The directors of Murray & Roberts are pleased to record another strong performance by the Group, with operating profit (EBIT) of R261 million, an increase of 102% on the comparative period last year. Core earnings (headline earnings excluding currency loss on offshore treasury funds) of 85 cents per share is a 86% improvement on the same period last year.

A stronger rand at 31 December 2002 has resulted in a R49 million reversal of a previously reported gain of R81 million on the translation of the Group’s offshore treasury funds.

All business clusters recorded increased revenues and profitability compared with the same period last year. Improved efficiencies throughout the business have resulted in an operating margin improvement to 5,0%, compared with 2,9% in the same period last year.

Rebuilding Murray & Roberts continues to unlock the inherent value in the Group. The resilience of the Group in the face of current economic and market uncertainty is evidence of balance sheet strength, broad leadership team quality and the strategic robustness of market choices to date.

Negative operating cash flow of R23 million is the result of an increase in working capital, primarily caused by debtor and stock build in the steel business and the funding of new activity in construction. Working capital is being tightly managed in the funding of revenue growth.

The projects market in South Africa is buoyant, with strong activity in infrastructure, mining and industrial development. Commercial building, however, remains an unattractive proposition. Construction markets in the rest of Africa have delivered good growth, although payment delays have impacted on working capital. The Middle East has experienced a relatively lean period but new projects are now starting to contribute to the bottom line.

Road building activities have continued to disappoint, reflecting a capacity problem in the industry that seems endemic. Provisions against known losses taken at 30 June 2002 appear adequate to cover problem contracts to completion.

New leadership and targeted investment underpinned a strong turnaround in Foundries Group. Improved market conditions and tighter management drove Consani to its best first-half performance for a number of years. UCW continued to deliver good value from its volatile market.

Companies forming the supplies and services cluster continue to benefit from increased expenditure in the regional construction economy. Further growth will stimulate demand for new production capacity for the first time in more than a decade.

The process of streamlining corporate costs has continued, with much of the capacity required for performance risk management now integrated into the operational leadership teams.

No additional provision has been considered necessary for property headleases at the half-year. A further review will be undertaken at 30 June 2003 to establish the adequacy of the long-term provision for the property headleases.

The Group continues to hold a significant portion of its cash balances denominated in hard currencies, which are required to support the performance bond and guarantee requirements of international activities.

This associate reported a 20% increase in headline earnings off a 23% increase in revenues compared with the same period last year. Attributable earnings for the six months under review are R112 million which translates into R50 million of attributable earnings for Murray & Roberts. Full details are available in the Unitrans interim report published on 25 February 2003.

A loss of R33 million was incurred on the disposal of Gearings Foundry and closure of the Cosmar business. These losses have been charged against the impairment provision raised in respect of these businesses in the 2000 financial year.

Johnson Access was sold as part of the Group’s exit strategy from non-core operations.

The manufacturing business of AWI (UK) was sold with effect from 30 June 2002 and certain protective rights in favour of the Group and its customers have been satisfied. Completion of the sale of the associated property company awaits environmental clearance.

The directors are conscious of the potential impact of current political and economic volatility on the Group’s markets and activities.

A project order book of R5,9 billion was available at 31 December 2002, a 15% improvement in the six months since 30 June 2002 if adjusted for the exchange rate differential. A number of major project opportunities are being pursued in South Africa, Africa and the Middle East.

Order books and market demand in the products and services activities are at satisfactory levels. Many of these businesses are prominent either in their South African or global markets and will continue to pursue expansion of their activity and reach.

The directors are confident that the Group will deliver the material increase in earnings per share, real growth in revenues and further improvement in profit margins that were forecast in the 2002 annual report and confirmed at the annual general meeting.

The directors have decided to resume the policy of interim dividends and have declared an interim dividend of 15 cents per share in respect of the year ending 30 June 2003. Attention is drawn to the formal dividend announcement below.

Directors:

DC Brink (Chairman), BC Bruce* (Chief Executive), BN Bam, WP Esterhuyse, SE Funde, PG Joubert, SJ Macozoma, AJ Morgan, RW Rees*, AA Routledge, MJ Shaw, KE Smith*, JJM van Zyl      *Executive

Secretary:

LJ Lindsay