Report of directors

for the year ended 30 June 2010

This report presented by the directors is a constituent of the Group financial statements at 30 June 2010. Except where otherwise stated, all monetary amounts set out in tabular form are expressed in millions of Rands.

NATURE OF BUSINESS

Main business and operations

Murray & Roberts Holdings Limited is an investment holding company with interests in the construction & engineering, construction materials & services and related fabrication sectors. The company does not trade and all of its activities are undertaken through a number of subsidiaries, joint ventures and associates. Information regarding the Group’s major subsidiaries and associate companies appears in Annexure 1 of the consolidated annual financial statements.

Group financial results

Group earnings for the year ended 30 June 2010 were R1 229 million (2009: R2 337 million), representing diluted earnings per share of 371 cents (2009: 678 cents). Diluted headline earnings per share were 340 cents (2009: 675 cents).

Full details of the financial position and results of the Group are set out in these consolidated annual financial statements.

The consolidated annual 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 1.

Major Projects – Uncertified revenue

Included in Amounts Due from Contract Customers in the Statement of Financial Position is the Group’s share of uncertified revenue that has been recognised through the Statement of Financial Performance in respect of claims and variation orders on three major projects (refer to note 9 of the consolidated annual financial statements).

A cumulative total revenue of R1,4 billion, being amounts Due from Contract Customers, has been recognised in the Statement of Financial Position at 30 June 2010 (2009: R1,1 billion) as the Group’s share of uncertified revenue in respect of claims and variation instructions on the Group’s three major projects. Recognition of these assets is supported by the Group’s contract partners and by independent experts and advisers.

Adjudication of these extremely complex legal and financial claims and variation instructions have 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 2010.

Exceptional items

During the year under review, the Group increased the fair value of its investment properties by R101 million in line with its policy on Investment Property (refer to note 3 and note 27 of the consolidated annual financial statements).

AUTHORISED AND ISSUED SHARE CAPITAL

Full details of the authorised and issued capital of the company at 30 June 2010 are contained in note 11 of the financial statements.

There were no changes to the authorised and issued share capital during the year under review.

Particulars relating to The Murray & Roberts Trust (Trust) are set out in note 12.1 of the financial statements. During the year, the Trust granted an aggregate total of 2 325 000 options over ordinary shares (2009: 79 250 options) to senior executives, including executive directors.

At 30 June 2010, the Trust held 7 260 782 ordinary shares (2009: 8 392 766 ordinary shares) against the commitment of 11 204 625 ordinary shares (2009: 11 212 234 ordinary shares). The total number of ordinary shares that may be utilised for purposes of the Murray & Roberts Holdings Limited Employee Share Incentive Scheme is limited to 10% of the total issued share capital of the company, currently 33 189 262 ordinary shares (2009: 33 189 262 ordinary shares).

Purchase of own shares

In terms of the general authority obtained at the last annual general meeting, the company or its subsidiaries may repurchase ordinary shares to a maximum of 10% of the issued ordinary shares. No ordinary shares were repurchased during the year in terms of this general authority. Approval will be sought at the forthcoming annual general meeting on 27 October 2010 to renew this general authority.

DIVIDEND

The following dividends were declared in respect of the year ended 30 June 2010:

Interim dividend number 116 of 52 cents per ordinary share (2009: 85 cents)

Final dividend number 117 of 53 cents per ordinary share (2009: 133 cents)

SUBSIDIARIES

Acquisitions

Acquisition of non-controlling interest in Murray & Roberts Cementation (Proprietary) Limited.

The Group acquired the remaining 20% of the issued share capital of Murray & Roberts Cementation (Proprietary) Limited effective 1 July 2009.

Acquisition of a further interest in Clough Limited (Clough)
The Group increased its shareholding in Clough from 59% to 62% during the year through the conversion of convertible notes previously held.

Acquisition of Ocean Flow International LLC (Ocean Flow)
Clough acquired 70% of the share capital of Ocean Flow on 14 August 2009, with the remaining 30% to be acquired early in 2013.

Acquisition of Forge Group Limited (Forge)
On 20 April 2010, Clough announced that it had acquired a 31% interest in Forge and subsequently entered into an alliance with Forge for long-term strategic co-operation that is expected to generate substantial benefits for both companies.

Disposals

Disposal of PT Petrosea Tbk
Clough disposed of 82% held Indonesian listed contract mining subsidiary PT Petrosea Tbk at a cash consideration of US$83,8 million on 6 July 2009.

Disposal of non-core assets
During the year, the Group disposed of its interest in a toll road concession. The Group also entered into a process to dispose of investment properties for which Competition Commission approval was received subsequent to 30 June 2010.

SPECIAL RESOLUTIONS ADOPTED BY SUBSIDIARY COMPANIES

Special resolutions relating to name changes and reduction in share capital were passed by subsidiary companies during the year under review.

POST STATEMENT OF FINANCIAL POSITION EVENT

The Group received Competition Commission approval on 29 July 2010 for the disposal of investment properties. This had no impact on the financial position of the Group at 30 June 2010.

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 annual financial statements, which significantly affects the financial position at 30 June 2010 or the results of its operations or cash flows for the year then ended.

DIRECTORS

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

Independent non-executive

RC Andersen (chairman); DD Barber; ADVC Knott-Craig; NM Magau; JM McMahon; IN Mkhize; AA Routledge; M Sello; SP Sibisi; RT Vice.

Executive

BC Bruce (group chief executive); MP Chaba; O Fenn; TG Fowler; RW Rees (group financial director).

Executive director SJ Flanagan resigned on 31 January 2010.

MP Chaba, TG Fowler and O Fenn were appointed executive directors on 1 September, 25 September and 20 November 2009 respectively.

INTERESTS OF DIRECTORS

A total of 2 488 750 (2009: 2 792 500) share options are allocated to directors in terms of the Murray & Roberts Holdings Limited Employee Share Incentive Scheme, further details are set out in note 46.

At 30 June 2010, the present directors of the company held direct and indirect beneficial and non-beneficial interests in 1 926 805 of the company’s issued ordinary shares (2009: 2 026 805 ordinary shares). Details of ordinary shares held per individual director are listed below.

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

SECRETARY

The Secretary’s business and postal addresses are:

AUDITORS

Deloitte & Touche continued in office as external auditors. At the annual general meeting of 27 October 2010, shareholders will be requested to appoint Deloitte & Touche as external auditors for the 2011 financial year. AF Mackie will be the individual and designated registered auditor who will undertake the audit.

25 August 2010