for the six months ended 31 December 2005 - Aveng · for the six months ended 31 December 2005 ......
Transcript of for the six months ended 31 December 2005 - Aveng · for the six months ended 31 December 2005 ......
Unaudited Interim Resultsfor the six months
ended 31 December 2005
Targeting construction in the developing worldsupported locally by steel and cement
Who are we?
• Previously Anglovaal Engineering – hence “Av-eng”
– South African born and bred with 116 years in construction
– Listed on the JSE in 1999
• Activities focused around three clusters
– Construction - mining, energy and heavy infrastructure client focus
– Steel & Allied – steel and concrete products for the motor, manufacturing, mining and construction sectors
– Cement - cement, quarry products and ready mixed concrete
• Working in 40 countries and providing 29 000 direct jobs
• Listed in the JSE’s SRI Index since inception
Who are we? - Brands
MANUFACTURING
CONSTRUCTION
Who are we? - Capabilities
Contract types – Full value chain
Build Own Operate (BOO)
Engineer Procure & Construct (EPC)
Engineer Procure & Construction Management (EPCM)
Turnkey infrastructure projects
Design & Build
Build
Experience – Broad FootprintBerg River Dam • Twin Jetty Contract
• Dampier Port Upgrade • Telfer Gas Pipeline• Sasol Pipeline • Palm Gate Apartments
• Low cost housing in Heidelberg• Walter Sisulu Square of Dedication
• Siguiri Open Pit mining• Mondi Secondary Effluent Treatment • Plant Segala
Gold Dump Reclamation• Ocean Outfall Sewer Rehabilitation
• ACP Acid Plant Rectification• Nelson Mandela Bridge
Geographic Diversity – 40 Countries
South Africa
Rest of Africa
Australia
South East Asia
Middle East
Skills – 29 000 direct jobsCivil and MarineMechanical, PipelineElectrical MaintenanceBuilding & Property DevelopmentRoads & EarthworksUnderground ConstructionOpencast MiningProcess EngineeringManufacturingSteel BeneficiationCement Manufacture, aggregates & concrete
Organisational structure
ENGINEERING & CONTRUCTION CLUSTER
Aveng LimitedCarl Grim
Director: FinanceDennis Gammie
Risk ManagerHylton Macdonald
Company Sec.John Baxter
Shared Services CentreWessel van Zyl
Grinaker-LTA Limited
E+PC5
Nick Bell
Manufacturing
Doug Keet
MINING SERVICES STEEL & ALLIED CLUSTER CEMENT
Holcim (South Africa) (Pty) Ltd.
Karl MeissnerRoloff
46%
Financial ManagerCraig Bishop
Aveng Australia Holdings (Pty) Ltd
Trident SteelHoldings (Pty) Ltd
TisoGroupLimited
McConnell Dowell
David Robison
Construction
Howard Jones
Moolmans
Brian Wilmot
25% 25%
Trident Steel
Ben Fourie
Business segmentation
Trident Steel(24%)
Grinaker-LTAConstruction
(35%)E+PC
(2,1%)
Moolmans(10%)
Grinaker-LTA Manufacturing
(13%)
McConnell DowellCorporation
(16%)
37%
23%
13%
13%11%
2,4%
December 2005 June 2005
Highlights
• Operational cash flow improved by R500m with net debt:equityratio of 21% compared to 58% a year ago
• Headline earnings up 52% to R202m after providing R105m for Marikana
• Core Construction activities now profitable
– Grinaker-LTA : Pre-Marikana provision – operating profit of R12m
– McConnell Dowell : Returned to profitability with operating profit of R29m
• Continued strong performance from Steel & Allied andCement
Financial ReviewDennis Gammie
Financial objectives
35,058,421,0%Net debt:equity
14,3 (CPIX + 10%)9,819,7%Growth in diluted HEPS2
14,3 (CPIX + 10%)10,513,2%Return on average equity1
TargetDecember2004
December2005
1 Annualised
2 Growth in diluted HEPS over average of 6 comparable periods
Financial performance
92592Cash generated by operations
+53132202Headline earnings
(15)8471Net finance costs
+53108165Operating profit
+136 7747 625Revenue
% ChangeDecember
2004December
2005Rm
Key ratios
+3,22,55,7%Cash flow margin
x
x
%
% +0,61,62,2Operating margin
+0,12,93,0Asset turnover
+1,53,04,5Net interest cover
+1,412,714,1ROCE*
ChangeDecember
2004December
2005
* Annualised
Cost of share options
• Provisions for options increased by R25m due to share price
increase
• Costs of all options exercised during the six months expended
Earnings per share
--49,5Diluted earnings
--50,4Diluted headline earnings
+4934,251,0Earnings
+5234,051,8Headline earnings
%Change
December 2004
December 2005Cents
+24648803NAV
Calculation of diluted headline earnings
Cts
Rm
Rm
1,51,4Dilution impact
49,550,4Diluted headline earnings per share
51,051,8Headline earnings per share
454 722454 722Diluted weighted average shares
65 48865 488Additional shares to be issued
225229Diluted headline earnings
3838Interest saved on convertible
(11)(11)Taxation on interest
198201Headline earnings at December 2005
EarningsHeadlineearnings
389 235389 235Weighted average shares
Balance sheet – Equity movements
387198Attributable earnings
140Equity portion of convertible bond
33Revaluation reserve
25Negative goodwill transfer
2 921
42
(6)
(55)
2 495
June 2005
3 180Closing shareholders’ funds
December 2005Rm
11Foreign currency translation
Equity accounted reserve movements
(90)Dividends paid
2 921Opening shareholders’ funds
Equity value of convertible bond
Cts
Rm
1 527Conversion price
860Loan portion of convertible
140Equity portion of convertible
1 000Total value of bond
Headlineearnings
65 488Number of additional shares to be issued
547PV of principle over 7 years at 9%
313PV of interest over 14 periods at 4,5%
860
Calculation (Rm):
Currency movements
+78,077,50ClosingEuro
7,877,86Average
AustralianDollar
US Dollar
(5)4,674,92Average
+95,094,63Closing
(5)6,236,54Average
+56,686,35Closing
% Change June2005
December 2005
Movements versus the Rand
Borrowings
70%79%Fixed - Long term
15%7%Fixed - Short term
86%
14%
668
1 197
1 865
December 2005
85%Fixed
June2005
Rm
15%Floating
1 166Net debt
857Cash
2 023Interest bearing debt
Working capital
• Working capital per rand of sales - 3 cents at end Dec. ’05 compared to 5 cents at June ‘05
36
64
96
42
89
122
Stock days Debtor days Creditor days
December 2005
June 2005
Dec. 2005 - 4 days net working capital
June 2005 - 9 days net working capital
Capital expenditure
180239
(39)0Cash flow move out / (in)
(185)(181)Depreciation
146181Net cash cost
3458Proceeds
56157Maintenance
12482Expansion
Capex:
December 2004
December 2005
Reconciliation of cash balances
140Equity portion of convertible bond
(668)Closing net borrowings
192Dividend received & other cash movements
(90)Dividends paid
(181)Net capital expenditure
(85)Tax
236Working capital movement
(71)Net finance costs
356Cash retained from operations
(1 166)Opening net borrowings
December 2005Rm
Marikana dispute
• Based on findings of independent auditor KPMG underpayment to
Moolmans at December 2005 is R219m
– R51m in escalation claims
– Balance of R168 million in deductions from certificates
• Additional claims for standing time and other matters for
unlawful repudiation of contract
• Moolmans withdrawn from site
• Group results include a R105m provision for all costs relating to
closure of operation and underpayment
• Moolmans’ entitlements in terms of the contract being pursued
with vigour
Operational ReviewCarl Grim
Grinaker-LTA Construction, Moolmans & E+PC
Revenue: Six months to December 2005
Grinaker-LTA Construction,
Moolmans & E+PC(R3,6bn)
37%
McConnell Dowell(R1,2bn)
12%
Steel & Allied(R2,8bn)
28%
Holcim (South Africa)(equity accounted)
(R2,3bn)23%
Grinaker-LTA Construction, Moolmans & E+PC
(1,3)(0,4%)(2,6%)Operating margin
-(12)(93)Operating Profit/(Loss)
+53 444 3 605Revenue
% ChangeDecember
2004December
2005Rm
•Provision of R105m in respect of Marikana
•Loss of R3m from joint ventures and construction associates
Grinaker-LTA Construction, Moolmans & E+PC
Revenue: R3,6bnSix months to December 2005
Construction75%
Moolmans21%
E+PC4%
Grinaker-LTAConstruction
Revenue: R2,7 billion Six months to December 2005
`
Grinaker-LTA Construction
• Period of consolidation – Focus on
growing margins
• Order book increased from R4,1bn
to R4,4bn (88% of 2005 revenue)
• Reviewing operating efficiencies &
structures to gear the company
operationally for higher levels of
activity
• Working with government & banks
to improve the delivery of social
services
Grinaker-LTA Construction segmentation
Building & Property
Development34%
Mechanical &Electrical
21%
Civil, Roads &Earthworks &Underground Contracting
45%Revenue: R2,7 billionSix months to December 2005
Africa, Middle East positioning
• Middle East
– Withdrawal by Grinaker-LTA from building, mechanical and
electrical sectors
– Continued presence by McConnell Dowell in niche markets
• Africa
– Well-positioned to provide “drill blast load and haul” services to
selected mining clients in West, East and Southern Africa
– Fabrication services to oil and gas industry out of
Port Harcourt, Nigeria
– Winding down of Aid agency funded road contracts except in
neighbouring countries
– Low risk building work as opportunities arise
Grinaker-LTA Construction order book
79
93
56
108
82
66
Building & PropertyDevelopment
Civils, Roads &Earthworks &
Underground Contracting
Mechanical & Electrical
Jun-05 Dec-05
Order book % of 2005
Montecasino Development Phase II
Project Description
Construction of new theatre, function hall, hotel and parkade
Client
Tsogo Sun Holdings
Location
Fourways
Value
R220 million
Duration
June 2005 to January 2007
Standard Bank Learning Centre
Project Description
Construction of a management training facility consisting of a parkade, accommodation block, auditorium, open hall and classrooms
Client
Standard Bank of SA Limited
Location
Morningside
Value
R135 million
Duration
July 2005 to June 2006
Toyota Paint Plant 3
Project Description
JV with Grinaker-LTA Civil Engineering - Construction of a paint plant
Client
Toyota SA
Location
Prospecscton, Durban
Value
R250 million
Duration
February 2005 to
March 2006
Radar Tower
Project Description
Construction of a 50m high concrete radar tower situated on the western
side of the main runway at Cape Town International Airport
Client
Air Traffic and Navigation Services Company (ATNS)
Location
Cape Town
Value
R80 million
Duration
May 2005 to November 2006
Volkswagen Paint Shop
Project Description
Construction of a paint shop for Volkswagen South Africa. A joint venture between Grinaker-LTA Civil Engineering and Grinaker-LTA Building Cape
Client
Volkwagen SA
Location
Uitenhage
Value
R128 million
Duration
May 2005 to June 2006
Ship to shore container cranes
Project Description
Fabrication and erection of ship-to-shore container cranes. The cranes
will be able to handle 40 ton containers at a reach of 50 metres
Client
IPS Jikelele Cranes
Location
Durban Harbour
Value
R22 million
Duration
February 2004 to
January 2006
LION – Clean Fuels Project
Project DescriptionFraser & Chalmers Siyakha, an empowerment company in the M & E business unit is responsible for the mechanical, piping, electrical and instrumentation erection work
Client
Sapref
Location
Durban
Value
R115 million
Duration
August 2004 to October 2005
PP2 (Polypropylene II) Project
Project DescriptionAbove ground and underground mechanical and piping, fabrication and erection
Client
Sasol Chemical Industries
Location
Secunda
Value
R380 million
Duration
November 2004 to July 2006
Agbami development project 12
Project Description
Construction of subsea manifolds and suction piles
Client
PMC Technology
Location
Port Harcourt, Nigeria
Value
US$24 million
Duration
August 2005 to
July 2007
Upgrading of the Northern Main Roads(MR5 and MR6)
Project DescriptionUpgrade of road from Mliba to Msahweni and Madlangempisi to Tshaneniin northern Swaziland to highway status
Client
Ministry of Public Works &
Transport, Swaziland
Location
Swaziland
Value
US$500 million
Duration
November 2004 to May 2007
Realignment of Road MR398 for Zimbali Coastal Resort
Project DescriptionRealignment of Road MR398. The contract also comprises civil infrastructure for the residential development at Zimbali, which includes roads, dams, stormwater, water reticulation, bulk sewer network and pump stations
Client
Ministry of Public Works & Transport, Swaziland
Location
Ballito
Value
R130 million
Duration
February 2004 to May 2006
Zandfontein Coal Mine
Project DescriptionSinking, lining and equipping of an elliptical split shaft system. Supply and erection of the headgear and headgear mounted Koepe winder. Installation of the conveyance and roping up of the winding systems
Client
Sasol Mining
Location
Evander
Value
R53 million
Duration
March 2005 to April 2006
Two Rivers Platinum Mine
Project Description
Development of declines, ventilation shafts and stoping
Client
ARM/Implats JV
Location
Steelpoort
Value
R208 million
Duration
2003 to April 2007
Moolmans
Revenue: R752 millionSix months to December 2005
Moolmans – Opencast Mining
• Six months taken up largely by
efforts to resolve dispute with
Aquarius Platinum (Marikana Mine)
• Business continues to be stretched
by strong rand as majority of
revenue earned in US$
• Current business profitable
• Actively seeking new work
Order book – Moolmans
261
166
93
171
South Africa Africa
Jun-05 Dec-05
Order book % of 2005 revenue
Siguiri Openpit Mining
Project Description
Mining ore and waste and the construction of Leach Pads
Client
SAG AngloGold Ashanti
Location
Guinea
Value
R1 billion
Duration
April 1997 to
September 2008
Klipbank Opencast Coal Mine
Project DescriptionMining Coal and OverburdenClientIngwe Colliery & BHP BillitonLocation
Mpumalanga Coalfields, South Africa
Value
R1 billion
Duration
May 2000 to
February 2008
Golden Pride Openpit Mining
Project DescriptionMining Ore and Waste ClientAngloGold AshantiIAM Gold Mali GovernmentLocation
Mali
Value
R1 billion
Duration
December 1995 to
December 2009
E+PC – Engineering & Projects Co.
• Grinaker-LTA Process Engineering
successfully rebranded
• Favourable market response
• Principally focused on providing
upstream engineering & project
management services to niche
customers in the mining, energy
and industrial sectors
• Significant amount of work won
subsequent to year end
E+PC
Revenue: R158 millionSix months to December 2005
Order book – E+PC
111
8071
66
South Africa Africa
Jun-05 Dec-05
Order book % of 2005 revenue
ACP Acid Plant Rectification
Project Description:
Supply of an acid plant capable of operating under variable gas flow conditions which would enable Waterval Smelter in Rustenburg to meet the new environmental emission regulations on a continuous basis
Client
Anglo Platinum
Location
Rustenburg
Value
R150 million
Duration
November 2005
Mufulira Smelter Expansion Project Phase 1
Project Description:
Supply of Sulphuric Acid plant on an EP basis. Joint Venture comprising E+PC and SNC - Lavalin awarded contract to execute the engineering, procurement and construction management of the overall project
Client
Mopanie Copper Mines
Location
Mufulira, Zambia
Value
US$180 million
Duration
July 2004 to July 2006
Lagos Refined Product Facility
Project Description:
E&PC providing a Basic Engineering Package together with a Capital Cost Estimate. Subsequently awarded the Implementation phase of the Project, all of which was undertaken on an EPCM basis
Client
Energem Nigeria Limited
Location
Lagos, Nigeria
Value
US$34 million
Duration
November 2004 to May 2006
McConnell Dowell Corporation
Revenue: Six months to December 2005
Grinaker-LTA Construction,
Moolmans & E+PC(R3,6bn)
37%
McConnell Dowell(R1,2bn)
12%
Steel & Allied(R2,8bn)
28%
Holcim (South Africa)(equity accounted)
(R2,3bn)23%
McConnell Dowell Corporation
(0,7%)2,4%Operating margin
(6)29Operating Profit
+358871 200Revenue
% ChangeDecember
2004December
2005Rm
McConnell Dowell segmentation
Civil & Marine(54%)
Electrical Maintenance
(24%)
Mechanical & Pipelines(22%)
Revenue: R1,2 billionSix months to December 2005
• Strategic review and repositioning
successfully completed
• Business performing well – rapidly
approaching 3,0% EBIT/Revenue
ratio
• Slow progress on old quarantined
projects
• Significant 35% growth in revenue
and significant growth in order
book
McConnell Dowell order book
8978
135134
221
141
Civil & marine Mechanical & pipelines Electrical Maintenance
Jun-05 Dec-05
Order book % of2005 revenue
Perth Desalination Plant
Project DescriptionMcConnell Dowell's scope as sub-alliance contractor for mechanical works includes the installation of mechanical equipment, including the Reverse Osmosis filters and pumps and the installation of all GRP and SAF piping for the plant. The piping work ranges in sizes up to 1200mm in diameter.ClientAlliance of The Water Corporation of WA & Multiplex Degremont JV LocationWestern AustraliaValueR105 million
Kogan Creek Power Station,Queensland, Australia
Project Description
Kogan Creek is a 750MW single turbine coal-fired power station situated
approximately 280km West of Brisbane and will be the largest single unit
in Australia.
Civil & Building contract encompassing the installation of approximately
30,000m3 of reinforced concrete forming the footings for all plant items.
Chimney contract – design & construction of a 160m high slip-formed
concrete windshield with a 7m diameter single steel flue
Client
Siemens Limited
Location
Queensland, Australia
Value
R274 million
Project DescriptionThe scope of work includes the following:
• a new 180m General Cargo Berth• a new 270m Bulk Berth• 3 new dolphins• General port area earthworks
encompassing 7000m3 of fill• Earthworks for conveyor system
encompassing 140000m3
of cut & fillClientGCTLocationNew CaledoniaValueR485 million
Goro Nickel Port Facilities, New Caledonia
Project DescriptionConstruction of 22 No. Precast Cooling Tower modules for Alcan’s development in Gove, Australia. Each module weighs 270 tonnes. including mechanical fit-out. Average cycle time is 5.5 days per unit.Also included in the scope of work is two precast turbine & generator assemblies each weighing 800 tonnes.McConnell Dowell’s excellent performance has resulted in the award of additional works with the original contract increasing 250% in value.ClientAlcan Smelter DevelopmentLocationIndonesiaValueR30 million
Batam Fabrication FacilityAlcan Gove Project
Project Description
Design and Construction of three new jetties.
Project includes driving over 200 No. piles and 14 No. dolphin structures.
Shells for the dolphins are being precast at McConnell Dowell’s Batam
Fabrication Facility. Precast elements for the platforms, approach and
walkways are being manufactured locally in Singapore and the steel pipe
piles were sourced in Malaysia.
Client
Oil Tanking
Location
Singapore
Value
R90 million
Oil Tanking Marine Jetties 18, 19 & 20
Project Description
McConnell Dowell is building the Meander Dam located in Tasmania’s central north.
The dam is a 47 m high RCC dam and is 150 m across at the spillway [83,000 cubic metres of crushed rock] and also includes outlet tower and mini-hydro scheme.
The Dam will hold 43000 ML will supply around 24000 ML of water for irrigation on an annual basis.
ClientTasmanian GovernmentLocationTasmania Australia
Value
R129 million
Meander Dam
Steel & Allied
Revenue: Six months to December 2005
Grinaker-LTA Construction,
Moolmans & E+PC(R3,6bn)
37%
McConnell Dowell(R1,2bn)
12%
Steel & Allied(R2,8bn)
28%
Holcim (South Africa)(equity accounted)
(R2,3bn)23%
Steel & Allied
+2,75,4%8,1%Operating margin
+82126229Operating Profit
+212 3332 819 Revenue1
% ChangeDecember
2004December
2005Rm
1 Revenue includes Trident Steel, Grinaker-LTA Manufacturing and Aveng Corporate Office
Trident Steel64%
Grinaker-LTA Manufacturing
36%
Revenue: R2,8 billionSix months to December 2005
Steel & Allied
• Outstanding performance due to:
– Strong housing infrastructure activity
– High demand for rebar from the civil
engineering industry
– Buoyant motor industry
• Operational efficiencies continually
being improved
• Pipe mill successfully
commissioned and running well
• State-of-the-art roof tile
manufacturing plant to be erected
Steel & Allied market segmentsRevenue H1 2006
Manufacturing(19%)
Automotive(30%)
Construction(41%)
Exports(10%)
Mining(12%)
Construction(86%)
Trident Steel(R1,8 billion)
Grinaker-LTA Manufacturing(R1,0 billion)
Exports(2%)
Revenue: Six months to December 2005
Cement: Holcim (South Africa)
Revenue: Six months to December 2005
Grinaker-LTA Construction,
Moolmans & E+PC(R3,6bn)
37%
McConnell Dowell(R1,2bn)
12%
Steel & Allied(R2,8bn)
28%
Holcim (South Africa)(equity accounted)
(R2,3bn)23%
Cement: Holcim (South Africa) (46%)
47222Capital expenditure
413Debt:equity (%)
+181 7112 020 Assets
(1,0)27,3%26,3%Operating margin
+11542603Operating Profit
+151 988 2 293 Revenue
% ChangeDecember
2004December
2005Rm
Cement – Holcim (South Africa)
• Year-on-year industry volume growth of 12,2% in past 6 months
reversing the growth declines over the past two six month
periods
• Demand remains strong
• Refurbishment of Dudfield Kiln No.2 (R160m) on schedule
• First shipment of cement import programme into East London to
supplement DK2 shortfall completed
• Capacity options under review
• Spoornet hard pressed to meet company requirements
Industry cumulative average monthly sales
Source: C&CI
20 000
25 000
30 000
35 000
40 000
45 000
50 000
55 000
Jan
Feb
Mar
Apr
May Jun
Jul
Aug
Sep Oct
Nov
Dec
Tons
2001 2002 2003 2004 2005 2006
Industry cementitious sales
-9.3%
-2.7%-2.4%
1.9%
7.1%
-2.6%
-0.1%
9.9%
4.5%
6.6%
17.3%
13.9%
8.7%
12.2%
8.9%
1.7%
-15%
-10%
-5%
0%
5%
10%
15%
20%
1st
Half
19
99
2n
d H
alf
19
99
1st
Half
20
00
2n
d H
alf
20
00
1st
Half
20
01
2n
d H
alf
20
01
1st
Half
20
02
2n
d H
alf
20
02
1st
Half
20
03
2n
d H
alf
20
03
1st
Half
20
04
2n
d H
alf
20
04
1st
Half
20
05
2n
d H
alf
20
05
1st
Half
20
06
2n
d H
alf
20
06
6 m
nth
% C
han
ge Y
-Y
Looking forward
Market sentiment
0
10
20
30
40
50
60
70
80
Q1 19
96Q3
1996
Q1 19
97Q3
1997
Q1 19
98Q3
1998
Q1 19
99Q3
1999
Q1 20
00Q3
2000
Q1 20
01Q4
2001
Q2 20
02Q4
2002
Q2 20
03Q4
2003
Q2 20
04Q4
2004
Q2 20
05Q4
2005
New Tender Contract awards General confidence
CIVIL ENGINEERING LEADING INDICATORS (5-qrt moving average)
Construction order book (two years)
6.6
8.28.7
9.8
8.28.9
7.5
8.7
7.2
8.7
9.8
0
2
4
6
8
10
12
Dec2000
June2001
Dec2001
June2002
Dec2002
June2003
Dec2003
June2004
Dec2004
June2005
Dec2005
R billions
Construction order book - (two years)% of revenue
129%
109%
94%
102%
82%
91%
115%
82%
102%
114%
95%
Dec2000
June2001
Dec2001
June2002
Dec2002
June2003
Dec2003
June2004
Dec2004
June2005
Dec2005
Target zone
Government infrastructure budget
Government infrastructure spending - 2006 to 2009R372 billion
Provincial - R109bn(26%)
Municipal - R82bn(22%)
Public Enterprise -R26bn (7%)
National - R 32bn(9%)
Other public - 123bn (33%)
Market conditions
• Upward trend in Government spending during past six months
– Increased annual investment expenditure in SOE’s with GFCF growth
up from 8,4% over the past ten years to 12,5% in last two years
• Acceleration in private sector development from average
annual GFCF growth of 4,7% in past decade to 8,4% in last two
years
• Resource companies announcing extensive new projects in all
sectors worth billions of rands
• Consumer sector continues to be buoyed by low interest rates
Government’s 25% GCFC:GDP target
• The 25% GCFC:GDP target can be achieved by 2014 based on
the following assumptions:
– GDP growth is 5% to 2009 and 6% thereafter
– Government GFCF growth is 10% to 2009 and 9% thereafter
– Private sector GFCF growth is 10% to 2014
• If this target is achieved, the construction industry will double in
size, i.e. 8% real growth per annum
• Three prerequisites
– More efficient delivery systems
– A streamlined legislative & regulatory environment
– Concerted effort on growing skills
Civil engineering employment
40,000
60,000
80,000
100,000
120,000
140,000
73 78 83 88 93 98 03Years
Num
ber
of E
mpl
oyee
s
EX SAFCEC
Dramatic drop in artisan registrations
EX Allyson Lawless
64 68 72 76 80 84 88 92 96 00
0
500
1000
1500
2000
Art
isan
s R
egis
tere
d
Building Industry Artisans Registered
Construction Charter
• Charter finalised and agreed to by Minister Sigau
• Signing date set for 16 March by all parties including government
• Timeline and action plan in place
– Develop business model for Charter Council
– Submit application for Section 12 to DTi
– Investigate the issues of a practice note to guide the industry during
interim period
– Submit application for Section 9 to DTi
– Establish Charter Council
What does this mean for Aveng? –in South Africa
• Three equally sized segments:
• Building and property development: Very strong levels of
demand, full order books
[Private capital driven by interest rates and consumer
confidence]
• Infrastructure development: Levels of demand picking up
quickly and likely to be strong for at least 5 years
[Public capital driven by Government policy]
• Mining expenditure: Activity levels starting to lift
[Private capital driven by commodity prices and rand/US$
exchange rate]
Australia and SE Asia prospects
• Australian & SE Asian minerals boom driven by Chinese demand
for coal and iron ore
– Downstream demand benefiting McConnell Dowell
• Upsurge in transport infrastructure developments in port, roads and rail
• Growth in utility sector projects
• Developments in oil and gas industry creating opportunities
• Asia undergoing growth phase with strong investment cycles
– Infrastructure construction in marine, pipeline and plant to support
investments in manufacturing sector
– Development of heavy industrial hubs in Thailand and Singapore
• McConnell Dowell’s areas of specialisation - Marine and civil,
pipelines and electrical installation and maintenance operations -
ideally suited to these opportunities
Conclusion
• Turn around in core SA construction activities gaining momentum
• McConnell Dowell’s capabilities in sweet spot of demand in its
target markets with strong growth in order book
• Improvement in profitability in Steel & Allied due to continued
strong demand from the housing infrastructure and motor
manufacturers
• Holcim will continue to perform well
• Significant increase in cash flow from operations a leading
indicator for improved profits
• Strong commitment to infrastructure delivery in our target
markets
Prospects
• South African building and civil engineering markets will continue
to perform well
• Grinaker-LTA Construction margins expected to improve
• Remainder of businesses will continue to perform well for the
balance of the year
Building Sustainable Value
www.aveng.co.za
Disclaimer
This presentation contains forward-looking statements about the company’s
operations and financial conditions.
They are based on Aveng Limited’s best estimates and information at the time of
writing. They are nonetheless subject to significant uncertainties and contingencies
many of which are beyond the control of the company. Unanticipated events will
occur and actual future events may differ materially from current expectations due
to new business opportunities, changes in priorities by the company or its joint
ventures as well as other factors. Any of these factors may materially affect the
company’s future business activities and its ongoing financial results.