Henry Laas
Group chief executive

Daniël Grobler
Group financial director

Henry Laas and Daniël Grobler

Over the past decade, the Murray & Roberts leadership teams have shown their strength in navigating challenging economic conditions, while holding true to our long- term strategic direction. We have substantive reason, supported by our already strong order book, to believe that we are on the cusp of a multi-year period of strong earnings growth. This will give us the opportunity to make good on our promise to enhance value for shareholders who have stood by Murray & Roberts.


In the last decade, the resilience of engineering and construction firms the world over has been severely tested. For Murray & Roberts, in particular, two unforeseen global events have been pivotal in our strategic development. The oil price collapse in 2014 and the COVID-19 pandemic have had severe implications for capital allocation in our markets, and hence project opportunities for our three business platforms. While these events restricted the Group's earnings potential in different ways, they challenged us to stay agile and responsive.

Over this time, we have worked to reshape the Group into a multinational engineering and construction group, with a substantial global footprint. Limited investment in the South African economy over many years have spurred this shift. The threat of local social instability and its damaging effect on the economy and livelihoods, as witnessed a few months ago, has not been encouraging either. Over the next three years, we expect the majority of the Group's revenue to be derived from our two international business platforms, which have established credible positions in regions and sectors with sustainable growth prospects. Broadening the Group's market focus over the last few years has served us well in this regard.

The Group's international scope now includes market sectors with robust fixed capital investment fundamentals. These market sectors will benefit from substantial stimulus earmarked for infrastructure-led economic recovery, which also seeks to sustainably meet the needs of a growing and urbanising global population. The resources, industrial, energy, water and specialised infrastructure sectors present the best opportunities for growth, diversification and differentiation for our business platforms, as specialist contractors in their regions.

While the competitive differentiation of our business platforms is rooted in Engineered Excellence, so too does this philosophy define our approach at Group level. We have applied the same purpose-driven thinking to choose our target markets, design the appropriate organisational structure and define the specialist capabilities our platforms need to thrive when prospects improve. This is not to say this work is complete. We continue to seek opportunities for growth, either organically or through value accretive acquisitions, that will also diversify our earnings potential as well as our risk exposure.

The consistent implementation of our strategy over the past few years culminated in significant order book growth in the year under review. With a record order book of R60,7 billion and near orders of R11,1 billion, the Group is well positioned for strong growth in profitability in FY2022 and meaningful earnings growth in the medium term. These positive expectations reflect greater certainty in global economic recovery as vaccination in developed markets gains more ground, and the world seeks to decisively address the socioeconomic and environmental vulnerabilities highlighted by the COVID-19 pandemic.

The outcome of six years of focused strategic effort has brought the Group's business platforms closer to strategic maturity, as envisioned in our New Strategic Future plan. Murray & Roberts is today a purpose-built Group, ready to capitalise on improved prospects in our two international platforms: Energy, Resources & Infrastructure and Mining. Together, their potential and growth opportunities far outweigh the slower anticipated turnaround in the Power, Industrial & Water platform's market sectors in sub-Saharan Africa, even though the platform is well positioned competitively.


The cusp of opportunity

Our primary strength lies in the counterbalancing effect of our portfolio of strategically mature platforms that are individually robust - well-led, -diversified, -positioned and -governed. The Group thrives when our two international platforms perform well. Our Mining platform has been a consistently strong performer for several years, while previously, adverse market conditions and inconsistent project performances held the Energy, Resources & Infrastructure and Power, Industrial & Water platforms back.

Systemic risks are hard to foresee and complex to manage. The collapse of the oil price in November 2014 had a devastating effect on our previous Oil & Gas (now Energy, Resources & Infrastructure) platform. By the end of that year, the oil and gas market slumped into hibernation, which to a degree, persists to this day. The impact on this business as our most significant earnings contributor at that time was severe. The market collapse saw this platform's contribution significantly decreasing year after year and losses were recorded during the previous two financial years.

After five years of strategic repositioning to diversify away from its dependence on a single cyclical market (Australian LNG), the Energy, Resources & Infrastructure platform returned to profitability in the year. Its order book has reached a historic high, with significant levels of revenue already secured for FY2022 and FY2023, and an impressive pipeline of project opportunities. This supports our expectation of strong earnings growth over the next three years.

Energy, Resources & Infrastructure's order book reflects its thriving target markets, with Australia leading in infrastructure investment to accelerate the domestic economy. While the North American market is somewhat tentative, we are evaluating a potential acquisition that will further grow our earnings and expand the platform's capabilities and add relevant capacity. This acquisition will diversify our service offering in North America in a similar way to the Australian operations. We are optimistic that both the APAC region and the Americas will perform well over the next few years. Specific focus will be on ensuring the platform's ability to attract the necessary specialised and technical skills, which could be a potential constraint to growth.

To have our two international platforms contributing in a material way to Group earnings may well become a reality in the coming year. Energy, Resources & Infrastructure's favourable prospects will benefit the Group for the foreseeable future, adding to our Mining platform's consistent contribution to earnings. In the case of the latter, there are encouraging signs of near-term earnings growth potential as the commodity upturn gains momentum.

Analysts are forecasting that the recent recovery in commodity prices has longer-term structural support, raising hopes for a commodity super-cycle. Our view is that the super-cycle may be restricted to those commodities required to convert global energy to lower-emission energy sources. Copper, platinum and other platinum group metals, for example, are likely to see significant upside. Our Mining platform holds leading positions in most major regional underground mining markets in the western world. With these commodities well represented in its portfolio, it is strongly positioned to grow and benefit from escalating demand.


The Mining platform has done well to protect its order book from deterioration due to the impact of COVID-19 on capital investment decisions and the timing thereof, as well as the impact on project schedules and resourcing. This impact was most pronounced in North America and Mongolia, and the platform's regional business structure has provided some shield against the vulnerability of team mobility, supply chains and travel restrictions.

The encouraging outlook for global mining markets will support the platform's focus on growing its order book in the coming year, especially in the Americas. The current order book is reasonably solid and the near-term project pipeline is robust and growing. We see opportunity for accelerated organic earnings growth in the medium term and, given its high regional market shares, the platform will continue to pursue value accretive acquisitions to sustain and diversify its earnings growth. It is also considering regional expansion opportunities, specifically into South American mining markets.

The sub-Saharan Africa focused Power, Industrial & Water platform continues to face significant challenges to its viability and sustainability. Investment in relevant infrastructure in this region is limited and no projects of meaningful value were secured. Ongoing restructuring, in line with the expectation of lower revenue potential, has reduced the platform's resources to the minimum required to win work and steer the platform to its targeted earnings potential. Power, Industrial & Water's scope for growth and diversification, as a regional business, is more limited than the two international platforms.

Material prospects for Power, Industrial & Water remain thin, besides for its OptiPower Projects business, even though the platform is well-placed to respond to the urgent need for industrial and water infrastructure and for participation in South Africa's renewable energy drive. Wade Walker Solar was established during the year to pursue industrial PV opportunities up to 10MW in scale. This business provides project development, EPC as well as equipment supply services and secured its first projects, albeit at a small scale. We continue to believe this business is well positioned competitively in markets with long-term promise. We recognise this is an ambition we reiterate annually, and the platform's sustainability will be re-evaluated towards the end of the next financial year, considering its current loss-making position. Power, Industrial & Water will continue to focus on achieving stability and sustainability in the next three years, in line with its business plan.

Value recognition braced by Engineered Excellence

Evidence for strategic maturity must ultimately be found in the stability and sustainability of earnings growth from each of our platforms. Besides market activity, this is contingent on their ability to consistently deliver safe, well-executed and profitable projects.

Our business platforms are well equipped to provide services across the engineering and construction value chain in their regional markets. The insight this provides enables them to optimise capital investment in both the design and execution of projects. This equates to better project outcomes whose value extends long into the operating life of the client's asset and the lives of local communities and host countries.

Our culture, guided by our Values and operationalised by our philosophy of Engineered Excellence, reinforces these outcomes. We expect our platforms to apply well-developed policies, management systems, business principles and practices that enable them to differentiate their services beyond competitive pricing. This serves to protect project margins and value recognition from complex risks. The concentration of EPC lump-sum contracts in the Group's order book, and specifically in Energy, Resources & Infrastructure, reflects a shift in proportional risk sharing from clients to contractors. This makes it critical to ensure near-flawless project planning, contracting and delivery to optimise earnings potential from the Group's order book.

Project delivery carries inherent risk that increases as project size grows and as contracting models shift from cost-reimbursable arrangements to lump-sum. On large projects, multiple project events can have a compounding impact on progress and commercial positions, which are difficult to quantify and thus hard to agree with clients. Our project governance and management systems are built to manage such risks, and their rigour also extends to the selection of experienced and tested joint-venture partners for large projects. However, as we have seen in the past on large projects such as those we are undertaking in Energy, Resources & Infrastructure, commercial and operational challenges have the potential to collide to undermine value recognition.



Given the execution risk associated with its substantial order book, the leadership team at Energy, Resources & Infrastructure is focused on disciplined tendering and project execution. The recently established regional platform structure creates more management capacity and a degree of autonomy, although this is balanced with a strict requirement to comply with platform management systems and protocols, which includes rigorous Group-aligned commercial and risk governance put in place over the last few years. These factors provide ample comfort that the platform can derive strong profit growth from its impressive order book.

In support of its commitment to drive growth and deepen Engineered Excellence, the Mining platform has clear objectives to optimise a range of business areas. These include improving risk assessment processes and higher-level controls in safety management; improving productivity through better and more accurate planning and execution; improving asset management, tracking and performance; and leveraging its global spending power through strategic centralised procurement. All of these will be served by improving management information, for more accurate performance management and reporting. The acceleration of its digital strategy will enable improved safety, accuracy of execution and potentially improved margins and greater market share.

Digital systems and solutions are inevitable business enablers. Murray & Roberts faces the uncertainty of rapid technological advancement to no lesser extent than any other business. We choose to embrace this as a manageable opportunity to remain a contractor and an employer of choice. Critically, our ability to compete depends on staying ahead of the technology curve, both in delivering our projects and attracting the brightest talent, especially among a younger generation of leaders and employees.

Digital opportunities to improve productivity, safety and efficiency at project level have been understood for some time. Our international platforms have several exciting initiatives underway to achieve these outcomes. However, unlocking technology's potential to contribute to sustained success is now of heightened priority, and is being overseen and coordinated out of the office of the Group financial director.

It is appropriate to assess the Group's capital position in the context of the material growth opportunities and the risks we have outlined. Murray & Roberts has demonstrated over many years an ability to manage short-term constraints while maintaining long-term focus in how we allocate capital. However, we will face a tightening liquidity environment in the next year, to deliver the projects in our record order book.

Globally, financial service institutions have intensified their lending and underwriting criteria, especially for the engineering and construction sector. Liquidity is, as a result, more restricted. It is becoming common for financial institutions to grant loans with the condition that subsidiaries are not allowed to pay dividends to foreign holding companies. Lenders' hardening stance at a platform level then inevitably spills over into cash constraints for the Group. However, this is a temporary challenge. The Energy, Resources & Infrastructure platform, as well as the mining business in Australia have delivered a much improved set of financial results that will allow them to renegotiate their facilities and to free up cash flow to the Group.

Ridership on the Gautrain is significantly down compared to pre-pandemic levels. The Gautrain system is operating with capacity restrictions and demand is expected to remain subdued until all COVID-19 lockdown restrictions have been lifted. These circumstances could limit the potential of dividend income from our investment in the Bombela Concession Company, although valuations are not currently impacted.

The Group's exit of the Middle East remains a priority, and a complex legal process to manage our potential contingent liabilities is still continuing.

The Group is in the process of disposing of the Abu Dhabi and Dubai companies. We expect this to be concluded by the end of September 2021. The proposed transaction will significantly reduce the legal fees and costs of maintaining an office in the UAE.

Sustainable advancement of human development

Integrating sustainability thinking in the way we conduct our business is not new to Murray & Roberts - it flows naturally from our Purpose and our culture. However, higher expectations and greater scrutiny from stakeholders demands that we operate within tighter ESG guidelines.

Our approach to ethical leadership, corporate citizenship and sustainability is embedded in our culture of Engineered Excellence. We define sustainability as the purposeful delivery of projects in a responsible manner, while at the same time respecting the needs and expectations of our stakeholders. These are critical success factors for our business to remain resilient and competitive throughout economic and social cycles.

Our Sustainability Management Framework provides an overarching approach to managing sustainability issues across the Group, while allowing for flexibility and local adaptation. It sets out our commitment to operate in an ethical and sustainable way by:

  • Creating sustainable value for shareholders, clients, employees, partners and suppliers, as well as the communities in which we operate.
  • Engaging with our stakeholders and taking their views and concerns into consideration when making strategic and operational decisions.
  • Managing all our impacts (e.g. on people and environment) according to the principle of Zero Harm.
  • Understanding and mitigating our operational risks and taking advantage of opportunities.
  • Applying best practice corporate governance.

Harmonising ESG imperatives with commercial opportunities is not only an ethical obligation for the Group, but also a requirement on which clients and funders insist. It is becoming an important source of competitive differentiation.

The Group's safety performance compares to the best in the world in our different market sectors, but we have reached a stubborn plateau in improvement on our path to Zero Harm. This aspiration, however, is becoming more of an expectation and the possibility of Zero Harm is growing among our leaders, managers and people. In the past year, we saw an 80% improvement in the number of projects that were delivered with Zero Harm.

However, as we reported last year, we were deeply saddened by the death of our colleague, Wilfred Moleofi from OptiPower Projects, on the first day of the financial year. Whereas Zero Harm is a challenging aspiration considering project environments, fatalities are entirely unacceptable and preventable. Of particular risk to the Group in improving our safety record, is the integration of newly acquired businesses and joint-venture partners in ensuring swift alignment to the Group's health, safety and environmental standards and systems. Customary for the Group, a deep assessment of the contributing factors to the safety performance at OptiPower Projects, acquired during the previous financial year, was completed and management oversight and safety systems have been aligned to the Group's expectations.

We achieved much of our progress by focusing on high-impact interventions, such as managing critical risks, as well as risks associated with changes, and containing the risks associated with demobilisation. To reach our goal of Zero Harm, the Group will continue to ensure more comprehensive and consistent application of systems, such as the MAP programme, which have served us well in driving the maturity of our safety culture.

To date, the Group has reported approximately 1 200 employees who were infected with COVID-19, where 99% have recovered. Regrettably, 12 employees lost their lives due to COVID-19 related complications. Managing the impact on our people of COVID-19 has seen unprecedented collaboration across the Group in knowledge sharing, adapting to new ways of working and applying the Group's Value of Care. COVID-19 risk mitigation measures are now fully embedded in our health and safety management programme.

High-performing and engaged employees are the foundation of the Group. All our human resources processes are underpinned by our Engineered Excellence philosophy and align to best practice principles. When integrating new businesses into the Group, we ensure that our culture and people practices are uniformly applied. Ethical leadership, employee health and safety, and diversity, inclusion and localisation are strategic priorities that enable us to attract, retain and engage high-calibre and high-performing employees who live the Group's Values. Career advancement through experience on high-profile projects, skills development and training, and mentorship opportunities along with fostering a working environment that fosters open communication and collaboration, are also important aspects of our value proposition to employees, which support them in engaging their innovation and creativity.

Given the criticality of retaining and attracting high-calibre leaders and managers, we place intense focus on leadership development and succession. Every year, we conduct an annual leadership and succession review for top and senior management level (this also extends to the Board). Individuals are categorised according to their performance and potential, and successors are categorised based on their readiness (immediate, within a year, three years or more than five years). Emergency successors are identified to act in certain positions, while successors are being sourced or appointed. Succession plans are developed in line with our diversity and inclusion priorities.

A diverse workforce contributes to improved business performance and supports our social licence to operate. We want to provide workplaces where everyone feels valued and included, where strengths and differences are embraced and respected, and opportunities exist for all to collaborate, contribute and achieve their full potential. Guided by our Group diversity policy, all our businesses have diversity policies appropriate to their regions. Although we acknowledge much work is still to be done, the policy commits us to being aware and responsive to the specific diversity priorities of the many different countries and cultures in which we operate. Our diversity and inclusion interventions create awareness of unconscious biases as a fundamental means of changing behaviour. We actively monitor diversity and inclusion across the Group to ensure we operate as a relevant multicultural organisation. Business platform chief executives are responsible for setting and delivering against the diversity targets applicable to their operations.


The Group is recovering from the initial impact we experienced in FY2020 from the pandemic and related deferrals, closures, and restrictions, with continuing operations returning to profitability in the year under review. The Group's exposure to the natural resources, industrial, energy, water and infrastructure markets, and its strong order book from those markets, holds the potential for meaningful earnings growth in FY2022 and in the medium term.

Revenue from continuing operations increased to R21,9 billion (FY2020: R20,8 billion), of which 81% was generated from outside of South Africa. The Group reported strong growth in earnings before interest and tax from continuing operations to R540 million (FY2020: R17 million loss). Operating earnings were partly offset by an increased loss for discontinued operations, resulting predominantly from non-recurring extraordinary and non-cash losses, while the attributable loss reduced to R180 million (FY2020: R352 million loss).

The effective tax rate remains high at 73%, mainly due to withholding tax in foreign jurisdictions, as well as losses incurred in entities where future taxable earnings are uncertain. Consequently, no deferred tax assets could be recognised on these losses. It is expected that the tax rate will normalise at more acceptable levels in the near term.

The Group is pleased report a strong order book of R60,7 billion (FY2020: R54,2 billion), which includes several multi-year contracts. The project pipeline includes near orders of R11,1 billion (FY2020: R11,4 billion).

The Energy, Resources & Infrastructure platform strongly returned to profitability in the year. Revenue and operating profit within this platform increased to R11,4 billion (FY2020: R6,9 billion) and R227 million (FY2020: R454 million operating loss), respectively. The previous year's operating loss was due to pandemic-related impacts and two loss-making projects that are now completed. The platform was successful in securing a large and quality order book of R37,0 billion (FY2020: R34,4 billion), reflecting its thriving target markets, with Australia continuing to invest in resources and infrastructure development. Near orders were increased marginally to R1,1 billion (FY2020: R1,0 billion).

The Mining platform's order book is strong, and its near-term project pipeline is robust and growing. Revenue and operating profit decreased to R9,5 billion (FY2020: R12,0 billion) and R473 million (FY2020: R630 million), respectively. The decrease was due to the Americas having experienced a prolonged period of disruption due to the pandemic, which led to deferred investment decisions by mining companies. The order book increased to R23,2 billion (FY2020: R19,4 billion) and near orders were marginally lower at R9,7 billion (FY2020: R10,4 billion). The platform is very well positioned in the global underground mining market and is anticipating further order book growth, especially in the Americas.

Power, Industrial & Water is focused on creating a sustainable base over the next three years, delivering an acceptable return on investment for the Group. Revenue decreased to R1,0 billion (FY2020: R2,0 billion) and the platform recorded an operating loss of R175 million (FY2020: R44 million operating loss). The order book increased marginally to R0,5 billion (FY2020: R0,4 billion) and near orders are at R0,3 billion (FY2020: Nil). The increased loss was due to the platform's low revenue base relative to its overhead costs, exacerbated by the completion of several loss-making projects, largely due to pandemic impacts. No projects of any significant value were secured during the period.

The initial estimated impact of the pandemic on the Group's 50% investment in Bombela Concession Company was accounted for in FY2020. The business was successful with its business interruption insurance claim, capped at R285 million and the funds, on receipt, were used to reduce it's debt. The potential prolonged impact of the pandemic on this investment is assessed on an ongoing basis. A fair value adjustment profit of R209 million was reported for the period (FY2020: R119 million).

The Group recorded an operating loss from discontinued operations of R256 million (FY2020: R19 million profit), of which circa R120 million comprised a cash loss. The prior year included substantial exchange rate gains, while the current year losses were due to:

  • Final impairment costs relating to the retained assets and liabilities of the South African Infrastructure & Building business that was sold in March 2017, comprising a

    R39 million write down in fair value, due to the pending sale of the Mooikloof residential development asset, as well as the settlement of all outstanding disputes against the Group at R107 million below the accounting value; and

  • Middle East related costs comprising R17 million in fair value adjustments on the sale of the companies in Dubai and Abu Dhabi, and R93 million for legal and office costs and foreign exchange movements.


After a long period of adversity and market instability, it is deeply gratifying to look forward with confidence to a brighter future for the Murray & Roberts Group. Our strategic efforts, especially over the past five years, are starting to bear fruit and we have substantive cause for confidence in a multi-year period of strong earnings growth.

Our order book reflects pressing global development needs, as well as significant opportunities for the Group in international markets. Our challenge now is to deliver on both these imperatives. Even though the planets are aligning for Murray & Roberts, we know there is no room for complacency in delivering on our commitments to our people, clients, communities and shareholders.