We are experiencing a period of global socio-economic
development that is defined increasingly by the will of society
rather than just by decision of leadership. Two thirds of the
global population live in the eastern hemisphere and we sense
this to be the driver of growth for infrastructure development and
resource extraction over the years ahead.
We have introduced a number of strategic initiatives through the
past year that have focused attention on building better
relationships between Murray & Roberts and its people and
supporting the role they will play in shaping our future potential.
This has been embodied in the concept of Letsema,which
is the brand name for our broad based black economic
empowerment (BBBEE) initiative.
Health, safety and environmental (HSE) issues have demanded
increased attention over recent years and in South Africa we are
faced with special challenges in this respect. Our Board has
committed to a target of zero harm consequence from our
activities on our company and clients, all people and the
environment. We have benchmarked fatalities and permanent
disablement at zero and set our lost time injury frequency rate
(LTIFR) target below a benchmark of 3,0 with a long term
objective of 1,0. Our performance this year was a LTIFR of 4,6
but regrettably at a price of 10 fatalities.
Stop.Think is a corporate intervention designed to stimulate a
sustainable culture change in the organisation such that
responsibility for personal health & safety is primarily devolved
to the individual at the workface. Accountability remains
with management.
The Group has committed significant funding and resources to
this important initiative.
We have established a number of communication forums in the
Group that encourage interaction between the company and
our stakeholders, including employees. The increasing success
of these initiatives is testimony to the integrity of engagement.
The Letsema BBBEEand Stop.Think initiatives are expected to
increase the volume of internal interaction and engagement
within the company.
We established ClientService initially as an interactive facility to
improve the response quality of communication between Murray
& Roberts and its external stakeholder community, who sought
increased levels of information and management access. This
facility is currently processing on average 2000 calls a month
and is now being extended to cater for an increase in activity
expected from our internal communication initiatives.
Facilities such as Ask Brianon our internal website, CE
discussion forumon the external website and Tip-Offs
Anonymous through an independent service provider, offer
additional and well utilised communication channels with our
internal and external community.
Performance
I am pleased to report that our performance for the year to
30 June 2006 has exceeded expectations, as the markets we
serve have started to deliver the increased opportunity
predicted in previous years. I am also pleased with the
performance platform serving these markets and established
through Rebuilding Murray & Roberts over the past six years.
Operating profit increased 47% to R800 million off a 16%
increase in revenue to R11,9 billion at a margin of 6,7%. This is
the highest margin recorded by Murray & Roberts since its
previous peak performance as an industrial holding group
through the five years 1991 to 1995. Excluding an R87 million
charge to the income statement relating to the granting of
shares to almost 14 000 employees in terms of the Groups
BBBEE transaction in the year, headline earnings increased
26% to 184 cents per share.
The prospects statement included in the 2005 annual report
was written with some caution following the disposal of the
Groups 44% interest in Unitrans in the previous year and the
loss of its associate contribution to headline earnings. We were
uncertain at that stage whether the Cementation businesses in
South Africa and Canada and Clough in Australia would
overcome this deficit, coupled with the turnaround risk in
Construction Middle East.
At the half year we disclosed problems experienced on some
projects in Construction SADC and an interim loss from
associate Clough. We maintained our cautious outlook for the
year although at that stage we were experiencing early signs of
improved performance from our construction materials,
industrial and remaining contracting operations.
While we are disappointed by the underperformance of
Construction SADC and Clough in India, the remainder of the
business has delivered ahead of expectation. We have taken
decisive measures to resolve our problems, including the
appointment of new leadership capacity that is geared for
future performance.
We provide in some detail in the accompanying operational
review, the performance characteristic of each business
segment in Murray & Roberts.