The reclassification in March 2017 of its listing on the JSE from the heavy construction to the diversified industrial subsector marked the beginning of a new development trajectory for Murray & Roberts, as a multinational provider of specialised engineering and construction services, primarily in the metals and minerals, oil and gas and power and water market sectors.

The Group’s resilience and growth potential depends on this strategic repositioning as an effective response to market cyclicality. It is pleasing to reflect on the progress made in the last year to further enlarge the Group’s international footprint and to grow its presence in core as well as selected high-growth complementary market sectors. Most rewarding has been the Group’s outstanding safety performance, with no fatal incidents and a world-class lost-time injury frequency rate recorded for the past financial year. This performance was achieved across a project portfolio of more than 100 projects around the world, making this a truly remarkable outcome.

Our order book is nearing record levels and the prospects for an improvement in the Group’s earnings in the near term is encouraging. The Group’s financial position, even after a number of years of subdued profitability, remains robust. With gearing at a prudent level and a strong cash balance, our financial position is solid to fund our organic and acquisitive growth plans.

STRATEGIC FLEXIBILITY – ACQUISITIVE GROWTH SUPPORTING ORGANIC GROWTH

During the past year, we concluded several strategic acquisitions, which strengthened the Group’s resilience against market volatility and also improved the earnings potential of our three business platforms. The acquisitions have grown our presence in our selected market sectors and geographic regions and provide us with greater coverage of the different phases of the project lifecycle:

• A strategic milestone in the internationalisation of the Oil & Gas platform was the acquisition of Saulsbury’s Gulf Coast’s downstream and petrochemical engineering, procurement and construction (EPC) division, rebranded as Clough USA.
• The Underground Mining platform acquired Terra Nova Technologies (TNT) in the USA, an international provider of material handling solutions for underground and aboveground mines. TNT adds a new capability to the platform’s service offering, diversifying its revenue and risk profile.
• The Underground Mining platform acquired a 49% stake in Boipelo, a business providing contract mining services to coal mines in South Africa. This extends the platform’s contract mining exposure beyond gold, copper, platinum and chrome.
• The acquisition of OptiPower Projects has given the Power & Water platform the capability to undertake work in the transmission, distribution and substation sub-sectors of the power market, with substantial growth potential in these segments in the next few years in both South Africa and sub-Saharan Africa.

An important focus in the coming year will be to grow the order books of these newly acquired businesses. An example of our acquisition strategy in action, is the recent award to Clough USA of a US$620 million petrochemical EPC project in the USA. This acquisition and the formation of Clough USA has essentially allowed for the internationalisation of the Oil & Gas platform in a significant way through a relatively lowrisk entry to the fast-growing gas and petrochemical markets in the USA.

UPDATE ON THE ATON MANDATORY OFFER

LOOKING FORWARD

The Group’s focus on Engineered Excellence, underpinned by continuous improvement and innovative approaches, will be the bedrock of our competitiveness, resilience and reputation – the cornerstones of sustainable value creation.

The three business platforms are making good headway in consolidating their strategic positions, competitive advantages and growth prospects. The Group has built a strong, quality order book of R46,8 billion and near orders of R13,9 billion, compared to an all-time high order book of R55,5 billion – which supports our confidence that the Group’s strategy is starting to deliver. The prospects for an improvement in our operational performance is encouraging and the Group remains optimistic about the longerterm outlook for natural resources markets.

I would like to thank the Group’s executive teams and all our employees for their extraordinary commitment to delivering excellence, our Board for the guidance provided and all our stakeholders, specifically our shareholders, for their support during the past year.