Notes to the Consolidated Financial Statements

		Immovable property	Plant and machinery	Other	Total
1.	PROPERTY, PLANT AND EQUIPMENT
	Cost or valuation:
	At 30 June 2000	450,9	1 406,0	380,6	2 237,5
	Additions	4,3	211,2	37,2	252,7
	Disposals	(26,2)	(152,7)	(40,7)	(219,6)
	Disposals of businesses	(34,2)	(47,6)	–	(81,8)
	Exchange rate adjustment	19,8	63,0	6,6	89,4

	At 30 June 2001	414,6	1 479,9	383,7	2 278,2

	Aggregate depreciation:
	At 30 June 2000	16,9	707,7	205,9	930,5
	Charge for the year	–	192,6	39,6	232,2
	Disposals	–	(121,2)	(36,8)	(158,0)
	Disposals of businesses	–	(3,8)	–	(3,8)
	Exchange rate adjustment	5,8	41,5	3,3	50,6

	At 30 June 2001	22,7	816,8	212,0	1 051,5

	Net book value:
	At 30 June 2001	391,9	663,1	171,7	1 226,7

	At 30 June 2000	434,0	698,3	174,7	1 307,0

	Details in respect of immovable property are set out in a register which may be inspected at the company’sregistered office.

	Freehold immovable properties were last valued during the 1996 financial year. The valuation was carried out by Murray & Roberts Properties group. No formal revaluation has been done at the year-end as all properties will shortly have to be revalued for Capital Gains Tax purposes.

	Net book value of capitalised leased plant and machinery, motor vehicles, equipment and office furniture included in total property, plant and equipment amounted to R24,0 million (2000: R33,8 million).

		2001	2000
2.	GOODWILL
	Goodwill at beginning of year	–	151,0
	Net goodwill arising	20,0	39,9
	Net amortisation	(4,0)	(190,9)

		16,0	–

3.	INVESTMENT IN ASSOCIATE COMPANY
	The group’s aggregate proportionate share of the associate company
	included in the consolidated balance sheet is as follows:
	Cost of investment	256,0	256,0
	Share of retained earnings	135,2	126,8

	Balance at year-end	391,2	382,8

	Valuation of shares	830,0	763,5
	Market value of listed associate company
	(33 196 580 shares at R25,00 each)

	Aggregate of associate company’s net assets and revenue
	Property, plant and equipment, investments and cash	708,0	883,2
	Total borrowings	77,6	113,1
	Working capital	231,3	242,5
	Revenue	5 242,5	4 585,1

Details of the associate company at 30 June 2001 are as follows:

Name of associate	Incorporation	% of ownership	% of votes	Main activity

Unitrans Limited	South Africa	43,6	43,6	Transport and motor

4.	OTHER INVESTMENTS
	Unlisted investments at cost less amounts written off	116,5	117,1
	(Directors’ valuation R116,5 million, 2000: R117,1 million)
	Listed investments	20,5	20,9
	(Market value R19,7 million, 2000: R19,3 million)
	Unsecured loans	6,4	33,7

		143,4	171,7

	Details in respect of investments are set out in a register which may be inspected at the company’s registered office.

5.	INVENTORIES
	At cost:
	Raw materials	131,6	137,4
	Work-in-progress	107,9	108,8
	Finished goods and manufactured components	178,5	288,5
	Consumable stores	85,1	94,1
	Property	98,6	143,6

		601,7	772,4

6.	CONTRACTS IN PROGRESS AND CONTRACT RECEIVABLES
	Amounts due on contracts	715,5	536,0
	Retentions receivable	136,1	195,1

		851,6	731,1

7.	ACCOUNTS RECEIVABLE
	Trade receivables	944,3	939,1
	Other	208,2	368,9

		1 152,5	1 308,0

8.	ORDINARY SHARE CAPITAL AND PREMIUM
	Authorised
	500 000 000 ordinary shares of 10 cents each
	(2000: 500 000 000 of 10 cents each)	50,0	50,0

	Issued
	331 892 619 ordinary shares of 10 cents each
	(2000: 345 967 540 of 10 cents each)	33,2	34,6

	Opening balance	34,6	34,6
	Repurchase and cancellation of shares	(1,4)	–

	Share premium	1 639,6	1 955,0

	Opening balance	1 955,0	1 955,0
	Transfer of funds to the distributable reserve	(273,6)	–
	Repurchase of shares	(41,8)	–

		1 672,8	1 989,6

	Deduct
	Shares held by the Murray & Roberts Share Trust at net cost	(146,6)	(145,8)

		1 526,2	1 843,8

	Share Trust
	The shares held by the Trust had a market value at 30 June 2001
	of 630 cents per share (2000: 330 cents per share) totalling
	R94,1 million (2000: R50 million).

	Unissued shares:
	(i) Shares available for allotment by the directors in terms of the employee
	share purchase scheme	18 246 043	19 431 467
	(ii) Shares which the directors may allot, grant options over
	or otherwise deal with at their own discretion	50 000 000	50 000 000
	(iii) Other unissued shares	99 861 338	84 600 993

		168 107 381	154 032 460

9.	SECURED LIABILITIES
	Certain liabilities of the group are secured as follows:
	Loans secured by mortgage on immovable property held as
	property, plant and equipment with a book value of R159,6 million
	(2000: R152,7 million)	72,5	65,5
	Amounts due on loans and overdrafts secured over movable
	property with a book value of R155,4 million
	(2000: R112,3 million)	50,8	63,3

		123,3	128,8

	Reflected in the balance sheet under:
	Long-term loans (note 11)	90,8	96,1
	Overdrafts and short-term loans (note 11)	32,5	32,7

		123,3	128,8

10.	LONG-TERM PROVISION
	Headlease and other discontinued property activities
	At beginning of year	422,7	160,0
	Additional provision charged to the income statement	56,0	299,4

		478,7	459,4
	Trading losses	(56,0)	(36,7)
	Cost of settling headleases	(43,3)	–

	At end of year	379,4	422,7
	Current portion included in accounts payable and provisions (note 13)	(63,8)	(56,2)

	Total long-term provision	315,6	366,5

The long-term provision is in respect of the expected headlease and other discontinued property losses which will have to be financed over the next twelve years (2000: fifteen years). The majority of the leases will terminate during or before the year ending 30 June 2008. The provision is based on the projected losses being the difference between the gross headlease commitments of R1 373,6 million (2000: R1 700,4 million) and the projected net revenue inflows of R994,2 million
(2000: R1 277,7 million).

11.	LONG-TERM LOANS
	Secured loans
	Current year	32,5	32,7
	Next five years excluding current	62,9	57,0
	After five years	27,9	39,1

		123,3	128,8
	Less: current portion (note 15)	(32,5)	(32,7)

	Long-term secured loans	90,8	96,1

	Unsecured loans
	Current year	54,4	84,8
	Next five years excluding current	126,9	165,9
	After five years	94,5	111,4

		275,8	362,1
	Less: current portion (note 15)	(54,4)	(84,8)

	Long-term unsecured loans	221,4	277,3

	Capitalised finance leases
	Current year	15,7	14,3
	Next five years excluding current	15,0	25,1
	After five years	–	3,4

		30,7	42,8
	Less: current portion (note 15)	(15,7)	(14,3)

	Long-term capitalised finance leases	15,0	28,5


	Total long-term loans	327,2	401,9


	Included in unsecured loans is a pound denominated loan which has been
	recorded at the average exchange rate of the matched foreign exchange contracts:
	Loan at spot rate on 30 June	243,7	257,0
	Matched foreign exchange contract	(97,2)	(91,4)

	Included above	146,5	165,6

	Details of the 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 9.

12.	DEFERRED TAXATION
	The movement on deferred taxation is as follows:
	At beginning of year	50,5	182,3
	Income statement charge/(credit)	6,7	(15,5)
	Disposal of subsidiary	–	(116,3)

	At end of year	57,2	50,5

	Comprising:
	Deferred taxation liabilities
	Property, plant and equipment	32,3	26,3
	Other	24,9	24,2

		57,2	50,5

	Calculated taxation losses available for set-off against future taxable income	805,0	1 125,0

13.	ACCOUNTS PAYABLE
	Trade and other payables	2 364,6	2 446,7
	Short-term portion of long-term provision (note 10)	63,8	56,2

		2 428,4	2 502,9

14.	SUB-CONTRACTORS
	Contracts in progress and contract receivables include claims against clients in respect of sub-contractor liabilities. These liabilities are only settled when payment has been received from clients.

15.	OVERDRAFTS AND SHORT-TERM LOANS
	Overdrafts	–	43,8
	Current portion of long-term borrowings (note 11)
	– secured	32,5	32,7
	– unsecured	54,4	84,8
	Current portion of capitalised finance leases (note 11)	15,7	14,3

		102,6	175,6

16.	EXCEPTIONAL ITEMS
	Asset impairment provisions	–	(287,0)
	Headlease and other property provisions	(56,0)	(282,7)
	Net loss on disposals/closures	(6,5)	(127,2)
	Investments realised, but not previously recognised	60,0	–

		(2,5)	(696,9)

17.	EARNINGS/(LOSS) BEFORE INTEREST AND TAXATION
	Earnings/(loss) before interest and taxation of the holding company, subsidiary and joint venture companies is arrived at after taking into account:
	Amortisation of goodwill	4,0	–
	Auditors’ remuneration:
	Fees for audits	11,8	12,2
	Other services	3,7	3,5
	Cost of sales	7 672,6	12 121,7
	Contribution to retirement benefit funds	53,9	102,0
	Depreciation:
	Immovable property	–	5,6
	Plant and machinery	192,6	321,9
	Other	39,6	40,4
	Fees paid for:
	Managerial services	3,5	2,9
	Technical services	3,7	4,5
	Administrative services	1,3	2,1
	Foreign exchange gains realised	39,6	15,8
	JSE fees	0,1	0,1
	Payroll costs	1 616,9	2 356,7
	Profit on disposal of property, plant and equipment	(20,2)	(95,8)
	Loss on disposal of property, plant and equipment	7,3	30,8
	Rentals:
	Land and buildings	37,0	35,5
	Plant, machinery and motor vehicles	15,7	29,2
	Other assets	7,8	5,1

18.	NET INTEREST PAID
	Interest paid
	Banks	(4,8)	(7,1)
	Loans	(92,1)	(126,8)
	Other	6,2	(5,9)

	Total	(90,7)	(139,8)

	Interest received
	Banks	49,4	37,8
	Loans	0,1	17,5
	Other	34,9	20,2

	Total	84,4	75,5

	Net interest paid	(6,3)	(64,3)

	Included in interest received (other) is R15 million (2000: R17 million), which relates to foreign exchange profit on foreign treasury funds.

19.	TAXATION
	Current:
	South African normal	2,0	33,3
	Foreign	18,8	14,7
	Deferred	6,7	(15,5)

		27,5	32,5
	Secondary tax on companies	–	6,9

		27,5	39,4


	Reconciliation of rate of taxation	%	%

	Effective rate of taxation	13,1	(8,5)
	Reduction/(increase) in rate of taxation due to:
	Capital profits	2,5	–
	Foreign income	8,5	(6,0)
	Prior year losses	12,5	(2,0)
	Prior year adjustments	–	(2,5)

		36,6	(19,0)

	Increase/(reduction) in rate of taxation due to:
	Secondary tax on companies	–	1,5
	Non-deductible expenditure	(1,3)	0,7
	Capital losses	–	21,1
	Current year losses	(5,3)	25,7

	South African normal taxation rate	30,0	30,0

20.	HEADLINE EARNINGS
	Earnings/(loss) attributable to ordinary shareholders	252,2	(571,2)
	Adjustments:
	Exceptional items (note 16)	2,5	696,9
	Goodwill amortisation	4,0	–

	Headline earnings	258,7	125,7

	Weighted average ordinary shares in issue (000’s)	340 103	345 968
	Headline earnings per ordinary share (cents)	76	36

21.	PROFITS AND LOSSES OF SUBSIDIARIES
	Aggregate profits	722,8	450,0
	Aggregate losses	(470,6)	(1 021,2)

22.	CONTINGENT LIABILITIES
	There are contingent liabilities in respect of limited guarantees covering loans, banking facilities and other obligations of third parties, the ascertainable outstanding liabilities at 30 June covered by such guarantees being	38,5	45,6

23.	CAPITAL COMMITMENTS
	Approved by the directors, contracted and not provided in the balance sheet	42,0	68,5
	Approved by the directors, not yet contracted for	475,0	250,0

		517,0	318,5

	Capital expenditure will be financed from internal resources and existing facilities.

24.	OPERATING LEASE COMMITMENTS
	Due within one year	3,0	8,6
	Due thereafter	3,9	11,2

		6,9	19,8

25.	FINANCIAL RISK MANAGEMENT
	The group’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable and loans to and from subsidiaries. In respect of all financial instruments mentioned above, book value approximates fair value.

	Treasury Risk Management
	The group’s treasury operations provide the group with access to local and foreign money markets and provide group subsidiaries with the benefits of bulk financing and depositing.

	Foreign Currency Management

	Loans
	In terms of group policy, all material foreign loans are covered under forward exchange contracts except where a natural hedge against underlying assets exists.

	Trade exposure
	The group’s policy is to cover forward all trade commitments. Each division manages its own trade exposure. In this regard the group has entered into certain forward exchange contracts which do not relate to specific items appearing in the balance sheet, but were entered into to cover foreign commitments not yet due and proceeds not yet received. The risk of having to close out these contracts is considered to be low. The amounts represent the net rand equivalents of commitments to purchase and sell foreign currencies. The contracts will be utilised during the next 12 months.
	Details of these contracts are as follows:


		2001		2000
		Foreign amount	Rand amount	Foreign amount	Rand amount
		million	million	million	million

Foreign currency
Bought	US Dollars	0,8	6,3	33,2	187,3
	Euros	8,8	64,4	–	–
	British Pounds	0,3	3,0	–	–
	German Marks	11,7	43,8	–	–
	Other currencies	–	14,9	–	2,1

	Total		132,4		189,4

Sold	US Dollars	4,3	35,1	25,4	168,9
	Canadian Dollars	–	–	4,4	20,4
	British Pounds	–	–	4,1	43,8
	Euros	8,9	66,5	–	–
	Other currencies	–	0,4	–	19,9

	Total		102,0		253,0


Maturity profile of financial instruments
The maturity profile of the recognised financial instruments
are summarised as follows:

	<1 year R’m	1 – 6 years R’m	Total R’m
Financial Assets
Cash and cash equivalents	1 219,8	–	1 291,8
Trade and other receivables	2 004,1	–	2 004,1
Financial Liabilities
Interest-bearing liabilities	102,6	327,2	429,8
Trade and other payables	2 871,5	–	2 871,5

Credit Risk Management
Potential areas of credit risk consist of trade accounts receivable and short-term cash investments.
Trade accounts receivable consists mainly of a large widespread customer base. Group companies monitor the financial position of their customers on an ongoing basis. Where considered appropriate, use is made of credit guarantee insurance. The granting of credit is controlled by application and account limits. Provision is made for both specific and general bad debts and at the year-end management believed that any material credit risk exposure was covered by credit guarantee or a bad debt provision.
It is group policy to deposit short-term cash investments with major banks.

Interest Rate Risk Management
Group companies generally adopt a policy of ensuring that their borrowings are at market related rates to address their interest rate risk.

Liquidity Risk Management
The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained.

26.	RETIREMENT BENEFIT INFORMATION
	It is the policy of the group to provide for retirement benefit obligations by payments to separate funds which are statutorily independent from the group.

	These funds cover the eligible employees, other than those employees who opt to be or are required by legislation to be members of various industry funds.

	The funds are covered by the Pensions Fund Act, 1956.

	During the year, the majority of eligible employees belonged to one of the following funds: The Murray & Roberts Retirement Fund, M&R Materials Retirement Fund or the Investment Solutions Pension Fund.

	The Murray & Roberts Retirement Fund, the M&R Materials Retirement Fund and the Investment Solutions Pension Fund were last actuarially valued at 31 December 2000, 31 December 2000 and 1 March 1999 respectively.

	All of the above funds were certified to be financially sound at the respective dates.

	These funds operated as defined contribution funds during the year.

	The group has an obligation in respect of post retirement medical costs to pay a subsidy in respect of the normal monthly contribution of certain pensioners and in respect of certain current employees whose employment commenced before 1 July 1996. At 30 June 2001 the unfunded liability was actuarially assessed at R53,5 million (2000: R78 million).

27.	RELATED PARTY TRANSACTIONS AND DIRECTORS' INTERESTS

	Related party transactions
	During the year, the company and its subsidiaries, 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.

	Associate company
	Details of the investment in the associate company are disclosed in note 3, including details of revenue and income relating to the associate.

	Interest of directors of the company in share capital
	The aggregate direct and indirect beneficial holdings as at 30 June 2001 of the directors of the company and their immediate families in the issued shares of the company are detailed below. There have been no material changes in these shareholdings since that date.

	2001	2000
	Number of shares	Number of shares
Executive directors	227 687	1 323 024
Non-executive directors	1 703 775	922 928

Total	1 931 462	2 245 952

A register detailing directors’ interests in the company is available for inspection at the company’s registered office.