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 condensed consolidated interim financial statements for the period ended 31 December 2020 have been prepared in accordance with International Financial Reporting Standard IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides, as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa. The condensed consolidated interim financial statements were compiled under the supervision of DF Grobler CA(SA), Group financial director.

The accounting policies applied in the preparation of these results are in accordance with International Financial Reporting Standards (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 independent auditor's review has been conducted in accordance with International Standards on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor, PricewaterhouseCoopers Inc., and their unmodified review report is available for inspection at the Company's registered office. Any reference to future financial performance included in this announcement has not been reviewed or reported on by the Group's external auditors. The auditor's report does not necessarily report on all of the information contained in this announcement/financial results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's report together with the accompanying financial statements from the registered office.

The information presented in the condensed consolidated interim financial statements represents reviewed results for the six-month periods ended 31 December 2020 and 31 December 2019. The comparative information presented in respect of the year ended 30 June 2020 is not reviewed or audited, however, has been derived from the audited consolidated annual financial statements for the year then ended. A copy of the auditor's report, together with the audited consolidated annual financial statements for the year ended 30 June 2020, is available for inspection at the registered office.

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

⁸ Other revenue includes the provision of labour, information technology and other services to joint arrangements.

Discontinued operations include the Middle East operation as well as retained assets and liabilities, following the sale of Genrec operations and the Southern African Infrastructure & Building businesses. The loss is due to a R39 million impairment following the decision to sell the investment in a joint venture ("JV") holding the Mooikloof residential development (a retained asset after the sale of the Infrastructure & Building businesses in 2017), which has not made any progress for several years, as well as a negative R39 million exchange rate movement on an intercompany loan to the Middle East. The investment in JV has been classified as a non-current asset held for sale in terms of IFRS 5: Non-current Assets Held for Sale and Discontinued Operations. These operations, as well as the investment in JV, met the requirements in terms of IFRS 5 to be classified as discontinued operations and have been presented as such in the condensed consolidated interim financial statements.

4.1 (LOSS)/PROFIT FROM DISCONTINUED OPERATIONS

4.2 CASH FLOWS FROM DISCONTINUED OPERATIONS INCLUDE THE FOLLOWING:

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 period.

^~ Business acquisitions in the current period are not considered significant.

UPDATE ON THE GROUP’S CLAIM PROCESSES

Since the end of the previous financial year, the Group's uncertified revenue remained unchanged at R1,1 billion. It has become more difficult to settle claims expediently with clients considering the uncertainty brought about by COVID-19 pandemic. The Group, however, 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 as at 31 December 2020.

10.1 FINANCIAL ASSETS DESIGNATED AS FAIR VALUE THROUGH PROFIT OR LOSS

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 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. Refer to note 15 for events after reporting date, impacting guarantees disclosed at 31 December 2020.

On an annual basis, the board of directors of the Company ("Board") considers a dividend post-year end. As a result of the significant growth in the Group’s order book and ongoing uncertainty brought about by COVID-19, the Board will prioritise retaining sufficient capacity to deliver the order book. No interim dividend has been declared.

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.

The directors are not aware of any matter or circumstance arising after the period ended 31 December 2020, not otherwise dealt with in the Group's interim results, which significantly affects the financial position at 31 December 2020 or the results of its operations or cash flows for the period then ended.

On 21 July 2020, a call on two guarantees for the completed Al Mafraq project 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, placing the joint venture account into overdraft of an equivalent amount, and paid the funds over to the client. The bank has no direct access to the funds of Murray & Roberts Limited, and will have to pursue a claim under Murray & Roberts Limited parent guarantees through an inter-jurisdictional legal process. The parent guarantees are limited to a third of the amount paid out by the bank. The payout under these securities is not expected to have any income statement impact, nor any direct cash flow implications for the Group.