 Operating profit up 102%
 Core earnings up 86%
 Operating margin up to 5%
 Ongoing revenues up 25%
 Interim dividend resumed

Murray & Roberts has delivered another excellent performance in the six months to
31 December 2002, with operating profit (EBIT) of R261 million double that achieved in the same period last year.

An interim dividend was resumed at 15 cents and, in a confident prospects statement, the Group confirmed its forecast in the 2002 annual report that it was positioned to deliver material growth in earnings for the full year, off real growth in revenue and further improvement in profit margins.

Group chief executive, Brian Bruce said: “These results confirm our non-negotiable commitment to sustainable earnings growth and value creation.”

Bruce added that the Rebuilding Murray & Roberts strategy continues to unlock inherent value in the Group. “Our resilience in the face of current economic and market uncertainty is evidence of our balance sheet strength, broad leadership team quality and the strategic robustness of our market choices to date.”

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

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

The domestic market continues to account for the bulk of business activity, contributing 60% of total revenue, approximately 33% of which is for export. The rest of Africa, the Middle East and other global markets contributed 15%, 14% and 11%, respectively.

The Group reported that while the projects market in South Africa is buoyant, with strong activity in infrastructure, mining and industrial development, commercial building remains an unattractive proposition. Construction markets in the rest of Africa have delivered good growth, although payment security remains a concern. The Middle East has experienced a relatively lean period over the past few years but new projects are now starting to contribute to activity levels.

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

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

Companies forming the supplies and services cluster have benefited from increased expenditure in the regional construction economy and 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.

Unitrans
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 were R112 million, translating into R50 million of attributable earnings for Murray & Roberts.

Disposals
Gearings Foundry was sold and the Cosmar business closed, resulting in a write-down of R33 million. 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.

Prospects
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, representing 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 on profit margins forecast in the 2002 annual report and confirmed at the annual general meeting.

ISSUED BY MURRAY & ROBERTS