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Aveng Limited - Audited group results for the year ended 30 June 2002
AVENG
"Targeting consistent long-term value"
* Revenue up 28%
* operating income up 50%
* Earnings up 35%
* Net debt to equity down to 42%
Audited group results for the year ended 30 June 2002
Consolidated balance sheet
2002 2001
Rm Rm
ASSETS
Non-current assets
Property, plant and 1 770,0 1 464,4
equipment
Goodwill 1 075,7 1 050,5
Investments 507,9 618,5
3 353,6 3 133,4
Current assets
Inventories 1 249,5 920,3
Trade and other receivables 3 020,6 1 727,3
Cash and cash equivalents 678,6 368,0
4 948,7 3 015,6
TOTAL ASSETS 8 302,3 6 149,0
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders` funds 2 555,0 2 012,9
Minority interests 248,7 173,7
Total shareholders` funds 2 803,7 2 186,6
Non-current liabilities
Interest-bearing borrowings 614,9 632,3
Deferred tax 66,9 76,5
681,8 708,8
Current liabilities
Trade and other payables 3 507,5 2 247,7
Short-term interest-bearing 1 253,3 930,3
borrowings
Taxation 56,0 75,6
4 816,8 3 253,6
TOTAL EQUITY AND LIABILITIES 8 302,3 6 149,0
Cash flow statement
2002 2001
Rm Rm
Cash retained from operating 216,8 315,6
activities
Net fixed assets purchased (624,4) (492,3)
Acquisitions net of 0,3 (1 550,2)
disposals
Investments - other 243,7 17,8
Net long-term borrowings 48,9 529,0
Proceeds from disposal of 169,0
treasury shares
Net increase/(decrease) in 54,3 (1 180,1)
cash and cash equivalents
Cash and cash equivalents at (485,2) 694,9
beginning of the year
Cash and cash equivalents at (430,9) (485,2)
end of the year
Segmental information
2002 2001
Rm % Rm %
Revenue
Construction 9 559,2 72,5 7 517,5 72,9
Steel & Allied 3 626,0 27,5 2 799,6 27,1
13 185,2 100,0 10 317,1 100,0
Operating income
Construction 345,0 53,6 253,1 58,8
Steel & Allied 299,1 46,4 177,7 41,2
644,1 100,0 430,8 100,0
Geographic revenue
Republic of South 7 286,5 55,3 6 654,8 64,5
Africa (CMA)
Africa and Middle 3 499,6 26,5 2 217,3 21,5
East
Australasia and 2 399,1 18,2 1 445,0 14,0
South East Asia
13 185,2 100,0 10 317,1 100,0
Other group information
2002 2001
Number of shares in issue and
weighted average (millions)
In issue 396,1 356,1
Weighted average 378,6 328,5
Diluted weighted average 392,3 383,4
Rm Rm
Non-trading items
Net (surplus)/loss on (1,3) 0,6
disposal of properties
Net loss/(surplus) on 5,9 (7,9)
disposal of investments
4,6 (7,3)
Capital expenditure
Expansion 315,6 324,8
Replacement 387,5 211,3
703,1 536,1
Consolidated income statement
2002 2001 %
Rm Rm Change
Revenue 13 185,2 10 317,1 28
Operating income 1 008,3 722,9
before depreciation
Depreciation 364,2 292,1
Operating income 644,1 430,8 50
Income from 113,8 99,9
associates and joint
ventures
Income from 48,6 67,2
investments
Income before 806,5 597,9 35
interest paid
Interest
Paid
242,6 178,5
Income before 563,9 419,4 34
goodwill and non-
trading items
Amortisation of (53,8) (65,9)
goodwill
Non-trading items (4,6) 7,3
Income before 505,5 360,8 40
taxation
Taxation 119,7 78,6
Income after taxation 385,8 282,2 37
Minority interests 23,3 14,3
Earnings 362,5 267,9 35
Net adjustments for
amortisation of
goodwill
and non-trading items 58,4 58,6
Headline earnings 420,9 326,5 29
EARNINGS PER SHARE
(Cents)
Earnings 95,7 81,6 17
Diluted headline 107,3 86,8 24
NET ASSET VALUE PER 645,0 517,1 25
SHARE (Cents)
DIVIDEND PER SHARE 27,0 22,5 20
(Cents)
Statement of changes in equity
Share Automatically
capital Non convertible
and distributable subordinated Retained
Rm premium reserves debentures income Total
Balance at 1 601,2 26,0 171,2 989,1 1 787,5
July 2000
Earnings for 267,9 267,9
the year
Dividends (60,7) (60,7)
paid
Foreign 16,0 16,0
currency
translation
Increase in
share
premium
as a result
of the issue
of
shares to
LTA Limited
shareholders
and share
scheme 2,9 2,9
participants
Transfers (6,9) 6,9
Other (0,7) (0,7)
Balance at 604,1 34,4 171,2 1 203,2 2 012,9
30 June 2001
Conversion 1,6 (171,2) (169,6)
of
debentures
Earnings for 362,5 362,5
the year
Disposal of 170,1 170,1
treasury
shares
Dividends (74,3) (74,3)
paid
Foreign 77,7 77,7
currency
translation
Premium on
issue of
ordinary
shares to
redeem the
debentures 175,7 175,7
Transfers (0,4) 0,4
Balance at 951,5 111,7 1 491,8 2 555,0
30 June 2002
Notes
These results had been compiled in accordance with the South African
Statements of Generally Accepted Accounting Practice and the Listings
Requirements of the JSE Securities Exchange South Africa and Schedule 4
of the South African Companies Act. The accounting policies used in the
preparation of the results are consistent in all material respects with
those adopted in the annual financial statements for the year ended 30
June 2001. During the year the group adopted AC 116 (employee benefits)
and AC 135 (investment properties). There has been no effect on earnings
in the adoption of these statements. No material events have occurred
subsequent to the year-end, other than the sale of the 34% interest in
Omnia Limited held by Alpha (Pty) Limited.
The results have been audited by Ernst & Young and the unqualified audit
opinion is available on request from the company secretary at the
company`s registered office.
The group`s annual financial report will be distributed by the end of
September 2002. The group subscribes to the Code of Corporate Practice
and Conduct as contained in the King Report on Corporate Governance for
South Africa: 2002. Matters requiring formalisation and attention will
be addressed during the current financial year.
Commentary
Financial review
Aveng had another excellent year of consistent profit improvement.
Diluted headline earnings per share amounted to 107,3 cents, 24% up on
the previous year. Revenue grew by 28% to R13,2 billion, an estimated 8%
of which can be ascribed to the unusually high depreciation of the Rand
against the US Dollar. Operating income increased by 50% and earnings by
35% compared to the prior year. Earnings per share were impacted by the
conversion of 40 million automatically convertible debentures during the
period.
Return on average equity improved to 18,4% compared to 17,2% in the
prior year, the fifth consecutive year of growth in this important
benchmark. The debt-to-equity ratio reduced from 55% to 43% in line with
expectations, in spite of funding substantial revenue growth and capital
expenditure that exceeded depreciation by R339 million. Hard currency
revenues increased from 35% to 45%. The net asset value per share grew
by 25% to 645 cents.
Operational review
Construction
Grinaker-LTA has substantially completed its rationalisation process and
is now a fully integrated business with seven large and well resourced
business units. Successes during the year included adding high profile
projects such as the Mozambique pipeline contract for Sasol. McConnell
Dowell, the 63% held Australian listed construction business returned to
a more acceptable level of profitability and size of order book.
Overall, the Construction cluster registered a 27% revenue growth and a
36% growth in operating income. Construction is strongly positioned with
a two year order book up to 103% of Construction revenue.
Steel & Allied
This cluster consists of the steel trading and processing businesses of
Trident and the Grinaker-LTA Infrastructure and Mining Services business
unit. Due to the rapidly growing local and export driven steel market,
the cluster registered a revenue growth of 30% and increased operating
income by 68%.
Structural steel sales into mining and energy construction projects have
been strong while the motor and steel-based manufacturing businesses
have been particularly buoyant over the past year, largely the result of
export driven demand. Iscor reports that local sales for the year ending
June are up by 19%, however, demand in this sector is likely to decline
as a result of the substantial steel price increases of the past few
months.
Cement
Alpha is South Africa`s second largest cement company, 46% held by Aveng
and is equity accounted. Despite a volume decline of 1% in the past year
operating income is up 43%. Its 34% interest in Omnia Limited was sold
after the year-end and its investments in Natal Portland Cement,
Slagment and Ash Resources are under review. Alpha recently embarked on
a three year R340 million capital driven efficiency programme.
Strategy
The past two years were focused on positioning and growth. The next two
years will reflect the benefit of that growth in the group`s cash flow,
the operating income margins and other efficiency measures. The emphasis
will be on quality rather than quantity of work.
Prospects
Construction is strongly positioned with its R9,8 billion two year order
book and is in the position of being able to be selective about the work
it targets. Steel & Allied continue to trade well, fuelled by local
construction demand and competitive rand-induced exports in the motor
and manufacturing sectors. Cement volumes are flat but efficiency
continues to improve.
Unless there is a substantial change to our operating environment in the
year ahead, Aveng should be able to repeat the past year`s growth in
diluted headline earnings per share. The group will move closer to
achieving the 20% return on average equity objective and aim to better
the 35% net debt to equity target.
Dividend declaration
Dividend No 3 of 27,0 cents per share, being the total dividend for the
financial year ended 30 June 2002 (2001: 22,5 cents per share) has been
declared payable on Monday, 28 October 2002 to those shareholders
recorded in the books of the company at the close of business on Friday
25 October 2002.
Last date to trade shares cum dividend Friday, 18 October 2002
Shares trade ex dividend from Monday, 21 October 2002
Record date Friday, 25 October 2002
Payment date Monday, 28 October 2002
No dematerialisation or rematerialisation of shares will be allowed for
the period from 21 October 2002 to 25 October 2002, both dates
inclusive.
By order of the board
Richard Savage (Chairman), Carl Grim (Chief Executive), Dennis Gammie
(Financial Director)
Sandton, 6 September 2002
Targeting construction in the developing world supported locally by
steel and cement
Directors: R B Savage* (Chairman), P L Erasmus* (Deputy Chairman), C
Grim (Chief Executive), D R Gammie (Financial Director), C V Campbell*,
P F Crowley, M M Doyle*, J R Hersov*, H D K Jones, V Z Mntambo*,
A R Mpungwe* (Tanzanian), P J Owen* (Australian), M Taback*, W
Wassermeier *Non-executive director Company secretary: P H Hansen
Transfer secretaries: Computershare Investor Services Limited
(Registration number 1958/003546/06), 70 Marshall Street, Johannesburg,
2001, PO Box 61051, Marshalltown, 2107, Telephone (011) 370-5000,
Telefax (011) 370-5560
Aveng Limited Registration number 1944/018119/06 Share code: AEG ISIN
code: ZAE 000018081 Registered office: 19 Impala Road, Chislehurston,
Sandton, 2196
For more information visit www.aveng.co.za
Date: 09/09/2002 08:15:00 AM Produced by the JSE SENS Department
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