EXECUTIVE SUMMARY This final year of Rebuilding Murray & Roberts was characterised by intense transformation and change as all the preparation through the previous five years crystallised into a new performance platform for the Group. Operating profits increased by 29% to R543 million (2004:R421 million) off a 27% increase in revenues to R10,7 billion (2004: R8,4 billion). This underpinned a performance consistent with the prospects statement included in the 2004 annual report and ahead of the half-year interim report. Unitrans Limited contributed only to the first half-year and with a return to normal levels of taxation, fully diluted headline earnings per share ended 10% down at 140 cents (2004: 155 cents). Disposal of the Group's 44% shareholding in non-core investment Unitrans freed the Group for the acquisition of 100% of Cementation and a control shareholding over time in Clough Limited. Both companies operate within the strategic focus of the Group and are expected to deliver attributable earnings from the 2007 financial year in line with what could have been expected had the Group remained invested in Unitrans. The operating margin is steady at 5,1% (2004: 5,0%). This incorporates a disappointing result in Middle East and a fair value increase in concession investments. The Group has remained within its sustainable operating margin range of 5,0% to 7,5% which reflects both the opportunity and risk profile of the Group's target market. The year-end net cash position improved to R1,7 billion (2004: R1,0 billion) following capital expenditure of R303 million (2004: R353 million) and a net acquisition inflow of R350 million (2004: R35 million out flow). Working capital peaked during the year, fuelled by delayed funding of previous-year losses and intra-year stock build-up primarily in the steel sector. Interest-bearing long term liabilities increased to R339 million (2004: R139 million). This primarily relates to a loan facility arranged to fund a portion of the acquisition of the Group's shares in Clough Limited. The Group returned 16,1% on average shareholders' funds (2004: 19,0%). This is below the historic Group target of 20%, and is expected to improve in the future once surplus cash has been invested into productive capacity. Three areas of concern are noted that have impacted on performance in the year. •    A loss of R40 million (12 cents per share) has been recorded on the Khalifa Sports Hall project in Qatar which has been recognised in full. Whereas some financial recovery is possible, it is the Group's experience over recent years that this will require significant corporate resolve and may take more than the current reporting period to finalise. •    A total of 12 fatalities (2004: 7 fatalities) were recorded in the year on work sites under control of the Group, highlighting the need for greater awareness amongst all employees and subcontractors of the inherent dangers associated with construction activity. The Group has committed the necessary resources to ensure that operations will become safer and that all people entering and working in the Group's many operations are appropriately prepared and protected against possible danger. •    The liquidation of Consani Engineering (Pty) Limited in January 2005 after it became evident that the company was not sustainable under current and projected economic and market conditions. This has been a major setback after the effort that went into transforming the company over the preceding years. An exceptional write-down of R144 million has been recognised in the accounts, paving the way for settlement of the majority of employee and creditor claims against Consani.