Commenting on the results, Group Chief Executive Brian Bruce said: “The Group has powered through its third year of Rebuilding Murray & Roberts against a strong currency headwind. In so doing it has delivered ahead of its plan for a material increase in earnings per share from real growth in revenues and a further improvement in profit margins.”

Mr Bruce conceded that currency volatility and a slowdown in the global economy had tested the Group. “The stronger Rand relative to the currencies in which we conduct our international operations limited ongoing revenue growth. This did not however affect our operating margins.” He said.

Performance
“This year sees the completion of the third year of our Rebuilding Murray & Roberts strategy”, comments Bruce. “The hard work done by our executive leadership team over this period has delivered on our performance commitment in the year”. He adds, stating that all business clusters operated profitably, reporting increased revenues and an operating margin of 6,1% compared to 4,3% in the previous year.

The new leadership teams appointed into the Group’s major operations and corporate office over the past three years have continued the process of transformation and consolidation necessary to meet the changing demands and increased volatility evident in the Group’s domestic and international markets. During the year the Group refined its principal market focus into the construction economies of South and southern Africa, the rest of Africa and the Middle East, which represent more than 75% of total activity.

Construction operations have been consolidated within South Africa and within SADC, allowing each to perform well in a steady market. Murray & Roberts has gained a foothold in selected markets in West Africa, which should deliver better value in future years. The Middle East operations experienced some difficulties in the year in an environment that was both competitive and volatile.

Road construction in remote regions of Africa has continued to be a challenge. “As a contractor we are increasingly expected to absorb levels of risk over extended periods that are often unreasonable and unjustified by the levels of reward available,” explains Bruce.

The general level of construction activity in South Africa has offered improved market conditions to most of the Group’s construction materials businesses. Management continued its focus on performance efficiencies and sought new opportunities in selected international markets.

The Mozal and Hillside smelter expansions both reached performance milestones ahead of budget and schedule. The long gestation period for new mining and industrial projects in South Africa has been exacerbated by investment uncertainty concerning proposed legislation and currency volatility.

The Group’s commitment “We are South African” has focused its investment in industrial manufacturing, where operations are based exclusively in South Africa serving selected domestic and global markets. Murray & Roberts also manages on contract, a number of sugar production facilities and associated agricultural estates in various locations throughout the developing world, which defines its principal international marketplace.

Manufacturers of tank containers in South Africa supply approximately two-thirds of the world market. The global market exploited the recent volatile currency and Murray & Roberts manufactured a record number of units in the year.

Refurbishment of commuter rail coaches has been the mainstay of Murray & Roberts’ rolling stock activities in recent years. The plan to renew South Africa’s mainline locomotive asset, as well as the potential of the proposed Gautrain project, will offer new levels of opportunity in this sector.
The Group holds a 45% interest in Unitrans Limited, which yesterday reported a 20% increase in headline earnings to R 234 million.

Disposals
Murray & Roberts has sold 50% of the business of AWI South Africa to Borbet GmbH of Germany, with effect from 1 July 2003 and subject to approval by the competition authorities. The company will be renamed Borbet South Africa and Murray & Roberts will continue to play a key role in partnering Borbet management through their introduction into the South African manufacturing environment.

Murray & Roberts has entered into a partnership arrangement with J&J Group whereby they and other empowerment partners’ will share in all future project work acquired by The UCW Partnership.

Prospects
“With two years of Rebuilding Murray & Roberts still in hand, we have considered and approved a framework to expand our business model into new markets and opportunities beyond 30 June 2005. The primary focus of this strategy will be the construction economies of the developing world, and leveraging South African competitiveness through industrial manufacturing,” states Bruce.

Murray & Roberts ended its year with an order book of R 4,8 billion which offers the opportunity to continue its non-negotiable commitment to sustainable earnings growth and value creation.

“We have been cautious in our engagement of major project opportunities in some of our markets, many of which are experiencing political and economic volatility. “ says Bruce, adding that the Group’s various supply and services companies are reporting good levels of activity while the automotive sector offers long-term order book potential.

“Overall, we foresee some performance consolidation in the forthcoming financial year, where investor uncertainty concerning pending mining legislation in South Africa and a general expectation of continuing strength in the Rand seems to be the major cause behind a current delay in major project approvals. “We expect the growth in headline earnings to be at a lower rate than achieved over the past three years,” concludes Bruce.

Dividend
Murray & Roberts has declared a final dividend of 37,5 cents per share, making the total dividend 52,5 cents per share for the year ended 30 June 2003.