Social performance

HEALTH AND SAFETY

Good progress was made in implementing the Group’s Zero Harm through Effective Leadership programme. Highlights for the year include a continuation of the positive trend in the lost time injury frequency rate (“LTIFR”), significant reduction of fatal incidents and achievement of OHSAS 18001 certification by the majority of our businesses. While this performance is encouraging, our ultimate goal is to achieve Zero Harm at all our operations.

SAFETY PERFORMANCE

The Group ended the 2012 financial year with a LTIFR of 1.14 (2011: 1.28), which is the lowest recorded rate since statistics were kept. Two operations, Technicrete and Concor Engineering, achieved 12 months without a lost time injury during this period.

These positive developments were unfortunately overshadowed by the tragic death of four employees (2011:12) who sustained fatal injuries while working for us. All four incidents occurred at underground mining operations and the hazards involved were fall of ground and equipment & machinery. We are saddened by these incidents and continue to take action to prevent similar incidents from occurring again. We have extended our deepest condolences and support to the families of the deceased. The graph below illustrates the Group’s historical lost time injury frequency rate against our target of less than 1.

The LTIFR is in line with the international norm which excludes restricted work day cases and is calculated per million hours worked. Including restricted work day cases the Group’s LTIFR is 2.2.

In 2011 financial year we introduced the total recordable case rate (“TRCR”), a broader indicator of safety performance that includes all injuries except first aid cases. The TRCR deteriorated to 4.6 (2011: 4.0) following an increase in the number of injuries of lesser severity.

OUR HEALTH AND SAFETY APPROACH

Murray & Roberts’ health and safety vision is “Together to Zero Harm”. Our short term goal is to eliminate all fatalities and major incidents while creating an environment that fosters the belief and mindset among our employees that it is possible to work injury free, regardless of where they are in the world.

As indicated in our last report to stakeholders, in 2011 we contracted DuPont Sustainable Solutions to undertake a comprehensive evaluation of our operations and help us in crafting a plan to achieve our Zero Harm goals. The culture assessment brought about an increased level of health and safety awareness in the organisation and has helped in establishing a common appreciation of where we are and what we need to do to achieve our goals. Following this assessment, operating entities reviewed their safety improvement plans to address deficiencies identified. The implementation of these plans is progressing well.

At Group level the following key focus areas were incorporated in our Zero Harm through Effective Leadership programme:

	Strengthening and expanding of the STOP.THINK programme
	Aligning and formalising of the Visible Felt Leadership (“VFL”) and behavioural observation programmes to ensure Group-wide consistency and focused leadership action
	Integrating health and safety structures and developing Centres of Excellence to ensure visibility, alignment of the total Group health & safety effort and accelerated learning and best practice sharing
	Identifying and implementing appropriate leading indicators serving as real-time business and cultural health indicators
	Capacitating our leadership in support of our purpose, vision and values
	Ensuring operational excellence by adopting a common disciplinary standard across the Group and rolling out a common set of Life Saving Rules
	Implementing a human resource strategy to improve employees’ skills and morale at operating entity and project level
	Implementing a focused risk awareness programme across the Group
	Optimising contractor safety management to ensure alignment of client and/or subcontractor standards
	Developing and implementing a systematic, structured, layered review system of the health and safety improvement drive

We have since reviewed and aligned our health and safety framework to reflect these developments. Our health and safety framework, depicted on the next page, articulates the roles, responsibility and accountability of the corporate office versus our operations in delivering our health and safety commitments. The framework seeks to implement a risk-based approach to better understanding and treating risks facing Murray & Roberts, and continually improving in this regard.

The key thrust of the Zero Harm through Effective Leadership programme is to entrench compliance and build commitment across the organisation.

During the year, we rolled out to operations our new health and safety vision, policy, principles and standards. These set the tone in terms of Group requirements and standards and also guide operations towards achievement of our Zero Harm goals. Our aim is to achieve a consistent standard that will bring sustainable improvement across the organisation.

Our major safety risks arise from underground mining operations, working at elevated heights, lifting operations, mobile plant and vehicles, falling and rolling objects, machinery & equipment and hazardous materials. These risks have been associated with the majority of our fatal and serious incidents. To this end, we have rolled out fatal risk control protocols (“FRCP”) to all operations, to help them in managing these risks. Effective implementation and embedment of the fatal risk control programme remains one of the key priorities going forward.

We also developed and implemented STOP.THINK Life Saving Rules to support the roll out and entrenchment of FRCP. These are absolute rules since violation of anyone of them could result in a fatality or serious injury. The main purpose of introducing Life Saving Rules is to provide a clear framework to guide employees’ behaviour in every operation and activity.

Implementing robust health and safety systems remains one of the key elements of our Zero Harm through Effective Leadership programme. It is pleasing to report an increase in the number of operating entities that are certified under OHSAS 18001, an international standard for health and safety management. To this end, 71% of our workforce (including subcontractors under our control) is covered by OHSAS 18001 certification. In the prior year we reported a 75% coverage which incorrectly assumed that all of the employees in two of our largest operations were covered by the certification, however only certain sites and corporate offices in these operations were certified. The correct level of certification was approximately 52% for FY2011.

MURRAY & ROBERTS OPERATIONS

INSTIL A CULTURE OF LEARNING AND SHARING

Active learning is one of our key health and safety principles which encourages continuous improvement through sharing of lessons learned and good practices across the organisation. Our diverse operations and exposure to various clients present us with an enormous opportunity to learn and improve. We continuously encourage and facilitate sharing of good practices across businesses. Where we have experienced failures we thoroughly investigate the causes and communicate lessons learned across the organisation. For example, the executive committee reviews investigation reports on all high potential incidents and lessons learned are widely communicated in the organisation to raise awareness and prevent re-occurrence.

Other sharing forums implemented include various task teams that work on common health and safety challenges and ideas, cross site audits and health and safety forums. These help create a platform for businesses to share good practices and ideas. More work is planned to enhance the culture of sharing in the Group going forward.

Keeping everyone’s mind focused on health and safety is a continuous challenge which requires a relentless focus on providing new and relevant safety messages. Our STOP.THINK programme introduced in 2006 has been the major driver in achieving this. STOP.THINK is a widely recognised Murray & Roberts health and safety brand aimed at educating and motivating employees to take responsibility for their own and their colleagues’ safety and the work environment. It consists of various communication media used on work sites, including STOP.THINK awareness videos, newsletters, safety clothing and signage.

In line with the changing mindset and new vision, we are reviewing and strengthening the STOP.THINK brand by introducing the “ACT.24/7” dimension. The new brand to be launched in 2013 is STOP.THINK.ACT.24/7. “ACT” emphasises the importance of taking action to correct unsafe conditions and behaviours as well as recognising positive behaviour while “24/7” highlights the need to be safety aware at all times both at work and at home.

Part of our employee motivation programme includes a focus on providing a clean and healthy work environment. During the year we launched a housekeeping improvement programme based on the 5S methodology (sort and discard, shine, signpost and order, simplify work and sustain) and we are pleased with the response from employees. We have observed innovative ideas where employees implemented various solutions to simplify their work and improve housekeeping.

We also reviewed and improved our health and safety recognition programme for behaviour that is aligned with our health and safety objectives. Recognition will be given to employees and operations that have demonstrated commitment towards our health and safety vision and goals.

	ZERO HARM THROUGH EFFECTIVE LEADERSHIP PROGRAMME
	1	Expand STOP.THINK
	2	VFL & behaviour observations
	3	Integrated structures
	4	Lead indicators
	5	World-class leadership thinking
	6	Operational discipline
	7	People capacity & morale
	8	Training modules
	9	Contractor safety management
	10	Audit protocols

FOCUS GOING FORWARD

Implementing key recommendations from the culture assessment remains the focus area going forward. We have since prioritised the following key initiatives for implementation during the 2013 financial year:

	Expansion and strengthening of the STOP.THINK approach to STOP.THINK.ACT.24/7
	Implementation of a custom-built leadership engagement programme focusing on safety interactions based on the principles of VFL
	Aligning HSE structures across the Group and establishing Centres of Excellence
	Implementing lead indicators to proactively measure the effectiveness of our programmes
	Improving the capabilities of our leaders to deliver on our vision, values and objectives

OCCUPATIONAL AND SOCIAL HEALTH

OCCUPATIONAL HEALTH

Noise-induced hearing loss (“NIHL”) remains the major prevalent occupational disease at our mining, construction and manufacturing businesses. During the past year, 36 (2011:104) new NIHL cases were recorded resulting in an occupational disease frequency rate of 0.18, measured over a million man hours (2011: 0.47).

We have instituted plans to improve our hearing conservation programmes to effectively respond to this challenge. More emphasis is placed on implementing engineering solutions to eliminate or manage noise risk, providing employees with knowledge and skills to protect themselves against noise exposure and ensuring adherence to wearing of hearing protection equipment in areas where noise levels cannot be reduced to within acceptable limits. Our aim is to have a consistent standard towards hearing conservation across the organisation. The graph below illustrates the Group’s historical occupational disease frequency rate, which only measures NIHL.

CUMULATIVE OCCUPATIONAL DISEASE FREQUENCY RATE (ODFR)

104 NIHL cases reported in 2011 financial year include confirmed cases plus those that were under investigation. The 2012 figure only includes cases that have been confirmed by medical specialists as work related NIHL cases.

Tuberculosis (“TB”) remains a health risk to employees working in environments with silica dust and is often compounded by HIV/AIDS. A total of 21 (2011: 37) TB cases were reported during the financial year. Plans are being reviewed as part of the integrated employee wellness programme to mitigate this challenge.

EMPLOYEE WELLNESS

Following an evaluation conducted by an outside service provider on our employee wellness programmes, a need was identified to enhance these programmes by implementing an integrated strategy to consistently deal with all wellness challenges facing our workforce. We are in the process of developing a holistic wellness strategy that addresses the following key aspects:

	HIV/AIDS
	Tuberculosis
	Substance abuse
	Psychosocial wellbeing
	Chronic diseases

The current approach to employee wellness includes various programmes at different levels of maturity at operational level including random substance abuse tests, voluntary HIV/AIDS testing and the Employee Wellness Programme. The HIV/AIDS prevalence among our employees who have been tested is estimated at 12% (2011: 13,6%). The overall prevalence is however likely to be much higher given the estimated 18% prevalence rate for the working population in South Africa.

We are excited and looking forward to the implementation of the new wellness programme during 2013. Our aim is to achieve a consistent standard across the organisation.

OUR EMPLOYEES

WE ARE ONLY AS GOOD AS OUR PEOPLE

Murray & Roberts is built on our values of care, integrity, respect, accountability and commitment, and we expect our people to live these values every day. We are committed to respecting human rights and providing a safe and healthy working environment free of discrimination and where employees have the right to freedom of association. The Group’s policies and procedures comply with the Constitution and the laws of the relevant countries.

At FY2012, Murray & Roberts had a total of 39 122 employees. This comprises 34 218 employees in our South African operating entities and 4 904 employees in our international operating entities.

The capacity and capability of our employees is a cornerstone of Murray & Roberts’ sustainability. The Group aims to be an employer of choice in the engineering and construction sectors within which it operates and its world-class delivery of products and services is a reflection of the capability of its diverse and experienced workforce.

DEVELOPING OUR PEOPLE

OUR PEOPLE ARE EXTREMELY IMPORTANT TO US, AND WE OFFER THEM THE OPPORTUNITY OF AN EXCITING CAREER SUPPORTED BY CONTINUOUS DEVELOPMENT AND TRAINING

As a leading organisation, Murray & Roberts recognises that our strength lies in our people and that we will only attain our purpose if we continue to attract, develop, retain and motivate talented and diverse people. It is for this reason that we have continued to invest in the development of our people despite the tough economic conditions. R133 million (2011: R116 million) was spent globally on training and development which equates to a healthy 2% of payroll. In South Africa R115 million was spent on training and development, 74% of which was spent on black employees. The training and development spend includes bursar costs, graduate development as well as technical and leadership development.

ATTRACTING ENGINEERING BURSARS

BUILDING SKILLS FOR THE FUTURE

We currently have 94 technical bursars studying at various tertiary institutions in South Africa – 66% are black and 23% are women. Even though the bursars belong to the various operating entities, they are recruited via a centralised online process. Selection includes individual psychometric assessment, group assessment and role play as well as a behavioural interview. This process is designed to ensure that we not only recruit for potential, but also for fit with our culture.

Bursars keep in touch via the Murray & Roberts Bursar page on facebook and attend a bursor camp each year. During May our bursars went on a Medupi site visit where they had the opportunity to interact with senior managers. One of the bursars said: “The site visit was an opportunity of a lifetime. Spending time with professionals and fellow bursars was motivational and gave us hope for the future.”

Bursars are encouraged to become “Brand Ambassadors” and assist Murray & Roberts to attract fellow students onto our bursar programme.

A further platform through which we aim to make a positive, broad-based contribution to skills development in society is through the Letsema Khanyisa Black Employee Benefits Trust (“Letsema Khanyisa”), a 2,2% shareholder in Murray & Roberts established as part of the Group’s Letsema BBBEE shareholding transaction in 2005. The word Khanyisa means ‘benefiting others besides yourself’. Letsema Khanyisa focuses exclusively on education and creates opportunities for employees’ children to access better quality secondary school and tertiary education. A total of 238 bursaries have been awarded since the introduction of the benefit.

For the period under review, education bursaries were awarded to 158 beneficiaries – 88 secondary school and 70 tertiary bursaries. Of these, 51 bursaries were new awards: 29 new secondary bursaries and 22 new tertiary bursaries. During the period between 1 July 2011 and 30 June 2012, bursary payments were made for 149 bursars, with the remaining nine bursaries on hold due to late registration or suspension.

The projected value of the bursaries for the 51 new awards is R8,9 million over the next five years, with the average secondary school bursary amounting to R18 000 and the average tertiary bursary at R70 000 per annum. The bursaries provide comprehensive support including payments for school fees and tuition, stationery and textbooks, uniforms and transport as well as accommodation costs where necessary.

GRADUATE DEVELOPMENT PROGRAMME

MURRAY & ROBERTS EMPLOYER OF CHOICE FOR GRADUATES

The Murray & Roberts Graduate Development Programme focuses primarily on the softer skills to develop leadership competencies which engineering graduates would not necessarily have been exposed to during their tenure at university. In addition, this programme helps with the transition from a learning environment to a working environment. We currently have 27 graduates on the programme – 59% are black and 19% are women.

Every year the South African Graduate Recruiters Association (“SAGRA”) conducts a graduate survey to help organisations understand the key motivators and drivers of their new graduates. Murray & Roberts was once again voted the Top Graduate employer in the Engineering and Industrial Sector for 2012.

We are proud of this achievement and are committed to continuously improving our Graduate Development Programme. We believe this programme forms a learning foundation for our future leaders.

PIPELINE ALIGNED LEADERSHIP DEVELOPMENT

MURRAY & ROBERTS SUPPORTS LONG TERM PEOPLE DEVELOPMENT THROUGH THE DELIVERY OF TRAINING PROGRAMMES ALIGNED TO OUR LEADERSHIP PIPELINE

Our Leadership Pipeline philosophy is in its fifth year of implementation and is now well entrenched in Murray & Roberts. This integrated, yet simple model, has created a common language for performance management, development and succession to be managed. All our Leadership Development programmes have been aligned to the Leadership Pipeline performance standards thus ensuring “just in time” training for the different layers of the pipeline. Senior leaders participate as guest lecturers or panel members during the programme ensuring that topics remain relevant to our business, while getting to know the delegates better. All programmes include an action learning project which creates a platform for delegates to apply their learning in the business. This year 207 individuals participated in the various leadership programmes at a cost of R3,6 million. Of the delegates 38% are black and 23% women.

WORLD-CLASS TECHNICAL TRAINING

TECHNICAL EXPERTISE IS OUR COMPETITIVE ADVANTAGE

The majority of our training and development spend continues to be on technical programmes that are fundamental to our competitive advantage, as well as to the improvement of the broader skills pool.

Every operating company conducts core technical training, with many having large scale specialised training facilities on site.

One such facility is the Murray & Roberts Projects’ Accelerated Artisan Training Programme (“AATP”) as endorsed by the Manufacturing, Engineering and Related Services Sector Education and Training Authority. This facility has already delivered 315 artisans who are currently gainfully employed on the Medupi project site in Lephalale. A further 219 artisans are currently being developed.

This training programme is split into two phases. First, the selected candidates complete a 26 week course which covers all the training modules in theory and simulated practice for the trade. Then the programme moves to the second phase, based on site where all the modules for the trade are covered in practical workplace experience for a period of 54 weeks. The Trade Test is completed at the end of the total 80 week period. The majority of artisans are black, with the number of woman increasing.

A significant achievement for the AATP is the appointment of their first Foreman. Lincon Mohlaka, a Boilermaker from Marapong started his tenure as an apprentice. He later qualified as an artisan and has now been promoted to Foreman.

Another world-class training facility is the Murray & Roberts Cementation Training Academy which continues to introduce innovative training enhancements to support the business.

One enhancement was to design and develop an electronic Training Management System (“TMS”), a single system that takes cognisance of our ISO 9001: 2008, 14001:2004 and OHSAS 18001:1999 management systems as well as the requirements of the Mining Qualifications Authority (“MQA”).

The TMS provides access to information such as the structure, qualifications and roles and responsibilities of Training Academy staff, including the products and services offered. Other important information is made available on relevant MQA systems and processes, provider service level agreements and safety, health, environment, as well as quality systems and processes.

E-LEARNING

The Training Academy has also expanded its e-learning offering to more than 28 e-learning modules, ranging from soft skills to technical skills with the objective of accelerating the foundational training process without jeopardising the quality of training. The process of e-learning stimulates the mind, increases knowledge and improves performance through the application of video, sound, reading, pictures, formative and summative assessments.

SIMULATION

A suite of virtual simulated training modules was introduced this year. Simulated training lends itself to safer and more productive training as 80% of the required skill can be acquired in this environment. Simulation equips employees with the necessary knowledge and skills to perform the technical work required of them, as well as the interpersonal skills to manage company objectives safely.

PERFORMANCE AND REMUNERATION

Value adding performance happens when people are in the right jobs, spend time doing the right things, and receive feedback and recognition for their work.

Murray & Roberts has an integrated performance and development management process which drives performance to deliver on our purpose, values and vision. This performance is measured against five dimensions that creates common direction for all:

	Financial results
	Leadership results
	Relationship results
	Operational excellence results
	Risk results

Performance evaluation outcomes drive individual remuneration and participation in incentive schemes as well as feed into our annual talent reviews where talent pools and succession is reviewed. This process also directly supports individual development and career planning.

TRANSFORMATION AND LOCAL ECONOMIC DEVELOPMENT

Murray & Roberts has embraced the philosophy that while broadbased transformation and employment equity are moral, social and legal imperatives, they are also economic imperatives that will shape our Group’s sustainable future within the South African context.

DIVERSITY AND EMPLOYMENT EQUITY

Due to historical factors, there are demographic categories that still experience inequality and disadvantage due to gender, disability and other forms of diversity. The labour market still lacks an adequate supply of appropriately qualified and skilled people, particularly among previously disadvantaged groups. Furthermore the impact of increased transformation pressure has created challenges to the retention of experienced black executives, engineers and other built environment professionals. Murray & Roberts is committed to continually redress these anomalies in order to strengthen the capacity of its entire workforce.

We are cognisant that our top and senior management needs to transform, and are pleased to announce that Jerome Govender has been appointed to the Group executive committee from 1 August 2012.

Of South African-based employees, 86,4% are black, while 14,6% of all employees are women. Approximately 57,6% (2011: 49,4%) of all levels designated as management in the domestic market are black, and 11,4% (2011: 11,1%) are women.

A revised Employment Equity Standard was approved by the Board in May this year, ensuring that a consistent approach is implemented across the Group. A strategy is in place to continue to transform our current profile and to promote diversity management in the Group. A holistic approach aimed at both supply side initiatives (growing the pool, diversifying the source and attracting better than the competition) and demand side activities (retention plans, accelerated development and reconsidering job designs) are required across the South African operations to ensure that they attract, develop and retain the talent they require to meet their transformation objectives.

Each of the Group’s South African business operations compiles employment equity plans and reports for the Department of Labour. Employment equity forums representing employees contribute to the pursuit of employment equity targets and objectives.

Non-South African operating companies are required to achieve a diverse representation of the people within their geographic location and comply with relevant legislation in the country in which they operate.

BROAD-BASED BLACK ECONOMIC EMPOWERMENT

Murray & Roberts is committed to Broad-Based Black Economic Empowerment (“BBBEE”) in our South African business and addresses the full range of empowerment requirements across its diverse operations. We follow the provisions of the Broad-Based Black Economic Empowerment Act No. 53 of 2003 and the principles embodied in the Codes of Good Practice on Broad-Based Black Economic Empowerment (“BBBEE Codes”) and the Construction Sector Charter. As a leading South African enterprise, Murray & Roberts and its business entities have adopted a holistic BBBEE strategy, which aims to achieve:

	Appropriate BBBEE ownership at all its operations through a tiered approach from Murray & Roberts Holdings Limited and from within selected operating subsidiaries
	A meaningful number of black senior executives throughout the Group
	An employee complement that reflects the diversity of South Africa’s demographic profile
	A core complement of black professionals
	Comprehensive skills development to enhance individual and organisational capability and capacity
	Preferential procurement policies that leverage the broad-based principles of BBBEE and support local procurement where appropriate
	Enterprise and social development programmes aimed at accelerating the development, empowerment and access to the economy of previously disadvantaged individuals and groups

Due to the Group’s diversity, individual business entities are encouraged to tailor their BBBEE strategies to their specific needs and the Group monitors their performance.

The Group achieved a consolidated BBBEE rating of level 3 when measured on the Construction Sector Charter through an independent verification process undertaken by EmpowerLogic (Pty) Limited, a South African National Accreditation System accredited BBBEE verification agency. Individual operating company BBBEE ratings range from level 2 to level 7. All operating entities are encouraged to improve their ratings in order for the Group to maintain a level 3 rating.

A review of the Group’s current empowerment criteria confirms that the Group’s empowerment status is compliant with various industry charters and current legislation. The key areas for improvement are management control and employment equity. We acknowledge that BBBEE remains a priority challenge for the Group and that there is much to be done to ensure we meet our expectations as well as maintain our commitment to meritocracy as the basis for appointment and reward.

The Letsema BBBEE shareholding scheme offers previously disadvantaged employees, their families and some of the communities in which Murray & Roberts operates a stake in the company and its future. Since Letsema was launched in 2005, wealth of approximately R680 million has been created for participants and total dividends of R230 million have been paid to the trusts. Wealth creation is primarily determined by the share price value and dividend payments by Murray & Roberts.

The Group’s BBBEE share ownership was not negatively impacted by the rights issue concluded in April 2012. The total BBBEE share ownership has remained steady at 31,7% (2011: 32,4%), above the Construction Sector Charter target of 27,5% and above the BBBEE Codes target of 25%. The Group’s BBBEE share ownership, calculated with reference to the Construction Sector Charter, may however be impacted by reduced international revenues a earnings. The calculation of our BBBEE ownership percentage is based on the value of Murray & Roberts’ South African operations, where our South African revenue, EBIT and assets are considered.

CONSOLIDATED SUMMARY OF THE MURRAY & ROBERTS EMPLOYMENT EQUITY PROFILE IN SOUTH AFRICA

GRADUATES GIVE MURRAY & ROBERTS TOP MARKS Every year the South African Graduate Recruiters Association surveys recent graduates to help organisations understand what motivates university leavers. This year 1 689 graduates were surveyed by the association on a number of issues, including which companies they believed had the best graduate programmes. Murray & Roberts was voted the top graduate employer in the engineering and industrial sector for 2012. It is not only in South Africa that the Murray & Roberts culture appeals to young job-seekers. This year the Financial Post named Cementation Canada one of the ten best companies to work for in that country across all sectors.

LOCAL ECONOMIC DEVELOPMENT

Murray & Roberts is committed to the principle of supporting local economic development in the economies within which it operates with the aim of supporting Government and client localisation strategies. We have made a significant investment in our plant and equipment over the past three years with a cumulative capital expenditure of R2,9 billion. R1,6 billion has contributed to the expansion of our productive base.

This investment has created more jobs both directly and indirectly and provides a platform for future growth and economic development in the economies in which we operate.

Verified preferential procurement as a percentage of total procurement spend increased to 68% (2011: 61%) of the South African operations’ procurement expenditure of approximately R12,9 billion. This represents an 11% increase in preferential procurement and is above the Construction Sector Code target of 50%.

We also increased our percentage procurement from small and micro enterprises and more than 50% black-owned businesses as shown below.

The improvements are partly attributable to better recording of preferential procurement but primarily to our commitment to supporting local empowered suppliers.

Procurement from black-women-owned suppliers remains a challenge. The target procurement spend outlined in the Construction Sector Charter for this category of supplier is 6% of total procurement spend. The Group currently achieves 2,6%. The constraint is the number of potential suppliers in this category.

The Group’s preferential procurement policy requires each operating entity to verify its suppliers and alternatively to source empowered suppliers, should the existing suppliers not be appropriately empowered.

Murray & Roberts has supported organised business’ (represented by Business Leadership South Africa) commitments to the South African Government’s New Growth Path Local Procurement Accord of analysing and reviewing company-level procurement strategies. This is to support domestic manufacturing sectors and to see how business can progressively increase their level of local procurement where possible, reporting annually on the attainment of local procurement targets. On initial evaluation we estimate that 83% of our South African procurement spend is local. This local content may be overstated because a South African subcontractor, as an example, may have mobile plant in their cost base, and while we may look at such a subcontractor as 100% South African content, there may be elements of their input cost that are not local. This level of detail is however difficult to ascertain.

We undertake various enterprise development activities through our operating companies. Activities include the procurement of subcontractors from small, medium and micro enterprises (“SMME”), early payment to SMME suppliers, preferential credit terms for buyers and administration support for certain contractors, suppliers and clients.

The total value of enterprise development initiatives across the Group has increased significantly over the last three years to R246,8 million as shown on the above graph.

COMMUNITY DEVELOPMENT

Corporate Social Investment (“CSI”), the Letsema Sizwe Broad-Based Community Trust (“Letsema Sizwe”) and the Letsema Khanyisa Black Employee Benefits Trust (“Letsema Khanyisa”) programmes serve as the conduits through which we engage in community development and realise our goal of positively impacting on individuals, our employees and the communities in which we operate.

Murray & Roberts has a long track record as a good corporate citizen. For over 50 years, we have engaged in social upliftment activities aimed at redressing inequalities of the past, while simultaneously influencing the development of quality engineering professionals needed to sustain infrastructure development and economic growth in the future.

CSI STRATEGY

Murray & Roberts recognises education as the key driver in addressing issues of poverty, unemployment and more specifically the shortage of critical skills needed in the engineering and construction industry. As such CSI within Murray & Roberts is embedded as a core business function needed to redress inequalities of the past and to simultaneously influence the development of quality engineering professionals needed to sustain infrastructure development and economic growth in the future.

WOMEN IN THE DRIVING SEAT Tolcon Lehumo, formed after a women-empowered group joined Murray & Roberts, is South Africa’s leading traditional tolling operator. It is also the most gender-empowered company in the country’s transport, infrastructure and logistics sectors according to the judges of the ninth annual Top Women awards, announced in August 2012 at a ceremony in Ekurhuleni. Tolcon Lehumo, which operates the N3, N1 North, N17, Mariannhill and Oribi routes, empowers its people with a specific focus on women, many of whom live in rural communities. Tolcon Lehumo’s CEO is female, as are two-thirds of all employees, more than half of management and Board representatives and more than a quarter of shareholders in a predominantly male sector. The company’s focus on empowerment and upliftment has earned it a level 2 BBBEE rating.

TAKING SCIENCE WHERE IT’S NEEDED MOST Once a week, a car pulling a trailer winds its way to the Mazwe High School in Seleka, Limpopo. The school is set in a deeply rural area where jobs are few and poverty is endemic, but the mobile science laboratory packed inside the trailer could represent the ticket out of poverty that many of Mazwe’s learners desperately need. The laboratory is managed by a qualified science teacher who visits Mazwe – and seven other high schools in the region – to give Grade 10, 11 and 12 learners practical hands-on science training. The mobile lab contains a fully-equipped laboratory with state-of-the-art equipment which is used by learners to capture, analyse and discuss scientific data. The mobile lab visiting Mazwe High is just one of 31 laboratories run by a non-profit organisation called Technology Research Activity Centre (“TRAC”). Twenty-four of the laboratories, like the one that serves Limpopo, are mobile, while seven are at fixed locations, mostly in urban areas. TRAC works with education departments to identify schools where the need is greatest – and where there is the commitment to actively support its work. It also liaises with relevant department officials to ensure that the tuition offered is aligned with the curriculum. Where schools have laboratories, TRAC brings the equipment they almost always lack. Where there is no laboratory, TRAC will bring that too. Not only do almost 300 000 learners get the first-class hands-on training that is so essential to grasping physical science concepts but hundreds of their teachers get in-service training at the same time. TRAC assists learners who show particular promise to pursue tertiary education in science, engineering and technology, often finding them bursaries. Murray & Roberts is a proud TRAC sponsor, each year paying for the operation of three mobile and three fixed laboratories. The fixed laboratories are in Port Elizabeth, northern KwaZulu-Natal and Johannesburg. The mobile laboratories serve communities near the Medupi power station in Lephalale and Kusile in Delmas as well as northern KwaZulu-Natal. Between them, the Murray & Roberts sponsored laboratories reached more than 7 700 learners. Donique de Figueiredo, Murray & Roberts CSI manager, says the TRAC sponsorship is the Group’s flagship CSI project. “Since 2007 our CSI strategy has focused more deliberately on education,” she explains. Murray & Roberts wants to invest in the youth of our country and it also wants to cultivate technical and engineering skills. Hopefully those who emerge from the education system with the best engineering skills will come to work for us. By bringing top-class science education to schools around Medupi and Kusile we are doing our bit to invest in the future of communities where we work.” TRAC is making a difference, proven by statistics from all over the country. In just one year the matric science pass rate at Mazwe rose from 4% to 52% and the overall pass rate at the schools served by the Murray & Roberts sponsored Lephalale mobile laboratory increased from 11% to 32%. Donique says the Group’s relationship with TRAC has grown over the past six years, as has the organisation’s impact. “TRAC gives learners great science education and also emphasises relationships and mentoring. Despite interacting with thousands of children, each lab manager quickly recalls anecdotes from specific schools and can recite individual results for individual learners. “Our TRAC sponsorship costs Murray & Roberts millions of Rands each year,” she says, “but it is impossible to put a price tag on the life-changing value of education.”

A targeted CSI strategy has enabled Murray & Roberts to invest almost exclusively in education. This investment is divided between three areas of education: mathematics, science and technology education; numeracy and literacy in early childhood development and environmental education. Each of these focus areas are closely aligned with the Group’s core business.

I) MATHEMATICS, SCIENCE AND TECHNOLOGY EDUCATION:

An investment in mathematics, science and technology education helps to ensure a ready pipeline of talent to meet Murray & Roberts’ own business needs and furthers the interests of the engineering and construction sector in general.

II) NUMERACY AND LITERACY DEVELOPMENT IN EARLY CHILDHOOD:

Numeracy and literacy education in early childhood helps to develop sound numerical foundations in very young children. This improves their chances of excelling in mathematics at primary and secondary school, which in turn paves the way for a range of mathematicallyoriented careers, many of which serve the engineering and construction industry.

III) ENVIRONMENTAL EDUCATION:

Environmental education is closely aligned to Murray & Roberts’ commitment to sustainability, of which responsible management of environmental impact is a significant component. Murray & Roberts recognises that sensitising future generations to the importance of environmental conservation is critical for the sustainable success of ‘green’ objectives.

2012 BUDGET EXPENDITURE

Murray & Roberts is deeply invested in the transformation of the education sector and dedicates the greater share of its annual CSI budget to education projects. The total budget expenditure for the 2012 financial year was R14,4 million (2011: R15,5 million), including CSI overheads and salaries. A total of 77% (R11 million) of this budget was allocated to education projects, 8% was allocated to discretionary projects which include strategic relationships with Business Against Crime, the National Business Initiative and other pertinent membership organisations and 15% was allocated to departmental overheads.

A further breakdown of the budget allocated to education projects indicates that 57% of the funds were allocated to mathematics, science and technology education at secondary schools, 31% was committed to universities and 6% to numeracy and literacy in early childhood development and environmental education.

LETSEMA SIZWE COMMUNITY TRUST

The Letsema Sizwe Community Trust forms one element of the Murray & Roberts BBBEE shareholding structure initiated in 2005. Murray & Roberts invested R494 million to extend its black economic empowerment ownership to a broad base and has already impacted the lives of close to a million women, children, youth and people living with disabilities. Through partnerships with reputable development organisations, individuals and communities have been empowered around issues of financial literacy, HIV/AIDS awareness and prevention, food security and leadership. The Trust also supports the development of sport among able bodied people and people with disabilities through the annual Jack Cheetham and Letsema Awards.

2011 JACK CHEETHAM AND LETSEMA AWARDS

For the period under review, R1,2 million was disbursed to beneficiaries of the Jack Cheetham and Letsema Awards. Four of the beneficiaries were nominated in 2012 and the remaining eight beneficiaries were nominated between 2009 and 2011. The 12 beneficiaries include the 2011 winners who were announced at the annual gala awards ceremony.

The 2011 Jack Cheetham Award was allocated to Johannesburg Gymnastics Centre, while the Chaeli Sports and Recreation Centre scooped the Letsema Award. Central Gauteng Squash and the Nelson Mandela Township Sports Federation were nominated as the first and second runners up for the Jack Cheetham Award.