2 billion but on generally reduced volumes which translated into

increased pressure on margins. However, given the disappointing

underperformance by Hall Longmore and tough market conditions,


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� The largest single item (some R6 million) in the capital expenditure

budget was a further investment in crushing and screening

equipment for the asphalt recycling initiative. Further capital

expenditure related to bag-house filter infrastructure to reduce

dust emissions

Government’s commitments to significant infrastructure spend and its

declaration that the SA National Roads Agency (“SANRAL”) will

command an expanded role in road development, maintenance and

management augurs well for Much Asphalt.

ROCLARocla’s LTIFR deteriorated to 3.3 (2011: 2.3).

Rocla’s operational performance this year underscored the belief that

the exceptional operating profits achieved in previous years are

unlikely to be sustainable in future.

In an environment of heightened competition and with little

government spend to stimulate the construction and infrastructure

sectors, volumes increased by 7% while revenue declined by 11%.

The business however remained profitable and generated strong cash.

Some 90% of Rocla’s income is derived either directly or indirectly

from government spending. There was little activity in this regard and

the ability of the public sector to implement infrastructural projects

remains a major cause for concern. However towards the end of

the year there were indications that the situation could be improving.

This translated into an upturn in the number of projects, including

those related to sanitation products, with a more positive outlook

for future prospects.

In line with tougher market conditions, operating profit reduced by

9%. The company succeeded in retaining its share of a crowded

market which has significantly contracted since the pre-2010 FIFA

World Cup™ infrastructural boom.

A constraint on growth was the ongoing shortage of bitumen which

has resulted from ageing refineries, unscheduled breakdowns and

their focus on the production of other products. To offset this

growing supply constraint, Much Asphalt and a strategic partner

imported their first two shipments of bitumen amounting to some

10 000 tonnes. This proved to be extremely successful and will be

expanded in future, as the shortage of bitumen supply is not

expected to improve as local refineries age. As the company grows

imports it will require greater storage capacity which is being

investigated actively.

Recycling of asphalt was a notable success in the last year, alleviating

to an extent the bitumen shortage, and adding significantly to Much

Asphalt’s bottom line with concomitant environmental benefits. Other

environmental achievements included:

� The expansion of warm mix capacity. Both the Benoni and Durban

plants have been modified to produce warm mix, a product that is

more energy efficient to manufacture and for which the market is

showing increased acceptance

� During the year the Benoni facility was successfully migrated to

clean-burning liquid gas. Not only has this cut carbon emissions in

line with world benchmarks, it has reduced fuel costs at the facility

by more than 30%

CONSTRUCTION PRODUCTS AFRICA CONTINUED

CASESTUDY


As was the case in South Africa, Rocla Botswana experienced

declining orders but returned robust profits, assisted by sales of

special products. The Namibian market was similarly depressed.

In partnership with Murray & Roberts Construction, work began on

opening a pipe and culvert manufacturing facility in Tete,

Mozambique, which is scheduled to begin production in January

2013. Six new product lines have been introduced over the past

two years, most finding favour with the market with some significant

orders received for certain products. In the short term Rocla

management intends targeting new product offerings in the

renewable energy and water sectors.

Continuing efforts were made to right-size the business and to

reduce costs and working capital requirements.

HALL LONGMOREHall Longmore’s LTIFR deteriorated to 3.1 (2011: 2.2).

Revenue remained flat on the previous year on volumes that were

11% down. Difficulties experienced on Sasol’s Gauteng National

Pipeline (“GNP”) project, a fiercely competitive market and a shortage

of orders, most notably for electric resistance welded (“ERW”) pipe,

resulted in a significantly weaker performance than anticipated.

As stated in the previous year’s report, the significant orders

received early in the latter half of the year for the Trans-Caledon

Tunnel Authority’s Komati water pipeline and the GNP project for

Sasol, ensured that the spiral plants at Wadeville and Duncanville

were kept working at maximum capacity for most of the year. ERW

work picked up towards the end of the year.

Notable achievements this year included:

� The awarding of ISO 14001 accreditation

� The successful industrialisation of the Bituguard pipe coating

process used on the Komati pipeline project which bodes well

for future business

� The completion of a two-year project to eradicate excess stock,

thus freeing up cash

� The appointment of two international pipe distributors to

promote the sales of coated ERW pipe primarily into Africa and

the Middle East.

The order book is filling up but work still needs to be done to

secure orders for the full year. Challenges and risks include the

awarding of public sector tenders on time and the need to source

additional ERW work.

BUILDING PRODUCTS (TECHNICRETE AND OCON BRICK)Building Products turned in an excellent workplace safety

performance: Technicrete’s LTIFR reached zero (2011: 1.7) while

Ocon Brick’s was 2.2 (2011: 2.9), both sterling performances given

the nature of the companies’ business.

Markets for both company’s products remained extremely

competitive and it became increasingly difficult to pass on input

cost increases to customers. In this environment, management

again focused sharply on cost reduction and efficiency

improvements which translated to the bottom line.

CONCRETE BED FOR BEIRA

Each mat consists of 152 blocks and weighs 5.8 tonnes.

Measuring 5.9 m X 2.4 m, the mats were assembled in White River

and transported to Mozambique on flatbed trucks.

Taco Voogt, Technicrete’s product development manager, says:

“It is very important that each mattress is correctly laid to fit snugly

against its neighbour to ensure maximum effect.”

According to Voogt, the area where the mats were laid is extremely

muddy and so it was not considered advisable to use divers.

“Laying all mats individually means performing the same operation

240 times without the aid of divers, obviously a very time-

consuming exercise. Therefore the possibility was investigated of

linking the mats together to form bigger units, which could be laid

in one operation or in a limited number of operations.”

To join the mats together, four half blocks were left out on each

side so that rebar could be threaded through end-loops protruding

from the mats.

The blocks were duly built and the mats assembled and deployed,

ensuring that conditions in Beira port are now better than ever.

Every day the seabed at the port of Beira in Mozambique is shifted by

strong tidal forces. The huge propellers and bow thrusters of ships

berthing and leaving the port loaded with coal further disturb the seabed.

To address the problems associated with a constantly shifting seabed,

port authorities tasked German consultants Odebrecht International to

come up with a solution. They turned to Technicrete. The solution

designed by Odebrecht and Dutch engineering consultants DHV,

executed by Technicrete, involved laying 35 000 concrete blocks

assembled into 230 separate “mats” and covering an area of 3 200 m²

of seabed.

The Armorflex blocks were manufactured at Technicrete’s White River

plant to a thickness of 220 mm, as opposed to the standard Armorflex

thickness of 115 mm.

Individual blocks were then “laced” together with polyrene, a rope made

from a particularly strong chafe-resistant mix of polyester and nylon.

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Technicrete’s revenue increased 6% year on year on flat volumes,

despite the closure of two factories in the previous year and one in

the current year. EBIT improved by 68%, contributing to enhanced

cash generation, although delays in public sector payments still

remain a concern. The restructuring of Technicrete over the past two

years means that the business is well positioned to exploit any upturn

in the market.

A particular success this year was the securing and execution of a

significant export order, placed by a German consultancy, specially

designed and manufactured for use in the port of Beira, Mozambique.

Technicrete also successfully implemented the new paving standard

SANS 1058:2012 at all operations, raising the quality standard on all

its paving products, the effect of which can be measured against the

sharp decline in the number of customer complaints. Technicrete’s

latest customer satisfaction survey (which is conducted twice a year)

received the highest scores for every performance dimension since

the survey was first introduced six years ago.

The R1,2 million extension of the Polokwane tile factory was completed

on time, safely and within budget. Manufacturing capacity will increase

by 300 000 tiles per month on a single shift. The Roodepoort block

plant in Polokwane was re-commissioned to manufacture products

outside Technicrete’s normal product range.

At Ocon Brick revenue increased by 4% on clay brick sales of

171 million, 7% down on the prior year. However, it failed to match

the profit reported last year, only breaking even due to high wastage

factors on kilns that were built during the implementation of a second

shift. With new senior management entrenched at Ocon Brick, a greater

focus on new manufacturing and process techniques, tighter cost

control and improved efficiencies already bearing fruit, which will return

Ocon Brick to profitability as soon as practically possible.

Ocon Brick also received excellent ratings from its customer

satisfaction survey across all performance dimensions.

To reduce the company’s contribution to the Group’s greenhouse-gas

profile, an initiative is underway to reduce emissions by recycling

waste brick material generated during the manufacturing process.

UCWA particularly pleasing decline was achieved at UCW, with a LTIFR

that fell from 5.1 to 2.5.

Apart from contributing to the Group’s operating profits, UCW ended

the year cash-positive after paying down a debt of almost R70 million

to the Group.

UCW successfully delivered the last of the Transnet 110 coal-line

(19E) and 44 ore-line (15E) locomotives during the year, and started

a follow-on order for an additional 32 ore-line locomotives.

Participation in the Passenger Rail Agency of South Africa’s

(“PRASA”) General Overhaul and Upgrade programme contributed to

revenue although initial difficulties were experienced in adapting to a

change in specification from fixed scope to condition-based

refurbishment work.

Industrial action forced management to shut the Nigel plant, resulting

in two and a half weeks of lost production. Management has

embarked on a concerted “New Era” programme to fundamentally

alter and improve relations with the union members. A tornado which

ripped through the Duduza/Nigel area resulted in the loss of a further

week’s production while conditions at the plant were made safe.

Significant investments were made in training artisans and a cost of

some R12 million was absorbed so as to retain scarce skills. It was

considered advisable to incur this cost in anticipation of significant

new business expected from both Transnet and PRASA in the short

to medium term.

PROSPECTSExpectations surrounding the South African Government’s planned

investment in infrastructure have been tempered by continuing

uncertainty over the timing and delivery of this investment.

During the year under review Rocla cemented its expansion into

northern Mozambique. This limited but strategically important

investment will be used as a launch pad and proving ground by other

platform businesses seeking to gain a foothold in markets outside of

South Africa.

Cost containment carried out over the past two years will stand the

platform in good stead. These measures included the sharing of

financial management services by Technicrete, Ocon Brick and

Rocla, a development which had the added benefit of minimising risk.

Given its rigorous cost reductions Technicrete, in particular, is extremely

well placed to exploit any upturn in overall construction spend.

Future prospects for Rocla and Hall Longmore give reason for

cautious optimism. UCW is well positioned to exploit opportunities

arising from an overdue large-scale investment in South African

rolling stock.

CONSTRUCTION PRODUCTS AFRICA CONTINUED


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91

JACK CHEETHAM AND LETSEMA AWARDS

The Jack Cheetham Memorial Award was initiated by Murray & Roberts over

30 years ago in recognition of Jack Cheetham, a former director of the

company and captain of the South African cricket team in the 1950’s.

The award targets sports development projects for the able bodied.

The Murray & Roberts Letsema Award was initiated in 2009 following

the outstanding performance of athlete Hilton Langenhoven who captured

the attention of the world at the 2008 Paralympics in Athens. The award

recognises sports development projects for people with disabilities.

Below: dancers performing at the Chaeli Sports and Recreation Club.


94 Governance report

98 Risk management report

106 Remuneration report

112 Board committee reports

GOVERNANCE, RISK & REMUNERATION REVIEW

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STATEMENT OF COMMITMENTThe Board of Murray & Roberts Holdings Limited (“Board”), in

promoting and supporting the highest standards of business

integrity, ethics and corporate governance, and in adopting the King

III Code of Governance Principles (“King III”), continued to conduct

the business of the Group with prudence, transparency, integrity

and accountability, and is pleased to deliver this integrated

annual report.

The Board has continued on its journey of meeting the requirements

of King III and in particular its “apply or explain” principle. While

the Group does not yet fully apply all of the principles of King III,

the following additional areas of application were achieved in relation

to the year under review:

� Passing of a non-binding advisory vote on the Company’s 2011

remuneration policy

� Development, approval and implementation of a policy and plan

for a system and process of Group-wide risk management

� Development and approval of a policy and plan for a system and

process of Group-wide regulatory compliance that delivered

limited assurance of compliance in relation to the South African

environment

� Outline of a comprehensive and effective IT governance policy

and plan

� Development, approval and implementation of a risk-based

internal audit policy and plan, and fully embedding internal audit

as a Group-wide function

As noted above, Murray & Roberts has not yet fully applied all of King III’s governance principles (and recommended practices), and the

following table lists the requirements of King III that have not yet fully been applied:

King III Principle Murray & Roberts Application Action plans to apply principle

Governance of risk

4.1 The Board should be

responsible for the

governance of risk.

A more comprehensive risk management plan was

developed and considered by the Board.

The Board will continue to receive

and review a risk report bi-annually.

4.5. The Board should ensure

that risk assessments are

performed on a continual

basis.

A comprehensive Group-wide risk assessment was carried

out and, based on the findings, an updated risk register was

prepared and considered by the Board.

The risk register will be submitted

to the Board bi-annually.

The governance of information technology

5.1. The Board should be

responsible for information

technology (“IT”) governance.

5.2. IT should be aligned with the

performance and sustainability

objectives of the company.

IT has been added and will feature as a regular agenda item

for future Board meetings.

IT was previously decentralised across the Group. Following

the reorganisation of the Group into a cohesive structure

entailing a strong corporate office supporting five operating

platforms, the IT function now reports directly to the Group

financial director. A Group-wide IT strategy has been

developed and is being implemented. This strategy will

ensure a consistent and coordinated approach to IT

governance and controls across the Group.

An IT Charter has been finalised for approval. The Charter

defines the governance structures, primary responsibilities

for each of the structures as well as the reporting framework

to ensure appropriate Board oversight of IT is performed in

a timely manner.

Independent assurance on the

effectiveness of the IT internal

controls is to be provided to

the Board through the Group’s

internal audit function.

GOVERNANCE REPORT


King III Principle Murray & Roberts Application Action plans to apply principle

5.4. The Board should monitor

and evaluate significant IT

investments and expenditure.

Significant IT investments and expenditure are currently

controlled and monitored by the IT Steering Committee.

Significant IT investments and

expenditure will be monitored and

evaluated by the Audit &

Sustainability Committee and a

summarised report will be presented

to the Board.

5.5. IT should form an integral part

of the company’s risk

management.

Compliance with IT laws has not been formally assessed. The Group-wide regulatory

compliance plan includes IT laws,

rules, codes and standards, and

provides appropriate assurance to

the Board.

5.6. The Board should ensure that

information assets are

managed effectively.

Information security and the protection of information assets

are primarily managed at a business level and the

requirement for a more centrally and formally defined

information security function has been identified.

An IT security policy and plan is

under development, and will be

implemented as soon as they have

been considered and approved by

the Board.

Compliance with laws, rules, codes and standards

6.1. The Board should ensure that

the company complies with

applicable laws and considers

adherence to nonbinding rules,

codes and standards.

While the Board reviews compliance and adherence by the

Group with laws, rules, codes and standards through the

Social & Ethics Committee, limited assurance of compliance

in a South African context was provided in the year under

review.

The Social and Ethics Committee will

monitor Group compliance and the

report of the Compliance Officer will

be presented to the Board.

The regulatory compliance plan will

be extended through the 2013

financial year to cover the Group’s

international operations.

6.4. The Board should delegate

to management the

implementation of an effective

compliance framework and

processes.

A complete compliance framework, including controls and

processes, has been approved and implementation is

underway.

On this basis, assurance of the effectiveness of the controls

and processes has not yet been established.

Implementation of this framework is

planned for the 2013 financial year;

following which assurance on the

effectiveness of the controls and

processes will be provided to the

Board.

Governing stakeholder relationships

8.1. The Board should appreciate

that stakeholders’ perceptions

affect a company’s reputation.

Stakeholder perceptions are measured in isolated cases, for

example, client and employee satisfaction surveys are

undertaken. However these measurements are not

pervasive across the Group.

A stakeholder engagement policy

that will assist the Board to gauge

stakeholder perceptions is being

formulated.

8.2. The Board should delegate to

management to proactively

deal with stakeholder

relationships.

A stakeholder engagement framework has been developed

and will be rolled out Group-wide.

As noted above, the Group is

formulating a stakeholder

engagement policy.

BOARD OF DIRECTORSAt the date of this report, Murray & Roberts had a unitary Board with

13 directors, of whom 10 are independent non-executive directors

and three are executive directors. The composition of the Board

promotes a balance of authority and prevents any one director from

exercising undue influence over decision-making.

The Board is the highest governing authority in the Group and has

ultimate responsibility for corporate governance. It appreciates that

strategy, risk, performance and sustainability are inseparable and the

Board is responsible for approving the strategic direction of the

Group, which integrates these elements. The Board is governed by a

charter that sets out the framework of its accountability, responsibility

and duty to the Company.

The Board has a fiduciary duty to conduct its business in the best

interest of the Company and, in discharging its duty, ensures that

the Group performs in the best interests of its stakeholders.

The Company’s key stakeholders include present and future

investors, customers, business partners, employees, regulators

and the communities in which it operates.

THE BOARD � Provides ethical leadership and gives direction to the Group

in all matters

� Approves the strategic plan developed by management and

monitors its implementation

� Acknowledges that strategy, risk, performance and sustainability

are inseparable by:

– satisfying itself that the strategy and business plans do not give

rise to risks that have not been thoroughly assessed by

management

– monitoring the governance of key risk areas and key

operational performance areas, including IT

– endeavours to ensure that the strategy will result in

sustainable outcomes

– considering sustainability as a business opportunity that guides

strategy formulation

� Directs the commercial and economic fortunes of the Company

� Endeavours to ensure the Company is a responsible corporate

citizen by considering the impact of the business operations of the

Company on its people, society and the environment

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GOVERNANCE REPORT CONTINUED

� Endeavours to ensure measurable corporate citizenship policies

are developed and programmes implemented

� Monitors the Company’s compliance with all relevant laws,

regulations and codes of business practice, and considers

adherence to non-binding rules and standards through a

compliance framework

� Monitors the Company’s communication with all relevant

stakeholders (internal and external) openly and promptly, on the

basis of substance over form

� Endeavours to ensure that shareholders are treated equitably

� Endeavours to ensure that disputes are resolved effectively and

expeditiously

� Defines levels of materiality, reserving specific powers to itself

and delegating other matters by written authority to management

� Monitors performance through the various Board committees

established to assist in the discharge of its duties without

abdicating its own responsibilities

� Endeavours to ensure directors act in the best interest of the

Company by adhering to legal standards of conduct, disclosing

real or perceived conflicts to the Board and dealing in securities

only in accordance with a developed policy

� Determines policies and processes to ensure the integrity

and effectiveness of

– risk management, risk-based internal audit and

internal controls

– executive and general remuneration

– external and internal communications

– director and chairman selection, orientation and evaluation

– the annual integrated report

Directors are required to act with due attentiveness and care in

all dealings and to uphold the ethics and values of the Company.

Accordingly, they are required to adhere to a Code of Conduct that

incorporates agreed standards of accepted behaviour and guidance

on decision-making, promotes integration and coordination, and

reaffirms the directors’ commitment to the Group.

The independent non-executive directors complement the executive

directors through the diverse range of skills and experience they have

based on their involvement in other businesses and sectors. They

also provide independent perspectives on corporate governance and

general strategy to the Board as a whole.

BOARD MEETINGSThe Board meets formally at least five times a year. In addition,

directors meet ahead of the scheduled meeting at which the Group’s

budget and business plan is examined in the context of an approved

strategy. At this meeting, the directors engage with senior executives

on the implementation of the Group’s strategy.

The Board has adopted a policy to visit key operations on an annual

basis. During the year under review, the Board visited the Medupi

power station project. The chief executive keeps all directors

informed between meetings of major developments affecting the

Group. The record of attendance at Board meetings for the year is

reflected in the table on page 120 of this report.

CHANGES TO THE BOARDDuring the year, the Board appointed TCP Chikane as non-executive

director. Due to other business commitments, non-executive director,

ADVC Knott-Craig, resigned during the year. Non-executive director,

AA Routledge has indicated, that after more than 18 years of service,

he will not be available for re-election and will retire at the 2012

annual general meeting.

SP Sibisi has indicated that he wishes to limit his non-executive

directorships to institutions focused on science or technology. As a

consequence he will resign as a non-executive director. NM Magau

has indicated that she will resign having served on the Board for

the past eight years. Both these resignations will be effective at

the conclusion of the 2012 annual general meeting.

RC Andersen who has served as independent non-executive

chairman over the past almost nine years has given notice of

his intention to retire as a director and chairman of the Company

effective 1 March 2013. The Board has unanimously agreed

to appoint M Sello as independent non-executive chairman following

the retirement of RC Andersen.

CHAIRMAN AND GROUP CHIEF EXECUTIVEThe roles of chairman and Group chief executive are separate.

They operate under distinct mandates issued and approved by

the Board. The mandates clearly differentiate the division of

responsibilities within the Company and ensure a balance of power

and authority.

The chairman, an independent non-executive director, presides over

the Board, providing it with effective leadership and ensuring that all

relevant information is placed before it for decision. The Group chief

executive is responsible for the ongoing operations of the Group,

developing its long term strategy, and recommending the business

plan and budgets to the Board for consideration and approval.

The Board appoints the chairman and the Group chief executive.

The Board appraises and appoints the chairman annually and the

remuneration & human resources committee appraises the Group

chief executive annually. This committee also assesses the

remuneration of the Board, chairman and Group chief executive.

The nomination committee is responsible for Board

succession planning.

BOARD COMMITTEESThe Board has established and mandated a number of permanent

standing committees to perform specific work on its behalf in various

key areas affecting the business of the Group.

They are the:

� Executive committee

� Audit & sustainability committee

� Health, safety & environment committee

� Nomination committee

� Remuneration & human resources committee

� Risk management committee

� Social & ethics committee

Shareholders elect the members of the audit & sustainability

committee at each annual general meeting. The audit & sustainability

committee still forms part of the unitary Board even though it has

statutory duties over and above the responsibilities set out in its

terms of reference.

Although all the committees assist the Board in the discharge of its

duties and responsibilities, the Board does not abdicate its

responsibilities. The Board and each committee give attention to new

and existing governance and compliance matters according to their

respective mandates. A statement from the chairman of the Board

and chairman of each committee, other than the executive

committee, is included in this report.

Each committee operates according to a Board-approved terms

of reference. With the exception of the executive committee, an

independent non-executive director chairs each committee.

The committee chairmen are appointed by the Board.

Each committee chairman participates fully in setting the agenda

and reporting back to the Board at the board meeting that follows


a committee meeting. In line with King III and as mandated by the

individual terms of reference, each committee chairman attends

the annual general meeting and is available to respond to shareholder

questions on committee activities.

During the year, all committees, other than the executive committee,

conducted a self-assessment of their effectiveness with positive

outcomes in each case. All committee terms of reference were also

reviewed and updated.

The record of attendance of the respective committees for the year is

reflected in the tables on pages 120 – 121 of this report.

SELECTION OF DIRECTORSThe Board has an approved policy on the selection and continuation

of office for directors, and the nomination and evaluation processes

to be followed. One third of directors are required to retire annually by

rotation and, if put forward for re-election, are considered for

reappointment at the annual general meeting. All directors are

appointed at the annual general meeting by a shareholders’

resolution. The Board is permitted to remove a director without

shareholder approval.

The nomination committee considers and makes appropriate

recommendations to the Board on the appointment and re-election

of directors. This process encompasses an annual evaluation of skills,

knowledge and experience, considers transformation imperatives and

ensures the retention of directors with an extensive understanding of

the Company. All recommended director appointments are subject

to background and reference checks: Re-election of directors to the

Board is made according to a formal and transparent process. Each

non-executive director is provided with a formal letter of appointment.

For newly approved directors there is an induction programme to

familiarise them with the Group.

The names of directors standing for re-election at the 2012 annual

general meeting are contained in the resolutions of the annual general

meeting on page 220.

As recommended by King III, the Board, assisted by the nomination

committee, assessed the independence of the non-executive

directors. All non-executive directors meet the criteria for

independence as set out in King III.

INDEPENDENT ADVICEThere is an agreed procedure for directors to seek professional

independent advice at the Company’s expense.

BOARD AND COMMITTEE EFFECTIVENESSExternal appraisal of the effectiveness of the Board, its committees

and individual directors were conducted during the year. The appraisals

were benchmarked against the Group’s strategic requirements

and the need to ensure the capacity to deliver these requirements

and strengthen the diversity and sector expertise of directors.

The appraisals were positive and their recommendations are being

followed through for implementation. An internal appraisal of the

chairman was led by the chairman of the remuneration & human

resources committee and discussed by the Board. The appraisal

was positive.

GROUP SECRETARYAll directors have access to the advice and services of the Group

secretary who is responsible for ensuring the proper administration of

the Board, sound corporate governance procedures and assisting

with best practice as recommended in King III. All directors have full

and timely access to information that may be relevant to the proper

discharge of their duties. The Group secretary provides guidance to

the directors on their responsibilities according to the prevailing

regulatory and statutory environment, and the manner in which such

responsibilities should be discharged. The Board is responsible for

the appointment and removal of the Group secretary. E Joubert was

appointed as Group secretary effective 1 August 2012, succeeding

Y Karodia, who has taken up a senior financial position within

the Group.

EXECUTIVE COMMITTEESThe directors of Murray & Roberts Limited serve as members of the

executive committee of the Board, chaired by the Group chief

executive. The directors support the Group chief executive in:

� Implementing the strategies and policies of the Group

� Managing the business and affairs of the Group

� Prioritising the allocation of capital, technical know-how and

human resources

� Establishing best management practices and functional standards

� Approving and monitoring the appointment of senior management

� Fulfilling any activity or power delegated to the executive

committee by the Board that conforms to the Company’s

memorandum of incorporation

RISK MANAGEMENT, SYSTEMS OF CONTROL AND INTERNAL AUDITThe Board promotes the rational engagement of risk in return for

commensurate reward and is responsible for ensuring that risk

management, including related systems of internal control, are

formalised throughout the Group. These systems of risk management

aim to promote the efficient management of operations, the

protection of the Group’s assets, compliance with legislative

environments ensuring business continuity and providing reliable

reporting in the interests of all stakeholders. Details of the Group’s

risk management process are set out on page 99 of this report.

CONFLICTS OF INTEREST AND SHARE DEALINGSDirectors are obliged to disclose their shareholdings, additional

directorships and any potential conflicts of interest, direct or indirect,

that may arise, at every meeting of the Board. These are

appropriately managed and recorded in the minutes.

In accordance with the JSE Listings Requirements and the prohibitions

contained in the Security Services Act, the Group has an insider

trading policy. It requires directors and officers who may have

access to price sensitive information to be precluded from dealing

in Murray & Roberts Holdings Limited’s shares as well as the shares

of listed subsidiary, Clough Limited for a period of approximately two

months prior to the release of the Group’s interim results and a

period of three months prior to the release of the Group’s annual

results. To ensure that dealings are not carried out at a time when

other price sensitive information may be known, directors, officers

and participants in the share incentive scheme must at all times

obtain permission from the chairman, Group chief executive or Group

financial director before dealing in the shares of the Group. The

Group secretary is notified of any share dealings and, in conjunction

with the corporate sponsor, publishes the details of dealings in the

Group’s shares by directors that have been approved on the Stock

Exchange News Service (“SENS”) of the JSE Limited. All approved

director dealings are reported to the Board.

SPONSORDeutsche Securities (SA) Proprietary Limited acted as sponsor during

the period under review in terms of the JSE Listings Requirements.

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GROUP INTEGRATED ASSURANCE FRAMEWORKThe Group Integrated Assurance Framework governs and co-ordinates the overall approach to Group risk management. This entails

understanding, identifying, reporting, managing and mitigating Group risk, and includes the process of independently auditing Group polices,

plans, procedures, practices, systems, controls and activities to ensure that the Group achieves the level of operational efficiency and

compliance required by the Board.

The Board approved the Group Assurance Policy, which establishes and mandates the risk management, regulatory compliance and internal

audit functions; effectively as the three building blocks of the Group Integrated Assurance Framework.

The Group Integrated Assurance Framework can be depicted graphically as follows:

INTEGRATED ASSURANCE FRAMEWORK

RISK MANAGEMENT REGULATORY COMPLIANCE INTERNAL AUDIT

Strategic Laws Risk

Corporate Statutes Governance

Operational Regulations Control

Project Codes Environment

GOVERNANCE STRUCTURE

METHODOLOGIES

SYSTEMS OF CONTROL

IMPLEMENTATION PLANS

RISK MANAGEMENTAlthough a level of risk awareness and response is embedded in daily

management and operational activities, a large and complex Group

faces corresponding risks. This in turn requires of management to

design and implement a planned and structured approach to

understand, identify, report, price, manage, mitigate and close out

the Group’s large and complex risks. This includes governance

structures (such as the Board risk management committee, the

executive committee and operating platform risk structures),

organisational leadership, strategic planning and effective

management to ensure that the appropriate operational and

functional capacities, controls, systems and processes are in place to

manage risk. Underpinning this is the Integrated Assurance

Framework.

The Group Risk Management Framework, which was approved by

the Board, comprises one of three building blocks that make up the

Integrated Assurance Framework, and aims to:

� Align strategy with risk tolerance

� Improve decision making which improves the Group risk profile,

� Promote the strategic and coordinated procurement of quality

order book

� Ensure equitable commercial terms and conditions are contracted,

and the rational pursuit of commercial entitlement

� Promote rigorous project review, and timeous response to

contracts in distress

� Promote continuous improvement through the application of key

lessons learnt

� Reduce operational surprises, improve predictability and build

shareholder confidence

� Build robust organisational risk structures and facilitate timeous

interventions, to promote long term sustainability

� Promote the efficient and proactive utilisation of opportunities

IAN HENSTOCK COMMERCIAL EXECUTIVE

RISK MANAGEMENT REPORT


REGULATORY COMPLIANCEWith the growth of the Group over time, in new geographies and

disciplines, regulatory compliance has become a large and complex

area to understand. This in turn requires a structured approach to

evaluate exposure and ensure adequate responses are initiated

timeously to mitigate and avoid any negative impact on the Group’s

performance through regulatory non-conformance. The regulatory

compliance function provides specific focus on regulatory compliance

risk within the context of the Integrated Assurance Framework.

The implementation of a regulatory compliance Framework focuses

on the seamless integration of regulatory compliance in conjunction

with risk management and internal audit into business planning,

execution and management.

The key imperative to be derived from the implementation of

regulatory compliance is to ensure material compliance across the

Group with every law, rule, code, standard and policy where

non-compliance could be materially injurious to the Group’s

performance and/or continued existence, whether from a financial,

legal or reputational perspective.

INTERNAL AUDITInternal audit is a key element of the Group’s assurance structure,

and constitutes the third building block of the Group Integrated

Assurance Framework. Internal audit has established a robust,

risk-based systems approach to identify the significant risk

management processes and responses which are to be tested and

evaluated (i.e. effort is focused on providing assurance that the key

strategic and operational risks are being effectively understood,

identified, managed, mitigated and closed out). Internal audit follows

a planning and execution process through which the risk-based

systems approach is delivered in a consistent manner, which is

followed by detailed reporting and issue tracking processes.

It is through the Group Integrated Assurance Framework that the

major element of critical risk processes and responses to be included

in the internal audit plan are developed. These include interactions

with the Group risk executive and the Group regulatory compliance

executive, and with specific reference to their respective mitigation

strategies and plans. The audit plan also encompasses governance

areas for assessment, the assessment of internal financial controls

and risk management policies and procedures, as well as specific

areas highlighted by the audit & sustainability committee, Group

executive committee and by executive and operational management

for separate and dedicated review.

GROUP RISK MANAGEMENT FRAMEWORKThe context within which the Group identifies, assesses and responds to risk and opportunity is described below in terms of its prevailing

strategic, corporate, operational and project environments:

RECOVERY & GROWTH

PROSPECT AND PROJECT LIFECYCLE

LESSONS LEARNT APPLIED TO FUTURE

PROSPECTS AND PROJECTS

RISK TO ACHIEVE LONG TERM STRATEGY.

DIRECTION SET FOR ORGANIC AND ACQUISITION

GROWTH TO ACCESS NEW MARKETS AND CREATE

NEW CAPACITY RISKS TO THE GROUP OUTSIDE

OF THE PLATFORMS AND

PROJECT ENVIRONMENTRISK TO ACTIVITIES RELATED TO THE GENERATION OF

PROFITS WITHIN THE CONSTRUCTION GLOBAL

UNDERGROUND MINING, CONSTRUCTION AFRICA AND

MIDDLE EAST ENGINEERING AFRICA AND CONSTRUCTION

PRODUCTS AFRICA OPERATION PLATFORMS

STRATEGIC

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PROSPECT AND PROJECT LIFECYCLE

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1 ORGANISATIONAL RISK STRUCTURES

In addition to the various Group

operating boards’ responsibilities,

organisational structures have

been created and tasked with

risk governance and include the

risk management committee,

the Murray & Roberts Limited

risk committee and the

Murray & Roberts Limited

project oversight committee.

2 STRATEGIC RISK MANAGEMENT

Strategic risk is evaluated as a hurdle to

achieving long term strategy. Direction

is set for organic and acquisition growth

to access new markets and create new

capacity, and applies to acquisitions,

disposals, new business development

and timely and needed leadership

intervention.

4 OPERATIONAL RISK MANAGEMENT

Operational risk is evaluated as a

hurdle to achieving planned profits

within the Construction Global

Underground Mining, Construction

Africa and Middle East, Engineering

Africa and Construction Products

Africa operating platforms.

5 PROJECT RISK MANAGEMENT

Project risk is evaluated as a hurdle

to delivering contracted scopes

against cost, time and technical

performance targets, while

maintaining health, safety and

environmental performance at

acceptable levels. A high level Group

Framework for Standardised Project

Delivery sets the minimum standard

for project management required in

the delivery of projects across the

Group. This Framework also

provides internal audit with a

consistent set of processes and

controls against which assurance

of project performance is tested.

Project risk management activities

include the Group risk tolerance

filters, lessons learnt register and

schedule of contracting principles,

project reviews and performance

monitoring.

6 CORPORATE RISK MANAGEMENT

Corporate risk management relates

to a range of portfolios within the

corporate office which address

various forms of risk including risk

management policies and

procedures, the statement of

business principles, regulatory

compliance, commercial and legal

oversight, integrated assurance, IT

business continuity and disaster

recovery, treasury, bonds and

guarantees, insurance, crisis

communication and forensic

investigations.

3 FUNCTIONAL SUPPORTDedicated functional support for risk

management has been created at

Group level and within operations,

including enterprise functional

leadership, risk management

monitoring, risk-based audit

programmes and operational and

project risk focus.


RECOVERY & GROWTH Our strategy for Recovery & Growth is aimed at establishing

Murray & Roberts as the leading construction and engineering group

in its selected markets. The year to June 2012 was defined as the

recovery year and the following two years as the growth years.

The recovery objectives included amongst others an improvement in

the Group’s liquidity position.

This improvement was achieved by the following five key initiatives:

driving cash generation from operations, the sale of non-core

operations and assets, the restructuring of the Group’s debt,

a successful rights issue and the resolution of project claims. Cost

containment and capital preservation form a key imperative in this plan.

Growth plans for the operating platforms have been defined and will

be vigorously pursued by the executive teams leading each platform.

The Growth strategy focuses on the commodity boom, engaging

Africa more proactively and leveraging the Group’s footprint in the

growing oil and gas market.

STRATEGIC RISK

Trend Risk Mitigation

Continued market volatility in developed economies

Demand for commodities is driven by economic growth in

China. This in turn is leading to strong pipeline and order

book for Cementation. A slowdown in the Chinese

economy could dampen the commodity run.

1. Further diversify in terms of geographies, clients and disciplines.

2. Utilise a “Growth through Acquisition” strategy to accelerate

capacity building in strong diversified commodity markets and

emerging geographies.

3. Establish a strong position in key areas of Africa that support

the beneficial and profitable delivery of new projects.

4. Leverage further the Group’s footprint in the growing oil and

gas markets.

5. The Group has adopted and implemented a stringent cost

containment and capital preservation programme to strengthen

its balance sheet.

Europe’s stagnation has forced Europe based contractors

into new markets, with an increased appetite for risk in

Africa and the Middle East.

Public sector clients introduce additional risk

to delivering infrastructure projects

The Group has exposure to public sector clients,

particularly in South Africa and the Middle East. The public

sector has a limited capacity to absorb the cost of scope

changes and drawn out dispute resolution processes

create pressure on working capital. The public sector also

has a limited capacity to meet delivery obligations.

1. Apply key lessons learnt and commercial guidelines to new

opportunities, and contract out of risk issues.

2. Understand the public sector’s capacity/or lack thereof to meet

its contractual responsibilities prior to concluding agreements.

3. Focus strongly on pricing approach, design completion,

implementation planning and change management.

SA business environment

Declining business confidence in South Africa, as a result

of the political and mining environment, could lead to

reduced foreign investment and further constrain

opportunities in the local infrastructure and mining markets.

1. Continue to seek growth opportunities in Africa, the Middle

East, Australasia and the Americas.

2. Target acquisitions in growth geographies.

Transformation

Lack of transformation (Employment Equity) and a low

BBBEE rating could reduce Murray & Roberts' chances of

being successful with public sectors tenders or incurring

client sanction or penalties on current projects if contractual

BBBEE obligations are not met.

1. Focus on improving transformation (implementation of

Transformation Policy) and BBBEE rating.

2. Growth in international markets will lead to proportionately

lower levels of domestic revenue, which will improve the

BBBEE rating.

3. Invest in capacity that is scalable into Africa and other

growth geographies.

Construction Products Africa Operating Platform

The construction products business in South Africa is

highly sensitive to local market conditions, and generally is

not able to adapt product ranges, or relocate plant to meet

changing markets dynamics.

1. Invest in capacity that is scalable into Africa and other growth

geographies.

KEY

Colours: Black – High, Dark grey – Medium, Light grey – Low

Risk trend: Arrow up – increasing, Arrow down – decreasing, Arrow right – stable

Object: Opportunity, New risk

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RISK MANAGEMENT REPORT CONTINUED

STRATEGIC RISK continued


New growth markets

Oil and gas is needed to fuel energy demands from global

urbanisation. Clough is strategically placed to benefit from

the oil and gas outlook and could become a meaningful

player and facilitator in the growing African gas market,

in addition to its traditional Australasian markets.

1. Develop strategies to leverage the Group further into the

oil and gas markets.

Group liquidity

Losses and severe working capital demands from

projects, in particular GPMOF, Dubai International Airport

and Gautrain, created significant liquidity stress for

the Group.

1. Disposal of a number of non-core businesses has brought

in approximately R0.9 billion.

2. Successful debt restructuring has been concluded with the

first covenant measurement in December 2012.

3. A heads of agreement has been signed with Eskom

on Medupi Civils, averting cash flow pressure.

4. Settlement of claims on GPMOF, Dubai International Airport

and Gautrain are in progress.

Leadership capacity to support growth strategy

The Growth strategy is placing increasing demands on

leadership capacity.

The Construction Africa and Middle East platform has

performed poorly over the past number of years, and

suffered from high staff turnover.

With the global scarcity of skilled technical talent,

Murray & Roberts risks the loss of key talent, including

project managers, contract managers and senior

executives.

1. Experienced COOs have been appointed for the Civils and

Buildings companies, with new MDs appointed to the Middle

East and Marine.

2. Jerome Govender has been appointed to lead the

Construction Africa and Middle East platform.

3. A new remuneration policy is being developed to focus on

performance and retention of key talent.

4. Performance management and development is receiving

appropriate attention.

5. Regular succession reviews are held to identify potential talent

retention risks and apply appropriate strategies to individuals.

KEY





OPERATIONAL RISK


Delay in South African infrastructure programme

Delays in the planned rollout of the Government’s

infrastructure plan in South Africa are impacting negatively

on a number of areas within the Group, in particular the

Construction Africa and Middle East, Engineering Africa

and Construction Products Africa platforms.

1. Africa strategy to reduce dependence on contracts and

projects within the South African environment.

2. Invest in capacity that is scalable into Africa and other

growth geographies.

CIDB and the Competition Act

The Construction Industry Development Board (CIDB) has

said that once the Competition Commission pronounced

the outcome of its investigation, the CIDB had the option,

in terms of its code of conduct, to remove guilty

companies from its grading system database for up to

10 years, precluding such contractors from working for the

South African public sector. This is however unlikely under

the current fast track process, but poses a significant risk

for future transgressions.

1. Continue with active Competition Law training, with all key

executives fully orientated on the subject matter.

2. Proactively enforce the Group’s Statement of Business

Principles.

3. Proactively enforce signing of the unethical and unlawful

practices declaration with tender finalisations.

4. Full co-operation with the Competition Commission.

Decline in Genrec order book

Genrec’s reduction in scope under the Hitachi contract

and loss of market share during the focus on the power

programme has placed strain on the Company’s medium

term outlook.

1. Rigorous focus on becoming the lowest cost producer.

Health, safety and environmental exposures

The Group has made significant progress in managing

safety risk, with the LTIFR of 1.14, just above the target of

1 and fatalities at a decade low of 4. However, anything

more than Zero Harm is a concern.

1. The majority of operating entities in the Group are

OHSAS 18001 (Health and Safety) certified, with a significant

number achieving ISO 9001 (Quality) and ISO 14001

(Environmental) certification.

2. The Zero Harm through Effective Leadership project aims

to strengthen the STOP.THINK.ACT brand, build a leadership

engagement programme, align HSE structures across the

Group, establish Centres of Excellence, develop lead

indicators and capacitate effective leadership.

Order book

The termination of the Aquarius contract reduced the

Group order book by R7,5 billion at year-end. The scope

reduction by Hitachi on the Medupi and Kusile Boiler

contracts has reduced the order book by a further

R6,2 billion. The Middle East business has not been able

to secure new orders for more than 18 months. The

Building markets in South Africa are flat and oversupplied,

with new building contracts secured at very low margins.

There has also been delays in bringing civil contracts to

market under the South African Government’s

infrastructure programme.

1. Africa strategy to reduce dependance on contracts and

projects within the South African environment.

KEY




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RISK MANAGEMENT REPORT CONTINUED

PROJECT RISK


Risk at tender stage and commercial close

Compromises during the tender stage due to pressure

to win work may introduce risks which are outside the

defined risk tolerance.

1. Rigorously apply the lessons learnt register and schedule of

contracting principles.

2. Murray & Roberts Limited risk committee reviews high risk

bids, and sets formal negotiating mandates.

3. Managing directors to confirm that contracts were closed

in full compliance with the mandates given.

4. Group legal services reviews all contracts for red

rated projects.

Lack of formalised project management discipline

Internal Audit findings indicate a general lack of formalised

project management discipline such as risk registers, cost

control and forecasting, as well as schedule and change

management on projects. This introduces risk of cost

overruns, late delivery and unpredictable profitability on

projects.

1. Operating platforms actively implementing formalised project

management processes, systems and controls, with the

necessary skills capacity.

2. Internal Audit ensures the Framework for Standardised Project

Delivery is implemented correctly and applied for all critical

and high-risk projects.

State procurement process

Recent bid adjudication by some State entities/

departments has not been strictly in line with the Request

For Proposal (RFP) evaluation criteria, raising concerns

around procurement processes.

1. Engage directly with relevant State entities/departments to

ensure consistency and transparency.

Mafraq Hospital

The late delivery of permanent power, delayed medical

equipment procurement and design coordination issues

is leading to substantial delay. The client has agreed to

a 10 month extension of time, but associated costs still

need to be negotiated.

1. Plans are to reach amicable settlement with the client,

including likely cost overruns.

Lonmin opencast mine

Actual costs on the project are escalating above what the

cost recovering mechanism is allowing.

1. Discussions are being held to increase the contract price,

alternatively to terminate the contract.

CORPORATE RISK


Uncertified revenues

Uncertified revenues taken to book on Gautrain, Dubai

International Airport and GPMOF must still be realised

through protracted claims processes. This creates the

risk of a write-back of revenues accounted for in prior

financial years, if the outcomes are less favourable

than anticipated.

1. Gautrain delay and disruption claim formulation is progressing.

An alternative negotiated settlement is no longer being pursued.

2. Favourable arbitration ruling on design changes for GPMOF.

Formulation of the claim is progressing.

3. Tribunal has ruled the ultimate respondent on the Dubai

International Airport Claim is the Dubai Government.

UAE Supreme Court will determine the responsible department,

following which claim arbitration will commence.

KEY





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INTRODUCTIONMurray & Roberts believes that directors, senior executives and staff

should be paid fair, competitive and appropriately structured

remuneration in the best interests of shareholders. It also recognises

that its remuneration philosophy has a direct effect on the behaviour

of employees and that it has to align with the business strategy of the

company.

The Group’s remuneration policy continues to be driven by the

principles of developing a performance culture and motivating and

retaining key and critical talent.

The Board and the remuneration & human resources committee

(“remuneration committee”) present this remuneration report. It

discloses the remuneration policy on executive remuneration and

some aspects of remuneration below executive level with regard to

fixed and variable components. Following a comprehensive review

of the Company’s remuneration policy from a King III corporate

governance best practice design perspective, various enhancements

were made from last year. These are detailed in this report. On

recommendation by the remuneration committee, the Board has

approved the information in this report.

REMUNERATION COMMITTEEThe remuneration committee is a committee of the Board and met

four times during the year. Membership of this committee and

attendance at committee meetings are provided on page 120.

The committee’s terms of reference are included on page 114.

The key decisions taken during the year by this committee were:

� Approval of guaranteed pay increases for the Group

� Approval of executive director and prescribed officer guaranteed

pay increases for 2013 financial year

� Review and approval of short term incentives design and related

company financial performance conditions

� Approval of short term incentive payments in respect of 2012

financial year

� Approval of long term incentive awards made in financial year

2012 and their underlying performance conditions

� Based on best practice recommendations and input from

shareholders, the design of a new long term incentive plan for

approval by shareholders

� Review and approval of non-executive director fees for 2013

financial year, excluding approval of any recommendation on their

own fees

� Review and approval of changes to the remuneration policy for

the 2013 financial year

� Review and approval of the Company’s remuneration report

and policy for inclusion in the 2012 annual integrated report

REMUNERATION POLICYThe Murray & Roberts remuneration policy is aligned to its strategic

policy, namely recovery in the short term and sustainable growth into

the future. Murray & Roberts recognises that its remuneration policy

should be formalised across all the Group’s operating companies to

drive synergies, however it needs to remain flexible enough to

acknowledge differences across operating companies, with varying

market conditions and external benchmarking, per operating platform.

To give effect to the general remuneration philosophy that directors,

senior executives and salaried staff should be paid fair, competitive

and appropriately structured remuneration in the best interests of the

company and shareholders, the following broad principles are applied:

� Remuneration consists of fixed and variable components,

with emphasis on variable pay at higher levels to encourage

performance and shareholder value add

� Remuneration structures support the development of a

performance culture and the Group’s business strategy

� Remuneration components are set at a competitive level to

motivate key talent and to attract the services of high calibre

future employees

� The short term incentive plan aligns the interests of executives

with those of shareholders in the short term as performance

bonuses are subjected to company key financial performance

and individual key performance indicators (“KPI”)

� The long term incentive plan and awards to participants are

subject to the satisfaction of financial performance conditions

supporting long term shareholder value creation

The remuneration committee ensures that the mix of remuneration,

including short term and long term incentives, meets the Group’s

strategic objectives.

Murray & Roberts has the following remuneration components:

� Guaranteed pay (consisting of salary, benefits and retirement

fund contributions)

� Short term incentives (“STI”)

� Long term incentives (“LTI”).

The Company seeks to position guaranteed pay at the median

against appropriate national benchmarks, however, for total pay

the policy is to position earnings at the 75th percentile for executives,

senior management and key talent and critical skills. This policy

supports the underlying principle of paying for performance and

the focus on variable pay.

In terms of optimal on-target remuneration mix for executives,

an exercise was conducted in 2012 to benchmark all components

REMUNERATION REPORT


of executives’ remuneration and to determine the on-target

remuneration mix, which supports the Group’s business strategy

and aligns with feedback provided by shareholders.

This optimal remuneration mix, which focuses on variable

remuneration for particularly the Group chief executive and Group

financial director, is depicted above, per level.

OVERVIEW OF REMUNERATION COMPONENTSGUARANTEED PAYGuaranteed pay is aimed at reflecting individual contribution to

Murray & Roberts and the market value for role with internal equity

and external equity being cornerstones for setting guaranteed pay.

Establishing internal equity entails a process of formal job matching

to ensure greater internal alignment, particularly between operating

companies within operating platforms. In terms of external equity,

which is essential to compete for scarce talent, a benchmarking

philosophy is adopted whereby benchmarking will be performed

relative to peer companies for executive directors and prescribed

officers against companies listed on the JSE which are of a similar

size and nature, in terms of market capitalisation and sector,

to Murray & Roberts.

Benchmarking for all roles is also performed against group

comparator industries, where data from third party salary survey

service providers is used.

The average remuneration adjustment for executive directors and

prescribed officers in 2012 was 7.4%. The adjustments are aligned

to the average Murray & Roberts increase awarded in March 2012 for

other salaried employees. The payments made to executive directors

and prescribed officers for the 2012 financial year are disclosed in

note [42] to the consolidated annual financial statements.

Murray & Roberts operates a total fixed cost of employment to

company (“TFCE”) remuneration structure for guaranteed pay.

Therefore, benefits such as travel allowances, insurance policies

relating to death in service and disability, group life benefits and

medical aid are included in TFCE.

Salaried employees in South Africa contribute to the

Murray & Roberts Retirement Fund, which is a defined contribution

pension fund governed by the Pension Funds Act.

Employees of Murray & Roberts in the Middle East region are not

required to belong to a retirement fund, while in Australia

contributions are made, as part of TFCE, to a superannuation fund

structured as a defined contribution fund. In Canada, contributions,

as part of TFCE, are made to a registered retirement fund.

SHORT TERM INCENTIVESThe purpose of the STI scheme is to drive company and team

financial performance as well as individual performance in order

to deliver sustained shareholder value.

The STI scheme is designed to be self-funding. On-target bonus

projections are used to ensure affordability and financial measures

such as earnings before interest and tax and actual profit are used to

calculate the bonus pool accrual.

As Murray & Roberts believes that all employees should be aligned

with key business drivers and sustainable growth participation in the

STI also includes middle management, junior management and

general staff, subject to the meeting of individual KPIs.

Targets for earning STI payments for executives consist of both

financial and individual targets. The Group chief executive, Group

financial director and operating platform executives have a 70%

weighting in favour of financial performance, while other prescribed

officers have a 50% weighting.

The STI disbursement is based on bonus qualification levels as a

percentage of TFCE, which is determined based on grade and

performance against agreed financial and/or individual KPIs as per

the individuals’ performance contracts and applied on a sliding scale

between threshold, target and stretch performance. Performance

below threshold attracts no STI payment for the specific component

of the STI below threshold, where threshold for financial KPIs is 80%

of target. The STI disbursement is capped at stretch performance or

120% of target. The potential maximum distribution to executive

directors and prescribed officers is between 100% and 150% of TFCE.

Financial performance KPIs will be measured against audited annual

financial performance. Individual performance KPIs will be based on

a formal performance and development evaluation conducted by

the executives’ direct manager.

100%

Guaranteed pay Target short term incentive Target long term incentive

CHIEF EXECUTIVE OFFICER

CHIEF FINANCIAL OFFICER

TOP MANAGEMENT

SENIOR MANAGEMENT

MIDDLE MANAGEMENT

50%0%

40%

45%

50%

55%

80%

30%

25%

25%

25%

30%

30%

25%

20%

20%

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REMUNERATION REPORT CONTINUED

The payments made to executive directors and prescribed officers for

the 2012 financial year are disclosed in note 42 to the consolidated

annual financial statements. The total STI payment to these executives

is 50% of their aggregate TFCE and 44% of their potential stretch

bonuses. The year to June 2012 was defined as the Group’s

Recovery year and has been an exceptional one for the Group, in the

context of the achievement of the Recovery objectives highlighted in

this annual integrated report. It is within this context that the awards

were made to the executive directors and prescribed officers.

Following input from shareholders, Murray & Roberts will implement,

from the 2013 financial year, an automatic deferral of part of the

calculated STI into forfeitable share awards as a long term share

incentive to enhance alignment with shareholder’s interests.

The financial measures for executive directors and prescribed officers

for the 2013 financial year STI will be Group EBIT, operating platform

EBIT, net cash and return on invested capital employed. The

individual measures of leadership, relationships, operational

excellence, safety and risk are designed to maintain a sustainable,

profitable business in the long term.

LONG TERM INCENTIVESThe overall purpose of the Murray & Roberts LTI scheme is to provide

general alignment between the executives and shareholders of

the Company. It also motivates and rewards executives who have

contributed to the Group’s value creation over the long term

and it supports retention and attraction of executives.

Murray & Roberts has reviewed its LTI in great detail and proposes

introducing a Forfeitable Share Plan in the 2013 financial year

and the phasing out of its historic option type plan, namely the

Murray & Roberts Holdings Limited Employee Share Incentive

Scheme (“Share Option Scheme”).

MURRAY & ROBERTS SHARE OPTION SCHEMEThe Share Option Scheme will be phased out and no further awards

will be made from financial year 2013.

However during the 2012 financial year, allocations were made in

August 2011. The purpose of the allocation was to provide greater

alignment between key executives and shareholders of the company,

to contribute to the alignment with the Recovery & Growth strategic

plan and sustainable value creation. Share options were allocated to

some 33 key executives. Options granted were based on cliff

vesting in year three subject to meeting a performance condition.

The performance condition applied was growth in diluted HEPS for

continuing operations of annual CPI + 5% cumulatively over the

performance period. In order to support retention, approximately 30%

of the awards allocated to certain executive directors and executive

committee members during the August 2011 allocation comprised

options with no performance condition attached to them.

As a result of the April 2012 rights issue, additional options were

issued to all existing participants of the Share Option Scheme in the

same proportion as the rights issue. This is in line with the scheme

rules of ensuring that the participants are entitled to the same

proportion of the equity capital as the participant was previously

entitled. Participants will be obliged to exercise these additional

options together with the options already held, resulting in a weighted

average adjusted option price. The adjustment is not a re-pricing of

the options.

Outstanding awards in terms of Share Option Scheme will continue

to vest in participants, mostly subject to meeting performance

conditions. Executive directors and senior management were eligible

to participate in the Share Option Scheme. Non-executive directors

were not eligible to participate in the Share Option Scheme.

A summary of the salient features are:

� Participants are granted options to acquire shares in

Murray & Roberts at a future date

� No consideration is paid by participants for the option grant

� The purchase price for the shares is set at the date of grant and

is the closing price of a share on the day of the grant

� At the end of the vesting periods, participants can exercise the

option and pay the purchase price and acquire the specified number

of shares in Murray & Roberts. It is only at this point that participants

will become shareholders and will acquire shareholder rights

� Staggered vesting periods apply to options granted under the scheme

after October 2009. All vested options must generally be exercised

within six years from the date of grant, failing which they lapse

� Where a performance condition is imposed, it was based on

an increase in the share price of CPI + 4% per annum

compound growth

The outstanding option awards made in terms of the Share Option

Scheme for executive directors and prescribed officers are disclosed

in note 42 to the consolidated annual financial statements.

Murray & Roberts proposes to amend certain provisions of the Share

Option Scheme to align with the introduction of the FSP and to effect

enhancements to the drafting of the scheme in line with Schedule 14

of the JSE Listings Requirements. The salient features of the

proposed amendments to the Share Option Scheme will be

presented to shareholders at the annual general meeting of

shareholders. In this regard, shareholders are referred to the special

resolution number 5 on page 222 of this report.

MURRAY & ROBERTS FORFEITABLE SHARE PLANINTRODUCTIONMurray & Roberts, as an outcome of the remuneration policy review,

proposes the introduction of a new long term incentive plan in

financial year 2013, namely the Murray & Roberts Holdings Limited

FSP. The rationale behind the introduction of the FSP is as follows:

� Best practice indicates a move away from the use of option-type

plans only and the use thereof in conjunction with full share plans

Full share plans, like the FSP, are less leveraged and have less

upside than option type plans, but provide more certain outcomes

� Most importantly, share ownership by executives provides

shareholder alignment which is essential for a LTI to succeed

� Furthermore, FSP instruments aid retention and provide more certainty

as these instruments are less volatile than option type instruments

� This instrument also supports the Company’s policy of attracting

and retaining the key talent and expertise required for its

business strategy

AWARD LEVELSAnnual allocations of forfeitable shares under the FSP will be made

on a consistent basis to ensure long term shareholder value creation.

This ensures that executives are not faced with an “all or nothing”

reward scenario and the impact of the cyclical nature of the business

is smoothed. Annual allocations will be benchmarked and set to a

market related level of remuneration.


The remuneration committee has discretion when making FSP

awards and will make awards with reference to the individual

performance of the executives. Annual allocation and aggregate caps

will be applied, with the aggregate cap being between four and six

times TFCE for executive directors and prescribed officers.

On an annual basis, the remuneration committee will review LTI

allocations to ensure its continued contribution to shareholder value

and adherence to best practice award guidelines. The remuneration

committee is also responsible for the governance relating to all LTIs

and will ensure that allocations are made consistently subject to

stringent performance conditions.

PERFORMANCE CONDITIONSFor annual awards, all awards under the FSP will be subject to a mix

of performance conditions, namely:

� Return on Invested Capital Employed (“ROICE”);

� Relative Total Shareholder Return (“TSR”); and

� Free Cash Flow per Share (“FCF”).

The FSP provides for retention allocations, however, retention

allocations will only be used in very specific, ad hoc circumstances

for retention of critical skills and will be approved by the remuneration

committee in terms of the FSP rules.

The weighting for each of the performance conditions and vesting

percentages for on-target performance for the FSP are as follows:

FSP PERFORMANCE CONDITIONS AND WEIGHTING

Performance condition Target (maximum vesting %)

ROICE 50%

TSR 25%

FCF 25%

Maximum vesting 100%

For each of the above performance conditions, targets will be set for

on-target performance with commensurate linear vesting levels

between threshold and on-target performance. Threshold will be set

at 80% of target and will be evaluated at the end of the three year

performance period.

The calculation and targets for the performance conditions are

contained in the table below.

Peer companies to be used for the TSR performance measure

are Aveng, Group 5, WBHO, Basil Read and Steffanuti Stocks.

The remuneration committee considers the performance targets to

be stretching in the context of the company’s business strategy and

the market conditions.

Due to the annual allocations cliff vesting will apply, subject to the

performance conditions, three years from the award date.

FSP PERFORMANCE CONDITIONS CALCULATIONS AND TARGETS

Criteria Method Target

ROICE

Taxed EBIT + Income from Associates

Total capital employed

WACC

plus 3%

TSR

Share price end of period – Share price start of period + Dividends paid during period

Share price start of period

100% Relative

to peers

FCF

Operating cash flow – CAPEX + Proceeds on disposal of PPE

Number of shares

Cash

positive

SALIENT FEATURES FOR SHAREHOLDER RESOLUTIONThe salient features of the FSP will be presented to shareholders

at the annual general meeting of shareholders. In this regard

shareholders are referred to the Special Resolution number 4

on page 222 of this report.

DILUTIONThe aggregate number of shares at any one time which may be

allocated under the Share Option Scheme and the FSP shall not

exceed 33 189 262 (thirty three million one hundred and eighty nine

thousand two hundred and sixty two) shares.

The maximum number of shares allocated to any participant in

respect of all unvested awards under the FSP and the Share Option

Scheme, shall not exceed 2 223 681 (two million two hundred and

twenty three thousand six hundred and eighty one) shares. This

currently represents 0,5% of the number of shares currently in issue.

LETSEMA VULINDLELA BLACK EXECUTIVE TRUSTIn addition to the Share Option Scheme and the FSP,

Murray & Roberts allocates shares to black executives through the

Letsema Vulindlela Black Executives Trust (Letsema), which was

established in December 2005 as part of the Group’s Broad-Based

Black Economic Empowerment shareholding structure. The objective

of Letsema is to give black executives the opportunity to become

shareholders in Murray & Roberts and as an attraction and retention

incentive. In addition, Letsema aims to align the interests of black

executives with those of the shareholders.

The beneficiaries of Letsema are black (African, Coloured and Indian)

South African citizens, who are employed on a permanent basis

within the Group as top, senior and middle managers.

109

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The August 2011 allocation was based on management band,

performance and potential and the number of shares allocated was

determined with reference to the expected value of shares to be

allocated relative to the employee’s TFCE. Allocations ranged from

5% to 35% of TFCE for stretch performance.

This trust was extended to 2021 and continued allocation of shares

will be made until 2016 with a five year vesting period.

Black executives who are top managers or are senior executives as

members of operating company executive committees will be

allocated shares under the FSP.

RETENTION PAYMENTSNo retention or severance payments were made during the year to

executive directors or prescribed officers.

CONTRACTS OF EMPLOYMENT – EXECUTIVE DIRECTORS AND PRESCRIBED OFFICERSExecutive directors do not have fixed term contracts, but are subject

to notice periods of between one and three months. Similarly,

prescribed officers are subject to a notice period of between one and

three months. There is no material liability to the Group with respect

to the termination of contract of any executive director or prescribed

officer. The applicable contracts of employment do not include

provisions entitling the individual to a specified payment on

termination of employment or on a change of control of

Murray & Roberts. Further, no agreements have been entered into

with the executive directors or prescribed officers regarding restraint

of trade.

The only provision in the contract of employment relating to a

payment on termination of employment is to provide that where

termination occurs during the first year of employment, any payment

to which the individual is entitled by law will be limited to a maximum

of 25% of annual TFCE.

Normal retirement of executive directors and senior management is

at age 63.

SHAREHOLDERS’ NON-BINDING ADVISORY VOTEIn terms of King III and best practice principles the remuneration

policy as contained in this remuneration report, will be put to a

non-binding shareholders’ vote at the annual general meeting of

shareholders. Shareholders are referred to ordinary resolution 6 on

page 220 in this regard.

NON-EXECUTIVE DIRECTORSNon-executive directors are appointed for a period of three years

and, following this period, may be available for re-election for a further

three year period. They are required to retire at age 70.

Non-executive directors receive a fee for their contribution to the

Board and its committees of which they are members. The fee paid

to the chairman includes his director’s fee as well as his committee

fees. In addition to a fee, non-executive directors are entitled to claim

travelling and other expenses incurred in carrying out the business of

the company and attending Board and committee meetings.

REMUNERATION REPORT CONTINUED

Non-executive directors do not participate in the STI or any LTI and

they do not receive any benefits other than those disclosed.

To the extent that a non-executive director does not attend a

scheduled Board or committee meeting, an amount will be deducted

from his or her fee. Where a director is required to attend a special

Board meeting, he or she will receive an additional fee in respect

of attendance.

This fee structure reflects the skill and experience brought to the

company by each non-executive director, responsibilities undertaken,

the time commitment involved and the importance of attendance at

and contribution to Board and committee meetings. The level of fees

for service as directors, additional fees for service on Board

committees and the chairman’s fee are reviewed annually. The fees

are benchmarked against companies listed on the JSE which are of a

similar size and nature, in terms of market capitalisation and sector,

to Murray & Roberts. This includes companies in the construction,

mining and industrial sectors. Consideration is also given to any

changes in the level of complexity of the roles when assessing fee

recommendations and benchmarks.

In accordance with King III, the remuneration committee reviews,

based on external benchmarks, and recommends fee structures to

the Board for approval (excluding recommendation on their own fees)

before submitting recommendations for approval by shareholders at

the annual general meeting.

An increase to the non-executive directors’ and committee fees is

proposed for 2013. This proposed increase is due to:

� External benchmarking indicating that Murray & Roberts is

remunerating non-executive directors at levels lower than the

company’s peer group

� The need to attract suitable, high quality non-executive directors

� An increase in time investment required by non-executive directors

due to the global nature of the Group, its risk profile and an

increase in general corporate governance requirements

In terms of section 66(8) of the Companies Act, shareholders are

referred to special resolution number 1 on page 221 of this report

regarding approval of the proposed non-executive director fee

structure for 2013.


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111

The health, safety & environment (HSE) committee assists the Board to

fulfil its supervisory role relating to the integration of sound HSE

management into all aspects of the Group’s business activities.

The committee operates under an approved charter. The committee

reviews HSE performance in operational entities and provides guidance

to management and the Board. It also evaluates the appropriateness

and adequacy of policies and strategies against global best practice.

MEMBERSHIPThe committee comprises five non-executive directors and the Group

chief executive, and is chaired by WA Nairn, an independent

non-executive director. During the year under review, independent

members RC Andersen, ADVC Knott-Craig, NM Magau and

JM McMahon served on the committee. ADVC Knott-Craig resigned

from the committee on 21 November 2011. The Group executive

directors, operating platform executives and executives responsible

for sustainability, health and safety attend meetings ex officio.

The committee met five times during the year.

TERMS OF REFERENCEThe committee’s responsibilities include:

� Approving the framework, strategy, policies and standards for

HSE management and monitoring implementation thereof � Ensuring that associate companies and significant investments

develop policies, guidelines and practices congruent with the

Company’s HSE policies � Monitoring the performance covering matters relating to

substantive HSE risks and liabilities � Monitoring key trailing and leading indicators of safety

performance � Taking into consideration substantive national and international

regulatory and technical developments and respond appropriately � Reviewing compliance with policy, guidelines and appropriate

local and international standards and relevant local laws in

health & safety matters

The Board reviewed and approved the committee’s terms of

reference during the year.

ASSESSMENTIn addition to the formal Board evaluation process, the committee

also evaluates its performance and effectiveness by way of self-

assessment questionnaires. Based on the results, the committee and

Board believe that the committee functions effectively and has

complied with its terms of reference in all material respects.

SAFETYFATALITIESThe committee deeply regrets the death of four employees (2011:12)

who sustained fatal injuries while on duty. All four incidents occurred

at underground mining operations and the hazards involved were as

a result of fall of ground and equipment and machinery failure. While

this performance is a significant improvement over previous periods,

it remains far from the Board’s aspiration of zero fatalities. Management

has revised standards and working procedures to prevent similar

occurrences.

LOST TIME INJURY FREQUENCY RATEThe Group’s consolidated lost time injury frequency rate, measured

over a million hours worked, improved to 1.14 (2011: 1.28). Further

information on the Group’s safety performance is provided in the

social performance section of the Group performance review on

page 37.

As indicated in the last report to stakeholders, in 2011 management

brought in DuPont Sustainable Solutions to conduct a comprehensive

health and safety evaluation and to help in crafting a plan to achieve its

Zero Harm goals. The evaluation was completed during the year and it

brought about an increased level of health and safety awareness in the

organisation. It also helped in establishing a common understanding

across the company’s operations on health and safety challenges

and opportunities for improvement. The recommendations from this

evaluation have been incorporated into safety improvement plans

which are being implemented at all operations.

HEALTHOCCUPATIONAL HEALTHWork continued on improving occupational health programmes

aimed at addressing potential health risks associated with operations.

Noise induced hearing loss (“NIHL”) remains a prevalent occupational

disease threat at mining, construction and manufacturing businesses.

During the past year, 36 (2011:104) new NIHL cases were recorded

resulting in an occupational disease frequency rate of 0.18, measured

over a million hours worked (2011: 0.47).

Assessments are carried out at operations to identify areas with noise

levels above legal limits and corrective measures are implemented to

eliminate or reduce the exposure. More effort is being focused to

engineer out excessive noise levels and to provide employees with

knowledge, skills and resources to protect themselves against noise

exposure. Silicosis and tuberculosis remain health risks to employees

working in environments with silica dust and these risks are often

compounded by HIV/AIDS. 21 (2011: 37) TB cases were reported

during the financial year. Plans are being reviewed as part of the

integrated employee wellness programme to mitigate this challenge.

EMPLOYEE WELLNESSIn 2011, a need was identified to streamline and enhance the

Company’s wellness programmes following an evaluation conducted

by an outside service provider. While an integrated employee

wellness strategy is being developed to address wellness challenges,

the current approach to employee wellness includes various

programmes which are at different levels of maturity at operational

level e.g. random substance abuse tests, voluntary HIV/AIDS testing

and an Employee Assistance Programme. The HIV/AIDS prevalence

among employees who have been tested is estimated at 12%

(2011: 14%). The real prevalence is likely to be higher than this figure

given the 18% prevalence estimated for the working population of

South Africa.

BILL NAIRN CHAIRMAN

HEALTH, SAFETY & ENVIRONMENT COMMITTEE

BOARD COMMITTEE REPORTS


The nomination committee ensures that the structure, size,

composition and effectiveness of the Board and its committees are

maintained at levels that are appropriate to the Group’s complexity

and strategy. It does so by regularly evaluating the Board’s

performance, undertaking performance appraisals of the directors,

evaluating the effectiveness of committees and making related

recommendations to the Board. The Board is responsible for

evaluating the performance of the Group chairman. The committee

operates under an approved charter.

MEMBERSHIPThe committee comprises the chairman of the Board and three other

independent non-executive directors. The Board appoints the

chairman of the committee. RC Andersen served as chairman of the

committee and SP Sibisi, M Sello and RT Vice as members. The

committee met four times during the year under review. The Board

reviewed and approved the committee’s terms of reference during

the year.

BOARD & COMMITTEE EFFECTIVENESSExternal appraisals of the effectiveness of the Board, its committees

and individual directors were conducted during the year. The

appraisals were benchmarked against the Group’s strategic

requirements and the need to ensure the capacity to deliver these

requirements and strengthen the diversity and sector expertise of

directors. Self-assessment questionnaires were also performed by

each committee during the year under review. The appraisals were

positive and their recommendations are being followed through for

implementation. An internal appraisal of the chairman was led by the

chairman of the remuneration & human resources committee and

discussed by the Board. The appraisal was positive.




Board believe that the committee functions effectively and has

complied with its terms of reference in all material respects.

SUCCESSIONSuccession planning, taking into account the strategy of the Group

and future retirements from the Board, was addressed. The

committee takes cognisance of the importance of institutional

knowledge to the Board and the need to balance this with

introducing new ideas and experience.

During the year, the Board appointed TCP Chikane as a non-

executive director. Shareholders will be requested to confirm this

appointment at the annual general meeting.

Due to other business commitments, non-executive director,

ADVC Knott-Craig, resigned during the year. Non-executive director,

AA Routledge has indicated that he will not be available for re-

election and will retire at the 2012 annual general meeting.

SP Sibisi has indicated that he wishes to limit his non-executive

directorships to institutions whose core business is underpinned

by science or technology. As a consequence he will resign as a

non-executive director. NM Magau has indicated that as she has

served on the Board for the past eight years as a non-executive

director, she felt a need for a change and will also be resigning.

Both these resignations will be effective at the conclusion of the

2012 annual general meeting.

RC Andersen who has served as independent non-executive

chairman over the past almost nine years has given notice of his

intention to retire as a director and chairman of the Company

effective 1 March 2013. The Board has agreed unanimously to

appoint M Sello as independent non-executive chairman following

the retirement of RC Andersen.

PERFORMANCE AND RE-ELECTIONThe committee reviewed the performance of directors RC Andersen,

M Sello and RT Vice who, in terms of the memorandum of

incorporation, retire by rotation at the 2012 annual general meeting.

RC Andersen recused himself from the committee’s review of

his performance. The committee recommends their re-election

to the Board.

King III recommends that the independence of non-executive

directors be assessed by the Board on an annual basis. The Board,

assisted by the nomination committee, conducted an assessment of

the independence of its non-executive directors. All non-executive

directors meet the criteria for independence set out in King III.

In the year under review, the average length of service of the current

non-executive and executive directors was less than six years.

AUDIT & SUSTAINABILITY COMMITTEEThe committee considered whether the current members (individually/

collectively) of the audit & sustainability committee satisfy the

requirements of section 94 of the Companies Act No. 71 of 2008

(as amended) and King III. The nomination committee recommends

the election of DD Barber, TCP Chikane, M Sello and RT Vice to the

audit & sustainability committee. This recommendation will be

submitted to the shareholders at the annual general meeting to be

held on 31 October 2012. The members of the audit & sustainability

committee will serve for a one-year term, concluding at the 2013

annual general meeting. M Sello will be stepping down as a member

when appointed chairman of the Company, effective 1 March 2013.

ROY ANDERSEN CHAIRMAN

NOMINATION COMMITTEE

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The remuneration & human resources committee assists the Board to

fulfil its corporate governance supervision responsibilities and to align

the remuneration philosophy with the company’s business strategy.

The key focus in this regard is to attract, retain, motivate and reward

directors, senior executives and staff by the payment of fair,

competitive and appropriately structured remuneration in the best

interests of the company and shareholders. The committee operates

under approved terms of reference.

MEMBERSHIPThe committee comprises the Group chairman and three

independent non-executive directors. RT Vice served as chairman of

the committee with RC Andersen, NM Magau and AA Routledge as

members. M Sello and JM McMahon were appointed as committee

members with effect from 27 June 2012. The Group chief executive,

Group financial director and sustainability executive attend meetings

ex officio. The executives who attended meetings ex officio did not

participate in any discussions or decisions pertaining to their own

remuneration. Specialised advice is sought from time to time.

The committee met four times during the year under review.

TERMS OF REFERENCEThe chairman of the committee reports to the Board on the committee’s

deliberations and decisions. The committee assists the Board by

regularly submitting reports and recommendations on the Group’s

employment framework and policies, and remuneration philosophy.

The committee is responsible for considering and approving

proposals regarding the guaranteed pay, benefits, short term

incentives, long term share incentives and related matters of

executive directors of the Group, including the Group chief executive,

all managing directors of the Group’s operating companies and

senior Group executives. It also considers and approves the

remuneration and benefits paid to general staff and has responsibility

to oversee the Group pension, provident and other benefit plans.

The functions, role and mandate of the Group chief executive are

considered by the committee and his performance is assessed.

Succession planning to the Group chief executive and senior

executives is also considered by the committee.

The committee considers the Group’s leadership succession and

development strategy and the Group’s employment equity status as

described in this report.

The committee oversees the preparation of the remuneration report

and recommends the report to the Board, ensuring that this report is

accurate, complete and transparent and provides a clear explanation

of how the Remuneration Policy has been implemented. The

committee ensures that the Remuneration Policy is put to a non-

binding advisory vote of shareholders at the annual general meeting.






Board believe that the committee functions effectively and complies

with its terms of reference in all material respects.

DIRECTOR AND EXECUTIVE REMUNERATIONThe remuneration packages of executive directors and senior

executives include performance-related remuneration, which is

determined in terms of incentive schemes operated at Group

and operating entity level. These schemes are disciplined and are

designed and implemented with assistance from independent

remuneration consultants to competitively reward those directors

and executives who have contributed to the Group’s performance.

Non-executive directors receive a fee for their contribution to the

Board and its committees. This fee structure reflects the skill and

experience brought to the Company by each non-executive director,

responsibilities undertaken, the time commitment involved and

the importance of attendance at and contribution to Board and

committee meetings. Please refer to page 110 for more details

on non-executive director fees.

The Group’s remuneration policy is described in the remuneration

report included on page 106 of this report. The remuneration of

executive directors for the year ended 30 June 2012 is set out


Remuneration details of non-executive directors for the year to

30 June 2012 are set out in note 42 to the consolidated annual

financial statements. The proposed fee increase for non-executive

directors is included on page 221.

RETIREMENT AND OTHER BENEFIT PLANSA number of retirement funds operate within the Group. In South

Africa these are registered as pension or provident funds and

accordingly are governed by the Pension Funds Act. Although

some funds are privately administered, the majority of funds are

incorporated in outsourced umbrella schemes.

The assets of the funds are independently controlled by boards of

trustees which include representatives elected by the members.

Further details on retirement and other benefit plans are provided


Employees of Murray & Roberts in the Middle East region are not

required to belong to a retirement fund, while in Australia

contributions are made, as part of total fixed cost of employment,

to a superannuation fund structured as a defined contribution fund.

In Canada, contributions, as part of total fixed cost of employment,

are made to a registered retirement fund.

BOARD COMMITTEE REPORTS CONTINUED

ROYDEN VICE CHAIRMAN

REMUNERATION & HUMAN RESOURCES COMMITTEE


The risk management committee assists the Board to fulfil its

corporate governance supervision responsibilities over the

development and implementation of the Integrated Assurance

Framework. The committee operates under approved terms

of reference.

MEMBERSHIPThe committee comprises four independent non-executive directors.

During the year under review, SP Sibisi served as chairman of the

committee with DD Barber (chairman of the audit & sustainability

committee), WA Nairn and RT Vice as members. TCP Chikane was

appointed a member of the committee with effect from 27 June

2012. The Group chief executive, Group financial director, Group

commercial executive and Group risk executive attend meetings ex

officio. As the chairman of the audit & sustainability committee also

serves on this committee, overlapping responsibilities are appropriately

managed. The committee met four times during the year.

The committee’s terms of reference were reviewed and approved by

the Board during the year.



assessment questionnaires. Based on the results, the Board believes

that the committee functions effectively and has complied with its

terms of reference in all material aspects.

RISK MANAGEMENTThe role of the committee is to assist the Board to ensure that:

� The Group has designed, implemented and monitors an effective

policy and plan for risk management (Group Risk Framework),

with appropriate organisational structures, processes and

systems, that together enhance the Group’s ability to achieve its

strategic objectives

� All significant risk exposures are timeously identified and clearly

understood, and that mitigation responses are effectively and

efficiently implemented to preserve and promote stakeholder

interests

� The Group’s risk management and control systems are adequate

and effective, and disclosure regarding risk is comprehensive,

timely and relevant

The committee continues to consider and review the Group Risk

Framework. The committee is satisfied that the further enhancements

implemented by management during the year ensured that the Group

responded effectively to the risks it faced.

The Murray & Roberts Limited risk committee acts as custodian

of the Group risk mandate, interrogates Group-level risk and

interrogates key decisions prior to Board approval. During the year

this committee reviewed 30 major project bids.

Currently 15 of the Group’s operating companies utilise the

opportunity management system. This project portfolio management

system was developed in-house and continues to be enhanced

to highlight project risks entering the Group’s environment. At

30 June 2012, opportunities in the active pipeline amounted

to R73 billion.

A top-down assessment of Group-level risks was conducted in

support of the 2012 results. Operating companies conducted risk

assessments as part of their business planning process, and also

carried out a range of project risk assessments. A table of significant

risk exposure is included under the risk management section of

this report.

The Integrated Assurance Framework effectively aligned risk

management, regulatory compliance and internal audit, and ensured

that common areas of concern were addressed comprehensively and

timeously.

INTERNAL AUDITThe Group’s risk-based systems approach to internal audit delivered

anticipated results. The Group internal audit executive, following a

co-sourced approach deploying Group and KPMG resources, carried

out reviews of all of the Group’s critical controls and major projects.

All material findings were satisfactorily addressed by management

and follow-up procedures were carried out to confirm responses

by management. Findings relating to the need to improve risk

management practices at project level are receiving attention.

INSURANCE AND TREASURYMurray & Roberts has a Group insurance programme covering asset

and liability risks. Bonds and guarantees are integrated with the

treasury management system, and administered centrally.

CLAIMS AND LITIGATIONSGroup Legal Services, under the leadership of the Group commercial

executive, and with the support and involvement of the operating

platform commercial executives, manages the Group’s contractual

risk. The capacity of Group legal services has been substantially

increased with the appointment of two construction attorneys and an

advocate specialising in regulatory compliance.

The Group commercial executive leads the engagement of general

litigation and reputational risks to the Group, supported as

appropriate by external legal advice.

FORENSICSThe Group employs a firm of forensic consultants and investigators

that reports to the Group commercial executive. Tip-Offs Anonymous,

an independent hotline service provider, is available to report

inappropriate, unethical and/or unlawful behaviour in the workplace.

Every reported incident was investigated and resolved to the

satisfaction of the executive committee.

SIBUSISO SIBISI CHAIRMAN

RISK MANAGEMENT COMMITTEE

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The social & ethics committee assists the Board to fulfil its supervisory

role, specifically in relation to the Group’s commitment to Zero Harm

from its business activities, to its employees, shareholders, customers,

business partners and society in general. It also monitors the Group’s

ethical practices.

MEMBERSHIPThe committee comprises the Group chairman and two independent

non-executive directors. M Sello serves as chairman of the committee,

with RC Andersen (Group chairman) and AA Routledge as members.

The Group chief executive, Group financial director, Group commercial

executive and Group sustainability executive attend meetings in an

ex officio capacity.

The committee met four times during the year under review.

TERMS OF REFERENCEThe chairperson of the committee reports to the Board on the

committee’s deliberations and decisions. The committee regularly

submits reports and recommendations and assists the Board by:

� Reviewing and approving the policy, strategy and structures to

manage social and ethics matters in the Group � Endeavours to ensure that operating entities, associate companies

and significant investments develop and maintain policies,

guidelines and practices congruent with the Group’s social and

ethics policies � Assessing and measuring social and ethics performance with

reference to the United Nations Global Compact Principles, the

OECD Guidelines for Multinational Enterprises, the JSE Socially

Responsible Investment Index, the Department of Trade and

Industry Broad-Based Black Economic Empowerment (“BBBEE”)

scorecard, International Labour Organisation protocols and King III � Reviewing compliance by the Company, its operating entities and

associates with laws, policies, guidelines and standards, including

competition law � Considering substantive national and international regulatory

developments as well as practices in social and ethics

management � Reviewing the Murray & Roberts Socially Responsible Investment

Index and BBBEE performance disclosures � Overseeing the activities of management in regard to consultation

and communication with internal and external stakeholders on

social and ethics issues � Reporting annually to shareholders on social and ethics issues � Endeavours to ensure that management has allocated adequate

resources to comply with social and ethics policies, codes of best

practice and regulatory requirements






that the committee functions effectively and has complied with its

terms of reference in all material respects.

COMPETITION MATTERSMurray & Roberts does not condone any anti-competitive or collusive

conduct by its employees and is committed to compliance with the

Competition Act.

Murray & Roberts continues to work with the Competition

Commission in the best interests of the Group and to eliminate any

possible collusion within the construction industry.

Further details on competition matters are contained in the chairman’s

statement on page 18 and the ethics performance review on page 52.

STATEMENT OF BUSINESS PRINCIPLESThe Statement of Business Principles, adopted in the previous financial

year, was widely distributed across the Group, both to existing

employees and new appointments, and its message was disseminated

in forums designed to reaffirm its importance as the standard bearer

of the moral and ethical culture the Group is striving to embed.

Every director, officer and employee of the Group must comply with

the letter and spirit of the Statement of Business Principles.

TRANSPARENCYThe Group encourages concerned employees to report observed

unethical behaviour within any of its operations, and continues to

promote the Tip-Offs Anonymous hotline service that supports

reporting of workplace dishonesty and unethical behaviour, including

discrimination, theft, fraud and corruption.

During the year under review, 58 cases were reported and

investigated. Of those, 46 were closed out and 12 remain under

investigation. A professional firm of forensic consultants and

investigators appointed by the Group assists with investigations into

reported cases. Appropriate disciplinary and legal action has been

initiated in all cases of dishonest conduct.

FRAUD, CORRUPTION, ANTI-COMPETITIVE BEHAVIOUR AND UNFAIR BUSINESS PRACTICESMurray & Roberts subscribes to good corporate governance, good

corporate citizenship and ethical business practices. The Group is a

signatory to the World Economic Forum Partnering Against Corruption

Initiative. The Group is also a member of Business Leadership South

Africa and supports its Code of Good Corporate Citizenship.

All executives involved in preparing and authorising each specific

project bid, sign a declaration that they have not committed, and

are not aware that anyone else affiliated with the bid has committed,

whether directly or indirectly, any unethical or unlawful practices in

the preparation and submission of the tender.

BROAD-BASED BLACK ECONOMIC EMPOWERMENTMurray & Roberts is committed to BBBEE in our South African

business and addresses the full range of empowerment requirements

across its diverse operations. The Group achieved a consolidated

BBBEE rating of level 3 when measured on the Construction Sector

Charter and individual operating company BBBEE ratings range from

level 2 to level 6. All operating companies are encouraged to improve

their ratings so that the Group can, at least, maintain a level 3 BBBEE

rating. Further details on BBBEE matters are contained in the

transformation and local economic development review on page 42.

MHLAPE SELLO CHAIRMAN

SOCIAL & ETHICS COMMITTEE

BOARD COMMITTEE REPORTS CONTINUED


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117

GROUP EXECUTIVE

NON-EXECUTIVE DIRECTORSROY CECIL ANDERSEN (64)CA(SA) CPA (Texas)

INDEPENDENT NON-EXECUTIVE CHAIRMANRoy was appointed to the Board in 2003 and became chairman in

2004. He is chairman of the nomination committee and a member of

the remuneration & human resources committee, the health, safety &

environment committee and the social & ethics committee. He is also

a trustee of The Murray & Roberts Trust. Roy’s other directorships

include Aspen Pharmacare Holdings, Nampak, Sasfin Bank and

Business Against Crime, and he is a member of the King Committee

on Corporate Governance. He was previously the chairman of

Sanlam and the chief executive and deputy chairman of Liberty

Group. Roy served as executive president of the JSE from 1992 to

1997 where he was responsible for overseeing its restructuring,

including the introduction of electronic equity trading. He was with

Ernst & Young from 1971 to 1992 where his last position was

executive chairman. He holds the rank of Major General and is Chief

of Defence Reserves of the SANDF, Honorary Colonel of the

Transvaal Horse Artillery as well as a member of the Council for the

Support of National Defence. He is a member of the Defence Staff

Council and the Military Command Council.

DAVID (DAVE) DUNCAN BARBER (59)FCA (England & Wales) AMP (Harvard)

INDEPENDENT NON-EXECUTIVE DIRECTORDave was appointed to the Board in 2008. He is chairman of the

audit & sustainability committee and a member of the risk

management committee. He is a director of AFGRI Limited. Dave was

formerly the global chief financial officer of Anglo Coal, a division of

the Anglo American Plc Group with operations in Australia, Canada,

Venezuela, Colombia, China and South Africa as well as chief

financial officer of Anglo American Corporation of South Africa. The

majority of his career was spent in the Anglovaal Group prior to its

unbundling where he held the position of Group chief financial officer.

He has served as a non-executive director and member of the audit

committee for several companies, including Anglo Platinum, Barnard

Jacobs Mellet Holdings, Telkom, Highveld Steel and Vanadium Corp.

His career has also included positions within

PricewaterhouseCoopers, Fedsure and SA Breweries.

THENJIWE CLAUDIA PAMELA CHIKANE (46)BCom BCompt (Hons)

INDEPENDENT NON-EXECUTIVE DIRECTORThenjiwe was appointed to the Board on 15 June 2012. She is a

member of the audit & sustainability committee and the risk

management committee. Thenjiwe is a director at Nedbank Group,

Nedbank Limited, Datacentrix Holdings and the Institute of Directors

and a trustee of AfricaRice. She previously held the position of Head

of the Gauteng Department of Finance and Economic Affairs and

served on the boards of several companies including the Development

Bank of Southern Africa and Telkom SA. She was the chairperson of

the State Information Technology Agency.

NAMANE MILCAH MAGAU (60)BA EdD (Harvard) MEd BEd

INDEPENDENT NON-EXECUTIVE DIRECTOR Namane was appointed to the Board in 2004. She is a member

of the remuneration & human resources committee and the

health, safety & environment committee, and trustee of The

Murray & Roberts Trust. Namane is a director of AON South Africa,

Crowie Holdings, Enza Construction and the National Research

Foundation, and previously held directorships at Santam, Simmer

& Jack Mines and Merrill Lynch South Africa. Namane is currently

a director of her own consulting company, and a member of the

Advisory Board of University of Cape Town Business School she was

formerly the director of group human capital services at the SABC.

She came to the SABC from the CSIR where she was vice president

of human resources.

JOHN MICHAEL MCMAHON (65) PrEng BSc Eng (Glasgow)

INDEPENDENT NON-EXECUTIVE DIRECTORMichael was appointed to the Board in 2004. He is a member of the

health, safety & environment committee and the remuneration &

human resources committee. Michael is a director of Central Rand

Gold and Impala Platinum Holdings. He was formerly the chairman of

Gencor and Impala Platinum Holdings, and a director of Gold Fields.

Michael was a project manager at Murray & Roberts during the

1970s.

WILLIAM (BILL) ALAN NAIRN (67) PrEng BSc Eng (Mining)

INDEPENDENT NON-EXECUTIVE DIRECTORBill was appointed to the Board in 2010. He is chairman of the health,

safety & environment committee and a member of the risk

management committee. Bill is a director of AngloGold Ashanti and

non-executive chairman of MDM Engineering Group and of the

Procurement Committee for MTN Group. He previously served on the

boards of several companies including Anglo American plc, Anglo

Platinum and Kumba Resources.

ANTHONY (TONY) ADRIAN ROUTLEDGE (64) BCom CA(SA)

INDEPENDENT NON-EXECUTIVE DIRECTORTony was appointed to the Board in 1994. He is a member of the

audit & sustainability committee, the remuneration & human

resources committee and the social & ethics committee, and a

trustee of The Murray & Roberts Trust. Tony was formerly an

executive director of Nedcor, Nedbank and Sankorp.

MAHLAPE SELLO (50) LLB, Master of Arts and Law (Russia)

INDEPENDENT NON-EXECUTIVE DIRECTORMahlape was appointed to the Board in 2009. She is chairman of the

social & ethics committee, a member of the audit & sustainability

committee, the nomination committee and the remuneration & human

resources committee. Mahlape serves on some of the committees of

the Johannesburg Bar Council and the General Council of the Bar

and is a member of the South African Law Reform Commission and

the chairperson of the Advertising Industry Tribunal of the Advertising

Standards Authority of South Africa. Mahlape was formerly the

chairperson of the Advisory Committee on Licensing of Private

Hospitals at the Gauteng Department of Health.


SIBUSISO PATRICK SIBISI (57) BSc Physics (Hons) PhD (Cambridge)

INDEPENDENT NON-EXECUTIVE DIRECTORSibusiso was appointed to the Board in 2007. He is chairman of

the risk management committee and a member of the nomination

committee. Sibusiso is president and CEO of the CSIR, director of

Liberty Group, Telkom SA and a member of the Roedean School

Board of Governors. He was the co-founder of a research-based

enterprise at Cambridge and a Fulbright Fellow at the California

Institute of Technology in 1988. He was formerly the deputy vice

chancellor, research and innovation, at the University of Cape Town.

ROYDEN THOMAS VICE (65) BCom CA(SA)


Royden was appointed to the Board in 2005. He is chairman of the

remuneration & human resources committee and a member of the

risk management committee and the nomination committee. He is

also a trustee of The Murray & Roberts Trust. Royden is chairman of

Hudaco Industries, Waco International and Puregas, and a Governor

of Rhodes University. He was previously the Chief Executive Officer

of Waco International and of Industrial and Special Products at

UK-based BOC Group, chairman of African Oxygen (“Afrox”), Afrox

Healthcare and Consol Glass.

EXECUTIVE DIRECTORSANDRIES JACOBUS (COBUS) BESTER (52)BCom (Acc) Hons CA(SA)

GROUP FINANCIAL DIRECTORCobus first joined the Group in 2006 following the acquisition

of Concor and was appointed to the Board 2011. Cobus is the

chairman of Murray & Roberts International Holdings and a director

of Clough. He was previously group financial director for Basil Read

and Concor for three and six years respectively and managing

director of Concor from 2005 – 2011. He has extensive experience

in the construction and engineering industry.


GROUP EXECUTIVE DIRECTOROrrie joined the Group and was appointed to the Board in 2009. He

is the executive director responsible for the Group’s Construction

Products Africa operating platform. Orrie was previously chief

operating officer of PPC and project director for Blue Circle Cement.

He spent seven years at the Chamber of Mines Research Organisation,

where he obtained a doctorate in engineering. Orrie is a member of

the SA Institute of Mining and Metallurgy, a fellow of the Institute of

Quarrying and holds a Government Certificate of Competency (Mines

and Works).

HENRY JOHANNES LAAS (52)BEng (Mining) MBA

GROUP CHIEF EXECUTIVEHenry first joined the Group in 2001 and was appointed to the

Board and as Group chief executive in 2011. He is a member

of the health, safety & environment committee. Henry is a director

of Murray & Roberts International Holdings and Clough. He played

an instrumental role in the global expansion of the Cementation

Group and has a strong track record of successful resolution of

complex commercial matters and business strategy development

and implementation.

Most recently, Henry was as executive director of Murray & Roberts

Limited responsible for the Group’s Engineering businesses. Since

2007 he served as a member of the Group executive committee as

director of Murray & Roberts Limited.

EMMARENTIA (RENTIA) JOUBERT (33)BCom (Acc) Hons CA(SA) GTP (SA)

GROUP SECRETARYRentia joined the Group in March 2010, when she was appointed

as the financial manager at Murray & Roberts Cementation. She was

appointed Group secretary on 1 August 2012.

Alan Knott-Craig resigned as an independent non-executive director on 17 January 2012.

Yunus Karodia stepped down as Group Secretary effective 1 August 2012 to take up a financial leadership role at Murray & Roberts Cementation.

Directors’ ages as at 30 June 2012.

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RECORD OF ATTENDANCE

RECORD OF ATTENDANCE AT DIRECTORS’ MEETINGS FOR THE 2012 FINANCIAL YEAR

Scheduled Special5

31/08/11 30/11/11 29/02/12 04/05/12 27/06/12 19/08/11 20/10/11 03/11/11 30/01/12 06/03/12

RC Andersen Independent chairman � � � � � � � � � �

DD Barber Independent � � � � � � � � � �

AJ Bester Executive � � � � � � � � � �

TCP Chikane2 Independent – – – – � – – – – –

O Fenn Executive � � � � � � � X � �

ADVC Knott-Craig1 Independent X � - - - � � � - -

HJ Laas Chief executive � � � � � � � � � �

NM Magau Independent X � � � � � � � � �

JM McMahon Independent � � � � � � � � � �

WA Nairn Independent � � � X � � � � � �

AA Routledge Independent � � � � � � � � � �

M Sello Independent � � � � � � � � X �

SP Sibisi Independent � � � � � X � X � X

RT Vice Independent � � � � � � X � X �

RECORD OF ATTENDANCE AT BOARD COMMITTEE MEETINGS FOR THE 2012 FINANCIAL YEAR

Special5

Audit & sustainability committee 29/08/11 27/02/12 03/05/12 25/06/12 12/08/11 27/01/12

DD Barber (Chairman) � � � � � �

TCP Chikane2 – – – � – –

ADVC Knott-Craig1 X – – – � –

AA Routledge � � � � � �

M Sello � � � � X �

Special5

Risk management committee 29/08/11 27/02/12 25/05/12 08/02/12

SP Sibisi (Chairman) � X � �

DD Barber � � � �

WA Nairn � � � �

RT Vice � � � �

Special5

Remuneration & human resources committee 30/08/11 28/02/12 25/06/12 03/02/12

RT Vice (Chairman) � � � �

RC Andersen � � � �

NM Magau � � � �

AA Routledge � � � �

Special5

Nomination committee 29/08/11 27/02/12 25/06/12 04/06/12

RC Andersen (Chairman) � � � �

M Sello4 – � � �

SP Sibisi � X X �

RT Vice � � � �


Health, safety & environment committee 30/08/11 28/11/11 28/02/12 03/05/12 22/06/12

WA Nairn (Chairman) � � � � X

ADVC Knott-Craig3 X – – – –

RC Andersen � � � � �

HJ Laas � � � � �

NM Magau � � � � �

JM McMahon � � � � �

Special5

Social & ethics committee 30/08/11 03/05/12 26/06/12 02/02/12

M Sello (Chairman) � � � �

RC Andersen � � � �

AA Routledge � � � X

1 Resigned 17 January 2012.

2 Appointed 15 June 2012.

3 Resigned 21 November 2011.

4 Appointed 31 August 2011.

5 Special meetings called at short notice can result in some directors/members being unavailable. Their views on the matters to be discussed are generally obtained.

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ANALYSIS OF SHAREHOLDERSJUNE 2012

Number of

shareholders

% of

shareholders

Number of

shares %

Size of holding

1 – 1 000 shares 4 899 61,02 1 399 014 0,31

1 001 – 10 000 shares 2 280 28,40 7 182 777 1,62

10 001 – 100 000 shares 560 6,98 18 161 026 4,08

100 001 – 1 000 000 shares 233 2,90 71 333 915 16,04

1 000 001 shares and above 56 0,70 346 659 386 77,95

Total 8 028 100 444 736 118 100

Category

Pension funds 208 2,60 177 923 412 40,09

Unit trusts/Mutual fund 216 2,70 134 685 987 30,28

Insurance companies 31 0,39 34 398 845 7,75

BEE 5 0,06 31 902 251 7,18

Private investor 85 1,06 11 099 328 2,60

Sovereign wealth 10 0,12 9 607 319 2,17

American Depositary Receipts 1 0,01 6 160 362 1,39

Custodians 13 0,16 3 253 204 0,74

Exchange-traded fund 3 0,04 2 090 150 0,47

University 10 0,12 1 245 262 0,29

Investment trust 6 0,07 1 026 141 0,22

Charity 10 0,12 847 791 0,21

Treasury 1 0,01 676 644 0,15

Hedge fund 2 0,03 295 348 0,07

Local authority 1 0,01 55 761 0,01

Real estate fund 1 0,01 43 684 0,01

Other 7 425 92,49 29 424 629 6,37

Total 8 028 100,00 444 736 118 100,00

Number

of shares

%

of shares

Major shareholders holding 5% or more of the company’s ordinary shares

Government Employees Pension Fund (ZA) 98 898 768 22,24

Lazard Emerging Markets Fund (US) 39 643 794 8,91

Fund managers holding 5% or more of the company’s ordinary shares

Lazard Asset Management LLC (Group) 70 756 639 15,91

PIC (ZA) 69 702 381 15,67

Old Mutual Asset Managers (Group) 40 175 815 9,03

Allan Gray Investment Council (ZA) 33 801 738 7,60

Boston Company Asset Management (US) 28 133 810 6,33

Shareholder spread

Number of

shareholders

% of

shareholders

Number of

shares

% of

shares

Non-public* 9 0,11 38 254 613 8,60

Public 8 019 99,89 406 481 505 91,40

Total 8 028 100,00 444 736 118 100,00

Domestic 275 875 747 62,03

International 168 860 371 37,97

444 736 118 100

* Includes directors, BEE Trusts, Treasury Shares, The Murray & Roberts Trust, Murray & Roberts Retirement Fund.


ASSURANCE STATEMENTIndependent assurance statement by Deloitte & Touche to

Murray & Roberts Holdings Limited on their sustainability

indicator disclosure and their self-declared Global Reporting

Initiative G3.1 application level in their annual integrated report

2012 (“the Report”)

SCOPE OF OUR WORKMurray & Roberts engaged us to perform limited assurance

procedures for the year ended 30 June 2012 on the self-declared

Global Reporting Initiative G3.1 Guidelines (“GRI G3.1”) B+

application level and the following subject matter:

� Corporate social investment in community programs (Rm)

� Letsema broad-based community commitments (Rm)

� Statement of total value added

� Significant fines paid (Rm)

� Total number of bursars and percentage of bursars who are black

and female

� Graduate recruitment and percentage of graduates who are black

and female

� Leadership Development Program attendance and percentage of

participants who are black and female

� Percentage of employees covered by collective bargaining

agreements

� Composition of governance bodies

� Number of fatalities

� Lost time injury frequency rate

� Total recordable case rate

� Percentage of employees covered by ISO 9001

� Percentage of employees covered by ISO 14001

� Percentage of employees covered by OSHAS 18001

� Bursaries awarded by the Letsema Employee Benefits Trust

� Cumulative wealth created through Letsema BBBEE share

ownership transaction (Rm)

� Verified preferential procurement spend (Rm)

ASSURANCE PROCESS AND STANDARDWe conducted our limited assurance engagement in accordance with

the International Standard on Assurance Engagements 3000,

“Assurance Engagements Other Than Audits or Reviews of Historical

Financial Information” (ISAE 3000). To achieve limited assurance,

ISAE 3000 requires that we review the processes and systems used

to compile information in the areas on which we provide assurance.

This provides less assurance and is substantially less in scope than

a reasonable assurance engagement.

The evaluation criteria used for our assurance are the

Murray & Roberts definitions and basis of reporting. GRI G3.1

served as the criteria used for the application level assurance.

KEY PROCEDURESConsidering the risk of material error, our multi-disciplinary team of

sustainability assurance specialists planned and performed our work

to obtain all the information and explanations we considered

necessary to provide sufficient appropriate evidence on which we

base our conclusion. Our work was planned to mirror

Murray & Robert’s own group level compilation processes.

Key procedures we conducted included:

� Gaining an understanding of Murray & Robert’s systems through

interview with management responsible for reporting systems at

corporate head office and site level; and

� Reviewing the systems and procedures to capture, collate,

aggregate, validate and process source data for the assured

performance data included in the Report.

OUR CONCLUSIONBased on our examination of the evidence obtained, nothing has

come to our attention which causes us to believe that the selected

sustainability performance indicators are not fairly presented.

Based on the work performed on the report, nothing has come to our

attention that causes us to believe that, management’s declaration of

an application level B+ in terms of the Global Reporting Initiative G3.1

Guidelines is not fairly stated.

RESPONSIBILITIES OF DIRECTORS AND INDEPENDENT ASSURANCE PROVIDERThe directors are responsible for the preparation of the annual

integrated report, including the implementation and execution of

systems to collect required sustainability data.

Our responsibility is to express our limited assurance conclusion on

the sustainability performance data for the year ended 30 June 2012.

This report is made solely to Murray & Roberts in accordance with

our engagement letter. Our work has been undertaken so that we

might state to the company those matters we are required to state

to them in a limited assurance report and for no other purpose.

Thus, we do not accept or assume responsibility to anyone other

than Murray & Roberts for our work, for this report, or for the

conclusions we have formed.

Deloitte and Touche

Registered Auditor

Per – AN le Riche

Partner

11 September 2012

1st Floor, The Square, Cape Quarter, 27 Somerset Road,

Greenpoint, Cape Town, 8005

National Executive: LL Bam Chief Executive, AE Swiegers Chief

Operating Officer, GM Pinnock Audit, DL Kennedy Risk Advisory,

NB Kader Tax, L Geeringh Consulting & Clients &Industries,

JK Mazzocco Talent & Transformation, CR Beukman Finance,

M Jordan Strategy, S Gwala Special Projects, TJ Brown Chairman

of the Board, MJ Comber Deputy Chairman of the Board, Regional

Leader GC Fannin

A full list of partners is available on request

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TABLE OF CONTENTS

The reports and statements set out below comprise the annual financial statements presented to shareholders:

125 Responsibilities of directors for annual financial statements

125 Certification by company secretary

126 Audit & sustainability committee

128 Independent auditors’ report

129 Report of directors

132 Consolidated statement of financial position

133 Consolidated statement of financial performance

134 Consolidated statement of comprehensive income

134 Consolidated statement of changes in equity

135 Consolidated statement of cash flows

136 Accounting policies

149 Notes to the annual financial statements

210 Murray & Roberts Holdings Limited annual financial statements

214 Annexure 1 – Major operating subsidiaries and associate companies

215 Annexure 2 – Interest bearing borrowings

216 Annexure 3 – Group segmental report

ANNUAL FINANCIAL STATEMENTS


RESPONSIBILITIES OF DIRECTORS FOR ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2012

CERTIFICATION BY COMPANY SECRETARYFOR THE YEAR ENDED 30 JUNE 2012

The directors of the Company and the Group are responsible for

the preparation of the annual financial statements that fairly present

the state of affairs of the Company and the Group at the end of the

financial year and of the profit or loss and cash flows for that year in

accordance with International Financial Reporting Standards and per

the requirements of the Companies Act 71 of 2008 (as amended)

(Companies Act). The directors of the Company are responsible

for the maintenance of adequate accounting records and the

preparation and integrity of the annual financial statements

and related information.

To enable directors to meet these responsibilities:

a) The Board and management set standards and management

implements systems of internal controls, accounting and

information systems; and

b) The audit & sustainability committee recommends Group

accounting policies and monitors these policies.

The directors are responsible for the systems of internal control.

These are designed to provide reasonable, but not absolute,

assurance as to the reliability of the annual financial statements and

to adequately safeguard, verify and maintain accountability of assets,

and to prevent and detect material misstatement and loss.

The systems are implemented and monitored by suitably trained

personnel with appropriate segregation of authority and duties.

The internal audit function is led by the Group chief audit executive

and comprises both internal employees and resources from KPMG.

It serves management and the Board by performing an independent

evaluation of the adequacy and effectiveness of risk management,

internal controls, financial reporting mechanisms and records,

information systems and operations, safeguarding of assets and

adherence to laws and regulations.

Even though the Group has identified certain financial control

weaknesses which are currently being addressed, the Group’s system

of internal controls continues to provide a basis for the preparation of

reliable annual financial statements in all material respects.

The annual financial statements have been prepared in accordance

with International Financial Reporting Standards and the Companies

Act and are based on appropriate accounting policies, supported by

reasonable and prudent judgements. These accounting policies have

been applied consistently compared to the prior year except for the

adoption of new or revised accounting standards as set out in note 1.

The annual financial statements have been compiled under the

supervision of AJ Bester (CA) SA, Group financial director and have

been audited in terms of Section 29(1) of the Companies Act of

South Africa.

The directors are of the opinion that the Company and the Group

have adequate resources to continue in operation for the foreseeable

future based on forecasts and available cash resources and accordingly

the annual financial statements have been prepared on a going

concern basis.

It is the responsibility of the auditors to express an opinion on the

annual financial statements. Their unmodified report to the

shareholders of the Company and Group is set out on page 128.

APPROVAL OF ANNUAL FINANCIAL STATEMENTSThe annual financial statements of the Company and the Group

for the year ended 30 June 2012, set out on pages 129 – 219,

were approved by the Board of directors at its meeting held on

29 August 2012 and are signed on its behalf by:

RC Andersen

Group chairman

HJ Laas

Group chief executive

AJ Bester

Group financial director

In my capacity as company secretary, I hereby certify, in terms of section 88(2)(e) of the Companies Act 71 of 2008 (as amended), that for the

year ended 30 June 2012, the Company has lodged with the Companies and Intellectual Property Commission all such returns and notices as

are required of a public company in terms of this Act, and that all such returns and notices, to the best of my knowledge and belief, appear to

be true, correct and up to date.

E Joubert

Company secretary

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FOR THE YEAR ENDED 30 JUNE 2012

The committee assists the Board to fulfil its supervisory role relating

to the integrity of financial reporting in terms of accounting standards

and the Listings Requirements of the JSE Limited. It does so by

evaluating the findings of the internal and external auditors, remedial

actions taken and the adequacy and effectiveness of the system

of internal financial controls required to form the basis for the preparation

of reliable financial statements. The audit & sustainability committee

operates under approved terms of reference.

The committee chairman reports on committee deliberations and

decisions at the Board meeting immediately following each committee

meeting. The internal and external auditors have unrestricted access

to the committee chairman. The independence of the external auditor

is regularly reviewed and all non-audit related services are pre-

approved and notified.

The committee reviews the quality and effectiveness of the external

audit process. The committee is satisfied that the external auditor

is independent and has nominated Deloitte & Touche for re-election

at the forthcoming Annual General Meeting of shareholders. Deloitte

& Touche is an accredited auditing firm, with AJ Zoghby as the

individual registered auditor.

MEMBERSHIPThe composition of the committee complies with the Companies

Act and King III, and comprises of four independent non-executive

directors. DD Barber served as chairman of the committee with

AA Routledge and M Sello as members, all of whom are suitably

skilled and experienced to discharge their responsibilities. ADVC

Knott-Craig resigned as a member during the year under review.

TCP Chikane was appointed a member effective 15 June 2012.

The committee members are appointed annually by shareholders.

M Sello will be stepping down as a member when appointed

chairman of the Company, effective 1 March 2013.

The Group chairman, Group chief executive, Group financial director,

Group commercial executive, Group chief audit executive, external

auditors and KPMG all attend meetings by invitation. The chairman

of the committee also serves on the risk management committee.

This ensures that overlapping responsibilities are appropriately

addressed.

The committee met six times during the year.

TERMS OF REFERENCEThe committee’s responsibilities include:

Assisting the Board to fulfil its responsibility with regard to financial

and auditing oversight including internal financial controls

Monitoring and reviewing the Group’s accounting policies,

disclosures and financial information issued to stakeholders

Making recommendations to the Board to ensure compliance

with International Financial Reporting Standards

Discussing and agreeing the scope, nature and priority of the

external and internal audits including the reviewing of the quality

and effectiveness of the external audit process

Nominating an independent auditor for shareholder approval,

terms of audit engagement, determining external auditor fees,

the nature and extent of non-audit related services and pre-

approving contracts for non-audit related services

Reviewing fraud and IT risks as they relate to financial reporting

Receiving and dealing with any complaints relating to either

accounting practices and internal audit and to the auditing

of entities and content in the Group’s annual financial statements

or related matters

Reviewing the annual integrated report and recommending

approval to the Board

Reviewing price sensitive information such as trading statements

Performing functions required of an audit committee on behalf

of subsidiaries incorporated in the Republic of South Africa as

public companies

The Board reviewed and approved the committee’s terms of reference

and policy for non-audit services during the year.




that the committee functions effectively and complies with its terms

of reference in all material respects.

STATUTORY DUTIESIn addition to the duties set out in the terms of reference, the

committee performed the required statutory functions in terms

of Section 94(7) of the Companies Act.

FINANCIAL DIRECTOR AND FINANCE FUNCTIONThe committee considered and satisfied itself of the appropriateness

of the expertise, experience and performance of the Group financial

director during the year. The committee also considered and satisfied

itself of the appropriateness of the expertise and adequacy of

resources of the finance function as well as the experience of senior

members of management responsible for the finance function.

DAVE BARBER CHAIRMAN

AUDIT & SUSTAINABILITY COMMITTEE


INTERNAL AUDITThe internal audit function is led by the Group chief audit executive

and comprises both internal employees and resources from KPMG.

It serves management and the Board by performing independent

evaluations of the adequacy and effectiveness of risk management,

internal controls, financial reporting mechanisms and records,

information systems and operations, safeguarding of assets and

adherence to laws and regulations.

The internal audit function is tasked with providing assurance by

performing risk-based audits throughout the Group, and adjusts

its coverage and focus based on changing strategic and operational

needs. Internal audit coverage includes a review of strategic risk

mitigations, a risk-based review of major projects, key business

processes and systems, the Group’s sustainability information,

IT governance and IT general controls. An integrated assurance

model was applied to ensure a coordinated approach to all assurance

activities, appropriate to address the significant risks the Group faces.

The purpose, authority and responsibility of the internal audit function

are formally defined in an internal audit charter, which was reviewed

by the committee and approved by the Board.

INTERNAL FINANCIAL CONTROLSThe internal audit plan works on a multi-year programme. Even

though this programme has identified certain financial control

weaknesses, which are currently being addressed, the Group’s

system of internal financial controls continues to provide a basis for

the preparation of reliable annual financial statements in all material

respects.

AUDIT AND ADMINISTRATIONFinancial leadership in Murray & Roberts is continuously strengthened

to cater for growth in the business, including ongoing employment

and redeployment of senior financial executives. The Group financial

director and lead external audit partner attend selected project

and operating activity reviews throughout the year. Audit close-out

meetings are held between external auditors and management at

year-end. A detailed audit summary memorandum is prepared for

all Group operating entities and a consolidated report is presented

to the committee. There is an agreed procedure for the committee

to seek professional independent advice at the Company’s expense.

INTEGRATED REPORTINGDuring the year, external service providers were appointed to assist

in the preparation of the annual integrated report and to provide a

partial assurance framework for sustainability information. The

committee recommended for Board approval the annual integrated

report and the Group’s annual financial statements. It is satisfied that

they comply with International Financial Reporting Standards on a

going concern basis following an assessment of solvency and liquidity

requirements. The Group’s annual financial statements will be open

for discussion at the forthcoming Annual General Meeting where

the committee chairman will be present to answer questions on

the activities of the committee.

ASSURANCEGroup assurance has expanded its activities and made significant

progress to ensure effective coverage of the Group’s operations,

implementation of King III principles and recommendations, and

sustainability assurance.

The Group’s commitment to continuous improvement in achieving

acceptable levels of assurance is underscored by various policy

frameworks that were developed and implemented, including a

stakeholder management framework, regulatory compliance and

information management frameworks. Currently 15 of the Group’s

operating companies utilise the opportunity management system

(OMS). This project portfolio management system was developed

in-house and continues to be enhanced to highlight project risks

entering the Group’s environment.

The multi-year rolling internal audit plan is designed to provide

assurance that the major risks and key processes are effectively

mitigated and managed, to recommend improvements and track

the implementation of audit recommendations.

The Group Integrated Assurance Framework governs and

co-ordinates the overall approach to Group risk management.

This entails understanding, identifying, reporting, managing and

mitigating Group risk, and includes the process of independently

auditing Group policies, plans, procedures, practices, systems,

controls and activities to ensure that the Group achieves the level

of operational efficiency and compliance required by the Board.

The efforts of the various internal and external assurance providers

are coordinated to ensure coverage of agreed risk areas and to

minimise duplication and eliminate gaps.

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INDEPENDENT AUDITORS’ REPORT

TO THE SHAREHOLDERS OF MURRAY & ROBERTSHOLDINGS LIMITEDWe have audited the consolidated and separate annual financial

statements of Murray & Roberts Holdings Limited, set out on

pages 132 to 219, which comprise the statements of financial

position as at 30 June 2012, and the statements of financial

performance, the statements of other comprehensive income,

statements of changes in equity and statements of cash flows for the

year then ended, and the notes comprising a summary of significant

accounting policies and other explanatory information.

Directors’ responsibility for the consolidated and separate

financial statements

The Company’s directors are responsible for the preparation and fair

presentation of these consolidated and separate financial statements

in accordance with International Financial Reporting Standards, and

the requirements of the Companies Act of South Africa, and for such

internal control as the directors determine is necessary to enable the

preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements

based on our audit. We conducted our audit in accordance with

International Standards on Auditing. Those standards require that we

comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance whether the consolidated and separate

financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence

about the amounts and disclosures in the financial statements. The

procedures selected depend on the auditors’ judgement, including

the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the

entity’s preparation and fair presentation of the financial statements in

order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on

the effectiveness of the entity’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by management, as

well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, these consolidated and separate financial statements

present fairly, in all material respects, the consolidated and separate

financial position of Murray & Roberts Holdings Limited as at

30 June 2012, and its consolidated and separate financial

performance and consolidated and separate cash flows for the

year then ended in accordance with International Financial Reporting

Standards, and the requirements of the Companies Act of

South Africa.

Other reports required in terms of the Companies Act

As part of our audit of the financial statements for the year ended

30 June 2012, we have read the directors’ report, the audit &

sustainability committee’s report and the certification by company

secretary for the purpose of identifying whether there are material

inconsistencies between these reports and the audited financial

statements. These reports are the responsibility of the respective

preparers. Based on reading these reports we have not identified

material inconsistencies between these reports and the audited

financial statements. However, we have not audited these reports

and accordingly do not express an opinion on these reports.

Deloitte & Touche

Registered Auditor

Per: AJ Zoghby

Partner

29 August 2012

Deloitte & Touche

Buildings 1 and 2, Deloitte Place, The Woodlands, Woodlands

Drive, Woodmead, Sandton

National executive: LL Bam Chief Executive, AE Swiegers

Chief Operating Officer, GM Pinnock Audit, DL Kennedy

Risk Advisory, NB Kader Tax, L Geeringh Consulting & Clients

& Industries, JK Mazzocco Talent & Transformation, CR Beukman

Finance, M Jordan Strategy, S Gwala Special Projects, TJ Brown

Chairman of the Board, MJ Comber Deputy Chairman of the Board.

A full list of partners and directors is available on request.

Member of Deloitte Touche Tohmatsu Limited


REPORT OF DIRECTORSFOR THE YEAR ENDED 30 JUNE 2012

This report presented by the directors is a constituent of the

consolidated annual financial statements at 30 June 2012, except

where otherwise stated, all monetary amounts set out in tabular form

are expressed in millions of Rands.

NATURE OF BUSINESSMain business and operations

Murray & Roberts Holdings Limited is an investment holding company

with interests in the construction & engineering, underground mining

development, oil & gas, construction materials and related fabrication

sectors.

The Company does not trade and all of its activities are undertaken

through a number of subsidiaries, joint ventures and associates.

Information regarding the Group’s major subsidiaries and associate

companies appears in Annexure 1 of the consolidated annual

financial statements.

Group financial results

At 30 June 2012 the Group recorded a loss of R592 million

(2011: loss of R1 648 million), representing a diluted loss per share of

214 cents (2011: diluted loss per share of 528 cents). Diluted

headline loss per share was 246 cents (2011: diluted headline loss

per share of 454 cents). The comparatives have been restated

retrospectively in terms of Circular 3/2009 issued by the South

African Institute of Chartered Accountants (“SAICA”) and International

Accounting Standards (“IAS”) 33: Earnings per share.

Full details of the financial position and results of the Group are set

out in these consolidated annual financial statements. The

consolidated annual financial statements have been prepared in

accordance with International Financial Reporting Standards. The

accounting policies have been applied consistently compared to the

prior year, except for the adoption of new or revised accounting

standards as set out in note 1.

Going concern

The Board is satisfied that the consolidated annual financial

statements comply with International Financial Reporting Standards

on a going concern basis following an assessment of solvency and

liquidity requirements.

Uncertified revenue

Included in amounts due from contract customers in the statement of

financial position is the Group’s share of uncertified revenue that has

been recognised through the statement of financial performance in

current and prior periods in respect of claims and variation orders on

projects (refer to note 9 of the consolidated annual financial

statements), mainly related to Gautrain Rapid Rail Link (“Gautrain”),

Dubai International Airport Concourse 2 (“Dubai Airport”) and Gorgon

Pioneer Material Offloading Facility contract.

A cumulative total revenue of R2 billion, net of on-account payments

of R50 million, being amounts due from contract customers, has been

recognised in the statement of financial position at 30 June 2012 (2011:

R2 billion) as the Group’s share of uncertified revenue in respect of

claims and variation instructions on the Group’s projects. Recognition

of these assets is supported by the Group’s independent experts and

advisers, and is in accordance with IAS 11: Construction Contracts.

Resolution of these extremely complex legal and financial claims and

variation instructions are yet to be finalised, and may be subject to

arbitration and/or negotiation. This could result in a materially higher

or lower amount being awarded finally, compared to that recognised

in the statement of financial position at 30 June 2012.

Competition Commission

The Competition Commission (“Commission”) engaged the

construction industry in April 2011 and the Group submitted

applications through the April 2011 Fast-Track process. A provision

was raised based on the potential violations that were identified as

a result of this process. The Board is of the opinion that the provision

raised for this liability is adequate to cover any penalties that may

arise as a result of the investigation. However, there is no guarantee

as to the size of the penalty or the sufficiency of the provision.

Gorgon Pioneer Material Offloading Facility (“GPMOF”)

The Group communicated to the market in October 2011 regarding

the additional losses to be incurred on the GPMOF project amounting

to R520 million relating to weather delays. A further R80 million was

recognised at 31 December 2011 and communicated with the half

year results. Subsequent to December 2011, the project experienced

further weather incidents as well as unexpected safety stoppages

which have delayed the final project completion date. The impact of

all these and other events further amounted to approximately

R600 million, which has been recognised in the second half of

the financial year.

Segmental disclosure

The Group manages its operations through five operating platforms.

An analysis of the Group’s results reflects the results and financial

position of each platform (refer to Annexure 3 of the consolidated

annual financial statements).

AUTHORISED AND ISSUED SHARE CAPITALFull details of the authorised and issued capital of the Company at

30 June 2012 are contained in note 12 of the consolidated annual

financial statements.

During the year under review, the Board of directors announced that

it had given due consideration to the continued implementation of the

Group’s Recovery and Growth plan, the expected funding

requirements of the order book, optimal statement of financial

position structure, debt repayment tenure and the protracted nature

of the claims settlement process. The Board was of the view that it

was prudent to raise additional equity capital from shareholders and

intended to propose a renounceable rights offer to raise R2 billion.

On 26 March 2012 a rights offer circular was posted to shareholders

relating to a renounceable rights offer of 112 843 490 shares at an

issue price of R18.00 per share, in the ratio of 34 rights offer shares

for every 100 Murray & Roberts shares held at the close of business

on Friday, 23 March 2012. The renounceable rights offer closed on

Friday, 20 April 2012. On 23 April 2012 shareholders were advised of

the results of the renounceable rights offer. Due to rounding principles

as set out in the rights offer circular, 112 843 499 renounceable

rights offer shares were issued and listed due to rounding up of

fractional entitlements.

As a result of the renounceable rights issue, additional options were

issued to all participants of the Murray & Roberts Holdings Limited

Employee Share Incentive Scheme (“Scheme”). Details of the

adjustments are disclosed in the remuneration report on page 108.

The intention of the Group is to settle any liability under this incentive

scheme by purchasing shares in the open market, therefore no

dilution of shareholding is anticipated.

129

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REPORT OF DIRECTORS CONTINUED

Particulars relating to the Scheme are set out in note 13 of the

consolidated annual financial statements. During the year,

the Trust granted a total of 3 637 000 options over ordinary

shares (2011: 1 738 000 options) to senior executives, including

executive directors.

At 30 June 2012, the Trust held 5 378 382 (2011: 6 189 282) shares

against the commitment of options granted by the Trust totalling

16 502 112 (2011: 11 173 125) ordinary shares. The shares held

by the Trust have been purchased in the market and have not been

issued by the Company.

The total number of ordinary shares that may be utilised for purposes

of the Scheme is limited to 7,5% of the total issued ordinary shares

of the Company, currently 33 189 262 (2011: 33 189 262) ordinary

shares. As no shares have been issued to date in connection with

the Scheme, this limit remains unutilised.

DIVIDENDNo interim or final dividends were declared or proposed for the years

ended 30 June 2011 and 2012.

SUBSIDIARIES AND INVESTMENTSAcquisitions

Acquisition of additional shares in Forge Group Limited (“Forge”)During the financial year Clough Limited increased its interest in

Forge by 3% to 36%, following a put option by previous executives.

Acquisition of remaining interest in PT Operational Services

Proprietary Limited (“PT Operational Services”)The Group acquired the remaining 33% equity interest in PT

Operational Services increasing its interest to 100% during the

current financial year.

Acquisition of 100% interest in Incycle Shotcrete (Proprietary)

Limited (“Incycle Shotcrete”)The Group acquired the full interest in Incycle Shotcrete for a

consideration of R7,4 million, effective 30 September 2011.

Acquisition of remaining 50% in RSC Tshwane Joint VentureThe Group acquired the remaining 50% shareholding in RSC

Tshwane Joint Venture for a consideration of R7,2 million on

1 July 2011.

Disposals

Disposal of non-core assetsThe Group disposed of the following non-core assets during the

current financial year:

Johnson Arabia LLC for proceeds of R109 million on

31 October 2011

The South African steel operations, comprising of RSC Ekusasa

Mining with an effective date of 1 July 2011, Alert Steel

Polokwane Proprietary Limited on 31 October 2011 and

Freyssinet Posten Proprietary Limited on 31 December 2011.

The combined proceeds totalled R120 million

BRC Arabia LLC, 49% shareholding on 30 June 2012 for

proceeds of R2 million

Clough’s Marine construction operations on 22 December 2011

for net proceeds of R591 million

The Group’s 47% shareholding in Murray & Roberts (Zimbabwe)

Limited for proceeds of R10 million

The Group’s equity interest in N3 Toll Concession Proprietary

Limited was disposed of on 1 July 2011, however, the proceeds

were received in advance of 30 June 2011

The Group’s 30% shareholding in Gryphon Logistics Proprietary

Limited for proceeds of R5 million

SPECIAL RESOLUTIONSDuring the year under review four special resolutions were passed by

shareholders. These related to:

1) The conversion of the Company’s entire authorised and issued

share capital from par value shares to no par value shares;

2) An increase in the Company’s authorised but unissued share

capital;

3) Authorisation for the ability to issue 30% or more of the

Company’s issued share capital; and

4) Authorisation for the amendment of the Company’s memorandum

of incorporation.

The special resolutions were filed with the Companies and Intellectual

Property Commission.

Special resolutions relating to name changes were passed by

subsidiary companies during the year under review.

EVENTS AFTER REPORTING DATEThe Steel Business, including CISCO, was disposed of at book value

subsequent to the year-end in two separate transactions. The Steel

Business transaction, excluding CISCO, is subject to Competition

Commission approval.

The directors are not aware of any other matter or circumstance

arising since the end of the financial year, not otherwise dealt with

in the Group and Company annual financial statements, which

significantly affects the financial position at 30 June 2012 or the

results of its operations or cash flows for the year then ended.

INTEREST OF DIRECTORSA total of 2 936 610 (2011: 2 065 750) share options are allocated to

directors in terms of the Murray & Roberts Holdings Limited Employee

Share Incentive Scheme, further details are set out in note 13.


The directors of the Company held direct beneficial interests in 65 351 of the Company’s issued ordinary shares (2011: 28 000 ordinary shares).

Details of ordinary shares held per individual director are listed below.

Beneficial Direct Indirect

30 June 2012

RC Andersen 54 459 –

DD Barber 2 723 –

AJ Bester* 8 169 –

30 June 2011

RC Andersen 20 000 –

DD Barber 2 000 –

AJ Bester* 6 000 –

BC Bruce** 1 404 805 –

Non-beneficial Direct Indirect

30 June 2011 & 2012

RW Rees** – 615 000

* AJ Bester was appointed to the Board as Group financial director on 1 July 2011.** BC Bruce and RW Rees retired on 30 June 2011.

At the date of this report, these interests remain unchanged.

DIRECTORSAt the date of this report, the directors of the Company were:

Independent non-executive

RC Andersen (Chairman); DD Barber; TCP Chikane; NM Magau;

JM McMahon; WA Nairn; AA Routledge; M Sello; SP Sibisi and

RT Vice.

Due to other business commitments, ADVC Knott-Craig resigned

as a non-executive director on 17 January 2012.

TCP Chikane was appointed as a non-executive director on

15 June 2012.

Executive

HJ Laas (Group chief executive); AJ Bester (Group financial director)

and O Fenn.

COMPANY SECRETARYThe company secretary’s business and postal addresses are:

Business address Postal address

Douglas Roberts Centre PO Box 1000

22 Skeen Boulevard Bedfordview

Bedfordview 2008

2007

AUDITORSDeloitte & Touche continued in office as external auditors. At the

Annual General Meeting of 31 October 2012, shareholders will be

requested to appoint Deloitte & Touche as external auditors for the

2013 financial year. AJ Zoghby will be the individual registered auditor

who will undertake the audit.

29 August 2012

131

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ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS Notes 2012 2011

ASSETSNon-current assets

Property, plant and equipment 2 3 599,6 3 325,1

Investment properties 3 22,2 18,3

Goodwill 4 437,3 434,9

Other intangible assets 5 191,1 197,0

Investments in associate companies 6 885,0 564,4

Other investments 7 459,8 445,0

Deferred taxation assets 21 634,1 469,8

Amounts due from contract customers 9 2 059,7 –

Non-current receivables 105,0 108,4

Total non-current assets 8 393,8 5 562,9

Current assets

Inventories 8 730,5 817,2

Derivative financial instruments – 10,5

Amounts due from contract customers 9 6 805,9 5 290,0

Trade and other receivables 10 2 127,1 1 836,6

Current taxation assets 34 90,7 82,9

Cash and cash equivalents 11 3 388,4 3 100,6

Total current assets 13 142,6 11 137,8

Assets classified as held-for-sale 31 905,0 2 859,8

Total assets 22 441,4 19 560,5

EQUITY AND LIABILITIESEquity

Stated capital (2011: share capital and share premium) 12 2 710,1 756,9

Reserves 14&15 625,7 189,3

Retained earnings 2 551,6 3 274,9

Equity attributable to owners of Murray & Roberts Holdings Limited 5 887,4 4 221,1

Non-controlling interests 16 1 214,7 1 100,3

Total equity 7 102,1 5 321,4

Non-current liabilities

Long term loans 18 493,8 1 225,2

Retirement benefit obligations 19 6,8 7,4

Long term provisions 20 164,9 126,5

Deferred taxation liabilities 21 210,5 310,9

Subcontractor liabilities 22 651,9 141,1

Non-current payables 67,5 62,0

Total non-current liabilities 1 595,4 1 873,1

Current liabilities

Amounts due to contract customers 9 3 018,9 2 244,4

Trade and other payables 23 5 898,5 5 226,9

Short term loans 24 1 895,7 1 079,5

Current taxation liabilities 34 174,6 115,8

Provisions for obligations 25 354,6 254,3

Subcontractor liabilities 22 2 098,4 2 171,4

Derivative financial instruments 15,9 45,1

Bank overdrafts 11 38,5 46,8

Total current liabilities 13 495,1 11 184,2

Liabilities directly associated with a disposal group held-for-sale 31 248,8 1 181,8

Total liabilities 15 339,3 14 239,1

Total equity and liabilities 22 441,4 19 560,5

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAT 30 JUNE 2012


CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCEFOR THE YEAR ENDED 30 JUNE 2012

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS Notes 2012 2011*

Continuing operations

Revenue 26 35 405,9 30 534,8

Profit/(loss) before interest, depreciation and amortisation 521,8 (92,6)

Depreciation (658,7) (562,0)

Amortisation of intangible assets (24,5) (23,2)

Loss before interest and taxation 27 (161,4) (677,8)

Interest expense 28 (347,9) (293,9)

Interest income 29 99,1 99,5

Loss before taxation (410,2) (872,2)

Taxation expense 30 (244,6) (196,3)

Loss after taxation (654,8) (1 068,5)

Income from equity accounted investments 143,4 86,3

Loss for the year from continuing operations (511,4) (982,2)

Loss from discontinued operations 31 (80,6) (666,1)

Loss for the year (592,0) (1 648,3)

Attributable to:

Owners of Murray & Roberts Holdings Limited (735,6) (1 735,1)

Non-controlling interests 16 143,6 86,8

(592,0) (1 648,3)

Weighted average number of ordinary shares (000)

Weighted average ordinary shares in issue 382 712 367 784

Weighted average ordinary shares held by The Murray & Roberts Trust (6 338) (7 466)

Weighted average ordinary shares held by the Letsema BBBEE trusts (32 115) (32 044)

Weighted average ordinary shares held by Murray & Roberts Limited (736) (749)

Dilutive adjustment for share options 699 1 029

344 222 328 554

Loss per share from continuing and discontinued operations (cents)

– Diluted 32.2 (214) (528)

– Basic 32.2 (214) (530)

Loss per share from continuing operations (cents)

– Diluted 32.2 (199) (349)

– Basic 32.2 (199) (350)

* The weighted average number of shares in issue in the prior year has been adjusted due to the rights issue made to shareholders in April 2012.

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133

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2012

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS 2012 2011

Loss for the year (592,0) (1 648,3)

OTHER COMPREHENSIVE INCOME/(LOSS):Exchange differences on translating foreign operations 617,0 3,8

Effects of cash flow hedges 20,3 (38,7)

Taxation related to effects of cash flow hedges (4,7) 11,7

Effects of available-for-sale financial assets (0,5) –

Other comprehensive income/(loss) for the year net of taxation 632,1 (23,2)

Total comprehensive income/(loss) 40,1 (1 671,5)

Total comprehensive income/(loss) attributable to:

Owners of Murray & Roberts Holdings Limited (297,8) (1 787,3)

Non-controlling interests 337,9 115,8

40,1 (1 671,5)

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONSOF RANDS

Statedcapital,

share capitaland sharepremium

Hedgingand

translationreserve

Othercapital

reservesRetainedearnings

Attributable

to owners

of Murray &

Roberts

Holdings

Limited

Non-controlling

interestsTotal

equity

Balance at 30 June 2010 737,1 44,0 171,1 5 251,1 6 203,3 974,0 7 177,3

Total comprehensive (loss)/income

for the year – (52,2) – (1 735,1) (1 787,3) 115,8 (1 671,5)

Treasury shares acquired (net) 19,8 – – – 19,8 – 19,8

Net acquisition/disposal of

non-controlling interests – – – (54,6) (54,6) 58,9 4,3

Net movement in non-controlling

interests loans – – – – – 36,2 36,2

Transfer to non-controlling interests – – (2,7) – (2,7) 2,7 –

Reclassification – (4,1) 4,1 – – – –

Recognition of share-based payment – – 32,5 – 32,5 – 32,5

Dividends declared and paid – – – (186,5) (186,5) (87,3) (273,8)

Recycled to the statement of

financial performance – – (3,4) – (3,4) – (3,4)

Balance at 30 June 2011 756,9 (12,3) 201,6 3 274,9 4 221,1 1 100,3 5 321,4

Total comprehensive income/(loss)

for the year – 438,3 (0,2) (735,9) (297,8) 337,9 40,1

Rights issue to shareholders

(net of transaction costs) 1 910,0 – – – 1 910,0 – 1 910,0

Treasury shares acquired (net) 43,2 – – – 43,2 – 43,2

Net acquisition/disposal of

non-controlling interests – – – (11,7) (11,7) (152,3) (164,0)

Net movement in non-controlling

interests loans – – – – – (20,9) (20,9)

Transfer to non-controlling interests – – (2,2) – (2,2) 2,2 –

Disposal of business – – (1,0) – (1,0) – (1,0)

Transfer to retained earnings – – (31,9) 31,9 – – –

Issue of shares to non-controlling interests – – – – – 22,5 22,5

Recognition of share-based payment – – 33,4 – 33,4 – 33,4

Dividends declared and paid* – – – (7,6) (7,6) (75,0) (82,6)

Balance at 30 June 2012 2 710,1 426,0 199,7 2 551,6 5 887,4 1 214,7 7 102,1

* Dividends relate to distributions made by entities that hold treasury shares.



Cash flows from operating activities

Receipts from customers 37 064,9 32 881,6

Payments to suppliers and employees (38 645,1) (32 010,0)

Cash (utilised in)/generated from operations 33 (1 580,2) 871,6

Interest received 106,8 105,6

Interest paid (387,7) (357,8)

Taxation paid 34 (429,0) (286,0)

Operating cash flow (2 290,1) 333,4

Dividends paid to owners of Murray & Roberts Holdings Limited (7,6) (186,5)

Dividends paid to non-controlling interests (75,0) (87,3)

Net cash (outflow)/inflow from operating activities (2 372,7) 59,6

Cash flows from investing activities

Acquisition of businesses 35 (14,6) (70,1)

Acquisition of share capital in start up company (10,3) –

Dividends received from associate companies 6 45,6 24,5

Acquisition of non-controlling interests (48,0) –

Acquisition of associates (132,8) (7,1)

Acquisition of investments (67,0) –

Acquisition of other investments by discontinued operations (40,0) –

Purchase of investment property (20,0) –

Purchase of intangible assets other than goodwill (16,5) (11,5)

Purchase of property, plant and equipment by discontinued operations (34,4) (35,2)

Purchase of property, plant and equipment (958,7) (832,4)

Replacements (569,0) (465,0)

Additions (389,7) (367,4)

Proceeds on disposal of property, plant and equipment 163,7 131,8

Proceeds on disposal of businesses 35 822,6 –

Proceeds on disposal of assets held-for-sale 126,6 635,4

Proceeds on disposal of investments in associates 15,3 –

Advance payment received in respect of investment disposal – 170,0

Cash related to acquisition/ disposal of businesses (270,5) –

Cash related to assets held-for-sale 258,2 (110,6)

Proceeds from loan repayments and dividends received 165,0 44,5

Other 1,8 (1,7)

Net cash outflow from investing activities (14,0) (62,4)

Cash flows from financing activities

Net movement in borrowings 36 342,1 529,4

Proceeds from rights issue to shareholders (net of transaction costs) 1 910,0 –

Net acquisition of treasury shares 43,2 19,8

Proceeds on share issue to non-controlling interests 22,5 –

Net cash inflow from financing activities 2 317,8 549,2

Net (decrease)/increase in net cash and cash equivalents (68,9) 546,4

Net cash and cash equivalents at beginning of year 3 053,8 2 566,2

Effect of foreign exchange rates 365,0 (58,8)

Net cash and cash equivalents at end of year 11 3 349,9 3 053,8

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2012

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135

1 PRESENTATION OF FINANCIAL STATEMENTS These accounting policies are consistent with the previous

period, except for the changes set out below.

The following new and revised Standards and Interpretations

have been adopted in the current period:

IAS 24 Revised (Amendment): Related Party Disclosures

The revised standard removes the requirement for government-

related entities to disclose details of all transactions with the

Government and other government-related entities. It also

clarifies and simplifies the definition of a related party. The

previous definition of a related party was complicated and

contained a number of inconsistencies. These inconsistencies

meant, for example, that there were situations in which only

one party to a transaction was required to make related-party

disclosures. The definition has been amended to remove such

inconsistencies and to make it simpler to apply.

IFRIC 14 (Amendment): The Limit on a Defined Benefit Asset,

Minimum Funding Requirements and their Interaction –

Prepayments of minimum funding requirements.

The amendment removes an unintended consequence of

IFRIC 14 relating to voluntary pension pre-payments when

there is a minimum funding requirement. An unintended

consequence of the interpretation, prior to this amendment,

was that IFRIC 14 could prevent the recognition of an asset

for any surplus arising from such voluntary pre-payment of

minimum funding contributions in respect of future service.

The interpretation has been amended to require an asset

to be recognised in these circumstances.

IFRS 7 (Amendment): Disclosures – Transfer of Financial Assets

The amendment requires greater disclosure of transferred

financial assets. The amendment has different requirements

for the following two categories:

transferred assets that are not derecognised in their

entirety; and

certain transferred assets that are derecognised in their

entirety.

Certain improvements to IFRS’s 2011

Improvements to IFRS is a collection of amendments to

International Financial Reporting Standards (“IFRS”). These

amendments are the result of conclusions the board reached

on proposals made in its annual improvements project.

The above Standards and Interpretations had no impact on the

Group or Company annual financial statements.

1.1 Basis of preparation

These consolidated and separate financial statements have

been prepared under the historical cost convention as modified

by the revaluation of non-trading financial asset investments,

financial assets and financial liabilities held-for-trading, financial

assets designated as fair value through profit and loss and

investment property. Non-current assets and disposal groups

held-for-sale, where applicable, are stated at the lower of its

carrying amount and fair value less costs to sell.

The preparation of financial statements requires the use of

estimates and assumptions that affect the reported amounts

of assets and liabilities, disclosure of contingent assets and

liabilities at the date of the financial statements and the reported

amounts of revenues and expenses during the reporting period.

Although these estimates are based on management’s best

knowledge of current events and conditions, actual results may

ultimately differ from those estimates.

The estimates and underlying assumptions are reviewed on an

ongoing basis. Revisions to accounting estimates are recognised

in the period in which the estimate is revised if the revision affects

only that period, or in the period of the revision and future

periods if the revision affects both current and future periods.

Judgements made by management in the application of IFRS

that have a significant effect on the financial statements, and

significant estimates made in the preparation of these

consolidated financial statements are discussed in note 45.

Standards, Interpretations and Amendments to published

standards that are not yet effective are discussed in note 46.

1.2 Statement of compliance

These consolidated financial statements are prepared in

accordance with IFRS and Interpretations adopted by the

International Accounting Standards Board (“IASB”) and the IFRS

Interpretations Committee (“IFRIC”) of the IASB and the AC 500

Standards as issued by the Accounting Practices Board.

1.3 Basis of consolidation

The Group consists of the consolidated financial position

and the operating results and cash flow information of

Murray & Roberts Holdings Limited (“Company”), its subsidiaries,

its interest in joint ventures and its interest in associates.

Subsidiaries are entities, including special purpose entities

such as The Murray & Roberts Trust controlled by the Group.

Control exists where the Group, directly or indirectly, has the

power to govern the financial and operating policies so as to

obtain benefits from its activities generally accompanying an

interest of more than half of the voting rights. In assessing

control, potential voting rights that are exercisable or

convertible presently are taken into account.

Income and expenses of subsidiaries acquired or disposed

of during the year are included in the consolidated statement

of comprehensive income from the effective date of acquisition

and up to the effective date of disposal, as appropriate. Total

comprehensive income of subsidiaries is attributed to the

owners of the Company and to the non-controlling interests

even if this results in the non-controlling interests having a

deficit balance.

If a subsidiary uses accounting policies other than those

adopted in the consolidated financial statements for like

transactions and events in similar circumstances, appropriate

adjustments are made to its financial statements in preparing

the consolidated financial statements.

Inter-company transactions and balances on transactions

between Group companies are eliminated.

Transactions with non-controlling interests

The Group treats transactions with non-controlling interests as

transactions with equity owners of the Group. For purchases

from non-controlling interests, the difference between any

consideration paid and the relevant share acquired of the

carrying value of net assets of the subsidiary is recorded in

equity. Gains or losses on disposals to non-controlling interests

are also recorded in equity.

ACCOUNTING POLICIESFOR THE YEAR ENDED 30 JUNE 2012


Any increase or decrease in ownership interest in subsidiaries

without a change in control is recognised as equity

transactions in the consolidated financial statements.

Accordingly, any premium or discount on subsequent

purchases of equity instruments from or sales of equity

instruments to non-controlling interests are recognised directly

in equity of the parent shareholder.

Non-controlling interest loans

Certain companies elect to contribute to shareholder loans as

opposed to share capital.

Loans from non-controlling shareholders are classified as

equity instruments rather than financial liabilities if both

conditions (a) and (b) below, as required by IAS 32 (Financial

Instruments: Presentation), paragraph 16, are met:

(a) Loans from non-controlling shareholders includes no

contractual obligations:

To deliver cash or another financial asset to another entity;

or

To exchange financial assets or financial liabilities with

another entity under conditions that are potentially

favourable to the issuer or the Group

(b) Loans from non-controlling shareholders will not or may not

be settled in the issuer’s or the Group’s own equity

instruments

If the loans made from non-controlling shareholders do not meet

both conditions (a) and (b) they are classified as financial liabilities.

The raise or repayment of non-controlling interest loans that

are classified as equity instruments has no impact on the

effective shareholding of the non-controlling shareholder.

1.4 Business combination

Acquisitions of businesses are accounted for using the

acquisition method. The consideration transferred in a

business combination is measured at fair value, which is

calculated as the sum of the acquisition-date fair values of

the assets transferred by the Group, liabilities incurred by

the Group to the former owners of the acquiree and the equity

interests issued by the Group in exchange for control of the

acquiree. Acquisition-related costs are recognised in profit

or loss as incurred.

At the acquisition date, the identifiable assets acquired

and the liabilities assumed are recognised at their fair value

at the acquisition date, except that:

deferred tax assets or liabilities and liabilities or assets

related to employee benefit arrangements are recognised

and measured in accordance with IAS 12 Income Taxes

and IAS 19 Employee Benefits respectively

Liabilities or equity instruments related to share-based

payment arrangements of the acquiree or share-based

payment arrangements of the Group entered into to replace

share-based payment arrangements of the acquiree are

measured in accordance with IFRS 2 Share-based Payment

at the acquisition date

Assets (or disposal groups) that are classified as held-for-

sale in accordance with IFRS 5 Non-current Assets Held

for Sale and Discontinued Operations are measured in

accordance with that Standard

Goodwill is measured as the excess of the sum of the

consideration transferred, the amount of any non-controlling

interests in the acquiree, and the fair value of the acquirer’s

previously held equity interest in the acquiree (if any) over the

net of the acquisition-date amounts of the identifiable assets

acquired and the liabilities assumed. If, after reassessment,

the net of the acquisition-date amounts of the identifiable

assets acquired and liabilities assumed exceeds the sum

of the consideration transferred, the amount of any non-

controlling interests in the acquiree and the fair value of the

acquirer’s previously held interest in the acquiree (if any), the

excess is recognised immediately in profit or loss as a bargain

purchase gain.

Non-controlling interests that present ownership interests and

entitle their holders to a proportionate share of the entity’s net

assets in the event of liquidation may be initially measured either

at fair value or at the non-controlling interests’ proportionate

share of the recognised amounts of the acquiree’s identifiable

net assets. The choice of measurement basis is made on a

transaction-by-transaction basis. Other types of non-controlling

interests are measured at fair value or, when applicable, on the

basis specified in another IFRS.

When the consideration transferred by the Group in a business

combination includes assets or liabilities resulting from a

contingent consideration arrangement, the contingent

consideration is measured at its acquisition-date fair value

and included as part of the consideration transferred in a

business combination. Changes in the fair value of the

contingent consideration that qualify as measurement period

adjustments are adjusted retrospectively, with corresponding

adjustments against goodwill. Measurement period adjustments

are adjustments that arise from additional information obtained

during the ‘measurement period’ (which cannot exceed one

year from the acquisition date) about facts and circumstances

that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the

contingent consideration that do not qualify as measurement

period adjustments depends on how the contingent

consideration is classified. Contingent consideration that is

classified as equity is not remeasured at subsequent reporting

dates and its subsequent settlement is accounted for within

equity. Contingent consideration that is classified as an asset

or a liability is remeasured at subsequent reporting dates in

accordance with IAS 39, or IAS 37 Provisions, Contingent

Liabilities and Contingent Assets, as appropriate, with the

corresponding gain or loss being recognised in profit or loss.

When a business combination is achieved in stages, the

Group’s previously held equity interest in the acquiree is

remeasured to fair value at the acquisition date (i.e. the date

when the Group obtains control) and the resulting gain or loss,

if any, is recognised in profit or loss. Amounts arising from

interests in the acquiree prior to the acquisition date that have

previously been recognised in other comprehensive income are

reclassified to profit or loss where such treatment would be

appropriate if the interest were disposed of.

If the initial accounting for a business combination is

incomplete by the end of the reporting period in which the

combination occurs, the Group reports provisional amounts

for the items for which the accounting is incomplete. Those

provisional amounts are adjusted during the measurement

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ACCOUNTING POLICIES CONTINUED

period (see above), or additional assets or liabilities are

recognised, to reflect new information obtained about facts

and circumstances that existed at the acquisition date that,

if known, would have affected the amounts recognised at

that date.

Business combinations that took place prior to 1 January 2010

were accounted for in accordance with the previous version of

IFRS 3.

Goodwill

The Group uses the acquisition method to account for the

acquisition of businesses.

Goodwill is recognised as an asset at the acquisition date

of a business, subsidiary, associate or jointly controlled entity.

Goodwill on the acquisition of a subsidiary and joint venture

company is included in intangible assets. Goodwill on the

acquisition of an associate company is included in the

investment in associates.

Goodwill is not amortised. Instead, an impairment test is

performed annually or more frequently if circumstances indicate

that it might be impaired. Any impairment is recognised

immediately in profit or loss and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to

each of the Group’s cash generating units expected to benefit

from the synergies of the business combination. Any impairment

loss of the cash generating unit is first allocated against the

goodwill and thereafter against the other assets of the cash

generating unit on a pro-rata basis.

Whenever negative goodwill arises, the identification and

measurement of the acquired identifiable assets, liabilities

and contingent liabilities is reassessed. If negative goodwill

still remains, it is recognised in profit or loss immediately.

On disposal of a subsidiary, associate or jointly controlled

entity, the attributable goodwill is included in the determination

of the profit or loss on disposal. The same principle is applicable

for partial disposals where there is a change in ownership,

in other words a portion of the goodwill is expensed as part

of the cost of disposal. For partial disposals and acquisitions

with no change in ownership, goodwill is recognised as a

transaction with equity holders.

1.5 Joint ventures

Joint ventures are those entities in which the Group has joint

control. The proportion of assets, liabilities, income and expenses

and cash flows attributable to the interests of the Group in

jointly controlled entities are incorporated in the consolidated

financial statements under the appropriate headings. The

results of joint ventures are included from the effective dates

of acquisition and up to the effective dates of disposal.

Inter-company transactions, balances and unrealised gains

on transactions between the Group and its joint ventures are

eliminated on consolidation. Unrealised losses are eliminated

and are also considered an impairment indicator of the asset

transferred. Accounting policies of joint ventures have been

changed where necessary to ensure consistency with policies

adopted by the Group.

1.6 Investments in associate companies

Associates are all entities over which the Group has significant

influence but not control, generally accompanying a shareholding

of between 20% and 50% of the voting rights. Investments in

associates are accounted for using the equity method of

accounting and are initially recognised at cost. The Group’s

investments in associates includes goodwill identified on

acquisition, net of any accumulated impairment loss.

The Group’s share of its associates’ post-acquisition profits or

losses is recognised in the statement of financial performance,

and its share of post-acquisition movements in reserves is

recognised in reserves. The cumulative post-acquisition

movements are adjusted against the carrying amount of the

investment. When the Group’s share of losses in an associate

equals or exceeds its interest in the associate, including any

other unsecured receivables, the Group does not recognise

further losses, unless it has incurred obligations or made

payments on behalf of the associate. The total carrying value

of associates is evaluated annually for impairment. Any

impairment loss recognised forms part of the carrying amount

of the investment. Any reversal of that impairment loss is

recognised in accordance with IAS 36 to the extent that the

recoverable amount of the investment subsequently increases.

Unrealised gains on transactions between the Group and its

associates are eliminated to the extent of the Group’s interest

in the associates. Unrealised losses are also eliminated unless

the transaction provides evidence of an impairment of the

asset transferred. Accounting policies of associates have been

changed where necessary to ensure consistency with the

policies adopted by the Group.

1.7 Stand-alone Company’s financial statements

In the stand-alone accounts of the Company, the investment

in a subsidiary company is carried at cost less accumulated

impairment losses, where applicable.

1.8 Foreign currencies

Foreign currency transactions A foreign currency transaction is recorded, on initial recognition

in Rands, by applying to the foreign currency amount the spot

exchange rate between the functional currency and the foreign

currency at the date of the transaction. At the end of the

reporting period:

foreign currency monetary items are translated using the

closing rate

Non-monetary items that are measured in terms of historical

cost in a foreign currency are translated using the exchange

rate at the date of the transaction

Non-monetary items that are measured at fair value in

a foreign currency are translated using the exchange rates

at the date when the fair value was determined

Exchange differences arising on the settlement of monetary

items or on translating monetary items at rates different from

those at which they were translated on initial recognition during

the period or in previous annual financial statements are

recognised in profit or loss in the period in which they arise.

When a gain or loss on a non-monetary item is recognised in

other comprehensive income and accumulated in equity, any

exchange component of that gain or loss is recognised in other

comprehensive income and accumulated in equity. When

a gain or loss on a non-monetary item is recognised in profit

or loss, any exchange component of that gain or loss is

recognised in profit or loss.


Cash flows arising from transactions in a foreign currency are

recorded in Rands by applying to the foreign currency amount

the exchange rate between the Rand and the foreign currency

at the date of the cash flow.

Foreign currency monetary items Monetary assets denominated in foreign currencies are translated

into the functional currency at the closing rate of exchange

ruling at the reporting date. Exchange differences arising on

translation are credited to or charged against income.

Monetary liabilities denominated in foreign currencies are

translated into the functional currency at the closing rate of

exchange ruling at reporting date. Exchange differences arising

on translation are credited to or charged against income.

Monetary Group assets and liabilities (being Group loans, call

accounts, equity loans, receivables and payables) denominated

in foreign currencies are translated into the functional currency

at the closing rate of exchange ruling at the reporting date.

Exchange differences arising on translation are credited to or

charged against income except for those arising on equity

loans that are denominated in the functional currency of either

party involved. In those instances, the exchange differences

are taken directly to equity as part of the foreign currency

translation reserve.

Exchange differences arising on the settlement of monetary

items are credited to or charged against income.

Foreign currency non-monetary items Non-monetary items carried at fair value that are denominated

in foreign currencies are translated at the rates prevailing on the

date when the fair value was determined. Exchange differences

arising on translation are credited to or charged against income

except for differences arising on the translation of non-monetary

items in respect of which gains and losses are recognised

directly in equity. For such items, any exchange component

of that gain or loss is also recognised directly in equity.

Non-monetary items that are measured in terms of historical cost

in a foreign currency are translated at historical exchange rates.

Foreign operations The results and financial position of a foreign operation are

translated into the functional currency using the following

procedures:

Assets and liabilities for each consolidated statement of

financial position presented are translated at the closing

rate at the date of that consolidated statement of financial

position

Income and expenses for each item of profit or loss are

translated at exchange rates at the dates of the

transactions

All resulting exchange differences are recognised in the

statement of other comprehensive income and

accumulated as a separate component of equity

Exchange differences arising on a monetary item that forms

part of a net investment in a foreign operation are recognised

initially in the statement of other comprehensive income and

accumulated in the translation reserve. On the disposal of a

foreign operation, all of the accumulated exchange differences

in respect of that operation attributable to the Group are

recycled to profit or loss.

In the case of a partial disposal that does not result in the

Group losing control over a subsidiary that includes a foreign

operation, the proportionate share of accumulated exchange

differences are re-attributed to non-controlling interests and are

not recognised in profit or loss. For all other partial disposals

(i.e. reductions in the Group’s ownership interest in associates

or jointly controlled entities that do not result in the Group

losing significant influence or joint control), the proportionate

share of the accumulated exchange differences is recycled to

profit or loss.

Any goodwill arising on the acquisition of a foreign operation and

any fair value adjustments to the carrying amounts of assets and

liabilities arising on the acquisition of that foreign operation are

treated as assets and liabilities of the foreign operation.

The cash flows of a foreign subsidiary are translated at the

exchange rates between the functional currency and the

foreign currency at the dates of the cash flows.

1.9 Financial instruments

Classification Classification depends on the purpose for which the financial

instruments were obtained/incurred and takes place at initial

recognition. Classification is re-assessed on an annual basis,

except for derivatives and financial assets designated as fair

value through profit or loss, which shall not be classified out

of the fair value through profit or loss category.

The Group classifies financial assets and financial liabilities into

the following categories:

Loans and receivables Loans and receivables are stated at amortised cost. Amortised

cost represents the original amount less principle repayments

received, the impact of discounting to net present value and

a provision for impairment, where applicable.

When a loan has a fixed maturity date but carries no interest,

the carrying value reflects the time value of money, and the

loan is discounted to its net present value. The unwinding

of the discount is subsequently reflected in the statement

of financial performance as part of interest income.

Trade and other receivables Trade and other receivables are initially recognised at fair value,

and are subsequently classified as loans and receivables and

measured at amortised cost using the effective interest rate

method.

The provision for impairment of trade and other receivables

is established when there is objective evidence that the Group

will not be able to collect all amounts due in accordance

with the original terms of the credit given and includes an

assessment of recoverability based on historical trend analyses

and events that exist at reporting date. The amount of the

provision is the difference between the carrying value and the

present value of estimated future cash flows, discounted at the

effective interest rate computed at initial recognition.

Contract receivables and retentions Contract receivables and retentions are initially recognised

at fair value, and are subsequently classified as loans and

receivables and measured at amortised cost using the effective

interest rate method.

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Contract receivables and retentions comprise amounts due

in respect of certified or approved certificates by the client or

consultant at the reporting date for which payment has not

been received, and amounts held as retentions on certified

certificates at the reporting date.

Cash and cash equivalents Cash and cash equivalents comprise cash on hand, demand

deposits and other short term highly liquid investments that are

readily convertible to a known amount of cash and are subject

to an insignificant risk of changes in value.

Bank overdrafts are not offset against positive bank balances

unless a legally enforceable right of offset exists, and there is

an intention to settle the overdraft and realise the net cash

simultaneously, or to settle on a net basis.

All short term cash investments are invested with major

financial institutions in order to manage credit risk.

Impairment of financial assets Financial assets, other than those at fair value through profit

and loss, are assessed for impairment at each reporting date

and impaired where there is objective evidence that as a result

of one or more events that occurred after initial recognition of

the financial asset, the estimated future cash flows of the

investment have been impacted.

For available-for-sale assets, a significant or prolonged decline

in the fair value of the asset below its cost is considered to be

objective evidence of impairment.

For all other financial assets, objective evidence of impairment

could include:

Significant financial difficulty of the issuer or counterparty;

or

Breach of contract, such as a default or delinquency in

interest or principal payments; or

It is becoming probable that the borrower will enter

bankruptcy or financial re-organisation; or

The disappearance of an active market for that financial

asset because of financial difficulties.

For financial assets carried at amortised cost, the impairment

is the difference between the asset’s carrying amount and the

present value of estimated future cash flows, discounted at the

original effective interest rate. The carrying amount of a financial

asset is reduced through the use of an allowance account and

changes to this allowance account are recognised in profit and

loss. Subsequent recoveries of amounts previously written off

are credited against the allowance account.

Derecognition of financial assets The Group derecognises a financial asset only when the

contractual rights to the cash flows from the asset expire,

or when it transfers the financial asset and substantially all

the risks and rewards of ownership of the asset to another

entity. If the Group neither transfers nor retains substantially

all the risks and rewards of ownership and continues to

control the transferred asset, the Group recognises its

retained interest in the asset and an associated liability

for amounts it may have to pay. If the Group retains

substantially all the risks and rewards of ownership of a

transferred financial asset, the Group continues to recognise

the financial asset and also recognises a collateralised

borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the

difference between the asset’s carrying amount and the

sum of the consideration received and receivable and the

cumulative gain or loss that had been recognised in other

comprehensive income and accumulated in equity is


Financial liabilities and equity Financial liabilities and equity are classified according to the

substance of the contractual arrangements entered into and

the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual

interest in the assets of the Group after deducting all of its

liabilities.

Equity instruments Equity instruments issued by the Company are recognised

as the proceeds received, net of direct issue costs.

Non-trading financial liabilities Non-trading financial liabilities are recognised at amortised

cost. Amortised cost represents the original debt less principle

payments made, the impact of discounting to net present

value and amortisation of related costs.

Trade and other payables Trade and other payables are liabilities to pay for goods or

services that have been received or supplied and have been

invoiced or formally agreed with the supplier. Trade and

other payables are initially recognised at fair value, and are

subsequently classified as non-trading financial liabilities and

carried at amortised cost using the effective interest rate

method.

Subcontractor liabilities Subcontractor liabilities represent the actual unpaid liability

owing to subcontractors for work performed including retention

monies owed. Subcontractor liabilities are initially recognised

at fair value, and are subsequently classified as non-trading

financial liabilities and carried at amortised cost using the

effective interest rate method.

Investments Service concession investments are designated as fair value

through profit and loss. All other investments are classified

as non-trading financial assets or loans and receivables and

accounted for accordingly.

Financial assets designated as fair value through profit

and loss Financial instruments, other than those held for trade, are

classified in this category if the financial assets or liabilities are

managed, and their performance evaluated, on a fair value

basis in accordance with a documented investment strategy,

and where information about these financial instruments are

reported to management on a fair value basis. Under this basis

the Group’s concession equity investment is the main class of

financial instruments so designated. The fair value designation,

once made is irrevocable.

Measurement is initially at fair value, with transaction costs and

subsequent fair value adjustments recognised in profit or loss.

The net gain or loss recognised in profit or loss incorporates

any dividend or interest earned on financial assets. Fair value is



determined in the manner as described in note 7. Where

management has identified objective evidence of impairment,

provisions are raised against the investment. Assets are

considered to be impaired when the fair value of the assets is

considered to be lower than the original cost of the investment.

Available-for-sale assets Available-for-sale assets include financial instruments normally

held for an indefinite period, but may be sold depending on

changes in exchange, interest or other market conditions.

Available-for-sale financial instruments are initially measured at

fair value, which represents consideration given plus transaction

costs, and subsequently carried at fair value. Fair value is based

on market prices for these assets. Resulting gains or losses

are recognised in the statement of other comprehensive income

and accumulated as a fair value reserve in the statement of

changes in equity until the asset is disposed of or impaired,

when the cumulative gain or loss is recognised in profit and loss.

Where management has identified objective evidence of

impairment, a provision is raised against the investment.

When assessing impairment, consideration is given to whether

or not there has been a significant or prolonged decline in the

market value below original cost.

Derivative financial instruments Derivative financial instruments are initially measured at fair

value at the contract date, which includes transaction costs.

Subsequent to initial recognition derivative instruments are

stated at fair value with the resulting gains or losses recognised

in profit or loss.

Derivatives embedded in other financial instruments or other

non-financial host contracts are treated as separate derivatives

when their risks and characteristics are not closely related to

those of the host contract and the host contract is not carried

at fair value with unrealised gains or losses recognised in the

statement of financial performance.

Where a legally enforceable right of offset exists for recognised

derivative financial assets and liabilities, and there is an intention

to settle the liability and realise the asset simultaneously, or to

settle on a net basis, all related financial effects are offset.

The Group generally makes use of three types of derivatives,

being foreign exchange contracts, interest rate swap agreements

and embedded derivatives. The majority of these are used to

hedge the financial risks of recognised assets and liabilities,

unrecognised forecasted transactions or unrecognised firm

commitments (hereafter referred to as “economic hedges”).

Hedge accounting is not necessarily applied to all economic

hedges but only where management made a decision to

designate the hedge as either a fair value or cash flow hedge

and the hedge qualifies for hedge accounting.

Hedging activities

Economic hedges where hedge accounting is not applied When a derivative instrument is entered into as a hedge, all

fair value gains or losses are recognised in profit or loss.

Economic hedges where hedge accounting is applied Hedge accounting recognises the offsetting effects of the

hedging instrument (i.e. the derivative) and the hedged item

(i.e. the item being hedged such as a foreign denominated liability).

Hedges can be designated as fair value hedges, cash flow

hedges, or hedges of net investments in foreign entities.

Fair value hedges When a derivative instrument is entered into and designated as

a fair value hedge, all fair value gains or losses are recognised

in profit or loss.

Changes in the fair value of a hedging instrument that is highly

effective and is designated and qualifies as a fair value hedge,

are recognised in profit or loss together with the changes in

the fair value of the related hedged item.

Hedge accounting is discontinued when the Group revokes the

hedging relationship, when the hedging instruments expires or

is sold, terminated, or exercised, or when it no longer qualifies

for hedge accounting.

Cash flow hedges Where a derivative instrument is entered into and designated

as a cash flow hedge of a recognised asset, liability or a highly

probable forecasted transaction, the effective part of any gain

or loss arising on the derivative instrument is recognised as

part of the hedging reserve until the underlying transaction

occurs. The ineffective part of any gain or loss is immediately


If the underlying transaction occurs and results in the recognition

of a financial asset or a financial liability, the associated gains

or losses that were recognised directly in equity must be

reclassified into profit or loss in the same period or periods

during which the asset acquired or liability assumed affects

profit or loss (such as in the periods that interest income or

interest expense is recognised). However, if the Group expects

that all or a portion of a loss recognised directly in equity

will not be recovered in one or more future periods, it shall

reclassify into profit or loss the amount that is not expected

to be recovered.

If the underlying transaction occurs and results in the

recognition of a non-financial asset or a non-financial liability,

or a forecasted transaction for a non-financial asset or

non-financial liability becomes a firm commitment for which

fair value hedge accounting is applied, the associated gains

or losses that were recognised directly in equity are included

in the initial cost or other carrying value of the asset or liability.

Hedge accounting is discontinued when the Group revokes the

hedging relationship, when the hedging instruments expires or

is sold, terminated, or exercised, or when it no longer qualifies

for hedge accounting. Any gain or loss recognised in other

comprehensive income and accumulated in equity at that time

remains in equity and is recognised when the forecast

transaction is ultimately recognised in profit or loss. When

a forecast transaction is no longer expected to occur, the gain

or loss accumulated in equity is recognised immediately in

profit or loss.

Loans to (from) Group companies These include loans to and from holding companies, fellow

subsidiaries, subsidiaries, joint ventures and associates are

recognised initially at fair value plus direct transaction costs.

Loans to Group companies are classified as loans and

receivables.

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Loans from Group companies are classified as financial

liabilities measured at amortised cost.

Bank overdrafts and borrowings Bank overdrafts and borrowings are initially measured at fair

value, and are subsequently measured at amortised cost,

using the effective interest rate method. Any difference

between the proceeds (net of transaction costs) and the

settlement or redemption of borrowings is recognised over

the term of the borrowings in accordance with the Group’s

accounting policy for borrowing costs.

1.10 Contracts-in-progress and contract receivables

Contracts-in-progress represents those costs recognised by the

stage of completion of the contract activity at the reporting date.

Anticipated losses to completion are expensed immediately

in profit or loss.

Advance payments received Advance payments received are assessed on initial recognition

to determine whether it is probable that it will be repaid in cash

or another financial asset. In this instance, the advance payment

is classified as a non-trading financial liability that is carried at

amortised cost. If it is probable that the advance payment will

be repaid with goods or services, the liability is carried at

historic cost.

1.11 Intangible assets other than goodwill

An intangible asset is an identifiable, non-monetary asset that

has no physical substance. An intangible asset is recognised

when it is identifiable; the Group has control over the asset;

it is probable that economic benefits will flow to the Group;

and the cost of the asset can be measured reliably.

Computer software Acquired computer software that is significant and unique

to the business is capitalised as an intangible asset on the

basis of the costs incurred to acquire and bring to use the

specific software.

Costs associated with maintaining computer software

programmes are capitalised as intangible assets only if it

qualifies for recognition. In all other cases these costs are

recognised as an expense as incurred.

Costs that are directly associated with the development and

production of identifiable and unique software products

controlled by the Group, and that will probably generate

economic benefits exceeding one year, are recognised as

intangible assets. Direct costs include the costs of software

development employees and an appropriate portion of relevant

overheads.

Computer software is amortised on a systematic basis over its

estimated useful life from the date it becomes available for use.

Research and development Research expenditure is recognised as an expense as incurred.

Costs incurred on development projects (relating to the design

and testing of new or improved products and technology) are

capitalised as intangible assets when it is probable that the

project will be a success, considering its commercial and

technological feasibility, and costs can be measured reliably.

The costs can be capitalised as an intangible asset from the

date that the above criteria is met.

Other development expenditure is recognised as an expense

as incurred. Development expenditure previously recognised

as an expense is not capitalised as an asset in a subsequent

period.

Development expenditure that has a finite useful life and that

has been capitalised is amortised from the commencement

of the commercial production of the product on a systematic

basis over the period of its expected benefit.

Other intangible assets Other intangible assets that are acquired by the Group are

stated at cost less accumulated amortisation and impairments.

Expenditure on internally generated goodwill and brands is

recognised in profit or loss as an expense when incurred and

is not capitalised.

Subsequent expenditure Subsequent costs incurred on intangible assets are included in

the carrying value only when it is probable that future economic

benefits associated with the item will flow to the Group and the

cost of the item can be measured reliably. All other expenditure

is expensed as incurred.

Amortisation Amortisation is charged to profit or loss on a systematic basis

over the estimated useful life of the intangible asset from the

date that they are available for use unless the useful lives are

indefinite. Intangible assets with indefinite lives are tested

annually for impairment. The estimated useful lives and residual

values are reviewed at the end of each reporting period and

the effect of any change in estimate will be applied

prospectively.

The average amortisation periods are set out in note 5.

Derecognition of intangible assets An intangible asset is derecognised on disposal, or when no

future economic benefits are expected from use or disposal.

Gains and losses arising from derecognition of an intangible

asset, measured as the difference between the net disposal

proceeds and the carrying amount of the asset, are

recognised in profit or loss when the asset is derecognised.

1.12 Property, plant and equipment

Property, plant and equipment are tangible assets that the

Group holds for its own use or for rental to others and which

the Group expects to use for more than one period. Property,

plant and equipment could be constructed by the Group or

purchased by the entities. The consumption of property, plant

and equipment is reflected through a depreciation charge

designed to reduce the asset to its residual value over its

useful life.

The useful lives of items of property, plant and equipment have

been assessed as follows:

The residual value, useful life and depreciation method of each

asset are reviewed at the end of each reporting period. If the

expectations differ from previous estimates, the change is

accounted for as a change in accounting estimate.

Each part of an item of property, plant and equipment with

a cost that is significant in relation to the total cost of the item

is depreciated separately.



The depreciation charge for each period is recognised in profit or

loss unless it is included in the carrying amount of another asset.

The gain or loss arising from the derecognition of an item of

property, plant and equipment is included in profit or loss when

the item is derecognised. The gain or loss arising from the

derecognition of an item of property, plant and equipment is

determined as the difference between the net disposal

proceeds, if any, and the carrying amount of the item.

Measurement All property, plant and equipment is stated at cost less

accumulated depreciation and accumulated impairment losses,

except for land, which is stated at cost less accumulated

impairment losses. Cost includes expenditure that is directly

attributable to the acquisition of the item and includes transfers

from equity of any gains or losses on qualifying cash flow

hedges of currency purchases of property, plant and

equipment.

Certain items of property, plant and equipment that had been

revalued to fair value on or prior to 1 July 2004, the date of

transition to IFRS, are measured on the basis of deemed cost,

being the revalued amount at that revaluation date.

Subsequent costs Subsequent costs are included in an asset’s carrying value only

when it is probable that future economic benefits associated

with the item will flow to the Group and the cost of the item

can be measured reliably. Day-to-day servicing costs are

recognised in profit or loss in the year incurred.

RevaluationsProperty, plant and equipment is not revalued.

Assets held under finance leases Assets held under finance leases are depreciated over their

expected useful lives on the same basis as owned assets or,

where shorter, the term of the relevant lease.

Components The amount initially recognised in respect of an item of

property, plant and equipment is allocated to its significant

components and where they have different useful lives, are

recorded and depreciated separately. The remainder of the

cost, being the parts of the item that are individually not

significant or have similar useful lives, are grouped together

and depreciated as one component.

Depreciation Depreciation is calculated on the straight-line or units of

production basis at rates considered appropriate to reduce

the carrying value of each component of an asset to its

residual value over its estimated useful life. The average

depreciation periods are set out in note 2.

Depreciation commences when the asset is in the location and

condition for its intended use by management and ceases

when the asset is derecognised or classified as held-for-sale.

The useful life and residual value of each component is

reviewed annually at year-end and, if expectations differ from

previous estimates, adjusted for prospectively as a change in

accounting estimate.

Impairment Where the carrying value of an asset is greater than its

estimated recoverable amount, an impairment loss is

recognised immediately in profit or loss to bring the carrying

value in line with its recoverable amount.

Dismantling and decommissioning costs The cost of an item of property, plant and equipment includes

the initial estimate of the costs of its dismantlement, removal,

or restoration of the site on which it was located.

1.13 Impairment of assets

At each reporting date the Group assesses whether there is an

indication that an asset may be impaired. If any such indication

exists, the asset is tested for impairment by estimating the

recoverable value of the related asset. Irrespective of whether

there is any indication of impairment, an intangible asset with

an indefinite useful life, intangible asset not yet available for use

and goodwill acquired in a business combination, are tested

for impairment on an annual basis.

When performing impairment testing, the recoverable amount

is determined for the individual asset for which an objective

indication of impairment exists. If the asset does not generate

cash flows from continuing use that are largely independent

from other assets or groups of assets, the recoverable amount

is determined for the cash-generating unit (“CGU”) to which the

asset belongs.

Recoverable amount is the higher of fair value less costs to sell

and value-in-use. In assessing value-in-use, the estimated future

cash flows are discounted to their present value using the pre-tax

discount rate that reflects current market assessments of the

time value of money and risks specific to the asset for which

the estimates of future cash flows have not been adjusted.

When an impairment loss subsequently reverses, the carrying

amount of the asset (or a cash-generating unit) is increased to

the revised estimate of its recoverable amount, but so that

increased carrying amount does not exceed the carrying amount

that would have been determined had no impairment loss been

recognised for the asset (or cash-generating unit) in prior years.

A reversal of an impairment loss is recognised immediately in

profit or loss, unless the relevant asset is carried at a revalued

amount, in which case the reversal of the impairment loss is

treated as a revaluation increase (see 1.12 above).

1.14 Investment properties

Investment properties are land, buildings or part thereof that

are either owned or leased by the Group under a finance lease

for the purpose of earning rentals or for capital appreciation, or

both, rather than for use in the production or supply of goods

or services, for administrative purposes, or sale in the ordinary

course of business. This classification is performed on a

property-by-property basis.

Initially, investment properties are measured at cost including

all transaction costs. Subsequent to initial recognition

investment properties are stated at fair value, with any

movements in fair value recognised in profit or loss.

Investment properties are derecognised when they have either

been disposed of or when the investment properties are

permanently withdrawn from use and no future economic

benefits are expected from their disposal.

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Any gain or loss on the derecognition of investment properties

is recognised in profit or loss in the year of derecognition.

1.15 Non-current assets held-for-sale

and discontinued operations

Non-current assets, disposal groups, or components of an

enterprise are classified as held-for-sale if their carrying

amounts will be recovered through a sale transaction rather

than through continuing use. This condition is regarded as

being met only when the sale is highly probable and the asset

(or disposal group) is available for immediate sale in its present

condition. Management must be committed to the sale, which

should be expected to qualify for recognition as a completed

sale within one year from the date of classification.

Non-current assets, disposal groups, or components of an

enterprise classified as held-for-sale are stated at the lower

of its previous carrying value and fair value less costs to sell.

An impairment loss, if any, is recognised in profit or loss for

any initial and subsequent write-down of the carrying value

to fair value less costs to sell. Any subsequent increase in fair

value less costs to sell is recognised in profit or loss to the

extent that it is not in excess of the previously recognised

cumulative impairment losses. The impairment loss recognised

first reduces the carrying value of the goodwill allocated to the

disposal group, and the remainder to the other assets of the

disposal group pro-rata on the basis of the carrying value of

each asset in the disposal group.

Assets such as inventory and financial instruments allocated

to a disposal group will not absorb any portion of the write-

down as they are assessed for impairment according

to the relevant accounting policy involved. Any subsequent

reversal of an impairment loss should be proportionately

allocated to the other assets of the disposal group on the basis

of the carrying value of each asset in the unit (group of units),

but not to goodwill.

Assets held-for-sale are not depreciated or amortised. Interest

and other expenses relating to the liabilities of a disposal group

continue to be recognised.

When the sale is expected to occur beyond one year, the costs

to sell are measured at their present value. Any increase in the

present value of the costs to sell that arises from the passage

of time is presented in profit or loss as an interest expense.

Non-current assets, disposal groups or components of an

enterprise that are classified as held-for-sale are presented

separately on the face of the statement of financial position.

The sum of the post-tax profit or loss of the discontinued

operation, and the post-tax gain or loss on the remeasurement

to fair value less costs to sell is presented as a single amount

on the face of the statement of financial performance.

1.16 Inventories

Inventories comprise raw materials, properties for resale,

consumable stores and in the case of manufacturing entities,

work-in-progress and finished goods. Consumable stores

include minor spare parts and servicing equipment that are

either expected to be used over a period less than 12 months

or for general servicing purposes. Consumable stores are

recognised in profit or loss as consumed.

Inventories are valued at the lower of cost or net

realisable value.

The cost of inventories is determined using the following

cost formulas:

raw materials — First In, First Out (“FIFO”) or Weighted

Average Cost basis.

finished goods and work-in-progress — cost of direct

materials and labour including a proportion of factory

overheads based on normal operating capacity.

For inventories with a different nature or use to the Group,

different cost formulas are used. The cost of inventories

includes transfers from equity of any gains or losses on

qualifying cash flow hedges of currency purchase costs,

where applicable.

In certain business operations the standard cost method

is used. The standard costs take into account normal levels

of materials and supplies, labour, efficiency and capacity

utilisation. These are regularly reviewed and, if necessary,

revised in the light of current conditions. All abnormal variances

are immediately expensed as overhead costs. All under

absorption of overhead costs are expensed as a normal

overhead cost, while over absorption is adjusted against the

inventory item or the cost of sales if already sold.

Net realisable value represents the estimated selling price in

the ordinary course of business less all estimated costs of

completion and costs incurred in marketing, selling and

distribution.

Property development Property developments are stated at the lower of cost or

realisable value. Cost is assigned by specific identification and

includes the cost of acquisition, development and borrowing

costs during development. When development is completed

borrowing costs and other charges are expensed as incurred.

1.17 Leases

Leases of property, plant and equipment where the Group

has substantially all the risks and rewards of ownership are

classified as finance leases. Finance leases are capitalised.

All other leases are classified as operating leases. The

classification is based on the substance and financial reality

of the whole transaction rather than the legal form. Greater

weight is therefore given to those features which have a

commercial effect in practice. Leases of land and buildings

are analysed separately to determine whether each component

is an operating or finance lease.

Finance leases At the commencement of the lease term, finance leases are

recognised as assets and liabilities in the statement of financial

position at an amount equal to the fair value of the leased

asset or, if lower, the present value of the minimum lease

payments. Any direct cost incurred in negotiating or arranging

a lease is added to the cost of the asset. The present value of

the cost of decommissioning, restoration or similar obligations

relating to the asset are also capitalised to the cost of the

asset on initial recognition. The discount rate used in calculating

the present value of minimum lease payments is the rate

implicit in the lease.

The Group as a lessee Capitalised leased assets are accounted for as property, plant

and equipment. They are depreciated using the straight-line

or unit of production basis at rates considered appropriate to



reduce the carrying values over the estimated useful lives to

the estimated residual values. Where it is not certain that an

asset will be taken over by the Group at the end of the lease,

the asset is depreciated over the shorter of the lease period

and the estimated useful life of the asset.

Finance lease payments are allocated between the lease

finance cost and the capital repayment using the effective

interest rate method. Lease finance costs are charged to

operating costs as they become due.

The Group as a lessor Amounts due from lessees under finance leases are recognised

as receivables at the amount of the Group’s net investment in the

leases. Finance lease income is allocated to accounting periods

so as to reflect a constant periodic rate of return on the

Group’s net investment outstanding in respect of the leases.

Operating leases Operating lease payments are recognised in profit or loss on a

straight-line basis over the lease term. In negotiating a new or

renewed operating lease, the lessor may provide incentives for

the Group to enter into the agreement, such as up-front cash

payments or an initial rent-free period. These benefits are

recognised as a reduction of the rental expense over the lease

term, on a straight-line basis.

1.18 Provisions and contingencies

Contingent assets and contingent liabilities are not recognised.

Contingencies are disclosed in note 38.

Provisions are recognised when the Group has a present legal

or constructive obligation as a result of past events, for which

it is probable that an outflow of economic benefits will be

required to settle the obligation and a reliable estimate can

be made of the amount of the obligation.

Provisions are measured at the directors’ best estimate of the

expenditure required to settle that obligation at the reporting

date, and are discounted to present value when the effect

is material.

Provisions are reflected separately on the face of the statement

of financial position and are separated into their long term

and short term portions. Contract provisions are, however,

deducted from contracts-in-progress.

Provisions for future expenses are not raised, unless supported

by an onerous contract, being a contract in which unavoidable

costs that will be incurred in meeting contract obligations are in

excess of the economic benefits expected to be received from

the contract.

Provisions for warranty costs are recognised at the date of sale

of the relevant products, at the directors’ best estimate of the

expenditure required to settle the Group’s obligation.

Contingent liabilities acquired in a business combination are

initially measured at fair value at the date of acquisition. At

subsequent reporting dates, such contingent liabilities are

measured at the higher of the amount that would be

recognised in accordance with IAS 37: Provisions, Contingent

Liabilities and Contingent Assets and the amount initially

recognised less cumulative amortisation recognised in

accordance with IAS 18: Revenue.

Restructuring A restructuring provision is recognised when the Group has

developed a detailed formal plan for the restructuring and has

raised a valid expectation in those affected that it will carry out

the restructuring by starting to implement the plan or

announcing its main features to those affected by it. The

measurement of a restructuring provision includes only the

direct expenditures arising from the restructuring, which are

those amounts that are both necessarily entailed by the

restructuring and not associated with the ongoing activities

of the entity.

Contingent liabilities A contingent liability is a possible obligation that arises from

past events and whose existence will be confirmed only by the

occurrence or non-occurrence of one or more uncertain future

events not wholly within the control of the Group, or a present

obligation that arises from past events but is not recognised

because it is not probable that an outflow of resources

embodying economic benefits will be required to settle the

obligation; or the amount of the obligation cannot be measured

with sufficient reliability.

If the likelihood of an outflow of resources is remote, the

possible obligation is neither a provision nor a contingent

liability and no disclosure is made.

Contingent assets A contingent asset is a possible asset that arises from past

events and whose existence will be confirmed only by the

occurrence or non-occurrence of one or more uncertain future

events not wholly within the control of the Group.

Such contingent assets are only recognised in the financial

statements where the realisation of income is virtually certain.

If the inflow of economic benefits is only probable, the

contingent asset is disclosed as a claim in favour of the

Group but not recognised in the statement of financial position.

1.19 Share-based payment transactions An expense is recognised where the Group receives goods or

services in exchange for shares or rights over shares (equity-

settled transactions) or in exchange for other assets equivalent

in value to a given number of shares or rights over shares

(cash-settled transactions).

Employees, including directors, of the Group receive

remuneration in the form of share-based payment transactions,

whereby employees render services in exchange for shares or

rights over shares (equity-settled transactions).

The cost of equity-settled transactions with employees is

measured by reference to the fair value at the date at which

they are granted. The fair value is determined independently

by an using the binomial lattice and Monte Carlo Simulation

models. In valuing equity-settled transactions, no account is

taken of any performance conditions, other than conditions

linked to the price of the shares of the Group (market

conditions). The expected life used in the model has been

adjusted, based on management’s best estimate, for the

effects of non-transferability, exercise restrictions and

behavioural considerations.

The cost of equity-settled transactions is recognised, together

with a corresponding increase in equity, on a straight-line basis

over the period in which the non-market performance conditions

are fulfilled, ending on the date on which the relevant employees

become fully entitled to the award (vesting date).

No expense is recognised for awards that do not ultimately

vest, except for awards where vesting is conditional upon a

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market condition, which are treated as vesting irrespective of

whether or not the market condition is satisfied, provided that

all other performance conditions are satisfied.

Where the terms of an equity-settled award are modified,

as a minimum, an expense is recognised as if the terms had

not been modified. In addition, an expense is recognised for

any increase in the value of the transaction as a result of the

modification, as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as

if it had vested on the date of cancellation, and any expense

not yet recognised for the award is recognised immediately.

However, if a new award is substituted for the cancelled

award, and designated as a replacement award on the date

that it is granted, the cancelled and new awards are treated as

if they were a modification of the original award.

The dilutive effect of outstanding options is reflected as

additional share dilution in the computation of diluted earnings

per share.

For cash-settled share-based payments, a liability equal to the

portion of the goods or services received is recognised at the

current fair value determined at each reporting date.

Where there are any vested share options which have not

been exercised by the employees and have expired, the

cumulative expense recognised in the share-based payment

reserve is reclassified to retained earnings.

1.20 Employee benefits

Defined contribution plans Under defined contribution plans the Group’s legal or

constructive obligation is limited to the amount that it agrees to

contribute to the fund. Consequently, the actuarial risk that

benefits will be less than expected and the investment risk that

assets invested will be insufficient to meet expected benefits, is

borne by the employee. Such plans include multi-employer or

state plans.

Employee and employer contributions to defined contribution

plans are recognised as an expense in the year in which

incurred.

Defined benefit plans Under defined plans, the Group has an obligation to provide

the agreed benefits to current and former employees. The

actuarial and investment risks are borne by the Group. A

multi-employer plan or state plan that is classified as a defined

benefit plan, but for which sufficient information is not available

to enable defined benefit accounting, is accounted for as a

defined contribution plan.

For defined benefit plans, the cost of providing benefits is

determined using the Projected Unit Credit Method, with

actuarial valuations being carried out at each reporting date.

Actuarial gains and losses that exceed 10% of the greater of

the present value of the Group’s defined benefit obligation and

the fair value of plan assets are amortised over the expected

average working lives of participating employees.

The current service cost in respect of defined benefit plans is

recognised as an expense in the year to which it relates.

Past-service costs, experience adjustments, effects of changes

in actuarial assumptions and plan amendments in respect of

existing employees are expensed over the remaining service

lives of these employees. Adjustments relating to retired

employees are expensed in the year in which they arise.

Deficits arising on these funds, if any, are recognised

immediately in respect of retired employees and over the

remaining service lives of current employees.

The defined benefit obligation in the statement of financial

position, if any, represents the present value of the defined

benefit obligation as adjusted for unrecognised actuarial gains

and losses and unrecognised past service costs, and are

reduced by the fair value of plan assets. Any asset resulting

from this calculation is limited to unrecognised actuarial losses

and past service costs, plus the present value of available

refunds and reductions in future contributions to the plan.

1.21 Government grants

Government grants are recognised at their fair value where

there is reasonable assurance that the grant will be received

and all attaching conditions will be complied with.

When the grant relates to an expense item, it is recognised as

income over the years necessary to match the grant on a

systematic basis to the costs that it is intended to compensate.

Where the grant relates to an asset, the fair value of the grant

is credited to the item of property, plant and equipment and is

released to profit or loss over the expected useful life of the

relevant asset by equal annual instalments.

Government grants that are receivable as compensation for

expenses or losses already incurred or for the purpose of

giving immediate financial support to the Group with no future

related costs are recognised in profit or loss in the period in

which they become receivable.

The benefit of a government loan at a below-market rate of

interest is treated as a government grant, measured as the

difference between proceeds received and the fair value of the

loan based on prevailing market interest rates.

1.22 Taxation

Income taxation expense represents the sum of current and

deferred taxation.

Current taxation assets and liabilities The current taxation liability is based on taxable profit for

the year. Taxable profit differs from profit as reported in the

statement of financial performance because it excludes items

of income or expense that are taxable or deductible in other

years and it further excludes items that are never taxable

or deductible. The Group’s liability for current taxation is

calculated using taxation rates that have been enacted

or substantively enacted by the reporting date.

Deferred taxation assets and liabilities A deferred taxation liability is recognised on differences

between the carrying amounts of assets and liabilities in the

financial statements and the corresponding tax bases used

in the computation of the taxable profits, and is accounted

for using the balance sheet liability method. Deferred taxation

liabilities are generally recognised for all taxable temporary

differences and deferred taxation assets are recognised to the

extent that it is probable that taxable profits will be available

against which deductible temporary differences can be utilised.



Such assets and liabilities are not recognised if the temporary

differences arise from goodwill or from the initial recognition,

other than in business combinations, of other assets and

liabilities in a transaction that affects neither the taxable profits

nor the accounting profits.

Deferred taxation liabilities are recognised for the taxable

temporary differences arising from investments in subsidiaries,

and interests in joint ventures, except where the Group is able

to control the reversal of the temporary differences and it is

probable that the temporary difference will not be reversed

in the foreseeable future. Deferred taxation assets arising

from deductible temporary differences associated with such

investments and interests are only recognised to the extent

that it is probable that there will be sufficient taxable profits

against which to utilise the benefits of the temporary differences

and they are expected to reverse in the foreseeable future.

The carrying amount of a deferred taxation asset is revised

at each reporting date and reduced to the extent that it is no

longer probable that sufficient taxable profits will be available

to allow the asset or part of the asset to be recovered.

Deferred taxation is calculated at the taxation rates that are

expected to apply in the period when the liability is settled

or the asset realised. Deferred taxation is charged or credited

to profit or loss, except when it relates to items charged or

credited directly to equity in which case the deferred taxation

is also charged or credited directly to equity.

Deferred taxation assets and liabilities are offset when there

is a legal enforceable right to offset current taxation assets

against liabilities and when the deferred taxation relates to the

same fiscal authority.

1.23 Related parties

Related parties are considered to be related if one party has

the ability to control or jointly control the other party or exercise

significant influence over the other party in making financial and

operating decisions. Key management personnel are also

regarded as related parties. Key management personnel are

those persons having authority and responsibility for planning,

directing and controlling the activities of the Group, directly or

indirectly, including all executive and non-executive directors.

Related party transactions are those where a transfer of

resources or obligations between related parties occur,

regardless of whether or not a price is charged.

1.24 Revenue

Revenue is the aggregate of turnover of subsidiaries and the

Group’s share of the turnover of joint ventures and is measured

at the fair value of the consideration received or receivable

and represents amounts receivable for goods and services

provided in the normal course of business, net of rebates,

discounts and sales related taxes.

Sale of goods Revenue from the sale of goods is recognised when all the

following conditions are satisfied:

The Group has transferred to the buyer the significant

risks and rewards of ownership of the goods

The Group retains neither continuing managerial

involvement to the degree usually associated with

ownership nor effective control over the goods sold

The amount of revenue can be measured reliably

It is probable that the economic benefits associated with

the transaction will flow to the entity

The costs incurred or to be incurred in respect of the

transaction can be measured reliably

Rendering of services Revenue from services is recognised over the period during

which the services are rendered.

Interest and dividend income Interest is recognised on a time proportion basis, taking

account of the principal outstanding and the effective rate over

the period to maturity.

Dividend income is recognised when the right to receive

payment is established.

Rental income Rental income from operating leases is recognised on a

straight-line basis over the term of the relevant lease. Initial

direct costs incurred in negotiating and arranging an operating

lease are added to the carrying amount of the leased asset

and recognised on a straight-line basis over the lease term.

Long term and construction contracts Where the outcome of a long term and construction contract

can be reliably measured, revenue and costs are recognised

by reference to the stage of completion of the contract at the

reporting date, as measured by the proportion that contract

costs incurred for work to date bear to the estimated total

contract costs. Variations in contract work, claims and

incentive payments are included to the extent that collection

is probable and the amounts can be reliably measured.

Anticipated losses to completion are immediately recognised

as an expense in contract costs.

Where the outcome of the long term and construction

contracts cannot be estimated reliably, contract revenue is

recognised to the extent that the recoverability of incurred

costs is probable.

Where contract costs incurred to date plus recognised profits

less recognised losses exceed progress billings, the surplus

is shown as amounts due from customers for contract work.

For contracts where progress billings exceed contract costs

incurred to date plus recognised profits less recognised losses,

the surplus is shown as the amounts due to customers for

contract work. Amounts received before the related work is

performed are included in the consolidated statement of

financial position, as a liability, as amounts received in excess

of work completed. Amounts billed for work performed but not

yet paid by the customer are included in the consolidated

statement of financial position under trade and other

receivables.

In limited circumstances, contracts may be materially impacted

by a client’s actions such that the Group is unable to complete

the contracted works at all or in the manner originally forecast.

This may involve dispute resolution procedures under the

relevant contract and/or litigation. In these circumstances the

assessment of the project outcome, while following the basic

principles becomes more judgemental.

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1.25 Dividends

Dividends are accounted for on the date of declaration and

are not accrued as a liability in the financial statements until

declared.

1.26 Segmental reporting

Operating segments are reported in a manner consistent

with the internal reporting provided to the chief operating

decision maker. The chief operating decision makers, who

are responsible for allocating resources and assessing

performance of the operating segments, have been identified

as the Executive Committee who makes strategic decisions.

The basis of segmental reporting is set out in Annexure 3.

Inter-segment transfers Segment revenue, segment expenses and segment results

include transfers between operating segments and between

geographical segments. Such transfers are accounted for

at arm’s-length prices. These transfers are eliminated on

consolidation.

Segmental revenue and expenses All segment revenue and expenses are directly attributable

to the segments.

Segmental assets All operating assets used by a segment principally include

property, plant and equipment, investments, inventories,

contracts-in-progress, and receivables, net of allowances.

Cash balances are excluded.

Segmental liabilities All operating liabilities of a segment principally include accounts

payable, subcontractor liabilities and external interest bearing

borrowings.

1.27 Black economic empowerment

IFRS 2: Share-Based Payment requires share-based payments

to be recognised as an expense in profit or loss. This expense

is measured at the fair value of the equity instruments issued at

grant date.

Letsema Vulindlela Black Executives Trust Once selected, black executives become vested beneficiaries

of the Letsema Vulindlela Black Executives Trust and are

granted Murray & Roberts shares. In terms of their vesting

rights, the fair value of these equity instruments, valued at the

various dates on which the grants take place, are recognised

as an expense over the related vesting periods.

Letsema Khanyisa Black Employee Benefits Trust and Letsema

Sizwe Community Trust

These trusts are established as 100-year trusts. However, after

the lock-in period ending 31 December 2015, they may, at the

discretion of the trustees be dissolved in which event any

surplus in these trusts, after the settlement of all the liabilities,

will be transferred to organisations which engage in similar

public benefit activities. An IFRS 2 expense will have to be

recognised at such point in time when this surplus is

distributed to an independent public benefit organisation.

1.28 Stated capital and equity

An equity instrument is any contract that evidences a residual

interest in the assets of an entity after deducting all of its liabilities.

1.29 Borrowing costs

Borrowing costs directly attributable to the acquisition,

construction or production of qualifying assets, which are

assets that necessarily take a substantial period of time to get

ready for their intended use or sale, are added to the cost of

those assets, until such time as the assets are substantially

ready for their intended use or sale.

Investment income earned on the temporary investment of

specific borrowings pending their expenditure on qualifying

assets is deducted from the borrowing costs eligible for

capitalisation.

All other borrowing costs are recognised in profit or loss

in the period in which they are incurred.



NOTES TO THE ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2012

2. PROPERTY, PLANT AND EQUIPMENT


2012 2011

Cost

Accumulateddepreciation

andimpairment

Carryingvalue Cost

Accumulateddepreciation

and impairment

Carryingvalue

Land and buildings 637,5 (109,2) 528,3 622,2 (83,3) 538,9

Plant and machinery 5 346,4 (2 513,3) 2 833,1 4 625,0 (2 041,6) 2 583,4

Other equipment 448,9 (210,7) 238,2 400,5 (197,7) 202,8

6 432,8 (2 833,2) 3 599,6 5 647,7 (2 322,6) 3 325,1

Reconciliation of property, plant and equipment

Land and

buildings

Plant and

machinery

Other

equipment Total

At 30 June 2010 711,7 3 165,9 355,8 4 233,4

Additions 22,0 731,3 79,1 832,4

Acquisition of businesses – 10,5 1,2 11,7

Disposals (1,9) (78,7) (2,4) (83,0)

Disposal of businesses (0,5) (2,4) – (2,9)

Transfer from investment property 3,0 – – 3,0

Transfer to other intangible assets – – (2,3) (2,3)

Transfer from contracts-in-progress – 148,4 – 148,4

Transfers to assets classified as held-for-sale (117,3) (746,5) (29,9) (893,7)

Foreign exchange movements (2,3) (12,2) (1,5) (16,0)

Transfers between categories (32,4) 175,0 (142,6) –

Depreciation (31,4) (544,5) (52,8) (628,7)

Impairment reversed – 22,4 – 22,4

Impairment loss (12,0) (285,8) (1,8) (299,6)

At 30 June 2011 538,9 2 583,4 202,8 3 325,1

Additions 35,0 816,0 107,7 958,7

Acquisition of business – 11,5 – 11,5

Disposals (23,5) (93,9) (2,6) (120,0)

Transfer to investment property (16,5) – – (16,5)

Foreign exchange movements 18,0 104,8 6,7 129,5

Transfers between categories 2,5 26,8 (29,3) –

Depreciation (29,8) (585,8) (48,9) (664,5)

Impairment reversed 4,3 0,6 1,8 6,7

Impairment loss (0,6) (30,3) – (30,9)

At 30 June 2012 528,3 2 833,1 238,2 3 599,6

Details in respect of land and buildings are set out in a register which may be inspected at the Group’s registered office.

The Group has pledged certain assets as security for certain interest bearing borrowings (note 17, Secured liabilities).

The following average depreciation periods are used for the depreciation of property, plant and equipment:

– Land

– Buildings

– Plant and machinery

– Other equipment

Not depreciated

20 to 40 years

3 to 30 years

3 to 10 years

on a straight-line basis



The impairment in plant and machinery relates primarily to the Construction Products Africa operating platform, where the recoverable

amount of the plant is lower than the carrying value as a result of depressed market conditions.

Impairment reversals were recorded where evidence was available that indicated the economic performance of the assets would be

better than previously expected.

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NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED

3. INVESTMENT PROPERTIES

Details in respect of the investment properties are set out in a register which may be inspected at the Group’s registered office.

The fair value of the investment properties at 30 June 2012 have been arrived at on the basis of a valuation carried out by

Murray & Roberts Properties Group, a related party, on an open market basis.

The property rental income earned by the Group from its investment properties, all of which are leased out under operating leases,

amounted to R6,0 million (2011: R82,1 million). Direct operating expenses arising on the investment properties in the year amounted

to R1,0 million (2011: R42,1 million).


At the beginning of the year 18,3 51,7

Additions 20,0 1,1

Acquisition of businesses – 21,6

Transfers to assets classified as held-for-sale (64,3) (47,7)

Transfer to property, plant and equipment – (3,0)

Transfer from property, plant and equipment 16,5 –

Fair value adjustments 31,7 (5,4)

22,2 18,3

4. GOODWILL


At beginning of the year 434,9 553,7

Additions through business combinations 1,9 41,9

Transfers to assets classified as held-for-sale – (43,9)

Foreign exchange movements 0,5 (6,8)

Impairment losses – (110,0)

437,3 434,9

Goodwill is allocated to the Group’s cash generating units identified according to the operating platforms

that are expected to benefit from that business combination. The carrying amount of goodwill has been

allocated to the following operating platforms:

Construction Africa and Middle East 51,6 51,6

Engineering Africa 52,2 52,2

Construction Global Underground Mining 37,1 34,7

Construction Australasia Oil & Gas and Minerals 296,4 296,4

437,3 434,9

Impairment testing

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

The recoverable amount of a cash generating unit is determined based on value-in-use calculations. These calculations use cash flow

projections based on financial budgets approved by management covering a three year period. Cash flows beyond the three year period

are extrapolated using an estimated growth rate of 2,0%. The growth rate does not exceed the long term average growth rate for the

relevant market.

In line with market practice, the Group applied a post-tax discount rate of 12,4% (pre-tax discount rate of 17,2%) to post tax cash flows

for impairment testing. These post-tax rates were applied as returns observable in the capital market on equity investments usually

include tax effects. The discount rate reflects the acquiree’s weighted average cost of capital adjusted for relevant risk factors. In

Construction Australasia Oil & Gas and Minerals the goodwill relates to the Group’s acquisition of Clough Limited, impairment testing is

performed using the fair value of Clough Limited’s shares at reporting date rather than a value-in-use calculation.


5. OTHER INTANGIBLE ASSETS


2012 2011

Cost

Accumulatedamortisation

andimpairment

Carryingvalue Cost

Accumulatedamortisation

and impairment

Carryingvalue

Patents, trademarks and other rights 4,2 (0,8) 3,4 4,2 (0,6) 3,6

Computer software 227,0 (188,9) 38,1 218,5 (182,9) 35,6

Mineral rights 19,9 (19,9) – 19,9 (19,9) –

Tolling rights 157,0 (8,6) 148,4 157,0 (0,7) 156,3

Other intangible assets 9,1 (7,9) 1,2 9,1 (7,6) 1,5

417,2 (226,1) 191,1 408,7 (211,7) 197,0

Reconciliation of other intangible assets

Patents,trademarks

and otherrights

Computersoftware

Mineralrights

Tollingrights

Otherintangible

assets Total

At 30 June 2010 3,8 47,2 10,9 – 9,6 71,5

Additions – 11,2 – – 0,3 11,5

Acquisition of businesses – – – 157,0 – 157,0

Scrappings – (2,5) – – – (2,5)

Transfers to assets classified as held-for-sale – (0,5) – – (5,2) (5,7)

Transfer from property, plant

and equipment – 2,3 – – – 2,3

Foreign exchange movements – 0,2 – – (0,7) (0,5)

Impairment loss – – (10,9) – – (10,9)

Amortisation (0,2) (22,3) – (0,7) (2,5) (25,7)

At 30 June 2011 3,6 35,6 – 156,3 1,5 197,0

Additions – 16,5 – – – 16,5

Scrappings – (0,7) – – – (0,7)

Foreign exchange movements – 2,6 – – 0,2 2,8

Amortisation (0,2) (15,9) – (7,9) (0,5) (24,5)

At 30 June 2012 3,4 38,1 – 148,4 1,2 191,1

The majority of intangible assets included above have finite useful lives, over which the assets are amortised. Average amortisation

periods are set out below. Intangible assets with indefinite lives are tested annually for impairment.

Tolling rights relate to an intangible asset recognised on the acquisition of the controlling interest obtained in PT Operational Services

Proprietary Limited in the 2011 financial year. The purpose of PT Operational Services Proprietary Limited is to provide toll operations,

maintenance and routine road maintenance services to Bakwena Platinum Corridor Concessionaire Proprietary Limited. The intangible

asset is amortised over the remaining life of the contract which runs until 31 December 2031.

The following amortisation periods are used for the amortisation of intangible assets:

– Patents, trademarks and other rights

– Computer software

– Tolling rights

– Other intangible assets

20 years

2 to 4 years

20,5 years

3 to 5 years or indefinite





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6. INVESTMENT ASSOCIATE COMPANIES


6.1 Investments in associate companies


Additions 132,8 90,2

Disposals (1,9) –

Deconsolidation of Peritus International (Proprietary) Limited – 5,4

Dividends received (45,6) (24,5)

Share of post-acquisition profit 144,7 70,2

Impairment loss – (7,9)

Foreign exchange movements 90,6 54,9

885,0 564,4

The carrying value of the investments may be analysed as follows:

Investments in associates at cost 717,6 496,1

Share of post-acquisition profit, net of dividends received 167,4 68,3

885,0 564,4

6.2 Valuation of shares

Construction Africa and Middle EastMurray & Roberts (Zimbabwe) Limited – 57,0

The 47% shareholding in Murray & Roberts (Zimbabwe) Limited was sold on 30 April 2012

for a consideration of R10,1 million.

The investment was fully impaired in prior years resulting in a profit on sale of R10,1 million.

Construction Australasia Oil & Gas and MineralsForge Group Limited 1 133,5 1 096,8

Forge Group Limited is listed on the Australian Stock Exchange. The valuation is determined based on

the quoted price per the exchange at each respective year-end. As at 30 June 2012 the carrying value

of the Group’s interest in Forge Group Limited is R854,9 million (2011: R527,0 million).

The Group acquired an additional 3% in Forge Group Limited for a consideration of R132,8 million

in the current year.

Other associatesDirectors’ valuation of unlisted associates 30,1 37,4

6.3 Summarised financial information in respect of the Group’s associates

Total assets 4 449,9 2 267,1

Total liabilities (2 937,6) (1 110,5)

Net assets 1 512,3 1 156,6

Revenue 7 271,5 5 248,8

Profit for the year 431,5 310,1

6.4 Details of associate companies

Name of associate

% of ownership and votes

Place ofincorporation 2012 2011 Main activity

Bombela Operating Company Proprietary Limited South Africa 23,9 23,9 Transport logistics

Bombela TKC Proprietary Limited South Africa 25,0 25,0 Construction

Forge Group Limited Australia 35,9 33,3 Construction

Murray & Roberts (Zimbabwe) Limited Zimbabwe – 47,0 Construction

Northmid Corporate Park Proprietary Limited South Africa 25,0 50,0 Property rental

Peritus International (Proprietary) Limited* Australia – 54,3 Subsea engineering

* Disposed of in December 2011 as part of the disposal of the Clough Marine business.


7. OTHER INVESTMENTS


7.1 Financial assets designated as fair value through profit or loss

Investments in infrastructure services concessionsAt beginning of the year 441,8 211,1

Additions – 66,6

Repayment of loans (165,0) –

Fair value adjustment recognised in the statement of financial performance 179,9 164,1

456,7 441,8

Directors’ valuation R456,7 million (2011: R441,8 million).

The financial assets designated as fair value through profit and loss comprise of the Group’s interest in

the following infrastructure service concession:

%interest

Remaining concession

period 2012 2011

Bombela Concession Company Proprietary Limited* 33 14 Years 456,7 441,8

* The fair value of the Bombela Concession Company is calculated using discounted cash flow models and a market discount rate of 19,5%. The discount rate was reduced by 1% in the current year due to more certainty regarding future cash flows. The discounted cash flow models are based on forecast patronage, operating costs, inflation and other economical fundamentals, taking into consideration the operating conditions experienced in the current financial year. An increase of 1% in the discount rate would result in a decrease in the value of the concession investment of R31,0 million.

7.2 Available-for-sale financial assets

Unlisted investmentsAt beginning of the year 2,7 4,5

Fair value loss through other comprehensive income (0,5) –

Additions, disposals and other movements 0,3 (1,8)

2,5 2,7

7.3 Loans and receivables measured at amortised cost

Unsecured loans and receivablesAt beginning of the year 0,5 0,6

Additional loans raised 7,1 22,9

Disposal and repayments (7,0) (20,2)

Foreign exchange movements – (2,8)

0,6 0,5

Total other investments 459,8 445,0

8. INVENTORIES


Raw materials 390,3 522,1

Work-in-progress 77,7 41,9

Finished goods and manufactured components 185,1 135,4

Consumable stores 77,4 107,2

Property development – 10,6

730,5 817,2

Inventories are valued at the lower of cost or net realisable value.

The cost of inventories recognised as an expense includes R37,4 million (2011: R55,0 million) in respect of write-downs of inventory

to net realisable value, and has been reduced by R23,9 million (2011: R21,9 million) in respect of the reversal of such write downs.

The amount of inventory carried at net realisable value amounts to R20,2 million (2011: R21,5 million).

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9. CONTRACTS-IN-PROGRESS AND CONTRACT RECEIVABLES


Contracts-in-progress (Cost incurred plus recognised profits, less recognised losses) 2 848,6 556,6

Uncertified claims and variations less payments received on account

(recognised in terms of IAS 11: Construction Contracts) 1 951,0 1 968,0

Uncertified claims and variations 2 001,0 2 302,0

Less payments received on account (50,0) (334,0)

Amounts receivable on contracts (net of impairment provisions) 3 642,0 2 339,9

Retentions receivable (net of impairment provisions) 424,0 425,5

8 865,6 5 290,0

Amounts received in excess of work completed (3 018,9) (2 244,4)

5 846,7 3 045,6

Disclosed as:

Amounts due from contract customers – non-current* 2 059,7 –

Amounts due from contract customers – current 6 805,9 5 290,0

Amounts due to contract customers (3 018,9) (2 244,4)

5 846,7 3 045,6

* During the year under review, circumstances have changed and developed which resulted in a portion of the amounts due from contract customers being expected to be received only after 12 months from the current year under review. Therefore, these amounts have been classified as non-current on the statement of financial position. Management considers the amounts to be fully recoverable.

10. TRADE AND OTHER RECEIVABLES

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS Note 2012 2011

10.1 Trade and other receivables

Trade receivables 1 036,7 1 115,4

Provision for doubtful debts (75,6) (75,9)

Operating lease receivables recognised on a straight-line basis 2,1 1,6

Amounts owing by joint venture partners 344,3 239,0

Prepayments 183,5 236,7

Finance lease receivable 10.2 26,7 55,1

Sundry loans 82,4 54,6

Deposits 52,1 37,4

Value Added Taxation receivable 74,0 –

Other receivables – sale of assets* 128,0 –

Other receivables 272,9 172,7

2 127,1 1 836,6

* The sale of assets was not in the ordinary course of business and therefore not classified as trade receivables.

Details in respect of the Group’s credit risk management policies are set out in note 41.

The directors consider that the carrying amount of the trade and other receivables approximate their fair value.


10. TRADE AND OTHER RECEIVABLES (continued)


10.2 Finance lease receivables

Current finance lease receivables 26,7 55,1

Non-current finance lease receivables** 3,0 29,8

29,7 84,9

** The non-current finance lease receivable is classified as part of non-current receivables on the face of the statement of financial position.

10.2.1 Leasing arrangements

The Group has entered into lease arrangements for certain of its plant. All leases are denominated in

South African Rand. The average term of the finance leases is 3 years.

10.2.2 Minimum lease payments receivable

Within 1 year 28,3 62,0

Within the 2nd year 3,0 28,3

Within 3 to 5 years – 3,1

31,3 93,4

Less: Unearned finance income (1,6) (8,5)

Present value of finance lease receivable 29,7 84,9

The present value of finance lease receivables can be analysed as follows:




29,7 84,9

There is no unguaranteed residual of assets leased at the end of the reporting period. The lease payments are considered by

management to be recoverable and as a result no allowance has been made for uncollectable lease payments. The finance lease

receivables at the end of the reporting period are neither past due nor impaired.

The interest rate inherent in the leases is linked to the prime rate for the duration of the lease term.

The average effective interest rate contracted is approximately 6,5% (2011: 6,5%) per annum.

11. NET CASH AND CASH EQUIVALENTS


Net cash and cash equivalents included in the statement of cash flows comprise the following amounts:

Bank balances 2 102,5 2 336,5

Restricted cash 1 285,9 764,1

Cash and cash equivalents 3 388,4 3 100,6

Bank overdrafts (38,5) (46,8)

3 349,9 3 053,8

Restricted cash

Cash and cash equivalents at the end of the year include bank balances and cash that are restricted

from immediate use due to being:

Held in joint ventures 1 182,0 724,1

Held in trust accounts for sublease tenants 0,5 5,6

Other agreements with banks and other financial institutions 103,4 34,4

1 285,9 764,1

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12. STATED CAPITAL (2011: SHARE CAPITAL AND SHARE PREMIUM)


12.1 Share capital

Authorised

500 000 000 ordinary shares with a par value of 10 cents each – 50,0

Issued and fully paid

331 892 619 ordinary shares at par value of 10 cents each – 33,2

Less: Treasury shares held by The Murray & Roberts Trust at par value – (0,6)

Less: Treasury shares held by the Letsema BBBEE trusts and companies at par value – (2,9)

Less: Treasury shares held by Murray & Roberts Limited at par value – (0,1)

Net share capital – 29,6

Unissued

At 30 June 2011 the number of unissued shares was 168 107 381.

12.2 Share premium

Share premium – 1 639,6

Less: Treasury shares held by The Murray & Roberts Trust at net cost – (468,3)

Less: Treasury shares held by the Letsema BBBEE trusts and companies at net cost – (428,3)

Less: Treasury shares held by Murray & Roberts Limited at net cost – (15,7)

Net share premium – 727,3

Total share capital and share premium – 756,9

12.3 Stated capital

Authorised

750 000 000 no par value shares 75,0 –


444 736 118 no par value shares 3 582,8 –

Less: Treasury shares held by The Murray & Roberts Trust at no par value (432,9) –

Less: Treasury shares held by the Letsema BBBEE trusts and companies at no par value (426,2) –

Less: Treasury shares held by Murray & Roberts Limited at no par value (13,6) –

Net stated capital 2 710,1 –

Unissued

At 30 June 2012 the number of unissued shares was 305 263 882.

Changes in authorised and issued share capital

During the year under review a special resolution was passed by shareholders of Murray & Roberts

Holdings Limited to convert the Company’s entire authorised and issued share capital from par value

shares to no par value shares.

A rights issue was undertaken in the current financial year, where shares were issued at an issue price

of R18,00 per share in the ratio of 34 rights offer shares for every 100 Murray & Roberts shares held at

close of business on 23 March 2012. The rights issue generated gross proceeds of R2 031,2 million,

with transaction costs of R121,2 million offset against stated capital.

12.4 Treasury shares

Market value of treasury shares:

The Murray & Roberts Trust 132,9 185,7

The Letsema BBBEE trust and companies 788,3 865,5

Murray & Roberts Limited 16,7 20,3


12. STATED CAPITAL (2011: SHARE CAPITAL AND SHARE PREMIUM) (continued)


Reconciliation of issued sharesNumber

of sharesNumber

of shares

12.4 Treasury shares (continued)

Issued and fully paid 444 736 118 331 892 619

Less: Treasury shares held by The Murray & Roberts Trust (5 378 382) (6 189 282)

Less: Treasury shares held by the Letsema BBBEE trusts and companies (31 902 251) (28 849 727)

Less: Treasury shares held by Murray & Roberts Limited (676 644) (675 644)

Net shares issued to public 406 778 841 296 177 966

13. SHARE INCENTIVE SCHEMES

During the year under review Murray & Roberts Holdings Limited had a rights issue, with the result of the share schemes being allocated

additional shares. This resulted in a modification charge that had to be recorded to account for the additional shares allocated where

there was a benefit for the employees.

As a result of the rights issue, the incremental fair value of the options granted amounted to R5,1 million for The Murray & Roberts Trust.

The valuations for the schemes were performed by invoking a risk-neutral binomial lattice from grant date until maturity with the valuation

of the modification charge of R5,1 million being calculated as the difference between the value of the options pre- and post-rights issue.

There was no incremental fair value in the options granted for the Letsema Vulindlela Black Executives Trust as a result of the rights issue

and thus no modification charge was recorded. The valuations for the schemes was performed by invoking a Monte Carlo simulation-

based option pricing model from grant date until maturity.

13.1 Equity-settled share incentive scheme – The Murray & Roberts Trust

The Murray & Roberts Holdings Limited Employee Share Incentive Scheme (“Scheme”) was approved by shareholders in October 1987

to operate through the means of The Murray & Roberts Trust (“Trust”). Subsequent amendments to the Scheme and Trust were

approved by shareholders in October 2009. Further amendments to the Scheme and Trust have been proposed and will be presented

to shareholders for approval at the Annual General Meeting on 31 October 2012.

At 30 June 2012, the Trust held 5 378 382 (2011: 6 189 282) shares against the commitment of options granted by the Trust totalling

16 502 112 (2011: 11 173 125) shares. In order to settle the shortfall and subject to shareholders’ approval, the Company can issue new

shares within the maximum of 10% of the Company’s total issued shares, being 44 473 612 (2011: 33 189 262) ordinary shares.

0,92% of the outstanding options at 30 June 2012 were available for exercise.

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13. SHARE INCENTIVE SCHEMES (continued)

13.1 Equity-settled share incentive scheme – The Murray & Roberts Trust (continued)

The details of the movement in the outstanding options granted by the Trust during the year ended 30 June 2012 were as follows:

Schemes implemented

Outstandingoptions

at30 June

2011

Grantedduring

theyear

Surrenderedduring

the year

Exercisedduring

theyear

Adjust-ment asresult of

rightsissue

Outstanding

options

at

30 June

2012

Optionprice

pershare(cents)

Adjustedoption

priceper

share(cents)

Weightedaverage

shareprice

onexercise

(cents)

13 March 2002 Standard 22 500 – – (30 150) 7 650 – 693 974 2 702

13 March 2002 Hurdle 22 500 – – (30 150) 7 650 – 693 974 2 702

06 March 2003 Standard 38 750 – – (20 000) 6 375 25 125 1 100 1 278 2 604

06 March 2003 Hurdle 35 000 – – – 11 900 46 900 1 100 1 278 –

15 March 2004 Standard 32 500 – – – 11 050 43 550 1 304 1 430 –

15 March 2004 Hurdle 27 500 – – – 9 350 36 850 1 304 1 430 –

28 June 2005* Standard 97 500 – (3 750) (93 750) – – 1 400 1 400 2 202

28 June 2005* Hurdle 72 500 – (5 000) (67 500) – – 1 400 1 400 2 702

03 March 2006 Standard 443 125 – (25 625) (494 000) 76 500 – 2 353 2 213 2 776

03 March 2006 Hurdle 125 000 – (11 475) (75 350) 36 899 75 074 2 353 2 213 2 684

06 March 2007 Hurdle 986 500 – (188 800) – 303 110 1 100 810 5 060 4 233 –

06 March 2007 Special 4 440 000 – (782 442) – 1 243 570 4 901 128 5 060 4 233 –

30 August 2007 Standard 10 000 – – – 3 400 13 400 7 200 5 830 –

02 November 2007 Standard 10 000 – – – 3 400 13 400 9 352 7 436 –

26 February 2008 Standard 1 012 500 – (107 650) – 329 290 1 234 140 9 201 7 323 –

01 July 2008 Standard 35 500 – – – 12 070 47 570 8 651 6 913 –

26 August 2008 Standard 33 750 – (825) – 11 195 44 120 9 372 7 451 –

26 August 2009 Hurdle 1 850 000 – (294 850) – 546 975 2 102 125 4 774 4 019 –

08 December 2009 Hurdle 140 000 – – – 47 600 187 600 4 542 3 846 –

20 April 2011 Hurdle 1 738 000 – (264 400) – 551 140 2 024 740 2 516 2 334 –

30 August 2011 Performance – 3 256 000 (268 000) – 1 107 040 4 095 040 2 770 2 524 –

30 August 2011 Retention – 381 000 – – 129 540 510 540 2 770 2 524 –

11 173 125 3 637 000 (1 952 817) (810 900) 4 455 704 16 502 112

Notes:1. For the 2002 and later schemes, the options vest at 25% per annum in each of the second to fifth anniversaries of the grant.2. For the 2004 and prior schemes, termination occurs on the tenth anniversary of the grant and any unexercised options expire at that date.3. For the 2005 and later schemes, termination occurs on the sixth anniversary of the grant and any unexercised options expire at that date.4. For the 2002 and 2003 schemes the hurdle rate is 25% per annum compound growth on option price.5. For the 2004 to April 2011 schemes the hurdle rate is CPI + 4% per annum compound growth on option price.6. The 2007 special scheme is time-related with the first tranche exercisable in 2011 and the expiry date being extended from 2015 to 2017.7. For the August 2011 Performance scheme, the hurdle rate is the growth in the budgeted 2012 fully diluted HEPS for continuing operations of annual

CPI + 5% cumulatively over the three year period to 30 June 2014. If the threshold performance of 85% of the target performance is not met, all the share options will be forfeited. The scheme options shall vest, subject to the performance conditions, on 30 August 2014 and all unexercised options expire on the sixth anniversary of the option date.

8. For the August 2011 Retention scheme, all share options will vest on the third anniversary subject to continued employment and all unexercised options expire on the sixth anniversary of the option date.

9. The Group has no legal or constructive obligation to repurchase or settle the options in cash.10. Options are forfeited if the employees leave the Group before the options vest.

* In the event that the sixth anniversary of the option date falls within a period which is designated by Murray & Roberts Holdings Limited (“Company”) to be a period during which

directors of the Company may not deal in shares of the Company (“closed period”), then the option period in respect of those participants who are precluded from dealing shall

be extended. Such extension shall be for the same number of business days after the end of the closed period as the number of business days between the beginning of the

closed period and the sixth anniversary of the option date.



13.1 Equity-settled share incentive scheme – The Murray & Roberts Trust (continued)

The estimated fair values of options granted were determined using the following valuation methodologies:

Standard scheme Binomial lattice model

Hurdle scheme Hybrid of binomial lattice and Monte Carlo models

Special scheme Binomial lattice model

Performance scheme Binomial lattice model

Retention scheme Binomial lattice model

The inputs into the models were as follows:

Schemes implemented

Optionprice per

share(cents)

Adjustedoption

price pershare(cents)

Expectedvolatility

Expectedexpiry

dateRisk free

rate

Expecteddividend

yield

Estimatedfair value

of optionsgranted

per option(cents)

06 March 2003 Standard 1 100 1 278 41,9% 06 March 2013 9,7% 3,0% 508

06 March 2003 Hurdle 1 100 1 278 41,9% 06 March 2013 9,7% 3,0% 254

15 March 2004 Standard 1 304 1 430 35,8% 15 March 2014 9,5% 4,0% 523



06 March 2007 Hurdle 5 060 4 233 31,0% 06 March 2017 8,2% 2,0% 1 629

06 March 2007 Special 5 060 4 233 31,0% 06 March 2017 8,2% 2,0% 1 838

30 August 2007 Standard 7 200 5 830 29,0% 30 August 2013 9,5% 1,0% 2 586

02 November 2007 Standard 9 352 7 436 29,5% 02 November 2013 8,9% 1,0% 3 278

26 February 2008 Standard 9 201 7 323 30,8% 26 February 2014 9,6% 1,0% 3 484

01 July 2008 Standard 8 651 6 913 31,3% 01 July 2014 11,6% 1,0% 2 829

26 August 2008 Standard 9 372 7 451 32,4% 26 August 2014 9,7% 5,0% 2 824

26 August 2009 Hurdle 4 774 4 019 38,3% 26 August 2015 8,4% 5,0% 1 499

08 December 2009 Hurdle 4 542 3 846 39,2% 08 December 2015 8,7% 5,0% 1 525

20 April 2011 Hurdle 2 516 2 334 40,3% 20 April 2017 7,9% 4,9% 801

30 August 2011 Performance 2 770 2 524 40,5% 30 August 2017 5,8% 4,9% 851

30 August 2011 Retention 2 770 2 524 40,5% 30 August 2017 5,8% 4,9% 851

Expected volatility was determined using either the exponentially weighted or equally weighted moving average models (where

appropriate) to calculate the historical volatility of the share price over the option lifetime.

The expected life used in the models has been adjusted, based on management’s best estimate, for the effects of sub-optimal exercise

behaviour of employees including exercise restrictions and closed periods.

The Group recognised total expenses of R20,5 million (2011: R15,7 million) relating to these share options during the year.

13.2 Equity-settled share incentive scheme – Letsema Vulindlela Black Executives Trust

The Letsema Share Incentive Scheme was approved by shareholders on 21 November 2005 as part of the Group’s Broad-based Black

Economic Empowerment transaction. This transaction operates through various broad-based entities of which the Letsema Vulindlela

Black Executives Trust (“Vulindlela Trust”) is one. The purpose of the Vulindlela Trust is to facilitate ownership in the Company’s ordinary

stated capital by black executives. At 30 June 2012, the Vulindlela Trust held 10 830 578 (2011: 9 865 703) shares against the

commitment of options granted by the Vulindlela Trust totaling 3 269 599 (2011: 2 463 713) shares.

The purchase of these shares was funded by an interest-free loan from the respective Group employer companies. All dividends paid to

the Trust will be offset against the outstanding balance of the loan. After the expiry of the five year lock in period but before 31 December

2021 provided that the prevailing market value exceeds the adjusted amount due in respect of those shares, the black executives may

elect to take delivery of the full benefit of the shares in accordance with their vesting rights. In the event of such election, the black

executives will be required to make a contribution to the Trust in order to settle the outstanding loan amount. Should the value of the

shares be less than the outstanding loan amount, the Trust must return the shares to the company and the loan will be cancelled.

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13.2 Equity-settled share incentive scheme – Letsema Vulindlela Black Executives Trust (continued)

The details of the movement in the outstanding options granted by the Vulindlela Trust during the year ended 30 June 2012 were as follows:

Schemes implemented

Outstandingoptions

at30 June

2011

Grantedduring

theyear

Surrenderedduring

the year

Exercisedduring

theyear

Adjust-ment asresult of

rightsissue

Out-

standing

options

at

30 June

2012

Optionprice

pershare(cents)

Weightedaverage

shareprice

onexercise

(cents)

02 March 2006 Standard 249 235 – (3 500) (15 527) 20 556 250 764 2 353 2 668

27 June 2006 Standard 8 167 – – (3 500) 814 5 481 2 431 2 611

28 August 2006 Standard 44 167 – – – 2 582 46 749 3 002 –

06 March 2007 Standard 417 744 – (12 834) – 31 072 435 982 5 200 –

25 June 2007 Standard 60 100 – (3 119) – 4 511 61 492 6 619 –

26 February 2008 Standard 109 500 – (16 056) – 6 067 99 511 9 201 –

28 August 2008 Standard 50 700 – (8 735) – 3 202 45 167 9 508 –

25 August 2009 Standard 630 200 – (150 927) – 39 260 518 533 4 774 –

24 August 2010 Standard 732 400 – (148 494) – 47 422 631 328 4 102 –

22 February 2011 Standard 6 500 – (6 500) – – – 2 820 –

20 April 2011 Hurdle 155 000 – (40 558) – 4 062 118 504 2 516 –

30 August 2011 Standard – 1 124 000 (143 843) – 75 931 1 056 088 2 770 –

2 463 713 1 124 000 (534 566) (19 027) 235 479 3 269 599

Notes:1. The options can only be exercised after 5 years from date of allocation.2. Options are forfeited if the employee leaves the Group before the options vest.3. For the 20 April 2011 scheme, the hurdle rate is CPI + 4% per annum compound growth on option price.

The estimated fair values of options granted were determined using the following valuation methodologies:

Standard scheme Monte Carlo

Hurdle scheme Binomial lattice model

Schemes implemented

Optionprice per

share(cents)

Expectedvolatility

Expectedexpiry

dateRisk free

rate

Expecteddividend

yield

Estimatedfair value

of optionsgranted

per option(cents)

02 March 2006 2 353 35,8% 31 December 2016 7,2% 2,7% 1 253

27 June 2006 2 431 35,8% 31 December 2016 8,7% 2,3% 1 395

28 August 2006 3 002 29,0% 31 December 2015 8,9% 2,0% 1 621

06 March 2007 5 200 29,0% 31 December 2015 8,0% 2,0% 2 590

25 June 2007 6 619 29,0% 31 December 2015 8,9% 2,0% 3 588

26 February 2008 9 201 31,2% 31 December 2015 9,6% 2,5% 4 209

28 August 2008 9 508 32,7% 31 December 2015 9,6% 5,0% 4 772

25 August 2009 4 774 40,3% 31 December 2016 8,2% 5,0% 2 133

24 August 2010 4 102 41,9% 31 December 2016 7,1% 4,9% 1 798

22 February 2011 2 820 42,4% 31 December 2016 7,9% 4,9% 1 248

20 April 2011 2 516 42,4% 31 December 2016 7,9% 4,9% 818

30 August 2011 2 770 41,8% 30 August 2017 5,8% 4,9% 1 163

Expected volatility was determined using either the exponentially weighted or equally weighted moving average models (where appropriate)

to calculate the historical volatility of the share price over the option lifetime.

The expected life used in the models has been adjusted, based on management’s best estimate, for the effects of sub-optimal exercise

behaviour of employees including exercise restrictions and closed periods.

The Group recognised total expenses of R7,1 million (2011: R10,0 million) relating to these share options during the year.


14. HEDGING AND TRANSLATION RESERVES


Hedging reserve

At beginning of the year (17,2) (1,7)

Reclassification – 1,5

Effects of cash flow hedges 20,3 (38,7)

Taxation related to effects of cash flow hedges (4,7) 11,7

Transfer to non-controlling interests (6,0) 10,0

(7,6) (17,2)

Foreign currency translation reserve


Reclassification – (5,6)

Foreign exchange movements 428,7 (35,2)

433,6 4,9

426,0 (12,3)

The hedging reserve represents the effective portion of fair value gains or losses of derivative financial instruments that have been

designated as cash flow hedges.

The foreign currency translation reserve is the result of exchange differences arising from the translation of the Group’s foreign subsidiary

companies to Rands, being the functional and reporting currency of the holding company.

15. OTHER CAPITAL RESERVES


Capital redemption reserve fund


Recycled to the statement of financial performance – (0,6)

1,1 1,1

Statutory reserve



31,3 31,3

Other non-distributable reserve

At beginning of the year (37,8) (35,4)


Recycled to the statement of financial performance – (2,8)

Fair value loss on available-for-sale financial assets (0,5) –

Transfer from retained earnings 0,3 –

(38,0) (37,8)

Share-based payment reserve


Reclassification – (4,5)

Disposal of business (1,0) –

Recognition of share-based payments 33,4 32,5

Transfer to retained earnings (31,9) –

Transfer to non-controlling interests (2,2) (2,7)

205,3 207,0

199,7 201,6

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15. OTHER CAPITAL RESERVES (continued)

The capital redemption reserve fund represents retained earnings transferred to a non-distributable reserve on the redemption

of previously issued redeemable preference shares of Group companies.

The statutory reserve represents retained earnings of foreign subsidiary companies that are not available for distribution to shareholders

in accordance with local laws.

The other non-distributable reserve represents the option that Clough Limited has to acquire the remaining non-controlling interest

in Ocean Flow International LLC.

The share-based payment reserve represents the total cost recognised for the Group’s equity-settled share-based payments.

The transfer to retained earnings in the current financial year reflects the value of the share-based payments reserve that was

recognised in prior years relating to share options that have vested but were not exercised.

16. NON-CONTROLLING INTERESTS

The non-controlling interests comprises


16.1 Non-controlling interests in reserves

At beginning of the year 1 002,2 903,1

Share of attributable profit 143,6 86,8

Dividends declared and paid (75,0) (87,3)

Acquisition of controlling interest in associate – (33,2)

Acquisition of controlling interest in joint venture – 37,7

Acquisition of non-controlling interest 10,8 50,1

Acquisition of remaining interest in subsidiary (38,6) –

Issue of shares to non-controlling interests 22,5 –

Transfers from reserves 8,2 2,7

Disposal of businesses (90,3) –

Foreign exchange and other movements 175,5 42,3

1 158,9 1 002,2

The remaining portion of the Group’s subsidiary PT Operational Services Proprietary Limited

was acquired in April 2012 of the year under review for a consideration of R48,0 million.

16.2 Equity loans from non-controlling interests


Additional loans raised – 64,6

Loan repayments (20,9) (28,4)

Acquisition of non-controlling interests – 4,3

Disposal of businesses (34,2) –

Foreign exchange and other movements 12,8 (13,3)

55,8 98,1

The loans from the non-controlling interests of subsidiary companies are unsecured, have no fixed

repayment terms and do not bear any interest. The loan repayments made by the non-controlling

interests were voluntary.

Balance at year-end 1 214,7 1 100,3


17. SECURED LIABILITIES


Liabilities of the Group are secured as follows:

Loans secured over plant and machinery with a book value of R783,6 million

(2011: R806,3 million). Loans secured over shares with a book value of R1 583,2 million

(2011: Rnil) and a market value of R3 016,0 million (2011: Rnil). 1 961,7 670,1

Reflected in the statement of financial position under:

Long term loans 18 117,1 100,6

Long term capitalised finance leases 18 376,5 322,8

Short term loans 18 1 468,1 246,7

1 961,7 670,1

18. LONG TERM LOANS


18.1 Interest bearing secured loans

Payable

Within 1 year 1 212,3 50,2


Within 3 to 5 years 68,4 94,8

1 329,4 150,8

Less: Current portion 24 (1 212,3) (50,2)

117,1 100,6

18.2 Interest bearing unsecured loans

Payable


Within the 2nd year – 300,0


184,4 1 625,0

Less: Current portion 24 (184,4) (825,0)

– 800,0

18.3 Non-interest bearing unsecured loans

Payable


Within the 2nd year – 1,8

Within 3 to 5 years 0,2 –

243,4 9,6


0,2 1,8

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18. LONG TERM LOANS (continued)


18.4 Capitalised finance leases

Minimum lease payments




Payable after 5th year 0,1 –

685,6 563,7

Less: Future finance charges (53,3) (44,4)

Present value of lease obligations 632,3 519,3

The present value of lease obligations can be analysed as follows:




Payable after 5th year 0,1 –

632,3 519,3


376,5 322,8

Total long term loans 493,8 1 225,2

The Group restructured its South African term debt and bank facilities. The facilities range from on-demand to four-year facilities,

achieving the objective of extending the average tenure of the Group’s debt structure. The facilities are supported by cross guarantees

from Group companies and have been secured by the pledging of Clough Limited shares.

Details of repayment terms of loans and the related interest rates are set out in Annexure 2. The assets encumbered to secure the loans

are detailed in note 17. Details of the Group’s interest rate risk management policies are set out in note 41.

19. RETIREMENT AND OTHER BENEFIT PLANS

The retirement funds operated by the Group in the Republic of South Africa are registered as provident or pension funds and are

accordingly governed by the Pension Funds Act No. 24 of 1956 (as amended).

19.1 Defined contribution plan – pension fund

In South Africa, the Group operates the following privately administered defined contribution pension plan for salaried employees:

Murray & Roberts Retirement Fund

The assets of the fund are independently controlled by a board of trustees which includes representatives elected by the members.

The fund was actuarially valued on 31 December 2011 and declared to be in a sound financial position.

The total cost to the Group in respect of the above fund for the year ended 30 June 2012 was R115,0 million (2011: R113,0 million).

19.2 Defined contribution plan – provident fund

In South Africa, the Group operates the following privately administered defined contribution provident plan for salaried employees:

Murray & Roberts Provident Fund

The assets of the fund are independently controlled by a board of trustees which includes representatives elected by the members.

The fund was actuarially valued on 28 February 2012 and declared to be in a sound financial position.

The total cost to the Group in respect of the above fund for the year ended 30 June 2012 was R2,4 million (2011: R3,6 million).


19. RETIREMENT AND OTHER BENEFIT PLANS (continued)


19.3 Defined benefit plan – retirement benefit

The Murray & Roberts Retirement Fund is a hybrid fund providing defined contribution benefits to

employee members and defined benefits to pensioners. The Fund provides, amongst other benefits,

guaranteed pensions to pensioners in payment. The latter benefits are classified as defined benefit

obligations. In the valuation of scheme reserves, all assets and liabilities of defined contribution

members have been ignored. The scheme currently has 3 017 pensioners as members.

Present value of funded liability 2 228,6 2 078,5

Fair value of plan assets (2 698,2) (2 583,2)

Funded status (469,6) (504,7)

Cumulative actuarial loss unrecognised due to paragraph 58A limits 469,6 504,7

– –

Movements in the present value of the funded liability were as follows:Opening defined benefit obligation 2 078,5 1 924,4

Interest costs 168,7 165,1

Contributions from plan participants 27,3 35,4

Actuarial losses 142,2 132,3

Benefits paid (188,1) (178,7)

2 228,6 2 078,5

Movements in the fair value of plan assets were as follows:Opening fair value of plan assets 2 583,2 2 395,1

Expected return on plan assets 251,3 241,5

Actuarial gains 24,5 89,9



2 698,2 2 583,2

The major categories of plan assets at the end of the reporting period for each category are as follows:Equity instruments 1 021,4 1 038,8

Debt instruments 1 264,3 1 185,6

Overseas equity 412,5 358,8

2 698,2 2 583,2

The disclosure of the funded status is for accounting purposes only, and does not indicate available

assets to the Group.

The most recent actuarial valuations of the plan assets and the present value of the defined obligations

were carried out at 30 June 2011 by NMG Consultants & Actuaries. These results have been projected

to 30 June 2012. The present value of the defined benefit obligation, and the related current service

costs were measured using the Projected Unit Credit Method. The next valuation will be performed on

30 June 2013.

Amounts recognised in the statement of financial performance in respect of the defined benefit plan

are as follows:Interest cost 168,7 165,1

Expected return on plan assets (251,3) (241,5)

Losses recognised due to paragraph 58A 117,7 42,4

Actuarial (gain)/loss unrecognised due to paragraph 58A limits (35,1) 34,0

– –

The principal assumptions used for the purpose of the actuarial valuation were as follows:Discount rate 7,6% 8,5%

Inflation rate 5,9% 6,0%

Expected return on plan assets 9,2% 10,1%

Pension increase allowance 4,4% 4,5%

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19.3 Defined benefit plan – retirement benefit (continued)

The plan assets do not directly include any significant Group financial instruments, nor any property occupied by, or other assets used

by, the Group.

The actual return on plan assets was R275,8 million (2011: R331,4 million). The expected rates of return on individual categories of plan

assets are determined by reference to indices published by the Bond Exchange of South Africa Limited. The overall expected rate of

return is calculated by weighing the individual rates in accordance with the anticipated balance in the plan’s investment portfolio.

The Group does not expect to contribute any amounts to its retirement defined benefit plan in 2013 (2012: Nil).


Present valueof defined

benefit liabilityFair value ofplan assets Surplus

Experienceadjustmenton defined

benefit liability

Experienceadjustment

on fair valueof plan assets

2012 2 228,6 (2 698,2) (469,6) 142,2 (24,5)

2011 2 078,5 (2 583,2) (504,7) 132,3 (89,9)

2010 1 924,3 (2 395,1) (470,8) 35,3 (123,0)

2009 1 865,4 (2 177,4) (312,0) (90,7) 178,1

2008 1 945,2 (2 274,4) (329,2) (27,8) 394,7


19.4 Defined benefit plan – post-retirement medical aid

Employees who joined the Group prior to 1 July 1996, and who satisfy certain qualifying criteria, may

have an entitlement in terms of this plan.

Present value of funded liability 66,5 66,0

Fair value of plan assets (79,7) (85,5)



– –

Movements in the present value of the funded liability were as follows:Opening defined benefit obligation 66,0 68,9

Current service cost 0,6 0,6



Actuarial losses 3,8 0,2


66,5 66,0

Movements in the fair value of plan assets were as follows:Opening fair value of plan assets 85,5 85,7


Actuarial (losses)/gains (3,4) 1,6



79,7 85,5

The major categories of plan assets at the end of the reporting period for each category are as follows:Equity instruments 36,5 35,1

Cash and money market instruments 43,2 50,4

79,7 85,5




19.4 Defined benefit plan – post-retirement medical aid (continued)




were carried out at 30 June 2012 by NMG Consultants & Actuaries. The present value of the defined

benefit obligation, and the related current service costs were measured using the Projected Unit Credit

Method. The next valuation will be performed on 30 June 2013.


are as follows:Current service cost 0,6 0,6

Interest cost 5,6 5,8


Net actuarial loss 7,2 4,0

6,3 2,7


Post retirement discount rate 8,8% 8,8%


Long term increase in medical subsidies 6,1% 6,3%

Sensitivity analysis on medical aid cost trendsMovement in current service costs 1% 1%

Effect on profit and loss – –

Movement in interest costs 1% 1%

Effect on profit and loss 0,1 0,1


by, the Group.

The actual return on plan assets was R4,6 million (2011: R10,1 million). The expected rates of return on individual categories of plan

assets are determined by reference to indices published by the Bond Exchange of South Africa Limited. The overall expected rate of

return is calculated by weighing the individual rates in accordance with the anticipated balance in the plan’s investment portfolio.

The Group does not expect to contribute to its post-retirement medical aid defined benefit in 2013 (2012: Rnil).





benefit liability



2012 66,5 (79,7) (13,2) 3,8 3,4

2011 66,0 (85,5) (19,5) 0,2 (1,6)

2010 68,9 (85,7) (16,8) (17,4) (1,7)

2009 59,2 (70,1) (10,9) 5,0 15,0

2008 63,9 (82,7) (18,8) 12,2 (13,5)

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19.5 Defined benefit plan – disability benefit

With effect from 1 March 2010 disability benefits for qualifying salaried employees are provided through

a registered insurer. Disability benefits for existing claimants are provided via the Murray & Roberts

Group Employee Benefits Policy. The defined benefit entitlement is equal to 75% of pensionable salary,

potentially payable up to the normal retirement age of 63. When an employee is entitled to benefits in

terms of the policy, the benefits may be reviewed annually and increases are discretionary and not

guaranteed. A group of members are also entitled to receive a medical scheme contribution waiver and

a skills levy refund.





– –



Actuarial losses/(gains) 3,8 (0,5)


27,7 28,0



Actuarial gains/(losses) 1,3 (0,9)


37,1 38,9

The major categories of plan assets at the end of the reporting period for each category are as follows:Equity instruments – 1,5

Cash and money market instruments 37,1 37,4

37,1 38,9




were carried out at 30 June 2012 by Momentum. The present value of the defined benefit obligation,

and the related current service costs were measured using the Projected Unit Credit Method. The next

valuation will be performed on 30 June 2013.


are as follows:Interest cost 2,2 2,5


Net actuarial loss/(gain) 2,5 (4,6)

1,5 (5,8)



Long term increase in disability benefits 5,9% 6,3%



19.5 Defined benefit plan – disability benefit (continued)


by, the Group.

The actual return on plan assets was R4,7 million (2011: R4,3 million). The expected rates of return on individual categories of plan assets

are determined by reference to indices published by the Bond Exchange of South Africa Limited. The overall expected rate of return is

calculated by weighing the individual rates in accordance with the anticipated balance in the plan’s investment portfolio.





benefit liability



2012 27,7 (37,1) (9,4) 3,8 (1,3)

2011 28,0 (38,9) (10,9) (0,5) 0,9

2010 31,1 (46,2) (15,1) (13,3) (9,4)

2009 37,2 (59,7) (22,5) (14,5) 11,3

2008 44,9 (51,4) (6,5) 1,6 5,9


19.6 Defined benefit plan – pension scheme

The Group is the principal employer for a defined benefit pension scheme in the United Kingdom, the

Multi (UK) Limited Pension Scheme. Membership comprises pensioners and deferred pensioners.



Unrecognised actuarial loss 6,8 7,4


were carried out at 30 June 2012 by Barnett Waddingham LLP. The present value of the defined benefit

obligation, and the related current service costs were measured using the Projected Unit Credit Method.



Actuarial (gains)/losses (0,9) 0,7

Exchange differences on foreign plans 7,7 (2,4)


48,4 43,1



Actuarial gains 0,6 1,5

Exchange differences on foreign plans 6,3 (1,9)

Contributions from the employer 1,2 1,1


41,6 35,7

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19.6 Defined benefit plan – pension scheme (continued)

The major categories of plan assets at the end of the reporting period for each category are as follows:Debt instruments 40,8 34,6

Cash 0,8 1,1

41,6 35,7


are as follows: Interest cost 2,6 2,3


Net actuarial gain (1,5) (0,8)

(0,8) (0,3)


Expected return on scheme assets 5,0% 5,0%

Rate of increase in pension payments 3,0% 3,7%

Rate of increase in pensions in deferment 2,0% 2,9%

Rate of inflation 2,8% 3,7%


by, the Group.

The actual return on plan assets was a profit of R2,6 million (2011: R2,0 million). The overall expected rate of return is calculated by

weighing the individual rates in accordance with the anticipated balance in the plan’s investment portfolio.

The Group does not expect to contribute any amount to this defined benefit plan in 2013 (2012: Nil).



benefit liabilityFair value ofplan assets Deficit


benefit liability



2012 48,4 (41,6) 6,8 (0,9) 0,6

2011 43,1 (35,7) 7,4 0,7 1,5

2010 46,3 (37,0) 9,3 – 8,5

2009 48,9 (33,2) 15,7 – (4,1)

2008 61,8 (52,2) 9,6 (1,3) (5,8)


20. LONG TERM PROVISIONS

ALL MONETARY AMOUNTS ARE EXPRESSEDIN MILLIONS OF RANDS

Decommissioning,payroll and other

provisions

Headleases andother property

activities Total

At 30 June 2010 82,7 1,7 84,4

Additional raised 35,9 – 35,9

Released during the year (9,1) – (9,1)

Utilised during the year (4,8) (1,7) (6,5)

Transfer to liabilities classified as held-for-sale (8,5) – (8,5)

Reclassified 34,3 – 34,3

Foreign exchange movements (4,0) – (4,0)

At 30 June 2011 126,5 – 126,5



Utilised during the year (22,6) – (22,6)

Acquisition of business 0,2 – 0,2

Transfer to trade and other payables (4,6) – (4,6)

Foreign exchange movements 22,6 – 22,6

At 30 June 2012 164,9 – 164,9

Decommissioning provisions

Decommissioning provisions comprise of costs relating to restoring of contract sites.

Payroll provision

The payroll provision comprises long term costs relating to statutory requirements in the Middle East and America regions.

Other provisions

Other provisions comprise primarily of deferred consideration payable on sale of subsidiary and incentive fees to be paid in terms of a

lease agreement.

The provisions have been determined based on assessments and estimates by management. Actual results could differ from estimates

and there is no certainty regarding timing of these cashflows.

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21. DEFERRED TAXATION


21.1 Deferred taxation assets

Uncertified work and other construction temporary differences (134,5) (305,7)

Plant (165,5) (268,5)

Taxation losses 573,4 628,0

Receivables 31,2 43,9

Provisions and accruals 190,3 153,5

Advance payments received net of taxation allowances 124,3 174,5

Fair value adjustments (77,8) (24,9)

Prepayments (8,5) (9,8)

Other 101,2 78,8

634,1 469,8

21.2 Reconciliation of deferred taxation assets


Transfer from deferred taxation liabilities – (119,0)

Credited to the statement of financial performance 134,7 94,6

(Charged)/credited to the statement of financial performance in respect of discontinued operations (40,1) 128,4

Charged directly to equity (4,7) –

Deferred taxation asset transferred to assets classified as held-for-sale – (2,5)

Foreign exchange movements 74,4 24,9

634,1 469,8

21.3 Deferred taxation liabilities

Inventory – (3,7)

Uncertified work and other construction temporary differences 175,0 252,5

Plant 187,4 112,8

Taxation losses (29,7) (20,7)

Receivables (0,3) (2,8)

Provisions and accruals (138,7) (110,2)

Advanced payments received net of taxation allowances (54,4) (35,0)

Fair value adjustments 1,8 60,6

Prepayments 4,7 5,2

Other 64,7 52,2

210,5 310,9

21.4 Reconciliation of deferred taxation liabilities


Acquisition of business 0,2 –

Transfer to deferred taxation assets – (119,0)

Charge relating to acquisition of business – 43,8

Deferred taxation liability transferred to liabilities directly associated with assets held-for-sale – (6,3)

(Credited)/charged to the statement of financial performance (108,6) 11,9

Foreign exchange movements 8,0 –

210,5 310,9

21.5 Unused taxation losses

The Group’s results include a number of legal statutory entities, which fall under a range of taxation jurisdictions. The deferred taxation

assets cannot be offset against the deferred taxation liabilities, as the Group will not be able to settle on a net basis.

At 30 June 2012, the Group had unused taxation losses of R4 207 million (2011: R3 579 million) available for offset against future profits.

A deferred taxation asset has been recognised in respect of R2 165 million (2011: R2 316 million) of such losses. No deferred taxation

asset has been recognised in respect of the remaining R2 042 million (2011: R1 263 million) due to the unpredictability of future profit

streams. The Group performed a three year forecast for the financial year 2013 to 2015 which supports the recognition of a deferred

taxation asset.


22. SUBCONTRACTOR LIABILITIES


Contracts-in-progress and contract receivables include claims against clients in respect

of subcontractor liabilities. These liabilities are only settled when payment has been received

from clients.

Non-current subcontractor liabilities 651,9 141,1

Current subcontractor liabilities 2 098,4 2 171,4

2 750,3 2 312,5

23. TRADE AND OTHER PAYABLES


Trade payables 1 775,1 1 585,2

Payroll accruals 1 020,1 684,1

Accruals and other payables 2 528,3 2 551,1

Amounts owing to joint ventures 575,0 406,5

5 898,5 5 226,9

The directors consider that the carrying amount of the trade and other payables approximate their fair value.

24. SHORT TERM LOANS


Current portion of long term loans:

– Interest bearing secured 18 1 212,3 50,2

– Interest bearing unsecured 18 184,4 825,0

– Non-interest bearing unsecured 18 243,2 7,8

Current portion of capitalised finance leases 18 255,8 196,5

1 895,7 1 079,5

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25. PROVISIONS FOR OBLIGATIONS

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS PayrollWarrantyand other Total

At 30 June 2010 384,7 2,6 387,3

Additional raised 210,4 0,4 210,8


Utilised during the year (223,1) (1,5) (224,6)

Acquisition of business 0,6 – 0,6

Reclassification (38,0) – (38,0)

Transfer to liabilities classified as held-for-sale (7,3) (0,4) (7,7)


At 30 June 2011 253,2 1,1 254,3



Utilised during the year (178,8) – (178,8)


At 30 June 2012 353,5 1,1 354,6

Payroll provision

The payroll provision comprises amounts owed to employees relating to discretionary bonuses and severance pay obligations.

Warranty provision

The provision for warranty claims represents the directors’ best estimate of future outflows of economic benefits that will be required

under the Group’s obligations for warranties.

The provisions have been determined based on assessments and estimates by management. Actual results could differ from estimates

and there is no certainty regarding timing of these cash flows.

26. REVENUE


Construction contracts 31 716,0 27 072,1

Sale of goods 3 259,8 3 183,5

Rendering of services 426,0 279,2

Properties 4,1 –

35 405,9 30 534,8


27. LOSS BEFORE INTEREST AND TAXATION


Loss before interest and taxation is arrived at after taking into account:

The items below comprise of continuing operations only

Items by nature

Investment income other than interest:

Dividends received – 1,2

Fair value gain on investments designated as fair value through profit and loss 7 179,9 164,1

Fair value of concession investment classified as held-for-sale – 54,4

Rentals received 68,1 23,0

Fair value gain on investment property 14,8 –

Amortisation of intangible assets 24,5 23,2

Auditors’ remuneration:

Fees for audits 38,7 35,9

Other services 6,7 16,1

Expenses 1,1 1,1

Compensation income from insurance claims 8,0 2,0

Depreciation:

Land and buildings 24,0 28,0

Plant and machinery 585,8 486,2

Other equipment 48,9 47,8

658,7 562,0

Employee benefit expense:

Salaries and wages 13 998,0 9 675,3

Share option expense 27,6 25,3

Share option expense (Clough Limited) 5,8 6,8

Pension costs – Defined contribution plans 19 117,4 116,6

Fees paid for:

Managerial services 85,5 82,8

Technical services 30,3 59,6

Administrative services 25,3 25,5

Secretarial services 1,5 1,3

Impairment loss recognised on:

Goodwill – 60,0

Other intangibles – 10,9

Plant and equipment 30,9 25,6

Inventory 37,4 42,0

Investment in associate – 7,9

Impairment charges:

Trade receivables 12,9 13,3

Uncertified revenue – 385,0

Amounts receivable on contracts 19,4 180,2


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27. LOSS BEFORE INTEREST AND TAXATION (continued)


Reversal of impairment loss recognised on property, plant and equipment 6,7 22,4

Profit on disposal of property, plant and equipment 43,8 57,3

Loss on disposal of property, plant and equipment 0,1 9,2

Profit on sale of investments in associates 15,1 –

Fair value loss on investment property 2,9 –

Net fair value profit on financial instruments 5,3 7,8

Net foreign exchange losses 5,3 37,0

Operating lease costs:

Land and buildings 250,5 179,6


Other 33,6 25,0

Research and development 1,8 1,5

Items by function

Cost of sales* 33 702,3 28 428,0

Distribution and marketing costs 261,6 270,8

Administration costs 2 524,2 3 137,5

Other operating income 920,8 623,7

* Cost of sales include R2,7 billion (2011: R2,6 billion) relating to the cost of inventories sold during the year.

28. INTEREST EXPENSE


Bank overdrafts 222,8 208,6

Present value expense 7,5 13,9

Capitalised finance leases 6,9 1,7

Loans and other liabilities 110,7 69,7

347,9 293,9

29. INTEREST INCOME


Bank balances and cash 88,7 79,9

Present value income 2,6 2,0


Unlisted loan investment and other receivables 0,9 4,0

99,1 99,5


30. TAXATION EXPENSE


Major components of the taxation expense

South African taxation

Normal taxation – current year 264,7 99,9

Secondary taxation on companies 4,3 25,7

Deferred taxation – current year (137,3) (86,6)

Deferred taxation – prior year (16,2) 11,9

Foreign taxation

Normal income taxation and withholding taxation – current year 218,9 153,3

Deferred taxation – current year (91,2) 10,5

Deferred taxation – prior year 1,4 (18,4)

244,6 196,3

South African tax is calculated at 28% (2011: 28%) of the estimated assessable profit for the year.

Taxation in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

Reconciliation of the standard rate of taxation to the effective rate of taxation % %

South African standard rate of taxation 28,0 28,0

Increase in rate of taxation due to:

Capital and non-deductible expenditure (12,9) (6,9)

Taxation on foreign companies – (18,9)

Current year’s losses not recognised (2,1) (32,6)

Foreign withholding taxation (3,1) (1,0)

Change in taxation rate (2,8) –

Imputed foreign income (0,2) (0,2)

Secondary taxation on companies (1,2) (2,9)

Prior year adjustments – (0,8)

5,7 (35,3)

Reduction in rate of taxation due to:

Capital and non-taxable items 6,0 6,9

Taxation on foreign companies (75,2) –

Taxation losses utilised – 5,9

Prior year adjustments 3,9 –

Effective rate of taxation (59,6) (22,5)

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31. DISCONTINUED OPERATIONS, ASSETS AND LIABILITIES CLASSIFIED AS HELD-FOR-SALE


31.1 Loss from discontinued operations

The Group continues to dispose of its investment properties, with proceeds of R81,4 million received

in the current financial year.

The Group disposed of Johnson Arabia LLC on 31 October 2011 for proceeds of R109,4 million.

BRC Arabia LLC was sold on 30 June 2012 for proceeds of R2,3 million. BRC Arabia FZC ceased

trading in December 2011 and is in the process of being wound up. A final dividend distribution is

expected to be received in the near future.

The Group disposed of RSC Ekusasa Mining, with an effective date of 1 July 2011 for proceeds

of R80,0 million and its 50% share in Alert Steel Polokwane Proprietary Limited on 31 October 2011

for proceeds of R14,9 million. In addition the Group disposed of its 50% share in Freyssinet Posten

Proprietary Limited in December 2011, with proceeds of R25,0 million received in January 2012.

On 22 December 2011 Clough Limited completed the sale of its Marine Construction business to

SapuraCrest Petroleum Berhad for proceeds of R591,0 million, net of borrowings and other costs.

The Steel Business, including CISCO, was disposed of at net book value subsequent to year-end,

in separate transactions. The Steel Business, excluding CISCO, is subject to Competition

Commission approval.

The loss from discontinued operations is analysed as follows:

Revenue

Construction contracts 383,1 555,0

Sale of goods 1 092,6 1 643,6

Rendering of services 236,9 260,2

Properties 25,1 187,6

1 737,7 2 646,4

Loss after taxation for the period is analysed as follows:

Loss before interest, depreciation and amortisation (11,0) (641,0)

Depreciation and amortisation (5,8) (69,2)

Loss before interest and taxation (16,8) (710,2)

Interest expense (39,8) (63,9)

Interest income 7,7 6,1

Loss before taxation (48,9) (768,0)

Taxation (expense)/credit (33,0) 118,0

Income/(loss) from equity accounted investments 1,3 (16,1)

Loss from discontinued operations (80,6) (666,1)

Non-controlling interests income relating to discontinued operations 29,4 78,5

Taxation effects of profit or loss on discontinuance of operations (0,9) (6,1)

Cash flows from discontinued operations

Cash flows from operating activities (252,9) (128,5)

Cash flows from investing activities 765,4 573,9

Cash flows from financing activities (100,9) (466,2)

Net increase/(decrease) in cash and cash equivalents 411,6 (20,8)


31. DISCONTINUED OPERATIONS, ASSETS AND LIABILITIES CLASSIFIED AS HELD-FOR-SALE (continued)


31.1 Loss from discontinued operations (continued)

Loss before interest and taxation is arrived at after taking into account:

Items by nature

Investment income other than interest: Rentals received 5,8 7,5

Fair value gain on investment property 19,8 –

Amortisation of intangible assets – 2,5

Auditors’ remuneration:Fees for audits 4,1 2,5

Other services 0,4 –

Expenses – 0,1

Depreciation:Land and buildings 5,8 3,4

Plant and machinery – 58,3

Other – 5,0

5,8 66,7

Employee benefit expense:Salaries and wages 276,4 598,8

Share option expense – 0,4

Fair value loss on investment property – 5,4

Fees paid for:Managerial services 1,2 4,9

Technical services 2,3 1,8

Administrative services 1,0 3,4

Impairment loss recognised on:Goodwill – 50,0

Plant and equipment – 274,0

Inventory 54,7 32,0

Impairment loss:Trade receivables 24,9 88,2


Profit on disposal of property, plant and equipment – 2,6

Loss on disposal of property, plant and equipment – 1,9

Profit on disposal of businesses (net) 46,7 16,7

Loss on sale of investment in associate 1,7 –

Loss on sale of property developments 9,5 –

Net foreign exchange (gains)/losses (0,2) 6,3

Operating lease costs:Land and buildings 11,4 19,1


Other 0,5 0,9

Research and development – 1,7

Items by function

Cost of sales* 1 481,4 2 529,8

Distribution and marketing costs 24,9 38,0

Administration costs 333,6 851,4

Other operating income 85,4 62,6

* Cost of sales includes R1,0 billion (2011: R1,6 billion) relating to the cost of inventories sold during the year.

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31. DISCONTINUED OPERATIONS, ASSETS AND LIABILITIES CLASSIFIED AS HELD-FOR-SALE (continued)


31.2 Assets classified as held-for-sale

Assets held-for-sale includes assets relating to discontinued operations as referred to in note 31.1.

Refer to Annexure 3 for a segmental analysis of assets held-for-sale. These disposals are expected

to occur within the next 12 months and have therefore been classified as assets held-for-sale.

The proceeds from disposals are expected to exceed or equal the net carrying amount of the assets,

and accordingly no impairment loss has been recognised on the classification of these assets as

held-for-sale.

The major classes of assets comprising the assets held-for-sale

Property, plant and equipment 198,0 1 137,2

Investment properties 92,8 67,2

Goodwill – 43,9

Other intangible assets – 7,9

Other investments 47,0 170,0

Deferred taxation asset – 6,4

Non-current receivables – 40,4

Inventories 295,3 497,4

Amounts due from contract customers – 166,0

Trade and other receivables 234,0 426,1

Current taxation assets 0,7 4,3

Cash and cash equivalents 37,2 293,0

905,0 2 859,8

31.3 The major classes of liabilities directly associated with a disposal group held-for-sale

Long term loans – 297,5

Long term provisions – 9,0

Deferred taxation liabilities 2,4 2,6

Non-current payables 5,5 66,9

Trade payables and other payables 184,7 537,7

Short term loans 38,3 78,6

Current taxation liability – 14,9

Provisions for obligations 6,6 7,6

Subcontractor liabilities – 138,5


248,8 1 181,8

Refer to Annexure 3 for a segmental analysis of assets and liabilities classified as held-for-sale.


32. LOSS AND HEADLINE LOSS PER SHARE


As a result of the rights issue made to shareholders in April 2012, the prior year’s

weighted average number of ordinary shares was adjusted by the bonus element of the

rights issue. A factor of 1.1081 was applied to ensure that loss per share calculations

are comparable.

32.1 Weighted average number of shares

Number of shares (000)

Weighted average number of shares in issue 382 712 367 784

Less: Weighted average number of shares held by The Murray & Roberts Trust (6 338) (7 466)

Less: Weighted average number of shares held by the Letsema BBBEE trusts (32 115) (32 044)

Less: Weighted average number of shares held by Murray & Roberts Limited (736) (749)

Weighted average number of shares in issue used in the determination of basic

per share figures 343 523 327 525

Add: Dilutive adjustment for share options 699 1 029

Weighted average number of shares in issue used in the determination of diluted

per share figures 344 222 328 554

32.2 Loss per share

Reconciliation of loss

Loss attributable to owners of Murray & Roberts Holdings Limited (735,6) (1 735,1)

Adjustments for discontinued operations:

Loss from discontinued operations 31 80,6 666,1

Non-controlling interests 31 (29,4) (78,5)

Loss for the purposes of basic and diluted earnings per share from continuing operations (684,4) (1 147,5)

Loss per share from continuing and discontinued operations (cents)

– Diluted (214) (528)

– Basic (214) (530)

Loss per share from continuing operations (cents)

– Diluted (199) (349)

– Basic (199) (350)

Loss per share from discontinued operations (cents)

– Diluted (15) (179)

– Basic (15) (180)

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32. LOSS AND HEADLINE LOSS PER SHARE (continued)

32.3 Headline loss


Reconciliation of headline loss

2012 2011

Note

Grosspre-tax &

non-controlling

interests Net

Grosspre-tax &

non-controlling

interests Net

Loss attributable to owners of Murray & Roberts

Holdings Limited (601,6) (735,6) (1 570,0) (1 735,1)

Investment property fair value adjustments (31,7) (27,3) 5,4 5,4

Profit on disposal of businesses (net) (46,7) (27,9) (16,7) (10,5)

Profit on disposal of property, plant and equipment (net) (43,7) (27,5) (48,8) (41,4)

Profit on sale of associates (net) (13,4) (12,0) – –

Impairment of property, plant and equipment (net) 24,2 17,4 277,2 202,1

Impairment of goodwill – – 110,0 110,0

Impairment of other intangibles – – 10,9 10,9

Fair value adjustments on assets held-for-sale 21,9 15,6 38,0 24,4

Profit on sale of assets held-for-sale (net) (51,1) (44,1) (5,9) (3,7)

Negative goodwill arising on business acquisitions – – (9,3) (9,3)

Fair value adjustment on acquisition of joint venture – – (52,3) (45,0)

Other (3,9) (3,9) (0,6) (0,4)

Headline loss (746,0) (845,3) (1 262,1) (1 492,6)

Adjustments for discontinued operations:

Loss from discontinued operations 31 47,6 80,6 784,1 666,1

Non-controlling interests 31 – (29,4) – (78,5)

Investment property fair value adjustments 19,8 17,0 (5,4) (5,4)

Profit on disposal of businesses (net) 46,7 27,9 16,7 10,5

Profit on disposal of property, plant and equipment (net) – – 1,1 1,5

Loss on sale of investment in associate (1,7) (1,7) – –

Impairment of property, plant and equipment (net) – – (274,0) (200,7)

Impairment of goodwill – – (50,0) (50,0)

Fair value adjustments on assets held-for-sale (27,0) (19,3) (38,0) (23,9)

Profit on sale of assets held-for-sale (net) 53,7 46,0 4,0 1,8

Negative goodwill arising on business acquisitions – – 1,3 1,3

Headline loss from continuing operations (606,9) (724,2) (822,3) (1 169,9)


Headline loss per share (cents) from continuing and discontinued operations

– Diluted (246) (454)

– Basic (246) (456)

Headline loss per share from continuing operations (cents)

– Diluted (210) (356)

– Basic (211) (357)

Headline loss per share from discontinued operations (cents)

– Diluted (36) (98)

– Basic (35) (99)


33. CASH (UTILISED IN)/GENERATED FROM OPERATIONS


Loss before interest and tax (178,2) (1 388,0)

Adjustments for non-cash items:

Amortisation of intangible assets 24,5 25,7

Depreciation 664,5 628,7

Fair value adjustments on concession investments (179,9) (164,1)

Fair value of concession investments classified as held-for-sale – (54,4)

Profit on sale of businesses (net) (46,7) (16,7)

Investment property fair value adjustments (31,7) 5,4

Long term provisions raised, released and utilised 20,2 20,3

Provisions for obligations raised, released and utilised 91,3 (88,5)

Profit on disposal of property, plant and equipment (net) (43,7) (48,8)

Share-based payment expense 33,4 32,5

Impairment of assets (net) 178,0 1 155,2

Non-cash contract completion expenses – 585,0

Other non-cash items 3,4 (45,9)

Adjustment for cash items:

Headlease and other property activities – (6,0)

Change in working capital: (2 115,3) 231,2

Inventories 50,8 367,0

Trade and other receivables (673,9) (80,9)

Contracts-in-progress and contract receivables (3 473,2) (541,4)

Trade and other payables 648,5 440,8

Subcontractor liabilities and amounts due to contract customers 1 332,5 45,7

(1 580,2) 871,6

34. TAXATION PAID


Taxation (unpaid)/due at beginning of the year (32,9) 9,7

Foreign exchange movements 9,7 –

Transfer to taxation directly associated with assets held-for-sale – (10,6)

Acquisition of business 0,1 –

Taxation charged to the statement of financial performance, excluding deferred taxation (487,9) (278,9)

Taxation credited/(charged) to the statement of financial performance under discontinued operations 7,1 (39,1)

Taxation paid under discontinued operations (9,0) –

Taxation unpaid at end of the year 83,9 32,9

(429,0) (286,0)

Current taxation assets (90,7) (82,9)

Current taxation liabilities 174,6 115,8

83,9 32,9

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35. ACQUISITION/DISPOSAL OF BUSINESSES

35.1 Acquisition of businesses

35.1.1 Acquisition of Incycle Shotcrete (Proprietary) Limited (“Incycle Shotcrete”)Effective 30 September 2011, RUC Cementation Mining Contractors (Proprietary) Limited (RUCC) obtained control of Incycle Shotcrete

by acquiring a 100% stake in the company from the shareholders for a consideration of R7,4 million. The purpose of Incycle Shotcrete

is to supply and install high fibre reinforced shotcrete for underground ground support to RUCC.

The net assets acquired at the date of acquisition:

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS Note

2012

Acquiree’scarrying

value Fair value

Property, plant and equipment 11,5 11,5

Inventories 0,1 0,1


Current taxation asset 0,1 0,1

Long term loans (4,5) (4,5)

Long term provisions (0,2) (0,2)

Deferred taxation liability (0,2) (0,2)

Trade and other payables (4,5) (4,5)

Fair value of net assets acquired 5,5 5,5

Goodwill 4 1,9

Consideration paid 7,4

Impact of acquisition on the results of the GroupThe profit for the year includes an amount of R1,6 million that relates to the business

acquired during the year. The revenue includes R23,0 million in respect of the business

acquired during the year.

The effect on revenue of the Group from continuing operations would have been

R27,0 million if the business had been acquired on 1 July 2011, and the profit for the year

from continuing operations would have been R1,9 million. Goodwill is recognised due to

expected synergies between RUCC and Incycle Shotcrete.

35.1.2 Acquisition of RSC Tshwane Joint VentureThe Group acquired the remaining 50% of the RSC Tshwane Joint Venture on 1 July 2011

from its joint venture partner for a consideration of R7,2 million thereby obtaining control

of the company.

The net assets acquired at the date of acquisition were classified as assets and liabilities

held-for-sale:

Property, plant and equipment 4,3 4,3

Inventories 3,1 3,1


Current taxation asset 0,2 0,2

Trade and other payables (4,1) (4,1)

Provisions for obligations (0,1) (0,1)

Bank overdraft (1,1) (1,1)

Consideration paid for fair value of assets acquired 7,2

Impact of acquisition on the results of the GroupThe profit for the year includes an amount of R0,1 million while revenue includes

R7,0 million in respect of the remaining 50% acquired in RSC Tshwane Joint Venture,

the following impacted the loss from discontinued operations.

Net cash and cash equivalents acquired (1,1)

Cash outflow on acquisition of businesses 14,6


35. ACQUISITION/DISPOSAL OF BUSINESSES (continued)

35.2 Disposal of businesses

35.2.1 Disposal of Johnson Arabia LLC

On 31 October 2011, the Group disposed of Johnson Arabia LLC for proceeds of R109,4 million which carries out its crane hire

operations in the Middle East.

Analysis of assets and liabilities, classified as assets and liabilities held-for-sale in the previous financial year, over

which control was lost.

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS 2012

Property, plant and equipment (186,7)

Trade and other receivables (159,4)

Cash and cash equivalents (21,3)

Long term loans 26,0

Trade and other payables 64,2

Provisions for obligations 49,5

Less: non-controlling interest portion 116,2

Net assets disposed of (111,5)

Consideration received 109,4

Loss on disposal of business (2,1)

Net cash inflow on disposal of business

Consideration received in cash and cash equivalents 109,4

Less: cash and cash equivalent balances disposed of (21,3)

88,1

35.2.2 Disposal of certain South African steel operations

The Group disposed of the following businesses:

– RSC Ekusasa Mining, its mining roof bolt business with an effective date of 1 July 2011.

– Alert Steel Polokwane Proprietary Limited, its 50% joint venture share, on 31 October 2011.

– Freyssinet Posten Proprietary Limited, 50% of its joint venture, on 31 December 2011.

These disposals generated R119,9 million in proceeds and the effect of the transactions are disclosed below:

Analysis of assets and liabilities, classified as assets and liabilities held-for-sale in the previous financial

year, over which control was lost.


Other investments (0,3)

Other intangible assets (1,4)

Inventories (84,3)


Current taxation asset (1,8)


Long term loans 0,5

Deferred taxation liabilities 1,1



Bank overdrafts 6,8



Net profit on disposal of business 6,6



Less: net cash and cash equivalent balances disposed of 0,8

120,7

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35. ACQUISITION/DISPOSAL OF BUSINESSES (continued)

35.2 Disposal of businesses (continued)

35.2.3 Disposal of Clough’s Marine Construction businessOn 22 December 2011 Clough disposed of its Marine Construction business for a consideration of R591,0 million,

net of borrowings, and other costs.

Analysis of assets and liabilities, classified as assets and liabilities held-for-sale in the previous financial year,

over which control was lost.

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS 2012


Other intangible assets (60,7)

Deferred taxation assets (3,3)


Amounts due from contract customers (45,3)


Reserves (45,5)

Non-controlling interest 6,0


Non-current payables 74,2


Subcontractor liabilities 256,9


Short term loans 8,0

Current taxation liability 2,8



Profit on disposal of business 46,8




354,6

35.2.4 Disposal of BRC Arabia LLCThe Group disposed of its 49% share in BRC Arabia LLC on 30 June 2012 for proceeds of R2,3 million.

Analysis of assets and liabilities, classified as assets and liabilities held-for-sale in the previous

financial year, over which control was lost.


Inventories (54,7)





Short term loans 119,2

Non-controlling interest 7,2



Loss on disposal of business (4,6)

Net cash outflow on disposal of business



(10,2)

The profit or loss on disposal of businesses is included in the loss for the year from discontinued operations in the

statement of financial performance, refer to note 31.

Cash inflow on disposal of businesses 822,6

Net cash and cash equivalents disposed of (269,4)

Net profit on disposal of businesses 46,7


36. NET MOVEMENT IN BORROWINGS


Loans raised 2 653,9 530,5

Loans repaid (2 428,3) (126,6)

225,6 403,9

Capitalised finance leases raised 116,5 125,5

342,1 529,4

37. JOINT VENTURES


37.1 Joint venture arrangements

A proportion of the Group’s operations are performed through joint ventures. The Group operates

through two types of joint ventures:

Joint venture entities

– these are incorporated arrangements such as jointly controlled companies.

Joint venture operations

– these are unincorporated arrangements such as partnerships and contracts.

The Group’s aggregate proportionate share of joint ventures included in the consolidated statement

of financial position is:

Non-current assets 30,6 55,9

Current assets 5 899,5 4 546,2

Total assets 5 930,1 4 602,1

Non-current liabilities 67,5 167,5

Current liabilities 5 305,8 3 799,6

Total liabilities 5 373,3 3 967,1

Net assets 556,8 635,0

The Group’s aggregate proportionate share of joint ventures included in the consolidated statement

of financial performance is:

Revenue 9 730,6 9 455,6

Profit/(loss) after taxation 893,2 (414,2)LE

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37. JOINT VENTURES (continued)

Operating platform2012

%

2011%

37.2 Details of significant joint ventures

Bombela Civils Joint Venture Proprietary Limited Construction Africa and Middle East 45,0 45,0

Medupi Civils Joint Venture* Construction Africa and Middle East 67,0 67,0

Mafraq Hospital Joint Venture Construction Africa and Middle East 30,0 30,0

St Regis Resort Joint Venture Construction Africa and Middle East 50,0 50,0

Al Habtoor — Murray & Roberts – Takenaka

Joint Venture Construction Africa and Middle East 40,0 40,0

Clough Amec (Proprietary) Limited Construction Australasia Oil & Gas and Minerals 50,0 50,0

CBI Clough Joint Venture (Proprietary) Limited Construction Australasia Oil & Gas and Minerals 35,0 35,0

BAM Clough Joint Venture Construction Australasia Oil & Gas and Minerals 50,0 50,0

Clough Downer Joint Venture Construction Australasia Oil & Gas and Minerals 50,0 –

Clough Curtain Joint Venture* Construction Australasia Oil & Gas and Minerals 65,0 65,0

Kellogg Joint Venture – Gorgon Construction Australasia Oil & Gas and Minerals 20,0 20,0

Streicher Clough Joint Venture Construction Australasia Oil & Gas and Minerals 50,0 50,0

The criteria used to determine significant joint ventures has been refined during the year under review. The criteria used includes

contribution to revenue or the Group’s share of obligations on a proportionately consolidated basis. A monetary threshold of R250 million

has been used to determine significant joint ventures for both the current and prior year.

* The Group does not have a controlling interest as unanimous decisions need to be made by all parties.

38. CONTINGENT LIABILITIES


The Group is from time to time involved in various disputes, claims and legal proceedings arising in the

ordinary course of business. The Group does not account for any potential contingent liabilities where

a back to back arrangement exists with the clients or subcontractors and there is a legal right to offset.

The Board does not believe that adverse decisions in any pending proceedings or claims against the

Group will have a material adverse effect on the financial condition or future of the Group.

The Competition Commission engaged the construction industry in April 2011 and the Group

submitted applications through the April 2011 Fast-Track process. A provision was raised based on

the potential violations that were identified as a result of this process. The Board is of the opinion that

the provision raised for this liability is adequate to cover any additional penalties that may arise as a

result of the investigation. However, there is no guarantee as to the size of the penalty or the sufficiency

of the provision.

The ascertainable contingent liabilities at 30 June being 1 445,3 982,9

Total financial institution guarantees given to third parties on behalf of Group companies amounted to 10 284,8 10 408,2

The directors do not believe any exposure to loss is likely.

Contingent liabilities and guarantees given to third parties arising from interest in joint ventures included

above amounted to 6 719,8 5 393,2

Contingent liabilities comprise of claims against JVs either by clients or subcontractors which have

not been brought to book.

In the prior year the amount in this disclosure note included the JV’s portion of guarantees only, this

has been updated in the current year to include both the guarantee and contingent liability amounts.

The directors do not believe any exposure to loss is likely.


39. CAPITAL COMMITMENTS


Approved by the directors, contracted and not provided in the statement of financial position 43,0 52,8

Approved by the directors, not yet contracted for 1 333,0 799,2

1 376,0 852,0

Capital expenditure will be financed from internal resources and existing facilities. The capital

commitments relate primarily to the acquisition of project related capital expenditure.

The Group’s share of the capital commitments of its jointly controlled entities is as follows: 2,0 –

40. OPERATING LEASE ARRANGEMENTS


40.1 General operating leases

Operating lease payments represent rentals payable by the Group for certain of its office properties

and certain items of plant and machinery, and furniture and fittings. These leases have varying terms,

escalation clauses and renewal periods.

Operating lease costs

Operating lease costs recognised in the statement of financial performance is set out in note 27.

Minimum lease payments due

Due within one year 403,0 381,8

Due between two and five years 846,8 896,6

Due thereafter 807,8 876,1

2 057,6 2 154,5

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41. FINANCIAL RISK MANAGEMENT

41.1 Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the

return to stakeholders through optimisation of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the borrowings as disclosed in note 18 and 24 and equity attributable

to owners of Murray & Roberts Holdings Limited, comprising issued reserves and retained earnings as disclosed.

The Board reviews the capital structure and as part of this review, considers the cost of capital and the risk associated with each class

of capital.

The Group is subject to externally imposed capital requirements in the form of financial covenants which are actively managed by the Board.

The Group has restructured its South African term debt and bank facilities and now includes facilities ranging from on-demand to

four-year facilities, achieving the objective of extending the average tenure of the Group’s debt structure. The facilities are supported by

cross guarantees from Group companies and have been secured by the pledging of Clough Limited shares.

41.2 Financial instruments

The Group does not trade in financial instruments but, in the normal course of operations, is exposed to currency, credit, interest and

liquidity risk.

In order to manage these risks, the Group may enter into transactions that make use of financial instruments. The Group’s financial

instruments consist mainly of deposits with banks, local money market instruments, short term investments, derivatives, accounts

receivable and payable and interest bearing borrowings.


Categories of financial instruments

Financial assets

Financial assets designated as fair value through profit and loss (level 3) 7 456,7 441,8

Loans and receivables 14 229,2 9 949,9

Available-for-sale financial assets carried at fair value (level 3) 7 2,5 2,7

Derivative financial instruments (level 2) – 10,5

Financial liabilities

Loans and payables 13 953,1 12 197,3

Derivative financial instruments (level 2) 15,9 45,1

The fair value hierarchy introduces 3 levels of inputs based on the lowest level of input

significant to the overall fair values:

Level 1 – quoted prices for similar instruments

Level 2 – directly observable market inputs other than Level 1 inputs

Level 3 – inputs not based on observable market data

41.3 Market risk

The Group operates in various countries and is exposed to the market risks evident in each specific country. The primary market risks

identified relate to foreign currency fluctuations and interest rate fluctuations. The sensitivities relating to these market risks are detailed in

notes 41.4 and 41.5.

41.4 Foreign currency risk management

The Group has major operating entities in the Middle East, Australia and Canada and hence has an exposure to fluctuations in exchange

rates. The Group may, from time to time, hedge its foreign currency exposure for either purchase or sale transactions through the use of

foreign currency forward exchange contracts.

Foreign currency sensitivity

The Group is mainly exposed to the currencies of United Arab Emirates, Australia, United States of America, Canada and Europe. The

following table details the Group’s major foreign currency balances at year-end and the sensitivity of a 1% decrease in the Rand against

the relevant currencies. The sensitivity includes only foreign currency denominated monetary items and adjusts their translation at the

period end for a change in foreign currency rates. A positive number indicates an increase in profit and equity where the Rand weakens

against the relevant currencies.


41. FINANCIAL RISK MANAGEMENT (continued)


Assets Liabilities

2012 2011 2012 2011

41.4 Foreign currency risk management continued

Australian Dollar 26,9 13,4 (11,4) (6,4)

Canadian Dollar 4,7 5,4 (3,1) (2,9)

European Euro 1,9 2,0 (0,5) (0,4)

UAE Dirham 4,2 8,8 (11,4) (12,9)

US Dollar 7,8 5,0 (4,3) (1,3)

Forward foreign exchange contracts

The Group may, from time to time, hedge its foreign currency exposure for either purchase or sale transactions through the use of foreign

currency exchange contracts. Each operation manages its own trade exposure. In this regard the Group has entered into certain forward

foreign exchange contracts. All such contracts are supported by underlying commitments, receivables or payables. The risk of having to

close out these contracts is considered to be low.

All forward foreign exchange contracts are valued at fair value on the reporting date with the resultant gain or loss included in the

statement of financial performance with the exception of effective cash flow hedges. The gains or losses on effective cash flow hedges

are recorded in other comprehensive income and either transferred to income when the hedged transaction affects income or are

included in the initial acquisition cost of the hedged assets or liabilities where appropriate.

The amounts represent the net Rand equivalents of commitments to purchase and sell foreign currencies. The majority of the contracts

will be utilised during the next 12 months, and are renewed on a revolving basis as required.

At reporting date, the notional amounts of outstanding forward foreign exchange contracts to which the Group is committed are as follows:


Related to specific statement of financial position items

2012 2011

Foreignamount

Randamount

Foreignamount

Randamount

Bought:

Australian Dollar 5,3 44,5 0,4 3,0

European Euro 5,2 54,0 10,5 103,3

Indonesian Rupiah 139 387,3 124,5 35 901,4 28,4

Singapore Dollar – – 2,0 11,1

Thai Baht – – 364,1 80,4

US Dollar 10,1 83,9 40,2 282,4

306,9 508,6

Sold:

Australian Dollar 26,0 218,5 36,3 263,7

Indonesian Rupiah 6 746,0 6,0 – –

US Dollar 5,9 48,3 11,0 74,7

272,8 338,4

At 30 June 2012, the fair value of the Group’s currency derivatives is estimated to be a profit of approximately R5,3 million

(2011: R5,8 million loss). These amounts are based on quoted market prices for equivalent instruments at the reporting date which

comprise Rnil assets (2011: R10,5 million) and liabilities of R15,9 million (2011: R45,1 million).

R9,6 million relating to currency derivatives that have been designated as cash flow hedges have been recognised in the statement of

comprehensive income during the year (2011: R17,0 million).

The Group does not currently designate any foreign currency denominated debt as a hedging instrument for the purpose of hedging the

translation of its foreign operations.

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41.4 Foreign currency risk management (continued)

The carrying amounts of the significant financial assets are denominated in the following currencies:

Cash and cash equivalents

Australian Dollar 1 470,3 626,6

Bahraini Dinar 50,5 89,7

Botswana Pula 78,8 51,9

British Pound 89,0 52,7

Canadian Dollar 61,8 73,9

European Euro 176,6 197,8

Malaysian Ringgit 34,4 7,9

Qatari Rial 22,5 4,4

Saudi Arabia Riyals 51,9 26,9

Singapore Dollar 20,2 16,9

South African Rand 631,2 894,2

Thai Baht 41,9 51,9

UAE Dirham 176,8 528,0

US Dollar 335,7 311,5

Other 146,8 166,3

3 388,4 3 100,6

Trade and net contract receivables

Australian Dollar 1 220,0 714,7

Bahraini Dinar – 51,1





Ghanaian New Cedi 42,0 –

Malaysian Ringgit 28,1 2,2

Saudi Arabia Riyals 24,5 10,1

South African Rand 2 475,6 1 938,8

Thai Baht 51,8 20,8

UAE Dirham 241,5 354,0

US Dollar 443,0 190,1

Other 120,9 42,5

Gross receivables 5 156,0 3 926,9

Present value and other adjustments (53,3) (46,1)

5 102,7 3 880,8

The carrying amounts of the significant financial liabilities are denominated in the following currencies:

Bank overdrafts

South African Rand 33,9 43,5

Other 4,6 3,3

38,5 46,8




41.4 Foreign currency risk management (continued)

Trade payables and subcontractor liabilities

Australian Dollar 814,0 591,1

Bahraini Dinar 57,3 37,5





Singapore Dollar 16,6 34,3


Thai Baht 26,0 16,7

UAE Dirham 1 137,0 1 301,1

US Dollar 391,5 128,4

Other 290,0 129,1

Gross liabilities 4 529,8 3 905,8

Present value and other adjustments (4,4) (8,1)

4 525,4 3 897,7

Interest bearing liabilities




US Dollar 40,1 0,2

2 146,1 2 295,1

Non-interest bearing liabilities


European Euro 20,9 –

Papua New Guinea Kina 43,5 –

South African Rand – 0,7

243,4 9,6

41.5 Interest rate risk management

The Group is exposed to interest rate risk as it borrows funds on both fixed and floating interest rates through bank overdrafts and other

interest bearing liabilities as well as borrows in local and foreign markets. The Group manages this risk by a central treasury function

which looks at the cash requirements of the various businesses and meets these requirements internally. The Group’s treasury function

also considers future interest rate forecasts and borrows at a fixed rate where necessary.

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives and non-derivative

instruments at reporting date as well as changes to interest rates in both local and foreign markets. It assumes the stipulated change

takes place at the beginning of the financial year and held constant throughout that reporting period in the case of instruments that have

floating rates.

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41.5 Interest rate risk management (continued)

The table below illustrates the Group’s sensitivity on profits had the interest rates been 100 basis points higher and all other variables

were held constant. A positive number indicates an increase in profit and other equity as a consequence of change in interest rates.

Based on the prime interest rates of the countries listed below:


South Africa

Basis points increase 100,0 100,0

Effect on profit and loss (14,5) (13,0)

Australia



United Arab Emirates



Canada


Effect on profit and loss (1,5) (1,2)

United States of America



41.6 Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Potential areas

of credit risk consist of cash and cash equivalents, trade and other receivables (net of provisions) and contract receivables (net of provisions).

Credit quality

Cash and cash equivalents: The Group only deposits its money with creditable financial institutions.

Trade and other receivables: Trade receivables consist mainly of a widespread customer base. Credit risk is managed by performing

credit checks on customers and setting of credit limits where necessary. Group companies monitor the financial position of their

customers on an ongoing basis and where appropriate, use is made of credit guarantee insurance. The credit quality of this category of

financial assets that are neither past due nor impaired (“not past due”) are considered appropriate.

Contract receivables (net of provisions): Contract receivables and retentions are usually secured by means of a lien over the property or

payment guarantee from third party bank. The credit quality of this category of financial assets that are neither past due nor impaired

(“not past due”) are considered appropriate.

Included in trade receivables and amounts due from contract customers are amounts due from South African parastatals and

Government of R83,8 million (2011: R165,0 million) and R604,9 million (2011: R237,0 million) respectively. An impairment of R0,8 million

(2011: Rnil) was recognised on trade receivables. An amount of R69,7 million (2011: R28,0 million) is considered to be past due, but not

impaired.

Provision is made for specific bad debts and at year-end, management believed that any material credit risk exposure was covered by

credit guarantees or bad debt provisions.

The following represents the Group’s maximum exposure, at reporting date to credit risk, before taking into account any collateral held or

other credit enhancements and after allowance for impairment and netting where appropriate.



41.6 Credit risk management (continued)

ALL MONETARY AMOUNTS ARE EXPRESSEDIN MILLIONS OF RANDS

ConstructionAfrica and

Middle EastEngineering

Africa

ConstructionProducts

Africa

ConstructionGlobal

UndergroundMining

ConstructionAustralasia

Oil & Gasand

Minerals

Corporateand

Properties Group

2012

Cash and cash equivalents 765,8 97,5 79,3 194,5 1 945,1 306,2 3 388,4

Trade and other receivables

(net of provisions) 476,4 76,1 600,4 340,5 523,2 110,5 2 127,1

Contract receivables

(net of provisions) 1 199,5 594,6 71,8 1 094,1 1 106,0 – 4 066,0

Non-current receivables – – – 7,0 86,5 11,5 105,0

Total assets subject to credit risk 2 441,7 768,2 751,5 1 636,1 3 660,8 428,2 9 686,5

Assets not subject to credit risk 4 039,6 1 449,3 2 134,0 2 210,1 2 628,5 293,4 12 754,9

Total assets 6 481,3 2 217,5 2 885,5 3 846,2 6 289,3 721,6 22 441,4

2011

Cash and cash equivalents 1 178,0 136,5 84,7 174,7 1 038,6 488,1 3 100,6


(net of provisions) 357,0 35,8 656,8 403,3 267,8 126,4 1 847,1

Contract receivables

(net of provisions) 1 281,1 77,7 96,9 802,9 506,8 – 2 765,4

Total assets subject to credit risk 2 816,1 250,0 838,4 1 380,9 1 813,2 614,5 7 713,1

Assets not subject to credit risk 3 619,4 1 124,9 2 457,6 1 502,2 2 846,7 296,6 11 847,4

Total assets 6 435,5 1 374,9 3 296,0 2 883,1 4 659,9 911,1 19 560,5

Financial assets subject to

credit risk*

2012

Not past due 1 976,9 755,6 662,8 1 368,8 3 629,0 424,3 8 817,4

Past due 487,7 13,9 160,3 279,8 50,8 4,2 996,7

Provisions for impairments (22,9) (1,3) (71,6) (12,5) (19,0) (0,3) (127,6)

Carrying value of financial assets 2 441,7 768,2 751,5 1 636,1 3 660,8 428,2 9 686,5

2011

Not past due 2 643,7 240,0 790,4 1 370,7 1 805,4 612,6 7 462,8

Past due 194,4 10,0 115,1 25,9 20,6 3,4 369,4

Provisions for impairments (22,0) – (67,1) (15,7) (12,8) (1,5) (119,1)

Carrying value of financial assets 2 816,1 250,0 838,4 1 380,9 1 813,2 614,5 7 713,1

* Not past due relates to invoices not past the expected payment date for trade, contract receivables and other receivables. Included in not past due is also cash and cash equivalents. The credit quality of the financial assets that are neither past due nor impaired is considered appropriate.

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Financial assets that are past due, but not impaired

These are assets where contractual payments are past due, but the Group believes that impairment is not appropriate as there has not

been a significant change in credit quality and the amounts are still considered to be recoverable.

The age of receivables that are past due, but not impaired is:


< Three months

Threeto six

months

Sixto twelve

months> Twelve

months Total

2012

Trade receivables 106,5 20,4 35,1 192,3 354,3

Contract receivables 265,0 79,0 100,2 52,9 497,1

Other receivables 72,7 23,4 40,6 8,6 145,3

444,2 122,8 175,9 253,8 996,7

2011

Trade receivables 43,2 11,6 27,1 47,6 129,5

Contract receivables 173,3 26,4 6,3 20,6 226,6

Other receivables 2,3 6,5 – 4,5 13,3

218,8 44,5 33,4 72,7 369,4

Financial assets individually assessed to be impaired

In determining the recoverability of a trade or contract receivable the Group considers any change in the credit quality of the trade or contract

receivable from the date the credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer

base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance

for doubtful debt.




Africa


Africa

ConstructionGlobal

UndergroundMining


Oil & Gasand

Minerals

Corporateand

Properties Group

2012

Trade receivables 3,1 – 71,6 0,6 – 0,3 75,6

Contract receivables 19,8 1,3 – 11,9 19,0 – 52,0

22,9 1,3 71,6 12,5 19,0 0,3 127,6

2011

Trade receivables 3,5 – 67,1 3,8 – 1,5 75,9

Contract receivables 18,5 – – 11,9 12,8 – 43,2

22,0 – 67,1 15,7 12,8 1,5 119,1




Reconciliation of total impairments




Africa


Africa

ConstructionGlobal

UndergroundMining


Oil & Gasand

Minerals

Corporateand

Properties Group

2012

Balance at the beginning

of the year 22,0 – 67,1 15,7 12,8 1,5 119,1

Raised during the year 5,4 1,3 6,1 – 5,9 – 18,7

Utilised during the year (5,9) – – – – (1,4) (7,3)

Released during the year (0,9) – (1,6) (4,0) (2,0) – (8,5)

Foreign exchange movements 2,3 – – 0,8 2,3 0,2 5,6

22,9 1,3 71,6 12,5 19,0 0,3 127,6

2011

Balance at the beginning

of the year 24,8 52,9 132,3 19,8 22,9 2,3 255,0

Acquisition of business – – 3,3 – – – 3,3

Transfer to assets held-for-sale – – (183,6) – – – (183,6)

Raised during the year 19,2 – 122,0 0,3 0,4 – 141,9

Utilised during the year (18,0) (21,0) (4,1) (1,1) (8,7) (0,7) (53,6)

Released during the year (3,5) (31,9) (3,2) (3,9) (0,2) – (42,7)

Foreign exchange movements (0,5) – 0,4 0,6 (1,6) (0,1) (1,2)

22,0 – 67,1 15,7 12,8 1,5 119,1

41.7 Liquidity risk management

The ultimate responsibility for liquidity risk management rests with the Board of directors. Liquidity risk is managed by monitoring forecast

cash flows and ensuring that adequate unutilised borrowing facilities are maintained. Additional borrowing facilities that the Group has at

its disposal to reduce liquidity risk are listed in the table below.

Borrowing capacity

The Company’s borrowing capacity is unlimited in terms of its articles of association.


Borrowing facilities

Total borrowing facilities 5 916,9 7 073,0

Current utilisation (2 173,8) (2 677,9)

Borrowing facilities available 3 743,1 4 395,1

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41.8 Maturity profile of financial instruments

The maturity profile of the recognised financial instruments are summarised as follows. These profiles represent the discounted cash

flows that are expected to occur in the future.

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS <1 year 1 – 6 years Total

2012

Financial assets

Cash and cash equivalents 3 388,4 – 3 388,4

Contract receivables 4 066,0 – 4 066,0

Contracts-in-progress 2 739,9 2 059,7 4 799,6

Trade and other receivables 2 127,1 – 2 127,1

Non-current receivables – 105,0 105,0

Other investments – 459,8 459,8


Bank overdrafts 38,5 – 38,5

Interest bearing liabilities 1 652,5 493,6 2 146,1

Non-interest bearing liabilities 243,2 0,2 243,4

Amounts due from contract customers 3 018,9 – 3 018,9

Trade and other payables 5 898,5 – 5 898,5

Derivative financial instruments 15,9 – 15,9

Subcontractor liabilities 2 098,4 651,9 2 750,3

Non-current payables – 67,5 67,5

2011

Financial assets

Cash and cash equivalents 3 100,6 – 3 100,6

Contract receivables 2 765,4 – 2 765,4

Contracts-in-progress 2 524,6 – 2 524,6

Trade and other receivables 1 836,6 – 1 836,6


Non-current receivables – 108,4 108,4

Other investments – 445,0 445,0


Bank overdrafts 46,8 – 46,8

Interest bearing liabilities 1 071,7 1 223,4 2 295,1

Non-interest bearing liabilities 7,8 1,8 9,6

Amounts due from contract customers 2 244,4 – 2 244,4

Trade and other payables 5 226,9 – 5 226,9


Subcontractor liabilities 2 171,4 141,1 2 312,5

Non-current payables – 62,0 62,0


42. RELATED PARTY TRANSACTIONS, DIRECTORS’ EMOLUMENTS AND INTEREST

42.1 Identity of related parties

The Group has a related party relationship with its subsidiary companies (Annexure 1), associate companies (note 6), joint ventures

(note 37), retirement and other benefit plans (note 19) and with its directors, prescribed officers and key management personnel.

42.2 Related party transactions and balances

During the year the Company and its related parties, in the ordinary course of business, entered into various inter-group sale and

purchase transactions. These transactions are no less favourable than those arranged with third parties.

Balances between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.


Amounts owed to related parties

Unsecured interest bearing borrowings

Amounts owing from joint ventures 38,1 35,0

Amounts owing to joint ventures (151,5) (184,3)

The amounts owing to the joint ventures are unsecured with no fixed terms of repayment and carrying

interest at 10% (2011: 10%) per annum. The movement in amounts owing to and owing from joint

ventures represent the transactions for the year.

Amounts owed to related parties


Amounts owing to joint ventures 344,3 239,0

Trade and other payables

Amounts owing by joint ventures 575,0 406,5

Normal trading conditions for the trade and other receivables & payables will apply.

42.3 Transactions with key management personnel

Interest of the directors in the share capital of the Company is set out in the directors’ report.

The key management personnel compensation, excluding the directors and prescribed officers are:

Salaries 30,5 33,7

Retirement fund contributions 2,9 2,8

Allowances 2,7 3,7

Other benefits 2,0 0,7

Total guaranteed remuneration 38,1 40,9

Gain on exercise of share options 0,1 1,2

Performance related 23,6 15,5

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42. RELATED PARTY TRANSACTIONS, DIRECTORS’ EMOLUMENTS AND INTEREST (continued)

42.3 Transactions with key management personnel (continued)

Executive Directors

The remuneration of executive directors for the year ended 30 June 2012 was as follows:


Totalguaranteed

remunerationR’000

Leavepayouts

R’000

Performancerelated*R’000

Contractpayment

R’000Total

R’000

2012

AJ Bester1 3 550 – 2 000 – 5 550

O Fenn 3 610 – 900 – 4 510

HJ Laas2 4 000 – 3 000 – 7 000

11 160 – 5 900 – 17 060

2011

BC Bruce3 4 850 517 – 4 850 10 217

MP Chaba4 2 383 9 – – 2 392

O Fenn 3 400 – 375 – 3 775

TG Fowler4 3 200 – – – 3 200

HJ Laas2 813 – 250 – 1 063

RW Rees3 3 750 179 – 3 750 7 679

18 396 705 625 8 600 28 326

* Performance bonuses are accounted for on an accrual basis to match the amount payable to the applicable financial year-end.

1 AJ Bester was appointed to the Board 1 July 2011 as Group financial director.2 Appointed to the Board 1 April 2011 and Group chief executive 1 July 2011.3 BC Bruce and RW Rees retired from the Board 30 June 2011. The contract payment represents 12 months guaranteed remuneration.4 MP Chaba and TG Fowler resigned from the Board 14 February 2011 and 30 June 2011 respectively and as employees 31 May 2011 and

30 June 2011 respectively.

The remuneration of executive directors and key management personnel is determined by the remuneration & human resources

committee having regard to the performance of individuals and market trends.

Details of service on Board committees are set out in the Corporate Governance Report. Interest of the directors in the share capital

of the Company is set out in the directors’ report.

The executive directors of the Company hold in aggregate, directly or indirectly, grants of options from The Murray & Roberts Trust in

respect of 0,66% (2011: 0,70%) of the ordinary shares of the Company. These options are subject to the terms and conditions of the

employee share option scheme.

Prescribed Officers


Totalguaranteed

R’000


Contractpayment

R’000Total

R’000

2012

PR Adams5 2 839 1 300 – 4 139

NWR Harvey6 3 458 – – 3 458

IW Henstock 2 770 1 300 – 4 070

AR Langham7 692 – – 692

RCC Noonan8 2 550 – 2 550 5 100

FP Saieva9 2 600 1 100 – 3 700

RAG Skudder 2 290 1 200 – 3 490


5 Remuneration is designated in GBP and converted to ZAR at the average exchange rate for the year.6 Resigned 6 July 2012 and a portion of remuneration is designated in AED converted to ZAR at the average exchange rate for the year.7 Resigned 29 August 2011.8 Retired 31 July 2012 from the Group. The contract payment represents 12 months guaranteed remuneration.9 Appointed 1 July 2011.




Prescribed Officers


Totalguaranteed

R’000


Contractpayment

R’000Total

R’000

2011

PR Adams 2 367 500 – 2 867

AJ Bester10 3 150 600 – 3 750

NWR Harvey 2 818 468 – 3 286

IW Henstock 2 600 500 – 3 100

HJ Laas11 2 104 750 – 2 854

AR Langham 2 600 – – 2 600

RCC Noonan 2 550 – – 2 550

RAG Skudder 2 000 450 – 2 450

KE Smith12 2 625 – – 2 625


10 Appointed executive director 1 July 2011.11 Remuneration to 31 March 2011.12 Retired 31 March 2011.

Non-Executive DirectorsThe level of fees for service as director, additional fees for service on the board committees and the chairman’s fee are reviewed annually.

The remuneration of non-executive directors for the year ended 30 June 2012 was:


Directors’fees

R’000

Non-attendance

R’000

SpecialboardR’000

Committeefees

R’000

Chairman’sfee

R’000

Total

2012

R’000

Total2011

R’000

RC Andersen – – – – 1 060 1 060 1 025

DD Barber 168 – 148 270 – 586 519

TCP Chikane13 9 – – 7 – 16 –

ADVC Knott-Craig14 83 (14) 88 88 – 245 346

N Magau 168 (14) 148 160 – 462 416

M McMahon 168 – 148 72 – 388 362

I Mkhize15 – – – – – – 151

W Nairn 168 (15) 148 184 – 485 329

AA Routledge 168 – 148 259 – 575 482

SP Sibisi 168 – 60 180 – 408 407

M Sello 168 – 118 271 – 557 481

RT Vice 168 – 88 268 – 524 502

1 436 (43) 1 094 1 759 1 060 5 306 5 020

13 Appointed 15 June 2012.14 Resigned 17 January 2012.15 Resigned 27 October 2011.

The remuneration of non-executive directors is submitted to the Annual General Meeting for approval in advance of such payment being made.

The chairman’s fee includes attendance at committee meetings.

Details of service on board committees are set out in the Corporate Governance Report. Interest of the directors in the stated capital of

the Company is set out in the directors’ report.

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The movements in share options of executive directors during the year ended 30 June 2012 are:

Executive Directors

Grant date Conditions

Outstandingoptions at

1 July 2011

Strikeprice

(Rands)Granted during

the year

Adjustmentas a result of

rights issue

Bester, AJ

06 Mar 2007 Special 500 000 50,60 – 170 000

20 Apr 2011 Hurdle 37 000 25,16 – 12 580

30 Aug 2011 Performance – 27,70 259 000 88 060

30 Aug 2011 Retention – 27,70 67 000 22 780

537 000 326 000 293 420

Fenn, O

8 Dec 2009 Hurdle 125 000 45,42 – 42 500

20 Apr 2011 Hurdle 37 000 25,16 – 12 580

30 Aug 2011 Performance – 27,70 183 000 62 220

30 Aug 2011 Retention – 27,70 42 000 14 280

162 000 225 000 131 580

Laas, HJ

28 Jun 2005 Standard 7 500 14,00 – –

28 Jun 2005 Hurdle 10 000 14,00 – –

03 Mar 2006 Standard 15 000 23,53 – 5 100

03 Mar 2006 Hurdle 15 000 23,53 – 5 100

06 Mar 2007 Special 385 000 50,60 – 130 900

20 Apr 2011 Hurdle 100 000 25,16 – 34 000

30 Aug 2011 Performance – 27,70 337 000 114 580

30 Aug 2011 Retention – 27,70 112 000 38 080

532 500 449 000 327 760

Past Executive Directors

Bruce, BC15

06 Mar 2007 Special 800 000 50,60 – 272 000

Fowler, TG16

26 Aug 2009 Hurdle 125 000 47,74 – –

Rees, RW15

28 Jun 2005 Standard 3 750 14,00 – –

03 Mar 2006 Standard 37 500 23,53 – –

03 Mar 2006 Hurdle 25 000 23,53 – 4 598

06 Mar 2007 Special 380 000 50,60 – 123 269

446 250 – 127 867

* In the event that the sixth anniversary of the option date falls within a period which is designated by Murray & Roberts Holdings Limited (“Company”) to be a period during which directors of the Company may not deal in shares of the Company (“closed period”), then the option period in respect of those participants who are precluded from dealing shall be extended. Such extension shall be for the same number of business days after the end of the closed period as the number of business days between the beginning of the closed period and the sixth anniversary of the option date.

15 Retired 30 June 2011. The outstanding options will expire on 30 June 2013.16 Resigned 14 February 2011.


Adjustedoption price

per share(Rands)

Exercisedduring the year

Net gain(Rands)

Averageexercise price

(Rands)Surrendered

during the year

Outstanding

options at

30 June 2012 Expiry date

42,33 – – – – 670 000 06 Mar 2017

23,34 – – – – 49 580 20 Apr 2017

25,24 – – – – 347 060 30 Aug 2017

25,24 – – – – 89 780 30 Aug 2017

– – – 1 156 420

38,46 – – – – 167 500 08 Dec 2015

23,34 – – – – 49 580 20 Apr 2017

25,24 – – – – 245 220 30 Aug 2017

25,24 – – – – 56 280 30 Aug 2017

– – – 518 580

14,00 (7 500) 96 979 27,04 – – 28 Jun 2011*

14,00 (10 000) 129 305 27,04 – – 28 Jun 2011*

22,13 (20 100) 80 567 26,24 – – 31 May 2012

22,13 (10 050) 40 278 26,25 – 10 050 03 Mar 2013

42,33 – – – – 515 900 06 Mar 2017

23,34 – – – – 134 000 20 Apr 2017

25,24 – – – – 451 580 30 Aug 2017

25,24 – – – – 150 080 30 Aug 2017

(47 650) 347 129 – 1 261 610

42,33 – – – – 1 072 000 06 Mar 2017

– – – – (125 000) – 26 Aug 2015

14,00 (3 750) 27 185 26,19 – – 28 Jun 2011*

22,13 (37 500) 76 365 26,90 – – 31 May 2012

22,13 – – – (11 475) 18 123 03 Mar 2013

42,33 – – – (17 442) 485 827 06 Mar 2017

(41 250) 103 550 (28 917) 503 950

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Prescribed Officers

Grant date Conditions

Outstandingoptions at

1 July 2011

Strikeprice

(Rands)Granted during

the year

Adjustmentas a result of

rights issue

Adams, PR

06 Mar 2007 Special 500 000 50,60 – 170 000

Harvey, NWR

28 Jun 2005 Standard 28 750 14,00 – –

28 Jun 2005 Hurdle 10 000 14,00 – –

03 Mar 2006 Standard 45 000 23,53 – 15 300

03 Mar 2006 Hurdle 30 000 23,53 – 10 200

06 Mar 2007 Special 325 000 50,60 – 110 500

20 Apr 2011 Hurdle 37 000 25,16 – 12 580

30 Aug 2011 Performance – 27,70 172 000 58 480

30 Aug 2011 Retention – 27,70 53 000 18 020

475 750 225 000 225 080

Henstock, IW

01 Jul 2008 Standard 25 000 86,51 – 8 500

26 Aug 2009 Hurdle 190 000 47,74 – 64 600

20 Apr 2011 Hurdle 37 000 25,16 – 12 580

30 Aug 2011 Performance – 27,70 124 000 42 160

30 Aug 2011 Retention – 27,70 56 000 19 040

252 000 180 000 146 880

Langham, AR

06 Mar 2007 Special 400 000 50,60 – –

20 Apr 2011 Hurdle 37 000 25,16 – –

437 000 – –

Noonan, RCC

13 Mar 2002 Standard 22 500 6,93 – 7 650

13 Mar 2002 Hurdle 22 500 6,93 – 7 650

06 Mar 2003 Standard 18 750 11,00 – 6 375

06 Mar 2003 Hurdle 35 000 11,00 – 11 900

15 Mar 2004 Standard 30 000 13,04 – 10 200

15 Mar 2004 Hurdle 25 000 13,04 – 8 500

28 Jun 2005 Standard 20 000 14,00 – –

28 Jun 2005 Hurdle 30 000 14,00 – –

03 Mar 2006 Standard 30 000 23,53 – 10 200

03 Mar 2006 Hurdle 30 000 23,53 – 10 200

06 Mar 2007 Special 375 000 50,60 – 127 500

638 750 – 200 175

Saieva, FP

30 Aug 2011 Performance – 27,70 131 000 44 540

Skudder, RAG

03 Mar 2006 Standard 37 500 23,53 – 12 750

06 Mar 2007 Hurdle 15 000 50,60 – 5 100

26 Feb 2008 Standard 12 500 92,01 – 4 250

26 Aug 2009 Hurdle 100 000 47,74 – 34 000

20 Apr 2011 Hurdle 37 000 25,16 – 12 580

30 Aug 2011 Performance – 27,70 96 000 32 640

30 Aug 2011 Retention – 27,70 51 000 17 340

202 000 147 000 118 660

* In the event that the sixth anniversary of the option date falls within a period which is designated by Murray & Roberts Holdings Limited (“Company”) to be a period during which directors of the Company may not deal in shares of the Company (“closed period”), then the option period in respect of those participants who are precluded from dealing shall be extended. Such extension shall be for the same number of business days after the end of the closed period as the number of business days between the beginning of the closed period and the sixth anniversary of the option date.


Adjustedoption price

per share(Rands)

Exercisedduring the year

Net gain(Rands)

Averageexercise price

(Rands)Surrendered

during the year

Outstanding

options at

30 June 2012 Expiry date

42,33 – – – – 670 000 06 Mar 2017

14,00 (28 750) 387 182 27,58 – – 28 Jun 2011*

14,00 (10 000) 134 672 27,58 – – 28 Jun 2011*

22,13 (60 300) 258 132 26,52 – – 31 May 2012

22,13 (30 150) 128 530 26,50 – 10 050 03 Mar 2013

42,33 – – – – 435 500 06 Mar 2017

23,34 – – – – 49 580 20 Apr 2017

25,24 – – – – 230 480 30 Aug 2017

25,24 – – – – 71 020 30 Aug 2017

(129 200) 908 516 – 796 630

69,13 – – – – 33 500 01 Jul 2014

40,19 – – – – 254 600 26 Aug 2015

23,34 – – – – 49 580 20 Apr 2017

25,24 – – – – 166 160 30 Aug 2017

25,24 – – – – 75 040 30 Aug 2017

– – – 578 880

– – – – (400 000) – 06 Mar 2017

– – – – (37 000) – 20 Apr 2017

– – (437 000) –

9,74 (30 150) 517 814 27,02 – – 13 Mar 2012

9,74 (30 150) 517 843 27,02 – – 13 Mar 2012

12,78 – – – – 25 125 06 Mar 2013

12,78 – – – – 46 900 06 Mar 2013

14,30 – – – – 40 200 15 Mar 2014

14,30 – – – – 33 500 15 Mar 2014

14,00 (20 000) 258 622 27,04 – – 28 Jun 2011*

14,00 (30 000) 387 933 27,04 – – 28 Jun 2011*

22,13 (40 200) 192 408 27,02 – – 31 May 2012

22,13 (30 150) 144 220 27,02 – 10 050 03 Mar 2013

42,33 – – – – 502 500 06 Mar 2017

(180 650) 2 018 840 – 658 275

25,24 – – – – 175 540 30 Aug 2017

22,13 (50 250) 289 281 28,00 – – 31 May 2012

42,33 – – – – 20 100 06 Mar 2013

73,23 – – – – 16 750 26 Feb 2014

40,19 – – – – 134 000 26 Aug 2015

23,34 – – – – 49 580 20 Apr 2017

25,24 – – – – 128 640 30 Aug 2017

25,24 – – – – 68 340 30 Aug 2017

(50 250) 289 281 – 417 410

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Interest of directors in contracts

A register detailing directors’ interests in the Company is available for inspection at the Company’s registered office.

Directors’ service contracts

Directors do not have fixed term contracts, but executive directors are subject to notice periods of between one and three months.

A twelve month notice period was applied to the previous Group chief executive and Group financial director. There is no material liability

to the Group with respect to the contract of any director. Normal retirement of executive directors is at age 63, while non-executive

directors are required to retire at age 70.

43. SUBSIDIARY COMPANIES

A list of the major subsidiary companies is set out in Annexure 1.

Although the Group does not own more than half of the equity shares of the following companies, it has the power to govern the financial

and operating policies via inter alia shareholder agreements and therefore has control. Consequently these companies are consolidated

as subsidiaries.

% direct ownership

2012 2011

Murray & Roberts Abu Dhabi LLC 49 49

Murray & Roberts Contractors (Middle East) LLC 49 49

Murray & Roberts (Qatar) LLC 49 –

Johnson Arabia LLC* – 49

BRC Arabia FZC 49 49

BRC Arabia LLC* – 49

The following entity is not consolidated as the Group does not have control:

Entilini Concession Proprietary Limited** 75 75

Peritus International (Proprietary) Limited* – 54

* Disposed of during the year.** The Group does not have voting rights on the 25% held by empowerment partners and as a result the investment is equity accounted.

44. EVENTS AFTER REPORTING DATE

The Steel Business, including CISCO, was disposed of at book value subsequent to the year-end in two separate transactions. The Steel

Business transaction, excluding CISCO, is subject to Competition Commission approval.

The directors are not aware of any matter or circumstance arising since the end of the financial year, not otherwise dealt with in the

Group annual financial statements, which significantly affects the financial position at 30 June 2012 or the results of its operations or

cash flows for the year then ended.


45. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of

future events that are believed to be reasonable under the circumstances.

Key sources of estimation uncertainty

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal

the related actual results. The most significant estimates and assumptions made in the preparation of these consolidated financial

statements are discussed below.

Revenue recognition and contract accounting The Group uses certain assumptions and key factors in the management of and reporting for its contracting arrangements. These

assumptions are material and relate to:

The estimation of costs to completion and the determination of the percentage of completion

The recoverability of over claims

The recognition of penalties and claims on contracts

The recognition of contract incentives

The scale and duration of major projects secured by the Group over the past few years presented a number of challenges, not least of

which is revenue recognition, such that neither present nor future shareholders are unduly prejudiced or advantaged relative to one another.

The Group has recognised in prior years uncertified revenue relating to claims and variation orders on projects. This mainly related to

Gautrain Rapid Rail Link (Gautrain), Dubai International Airport Concourse 2 (Dubai Airport) and Gorgon Pioneer Materials Offloading

Facility contract (GPMOF).

The Group utilises experts and probabilities in determining the amount to be recognised relating to uncertified revenues and that the

amounts currently recognised are recoverable. A cumulative balance of R2 billion, net of on account payments has been recognised in

the statement of financial position (refer to note 9).

The level of revenue recognition on construction contracts, which includes a portion of the claims submitted, is prudent and justifiable in

terms of each contract, given the complexity and magnitude of claims and variation orders still to be resolved.

Estimated impairment of goodwillAssumptions were made in assessing any possible impairment of goodwill. Details of these assumptions and risk factors are set out in note 4.

Estimation of the fair value of share optionsAssumptions were made in the valuation of the Group’s share options. Details of the assumptions used are set out in note 13.

Estimated value of employee benefit plans Assumptions were made in the valuation of the Group’s retirement and other benefit plans. Details of the assumptions and risk factors

used are set out in note 19.

Other estimates madeThe Group also makes estimates for the:

Calculation of the provision for doubtful debts

Determination of useful lives and residual values of items of property, plant and equipment

Calculation of the provision for obsolete inventory

Calculation of any provision for claims, litigation and other legal matters

Calculation of any other provisions including warrantees, guarantees and bonuses

Assessment of impairments and the calculation of the recoverable amount of assets

Recognition of deferred taxation asset

Calculation of the fair value of financial instruments including the service concessions (refer to note 7)

Calculation of the fair value of assets, identifiable intangible assets and contingent liabilities on acquisition of businesses, and the

determination of taxation liabilities

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46. STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED STANDARDS THAT ARE NOT YET EFFECTIVE

46.1 Standards and interpretations that are not yet effective

Set out below are the significant new and revised accounting standards and interpretations that apply in the future. Management is

currently assessing the impact of these amendments and new interpretations.

Accounting Standard/Interpretation Type Effective date

IAS 1: Presentation of Financial Statements Amendment Financial years commencing on or after

1 January 2013

IAS 12: Deferred Tax: Recovery of Underlying Assets Amendment Financial years commencing on or after

1 January 2012

IAS 16: Property, Plant and Equipment Amendment Financial years commencing on or after

1 January 2013

IAS 19: Employee Benefits Amendment Financial years commencing on or after

1 January 2013

IAS 27: Separate Financial Statements New Financial years commencing on or after

1 January 2013

IAS 28: Investments in Associates and Joint Ventures New Financial years commencing on or after

1 January 2013

IAS 32: Financial Instruments – Presentation Amendment Financial years commencing on or after

1 January 2013

IAS 34: Interim Financial Reporting Amendment Financial years commencing on or after

1 January 2013

IFRS 7: Financial Instruments – Disclosure Amendment Financial years commencing on or after

1 January 2013

IFRS 9: Financial Instruments New Financial years commencing on or after

1 January 2015

IFRS 10: Consolidated Financial Statements New Financial years commencing on or after

1 January 2013

IFRS 11: Joint Arrangements New Financial years commencing on or after

1 January 2013

IFRS 12: Disclosure of Interest in Other Entities New Financial years commencing on or after

1 January 2013

IFRS 13: Fair Value Measurement New Financial years commencing on or after

1 January 2013

IFRIC 20: Stripping Costs in the production Phase of a Surface Mine New Financial years commencing on or after

1 January 2013

Certain improvements to IFRS 2012 Improvement Each improvement has its own effective

date the earliest being 1 January 2013


47. DISCLOSURE UPDATE

In the annual financial statements for the current year the Group enhanced certain disclosures required by IFRS. Comparative disclosures

for the year ended 30 June 2011 were also included as part of this enhancement process. The notes impacted are as follows:

2. Property, plant and equipment– Separate disclosure of impairment loss and impairment reversal recognised in the year and detail regarding the nature of the

impairment and reversal.

8. Inventories– Disclosure of amounts written down and reversal of such write downs as well as inventory carried at net realisable value.

10.2 Finance lease receivable– Details regarding leasing arrangements.

14. Hedging and translation reserve– The taxation effects of cash flow hedges have been separately disclosed.

19.3 Defined benefit plan – retirement benefit– Movement in the present value of the funded liability.

– Movement in the fair value of plan assets.

– Disclosure of experience adjustments for the current year and previous four years.

– Major categories of plan assets.

19.4 Defined benefit plan – post retirement medical aid– Movement in the present value of the funded liability.




– Sensitivity analysis of 1% change on current service cost and interest expense.

19.5 Defined benefit plan – disability benefit– Movement in the present value of the funded liability.




19.6 Defined benefit plan – pension scheme– Movement in the present value of the funded liability.




39. Capital commitments– Detail regarding the Group’s share of capital commitments in jointly controlled entities.

41.6 Credit risk management– Disclosure of assets past due, but not impaired into more detailed ageing categories.

Annexure 3– Disclosure of the inter-segmental revenue for the different operating segments.

– Disclosure of geographical information relating to revenue and non-current assets excluding deferred taxation assets.

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STATEMENT OF FINANCIAL POSITIONas at 30 June 2012

ASSETSNon-current assets

Investment in subsidiary company 2 0,4 0,4

Total non-current assets 0,4 0,4

Current assets

Amount owing from subsidiary company 2 3 355,5 1 408,0

Amount owing from The Murray & Roberts Trust 3 133,0 188,9

Trade and other receivables – 0,3

Cash and cash equivalents 1,7 1,0

Total current assets 3 490,2 1 598,2

TOTAL ASSETS 3 490,6 1 598,6

EQUITY AND LIABILITIESEquity

Stated capital (2011: share capital and share premium) 4 3 582,8 1 672,8

Non-distributable reserve 0,9 0,9

Retained earnings (96,2) (78,7)

Total ordinary shareholder’s equity 3 487,5 1 595,0

Current liabilities

Trade and other payables 3,1 3,6

Total current liabilities 3,1 3,6

TOTAL EQUITY AND LIABILITIES 3 490,6 1 598,6

STATEMENT OF FINANCIAL PERFORMANCEfor the year ended 30 June 2012

Revenue

Dividends received from subsidiary companies – 175,9

Fees received from subsidiary company 5,3 5,9

Total revenue 5,3 181,8

Total expenses (22,8) (80,2)

Impairment of loan (16,5) (74,3)

Auditors’ remuneration (0,8) (0,7)

JSE fees (0,1) (0,1)

Other (5,4) (5,1)

(Loss)/profit before taxation (17,5) 101,6

Taxation – –

(Loss)/profit for the year (17,5) 101,6

Other comprehensive (loss)/income – –

Total comprehensive (loss)/income for the year (17,5) 101,6

MURRAY & ROBERTS HOLDINGS LIMITED



Statedcapital,

share capitaland sharepremium

Capitalredemption

reserveRetainedearnings

Attributableto owners of

the parent

STATEMENT OF CHANGES IN EQUITYfor the year ended 30 June 2012

Balance at 30 June 2010 1 672,8 0,9 (4,4) 1 669,3

Total comprehensive income for the year – – 101,6 101,6

Dividends declared and paid – – (175,9) (175,9)

Balance at 30 June 2011 1 672,8 0,9 (78,7) 1 595,0

Total comprehensive loss for the year – – (17,5) (17,5)

Proceeds from rights issue to shareholders (net of transaction costs) 1 910,0 – – 1 910,0

Balance at 30 June 2012 3 582,8 0,9 (96,2) 3 487,5


STATEMENT OF CASH FLOWSfor the year ended 30 June 2012

(Loss)/profit before taxation (17,5) 101,6

Adjustment for:

Dividends received – (175,9)

Impairment of loan 16,5 74,3

Changes in working capital (0,2) –

Decrease in trade and other receivables 0,3 –

Decrease in trade and other payables (0,5) –

Operating cash flow (1,2) –

Dividends paid – (175,9)

Cash flows from operating activities (1,2) (175,9)

Dividends received – 175,9

Cash flows from investing activities – 175,9

Proceeds on rights issue to shareholders 1 910,0 –

Increase in amounts owing from subsidiary company (1 947,5) (18,2)

Decrease in amounts owing from The Murray & Roberts Trust 39,4 18,4

Cash flows from financing activities 1,9 0,2

Net increase in cash and cash equivalents 0,7 0,2

Net cash and cash equivalents at beginning of the year 1,0 0,8

Net cash and cash equivalents at end of the year 1,7 1,0

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NOTES TO THE MURRAY & ROBERTS HOLDINGS FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

These annual financial statements are prepared according to the same accounting policies used in preparing the consolidated financial

statements of the Group other than accounting policy 1.3 which deals with the basis of consolidation.

The accounting policies are set out on pages 136 – 148.

2. INVESTMENT IN SUBSIDIARY COMPANY


Shares at cost 0,4 0,4

Amount due 3 355,5 1 408,0

3 355,9 1 408,4

The amount due from the subsidiary company is unsecured, interest free and does not have any fixed repayment terms (refer to

Annexure 1 for details).

3. AMOUNT OWING FROM THE MURRAY & ROBERTS TRUST


Amount due 361,5 400,9

Impairment of amount owing (228,5) (212,0)

Total due 133,0 188,9

The amount due from The Murray & Roberts Trust (“Trust”) is unsecured, interest free and does not have any fixed repayment terms.

The Company has subordinated its claims against the Trust in favour of all other creditors of the Trust. The agreement between the Trust

and the Company will remain in force and effect for as long as the liabilities of the Trust exceed its assets, fairly valued.

4. STATED CAPITAL (2011: SHARE CAPITAL AND PREMIUM)


Authorised

500 000 000 ordinary shares with a par value of 10 cents each – 50,0


331 892 619 ordinary shares at par value of 10 cents each – 33,2

Share premium – 1 639,6

Total share capital and share premium – 1 672,8

Authorised

750 000 000 shares of no par value 75,0 –


444 736 118 shares of no par value

Net stated capital 3 582,8 –

Changes in authorised and issued share capital

The Company has converted its share capital and share premium to no par value stated capital by means of a special resolution.

A rights issue was undertaken in April 2012 in which the Company issued 112 843 499 shares at a price of R18,00 per share resulting

in gross proceeds of R2 031,2 million, with transaction costs of R121,2 million offset against stated capital.


5. EMOLUMENTS OF DIRECTORS


Executive directors (paid by subsidiary companies) 11,2 28,3

Non-executive directors (paid by the Company) 5,3 5,0

Number of directors at year-end 13 16*

*Executive directors

BC Bruce and RW Rees retired from the Board on 30 June 2011. TG Fowler resigned from the Board on 30 June 2011.

Non-executive directors

ADVC Knott-Craig resigned from the Board 17 January 2012. TCP Chikane was appointed to the Board on 15 June 2012.

Details of individual director emoluments are disclosed in note 42 on the consolidated financial statements.

6. CONTINGENT LIABILITIES


There are contingent liabilities in respect of limited and unlimited guarantees covering loans, banking

facilities and other obligations of joint venture and subsidiary companies and other persons; the

ascertainable contingent liabilities at 30 June covered by such guarantees amounting to: 4 270 1 400

7. DERIVATIVE FINANCIAL INSTRUMENTS: CALL OPTIONS

In terms of the Broad-based Black Economic Empowerment transaction approved by shareholders on 21 November 2005, the Company

has one call option to repurchase the shares in Murray & Roberts Letsema Khanyisa Proprietary Limited and Murray & Roberts Letsema

Sizwe Proprietary Limited (“BBBEE subco’s”) at market value and on the following condition:

31 December 2015 call option

On 31 December 2015, being the date on which the lock-in-period expires, if the value of the shares owned by the BBBEE subco’s is

less than the aggregate redemption amount of the funding.

No value has been placed on this call option as it provides the Company with an option to repurchase the shares at market value and

therefore does not expose the Company to any potential loss or gain.

Following a review, the 31 December 2010 call option was not exercised as the structure at that date was still economically viable.

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ANNEXURE 1 – MAJOR OPERATING SUBSIDIARIES AND ASSOCIATE COMPANIES

a) Direct

Issuedshare

capitalamountin Rand

Interest in issued share capital

Cost of investment

Loanaccount

2012

%

2011%

2012

Rm

2011Rm

2012

Rm

2011Rm

Murray & Roberts Investments Limited 68 000 100 100 0,4 0,4 3 355,5 1 408,0

b) Indirect

Issuedshare capital

(in Randsunless

otherwisestated)

Proportion ownershipinterest

Proportion of voting power held

2012

%

2011%

2012

%

2011%

Murray & Roberts Limited 59 100 100 100 100

Construction Africa and Middle East

Concor Proprietary Limited 6 673 797 100 100 100 100

Murray & Roberts (Namibia) Limited

(incorporated in Namibia) NAD 80 000 100 100 100 100

Murray & Roberts (Botswana) Limited

(incorporated in Botswana) BWP 2 100 100 100 100

Murray & Roberts Contractors (Middle East) LLC

(incorporated in Dubai) AED 2 000 000 49 49 100 100

Murray & Roberts Abu Dhabi LLC (incorporated in Abu Dhabi) AED 2 000 000 49 49 100 100

Johnson Arabia LLC (incorporated in Dubai)* AED 300 000 – 49 – 50

Tolcon Lehumo Proprietary Limited 100 74 74 74 74

Toll Road Concessionaires Proprietary Limited 12 000 100 100 100 100

PT Operational Services Proprietary Limited 1 000 100 66,67 100 66,67

Engineering Africa

Wade Walker Proprietary Limited 101 100 100 100 100

Construction Products Africa

Murray & Roberts Steel Proprietary Limited** 100 100 100 100 100

BRC Arabia (FZC) Limited AED 2 000 000 49 49 50 50

BRC Arabia (LLC) Limited* AED 300 000 – 49 – 50

Union Carriage and Wagon Company Proprietary Limited 8 160 000 100 100 100 100

Construction Global Underground Mining

Cementation Canada Inc (incorporated in Canada) CAD 2 700 010 100 100 100 100

Murray & Roberts Cementation Proprietary Limited 1 750 000 100 100 100 100

Cementation Sudamérica SA (incorporated in Chile) USD 2 036 90 90 90 90

Cementation USA Inc (incorporated in Nevada,

United States of America) USD 5 000 100 100 100 100

Construction Australasia Oil & Gas and Minerals

Clough Limited (incorporated in Australia) AUD 232 614 001 62 62 62 62

Corporate

Murray & Roberts Australia (Proprietary) Limited AUD 1 100 100 100 100

Murray & Roberts International Limited

(incorporated in British Virgin Islands) USD 5 000 000 100 100 100 100

Murray & Roberts (Malaysia) Sdn. Bhd.

(incorporated in Malaysia) MYR 250 000 100 100 100 100

Associate companies

Forge Group Limited AUD 42 836 560 35,9 33,3 35,9 33,3

Bombela TKC Proprietary Limited 100 25,0 25,0 25,0 25,0

Bombela Operating Company Proprietary Limited 100 23,9 23,9 23,9 23,9

Northmid Corporate Park Proprietary Limited 100 25,0 50,0 25,0 50,0

* Disposed of during the year.** Disposed of during August 2012.


Financialyears of

redemption

Closing interest rate (effective NACM) Amount

2012

%

2011%

2012

Rm

2011Rm

Secured

Bullet Repayment 2013 9,49 – 120,0 –








Bullet Repayment 2014 4,13 3,88 179,4 150,8

1 329,4 150,8

Unsecured

One bullet repayment 2011 – 8,79 – 300,0




Equal monthly instalments 2012 4,86 5,70 20,2 14,3

No fixed terms of repayment 2,45 2,30 52,3 44,9

Various obligations each under R10 million at varying rates of

interest and on varying terms of repayment 111,9 165,8


222,9 1 671,8

Capitalised finance leases

Plant and equipment 372,6 195,0

IT Equipment rentals 0,1 0,5

Specific project plant and equipment 250,0 316,8

Various plant and equipment financing 9,6 7,0

632,3 519,3

Total Group 2 184,6 2 341,9

Reflected in the notes under:

Long term loans (note 18)

Interest bearing secured loans 117,1 100,6

Interest bearing unsecured loans – 800,0


Bank overdrafts (note 11) 38,5 46,8

Short term loans (note 24)

Current portion of long term borrowings 1 396,7 875,2

Current portion of capitalised finance leases 255,8 196,5

2 184,6 2 341,9

ANNEXURE 2 – INTEREST BEARING BORROWINGS

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ANNEXURE 3 – GROUP SEGMENTAL REPORT

The operating segments reflect the management structure of the Group and the manner in which performance is evaluated and resources

allocated as managed by the Group’s chief decision maker, as required per revised IFRS 8: Operating Segments.

The Group’s operating segments are categorised as follows:

Construction Africa and Middle East

The Construction Africa and Middle East operating segment comprises of the following elements:

SADC Construction engages the large to medium sector building, civil engineering, industrial and roads & earthworks construction markets

of South Africa, Botswana and Namibia and pursues selected project opportunities elsewhere in SADC

Middle East market is coordinated out of Dubai in the United Arab Emirates and projects are engaged through separate companies

established in each jurisdiction and in joint venture with appropriate local partners. The primary market focus is major commercial facilities

and selected infrastructure projects

Marine engages the Africa, Middle East and Australasia markets to design and construct the marine infrastructure

PPP Investments & Services includes the Tolcon Group of companies who operate various tollroad and rail concessions throughout South

Africa and investment in selected concession companies

Engineering Africa engages large scale engineer, procure, construct and manage (“EPCM”) and engineer, procure and construct (“EPC”)

projects in the industrial, mining and power markets.

Construction Products Africa manufacture and supply value-added construction products to the infrastructure and building markets of South

Africa and the rest of Africa. Principal raw material inputs are steel, cement, aggregate, bitumen and clay.

Construction Global Underground Mining comprises of five constituents based in Johannesburg South Africa, North Bay in Ontario Canada,

Salt Lake City USA, Kalgoorlie Western Australia and Santiago Chile which are coordinated out of London. The segment provides specialist

engineering, construction and operational services in the underground mining environment worldwide.

Construction Australasia Oil & Gas and Minerals is based in Perth, Western Australia and delivers a variety of engineering, procurement

and construction services.

Inter-segment transfers

Segment revenue, segment expenses and segment results include transfers between operating segments and between geographical segments.

Such transfers are accounted for at arms-length prices. These transfers are eliminated on consolidation.

Segmental revenue and expenses

All segment revenue and expenses are directly attributable to the segments.

Segmental assets

All operating assets used by a segment, principally property, plant and equipment, investments, inventories, contracts-in-progress and

receivables, net of allowances. Cash and taxation balances are excluded. Segment assets are allocated to the geographic segments based on

where the assets are located.

Segmental liabilities

All operating liabilities of a segment, principally accounts payable, subcontractor liabilities and external interest bearing borrowings. Bank

overdrafts and taxation balances are excluded.


ANNEXURE 3 – GROUP SEGMENTAL REPORT CONTINUED




Africa


Africa

ConstructionGlobal

UndergroundMining


Oil & Gasand

Minerals

Corporateand

Properties Group

2012

Revenue* 8 108 5 213 3 738 9 859 8 484 4 35 406

Inter-segmental revenue 57 36 28 27 10 – 158

Gross revenue 8 165 5 249 3 766 9 886 8 494 4 35 564

Results

(Loss)/profit before interest

and taxation (1 317) 200 197 605 286 (132) (161)

Net interest (expense)/income (69) (71) (122) (1) 28 (13) (248)

(Loss)/profit before taxation (1 386) 129 75 604 314 (145) (409)

Taxation (expense)/credit (79) (61) (15) (177) (53) 140 (245)

(Loss)/profit after taxation (1 465) 68 60 427 261 (5) (654)

Income from equity accounted

investments 9 – – – 134 – 143

(Loss)/profit from discontinued

operations (1) – (78) – (60) 58 (81)

Non-controlling interests (9) (4) (1) 1 (131) – (144)


Murray & Roberts Holdings Limited (1 466) 64 (19) 428 204 53 (736)

2011

Revenue* 9 108 4 094 4 157 7 789 5 387 – 30 535

Inter-segmental revenue 3 189 58 22 12 – 284

Gross revenue 9 111 4 283 4 215 7 811 5 399 – 30 819

Results

(Loss)/profit before interest

and taxation (1 399) (51) 192 602 269 (291) (678)

Net interest (expense)/income (44) (19) (189) 14 29 15 (194)

(Loss)/profit before taxation (1 443) (70) 3 616 298 (276) (872)

Taxation (expense)/credit (106) 98 (1) (189) (17) 19 (196)

(Loss)/profit after taxation (1 549) 28 2 427 281 (257) (1 068)

(Loss)/income from equity accounted

investments (2) – (12) – 91 9 86

(Loss)/profit from discontinued

operations (132) – (517) – (45) 28 (666)

Non-controlling interests (6) (4) 6 3 (86) – (87)


Murray & Roberts Holdings Limited (1 689) 24 (521) 430 241 (220) (1 735)

* Segmental revenue reported above represents revenue generated from external customers.

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ALL MONETARY AMOUNTS ARE EXPRESSEDIN MILLIONS OF RANDS Notes



Africa


Africa

ConstructionGlobal

UndergroundMining


Oil & Gasand

Minerals

Corporate**and

Properties Group

Operating segments

2012

Statement of financial position

Segmental assets 1 5 683 2 102 2 755 3 606 3 995 188 18 329

Segmental liabilities 2 5 086 1 792 1 169 2 312 2 906 1 650 14 915

Investments in associate

companies* 30 – – – 855 – 885

Assets classified as

held-for-sale* 32 – 656 – 185 32 905

Liabilities directly associated

with a disposal group

held-for-sale* – – 211 – 38 – 249

Other information

Purchases of property, plant

and equipment 174 67 79 548 72 19 959

Purchases of other intangible

assets 1 – – 4 10 2 17

Depreciation 141 140 82 250 31 21 665

Amortisation of other intangible

assets 8 1 – 10 2 4 25

Impairment of property, plant

and equipment 1 – 30 – – – 31

Reversal of impairment on

property, plant and equipment 4 – 2 1 – – 7

Impairment of receivables 19 2 36 1 4 – 62

People 7 723 8 283 5 191 18 613 4 785 115 44 710

2011

Statement of financial position

Segmental assets 1 5 201 1 241 3 166 2 708 3 354 236 15 906

Segmental liabilities 2 5 300 1 224 1 448 1 708 2 039 2 046 13 765

Investments in associate

companies* 35 – 2 – 527 – 564

Assets classified as

held-for-sale* 505 – 1 026 – 1 298 31 2 860

Liabilities directly associated

with a disposal group

held-for-sale* 123 – 395 – 663 1 1 182

Other information

Purchases of property, plant

and equipment 132 174 76 356 80 14 832

Purchases of other intangible

assets 1 – – 4 3 4 12

Depreciation 164 86 121 173 65 20 629

Amortisation of other intangible

assets 3 1 1 9 8 4 26

Impairment of property, plant

and equipment – – 270 7 – 23 300

Reversal of impairment on

property, plant and equipment – – – 22 – – 22

Impairment of receivables 568 – 107 – – – 675

People 10 140 5 193 6 377 16 952 3 636 124 42 422

* Amounts included in segmental assets and liabilities.

** Corporate segmental assets include the inter-segment eliminations of group loans and receivables.



NOTES

1. RECONCILIATION OF SEGMENTAL ASSETSTotal assets 22 442 19 560

Cash and cash equivalents (3 388) (3 101)

Current taxation assets (91) (83)

Deferred taxation assets (634) (470)

Segmental assets 18 329 15 906

2. RECONCILIATION OF SEGMENTAL LIABILITIESTotal liabilities 15 340 14 239

Bank overdrafts (39) (47)

Current taxation liabilities (175) (116)

Deferred taxation liabilities (211) (311)

Segmental liabilities 14 915 13 765

Geographical information

The Group operates in four principal geographical areas – Southern Africa, with South Africa as the country of domicile, Middle East,

Australasia & Southeast Asia and North America & other.

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current

assets by location of assets are detailed below.


Revenue Non-current assets*

2012 2011 2012 2011

Southern Africa 20 504 18 479 4 635 3 833

Middle East 1 356 2 494 1 182 12

Australasia & Southeast Asia 10 332 7 276 1 424 882

North America & other 3 214 2 286 519 366

35 406 30 535 7 760 5 093

* Non-current assets exclude deferred tax assets.

Major customers

There were no customers in the year under review or in the prior year that individually made up greater than 10% of the Group’s revenue.


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NOTICE OF ANNUAL GENERAL MEETING

Murray & Roberts Holdings Limited

(Incorporated in the Republic of South Africa)

(Registration number: 1948/029826/06)

(JSE Share code: MUR) (ISIN: ZAE000073441)

(“Company”) or (“Group”)

Notice is hereby given to shareholders, as at the record date of Friday, 14 September 2012, that the sixty-fourth annual general meeting of the

Company will be held at Douglas Roberts Centre, 22 Skeen Boulevard, Bedfordview, Johannesburg on Wednesday, 31 October 2012 at 11:00

to conduct the following business and to consider and, if deemed fit, to pass, with or without modification, the ordinary and special resolutions

set out below in the manner required by the Companies Act No. 71 of 2008 (as amended) (“Act”):

1. PRESENTATION OF ANNUAL FINANCIAL STATEMENTS The annual financial statements, incorporating the directors’ and audit & sustainability committee reports of the Group and Company for

the year ended 30 June 2012, have been approved by the Board of directors of the Company (“Board”) on 29 August 2012 and will be

presented at the annual general meeting.

2. ELECTION OF DIRECTORS To elect by way of separate resolutions:

2.1 TCP Chikane as non-executive director, who was appointed since the last annual general meeting and, in accordance with the

Company’s memorandum of incorporation, retires at this annual general meeting.

2.2 RC Andersen, M Sello and RT Vice as non-executive directors, who in terms of the memorandum of incorporation retire by rotation.

All the above retiring directors are eligible and available for re-election. Their profiles appear on pages 118 – 119. The Board

recommends the re-election of these directors. AA Routledge retires by rotation and is not available for re-election. RC Andersen has

given notice of his intention to retire as a director and chairman of the Company effective 1 March 2013, and thus his appointment will

end on that date.

Ordinary resolution number 1

“RESOLVED THAT TCP Chikane be and is hereby elected as a director of the Company.”


“RESOLVED THAT RC Andersen be and is hereby elected as a director of the Company.”


“RESOLVED THAT M Sello be and is hereby elected as a director of the Company.”


“RESOLVED THAT RT Vice be and is hereby elected as a director of the Company.”

3. REAPPOINTMENT OF EXTERNAL AUDITORS The audit & sustainability committee has nominated for re-appointment Deloitte & Touche as independent auditors and in particular

AJ Zoghby, being the individual registered auditor who will undertake the Company’s audit for the year ending 30 June 2013.


“RESOLVED THAT Deloitte & Touche be and is hereby re-appointed as auditors of the Company to hold office until conclusion of the

next annual general meeting.”

4. APPROVAL OF REMUNERATION POLICY To consider and approve the remuneration policy. The vote on this resolution is advisory only and non-binding. The resolution is put to

shareholders to endorse the Company’s remuneration programme and policies and their implementation, as summarised in the

remuneration policy set on pages 106 – 107.


“RESOLVED THAT the remuneration policy be and is hereby approved.”

5. APPOINTMENT OF MEMBERS OF THE AUDIT & SUSTAINABILITY COMMITTEE To elect, by way of separate resolutions, the following independent non-executive directors as members of the Company’s

audit & sustainability committee until the conclusion of the next annual general meeting:


“RESOLVED THAT DD Barber be and is hereby elected as a member of the Company’s audit & sustainability committee.”


“RESOLVED THAT TCP Chikane be and is hereby elected as a member of the Company’s audit & sustainability committee.”


“RESOLVED THAT M Sello be and is hereby elected as a member of the Company’s audit & sustainability committee.”


“RESOLVED THAT RT Vice be and is hereby elected as a member of the Company’s audit & sustainability committee.”


The profiles of the directors up for membership appear on pages 118 – 119. The nomination committee recommends the election of these members. M Sello will be stepping down as a member of the audit & sustainability committee when appointed chairman of theCompany, effective 1 March 2013.

6. SPECIAL BUSINESSTo consider and, if deemed fit, to pass, with or without modification, the following special resolutions:

6.1 Fees payable to non-executive directors

To approve the proposed fees payable quarterly in arrears to non-executive directors.

Special resolution number 1

“RESOLVED THAT the proposed fees for the next 12-month period, payable quarterly in arrears to non-executive directors with effectfrom the quarter commencing 1 October 2012, be approved as follows:

Proposed

per annum

Previous

per annum

Chairman Includes director and committee fees 1&2 R1 095 000 R1 095 000

Director Per annum 3&4 R200 000 R170 000

Committee fees:

Audit & sustainability Chairman R205 000 R170 000

Member R100 000 R85 500

Health, safety & environment Chairman R138 500 R115 500

Member R73 500 R73 500

Nomination Member R37 000 R37 000

Remuneration & human resources Chairman R138 500 R115 500

Member R73 500 R73 500

Risk management Chairman R138 500 R115 500

Member R73 500 R73 500

Social & ethics Chairman R138 500 R115 500

Member R73 500 R73 500

1 No fee increase was proposed for the chairman.2 Includes fees for chairing the nomination committee, attendance at the health, safety & environment committee, remuneration & human resources

committee and the social & ethics committee.3 Calculated on the basis of five meetings per annum.4 A deduction of R17 500 per meeting will apply for non-attendance at a scheduled meeting and R35 000 will be payable for attendance at a special Board

meeting as well as R17 500 per special committee meeting.

Explanatory note to special resolution number 1 – refer to page 223

6.2 Financial assistance to directors, prescribed officers, employee share scheme beneficiaries and related or inter-related companies and corporations

To approve the provision of financial assistance in terms of sections 44 and 45 of the Act.


“RESOLVED THAT the Board may, subject to sections 44 and 45 of the Act and the requirements (if applicable) of the:

(i) Company’s memorandum of incorporation; and

(ii) JSE Listings Requirements,

authorise the Company to provide direct or indirect financial assistance:

(i) to any person for the purpose of, or in connection with, the subscription for any option or any securities issued or to be issued by the Company, or any related or inter-related company, or for the purchase of any securities of the Company, or any related or inter-related company; and/or

(ii) to a director or prescribed officer of the Company or of a related or inter-related company; to a related or inter-related company or corporation; to a member of a related or inter-related corporation; or to any person related to the Company or to any such aforementioned company, corporation, director, prescribed officer or member,

provided that no such financial assistance may be provided at any time in terms of this authority after the expiry of two years from the date of the adoption of this special resolution number 2”

Explanatory note to special resolution number 2 – Refer to page 223

6.3 Adoption of new memorandum of incorporation

To approve the adoption of a new memorandum of incorporation to replace the existing memorandum and articles of association:


“RESOLVED THAT in terms of section 16(1)(c)(ii) of the Act and item 4(2) of Schedule 5 to the Act, the existing memorandum and articles

of association of the Company (re-named a memorandum of incorporation in terms of the Act) be and are hereby amended and

substituted in their entirety by the new memorandum of incorporation signed by the chairman of the annual general meeting on the first

page thereof for identification purposes, with effect from the date of filing of the required notice of amendment with the Companies and

Intellectual Property Commission.”

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NOTICE OF ANNUAL GENERAL MEETING CONTINUED


6.4 Adoption of new share incentive scheme

To approve the adoption of the proposed Murray & Roberts Holdings Limited Forfeitable Share Plan


“RESOLVED THAT the proposed Murray & Roberts Holdings Limited Forfeitable Share Plan be and is hereby approved.”


6.5 Amendment of existing share incentive scheme

To approve amendments to The Murray & Roberts Trust Deed


“RESOLVED THAT the Company hereby adopts the amendments to the Trust Deed of The Murray & Roberts Trust (incorporating the

Murray & Roberts Holdings Limited Employee Share Option Scheme) (“Trust”).


RECORD DATEThe record date for shareholders to be registered in the register of the Company for purposes of being entitled to attend, speak and vote at the

annual general meeting is Friday 26 October 2012. Accordingly, the last date to trade in order to be registered as a shareholder in the

Company’s registers on the record date shall be Friday 19 October 2012.

VOTING AND PROXIESOrdinary shareholders are entitled to attend, speak and vote at the annual general meeting. Ordinary shareholders may appoint a proxy to

attend, speak and vote in their stead. A proxy need not be a shareholder of the Company.

The special resolutions proposed to be adopted at this annual general meeting require the support of at least 75% of the voting rights exercised

thereon in order to be adopted. Ordinary resolutions proposed to be adopted require the support of more than 50% of the voting rights

exercised thereon in order to be adopted.

Shareholders holding dematerialised shares, but not in their own name, must furnish their Central Securities Depository Participant (“CSDP”)

or broker with their instructions for voting at the annual general meeting. If your CSDP or broker, as the case may be, does not obtain

instructions from you, it will be obliged to act in terms of your mandate furnished to it, or if the mandate is silent in this regard, complete the

relevant form of proxy attached.

Unless you advise your CSDP or broker, in terms of the agreement between you and your CSDP or broker by the cut off time stipulated in the

agreement, that you wish to attend the annual general meeting or send a proxy to represent you at the annual general meeting, your CSDP

or broker will assume that you do not wish to attend the annual general meeting or send a proxy.

If you wish to attend the annual general meeting or send a proxy, you must request your CSDP or broker to issue the necessary letter of

representation to you. Shareholders holding dematerialised shares in their own name, or holding shares that are not dematerialised, and who

are unable to attend the annual general meeting and wish to be represented at the meeting, must complete the relevant form of proxy attached

in accordance with the instructions and lodge it with or mail it to the transfer secretaries.

Forms of proxy (which are enclosed) should be forwarded to reach the transfer secretaries, Link Market Services South Africa (Proprietary)

Limited, by no later than 11:00 on Monday, 29 October 2012.

The completion of a form of proxy does not preclude any shareholder registered by the record date from attending the annual

general meeting.

Shareholders and proxies attending the annual general meeting on behalf of shareholders are reminded that satisfactory identification must

be presented in order for such shareholder or proxy to be allowed to attend or participate in the annual general meeting.

Shareholders or their proxies may participate in the meeting by way of telephone conference call and, if they wish to do so:

Must contact the company secretary (by email at the address [email protected]) by no later than 11:00 on

Monday 29 October 2012 in order to obtain dial-in details for that conference call;

Will be required to provide reasonably satisfactory identification; and

Will be billed separately by their own telephone service providers for their telephone call to participate in the meeting.

Voting will not be possible via the electronic facilities and shareholders wishing to vote their shares will need to be represented at the meeting

either in person, by proxy or by letter of representation, as provided for in the notice of meeting.

By order of the Board

Per: Rentia Joubert

Group Secretary

28 September 2012


EXPLANATORY NOTES TO SPECIAL RESOLUTIONS CONTAINED IN THE NOTICE OF AGM

1. SPECIAL RESOLUTION NUMBER 1: FEES PAYABLE TO NON-EXECUTIVE DIRECTORSExplanatory note to special resolution number 1

The Board has recommended that the level of fees paid to non-executive directors be adjusted as proposed with effect from

1 October 2012. Please refer to page 110 for more details on non-executive director fees.

2. SPECIAL RESOLUTION NUMBER 2: FINANCIAL ASSISTANCE TO DIRECTORS, PRESCRIBED OFFICERS, EMPLOYEESHARE SCHEME BENEFICIARIES AND RELATED OR INTER-RELATED COMPANIES AND CORPORATIONSExplanatory note to special resolution number 2

The Company would like the ability to provide financial assistance, if necessary, in accordance with section 45 of the Act. Furthermore, it

may be necessary or desirous for the Company to provide financial assistance to related or inter-related companies and corporations to

subscribe for options or securities or purchase securities of the Company or another company related or inter-related to it. Under the

Act, the Company will, however, require the special resolution referred to above to be adopted. In the circumstances and in order to,

among others, ensure that the Company’s subsidiaries and other related and inter-related companies and corporations have access to

financing and/or financial backing from the Company (as opposed to banks), it is necessary to obtain the approval of shareholders, as

set out in special resolution number 2. Sections 44 and 45 contain exemptions in respect of employee share schemes that satisfy the

requirements of section 97 of the Act. To the extent that any Murray & Roberts share incentive scheme does not satisfy such

requirements, financial assistance (as contemplated in sections 44 and 45) to be provided under any such scheme will, among others,

also require approval by special resolution.

3. SPECIAL RESOLUTION NUMBER 3: ADOPTION OF NEW MEMORANDUM OF INCORPORATIONExplanatory note to special resolution number 3

Material amendments to the current memorandum and articles of association of Murray & Roberts Holdings Limited (“Company”)

The following is an overview of the material changes to the memorandum and articles of association of the Company, which are currently

in force (“Current MOI”) and which are to be substituted by the proposed memorandum of incorporation (“Proposed MOI”). Please note

that this is intended as a summary for information purposes only, and is not intended as a substitute for the thorough perusal of the

document to which it relates. Shareholders are requested to familiarise themselves with the contents of the Proposed MOI, which is

available for inspection at the Company’s registered office from 1 October 2012 to 31 October 2012 at and after any adjourned meeting.

New additions

The following items constitute additions to the provisions of the Current MOI of the Company (references to articles in brackets are to

articles of the Proposed MOI for the Company)

1.1 the requirements of Schedule 10 to the listings requirements (“Listings Requirements”) of the JSE Limited (“JSE”)

all provisions required to be included in the MOI of the Company in terms of the Listings Requirements of the JSE, insofar as these

did not previously appear in the MOI, have been included and approved by the JSE, namely the following have been included -

1.1.1 alteration and amendment of the MOI

1.1.1.1 no alteration or amendment may be effected to the MOI unless the JSE has approved the proposed amendment/s;

1.1.1.2 in addition, where an amendment relates to the variation of the preferences, rights and other terms attaching to

a class of securities (where there are more than 1 (one) in issue), the affected securities holders may vote at the

general meeting of ordinary shareholders provided that their votes shall carry no special rights or privileges and

shall not exceed 24,99% (two four point nine nine percent) of the aggregate voting rights of all shareholders at

the meeting; and

1.1.1.3 the approvals contemplated above are not required if an amendment is ordered by a court in terms of section

16 of the Companies Act, 2008 (“Companies Act”) (article 3.3.1);

1.1.2 Company rules

the Board of the Company may not make or amend any rules of the Company (article 3.4);

1.1.3 variation of rights and other terms attaching to shares in response to “external fact/s”

the application of the provisions of sections 37(6) and 37(7) of the Companies Act have been excluded (article 4.1.2.1);

1.1.4 pari passu

1.1.4.1 all listed securities in each class rank pari passu (article 4.1.2.2.1);

1.1.4.2 for as long as there are cumulative or non-cumulative preference shares in issue, no further securities ranking in

priority to or pari passu with preference shares may be created without a special resolution passed at a separate

general meeting of such preference shareholders (article 4.1.2.2.2);

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1.1.5 rights attaching to ordinary shares

ordinary shareholders shall have only one vote in respect of each ordinary share held (article 4.1.2.3.2);

1.1.6 alteration of authorised securities

no alteration of share capital or authorised securities may be made except in compliance with the Listings Requirements

(article 4.2);

1.1.7 issues of capitalisation shares

the Board may inter alia approve the issue of capitalisation shares as set out in section 47(1) of the Companies Act (article 4.3);

1.1.8 power of Board to issue securities for special consideration restricted

securities for which listings are sought must be fully paid up and transferable and the power of the Board in section 40(5) of

the Companies Act is excluded (article 5.2);

1.1.9 issues of securities

1.1.9.1 issues of securities, convertible securities or options may only be effected in compliance with the Listings

Requirements (article 5.1);

1.1.9.2 the manner and procedures for pre-emptive offers on issue are set out in detail (article 5.3);

1.1.10 issue of debt instruments

the granting of special privileges to holders of debt instruments is prohibited (article 5.4);

1.1.11 acquisition by the Company of its own shares

the acquisition by the Company of its own shares is subject to approval by special resolution and the Listings Requirements

(article 9);

1.1.12 no liens

paid up securities of the Company may not be subject to liens in favour of the Company (article 10);

1.1.13 record date

record dates must be determined with reference to the Listings Requirements (article 13);

1.1.14 compliance with the Listings Requirements

the Company is required to hold meetings to adhere to the Listings Requirements in addition to those contemplated in the

Companies Act and is not restricted from doing so (articles 14.2.3 and 14.3);

1.1.15 conduct of shareholders’ meetings

all shareholders’ meetings required in terms of the Listings Requirements are to be held in person, and may not be

conducted by means of a written resolution as contemplated in section 60 of the Companies Act (article 14.4.1);

1.1.16 quorum for shareholders’ meetings

1.1.16.1 quorum for shareholders’ meetings shall be at least 3 (three) shareholders, and shareholders holding at least

25% (two five percent) of the voting rights exercisable at the relevant meeting (article 14.7.1);

1.1.16.2 any shareholders’ meeting which ceases to be quorate must be adjourned immediately (article 14.7.5);

1.1.17 notices of shareholders’ meetings

1.1.17.1 notices of general and annual general meetings must be delivered to each shareholder entitled to vote at such

meeting and who has elected to receive such documents (article 14.8.2);

1.1.17.2 for as long as shares of the Company remain listed, notices of shareholders’ meetings must be sent to the JSE

at the same time as they are sent to shareholders, and must be announced through SENS (article 14.8.3);

1.1.18 ratification of ultra vires acts prohibited

the ratification of ultra vires acts by shareholders is prohibited where this would be contrary to the Listings Requirements or

the other provisions of the MOI (article 14.10);

1.1.19 appointment of directors

1.1.19.1 all directors must be elected by the shareholders entitled to exercise voting rights and shareholders shall have

the right to nominate any person for appointment (article 15.2.1);

1.1.19.2 the appointment of any person by the Board to fill a casual vacancy or as an addition to the Board must be

confirmed at the next annual general meeting of the Company, failing which such person must vacate his or her

office (article 15.2.6.1);

EXPLANATORY NOTES TO SPECIAL RESOLUTIONS CONTAINED IN THE NOTICE OF AGM CONTINUED


1.1.19.3 where the number of directors falls below the minimum number prescribed in the MOI, the remaining directors

must within 3 (three) months fill such vacancies or call a general meeting to do so (article 15.2.7);

1.1.19.4 a failure to have such minimum number of directors during the 3 (three) month period does not limit or negate

the authority of the Board or invalidate anything done by the Board during such period but, after such 3 (three)

month period, the remaining directors shall only be permitted to act for the purpose of filling vacancies or calling

general meetings of the Company (article 15.2.7);

1.1.20 retiring non-executive directors may be re-elected if eligible

a retiring non-executive director may be re-elected if he or she is eligible, as recommended by the nomination committee

of the Company (article 15.3.2.5);

1.1.21 payment policy

1.1.21.1 dividends are payable to shareholders registered as at a date subsequent to the declaration or confirmation of

the dividend, whichever is later (article 16.1.1);

1.1.21.2 any distribution by the Company must be in compliance with section 46 of the Companies Act and the Listings

Requirements (article 16.1.3);

1.1.21.3 any dividend or payment due to shareholders on or in respect of a share must be held in trust by the Company

indefinitely (subject to the laws of prescription) (article 16.1.6.1);

1.1.21.4 payments to all holders of securities in the Company must be made in accordance with the Listings

Requirements and capital shall not be repaid on the basis that it may be called up again (article 16.4);

1.1.22 financial statements

a copy of the financial statements must be distributed to the shareholders by no less than 15 (fifteen) business days prior

to the annual general meeting or in accordance with other, relevant provisions of the Listings Requirements (article 17.1);

1.2 other provisions included

1.2.1 alteration of rights attaching to shares

the special rights attached to the ordinary shares shall not be regarded as being amended by the creation or allotment of

any securities ranking pari passu with or after, but not in priority to the ordinary shares as regards participation in the

Company’s assets or profits, unless the special rights attaching to the ordinary shares, or the further securities created

and/or allotted so provide (article 3.3.3);

1.2.2 winding up

1.2.2.1 on winding up, the assets remaining after payment of the debts of the Company and the costs of liquidation

shall be used to repay the amount paid by the ordinary shareholders on the ordinary shares held by them, with

the balance distributed among the ordinary shareholders pro rata to their shareholding and subject to the special

rights attaching to other securities; and

1.2.2.2 the assets of the Company may by special resolution be paid in specie or vested in trustees for the benefit of

ordinary shareholders (articles 4.1.2.3.4 and 4.1.2.3.5);

1.2.3 securities register

the administration of the securities of the Company may at the discretion of the directors be outsourced to a suitable firm

(article 4.4);

1.2.4 financial assistance

the Board may not authorise the provision of financial assistance in terms of section 44 of the Companies Act unless the

provision thereof complies with the Listings Requirements (article 8);

1.2.5 acquisition of the Company’s shares

1.2.5.1 if a special resolution authorising the acquisition by the Company of its own shares is in the form of a general

approval, such approval is valid only until the next annual general meeting or for 15 (fifteen) months from the

date thereof, whichever is the shorter; and

1.2.5.2 a subsidiary is entitled to acquire securities in the Company, subject to the approval of the relevant securities

holders (article 9);

1.2.6 annual general meetings

annual general meetings shall be held not later than 6 (six) months after the end of each financial year (article 14.3.2);

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1.2.7 electronic participation in shareholders’ meetings

1.2.7.1 each shareholders’ meeting must be reasonably accessible within the Republic of South Africa for electronic

participation by the shareholders, as contemplated in section 61(10) of the Companies Act; and

1.2.7.2 the manner and procedures for electronic participation by shareholders are set out in detail (article 14.6);

1.2.8 the chairman shall not have a casting vote

in the case of an equality of votes at a shareholders’ meeting, the chairman shall not have a casting vote (article 14.11.1);

1.2.9 additional election

the appointment of a director appointed by the Board on a temporary basis is subject to confirmation at the next annual

general meeting in addition to any director elected thereat in terms of the provisions of the MOI relating to the retirement of

non-executive directors (article 15.2.8);

1.2.10 payment policy

1.2.10.1 any dividend or other monies payable on or in respect of a security shall not bear interest against the Company

(article 16.1.6.2);

1.2.10.2 the Company may terminate the payment of dividends and any other monies payable on or in respect of a

security to a securities holder if the correspondence enclosing a dividend/cheque is returned undelivered or

remains uncashed, and/or any payment by electronic transfer is unsuccessful due to incorrect banking details

provided by the securities holder on 3 (three) or more consecutive occasions; further procedural clarity in this

regard is also provided for (article 16.1.8);

1.2.10.3 if the shareholders resolve to apply for the Company to be struck off the register of companies, the directors

may nominate trustees as paying agents for the final repayment of capital and all amounts unclaimed in respect

of dividends not forfeited by the shareholders, to be held by such trustees for the benefit of persons entitled

thereto until claimed, or until such amounts become liable to be paid into the Guardians Fund (article 16.3.9);

1.2.11 capitalisation

various procedural steps pertaining to the manner of distribution of excess share capital, the resolution of difficulties

pertaining to such distribution, the reduction of share capital, and the disposal of unclaimed amounts are provided for in

detail (articles 16.3.4 to 16.3.8);

1.3 provisions amended

the following articles of the Current MOI have been amended -

1.3.1 right to call a meeting

whereas article 10.2 of the Current MOI provides that directors are to convene a general meeting, the Proposed MOI provides –

1.3.1.1 the Board may call a shareholders’ meeting at any time;

1.3.1.2 if there are insufficient directors in the Republic of South Africa capable of forming a quorum, any 2 (two)

shareholders of the Company may convene a shareholders’ meeting; and

1.3.1.3 the secretary of the Company may call a meeting for the purposes of section 61(11) of the Companies Act

(article 14.2);

1.3.2 adjournment of shareholders’ meetings

article 11.5 of the Current MOI provides that, where a shareholders’ meeting is to be adjourned, the chairperson of the

meeting shall adjourn such meeting to a day not earlier than 7 (seven) days and not later than 21 (twenty-one) days after

the date of the meeting: the Proposed MOI provides that a shareholders’ meeting may be adjourned to a day not earlier

than 7 (seven) calendar days and not later than 20 (twenty) business days after the date of the meeting (article 14.7.4);

1.3.3 voting by shareholders only by polling

article 11.6 of the Current MOI provides that, at a shareholders’ meeting, voting may be by a show of hands or by polling:

the Proposed MOI provides that voting shall only be by polling (article 14.11);

1.3.4 composition of the Board

article 15.1 of the Current MOI provides that the minimum number of directors shall be 4 (four): in terms of the Proposed

MOI, the Board shall comprise the minimum number of directors required in terms of the Companies Act, being at least 6

(six) directors (article 15.1);

1.3.5 rotation of non-executive directors

article 16 of the Current MOI provides inter alia that each year at the annual general meeting 1/3 (one-third) of the directors

(or the number nearest to, but not less than 1/3 (one-third)) shall retire from office: the Proposed MOI provides that each

year the higher of 1/3 (one-third) of the non-executive directors (if such number is not a round number, the number will be

rounded up) and 3 (three) non-executive directors shall so retire (article 15.3);



1.3.6 chairman of the Board

article 20.6 of the Current MOI provides for the election of the chairman of the Board: the Proposed MOI provides that the

chairman will be elected by the Board from their own number and that, should the chairman be subject to rotation and not

re-elected, he or she shall cease to hold such office immediately after the relevant annual general meeting and the Board

shall elect a new chairman (article 15.4);

1.3.7 quorum for Board meetings

article 20.2 of the Current MOI provides that a quorum for Board meetings is a majority of the directors for the time being,

with ½ (one half) comprising non-executive directors: the Proposed MOI provides that a quorum shall be a majority of the

total number of directors (article 15.6.4); and

1.3.8 tied votes

article 20.5 of the Current MOI provides that the chairman of a directors’ meeting will have a second or casting vote: the

Proposed MOI excludes the second or casting vote of the chairman (article 15.7.1).

Exclusions

The Proposed MOI excludes or departs from the provisions of the Current MOI of the Company in various aspects, either as a result of

a direct conflict with the Companies Act and/or the Listings Requirements, or by virtue of the fact that such items unnecessarily duplicate

the provisions of the Companies Act, and/or are no longer relevant or applicable to the Company.

4. SPECIAL RESOLUTION NUMBER 4: ADOPTION OF NEW SHARE INCENTIVE SCHEMEExplanatory note to special resolution number 4

Background

The Company has reviewed its remuneration policy and long term incentive plan (“LTI”) in great detail and proposes introducing the

Murray & Roberts Holdings Limited Forfeitable Share Plan (“FSP”). The JSE provided formal approval for the FSP.

Rationale for the introduction for the FSP

Best practice indicates a move away from the use of option-type plans only and the use thereof in conjunction with full share plans. Full

share plans, like the FSP, are less leveraged and have less upside than option type plans, but provide more certain outcomes. Most

importantly, share ownership by executives provides shareholder alignment which is essential for a long term incentive plan to succeed.

Furthermore, FSP instruments aid retention and provide more certainty as these instruments are less volatile than option type

instruments. This instrument also supports the Company’s policy of attracting and retaining the key talent and expertise required for its

business strategy.

Salient features for shareholder resolution

1. The remuneration & human resources committee (“remuneration committee”) may, in its discretion, call upon companies in the

Group which employs an employee eligible to participate in the FSP and which will have an obligation to settle shares to such an

employee (“Employer Companies”), to make recommendations to the remuneration committee as to which of their respective

employees they recommend to incentivise, retain the services of or attract the services of, by the making of an award of forfeitable

shares. Eligible employees include any person holding permanent salaried employment or office with any Employer Company,

including any executive director, but excluding any non-executive director of the Group.

2. The remuneration committee will have the final authority to decide:

which employees will participate in the FSP in respect of each award;

the aggregate annual quantum of awards to be made to all employees as well as the quantum of FSP awards made in terms of

the short term incentive (“STI”) policy as deferred STI;

the vesting period and vesting date in respect of each award;

the extent to which the award will be subject to the performance condition (if any), the terms of the performance condition and

the performance period; and

all other issues relating to the governance and administration of the FSP.

3. An award of forfeitable shares will be made based on an employee’s total fixed cost of employment (“TFCE”), grade, performance,

retention and attraction requirements and market benchmarks. The shares are registered in the name of the employee on

settlement subsequent to the award date, from which time the employee has all shareholder rights, subject to forfeiture and

disposal restrictions. The rules of the FSP allow for settlement of the benefits by way of an acquisition of the required number of

shares on the market, the use of shares held in treasury account, the use of shares held by The Murray & Roberts Trust, or an

issue of shares.

4. The rules of the FSP allow for settlement of the benefits by way of an acquisition of the required number of shares on the market,

the use of shares held in treasury account, the use of shares held by The Murray & Roberts Trust, or an issue of shares.

5. The employee will give no consideration for the grant or settlement of an award.

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6. The maximum aggregate number of shares which may at any one time be allocated under the FSP, when added to the total

number of shares allocated under the existing share plans shall not exceed 33 189 262 (thirty three million one hundred and eighty

nine thousand two hundred and sixty two). The maximum number of shares which may be allocated to an individual in respect of all

unvested awards may not exceed 2 223 681 (two million two hundred and twenty three thousand six hundred and eighty one),

which represents 0,5% of the number of shares currently in issue. Shares allocated by way of awards under the FSP or shares

allocated by way of awards under the existing Share Option Scheme, which are not subsequently settled to an employee as a

result of the forfeiture thereof or which have lapsed without being exercised, will be excluded in calculating the Company limit.

Likewise, shares purchased in the market in settlement of the FSP and the existing Share Option Scheme and shares purchased in

the market by The Murray & Roberts Trust that are used to settle awards under the existing Share Option Scheme and the FSP, will

be excluded in calculating the Company limit.

7. Vesting of the awards in all instances is subject to vesting conditions, such as continued employment, unless otherwise stated in

the rules of the FSP.

8. It is the intention that awards of forfeitable shares in all instances, except awards made as deferred STI, be subject to the

satisfaction of performance conditions measured over performance periods. Awards subject to performance conditions, or any

other conditions imposed, will vest on the later of:

the date on which the remuneration committee determines that the performance condition or any other conditions imposed have

been satisfied; or

the date or dates on which the employee has satisfied the vesting condition specified in the award letter.

9. The remuneration committee will set appropriate vesting periods, vesting conditions and performance conditions, as relevant,

for each award.

10. In very specific circumstances, on an ad-hoc basis, where it is necessary to retain critical talent, the remuneration committee may

make awards only subject to vesting conditions with no performance conditions. These awards aimed at retention, however, will

not form part of the annual awards.

11. For the initial awards of forfeitable shares to be made in the first half of financial year 2013, the remuneration committee has

approved the use of the following performance conditions:

Return on Invested Capital Employed (“ROICE”) – 50% of the awards;

Relative Total Shareholder Return (“TSR”) – 25% of the awards; and

Free Cash Flow per Share (“FCF”) – 25% of the awards.

12. For each of the above performance conditions, targets will be set for threshold and on-target performance with commensurate

linear vesting levels.

13. For further information on the proposed performance conditions to be adopted in the first allocation under the FSP, please refer to

page 109 of the remuneration report.

14. In order to facilitate any forfeiture thereof and secure the Company’s rights, forfeitable shares will be held by an escrow agent on

behalf of the employee.

15. Employees terminating employment due to resignation or dismissal on grounds of misconduct, poor performance or dishonest or

fraudulent conduct or due to absconding, will be classified as bad leavers and will forfeit all unvested awards of forfeitable shares.

16. Employees terminating employment due to death, retirement, retrenchment, ill-health, disability, injury or the sale of the Employer

Company will be classified as good leavers and a portion of the award will vest on the date of termination of employment. This

portion will reflect the number of months served since the award date to the date of termination of employment over the total number

of months in the vesting period and the extent to which the performance conditions imposed have been met. The remainder of the

awards will lapse.

17. In the event of a change of control of the company occurring before the vesting date, a portion of the award will vest on the change

of control date. The portion will reflect the period of time which has elapsed from the award date to the date of the change of

control for awards not subject to performance conditions. For awards subject to performance conditions, the remuneration

committee will calculate whether, and the extent to which, the performance condition has been satisfied by reference to the results

reported by the Company in the previous financial year. The portion of the award which shall vest will be determined based on the

extent to which the performance condition has been satisfied and the number of complete months served since the award date to

the change of control date over the total number of months in the vesting period.

18. If the Company undergoes a change of control pursuant to a transaction, the terms of which make provision for the FSP to

continue to operate as set out in the FSP rules and the relevant award letter, irrespective of the change of control, clause 17 above

will not apply. Also, if the participants’ rights under the FSP are to be replaced with awards in respect of shares in one or more

other companies on a basis which is determined by an independent merchant bank or auditor to be fair and reasonable, clause 17

above will not apply.



19. In the event of a variation in share capital as a result of a capitalisation issue, subdivision of shares, consolidation of shares, the

Company entering into a scheme of arrangement, or the Company making distributions to shareholders, other than dividends paid

in the ordinary course of business out of the then current year’s retained earnings, Participants shall continue to participate in the

FSP. The remuneration committee may make such adjustment to the number of forfeitable shares comprised in an award, or take

such other action to place participants in no worse a position than they were prior to the happening of the relevant event and to

provide that the fair value of the award immediately after the event is materially the same as the fair value of the award immediately

before the event. The issue of shares as consideration for an acquisition, and the issue of shares or a vendor consideration placing

will not be regarded as a circumstance that requires any adjustment to awards. Where the remuneration committee regards an

adjustment as necessary, auditors, acting as experts and not as arbitrators, and whose decision shall be final and binding on all

persons affected thereby, shall confirm to the Company in writing that these are calculated on a non-prejudicial basis. The auditors

shall confirm in writing to the JSE whether those adjustments were calculated in accordance with the rules of the FSP, which

confirmation must be provided at the time that the relevant adjustment is made. Any adjustments made will be reported in the

Company’s annual financial statements in the year during which the adjustment is made, to the extent required by the Companies

Act or the JSE Listings Requirements.

20. In the event of a rights issue, a participant shall be entitled to participate in any rights issue in respect of his forfeitable shares.

21. The provisions relating to:

the category of persons who are eligible for participation in the FSP;

the number of shares which may be utilised for purposes of the FSP;

the individual limit entitlements under the FSP;

the basis upon which awards are made;

the amount (if any) payable upon the grant, settlement or vesting of an award;

the voting, dividend, transfer and other rights attached to the awards, including those arising on a liquidation of the Company;

the adjustment of awards in the event of a change of control of the Company or other corporate actions; and

the procedure to be adopted in respect of the vesting of awards in the event of termination of employment

may not be amended without the prior approval of the JSE and by a resolution adopted with the support of at least 75% (seventy

five percent) of the voting rights exercised on such resolution by the shareholders of the Company present or represented by

proxy, in general meeting, excluding all the votes attached to unvested forfeitable shares held under the FSP and all shares owned

by persons as a result of the vesting of forfeitable shares under the FSP and who are existing participants in the FSP. Only shares

that may be impacted by the changes will be excluded from the said vote.

The rules of the FSP are available for inspection at the Company’s registered office from 1 October 2012 to 31 October 2012 at

and after any adjourned meeting.

5. SPECIAL RESOLUTION NUMBER 5: AMENDMENT OF EXISTING SHARE INCENTIVE SCHEMEExplanatory note to special resolution number 5

The Company has reviewed its long term incentive plan (“LTI”) in great detail and propose introducing the Murray & Roberts Holdings

Limited Forfeitable Share Plan (“FSP”). The Company has an existing Share Option Scheme (“Scheme”) operated through

The Murray & Roberts Trust (“Trust”). The Scheme will be phased out and no more awards have been made in terms of the Scheme

as from June 2012. Outstanding awards in terms of the Scheme will continue to vest in Participants after the prescribed Vesting Periods,

subject to the meeting of performance conditions in most instances.

Rationale for the amendments to the Trust

As a result of the proposed introduction of the FSP it has become necessary to amend certain provisions of the Trust. In addition,

enhancements to the drafting of the Scheme are proposed in line with Schedule 14 of the JSE Listings Requirements. The JSE provided

formal approval of the amendments to the Scheme.

Principal amendments

The principal amendments are summarised as follows:

Clause 11 dealing with the funding of the Participation Costs incurred by or on behalf of the Trustees in the performance of their duties

in order to give effect to the Scheme has been expanded to include loans or non-refundable contributions to be made to the Trust by

Employer Companies in accordance with the provisions of sections 44(2) and 44(3) of the Companies Act of 71 of 2008 (“Act”).

Clause 12 has been amended to provide that the prior authority of the shareholders of the Company in general meeting shall be

required if the aggregate number of Shares which may be acquired by:

– all Participants under the Scheme and the FSP is to exceed 33 189 262 Shares, or [14.1(b)]

– any one Participant in terms of the Scheme and the FSP is to exceed 2 223 681 Shares.

A new clause 12.2 has been inserted to provide that the overall Scheme limit shall include new Shares allotted and issued by the

Company and Shares held in treasury used, for purposes of Settlement in terms of the Scheme and the FSP.

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A new clause 12.3 has been inserted to exclude from the overall Scheme limit Shares purchased in the market in Settlement of the

Scheme and the FSP and Options granted or Offers made under the Scheme or awards under the FSP that lapse as a result of

forfeiture thereof by Participants.

A new clause 12.5 has been inserted to comply with 14.3(a) and 14.3(b) of the JSE Listings Requirements and provides that in the

event of:

– a subdivision or consolidation of Shares, the Board shall, without requiring the approval of shareholders of the Company in general

meeting, adjust the aggregate number of Shares, which may be utilised for purposes of the Scheme, and the number of Shares

subject to existing Options and Offers under the Scheme; or

– a capitalisation issue, special dividend, a rights issue or a reduction of capital by the Company, the Board shall, without requiring

the approval of shareholders of the Company in a general meeting, adjust the maximum number of Shares which a Participant

may receive in terms of the Scheme so as to ensure that Participants are given entitlement to the same proportion of the equity

capital of the Company as that to which he was previously entitled prior to the occurrence of the relevant event.

A new clause 12.6 has been inserted to comply with 14.3(d) and 14.3(e) of the JSE Listings Requirements and provides that the

Company’s auditors must confirm to the JSE in writing that any adjustments made in terms of clause 12.5 have been properly

calculated on a reasonable and equitable basis, in accordance with the rules of the Scheme. Such written confirmation must be

provided to the JSE at the time that any such adjustment is finalised. Any adjustment made in accordance with clause 12.5 must be

reported on in the Company’s annual financial statements in the year during which the adjustments are made.

A new clause 12.7 has been inserted to comply with 14.3(c) of the JSE Listings Requirements and provides that the issue of equity

securities for an acquisition, the issue of securities for cash and the issue of equity securities for a vendor consideration placing will

not be regarded as a circumstance requiring adjustment in terms of clause 12.5.

Clause 14.1 has been amended to confirm the policy that the number of Options offered to an Eligible Employee is primarily based on

the Employee’s TFCE, grade, performance, retention requirements and market benchmarks.

Clause 20.1.5 has been amended to provide that any adjustments made to the rights of Participants in the event of a Special

Distribution or if the Company restructures its capital upon the occurrence of the events listed in clause 20.1, will be reported in the

Company’s annual financial statements in the year during which the adjustments are made to the extent required by the Act or the

JSE Listings Requirements.

In order to align the Scheme with the FSP which clauses dealing with Change of Control had been drafted to comply with best

practice and corporate governance guidelines, the Change of Control definition has been amended to the effect that an acquisition of

50% (previously 35%) or more of the Company’s issued Shares or control of 50% (previously 35%) or more of the voting rights at

meetings of the Company by a party (or parties acting in concert), who did not previously do so, are required to constitute a Change

of Control. In addition clause 20.3 of the Scheme had been replaced with new clauses 20.3 to 20.9 as follows:

– Clause 20.3 provides that subject to clause 20.8, in the event of a Change of Control of the Company occurring before the Vesting

Date which directly results in:

a portion of the Options held by a Participant will Vest on the Change of Control Date, or as soon as reasonably practicable

thereafter. The portion of the Options which shall Vest will be calculated in accordance with clause 20.4 and 20.5.

– Clause 20.4 provides that in respect of the Options not subject to performance conditions, the portion of the Options which shall

Vest will reflect the number of complete months served since the Option Date to the Change of Control Date, over the total

number of months in the Vesting Period.

– Clause 20.5 provides that in respect of Options subjected to performance conditions, the Board will calculate whether, and the

extent to which, the performance conditions have been satisfied by reference to the results reported by the Company at its

previous financial year-end. The portion of the Options which shall Vest will be determined based on the extent to which the

performance condition have been satisfied and the number of complete months served since the Option Date to the Change of

Control Date over the total number of months in the Vesting Period.

– Clause 20.6 provides that to the extent that there is more than one Vesting Date and more than one Vesting Period in respect of a

particular Option grant, the calculation set out in clause 20.4 and 20.5 should be carried out in respect of each Vesting Period.

– Clause 20.7 provides that the portion of the Option that does not Vest on the Change of Control Date will lapse.

– Clause 20.8 provides that if the Company undergoes a Change of Control pursuant to a transaction, the terms of which make

provision for:

basis which is determined by an independent merchant bank or auditor to be fair and reasonable to the Participants, the

provisions of clause 20.3 shall not apply.

– Clause 20.9 provides that if there is an internal reconstruction or other event which does not involve:



the Options held by a Participant shall not Vest as a consequence of that event and shall continue to be governed by the rules of

the Scheme. However, the Board may take such action as it considers appropriate to protect the interests of Participants

following the occurrence of such event, including converting Options into awards in respect of shares in one or more other

companies, provided the Participant is no worse off. The Board may also vary the performance conditions relating to Options.

Clause 26.1 has been amended to provide clarity that the provisions of the Scheme dealing with:

– the definition of Eligible Employees and Participants;

– the definition of Fair Market Value, Purchase Price or Exercise Price;

– the maximum number of Shares which may be acquired for the purpose of or pursuant to the Scheme;

– the maximum number of Shares which may be acquired by any Participant in terms of the Scheme;

– the amount (if any) payable on acceptance of offers and exercise of Options, the basis for determining the price payable by

Participants and the period after or during which such payment must be made, and the period in which payments, or loans to

provide same (if any) may be paid;

– the voting, dividend, transfer or other rights (including rights on liquidation of the Company) which may attach to any Option;

– the basis on which offers are made;

– the treatment of Options in instances of mergers, take-overs or corporate actions as set out in clause 20;

– the provisions dealing with the rights (whether conditional or otherwise) in and to the Options of any Participants who leave the

employment of the Group prior to Vesting or Exercise; or

– the provisions of clause 26

may not be amended without the prior approval of the JSE and by ordinary resolution adopted with the support of at least 75% (seventy

five percent) of shareholders of the Company present or represented by proxy, in general meeting, excluding all the votes attached to

Shares owned by persons as a result of the exercise of Options under the Scheme and who are existing Participants in the Scheme. Only

Shares which may be impacted by the amendments will be excluded from the said vote.

The rules of the Scheme contained in the Trust deed are available for inspection at the Company’s registered office from 1 October 2012

to 31 October 2012 at and after any adjourned meeting.

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SHAREHOLDERS’ DIARY

ADMINISTRATION

Financial year-end 30 June 2012

Mailing of annual integrated report 28 September 2012

Annual general meeting 31 October 2012

Publication of half year results 2012/13 27 February 2013

Publication of preliminary report 2012/13 28 August 2013

Company Registration Number 1948/029826/06

JSE Share Code MUR

ISIN ZAE000073441

BUSINESS ADDRESS AND REGISTERED OFFICEDouglas Roberts Centre,

22 Skeen Boulevard, Bedfordview 2007

Republic of South Africa

POSTAL & ELECTRONIC ADDRESSES AND TELECOMMUNICATIONS NUMBERSPO Box 1000, Bedfordview 2008


Telephone +27 11 456 6200

Fax +27 11 455 2222

Email [email protected]

Website www.murrob.com

Mobile website http://murrob.mobi

SHARE TRANSFER SECRETARIESLink Market Services South Africa Proprietary Limited

13th Floor, Rennie House

19 Ameshoff Street, Braamfontein 2001

PO Box 4844, Johannesburg 2000


Telephone +27 11 713 0800

Fax +27 86 674 4381

SPONSORED LEVEL 1 AMERICAN DEPOSITARY RECEIPT (“ADR”) PROGRAMUS Exchange OTC

US Ticker MURZY

Ratio of ADR to Ordinary Share 1:1

CUSIP 626805204

Depository Bank Deutsche Bank Trust Company Americas

AUDITORSDeloitte &Touche

Deloitte Place

The Woodlands

20 Woodlands Drive

Woodmead, Sandton 2196

Private Bag X6, Gallo Manor 2052

SPONSORDeutsche Securities (SA) Proprietary Limited

3 Exchange Square

87 Maude Street, Sandton 2196

Private Bag X9933, Sandton 2146

COMMUNICATION ENQUIRIESEd Jardim

Telephone +27 11 456 6200

Email Address [email protected]


FORM OF PROXY

Murray & Roberts Holdings Limited(Incorporated in the Republic of South Africa)

(Registration number: 1948/029826/06)

(JSE share code: MUR) (ISIN: ZAE000073441)

(Company)

If you are a dematerialised shareholder, other than with own name registration, do not use this form. Dematerialised shareholders, other than with own

name registration, should provide instructions to their appointed Central Securities Depository Participant (“CSDP”) or broker in the form as stipulated in

the agreement entered into between the shareholder and the CSDP or broker.

I/We

(please print full names)

of

(please state address)

being the holder(s) of ordinary shares in the issued share capital of the Company, do hereby appoint

(see note 3 and 5)

1.

2.

3. the chairman of the annual general meeting

as my/our proxy to attend and speak and vote for me/us on my/our behalf at the sixty-fourth annual general meeting which will be held at Douglas

Roberts Centre, 22 Skeen Boulevard, Bedfordview, Johannesburg on Wednesday, 31 October 2012 at 11:00 and at any adjournment or postponement

of the meeting, for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed at the meeting,

and to vote on the resolutions in respect of the ordinary shares registered in my/our name(s) in accordance with the following instructions (see note 6):

Insert an ‘X’ or number of ordinary shares

For Against Abstain

1. Ordinary resolution number 1Election of TCP Chikane as a director

2. Ordinary resolution number 2Election of RC Andersen as a director

3. Ordinary resolution number 3Election of M Sello as a director

4. Ordinary resolution number 4Election of RT Vice as a director

5. Ordinary resolution number 5Re-appointment of Deloitte & Touche as external auditors

6. Ordinary resolution number 6Approval of the remuneration policy

7. Ordinary resolution number 7Appointment of DD Barber as member of the audit & sustainability committee

8. Ordinary resolution number 8Appointment of TCP Chikane as member of the audit & sustainability committee

9. Ordinary resolution number 9Appointment of M Sello as member of the audit & sustainability committee

10. Ordinary resolution number 10Appointment of RT Vice as member of the audit & sustainability committee

11. Special Resolution number 1Approval of the fees payable to non-executive directors

12. Special Resolution number 2Approve the provision of financial assistance to directors, prescribed officers, employee share

scheme beneficiaries and related or inter-related companies and corporations

13. Special Resolution number 3Adoption of a new memorandum of incorporation

14. Special Resolution number 4Adoption of new share incentive scheme

15. Special Resolution number 5Amendment of existing share incentive scheme

Signed at on 2012

Signature

Assisted by me (where applicable)

Each ordinary shareholder is entitled to appoint one or more proxies (none of whom needs to be an ordinary shareholder of the Company) to attend,

speak and, on a poll, vote in place of that ordinary shareholder at the annual general meeting.

233

NOTES TO FORM OF PROXY

Instructions on signing and lodging the annual general meeting proxy form

1. The following categories of ordinary shareholders are entitled to complete a form of proxy:

a) certificated ordinary shareholders whose names appear on the Company’s register;

b) own name electronic ordinary shareholders whose names appear on the sub-register of a Central Securities Depository Participant

(“CSDP”);

c) CSDPs with nominee accounts; and

d) brokers with nominee accounts.

2. Certificated ordinary shareholders wishing to attend the annual general meeting have to ensure beforehand with the transfer secretaries of

the Company that their shares are registered in their name.

3. Beneficial ordinary shareholders whose shares are not registered in their own name, but in the name of another, for example, a nominee,

may not complete a proxy form, unless a form of proxy is issued to them by the registered ordinary shareholder and they should contact

the registered ordinary shareholder for assistance in issuing instruction on voting their shares, or obtaining a proxy to attend, speak and, on

a poll, vote at the annual general meeting.

4. All beneficial owners who have dematerialised their shares through a CSDP or broker, other than those in their own name, must provide

the CSDP or broker with their voting instructions. Alternatively, should such an ordinary shareholder wish to attend the meeting in person,

in terms of the agreement with the CSDP or broker, such ordinary shareholder may request the CSDP or broker to provide the ordinary

shareholder with a letter of representation.

5. An ordinary shareholder may insert the name of a proxy or the names of two alternative proxies of the ordinary shareholder’s choice in the

space/s provided, with or without deleting “the chairman of the annual general meeting”, but the ordinary shareholder must initial any such

deletion. The person whose name stands first on the form of proxy and who is present at the annual general meeting will be entitled to act

as proxy to the exclusion of those whose names follow.

6. Please insert an ‘X’ or the number of votes in the relevant spaces according to how you wish your votes to be cast. However, if you wish

to cast your votes in respect of a lesser number of ordinary shares than you own in the Company, insert the number of ordinary shares in

respect of which you desire to vote. Failure to comply with the above will be deemed to authorise the proxy to vote, or to abstain from

voting at the annual general meeting as he/she deems fit in respect of all ordinary shareholder’s votes exercisable. Where the proxy is the

chairman, failure to comply will be deemed to authorise the chairman to vote in favour of the resolution. An ordinary shareholder or the

proxy is not obliged to use all the votes exercisable by the ordinary shareholder or by the proxy, but the total of votes cast and in respect

of which abstention is recorded may not exceed the total of the votes exercisable by the ordinary shareholder or by the proxy.

7. Forms of proxy must be received by the Company’s transfer secretaries, Link Market Services South Africa Proprietary Limited, at any of

the following addresses:

a) Physical address: 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001;

b) Postal address: PO Box 4844, Johannesburg, 2000;

c) Fax: +27 (86) 674 2450; and/or

d) Email: [email protected]

by no later than 11:00 on Monday 29 October 2012.

8. The completion and lodging of this form of proxy will not preclude the relevant ordinary shareholder from attending the annual general

meeting and speaking and voting in person at the meeting to the exclusion of any proxy appointed.

9. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to

this form of proxy.

10. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.

11. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or

have been registered by Link Market Services South Africa Proprietary Limited.

12. The chairman of the annual general meeting may reject or accept a form of proxy which is completed and/or received other than in

accordance with these notes, if he/she is satisfied as to the manner in which the ordinary shareholder wishes to vote.


Shareholders’ right to be represented by proxy

1. A shareholder may at any time appoint any individual, including a non-shareholder of the Company, as a proxy to participate in, speak

and vote at a shareholders’ meeting on his or her behalf, or to give or withhold consent on behalf of the shareholder to a decision.

2. A proxy appointment must be in writing, dated and signed by the shareholder, and remains valid for one year after the date on which it

was signed or any longer or shorter period expressly set out in the appointment, unless it is revoked in terms of paragraph 6.3 or expires

earlier in terms of paragraph 10.4 below.

3. A shareholder may appoint two or more persons concurrently as proxies and may appoint more than one proxy to exercise voting rights

attached to different securities held by the shareholder.

4. A proxy may delegate his or her authority to act on behalf of the shareholder to another person, subject to any restriction set out in the

instrument appointing the proxy (“proxy instrument”).

5. A copy of the proxy instrument must be delivered to the Company, or to any other person acting on behalf of the Company,

before the proxy exercises any rights of the shareholder at a shareholders’ meeting of the Company at least 48 hours before the

meeting commences

6. Irrespective of the form of instrument used to appoint a proxy:

6.1 the appointment is suspended at any time and to the extent that the shareholder chooses to act directly and in person in the

exercise of any rights as a shareholder;

6.2 the appointment is revocable unless the proxy appointment expressly states otherwise; and

6.3 if the appointment is revocable, a shareholder may revoke the proxy appointment by cancelling it in writing or by making a later,

inconsistent appointment of a proxy, and delivering a copy of the revocation instrument to the proxy and to the Company.

7. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the

shareholder as of the later of the date stated in the revocation instrument, if any, or the date on which the revocation instrument was

delivered as contemplated in paragraph 6.3 above;

8. If the proxy instrument has been delivered to a Company, as long as that appointment remains in effect, any notice to be delivered by the

Company to the shareholder must be delivered by the Company to the shareholder, or the proxy or proxies, if the shareholder has

directed the Company to do so in writing and paid any reasonable fee charged by the Company for doing so.

9. A proxy is entitled to exercise, or abstain from exercising, any voting right of the shareholder without direction.

10. If a Company issues an invitation to shareholders to appoint one or more persons named by the Company as a proxy, or supplies a form

of proxy instrument:

10.1 the invitation must be sent to every shareholder entitled to notice of the meeting at which the proxy is intended to be exercised;

10.2 the invitation or form of proxy instrument supplied by the Company must:

10.2.1 bear a reasonably prominent summary of the rights established in section 58 of the Companies Act;

10.2.2 contain adequate blank space, immediately preceding the name(s) of any person(s) named in it, to enable a shareholder

to write the name, and if desired, an alternative name of a proxy chosen by the shareholder; and

10.2.3 provide adequate space for the shareholder to indicate whether the appointed proxy is to vote in favour of or against

any resolution(s) to be put at the meeting, or is to abstain from voting;

10.3 the Company must not require that the proxy appointment be made irrevocable; and

10.4 the proxy appointment remains valid only until the end of the meeting at which it was intended to be used, subject to

paragraph 7 above.

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MURRAY & ROBERTS INTERNATIONAL OFFICES

AUSTRALIA1 Yulpari Road

West Kalgoorlie

Western Australia, 6430

Tel: +61 890 21 7777

Fax: +61 890 21 3333

Email: [email protected]

BOTSWANAPlot 1214, Nkuruma Road, Old Industrial Site

PO Box 657, Gaborone

Tel: +267 395 1871

Fax: +267 395 1877


CANADA590 Graham Drive

North Bay

Ontario, Canada

P1B 7S1

Tel: +1 705 472 3381

Fax: +1 705 472 0078


CHILEAvenida del Valle 787

Oficina 403

Ciudad Empresarial

Huechuraba

Santiago, Chile

Tel: +56 2 7133100

Fax: +56 2 7133101


CLOUGH LIMITEDAlluvion Building

58 Mounts Bay Road

Perth, Western Australia, 6000

Tel: +61 8 9281 9281

Fax: +61 8 9281 9943


GHANAUnits 3 and 4

5th Floor

Ambassador Hotel

Ridge

Accra, Ghana

NAMIBIA7 Joule Street, Southern Industrial Area

Windhoek, 9000, Namibia

PO Box 33, Windhoek

Tel: +264 61 23 8500

Fax: +264 61 22 2189 or +264 61 23 8803


UNITED ARAB EMIRATESGround Floor, Dubai National Insurance Building

Sheikh Zayed Road

PO Box 30023, Dubai, United Arab Emirates

Tel: +971 4 372 8500

Fax: +971 4 321 1011


UNITED KINGDOM1st Floor, 25 Hanover Square

London, W1S 1JF

Tel: +44 20 7758 9860

Fax: +44 20 7758 9869



about ouR REPoRt We are pleased to present to stakeholders our annual integrated report for the year ended 30 June 2012. The scope of this report covers the performance of the Group and its operating subsidiaries, over whose operating policies and practices it exercises control or significant influence. The report includes Clough, which has an independent board of directors. These subsidiaries are set out on page 214.

The material issues discussed in our annual integrated report, set out on page 2 – 3, were identified through an internal process of engagement with executive management across the business to determine what would substantially influence the sustainability of the Group, and the assessments and decisions of our stakeholders.

The information included in the annual integrated report is provided in accordance with International Financial Reporting Standards (“IFRS”), the South African Companies Act 2008, the JSE Listings Requirements, as well as the King Code of Governance Principles 2009 and related guidance. We have again used the Global Reporting Initiative (“GRI”) G3 guidelines in preparing our annual integrated report. This year, we have reported at a self declared B+ level in terms of the GRI.

The report may be accessed on our website www.murrob.com

We are confident that our annual integrated report will provide the basis for meaningful engagement with our stakeholders in the year ahead. A feedback form and contact details for comments, suggestions and queries can be found online.

The Group is moving to a combined assurance model for the annual integrated report. Our external auditors, Deloitte & Touche, have audited the annual financial statements and provided limited assurance over selected key non-financial performance indicators. The recommendations flowing from the limited assurance engagement will be addressed as required in the coming year.

The Group’s Broad-Based Black Economic Empowerment (“BBBEE”)rating and scorecard have been verified by accredited rating agency, EmpowerLogic.

The audit & sustainability committee had oversight of the preparation of the annual integrated report and recommended it for Board approval, which was obtained on 29 August 2012.

auDIt & SuStaINabILItY CoMMIttEE REPoRt 126/PG

INDEPENDENt auDItoR’S REPoRt 128/PG

aSSuRaNCE StatEMENt 123/PG

INFoRMatIoN oN FoRWaRD-LooKING StatEMENtS ibc/PG

Disclaimer – Annual Integrated Report

This report is not an offer for the sale of securities. The securities discussed herein have not been and will not be registered under the

U.S. Securities Act of 1933 (the “U.S. Securities Act”), or under any securities laws of any state or other jurisdiction of the United States

and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States

absent an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance

with any applicable securities laws of any state or other jurisdiction of the United States.

This report includes certain various “forward-looking statements” within the meaning of Section 27A of the US Securities Act 10 1933 and

Section 21 E of the Securities Exchange Act of 1934 that reflect the current views or expectations of the Board with respect to future events

and financial and operational performance. All statements other than statements of historical fact are, or may be deemed to be, forward-

looking statements, including, without limitation, those concerning: the Group’s strategy; the economic outlook for the industry; use of the

proceeds of the rights offer; and the Group’s liquidity and capital resources and expenditure. These forward-looking statements speak only

as of the date of this report and are not based on historical facts, but rather reflect the Group’s current expectations concerning future

results and events and generally may be identified by the use of forward-looking words or phrases such as “believe”, “expect”, “anticipate”,

“intend”, “should”, “planned”, “may”, “potential” or similar words and phrases. The Group undertakes no obligation to update publicly

or release any revisions to these forward looking statements to reflect events or circumstances after the date of this report or to reflect

the occurrence of any unexpected events.

Neither the content of the Group’s website, Clough’s website nor any website accessible by hyperlinks on the Group’s website is incorporated

in, or forms part of, this report.

DIAVIK DIAMOND MINE The Diavik Diamond Mine, owned by Rio Tinto and Harry Winston Diamond Corporation, is located in the Northwest Territories of Canada. Our mining business continues to secure significant contracts globally with major international mining houses, on the strength of its innovative application of new methods and experience in challenging locations.

ANNUAL INTEGRATEDREPORT 2012

· 02 snapshot of the year 04/ pg group overview strategy for recovery & growth 07 structure...

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