| Wed 7 Mar 2001, 0:00 | | Aveng Limited Interim Results |
|
AVENG LIMITED
Targeting construction to create new wealth
- Operating income +43%
- Headline earnings per share +19%
- Offshore earnings 30%
- Grinaker-LTA order book R6,5 billion
Interim report for the six months ended 31 December 2000
Aveng's vision is to be a globally competitive construction-related group
focussed principally on the developing world.
www.aveng.co.za
Group Balance Sheet
31 December 30 June
Rm 2000 1999 2000
ASSETS
Property, plant and equipment 1 402 490 494
Goodwill 1 061
Associated companies and
joint ventures 497 448 399
Other investments 59 43 50
Inventories 876 751 949
Accounts receivable 1 335 533 578
Cash and cash equivalents 431 681 735
TOTAL ASSETS 5 661 2 946 3 205
EQUITY AND LIABILITIES
Shareholders' funds 1 679 1 631 1 616
Convertible subordinated debentures 171 172 171
Minority interests 159 95 90
Long-term borrowings 915 30 41
Deferred taxation 77 59 64
Trade and other payables 1 957 871 1 098
Short-term borrowings 656 84 90
Taxation 47 4 35
TOTAL EQUITY AND LIABILITIES 5 661 2 946 3 205
Number of ordinary shares in
issue (million) 356 356 356
Diluted number of ordinary shares 367 391 367
Fully diluted number of ordinary
shares 384 393 371
Net asset value per ordinary share
(cents) 471 458 454
Associated and joint venture companies comprise unlisted investments which were
valued by the directors at not less than their carrying value.
Group Cash Flow
Six months ended Year ended
31 December 30 June
Rm 2000 1999 2000
Cash generated from operations 295 153 326
Income from investments 66 67 177
Working capital changes (37) 36 14
Interest paid (68) (16) (30)
Taxation paid (89) (42) (41)
Dividends paid (78) (5)
Cash flow from operating activities 89 198 441
Cash flow from investing activities (1 714) (63) (167)
Cash flow from financing activities 723 54 (5)
Net increase/(decrease) in cash
and cash equivalents (902) 189 269
Cash and cash equivalents
at beginning of period 677 408 408
Cash and cash equivalents
at end of period (225) 597 677
Statement in changes in equity
Six months ended Year ended
31 December 30 June
Rm 2000 1999 2000
Shareholders' funds and debentures
at the beginning of the period 1 787 1 580 1 580
Dividends paid (61)
Earnings for the period 104 119 264
Foreign currency translation 16 6
Purchase of shares by related
parties (38) (188)
Ordinary shares issued 3 122 122
Other 1 20 3
1 850 1 803 1 787
SEGMENTAL ANALYSIS
Turnover Operating income
Six months Year Six months Year
ended ended ended ended
31 Dec 31 Dec 30 June 31 Dec 31 Dec 30 June
Rm 2000 1999 2000 2000 1999 2000
Construction 3 702 1 310 2 960 103 37 75
Steel and
allied 1 238 698 1 291 55 48 114
Bearings - 277 560 - 25 54
Total 4 940 2 285 4 811 158 110 243
Group Income Statement
Six months Year ended
ended 31 December Percentage 30 June
Rm 2000 1999 change 2000
Turnover 4 940 2 285 116 4 811
Operating income before
depreciation 290 150 94 324
Depreciation 132 40 81
Operating income 158 110 43 243
Interest paid (68) (16) (30)
Income from investments 45 23 68
Income from associates 57 41 98
Income before
exceptional items 192 158 21 379
Exceptional items (30) (1) (22)
Income before taxation 162 157 3 357
Taxation 39 29 77
Income after taxation 123 128 (4) 280
Minority interests 19 9 16
Earnings 104 119 (14) 264
Headline earnings
adjustment 29 (1) 14
Headline earnings 133 118 12 278
Headline earnings
adjustment
Profit on disposals 9 9
Restructuring costs (4) (7) (17)
Goodwill (35) (3) (10)
Other 9 (4)
Exceptional items (30) (1) (22)
Attributable taxation
credit 1 2 5
(29) 1 (17)
Attributable to minority
interests 3
Headline earnings
adjustment (29) 1 (14)
Earnings per share
(cents)
Headline 39,5 33,1 19 79,3
Diluted headline
(Note 1) 36,1 30,5 18 72,9
Fully diluted headline
(Note 2) 35,4 30,3 17 72,8
Earnings 30,7 33,4 (8) 75,3
Diluted (Note 1) 28,2 30,8 (8) 69,4
Fully diluted (Note 2) 27,6 30,6 (10) 69,2
Notes:
1 Diluted number of shares comprises ordinary shares and the compulsorily
convertible subordinated debentures
2 Fully diluted number of shares includes the share options issued.
Other information
Six months ended Year ended
31 December 30 June
Rm 2000 1999 2000
Capital expenditure 305 65 133
Commitments for future capital
expenditure:
Contracted 10 20 37
Authorised, but not contracted for 52 71 134
62 91 171
Contingent liabilities
Claims which may result from guarantees issued amount to R61 million compared
to R24 million at 30 June 2000.
Notes
Compliance with Statements of Generally Accepted Accounting Practice and
accounting policies
The interim results have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. Except for the changes
stated below, there have been no changes effected to any accounting policies,
and the methods of computation applied are consistent in all respects with
those applied in the annual financial statements for the year ended 30 June
2000.
Accounting for investments in associates and joint ventures
The policy has been changed to conform with AC418 - Consistency - Alternative
Methods which requires that enterprises apply the same policy for similar
transactions throughout the reporting entity. All incorporated joint ventures
are now accounted for using the equity method. Comparative information has been
restated to reflect this change. The result of this change in policy is that
Alpha (Pty) Limited is no longer proportionately consolidated.
Intangible assets
In accordance with Statements of Generally Accepted Accounting Practice AC129
and AC131 the Group has changed its accounting policy for goodwill and other
intangible assets. With effect from 1 July 2000 any goodwill arising on the
acquisition of investment in subsidiaries, businesses, joint ventures or
associates is stated at cost less accumulated amortisation. Goodwill is
amortised through the income statement over its estimated useful life for a
maximum period of 20 years. This change in policy will be applied in future.
Revaluation of properties
With effect from 1 July 1999 the Group changed its policy from carrying
properties at valuation and reverted to carrying properties at depreciated
historical cost. The originally published Group balance sheet for the
comparable period at 31 December 1999 has been adjusted to reflect the effect
of this change in policy.
COMMENT
Performance of the group in the past six months has been pleasing and following
the inclusion of LTA turnover has risen by 116% to almost R5-billion.
Aveng's focus on construction-related businesses is paying off and improved
results were reported from all operations.
Operating income of R158-million reflects a 43% increase over the same
six-month period a year ago. Income before exceptional items amounted to
R192-million, 21% ahead of the previous year's R158-million.
Headline earnings totalled R133-million which is 12% higher than the 1999
interim figure of R118-million. Headline earnings per share at 39,5 cents a
share reflect a 19% improvement on the 33,1 cents recorded a year ago.
It is Aveng's policy to declare an annual dividend at the year-end.
The period under review was a busy time for the group, with the primary focus
being on the strategic realignment of Aveng. The successful integration of the
Grinaker and LTA businesses with the formation of Grinaker-LTA was a singularly
important milestone.
Management attention is being focussed on the reduction of debt. While the
group's borrowings and interest paid have risen sharply, the current
debt:equity ratio of 62% is manageable.
The construction division, Grinaker-LTA, performed well. With the broadening of
the group into other developing regions of the world, promising opportunities
are presenting themselves and our companies are winning contracts.
Construction remains the largest of Aveng's three divisions and contributed the
bulk of both turnover and operating income. The construction order book, which
is cut off at two years, now stands at close to R6,5 billion of construction
turnover.
The steel and allied division, encompasses Trident Steel, the other steel and
related interests previously included in the construction company numbers, as
well as the corporate office. Trident Steel benefited from increased demand in
the automotive sector.
Aveng's cement interests held in Alpha, performed particularly well during the
second quarter.
Corporate activity
With effect from 1 July 2000 the company acquired LTA Limited, disposed of its
shareholding in Bearing Man Limited and acquired the business of Fraser Fyfe
from Fraser Alexander.
On 1 January 2001, Aveng acquired three automotive steel service centres -
Rosslyn, Port Elizabeth and Durban - from Baldwins. These are being integrated
into Trident Steel.
Prospects
The integration of Grinaker and LTA and the building of the new organisation
and brand, is progressing extremely well. Grinaker-LTA has been warmly received
by its staff and customers. The strategic plans for the new construction group
will be finalised within the next quarter.
Conditions in the South African construction industry remain tough but we see
signs of improvement. Outside of the country there are an increasing number of
opportunities but competition is fierce. Aveng remains committed to achieving a
significant enhancement in headline earnings per share for the current
financial year.
Directorate
As indicated two years ago, the Aveng chairman, Basil Hersov, will retire from
the board with effect from 1 July 2001. He will be replaced by Richard Savage
with Phil Erasmus being appointed deputy chairman.
The board notes with regret the passing away of Bean Bornheimer and
acknowledges the considerable contribution he made to the group.
For and on behalf of the board
RB Savage Deputy chairman C Grim Managing director
Registered office
19 Impala Road
Chislehurston Johannesburg
Sandton 2196 7 March 2001
AVENG LIMITED Registration number 1944/018119/06
Directors: B E Hersov* (Chairman), R B Savage* (Deputy chairman), C Grim
(Managing director), E A Behr, C V Campbell*, P F Crowley, A Dawson, M M Doyle,
P L Erasmus*, D R Gammie, J R Hersov*, H D K Jones, P J Owen*#, W Wassermeier
Company Secretary: P H Hansen * Non-executive #Australian
