for the six months ended 31 december 2005 - aveng · for the six months ended 31 december 2005 ......

Unaudited Interim Resultsfor the six months

ended 31 December 2005

Targeting construction in the developing worldsupported locally by steel and cement

Who are we?

• Previously Anglovaal Engineering – hence “Av-eng”

– South African born and bred with 116 years in construction

– Listed on the JSE in 1999

• Activities focused around three clusters

– Construction - mining, energy and heavy infrastructure client focus

– Steel & Allied – steel and concrete products for the motor, manufacturing, mining and construction sectors

– Cement - cement, quarry products and ready mixed concrete

• Working in 40 countries and providing 29 000 direct jobs

• Listed in the JSE’s SRI Index since inception

Who are we? - Brands

MANUFACTURING

CONSTRUCTION

Who are we? - Capabilities

Contract types – Full value chain

Build Own Operate (BOO)

Engineer Procure & Construct (EPC)

Engineer Procure & Construction Management (EPCM)

Turnkey infrastructure projects

Design & Build

Build

Experience – Broad FootprintBerg River Dam • Twin Jetty Contract

• Dampier Port Upgrade • Telfer Gas Pipeline• Sasol Pipeline • Palm Gate Apartments

• Low cost housing in Heidelberg• Walter Sisulu Square of Dedication

• Siguiri Open Pit mining• Mondi Secondary Effluent Treatment • Plant Segala

Gold Dump Reclamation• Ocean Outfall Sewer Rehabilitation

• ACP Acid Plant Rectification• Nelson Mandela Bridge

Geographic Diversity – 40 Countries

South Africa

Rest of Africa

Australia

South East Asia

Middle East

Skills – 29 000 direct jobsCivil and MarineMechanical, PipelineElectrical MaintenanceBuilding & Property DevelopmentRoads & EarthworksUnderground ConstructionOpencast MiningProcess EngineeringManufacturingSteel BeneficiationCement Manufacture, aggregates & concrete

Organisational structure

ENGINEERING & CONTRUCTION CLUSTER

Aveng LimitedCarl Grim

Director: FinanceDennis Gammie

Risk ManagerHylton Macdonald

Company Sec.John Baxter

Shared Services CentreWessel van Zyl

Grinaker-LTA Limited

E+PC5

Nick Bell

Manufacturing

Doug Keet

MINING SERVICES STEEL & ALLIED CLUSTER CEMENT

Holcim (South Africa) (Pty) Ltd.

Karl MeissnerRoloff

46%

Financial ManagerCraig Bishop

Aveng Australia Holdings (Pty) Ltd

Trident SteelHoldings (Pty) Ltd

TisoGroupLimited

McConnell Dowell

David Robison

Construction

Howard Jones

Moolmans

Brian Wilmot

25% 25%

Trident Steel

Ben Fourie

Business segmentation

Trident Steel(24%)

Grinaker-LTAConstruction

(35%)E+PC

(2,1%)

Moolmans(10%)

Grinaker-LTA Manufacturing

(13%)

McConnell DowellCorporation

(16%)

37%

23%

13%

13%11%

2,4%

December 2005 June 2005

Highlights

• Operational cash flow improved by R500m with net debt:equityratio of 21% compared to 58% a year ago

• Headline earnings up 52% to R202m after providing R105m for Marikana

• Core Construction activities now profitable

– Grinaker-LTA : Pre-Marikana provision – operating profit of R12m

– McConnell Dowell : Returned to profitability with operating profit of R29m

• Continued strong performance from Steel & Allied andCement

Financial ReviewDennis Gammie

Financial objectives

35,058,421,0%Net debt:equity

14,3 (CPIX + 10%)9,819,7%Growth in diluted HEPS2

14,3 (CPIX + 10%)10,513,2%Return on average equity1

TargetDecember2004

December2005

1 Annualised

2 Growth in diluted HEPS over average of 6 comparable periods

Financial performance

92592Cash generated by operations

+53132202Headline earnings

(15)8471Net finance costs

+53108165Operating profit

+136 7747 625Revenue

% ChangeDecember

2004December

2005Rm

Key ratios

+3,22,55,7%Cash flow margin

x

x

%

% +0,61,62,2Operating margin

+0,12,93,0Asset turnover

+1,53,04,5Net interest cover

+1,412,714,1ROCE*

ChangeDecember

2004December

2005

* Annualised

Cost of share options

• Provisions for options increased by R25m due to share price

increase

• Costs of all options exercised during the six months expended

Earnings per share

--49,5Diluted earnings

--50,4Diluted headline earnings

+4934,251,0Earnings

+5234,051,8Headline earnings

%Change

December 2004

December 2005Cents

+24648803NAV

Calculation of diluted headline earnings

Cts

Rm

Rm

1,51,4Dilution impact

49,550,4Diluted headline earnings per share

51,051,8Headline earnings per share

454 722454 722Diluted weighted average shares

65 48865 488Additional shares to be issued

225229Diluted headline earnings

3838Interest saved on convertible

(11)(11)Taxation on interest

198201Headline earnings at December 2005

EarningsHeadlineearnings

389 235389 235Weighted average shares

Balance sheet – Equity movements

387198Attributable earnings

140Equity portion of convertible bond

33Revaluation reserve

25Negative goodwill transfer

2 921

42

(6)

(55)

2 495

June 2005

3 180Closing shareholders’ funds

December 2005Rm

11Foreign currency translation

Equity accounted reserve movements

(90)Dividends paid

2 921Opening shareholders’ funds

Equity value of convertible bond

Cts

Rm

1 527Conversion price

860Loan portion of convertible

140Equity portion of convertible

1 000Total value of bond

Headlineearnings

65 488Number of additional shares to be issued

547PV of principle over 7 years at 9%

313PV of interest over 14 periods at 4,5%

860

Calculation (Rm):

Currency movements

+78,077,50ClosingEuro

7,877,86Average

AustralianDollar

US Dollar

(5)4,674,92Average

+95,094,63Closing

(5)6,236,54Average

+56,686,35Closing

% Change June2005

December 2005

Movements versus the Rand

Borrowings

70%79%Fixed - Long term

15%7%Fixed - Short term

86%

14%

668

1 197

1 865

December 2005

85%Fixed

June2005

Rm

15%Floating

1 166Net debt

857Cash

2 023Interest bearing debt

Working capital

• Working capital per rand of sales - 3 cents at end Dec. ’05 compared to 5 cents at June ‘05

36

64

96

42

89

122

Stock days Debtor days Creditor days

December 2005

June 2005

Dec. 2005 - 4 days net working capital

June 2005 - 9 days net working capital

Capital expenditure

180239

(39)0Cash flow move out / (in)

(185)(181)Depreciation

146181Net cash cost

3458Proceeds

56157Maintenance

12482Expansion

Capex:

December 2004

December 2005

Reconciliation of cash balances

140Equity portion of convertible bond

(668)Closing net borrowings

192Dividend received & other cash movements

(90)Dividends paid

(181)Net capital expenditure

(85)Tax

236Working capital movement

(71)Net finance costs

356Cash retained from operations

(1 166)Opening net borrowings

December 2005Rm

Marikana dispute

• Based on findings of independent auditor KPMG underpayment to

Moolmans at December 2005 is R219m

– R51m in escalation claims

– Balance of R168 million in deductions from certificates

• Additional claims for standing time and other matters for

unlawful repudiation of contract

• Moolmans withdrawn from site

• Group results include a R105m provision for all costs relating to

closure of operation and underpayment

• Moolmans’ entitlements in terms of the contract being pursued

with vigour

Operational ReviewCarl Grim

Grinaker-LTA Construction, Moolmans & E+PC

Revenue: Six months to December 2005

Grinaker-LTA Construction,

Moolmans & E+PC(R3,6bn)

37%

McConnell Dowell(R1,2bn)

12%

Steel & Allied(R2,8bn)

28%

Holcim (South Africa)(equity accounted)

(R2,3bn)23%


(1,3)(0,4%)(2,6%)Operating margin

-(12)(93)Operating Profit/(Loss)

+53 444 3 605Revenue

% ChangeDecember

2004December

2005Rm

•Provision of R105m in respect of Marikana

•Loss of R3m from joint ventures and construction associates


Revenue: R3,6bnSix months to December 2005

Construction75%

Moolmans21%

E+PC4%

Grinaker-LTAConstruction

Revenue: R2,7 billion Six months to December 2005

`

Grinaker-LTA Construction

• Period of consolidation – Focus on

growing margins

• Order book increased from R4,1bn

to R4,4bn (88% of 2005 revenue)

• Reviewing operating efficiencies &

structures to gear the company

operationally for higher levels of

activity

• Working with government & banks

to improve the delivery of social

services

Grinaker-LTA Construction segmentation

Building & Property

Development34%

Mechanical &Electrical

21%

Civil, Roads &Earthworks &Underground Contracting

45%Revenue: R2,7 billionSix months to December 2005

Africa, Middle East positioning

• Middle East

– Withdrawal by Grinaker-LTA from building, mechanical and

electrical sectors

– Continued presence by McConnell Dowell in niche markets

• Africa

– Well-positioned to provide “drill blast load and haul” services to

selected mining clients in West, East and Southern Africa

– Fabrication services to oil and gas industry out of

Port Harcourt, Nigeria

– Winding down of Aid agency funded road contracts except in

neighbouring countries

– Low risk building work as opportunities arise

Grinaker-LTA Construction order book

79

93

56

108

82

66

Building & PropertyDevelopment

Civils, Roads &Earthworks &

Underground Contracting

Mechanical & Electrical

Jun-05 Dec-05

Order book % of 2005

Montecasino Development Phase II

Project Description

Construction of new theatre, function hall, hotel and parkade

Client

Tsogo Sun Holdings

Location

Fourways

Value

R220 million

Duration

June 2005 to January 2007

Standard Bank Learning Centre

Project Description

Construction of a management training facility consisting of a parkade, accommodation block, auditorium, open hall and classrooms

Client

Standard Bank of SA Limited

Location

Morningside

Value

R135 million

Duration

July 2005 to June 2006

Toyota Paint Plant 3

Project Description

JV with Grinaker-LTA Civil Engineering - Construction of a paint plant

Client

Toyota SA

Location

Prospecscton, Durban

Value

R250 million

Duration

February 2005 to

March 2006

Radar Tower

Project Description

Construction of a 50m high concrete radar tower situated on the western

side of the main runway at Cape Town International Airport

Client

Air Traffic and Navigation Services Company (ATNS)

Location

Cape Town

Value

R80 million

Duration

May 2005 to November 2006

Volkswagen Paint Shop

Project Description

Construction of a paint shop for Volkswagen South Africa. A joint venture between Grinaker-LTA Civil Engineering and Grinaker-LTA Building Cape

Client

Volkwagen SA

Location

Uitenhage

Value

R128 million

Duration

May 2005 to June 2006

Ship to shore container cranes

Project Description

Fabrication and erection of ship-to-shore container cranes. The cranes

will be able to handle 40 ton containers at a reach of 50 metres

Client

IPS Jikelele Cranes

Location

Durban Harbour

Value

R22 million

Duration

February 2004 to

January 2006

LION – Clean Fuels Project

Project DescriptionFraser & Chalmers Siyakha, an empowerment company in the M & E business unit is responsible for the mechanical, piping, electrical and instrumentation erection work

Client

Sapref

Location

Durban

Value

R115 million

Duration

August 2004 to October 2005

PP2 (Polypropylene II) Project

Project DescriptionAbove ground and underground mechanical and piping, fabrication and erection

Client

Sasol Chemical Industries

Location

Secunda

Value

R380 million

Duration

November 2004 to July 2006

Agbami development project 12

Project Description

Construction of subsea manifolds and suction piles

Client

PMC Technology

Location

Port Harcourt, Nigeria

Value

US$24 million

Duration

August 2005 to

July 2007

Upgrading of the Northern Main Roads(MR5 and MR6)

Project DescriptionUpgrade of road from Mliba to Msahweni and Madlangempisi to Tshaneniin northern Swaziland to highway status

Client

Ministry of Public Works &

Transport, Swaziland

Location

Swaziland

Value

US$500 million

Duration

November 2004 to May 2007

Realignment of Road MR398 for Zimbali Coastal Resort

Project DescriptionRealignment of Road MR398. The contract also comprises civil infrastructure for the residential development at Zimbali, which includes roads, dams, stormwater, water reticulation, bulk sewer network and pump stations

Client

Ministry of Public Works & Transport, Swaziland

Location

Ballito

Value

R130 million

Duration

February 2004 to May 2006

Zandfontein Coal Mine

Project DescriptionSinking, lining and equipping of an elliptical split shaft system. Supply and erection of the headgear and headgear mounted Koepe winder. Installation of the conveyance and roping up of the winding systems

Client

Sasol Mining

Location

Evander

Value

R53 million

Duration

March 2005 to April 2006

Two Rivers Platinum Mine

Project Description

Development of declines, ventilation shafts and stoping

Client

ARM/Implats JV

Location

Steelpoort

Value

R208 million

Duration

2003 to April 2007

Moolmans

Revenue: R752 millionSix months to December 2005

Moolmans – Opencast Mining

• Six months taken up largely by

efforts to resolve dispute with

Aquarius Platinum (Marikana Mine)

• Business continues to be stretched

by strong rand as majority of

revenue earned in US$

• Current business profitable

• Actively seeking new work

Order book – Moolmans

261

166

93

171

South Africa Africa

Jun-05 Dec-05

Order book % of 2005 revenue

Siguiri Openpit Mining

Project Description

Mining ore and waste and the construction of Leach Pads

Client

SAG AngloGold Ashanti

Location

Guinea

Value

R1 billion

Duration

April 1997 to

September 2008

Klipbank Opencast Coal Mine

Project DescriptionMining Coal and OverburdenClientIngwe Colliery & BHP BillitonLocation

Mpumalanga Coalfields, South Africa

Value

R1 billion

Duration

May 2000 to

February 2008

Golden Pride Openpit Mining

Project DescriptionMining Ore and Waste ClientAngloGold AshantiIAM Gold Mali GovernmentLocation

Mali

Value

R1 billion

Duration

December 1995 to

December 2009

E+PC – Engineering & Projects Co.

• Grinaker-LTA Process Engineering

successfully rebranded

• Favourable market response

• Principally focused on providing

upstream engineering & project

management services to niche

customers in the mining, energy

and industrial sectors

• Significant amount of work won

subsequent to year end

E+PC

Revenue: R158 millionSix months to December 2005

Order book – E+PC

111

8071

66

South Africa Africa

Jun-05 Dec-05

Order book % of 2005 revenue

ACP Acid Plant Rectification

Project Description:

Supply of an acid plant capable of operating under variable gas flow conditions which would enable Waterval Smelter in Rustenburg to meet the new environmental emission regulations on a continuous basis

Client

Anglo Platinum

Location

Rustenburg

Value

R150 million

Duration

November 2005

Mufulira Smelter Expansion Project Phase 1


Supply of Sulphuric Acid plant on an EP basis. Joint Venture comprising E+PC and SNC - Lavalin awarded contract to execute the engineering, procurement and construction management of the overall project

Client

Mopanie Copper Mines

Location

Mufulira, Zambia

Value

US$180 million

Duration

July 2004 to July 2006

Lagos Refined Product Facility


E&PC providing a Basic Engineering Package together with a Capital Cost Estimate. Subsequently awarded the Implementation phase of the Project, all of which was undertaken on an EPCM basis

Client

Energem Nigeria Limited

Location

Lagos, Nigeria

Value

US$34 million

Duration

November 2004 to May 2006

McConnell Dowell Corporation




37%


12%


28%


(R2,3bn)23%

McConnell Dowell Corporation

(0,7%)2,4%Operating margin

(6)29Operating Profit

+358871 200Revenue

% ChangeDecember

2004December

2005Rm

McConnell Dowell segmentation

Civil & Marine(54%)

Electrical Maintenance

(24%)

Mechanical & Pipelines(22%)

Revenue: R1,2 billionSix months to December 2005

• Strategic review and repositioning

successfully completed

• Business performing well – rapidly

approaching 3,0% EBIT/Revenue

ratio

• Slow progress on old quarantined

projects

• Significant 35% growth in revenue

and significant growth in order

book

McConnell Dowell order book

8978

135134

221

141

Civil & marine Mechanical & pipelines Electrical Maintenance

Jun-05 Dec-05

Order book % of2005 revenue

Perth Desalination Plant

Project DescriptionMcConnell Dowell's scope as sub-alliance contractor for mechanical works includes the installation of mechanical equipment, including the Reverse Osmosis filters and pumps and the installation of all GRP and SAF piping for the plant. The piping work ranges in sizes up to 1200mm in diameter.ClientAlliance of The Water Corporation of WA & Multiplex Degremont JV LocationWestern AustraliaValueR105 million

Kogan Creek Power Station,Queensland, Australia

Project Description

Kogan Creek is a 750MW single turbine coal-fired power station situated

approximately 280km West of Brisbane and will be the largest single unit

in Australia.

Civil & Building contract encompassing the installation of approximately

30,000m3 of reinforced concrete forming the footings for all plant items.

Chimney contract – design & construction of a 160m high slip-formed

concrete windshield with a 7m diameter single steel flue

Client

Siemens Limited

Location

Queensland, Australia

Value

R274 million

Project DescriptionThe scope of work includes the following:

• a new 180m General Cargo Berth• a new 270m Bulk Berth• 3 new dolphins• General port area earthworks

encompassing 7000m3 of fill• Earthworks for conveyor system

encompassing 140000m3

of cut & fillClientGCTLocationNew CaledoniaValueR485 million

Goro Nickel Port Facilities, New Caledonia

Project DescriptionConstruction of 22 No. Precast Cooling Tower modules for Alcan’s development in Gove, Australia. Each module weighs 270 tonnes. including mechanical fit-out. Average cycle time is 5.5 days per unit.Also included in the scope of work is two precast turbine & generator assemblies each weighing 800 tonnes.McConnell Dowell’s excellent performance has resulted in the award of additional works with the original contract increasing 250% in value.ClientAlcan Smelter DevelopmentLocationIndonesiaValueR30 million

Batam Fabrication FacilityAlcan Gove Project

Project Description

Design and Construction of three new jetties.

Project includes driving over 200 No. piles and 14 No. dolphin structures.

Shells for the dolphins are being precast at McConnell Dowell’s Batam

Fabrication Facility. Precast elements for the platforms, approach and

walkways are being manufactured locally in Singapore and the steel pipe

piles were sourced in Malaysia.

Client

Oil Tanking

Location

Singapore

Value

R90 million

Oil Tanking Marine Jetties 18, 19 & 20

Project Description

McConnell Dowell is building the Meander Dam located in Tasmania’s central north.

The dam is a 47 m high RCC dam and is 150 m across at the spillway [83,000 cubic metres of crushed rock] and also includes outlet tower and mini-hydro scheme.

The Dam will hold 43000 ML will supply around 24000 ML of water for irrigation on an annual basis.

ClientTasmanian GovernmentLocationTasmania Australia

Value

R129 million

Meander Dam

Steel & Allied




37%


12%


28%


(R2,3bn)23%

Steel & Allied

+2,75,4%8,1%Operating margin

+82126229Operating Profit

+212 3332 819 Revenue1

% ChangeDecember

2004December

2005Rm

1 Revenue includes Trident Steel, Grinaker-LTA Manufacturing and Aveng Corporate Office

Trident Steel64%

Grinaker-LTA Manufacturing

36%

Revenue: R2,8 billionSix months to December 2005

Steel & Allied

• Outstanding performance due to:

– Strong housing infrastructure activity

– High demand for rebar from the civil

engineering industry

– Buoyant motor industry

• Operational efficiencies continually

being improved

• Pipe mill successfully

commissioned and running well

• State-of-the-art roof tile

manufacturing plant to be erected

Steel & Allied market segmentsRevenue H1 2006

Manufacturing(19%)

Automotive(30%)

Construction(41%)

Exports(10%)

Mining(12%)

Construction(86%)

Trident Steel(R1,8 billion)

Grinaker-LTA Manufacturing(R1,0 billion)

Exports(2%)


Cement: Holcim (South Africa)




37%


12%


28%


(R2,3bn)23%

Cement: Holcim (South Africa) (46%)

47222Capital expenditure

413Debt:equity (%)

+181 7112 020 Assets

(1,0)27,3%26,3%Operating margin

+11542603Operating Profit

+151 988 2 293 Revenue

% ChangeDecember

2004December

2005Rm

Cement – Holcim (South Africa)

• Year-on-year industry volume growth of 12,2% in past 6 months

reversing the growth declines over the past two six month

periods

• Demand remains strong

• Refurbishment of Dudfield Kiln No.2 (R160m) on schedule

• First shipment of cement import programme into East London to

supplement DK2 shortfall completed

• Capacity options under review

• Spoornet hard pressed to meet company requirements

Industry cumulative average monthly sales

Source: C&CI

20 000

25 000

30 000

35 000

40 000

45 000

50 000

55 000

Jan

Feb

Mar

Apr

May Jun

Jul

Aug

Sep Oct

Nov

Dec

Tons

2001 2002 2003 2004 2005 2006

Industry cementitious sales

-9.3%

-2.7%-2.4%

1.9%

7.1%

-2.6%

-0.1%

9.9%

4.5%

6.6%

17.3%

13.9%

8.7%

12.2%

8.9%

1.7%

-15%

-10%

-5%

0%

5%

10%

15%

20%

1st

Half

19

99

2n

d H

alf

19

99

1st

Half

20

00

2n

d H

alf

20

00

1st

Half

20

01

2n

d H

alf

20

01

1st

Half

20

02

2n

d H

alf

20

02

1st

Half

20

03

2n

d H

alf

20

03

1st

Half

20

04

2n

d H

alf

20

04

1st

Half

20

05

2n

d H

alf

20

05

1st

Half

20

06

2n

d H

alf

20

06

6 m

nth

% C

han

ge Y

-Y

Looking forward

Market sentiment

0

10

20

30

40

50

60

70

80

Q1 19

96Q3

1996

Q1 19

97Q3

1997

Q1 19

98Q3

1998

Q1 19

99Q3

1999

Q1 20

00Q3

2000

Q1 20

01Q4

2001

Q2 20

02Q4

2002

Q2 20

03Q4

2003

Q2 20

04Q4

2004

Q2 20

05Q4

2005

New Tender Contract awards General confidence

CIVIL ENGINEERING LEADING INDICATORS (5-qrt moving average)

Construction order book (two years)

6.6

8.28.7

9.8

8.28.9

7.5

8.7

7.2

8.7

9.8

0

2

4

6

8

10

12

Dec2000

June2001

Dec2001

June2002

Dec2002

June2003

Dec2003

June2004

Dec2004

June2005

Dec2005

R billions

Construction order book - (two years)% of revenue

129%

109%

94%

102%

82%

91%

115%

82%

102%

114%

95%

Dec2000

June2001

Dec2001

June2002

Dec2002

June2003

Dec2003

June2004

Dec2004

June2005

Dec2005

Target zone

Government infrastructure budget

Government infrastructure spending - 2006 to 2009R372 billion

Provincial - R109bn(26%)

Municipal - R82bn(22%)

Public Enterprise -R26bn (7%)

National - R 32bn(9%)

Other public - 123bn (33%)

Market conditions

• Upward trend in Government spending during past six months

– Increased annual investment expenditure in SOE’s with GFCF growth

up from 8,4% over the past ten years to 12,5% in last two years

• Acceleration in private sector development from average

annual GFCF growth of 4,7% in past decade to 8,4% in last two

years

• Resource companies announcing extensive new projects in all

sectors worth billions of rands

• Consumer sector continues to be buoyed by low interest rates

Government’s 25% GCFC:GDP target

• The 25% GCFC:GDP target can be achieved by 2014 based on

the following assumptions:

– GDP growth is 5% to 2009 and 6% thereafter

– Government GFCF growth is 10% to 2009 and 9% thereafter

– Private sector GFCF growth is 10% to 2014

• If this target is achieved, the construction industry will double in

size, i.e. 8% real growth per annum

• Three prerequisites

– More efficient delivery systems

– A streamlined legislative & regulatory environment

– Concerted effort on growing skills

Civil engineering employment

40,000

60,000

80,000

100,000

120,000

140,000

73 78 83 88 93 98 03Years

Num

ber

of E

mpl

oyee

s

EX SAFCEC

Dramatic drop in artisan registrations

EX Allyson Lawless

64 68 72 76 80 84 88 92 96 00

0

500

1000

1500

2000

Art

isan

s R

egis

tere

d

Building Industry Artisans Registered

Construction Charter

• Charter finalised and agreed to by Minister Sigau

• Signing date set for 16 March by all parties including government

• Timeline and action plan in place

– Develop business model for Charter Council

– Submit application for Section 12 to DTi

– Investigate the issues of a practice note to guide the industry during

interim period

– Submit application for Section 9 to DTi

– Establish Charter Council

What does this mean for Aveng? –in South Africa

• Three equally sized segments:

• Building and property development: Very strong levels of

demand, full order books

[Private capital driven by interest rates and consumer

confidence]

• Infrastructure development: Levels of demand picking up

quickly and likely to be strong for at least 5 years

[Public capital driven by Government policy]

• Mining expenditure: Activity levels starting to lift

[Private capital driven by commodity prices and rand/US$

exchange rate]

Australia and SE Asia prospects

• Australian & SE Asian minerals boom driven by Chinese demand

for coal and iron ore

– Downstream demand benefiting McConnell Dowell

• Upsurge in transport infrastructure developments in port, roads and rail

• Growth in utility sector projects

• Developments in oil and gas industry creating opportunities

• Asia undergoing growth phase with strong investment cycles

– Infrastructure construction in marine, pipeline and plant to support

investments in manufacturing sector

– Development of heavy industrial hubs in Thailand and Singapore

• McConnell Dowell’s areas of specialisation - Marine and civil,

pipelines and electrical installation and maintenance operations -

ideally suited to these opportunities

Conclusion

• Turn around in core SA construction activities gaining momentum

• McConnell Dowell’s capabilities in sweet spot of demand in its

target markets with strong growth in order book

• Improvement in profitability in Steel & Allied due to continued

strong demand from the housing infrastructure and motor

manufacturers

• Holcim will continue to perform well

• Significant increase in cash flow from operations a leading

indicator for improved profits

• Strong commitment to infrastructure delivery in our target

markets

Prospects

• South African building and civil engineering markets will continue

to perform well

• Grinaker-LTA Construction margins expected to improve

• Remainder of businesses will continue to perform well for the

balance of the year

Building Sustainable Value

www.aveng.co.za

Disclaimer

This presentation contains forward-looking statements about the company’s

operations and financial conditions.

They are based on Aveng Limited’s best estimates and information at the time of

writing. They are nonetheless subject to significant uncertainties and contingencies

many of which are beyond the control of the company. Unanticipated events will

occur and actual future events may differ materially from current expectations due

to new business opportunities, changes in priorities by the company or its joint

ventures as well as other factors. Any of these factors may materially affect the

company’s future business activities and its ongoing financial results.

for the six months ended 31 december 2005 - aveng · for the six months ended 31 december 2005 ......

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