NOTES

The Group operates in the construction, engineering and mining environment 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 interim report for the six months ended 31 December 2011 has been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (“IFRS”), the AC 500 standards as issued by the Accounting Practices Board or its successor, IAS 34: Interim Financial Reporting and in compliance with the requirements of the Companies Act, No. 71 of 2008 of South Africa. This report was compiled under the supervision of AJ Bester (CA) SA, Group financial director.

The accounting policies used in the preparation of these results are in accordance with IFRS and are consistent in all material respects with those used in the audited annual financial statements for the year ended 30 June 2011.

This review has been conducted in accordance with International Standards on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor, Deloitte & Touche, and their unmodified review opinion 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 auditors.

Loss before interest and taxation includes the following signficant items:

The Group disposed of its mining roof bolt & Alert Steel Polokwane businesses and Johnson Arabia crane hire while Clough disposed of its marine operations during the six months ended 31 December 2011. Refer to note 7 for further details on these disposals.

The remaining discontinued operations comprise of the Group’s properties and interests in steel reinforcing bar manufacture and trading operations.

⁵ During the financial year ended 30 June 2011 the Group elected to disclose the uncertified claims and variations less payments received on account separately from contracts-in-progress. Furthermore, the under claims and over claims per contract were disclosed on a net basis to determine the net position per contract whilst in previous periods these amounts were disclosed separately in amounts due to and from contract customers. This resulted in a reclassification of R13 million in December 2010 between amounts due to and from contract customers, however, the net amount remained unchanged.

The reclassification had no impact on the net working capital of the Group, nor its working capital movement. The Group is of the view that the revised contracts-in-progress and contract receivables disclosure provides more useful information to users of the financial statements as the uncertified claims and variations recognised is easily identifiable.

The Group operates in the construction, engineering and mining environment and engages in construction contracts with various clients. The contracts end of site position is continuously re-estimated based on the latest available information. As a result it is impractical for the nature and amount of the change in estimate to be disclosed at each reporting period.

Contingent liabilities are related to disputes, claims and legal proceedings in the ordinary course of business. The Group does not account for any potential contingent liabilities where a back to back arrangement exists with clients or subcontractors.

The Competition Commission ( the “Commission”) engaged the construction industry in April 2011 and submitted applications through the April 2011 Fast-Track process. As previously reported, the Fast-Track process might highlight further transgressions, unknown to the Board. The Commission has subsequently presented unreported projects falling into this category for the Group to investigate. Based on current information, the Board is of the view that an increase in the penalty provision raised in the previous financial year is not necessary.

The Group has restructured South African term debt and bank facilities, the new debt package of approximately R4,3 billion (previously R3,4 billion) includes facilities ranging from on-demand to four-year facilities, achieving the objective of extending the average tenure of the Group’s debt structure. The facilities are supported by cross guarantees from Group companies and have been secured by the pledging of Clough shares.

The Board has resolved not to declare a dividend until the Group’s liquidity and trading position has improved further.

There have been no significant changes to the nature of related party transactions since 30 June 2011.

Subsequent to the period under review, the Gorgon Pioneer Material Offloading Facility (“GPMOF”) project experienced further weather delays, as well as unexpected safety related stoppages, which have been treated as non-adjusting events after the reporting period. The impact of these delays is currently estimated at R220 million which will be accounted for in the second half of the financial year. The Group is in the process of evaluating the recoverability of any costs incurred as a result of these delays.

The directors are not aware of any other matter or circumstance arising after the period ended 31 December 2011, not otherwise dealt with in the Group’s interim results, which significantly affects the financial position at 31 December 2011 or the results of its operations or cash flows for the period then ended.