| Tue 25 Sep 2001, 0:00 | | AVENG SETS ITS SIGHTS ON GLOBAL COMPETITIVENESS |
|
Johannesburg - Tuesday September 25, 2001
Having transformed itself from a fixed investment conglomerate with multiple
investor entry points into a focused construction-related group in just
three years, Aveng is moving ahead urgently to accomplish its fourth
objective: that of building global competitiveness.
Writing in the company's annual report that was released today managing
director Carl Grim said that enhancing global competitiveness was Aveng's
primary imperative for the year ahead. This is in line with the company's
vision which is build a globally competitive construction-related group
focused principally on the developing world.
Mr Grim explained that the group's two-legged strategy is quite clear.
"Firstly we aim to maintain financial stability by nurturing the profit and
cash generating capacities of the southern African-based construction, steel
and cement businesses. The other leg of our strategy seeks to promote
sustainable growth by building a globally competitive international
construction capability with specialised niche skills operating in selected
areas of the developing world."
He tells shareholders that once Aveng is satisfied that it is able to
compete on the global stage, "we will embark on another acquisition phase to
further consolidate our geographical positioning in the developing world.
"Our southern African construction businesses will remain active across the
full spectrum of local construction activity. When expanding outside of
southern Africa, however, we will seek to focus our energies and build
capacity in the following three niche markets - mining services, energy
services and heavy infrastructure. Geographically, we will continue to
focus principally on two areas of the developing world, namely -
Africa/Middle East and Australia/South East Asia."
Mr Grim added that this will not detract from Aveng's commitment to nurture
the southern African construction, steel and cement businesses by investing
in attractive opportunities that may arise from time to time. "In addition,
we may, in the longer term, consider the further broadening of our
'financial stability base' by acquiring another stand-alone
construction-related business."
Aveng owns 100% of Grinaker-LTA, South Africa's leading construction
business with operations in other areas of the developing world. Its steel
and allied cluster includes 100% owned Trident Steel and Amalgamated Steele,
together processing over 650 000 tons of steel annually, making Aveng South
Africa's largest domestic steel beneficiator and merchant. Aveng's cement
interests lie in its 46% holding in Alpha (Pty) Limited with the remaining
interest being held by Holcim (formerly Holderbank) one of the world's
cement companies.
In reviewing the group's progress to date Mr Grim also points to the success
Aveng has registered in meeting its stated objectives early. "Our three
corporate objectives, committed to at the time of our listing in 1999, were
to command a price-earnings rating within the top three of our sector; to
achieve a long-term real return on equity of 10% and to generate 25% of
earnings in hard currencies by 2003."
He went on to say: "We have achieved the first two objectives consistently
since listing and have been able to tick off the third, two years early. Mr
Grim comments that while the group may wish to grow the offshore earnings
component further in the future, it believes that the 25% level is adequate
for the present.
For the 12 months to June 30 Aveng reported 25% improvement in headline
earnings per share which rose to 99,4 cents, following a 71,6% increase in
operating profit which totalled R430,8-million for the period.
Looking ahead chairman Richard Savage notes that a great deal has been
accomplished at Aveng within a relatively short time. However, he comments
that the true test of the recent repositioning strategy lies in extracting
earnings growth from the group in an economic environment that does not
offer much promise.
"Unfortunately leading indicators suggest that the world's major economies
will continue to slow, which will have a negative impact on South African
and other developing markets. Clearly this will affect Aveng as its
business is aligned with the growth in gross fixed investment."
He concludes that construction has a strong, signed and sealed, two year
order book amounting to R8,2-billion and should achieve ongoing benefits
from the Grinaker-LTA merger. "Our steel and allied strategic grouping
expects to profit from the growth in the automotive industry and from any
revival in construction. Cement's performance is directly related to the
building and construction components of South Africa's capital formation,
projected to be buoyant for the next year.
"Within the businesses, management will concentrate on reducing borrowings
and turning assets, which should result in a real increase in earnings again
next year," he says.
The Aveng annual general meeting will be held on Wednesday October 24.
Please note:
Aveng Limited is a South African based construction-related group. It was
listed on the JSE Securities Exchange SA in July 1999 and is aiming to be a
globally competitive construction-related group focused principally on the
developing world.
Its major businesses are
* Construction
Grinaker-LTA Limited is 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 Grinaker-LTA holds 64%, and Grinaker-LTA Engineering
and Mining Services. Aveng holds 100% of Grinaker-LTA.
* Steel and Allied
A cluster of steel and manufacturing businesses which together make Aveng
South Africa's largest domestic steel beneficiator/merchant. The two largest
businesses are Trident Steel and Amalgamated Steele, both of which are 100%
held by Aveng.
* Cement
Alpha Limited is South Africa's second largest cement manufacturer. Aveng
holds 46% of Alpha and the Swiss group Holcim, one of the world's leading
suppliers of cement, aggregates and concrete, holds 54%.
Aveng's objectives are to achieve
* PE rating in the top three of the BCE sector
* Long-term real ROE of 10%
* Minimum 25% of earnings in hard currencies
Visit our website - www.aveng.co.za
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
Penelope Gracie Investor Relations
Tel: +27 (11) 447-3301
Fax: +27 (11) 447-3319
Mobile: 082-55-77-444
e-mail: penelope@pgir.co.za
