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AVENG LIMITED - AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 2003
AVENG LIMITED
(Registration number 1944/018119/06)
ISIN: ZAE000018081
SHARE CODE: AEG
AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 2003
"Targeting consistent long-term value"
* Headline earnings per share up 10,5%
* Dividend up 11,1%
Consolidated balance sheet
2003 2002
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 1 922,9 1 770,0
Goodwill 959,2 1 075,7
Investments 526,1 507,9
Deferred tax 29,8 22,4
3 438,0 3 376,0
Current assets
Inventories and contracts in progress 1 121,4 1 249,5
Trade, other receivables and prepayments 3 122,5 3 020,6
Cash and cash equivalents 673,8 678,6
4 917,7 4 948,7
TOTAL ASSETS 8 355,7 8 324,7
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders" funds 2 823,2 2 555,0
Minority interests 173,9 248,7
Total shareholders" funds 2 997,1 2 803,7
Non-current liabilities
Interest-bearing borrowings 732,1 614,9
Deferred tax 53,2 89,3
785,3 704,2
Current liabilities
Trade and other payables 3 242,7 3 507,5
Short-term borrowings 1 256,2 1 253,3
Taxation 74,4 56,0
4 573,3 4 816,8
TOTAL EQUITY AND LIABILITIES 8 355,7 8 324,7
Cash flow statement
2003 2002
Rm Rm
Cash retained from operating activities 190,9 216,8
Net fixed assets purchased (551,7) (624,4)
Acquisitions net of disposals 0,3
Investments - other 238,5 243,7
Net long-term borrowings 152,9 48,9
Proceeds from disposal of treasury shares 169,0
Net increase in cash and cash equivalents 30,6 54,3
Cash and cash equivalents at beginning of the (430,9) (485,2)
year
Cash and cash equivalents at end of the year (400,3) (430,9)
Other group information
2003 2002
Rm Rm
Determination of headline and diluted
headline earnings:
Adjustment for amortisation of goodwill 59,9 53,8
Surplus on disposal of properties (0,7) (1,3)
(Surplus)/loss on disposal of investments (191,7) 5,9
Taxation 6,9
Headline earnings adjustment (125,6) 58,4
Earnings 587,3 362,5
Headline earnings 461,7 420,9
Net debt to equity ratio (%) 43,9 42,4
Effective taxation rate excluding
associated companies and joint ventures (%) 24,5 26,7
Capital expenditure
Expansion 403,8 315,6
Replacement 423,8 387,5
827,6 703,1
Goodwill and amortisation
At beginning of year 1 075,7 1 050,5
Net acquisition, disposal of subsidiaries (4,8)
Foreign exchange movements (51,8) 79,0
Goodwill written off (59,9) (53,8)
959,2 1 075,7
Weighted average number of shares
in issue (millions) 396,1 396,1
Weighted average 389,3 378,6
Diluted weighted average 389,3 392,3
Consolidated income statement
2003 2002 %
Rm Rm Change
Revenue 13 244,2 13 185,2 0,4
Operating income before 1 047,1 1 008,3
depreciation
Depreciation 375,4 364,2
Operating income 671,7 644,1 4,3
Income from associates 155,1 113,8
Income from investments 53,9 48,6
Income before interest paid 880,7 806,5 9,2
Interest paid 315,4 242,6
Income before goodwill and 565,3 563,9
non-trading items
Amortisation of goodwill (59,9) (53,8)
Non-trading items 192,4 (4,6)
Income before taxation 697,8 505,5 38,0
Taxation 100,6 119,7
Income after taxation 597,2 385,8 54,8
Minority interests 9,9 23,3
Earnings 587,3 362,5 62,0
Headline earnings adjustment (125,6) 58,4
Headline earnings 461,7 420,9 9,7
EARNINGS PER SHARE (cents)
Earnings 150,9 95,7 57,7
Diluted headline 118,6 107,3 10,5
NET ASSET VALUE PER SHARE 712,7 645,0 10,5
(cents)
DIVIDEND PER SHARE (cents) 30,0 27,0 11,1
Segmental information
2003 2002
Rm % Rm %
Turnover
Construction 9 832,4 74,2 9 559,2 72,5
Steel & Allied 3 411,8 25,8 3 626,0 27,5
13 244,2 100,0 13 185,2 100,0
Operating income
Construction 342,9 51,0 345,0 53,6
Steel & Allied 328,8 49,0 299,1 46,4
671,7 100,0 644,1 100,0
Geographical revenue
Republic of South Africa 7 871,5 59,4 7 286,5 55,3
(CMA)
Africa and Middle East 3 398,3 25,7 3 499,6 26,5
Australasia and South East 1 974,4 14,9 2 399,1 18,2
Asia
13 244,2 100,0 13 185,2 100,0
Statement of changes in equity
Share Automatically
capital Non- convertible
and distributable subordinated Retained
Rm premium reserves debentures income Total
Balance at 604,1 34,4 171,2 1 203,2 2 012,9
1 July 2001
Conversion 1,6 (171,2) (169,6)
of
debentures
Disposal of 170,1 170,1
treasury
shares
Dividends (74,3) (74,3)
paid
Earnings 362,5 362,5
for the
year
Equity 14,3 14,3
accounted
reserve
movements
Foreign 63,4 63,4
currency
translation
Premium on 175,7 175,7
issue of
ordinary
shares to
redeem the
debentures
Transfers (0,4) 0,4
Balance at 951,5 111,7 1 491,8 2 555,0
30 June
2002
Dividends (105,2) (105,2)
paid
Earnings 587,3 587,3
for the
year
Equity (42,6) (42,6)
accounted
reserve
movements
Foreign (169,2) (169,2)
currency
translation
Repurchase (2,1) (2,1)
of shares
by share
trust
Balance at 949,4 (100,1) 1 973,9 2 823,2
30 June
2003
Notes
These results have 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 2002. During the year the group
adopted AC 133, Financial Instruments: Recognition and Measurement. There has
been no material effect on earnings on the adoption of this statement. No
material events have occurred subsequent to the year-end except for the purchase
of the 37% minority shares in McConnell Dowell Corporation Limited on 18 August
2003.
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 available by the end of September
2003.
Commentary
Financial review
The directors of Aveng are able to report to shareholders that in spite of a
difficult currency environment during the year ended June 2003, the group
returned a growth of 10,5% in diluted headline earnings per share. While lower
than our targets for the year, the currency volatility of recent years makes a
three-year comparison benchmark more appropriate. Using this benchmark, the
group"s three-year growth target of CPIX + 10% was achieved.
Revenue was flat, reflecting a 28% rand appreciation against the US dollar, the
currency to which approximately 40% of group revenue is linked. This translated
into a negative impact of R91 million (R86 million positive in 2002) on the
income statement, restraining operating income growth to 4,3%.
The stronger rand also affected the balance sheet which suffered a negative R169
million in foreign currency translation. Increased net borrowings of R125
million reflected a substantial capital expenditure programme and payment
difficulties on some contracts. The group"s net debt to equity ratio of 43,9%
(42,4% in 2002), interrupting the downward trend in this ratio over the past two
years.
The past year"s 17,2% return on average equity was below the target of 20%. The
three-year average return was just short of the long-term target of CPIX + 10%.
The underlying efficiency measures in the business showed improvement. The
operating margin of 5,1% is the highest it has ever been. Inventory levels
declined by 11%, despite an average 28% rise in steel prices, and revenue per
employee continued to grow in real terms.
Construction
Revenue of R9,8 billion was 3% up on the prior year, contributing 75% of group
turnover. Operating income remained unchanged, largely the result of a stronger
rand impacting the international businesses together with a difficult
contracting environment which resulted in payment delays with a number of claims
on road jobs in Africa. Turnkey `engineer procure contract" projects have led to
a number of prolonged negotiations, impacting the cash flow.
Steel & Allied
Revenue of R3,4 billion was approximately 6% down on the prior year. This was
largely the result of the serious impact that the compounding effect of a strong
rand and rapidly increasing steel prices had on our customers in the
manufacturing section, most of whom had large export orders. Assets declined by
15% as a result of more stringent stock management.
Capital expenditure grew substantially to R163 million following the
commissioning of the R110 million press feed line at Roodekop and the
commencement of construction on the steel service centre at Saldanha.
Cement
Alpha had another good year albeit with a second half volume growth of 4,4%
following an exceptionally buoyant first half growth of 9,9%. Outside of South
Africa, the Tanzanian business performed well although profitability was diluted
by the strong rand.
The R315 million kiln upgrade programme at the Dudfield cement factory is on
schedule for completion by calendar year end and while contributing
significantly to production efficiencies, will also add 400 000 tons to Alpha"s
annual clinker capacity.
The non-core businesses of Natal Portland Cement (33% interest) and Omnia
Limited (34% interest) were sold during the year. The quest to optimally realign
the Slagment and Ash Resources businesses continues.
Post-balance sheet events
Subsequent to the year-end the 37% minority shareholding in McConnell Dowell
Corporation Limited was purchased at a cost of R130 million.
Now that Aveng owns 100% of the business, McConnell Dowell will be managed as a
business in the construction division. Aveng"s risk management systems together
with the associated financial disciplines will be introduced into the business,
bolt-on opportunities from other group companies will be evaluated and operating
capabilities enhanced where required.
Future outlook
In looking forward, the volatile currency environment continues to preclude a
short term perspective. The construction order book is running at 91% of revenue
- almost exactly in the middle of our target zone. We are able to compete
internationally at current Rand levels. Locally, there are some exciting
projects in the wings. While the steel market is very tough at the moment,
largely the result of mining investment inertia, the current declining interest
rate environment is expected to boost cement with its strong consumer demand
profile.
In addition to the cement expansion project mentioned earlier, Aveng spent
R828 million in capital expenditure to prepare itself for future growth,
exceeding the depreciation charge of R375 million.
Aveng is value-driven, strategically balanced, and soundly positioned in its
chosen segments. While markets remain volatile, the group"s longer term outlook
is assured.
Dividend declaration
Dividend No 4 of 30,0 cents per share, being the total dividend for the
financial year ended 30 June 2003 (2002: 27,0 cents per share) has been declared
payable to shareholders recorded in the share register at the close of business
on Friday 24 October 2003.
The salient dates are:
Last date to trade shares cum Friday 17 October 2003
dividend
Shares trade ex dividend from Monday 20 October 2003
Record date Friday 24 October 2003
Payment date Monday 27 October 2003
No dematerialisation or rematerialisation of shares may take place for the
period from 20 October 2003 to 24 October 2003, both days inclusive.
On Monday 27 October 2003, the dividend will be electronically transferred to
the bank accounts of all certificated shareholders unless this has not been
requested by or is not available to them. If electronic funds transfer is not
applicable cheques dated 27 October 2003 will be posted on that date. Transfers
will be made to the dematerialised shareholder accounts at their CSDP or broker
on 27 October 2003.
By order of the board
Richard Savage (Chairman), Carl Grim (Chief Executive), Dennis Gammie (Financial
Director)
Sandton
12 September 2003
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, B P J
Fourie, L Gcabashe*, J R Hersov*, H D K Jones, K W Meissner-Roloff*, V Z
Mntambo*, A R Mpungwe*, B P Steele*, M Taback*, W Wassermeier
*Non-executive director
Company secretary:
P H Hansen
Registrars:
Computershare Limited, Investor Services Division
(Registration number 2000/006082/06),
70 Marshall Street, Johannesburg, 2001;
PO Box 61051, Marshalltown, 2107,
Telephone (011) 370-5000, Telefax (011) 688-7717
Aveng Limited
Registration number 1944/018119/06
Registered office:
19 Impala Road, Chislehurston, Sandton, 2196
For more information visit www.aveng.co.za
Date: 15/09/2003 10:05:16 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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