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| CHAIRMAN STATEMENT |
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| 2007 has been characterised by the realisation of major opportunities for which Murray & Roberts has been strategically positioned in recent years. |
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| Roy Andersen, chairman |
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| DEAR SHAREHOLDER |
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Our financial results for the year to 30 June 2007 reflect the significant growth in the domestic
and global markets we serve and show the extent to which Murray & Roberts has been
positioned to play a leading role in this period of increasing opportunity.
Operating profits grew 100% in the year as the majority of group operations delivered strong
results. A turnaround in the performance of the SADC Construction business, a solid
performance by newly acquired Concor, significant growth in the mining operations and
another excellent performance by the construction materials & services businesses contributed
to the growth in operating profits. Earnings from associates were adversely impacted by
provisions against the completion of two projects undertaken by Clough in India and Australia.
Diluted headline earnings per share (excluding BBBEE expense) grew by 77%.
During the year, we achieved two key strategic targets which underscore the Group's financial
health: the operating margin of 8% exceeded the upper end of the targeted range of 5% to
7,5% and the return on average ordinary shareholders' funds breached the 20% target for the
third time since it was established in 2001.
These results exceeded our forecasts in the 2006 Annual Report and the 2007 Interim Report
and are consistent with the advice offered to the market prior to the release of our preliminary
results. I am pleased to report that the Board has declared a dividend of 116 cents for the full
year, an increase of 93% over the 2006 dividend.
The Murray & Roberts share price increased by 152% to 6 400 cents at 30 June 2007. In May,
Murray & Roberts entered the Top 40 Index of the JSE Limited. |
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| BUSINESS ENVIRONMENT |
The global economy continues to grow at a robust pace,
although there has been a moderate deceleration to an
expected growth rate of 3,7% in 2007. Economic growth
in China accelerated to more than 11% in the first half of
2007, fuelling ongoing demand for natural resources and
unabated growth in our selected mining & minerals
markets in South Africa, Canada and Australia. Oil prices
remained buoyant, driving growth in our Middle East
market, where plans to diversify economic activity
contributed to increased levels of investment in the
transport infrastructure and tourism sectors.
The domestic economy sustained a growth rate of
approximately 5% in the second half of 2006, slowing
down to between 4,5% and 5% in the first half of
2007. Growth in gross fixed capital formation (GFCF)
accelerated significantly from a seasonally adjusted
annualised rate of 12,8% in the second quarter
of 2006 to 21,8% in the first quarter of 2007.
Government's infrastructure drive to develop the
facilities required for the 2010 Soccer World Cup
was complemented by increased levels of capital
expenditure in the private sector as mining and
industrial companies commenced major capacity
expansion programs. GFCF is forecast to grow at
more than 10% annually from 2007 to 2011,
underpinned largely by infrastructure investment.
The participation by Murray & Roberts in major expansion
programs in the power, mining and transportation sectors
is reflected in the growth in the order book to R22,5 billion
at 30 June 2007. Murray & Roberts was awarded a
leading role in a number of major projects, including the
Greenpoint Stadium in Cape Town, the Coega aluminium
smelter in Port Elizabeth and the Ore Line locomotive
project for Transnet during the year and is well positioned
for a significant role in Eskom's first phase five-year
R150 billion build program. The Gautrain project has
achieved good progress since commercial close in
September 2006. |
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View project order book chart  |
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| STRATEGIC POSITIONING |
The results of strategies implemented in recent years to
focus our Group on selected market segments and
efficiently deploy capital and cash resources, are strongly
evident in the world class performances delivered by the
majority of our operations during the year under review.
Acquisition has been an essential element in our strategy
to achieve the quantum growth in capacity required
to take on the major opportunities that are now
being realised. Acquisition has also strengthened our competitiveness in an environment in which increased
opportunity has driven a world-wide trend of
consolidation and globalisation in the construction and
engineering sectors. In recent years, we have acquired
significant capacity to position the Group for growth
opportunities. The acquisition of Concor from July 2006
has added considerable value to our domestic
construction offering, while the earlier acquisition of
Cementation has enabled us to globalise our underground mining business in line with the globalisation of
key mining clients. During the year, we disposed of the
non-core Murray & Roberts Foundries Group and
acquired 80% of Wade Walker, an electrical and
instrumentation engineering contractor.
A strategic investment in Clough was first acquired in
November 2004 to strengthen our position in the global
oil and gas markets. We have managed the acquisition
with caution, recapitalising and gaining control of the
business incrementally to ensure that it returns to
appropriate levels of profitability, while protecting our
group accounts. Based on a review of the value and
potential inherent in Clough, the Board has supported a
further recapitalisation which is likely to increase our
shareholding above 60%, and the business will be
consolidated into our accounts from 1 July 2007. |
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| HUMAN CAPITAL |
Our approach to human capital management and
employment equity has evolved to reflect the trans -
formation in South African society and our business. In a
competitive environment where there is a scarcity of skills,
the management of human capital has become a critical
factor in maintaining our competitive advantage. We
continue to be an employer of choice in the construction
and engineering sectors.
In recent years, we have strengthened our executive and
operational leadership to ensure that it is benchmarked
against global best practice and capable of achieving
our strategic objectives. The past year has seen an
intensification in our focus on recruitment and development
as a group and a participant in industry-wide initiatives to
enlarge and strengthen the construction skills base.
In the longer term, sustainable growth requires organic
development of leadership talent and Murray & Roberts
has adopted a strategy to develop and retain its own
leadership by means of a comprehensive leadership
succession and development process. |
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Leadership reports