The Group operates in the mining, energy, resources & infrastructure and power, industrial & water markets and as a result the revenue is not seasonal in nature but is influenced by the nature of the contracts that are currently in progress. Refer to commentary for a more detailed report on the performance of the different operating platforms within the Group.

The summarised consolidated financial statements for the year ended 30 June 2021 have been prepared in compliance with the Listings Requirements of the JSE Limited, the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards ("IFRS"), the minimum requirements of the International Accounting Standards ("IAS") 34, Interim Financial Reporting, SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee and the Financial Pronouncements as issued by the Financial Reporting Standards Council and the Companies Act, No. 71 of 2008 ("Act"). These summarised consolidated financial statements were compiled under the supervision of DF Grobler CA(SA), Group financial director. The directors take full responsibility for the preparation of the summarised consolidated financial statements and that the financial information has been correctly extracted from the underlying consolidated financial statements.

The accounting policies applied in the preparation of the consolidated financial statements from which the summarised financial statements were derived are in terms of IFRS and are consistent in all material respects with those applied in the audited consolidated financial statements for the year ended 30 June 2020.

The external auditors, PricewaterhouseCoopers Inc., have issued their opinion on the consolidated financial statements for the year ended 30 June 2021. The audit was conducted in accordance with International Standards on Auditing. The auditor responsible for the audit is JFM Kotzé. They have issued an unmodified audit opinion, which includes key audit matters, on the consolidated financial statements. A copy of the auditor’s report together with a copy of audited consolidated financial statements are available for inspection at the Company’s registered office. These summarised consolidated financial statements have been derived from the audited consolidated financial statements but are not audited itself.

Revenue is recognised at a point in time for the sale of goods and over time for all other categories of revenue.

Discontinued operations in the current year comprise the Middle East Operations, businesses included within the previous Southern Africa Infrastructure & Building Platform and the Genrec operations.

Infrastructure & Building Platform

In the current year, an investment in a Joint Venture (Forum SA Trading 284 Proprietary Limited), which holds an interest in an investment property in Mooikloof and falls into the previous Southern Africa Infrastructure & Buildings Platform, met the criteria to be classified as held for sale, in terms of IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (IFRS 5). An impairment of R39 million has been recognised in the loss from discontinued operations in the current year, on classification of this investment as a non-current asset held for sale.

Middle East Operations

The Middle East Operations were classified as a discontinued operation in the 2020 financial year as a result of being abandoned, in terms of IFRS 5. Towards the end of the current financial year, the Group entered into discussions with a UAE-based investment company to dispose of its investments in Murray & Roberts Contractors (Abu Dhabi) LLC and Murray & Roberts Contractors (Middle East) LLC (part of its Middle East operations). By 30 June 2021, the discussions had progressed to an advanced stage of negotiations and as a result thereof these companies met the criteria, in terms of IFRS 5, to be classified as a disposal group held for sale. Included in the current year loss from discontinued operations is an impairment of R96 million recognised on classification of this disposal group as held for sale, and a further R39 million foreign exchange rate loss.

The transaction above recognised that on 21 July 2020, a call on two guarantees for the completed Al Mafraq project (a joint arrangement between Murray & Roberts Contractors (Abu Dhabi) LLC and a local partner) was made without cause by a client in the Middle East. On 16 January 2021, without formal notice, the call on the two guarantees issued by a Dubai-based bank was implemented by the bank. The bank debited the joint venture bank account with AED474 million (M&R share of AED153 million), placing the joint venture account into overdraft of an equivalent amount, and paid the funds over to the client. Murray & Roberts accounts for this joint arrangement as a joint operation and proportionately consolidates its share of the assets, liabilities and profit or loss of the joint operation.

The call on the two guarantees, implemented by the bank, has been treated as a non-cash flow transaction and is not included in the disclosure of cash flows from discontinued operations below.

The assets and liabilities classified as held for sale below relate mainly to the Middle East Operation.

The Group tests goodwill annually for impairment or more frequently if there are indicators that goodwill might be impaired. No goodwill has been impaired in the current year.

Update on the Group's claim processes

The Group's uncertified revenue increased to R1,3 billion (FY2020: R1,1 billion). The Group remains confident that revenue recognised as uncertified will be certified and paid once attendant commercial matters have been resolved.

The Group's financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable and interest-bearing borrowings.

The fair value of the Group's financial instruments approximate their carrying values at 30 June 2021.

As a contracting Group, Murray & Roberts is in the ordinary course of its business involved in various disputes, a number of which arise when operations and projects are closed out and finalised. Depending on the merits, disputes can translate into claims and legal proceedings, which Murray & Roberts always rigorously defends. Where Murray & Roberts, in consultation with its legal advisors and counsel, believes the claims are predicated on weak and/or spurious grounds, and Murray & Roberts has sound and strong defences, no provision is made for any such claim, and they are aggregated and disclosed as contingent liabilities. The increase in contingent liabilities relates mainly to claims in the Middle East and in the Power, Industrial & Water platform which management do not believe poses a significant risk as the potential obligations will be disputed and defended. The Board does not believe that adverse decisions in any pending proceeding or claims against the Group will have a material adverse effect on the financial condition or future of the Group. The Group does not account for any potential contingent liabilities where a back-to-back arrangement exists with the clients or subcontractors and there is a legal right to offset (R1,2 billion).

Every year, the board of directors of the Company (“Board”) considers an annual dividend, post year end. Dividends are subject to the Group’s financial position and market conditions. Considering the Group’s large and growing order book and its impact on working capital requirements, the Board has resolved not to declare a dividend for the period under review.

COVID-19 impacted earnings in the current financial year which indirectly had an impact on covenant triggers and cash flows for the year ended 30 June 2021. At 30 June 2020, covenant breaches were noted in RUC Cementation Mining Contractors (Pty) Ltd on the HSBC and EFIC facilities. In the current financial year, the EFIC facility was repaid and not renewed. The HSBC facility was renegotiated. Covenants were met on the HSBC facility at 30 June 2021.

Further covenants in the Group relate to facilities with the Toronto Dominion Bank for which the covenants were met at 30 June 2021. The call on two guarantees in the Middle East as described in note 15 in the interim financial statements at 31 December 2020 were made without cause and was not as a result of a breach of covenants. Should a covenant be at risk of breach, a waiver will be requested from the bank in advance of a breach. However, no such instances were noted in the current financial year.

Details of all debt covenants in the Group have been reflected in the table below:

The Board reviews the Group's debt usage and considers the risk thereof. The Group is subject to externally imposed capital requirements in the form of financial covenants which are actively managed by the Board. The Group was able to fulfil all covenants across its various subsidiaries at 30 June 2021.

There have been no significant changes to the nature of related party transactions since 30 June 2020 or any transactions outside the normal course of business.

During July 2021, civil unrest and protest action occurred in many parts of South Africa. This was considered to be a non-adjusting event. There was no significant impact on results post year end.

During the current financial year, as documented in note 4, the Group’s exit from the Middle East is progressing and it has entered a transaction process with a
UAE-based investment company for the sale to it of the Abu Dhabi and Dubai companies. Regulatory approval is a pre-requisite for the shares to be transferred to the purchaser. The transaction is expected to be concluded by the end of September 2021. Considering the remaining project disputes in each of the two companies, the parties agreed that the consideration for sale would be a nominal amount. The post year end events as discussed above were not considered to be adjusting events and therefore the financial position and results of the Group were not deemed to be significantly affected.

The directors are not aware of any other matter or circumstance, other than noted above, arising since the end of the financial year not otherwise dealt with in the Group and Company annual financial statements which significantly affects the financial position at 30 June 2021 or the results of its operations or cash flows for the year then ended. Events that occurred after the reporting period were indicative of conditions that arose after the reporting period and did not have a material impact on the current financial year results.