The cluster was impacted by the effect of the global economic crisis on the construction markets in Dubai and Bahrain but well-timed expansion into other markets in the region, together with a focused risk management regime, enabled it to deliver a solid financial result and maintain a healthy order book.

World Trade Centre, Bahrain

	Middle East
	2010	2009
Revenues*	2 882	3 558
Operating profit*	300	350
Margin (%)	10,4	9,8
Assets*	3 133	2 521
People	369	408
LTIFR (Fatalities)	0,4 (2)	0,3 (0)
Order book*	4 393	4 172

* R millions

Background

Murray & Roberts was established in the Middle East in 1994 and, in partnership with Al Habtoor Group, completed its first project, the iconic Burj al Arab Hotel in Dubai. This was followed by a number of major projects in Dubai and Abu Dhabi which entrenched the Group’s reputation as a world class contractor in the successful delivery of major and mega commercial projects.

Expansion into Bahrain (in partnership with Nass Group) and Qatar diversified the business and enhanced its reputation.

These partnerships have remained strong, bolstered in the United Arab Emirates (UAE) by the formation of the Habtoor Leighton Group which has significantly enhanced the contracting partnership in the UAE. A further partnership established with Saudi Oger in 2009 has already resulted in the award of two construction projects in Saudi Arabia and offers significant opportunity for future expansion in the region’s largest construction market.

Murray & Roberts Marine established a presence in the Middle East in 1998 through the HIDD Port Project in Bahrain and has been active over a number of years constructing various marine infrastructure projects in Abu Dhabi in partnership with Overseas AST.

Johnson Arabia was established in the region in 1999 in partnership with Kanoo Group. Murray & Roberts has decided to withdraw from the capital equipment sector in the UAE and is in discussion with the Kanoo Group to facilitate the sale of Johnson Arabia and BRC Arabia.

Market environment

The Middle East region as a whole fared better than many other global economies in 2009 with the exception of Dubai, where construction work ground to a virtual standstill. While a return to previous levels of construction activity is not likely to occur in the near term, the local Dubai economy is buoyed by its close relationship with Abu Dhabi and its Gulf Cooperation Council (GCC) neighbours, where oil and gas prices are currently at levels that support ongoing infrastructure development.

Middle East


Ramsay Abassi		Peter Thomas

Zayed University library under construction

Arcapita Bank HQ with World Trade Centre in the background, Bahrain

Since 2005, Murray & Roberts Middle East has sought growth from government supported commercial infrastructure. This strategy has shielded the company from significant exposure to the speculative forces of the property market. As a consequence, the company has been able to bolster its order book by winning work in markets outside Dubai and Bahrain, particularly in Abu Dhabi and more recently in Saudi Arabia.

Final account settlement has always been a challenge in the Middle East, but has recently been compounded by the global financial crisis, particularly in Dubai. However, there are signs of improvement.

Leadership

Murray & Roberts engages the Middle East market from its base in Dubai with an international board of directors and an experienced local management team led by Nigel Harvey. Strong regional leadership and support capacity in Abu Dhabi through Ramsay Abassi and Bahrain through Peter Thomas, target and deliver growth opportunities in each market. This business model provides a platform supported by local partnerships that allow other Murray & Roberts companies to enter the market and support further development in the region.

The company employs people from a broad range of different nationalities and selects bestin- class construction talent from the international market. There is currently an emphasis on attracting and retaining a full staff complement in Saudi Arabia.

Operations

The R2,5 billion Paris Sorbonne University for Mubadala in Abu Dhabi was completed ahead of schedule in July 2010. The R6,0 billion Zayed University also for Mubadala is progressing well and has a target completion date of July 2011. Construction of the complicated spaceage roof is underway, and the structure is starting to take shape.

Work on the new St Regis hotel, resort, and conference centre on Saadiyat Island in Abu Dhabi is proceeding to plan. The Al Habtoor-Murray & Roberts partnership continues to focus on its commitment to safety and the highest quality of construction expected by its client, the Tourism Development and Investment Company. The project commenced on site in August 2009 and is scheduled for completion in 2011.

In Bahrain, the Arcapita Bank headquarters building and mosque is almost ready for occupation. The building has a prominent position in Bahrain Business Bay.

Sustainability

Murray & Roberts Middle East has prioritised the immediate application of its health, safety, environmental and quality procedures to all new work environments and this is reflected in the 0,4 LTIFR (2009: 0,3). The St Regis hotel, resort and conference centre exceeded five million hours without a lost time injury during the year under review.

Regular auditing of quality standards and documentation for compliance is now in place and this will continue to drive standardisation, improvements and conformity to standards. New risk procedures have been implemented together with a stronger enforcement process, including a schedule of internal audits. This will ensure conformance to the requirements of the management system. Ongoing training will enable the best use of this important management tool.

Prospects

Several oil producing countries, most notably Saudi Arabia and Abu Dhabi, have accumulated cash surpluses in the past three years that are sustaining them through the global recession. This trend has, to a large extent, offset the construction market collapse in Dubai and mitigated the risk of insufficient workflow in the region.

A steady flow of quality work, particularly in Abu Dhabi, has maintained the company’s order book. Major future opportunities will be in Abu Dhabi and Saudi Arabia where strong government-led infrastructure development is supported by oil revenues. The medium term outlook for Dubai remains conservative.

Competition in the region has continued to grow as international contractors seek to replace recessionary conditions in their domestic markets. Market analysis indicates a reduction in the number of mega projects as owners focus on tighter commercial models that satisfy their investment requirements. This has resulted in a perceptible shift towards infrastructure projects, and predominantly rail.

Successful partnerships with strong contrac tors in key markets and the development of new client relationships offer significant prospects for future expansion in the company’s established markets and new territories in the region.

Nigel Harvey

Delivering the highest standards of construction to the world

The internationally acclaimed Emirates Terminal 3 and Concourse 2 in Dubai – undertaken by a joint venture led by Murray & Roberts with local partner Habtoor and airport systems specialist Takenaka of Japan – was opened to the public on schedule on 14 October 2008.

The scale and quality of the airport complex meets the highest international standards and has become another important landmark in Dubai – and a coup for Emirates as passenger footfall through the airport has increased significantly since its opening.

The new Etihad Terminal 3 in Abu Dhabi constructed by the Al Habtoor-Murray & Roberts joint venture was also recently completed on schedule, and has brought bespoke facilities for the new Airbus A380 aircraft to the capital.

In recent years, Murray & Roberts has successfully delivered a range of other major projects throughout the United Arab Emirates, including the BurJuman mixed-use development in Dubai, the Goldcrest Tower residential development in Jumeirah Lakes, Dubai, the Durrat Bridges and the World Trade Centre in Bahrain.

The Al Raha Beach project in Abu Dhabi, recently completed by Murray & Roberts Marine, has facilitated the formation of a new waterfront, with prime development land stretching over more than 14 kilometres of the new coastline.