NOTES TO THE MURRAY & ROBERTS HOLDINGS FINANCIAL STATEMENTS

ACCOUNTING POLICIES

These annual financial statements are prepared according to the same accounting policies used in preparing the consolidated financial statements of the Group other than accounting policy 1.3 which deals with the basis of consolidation.

The accounting policies are set out on pages 136 – 148.

INVESTMENT IN SUBSIDIARY COMPANY

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS	2012	2011
Shares at cost	0,4	0,4
Amount due	3 355,5	1 408,0
	3 355,9	1 408,4

The amount due from the subsidiary company is unsecured, interest free and does not have any fixed repayment terms (refer to Annexure 1 for details).

AMOUNT OWING FROM THE MURRAY & ROBERTS TRUST

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS	2012	2011
Amount due	361,5	400,9
Impairment of amount owing	(228,5)	(212,0)
Total due	133,0	188,9

The amount due from The Murray & Roberts Trust (“Trust”) is unsecured, interest free and does not have any fixed repayment terms.

The Company has subordinated its claims against the Trust in favour of all other creditors of the Trust. The agreement between the Trust and the Company will remain in force and effect for as long as the liabilities of the Trust exceed its assets, fairly valued.

STATED CAPITAL (2011: SHARE CAPITAL AND PREMIUM)

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS	2012	2011
Authorised
500 000 000 ordinary shares with a par value of 10 cents each	–	50,0
Issued and fully paid
331 892 619 ordinary shares at par value of 10 cents each	–	33,2
Share premium	–	1 639,6
Total share capital and share premium	–	1 672,8
Authorised
750 000 000 shares of no par value	75,0	–
Issued and fully paid
444 736 118 shares of no par value
Net stated capital	3 582,8	–

Changes in authorised and issued share capital

The Company has converted its share capital and share premium to no par value stated capital by means of a special resolution. A rights issue was undertaken in April 2012 in which the Company issued 112 843 499 shares at a price of R18,00 per share resulting in gross proceeds of R2 031,2 million, with transaction costs of R121,2 million offset against stated capital.

EMOLUMENTS OF DIRECTORS

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS	2012	2011
Executive directors (paid by subsidiary companies)	11,2	28,3
Non-executive directors (paid by the Company)	5,3	5,0
Number of directors at year-end	13	16*

*Executive directors

BC Bruce and RW Rees retired from the Board on 30 June 2011. TG Fowler resigned from the Board on 30 June 2011.

Non-executive directors

ADVC Knott-Craig resigned from the Board 17 January 2012. TCP Chikane was appointed to the Board on 15 June 2012.

Details of individual director emoluments are disclosed in note 42 on the consolidated financial statements.

CONTINGENT LIABILITIES

ALL MONETARY AMOUNTS ARE EXPRESSED IN MILLIONS OF RANDS	2012		2011
There are contingent liabilities in respect of limited and unlimited guarantees covering loans, banking facilities and other obligations of joint venture and subsidiary companies and other persons; the ascertainable contingent liabilities at 30 June covered by such guarantees amounting to:	4 270		1 400

DERIVATIVE FINANCIAL INSTRUMENTS: CALL OPTIONS

In terms of the Broad-based Black Economic Empowerment transaction approved by shareholders on 21 November 2005, the Company has one call option to repurchase the shares in Murray & Roberts Letsema Khanyisa Proprietary Limited and Murray & Roberts Letsema Sizwe Proprietary Limited (“BBBEE subco’s”) at market value and on the following condition:

31 December 2015 call option
On 31 December 2015, being the date on which the lock-in-period expires, if the value of the shares owned by the BBBEE subco’s is less than the aggregate redemption amount of the funding.

No value has been placed on this call option as it provides the Company with an option to repurchase the shares at market value and therefore does not expose the Company to any potential loss or gain.

Following a review, the 31 December 2010 call option was not exercised as the structure at that date was still economically viable.