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AVENG LIMITED
Johannesburg - Wednesday May 30, 2001
The fact that its Australian-subsidiary McConnell Dowell Corporation is not
likely to trade profitably for the six months to June will have little
effect on the results for Aveng Limited for the 12 months ended June. Aveng
remains on track to report meaningful earnings growth for the period.
McConnell Dowell is the Australian-based engineering and construction
company offering specialised building, heavy civil, mechanical and pipeline
construction services to a geographically diverse selection of quality
clients in which Aveng holds a 64% interest. Because McConnell Dowell's
work is of a contract nature, its profits tend to be lumpy and taken as and
when contracts are completed.
At its annual general meeting earlier this month McConnell Dowell told
shareholders that there were two reasons for the six month profit dip. In
the past 18 months McConnell Dowell has had to change its year end twice -
once when LTA Limited acquired the company and it changed its year end to
conform with that of LTA, and then again when LTA was acquired by Aveng and
McConnell Dowell's reporting period reverted to June in line with that of
Aveng.
The second reason for the decline in profitability is the fact that during
the period McConnell Dowell encountered major industrial problems in
Victoria with adverse effects on the relevant contract results. Chairman
Jim Dowell told shareholders: "Thankfully these projects are now complete.
Our company has not previously encountered industrial disharmony of this
magnitude for many years."
He went on to say that the good news is that McConnell Dowell has secured
substantial new work including major construction in Vietnam, Singapore and
Indonesia. "All of this work is for major international clients. The
result of this work means, when entering the new year beginning 1 July, we
will have a record amount of secured work amounting to A$400-million. This
increased level of workload should restore us to normal levels of
profitability."
Commenting on the impact that these results will have on Aveng, financial
director Dennis Gammie said: "One must put McConnell Dowell into an Aveng
context. McConnell Dowell's turnover for the six month period is likely to
be around A$200-million or about R800-million which, when incorporated into
the Aveng 12 month turnover figure which looks likely to be around R10-
billion or R11-billion, is not material. And at an earnings level it will
have even less impact."
Mr Gammie says that this year McConnell Dowell's contribution to Aveng
earnings for fiscal 2001 was never expected to be more than 5% "so it is
small in the overall context of Aveng".
"We expect that next year when McConnell Dowell reports for a full 12 month
period that shareholders will get a more accurate picture of the earnings
potential of the company," he said.
Aveng is scheduled to report its results for the 12 months to June 30, 2001
in early September.
Please note:
Aveng Limited is a South African based construction-related group. It was
listed on the JSE Securities Exchange South Africa in July 1999 and is
aiming to be a globally competitive construction-related company focused
principally on the developing world.
Its major businesses are
Grinaker-LTA Limited - South Africa's largest construction company organised
into three divisions: Grinaker-LTA Construction and Development; McConnell
Dowell which is listed on the Australian and New Zealand stock exchanges and
in which Aveng holds 64%, and Grinaker-LTA Engineering and Mining Services.
Aveng holds 100% of Grinaker-LTA.
Trident Steel (Pty) Limited - South Africa's second largest steel merchant.
Aveng holds 100% of Trident.
Alpha Limited - South Africa's second largest cement manufacturer. Aveng
holds 46% of Alpha and the Swiss group Holderbank, the world's largest
cement manufacturer, holds 54%.
Aveng's objectives are to
Achieve a PE rating in the top three of the BCE sector
Long-term real ROE of 10%
25% of earnings offshore by 2003
ends
ISSUED BY : PENELOPE GRACIE INVESTOR RELATIONS
ON BEHALF OF : AVENG LIMITED
FURTHER INFORMATION : PENELOPE GRACIE
CONTACT : OFFICE +27 (11) 447-3301
MOBILE 082-55-77-444
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