Report of directors


This report presented by the directors is a constituent of the consolidated and separate annual financial statements at 30 June 2017, except where otherwise stated. All monetary amounts set out in tabular form are expressed in millions of Rands, except where otherwise stated.



Main business and operations

Murray & Roberts Holdings Limited is an investment holding company with interests in the underground mining, oil & gas and power & water markets.

The Company does not trade and its activities are undertaken through subsidiaries, joint arrangements and associates. Information regarding the Group’s major subsidiaries and associate companies appears in Annexure 1 of the consolidated financial statements.

Group financial results

At 30 June 2017 the Group recorded earnings of R48 million (2016: R753 million), representing diluted earnings per share of 12 cents (2016: diluted earnings per share of 182 cents). Diluted headline earnings per share was 26 cents (2016: diluted headline earnings per share of 153 cents).

Full details of the financial position and results of the Group are set out in these consolidated and separate financial statements. The consolidated and separate financial statements have been prepared in accordance with International Financial Reporting Standards. The accounting policies have been applied consistently compared to the prior year, except for the adoption of new or revised accounting standards as set out in note 46, in the online annual financial statements

Going concern

The Board is satisfied that the consolidated and separate financial statements comply with International Financial Reporting Standards on a going concern basis following an assessment of solvency and liquidity requirements.

The directors are of the opinion that the Company and the Group have adequate resources to continue in operation for the foreseeable future based on forecasts and available cash resources and accordingly the annual financial statements have been prepared on a going concern basis

Uncertified revenue

The Group’s share of uncertified revenue is included in amounts due from contract customers in the statement of financial position. The uncertified revenue has been recognised through the statement of financial performance in current and prior periods in respect of claims and variation orders on projects (refer to note 9 of the consolidated financial statements), relating mainly to claims on projects in the Middle East.

A cumulative total revenue of R914 million being amounts due from contract customers (net of payments received on account of R445 million (2016: R474 million)), has been recognised in the statement of financial position at 30 June 2017 (2016: R2 020 million) as the Group’s share of uncertified revenue in respect of claims and variation instructions on the Group’s projects. Recognition of these assets is supported by the Group’s independent experts and advisers, and in accordance with IAS 11: Construction Contracts.

All Gautrain development period claims have been settled with the Gauteng Provincial Government. This was an all-inclusive settlement and the settlement value achieved supported the uncertified revenue previously taken against these claims, net of the provision for potential future Gautrain tunnel water ingress work which was released. In terms of this agreement no further work is required to be undertaken in the tunnel.

In the Middle East all projects are expected to be completed during FY2018. Close-out of the business in the Middle East continues to present major risk, but all known project losses have been fully accounted for in FY2017. Costs during FY2018 should be limited to a significantly reduced overhead cost and ongoing legal fees on the Dubai Airport dispute. After a protracted legal process, the Dubai Airport claim is finally in arbitration, with an award expected in May 2018.

Resolution of these extremely complex legal and financial claims and variation instructions has yet to be finalised, and may be subject to arbitration and/or negotiation. This could result in a materially higher or lower amount being awarded finally, compared to that recognised in the statement of financial position at 30 June 2016.

Grayston temporary works collapse

In November 2015, the Department of Labour instituted a Section 32 Inquiry (“Inquiry”) into this incident to determine the cause or causes of the collapse of the temporary works structure. This formal Inquiry currently underway, is conducted in terms of the provisions of the Occupational Health and Safety Act, 1993. The Inquiry was recently paused, but is due to resume again in September 2017. The Board is disappointed at the slow pace that is delaying closure of this distressing incident for all parties involved.

All costs incurred to date have been expensed as and when incurred. This incident is one of the retained liabilities following the disposal of the Southern African Infrastructure & Building businesses and the direct financial impact of this incident on the Group is not expected to be material considering the comprehensive insurance cover in place. The project is expected to be completed during the latter part of the 2017 calendar year and the date by which the Inquiry will be concluded remains uncertain.

Segmental disclosure

The Group will operate under three strategic platforms in financial year 2018. An analysis of the Group’s results reflects the results and financial position of each platform (refer to Annexure 3 of the consolidated financial statements).



Full details of the authorised and issued capital of the Company at 30 June 2017 are contained in note 12 of the consolidated financial statements.

Particulars relating to the Murray & Roberts Trust are set out in note 13 of the consolidated financial statements.

At 30 June 2017 the Trust held 30 150 (2016: 30 150) shares against the commitment of options granted by the Trust totalling 371 180 (2016: 3 224 040) ordinary shares. The shares held by the Trust were purchased in the market and have not been issued by the Company.


Particulars relating to the Vulindlela Trust are set out in note 13 of the consolidated financial statements. During the year the Vulindlela Trust granted a total of 2 173 000 shares (2016: 2 012 700 shares) to black executives as part of the Group’s BBBEE.

At 30 June 2017 the Vulindlela Trust held 10 624 366 (2016: 10 626 886) shares against the commitment of shares granted by the Vulindlela Trust totalling 5 974 451 (2016: 5 914 060) ordinary shares. The shares held by the Vulindlela Trust were purchased in the market and have not been issued by the Company.

The total number of ordinary shares that may be utilised for purposes of the Murray & Roberts Holdings Limited Employee Share Incentive Scheme (“Scheme”) is limited to 5,0% (2016: 5,0%) of the total issued ordinary shares of the Company, currently 22 236 806 (2016: 22 236 806) ordinary shares. As no shares have been issued to date in connection with the Scheme, this limit remains unutilised.

In terms of the FSP employees were allocated shares during the year by the remuneration committee totalling 6 372 026 shares (2016: 8 831 888). The shares held by the entities, in escrow, were purchased on the market and have not been issued by the Company.

Share buy-back

Shareholders are referred to the announcement released on SENS on 29 June 2017 regarding the Company’s decision to buy-back shares to the value of R250 million. As at 23 August 2017, shares to the value of R9,6 million have been bought on the open market.



The Board resolved to maintain a gross annual dividend of 45 cents (2016: 45 cents) per ordinary share for the year ended 30 June 2017. The dividend will be subject to the dividend tax rate of 20%, which will result in a net dividend of 36 cents per share to those shareholders who are not exempt from paying dividend tax. The dividend has been declared from income reserves.

Notwithstanding the losses incurred in the Middle East, the Board’s decision took into consideration the Group’s strong cash position, partly as a result of the Gautrain settlement, as well as the view that FY2018 will be the start of a new EBIT growth period, supported by analyst and third party research citing mainly the current turn in the metals and minerals cycle.

The number of shares in issue as at the date of this declaration is 444 736 118 and the Company’s tax reference number is 9000203712.

The relevant dates are:

Last day to trade (cum-dividend) Tuesday, 3 October 2017
Shares to commence trading (ex-dividend) Wednesday, 4 October 2017
Record date (date shareholders recorded in books) Friday, 6 October 2017
Payment date Monday, 9 October 2017

No share certificates may be dematerialised or rematerialised between Wednesday, 4 October 2017 and Friday, 6 October 2017, both dates inc


On Monday, 9 October 2017, the dividend will be electronically transferred to the bank accounts of all certificated shareholders where this facility is available. No dividend cheques will be paid to shareholders who have not provided their banking details to the transfer secretaries: Link Market Services. Accordingly, the cash dividend will remain unpaid until such time as the non-compliant shareholder has provided relevant banking details to the transfer secretary, to receive the cash dividend by electronic funds transfer. No interest will be paid for unpaid dividends.




Acquisition of a further interest in Bombela Concession Company (“BCC”)

Shareholders are referred to the announcement released on SENS on 22 August 2017, regarding the acquisition of a further 17% in Bombela Concession Company (RF) (Pty) Ltd (“BCC”) by Murray & Roberts Limited for a total consideration of R405 million. The cash position of the Group and its subsidiaries is sufficiently robust to undertake the acquisition. This is a good investment expected to yield a return of 18% before interest. The implementation of the transaction remains subject to approval of the Gauteng Management Agency, Competition Authorities and BCC’s funders.


Disposal of interest in Southern African Infrastructure & Building businesses

The Group disposed of its interest in the Southern African Infrastructure & Building businesses, effective 1 April 2017, for a gross consideration of R564 million (R397,2 million net of transaction costs (R27,5 million) and purchase price adjustment (R139,3 million)).

The gross cash consideration of R314 million was received on 12 May 2017.

The gross deferred consideration of R250 million mainly relates to working capital assets on contracts that have achieved practical completion as at the effective date, Grayston Pedestrian Bridge and Lonmin receivables. The amount is payable within 5 days of recovery, after which interest is calculated at bank deposit rates. An amount of R56,8 million relating to the deferred consideration has been written off to profit or loss in the 2017 financial year.

Discontinued operations

The disposal of the Southern African Infrastructure & Building businesses was effective 1 April 2017 and the Group recorded R71 million of retained liabilities on the sale of these businesses and other historical items. Genrec recorded a loss before taxation of R68 million for the year, primarily due to low levels of revenue and a weak order book. The sale of Genrec is underway, targeted for completion in the first half of FY2018. The R170 million net present value charge of future expenses in relation to the Voluntary Rebuilding Programme agreement between the listed construction companies and the South African Government, as previously announced on the Stock Exchange News Service of the JSE Limited (“SENS”), was also recorded under discontinued operations.



During the year under review the following special resolutions were passed by shareholders:

  1. The proposed fees payable quarterly in arrears to non-executive directors;
  2. General authority to repurchase shares;
  3. Financial Assistance to related or inter-related companies; and
  4. Amendments to the Memorandum of Incorporation.

In terms of the Companies Act requirements, special resolutions relating to the sale of certain businesses were passed by subsidiary companies.



Other than the share buy-back and acquisition of a further interest in BCC, the directors are not aware of any other matter or circumstance arising since the end of the financial year, not otherwise dealt with in the Group and Company financial statements, which significantly affects the financial position at 30 June 2017 or the results of its operations or cash flows for the year then ended.



A total of 150 080 (2016: 1 609 340) share options are allocated to directors in terms of the Murray & Roberts Holdings Limited Employees Share Incentive Scheme, further details are set out in note 13, the online annual financial statements.

The directors of the Company held direct beneficial interests in 401 080 ordinary shares of the Company’s issued ordinary shares (2016: 278 392). Details of the ordinary shares held per individual director are listed below.

BENEFICIAL Direct Indirect  
30 June 2017      
DD Barber 2 723  
DF Grobler 407 000  
HJ Laas 398 357 1 971 500  
30 June 2016      
DD Barber 1 971 500  
AJ Bester 123 472 817 000  
HJ Laas 152 197 1 337 000  

At the date of this report, these interests remain unchanged.



At the date of this report, the directors of the Company were:

Independent non-executive

M Sello (Chairman); DD Barber; R Havenstein; SP Kana; NB Langa-Royds; XH Mkhwanazi and KW Spence.


HJ Laas (Group chief executive) and DF Grobler (Group financial director).



Michael McMahon and Royden Vice retired from the Board effective from 30 September 2016 and 30 November 2016 respectively, having reached the mandatory retirement age for Board members.

Shareholders are also referred to the announcements released on SENS on 30 November 2016 and 9 March 2017 respectively, regarding the retirement of Cobus Bester as Group financial director and the appointment of Daniël Grobler effective 1 April 2017.

Subsequent to year end, Suresh Kana was nominated as independent non-executive chairman to succeed Mahlape Sello, who will retire as a director and chairman of the Group at the conclusion of the 2017 AGM. Furthermore, Dave Barber, who has served as an independent non-executive director since June 2008, will also step down from the Board at the AGM.

As announced on SENS on 17 August 2017, Ralph Havenstein was appointed as Lead Independent director, and three new directors, Diane Radley, Alex Maditsi and Emma Mashilwane, were appointed to the Board.



Lambertus Kok

The company secretary’s business and postal addresses are:

Postal address
PO Box 1000, Bedfordview, 2008

Business address
Douglas Roberts Centre, 22 Skeen Boulevard
Bedfordview, 2007



Deloitte & Touche continued in office as external auditors. At the annual general meeting on 2 November 2017, shareholders will be requested to re-appoint Deloitte & Touche as external auditors for the 2018 financial year. Graeme Berry will be the individual registered auditor who will undertake the audit.