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A
Line in the Sand–2000 | A
stake in the future -– 2001 | Performance
Review-2002 | Human
Capital |
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Transformation
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is
our fundamental
challenge.
There will be no compromise in
this respect.
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The executive
leadership team includes:
From left to right standing: Dan Modzelewski, Sean Flanagan,
Barbara Friend, Lionel Lindsay, Stephen Pell.
From left to right sitting: Terry Rensen, Roland Berndt, Brian
Bruce, Roger Rees,
Keith Smith | |
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EXECUTIVE LEADERSHIP
The executive leadership team in Murray & Roberts continues
to develop from both within the organisation and through the introduction
of new talent from without. During the year we have further consolidated
compatible operations to create significant global business strategies
under the leadership of key senior executives.
Keith Smith (52) has continued
the development of a focused range of businesses that supply to
and service the construction, mining and industrial sectors in southern
and South Africa. This includes the formulation of a significant
steel conversion cluster. Keith also leads the development of a
strategy to enlarge our total offering into the economies of all
SADC countries and is responsible for all equity investments into
project related infrastructure and industrial facilities.
Sean Flanagan (43) initiated the consolidation of our engineering-related
operations into a single business enterprise capable of a complete
design and build offering to the mining and industry sectors and
for marine infrastructure. The addition of MEI capability following
rationalisation elsewhere in the group has significantly enhanced
this total service offering. Sean also leads the development of
a strategy for expansion into the markets of Australasia and Southeast
Asia.
Stephen Pell (44) has been appointed to the board of Murray
& Roberts Limited from 1 September 2002. He has since January
2002 managed the consolidation of our domestic building and civil
engineering operations and has led the integration of the Africa
and Middle East operations into our international construction strategy.
Stephen also leads the development of a strategy to expand our construction
service offering into the growing oil and gas related markets of
West Africa.
Geoff Turner (56) is responsible for management and integration
of all business activity outside South Africa as managing director
of Murray & Roberts International based in Gaborone, Botswana.
He has corporate responsibility as project director for our activities
in Bahrain and Egypt and for the establishment of a new operation
in the emerging market of Angola.
KNOWLEDGE
EXECUTIVES
The core principles underpinning
a unitary framework for Murray & Roberts are held champion by
a group of knowledge executives based in corporate office but with
collective group-wide responsibility.
Dan Modzelewski (43) joined the group in July 2001 and has
brought significant new insight from a technical leadership perspective
related to procurement, supply-chain logistics and systems connectivity.
Barbara Friend (41) has accepted one of our most significant
and complex leadership challenges for the years ahead, as champion
of Human Capital development. The broad leadership team for Murray
& Roberts beyond the tenure of current executives will grow
from this initiative.
Roland Berndt (34) has taken the challenge to grow into the
broader strategic demands of his role as knowledge leader for innovation
and champion of industrial design as our core competence. |
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STRATEGIC KALEIDOSCOPE
A Unitary Murray & Roberts binds together all our people within
a strategic framework depicted through our use of the kaleidoscope
as a symbol. One dimension of our sustainable development challenge
into the future is reflected through succession planning.
We have engaged the development of our human capital potential from
the perspective of being South African, as well as to meet the requirements
of our global aspiration. Our emerging leadership starts to reflect
both, combining youth and energy with experience and wisdom, reflecting
the societies in which we do business. |
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KEY OPERATIONS EXECUTIVES
A greater level of focus is directed
into specific market sectors off a number of substantial performance
platforms under the leadership of key operations executives, who
have complete executive teams at their disposal.
Henry Laas (43), who joined the group in February 2001, is
responsible for our worldwide underground mining contracting operations.
He has rationalised the business to meet the world class demands
of our global resources clients.
Bryan Dyer (53) joined the group in July 2001 and from his
base in the United Kingdom, leads the transformation of our agricultural
business from sugar alone to a focus on renewable resources and
bio-energy development.
Terry Rensen (55) joined Murray & Roberts in January
2002 as group executive with corporate responsibility for the development
of an integrated transport systems cluster embracing our capability
in the design and build of ISO tank containers, rail coaches and
traction units.
Edwin Hewitt (36) rejoined the group in August 2002 as responsible
executive for the turnaround and future development of our foundry
operations. He will focus the consolidated business on the automotive
sector, building off our established expertise in grey iron and
aluminium engine systems.
Rob Noonan (52) has executive responsibility for a number
of operations that have been consolidated around the conversion
of primary steel into finished products for the construction, mining
and industrial markets.
Graham Mullany (47) joined the group in February 2002 as
financial controller for our construction-related businesses. He
fills an important strategic interface between corporate office
and the key operations in this sector.
HIGH-LEVEL EXECUTIVE PROJECT DIRECTORS
Murray & Roberts has a proud history in the delivery of
major projects throughout southern Africa and internationally. A
major project is defined as any project where the challenge of fulfilment
exceeds the inherent capacity of the organisation responsible for
its delivery. In Murray & Roberts, this would arise, for instance,
where a single project might exceed 50% of the business in the responsible
operating unit.
Managing the risk of major projects requires leadership intervention
and thoughtful structuring, often with joint venture partners and
a project steering committee. The appointment of a high-level executive
project manager is a prerequisite for success.
Peter Young (59) is responsible for the fulfilment of the
RoCam project to Ford on behalf of Murray & Roberts. He has
ensured the facilities and human capital expansion and upgrades
necessary to meet the performance demand, working closely with corporate
and operations management in partnership with Ford.
Duncan Barry (53) is responsible for the N3 and N4 Toll Road
projects and for delivery of the Gautrain proposal and other concession
opportunities on behalf of Murray & Roberts. These projects
have complex partnership and financing structures with long-term
operations and maintenance obligations.
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(continued) |
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UNITRANS
Unitrans reported a pleasing 21% increase in attributable earnings for the
year, delivering a 20,1% return on our average investment. The company’s
share fared less well, closing 16,5% down on the previous year at 2 090
cents. To some extent this reflects the decline in the fortunes of the JSE
but in our view undervalues the future potential of the business.
We are conscious of our responsibility to the minority shareholders of Unitrans,
to ensure sound strategy, good governance and acceptable performance. Our
investment in the company remains under strategic review and we continue
to seek a solution that meets the best interest requirements of Murray &
Roberts and its shareholders.
PROSPECTS
The challenge for the year ahead is to deliver the next stage of performance
in Rebuilding Murray & Roberts. Although good growth will still flow
from the ongoing turnaround of under-performing operations, a material increase
in earnings per share will result from real growth in revenues and a further
improvement in profit margins.
We start the year with a project order book of R5,8 billion, up 53% on the
previous year. There is particular strength in the mining and industry sector
throughout the SADC region, in civil engineering throughout Africa and in
building in the Middle East. Whereas the domestic building market is expected
to remain flat throughout the year, the road building and maintenance market
has improved appreciably.
The domestic economy is proving to be robust and higher levels of fixed
investment in southern and South Africa offer increased levels of opportunity
to our supplies and services businesses, all of which hold leading market
positions in the region.
Our fabrication and manufacturing order books are at their best levels in
many years. We are running full production lines in the manufacture of ISO
tank containers and are busy with the refurbishment of railway coaches.
MIDP continues to provide opportunity for the manufacture of automotive
components for the global market. Our foundry operation is experiencing
increased demand for engine components and the demand for alloy wheels has
improved significantly.
We have worked on our value proposition throughout the year and wherever
possible we seek to leverage our unique design and build capability on a
partnership basis, offering best value pricing. This is a significant shift
from traditional procurement processes that rely on lowest priced tender
as the principle measure of value.
It is unfortunate that our industry is characterised as being driven by
a need to just do work, without regard for long term shareholder returns
or an appropriate level of reward relative to the risks involved. This is
unsustainable and represents a past culture of value extraction rather than
value creation.
We believe that sufficient opportunity will exist in our markets into the
foreseeable future such that we can remain dedicated to improving the quality
of performance in our market and investment sectors.
We have engaged a process to explore the best manner in which we can expand
our business model and value proposition most effectively and sustainably
into the developing markets of the world. These regions remain in a difficult
economic condition, and our agricultural operations offer some insight into
the challenges we face. We are confident that these markets hold good value
in the context of the extraction, beneficiation and industrialisation of
natural resources and the associated enabling infrastructure.
The world economy is experiencing a difficult period, with a great deal
of tension surrounding the American market and that country’s war on
terror. Politics in the European Union seem on the move towards the right
and the voice of the developing world is louder and more demanding. Stock
markets are undergoing a significant revaluation, placing greater emphasis
on tangible value.
We are South African. That is the commitment we make as business and corporate
citizen. We will find the way in which to navigate our strategy through
these troubled times in pursuit of our commitment to sustainable earnings
growth and value creation.
The way forward looks good. Murray & Roberts is well set to deliver
on its performance promise. We have performance targeted every aspect of
our business and we will pursue our value proposition to the market with
passion and vigour. We will continuously review and challenge those aspects
within our business that are unable to meet our demanding performance criteria.
We continue to build the leadership team that will ensure sustainable success
into the future and we have committed the capital expenditure required by
them to engage the market.
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CORPORATE
As we have succeeded in establishing
sound leadership teams in our key operations in the past year, so
have we been able to shift the nature of the corporate office resource
from centralised performance control to decentralised strategic
engagement.
Corporate costs have shown a pleasing reduction in the year. The
additional costs associated with our support of the 2002 World Summit
on Sustainable Development and various NEPAD initiatives (approximately
R6,0 million) have been covered by sundry revenue gains. Expenses
in terms of our core Corporate Social Involvement programmes amounted
to R5,0 million in the year.
Approximately R6,0 million was expensed on various strategic interventions
supporting the Rebuilding Murray & Roberts process, some of
which will be continued into the new financial year.
We established our international corporate office in Gaborone, Botswana
during the year. Full accountability rests with this office to ensure
that we meet all procedural and governance requirements relating
to our international operations. International treasury responsibility
remains with our office in the Isle of Man.
Exceptional items produced a net loss of R1,6 million in the year.
Provisions amounting to R52 million in respect of warranties on
disposals of businesses carried forward from earlier years have
been written back in the current year. An interim dividend of R9,0
million was received from the liquidation of AWI Canada. In the
circumstances, it was considered prudent by the board to increase
the property headlease provision by a total of R58 million for the
year.
Through its listing on the Harare Stock Exchange, the Group holds
48% of the shares in Murray & Roberts (Zimbabwe) Limited. The
company is not consolidated and the holding cost is reflected as
a listed investment although it performs well in the context of
the Zimbabwe economy. Our executive leadership participates actively
in the direction of the company.
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ACKNOWLEDGEMENTS
In writing this report, I have highlighted the core leadership team in Murray
& Roberts and the significant responsibility and challenge they embrace
in pursuit of our strategic value proposition. We are truly privileged to
have such depth of capacity and dedication in the service of our investors,
both shareholder and customer. I thank them for all they have achieved this
year and for their ongoing commitment to our future development.
Roger Rees, Keith Smith, Sean Flanagan and Stephen Pell in particular, have
taken proactive responsibility to lead Rebuilding Murray & Roberts as
my partners and in the best interests of all our stakeholders. We enjoy
a rigorous and open process of engagement and peer review that I trust will
ensure we do not place any “bricks in the wall” that might lead
to future value destruction.
There are many executives and staff throughout the organisation who work
under challenging physical and emotional conditions. I thank all of them,
and their families, for their continued support and commitment to our company
and customers.
In his statement, the chairman has acknowledged those senior executives
who have left our employ since the last report.
It is our customers that make our business environment possible. Murray
& Roberts is privileged to work with some of the world’s leading
corporations, many of whom have taken responsibility to redefine the basis
under which capital investment projects are implemented.
Our business partners, too, have contributed to the success achieved in
the year and are an integral element of our organisational capacity into
the future.
The board committees in Murray & Roberts do much of the work to ensure
that governance standards are applied in all aspects of the business. The
remuneration, audit and risk management committees in particular have provided
wise counsel and direction to the ongoing process of Rebuilding Murray &
Roberts. 
Brian Bruce
Group Chief Executive
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