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| Operations |
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Public sector expenditure on infrastructure has emerged strongly through the year, with a full
range of programs now evident in the power, transportation and water sectors. The general
level of investment associated with 2010 Soccer World Cup preparation has increased,
including additional allocations for the various stadium projects.
Southern Africa regional construction activities recorded revenues up 16% at R5,8 billion
(2007: R5,0 billion) and delivered operating profits of R421 million (2007: R328 million) at a
margin of 7,3% (2007: 6,6%). This includes a positive R86 million contribution arising from a
fair value adjustment on concession investments (2007: R76 million).
Despite the increased interest rate regime and decline in consumer activity, there is still good
activity in the private commercial building sector, particularly for hotels and high-end
residential developments.
Murray & Roberts has secured a lead position in the mechanical and civil works for the
world’s largest thermal power stations currently under construction. Engineering contracting
operations delivered revenues of R1,6 billion (2007: R794 million) delivering operating profits
of R70 million (2007: R46 million) at a margin of 4,4% (2007: 5,8%) with benefits only
expected to flow from the 2009 financial year. Private investment into new industrial capacity
has waned through the year, but has been compensated by increased activity in the power
sector and minerals beneficiation.
Market activity has increased throughout the Gulf, fuelled by the free cash flow from higher
oil revenues into the region. The Group’s primary focus is in the United Arab Emirates and Bahrain where major project activity continues to dominate market opportunity. Middle East
construction recorded revenues of R2,83 billion (2007: R2,38 billion) an increase of 19% and
delivered an operating profit of R234 million (2007: R123 million) at a margin of 8,3%
(2007: 5,1%). The Concourse 2 Project for Dubai International Airport was successfully
completed and handed over to the client in the year.
Global mining contracting operations in South Africa, Australia and Canada recorded
increased revenues of R5,2 billion (2007: R3,6 billion) and an operating profit of R406 million
(2007: R233 million) at a margin of 7,8% (2007: 6,5%). South African mining activity has
remained steady while international mining markets continued to deliver strong growth.
The Group’s construction materials and services companies have delivered exemplary
performance again this year off improved levels of gross fixed investment in Southern Africa
and Middle East.
Reinforcing steel construction products and trading services increased revenues 41% to
R3,1 billion (2007: R2,2 billion) at an operating profit of R286 million (2007: R168 million).
Concrete and Asphalt infrastructure products increased revenues 20% to R1,49 billion
(2007: R1,24 billion) at an operating profit of R328 million (2007: R302 million).
Clay, steel and concrete building products delivered revenues of R632 million (2007:
R634 million) at an operating profit of R100 million (2007: R133 million). This sector has felt
the impact on consumer affordability of higher interest rates.
Specialist services to the construction and infrastructure sector delivered an operating profit
of R186 million (2007: R133 million) on revenues of R587 million (2007: R411 million).
Steel fabrication and manufacturing operations recorded revenues up 23% to R1,6 billion
(2007: R1,3 billion) at an operating profit of R177 million (2007: R83 million).
Corporate overheads decreased marginally to R147 million (2007: R152 million) in the year
before a R57 million (2007: R67 million) contribution from Properties and a charge of R43
million (2007: R21 million) relating to share-based payments accounted for in terms of IFRS
2. Corporate capacity continues to play an important role engaging risk mitigation in the
Group’s major project and diverse geographic operations. |
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