AVENG LIMITED - Unaudited Interim Group results fo15 Mar 2013
AEG 201303150002A
Unaudited Interim Group results for the six months ended 31 December 2012

AVENG LIMITED
(Aveng, the company, the Group or Aveng Group)
(Incorporated in the Republic of South Africa)
(Registration number: 1944/018119/06)
ISIN: ZAE000111829
SHARE CODE: AEG

Unaudited Interim Group results 
for the six months ended 31 December 2012

Revenue
R25 billion 
Increase of 30% from comparative period (1)

Operating profit
R518 million
Increase of 56% from comparative period (1)

Headline earnings
R392 million 
Increase of 43% from comparative period (1)

Headline earnings per share
104,5 cents
Increase of 48% from comparative period (1)


Net asset value per share
R33,91 
increase of 4,5% from June 2012 (2)

Two Year Order book
R39,7 billion
decrease of 15,3% from June 2012(2)
 (1) From the six month period ending 31 December 2011 (1 July 2011  31 December 2011)
 (2) From the period ended 30 June 2012.

 
Interim condensed consolidated statement of financial position                                                                                           
                                                    31 December    31 December    30 June     
                                                    2012           2011           2012        
                                                    (Unaudited)    (Unaudited)    (Audited)   
                                                    Rm             Rm              Rm                                                                                                      
  ASSETS                                                                                      
  Non-current assets                                                                          
  Property, plant and equipment                     6 822          6 252          6 664       
  Goodwill and other intangibles                    1 553          1 530          1 549       
  Equity-accounted investments                      91             110            108         
  Available-for-sale investments                    147            149            143         
  Deferred tax assets                               1 011          445            1 373       
                                                    9 624          8 486          9 837       
  Current assets                                                                              
  Inventories                                       2 625          2 550          2 467       
  Trade and other receivables                       11 116         9 515          10 442      
  Cash and bank balances                            5 263          5 260          5 202       
                                                    19 004         17 325         18 111      
                                                                                              
  TOTAL ASSETS                                      28 628         25 811         27 948      
  EQUITY AND LIABILITIES                                                                      
  Capital and reserves                                                                        
  Share capital and share premium                   1 435          1 883          1 435       
  Foreign currency translation reserve              710            577            546         
  Insurance and other reserves                      57             72             57          
  Distributable reserves                            11 017         10 613         10 864      
  Non-controlling interests                         13             (6)            10          
                                                    13 232         13 139         12 912      
  Non-current liabilities                                                                     
  Borrowings                                         1 289         53             748         
  Deferred tax liabilities                           255           163            674         
                                                    1 544          216            1 422       
  Current liabilities                                                                         
  Trade and other payables                           10 982        10 476         10 648      
  Provisions                                         2 040         1 461          2 201       
  Borrowings                                         161           41             180         
  Bank overdrafts                                    508           368            343         
  Taxation payable                                  161             110           242         
                                                    13 852         12 456         13 614      
                                                                                              
  TOTAL EQUITY AND LIABILITIES                      28 628         25 811         27 948      
  Net cash position to equity ratio (%)             (25)           (37)           (30)        
  Net asset value per ordinary share (cents)        3 391          3 273          3 310       


Interim condensed consolidated statement of comprehensive income                                                                                                                               
                                                                             Six months       Six months                   Year        
                                                                             ended            ended                        ended       
                                                                             31 December      31 December                  30 June     
                                                                             2012             2011                         2012        
                                                                             (Unaudited)      (Unaudited)      %           (Audited)   
                                                                             Rm               Rm               change       Rm         
                                                                                                                                       
  Revenue                                                                    24 987           19 149           30          40 886      
  Operating profit before depreciation and amortisation                       1 202           1 066            13          2 020       
  Depreciation                                                                668             719                          1 479       
  Amortisation of intangibles                                                 18              15                           37          
  Operating profit                                                            516             332              55          504         
  Other gains and losses                                                      2                *                           31          
  Operating profit after other gains and losses                              518              332              56          535         
  Share of profits and losses from equity-accounted investments              (16)             15                           41          
  Income from available-for-sale investments                                 42               40                           37          
  Operating income                                                           544              387              41          613         
  Finance income                                                             66               93                           189         
  Finance and transaction costs                                              54               28                           76          
  Profit before taxation                                                     556              452              23          726         
  Taxation                                                                   159              182                          203         
  Profit for the period                                                      397              270              47          523         
  Other comprehensive income for the period                                                                                            
  Exchange differences on translation of foreign operations                  164              515                          484         
  Fair value movement                                                        *                *                            (11)        
  Total comprehensive income for the period                                  561              785              (29)        996         
  Profit attributable to:                                                                                                              
  Equity holders of Aveng Limited                                            394              274                          521         
  Non-controlling interests                                                  3                (4)                          2           
  Profit for the period                                                      397              270              47          523         
  Total comprehensive income attributable to:                                                                                          
  Equity holders of Aveng Limited                                            561              789                          994         
  Non-controlling interests                                                  *                (4)                          2           
  Total comprehensive income for the period                                  561              785              (29)        996         
  Determination of headline earnings                                                                                                   
  Profit for the year attributable to equity holders of Aveng Limited        394              274                          521         
  Adjusted for (net of tax)                                                                                                            
  Profit on sale of property, plant and equipment                            (2)               *                           *           
  Profit on sale with change in ownership holding in subsidiary                                                            (26)        
  Headline earnings                                                          392              274              43          495         
  *Amounts are less than R1 million.                                                                                             


Interim condensed consolidated statement of cash flows                                                                                                                                   
                                                                           Six months        Six months        Year        
                                                                           ended             ended             ended       
                                                                           31 December       31 December       30 June     
                                                                           2012              2011              2012        
                                                                           (Unaudited)       (Unaudited)       (Audited)   
                                                                           Rm                Rm                 Rm                                                                                                                                           
  Cash retained from operating activities                                                                                  
  Cash retained from operations                                             518              332               535         
  Depreciation                                                              668              719               1 479       
  Amortisation                                                              18               15                37          
  Non-cash and other movements                                             (210)             (147)             173         
  Cash generated by operations                                             994               919               2 224       
  Changes in working capital                                                                                               
  Increase in inventories                                                  (160)             (543)             (398)       
  (Increase)/decrease in receivables                                       (687)             340               1 769       
  Increase/(decrease) in payables                                          349               (483)             (2 170)     
  Cash generated by operating activities                                   496               233               1 425       
  Finance income                                                           59                93                189         
  Finance and transaction costs paid                                       (57)              (28)              (76)        
  Taxation paid                                                            (302)             (284)             (567)       
  Cash inflow from operating activities                                    196               14                971         
  Investing activities                                                                                                     
  Property, plant and equipment purchased  expansion                      (222)             (204)             (1 220)     
    replacement                                                           (560)             (640)             (867)       
  Changes in equity-accounted and available-for-sale                                                        
  investments                                                              (2)               26                30          
  Proceeds on disposal of property, plant and equipment                    25                46                149         
  Purchase of subsidiaries                                                                   (18)                          
  Disposal/(acquisition) of other investments                                                (18)                          
  Dividends received                                                       42                40                37          
  Cash outflow from investing activities                                   (717)             (768)             (1 871)     
  Operating free cash outflow                                              (521)             (754)             (900)       
  Financing activities with equity holders                                                                                 
  Shares repurchased                                                                                           (449)       
  Increase in shares by non-controlling interests in                                                        
  subsidiary company                                                                                           10          
  Dividends paid                                                           (241)             (561)             (561)       
  Financing activities with debt holders                                                                                   
  Long-term borrowings raised                                              523               11                845         
  Net decrease in cash and cash equivalents before foreign                                                  
  exchange movements on cash                                               (239)             (1 304)           (1 055)     
  Foreign exchange movements on cash                                       135               796               514         
  Cash and cash equivalents at beginning of year                           4 859             5 400             5 400       
  Cash and cash equivalents at end of year                                 4 755             4 892             4 859       
  Borrowings, excluding Bank overdrafts                                    (1 450)           (94)              (928)       
  Net cash position                                                        3 305             4 798             3 931       


Interim condensed consolidated statement of changes in equity                                                                                                                                                                                    
                                                       Share            Foreign         Insurance                                
                                                       capital          currency        and           Dis-                          Non-            													   
                                                       and share        translation     other         tributable                    contolling       Total    
                                                       premium          reserve         reserves      reserves         Total        interests       equity   													   
                                                       Rm               Rm               Rm           Rm               Rm           Rm              Rm                                                                                                                                                                              
  Six months ended 31 December 2011 (Unaudited)                                                                                                                    
  Balance at 1 July 2011                               1 883            62              72            10 900           12 917       (2)             12 915         
  Profit for the year                                                                                 274              274          (4)             270            
  Other comprehensive income                                                                                                                                       
   Foreign currency translation                                        515                                            515                          515            
   Fair value movement                                                                 *                              *                            *              
  Total comprehensive income                                           515             *             274              789          (4)             785            
  Dividends paid                                                                                      (561)            (561)        *               (561)          
  Balance at 31 December 2011                          1 883            577             72            10 613           13 145       (6)             13 139         
  Year ended 30 June 2012 (Audited)                                                                                                                                
  Balance at 1 July 2011                               1 883            62              72            10 900           12 917       (2)             12 915         
  Profit for the year                                                                                 521              521          2               523            
  Other comprehensive income/(loss)                                                                                                                                
   Foreign currency translation                                        484                                            484          *               484            
   Fair value movement                                                                 (11)                           (11)                         (11)           
  Total comprehensive income                                            484             (11)          521              994          2               996            
  Dividends paid                                                                                      (561)            (561)        *               (561)          
  Shares issued                                        327                                                             327          10              337            
  Share repurchased programme                          (448)                                                           (448)                        (448)          
  Movement in treasury shares                          (327)                                                           (327)                        (327)          
  Transfers                                                                             (4)           4                                                            
  Balance at 30 June 2012                              1 435            546             57            10 864           12 902       10              12 912         
  Six months ended 31 December 2012 (Unaudited)                                                                                                                    
  Balance at 1 July 2012                               1 435            546             57            10 864           12 902       10              12 912         
  Profit for the year                                                                                 394              394          3               397            
  Other comprehensive income                                                                                                                                       
   Foreign currency translation                                        164                                            164          *               164            
   Fair value movement                                                                 *                              *                            *              
  Total comprehensive income                                            164             *             394              558          3               561            
  Dividends paid                                                                                      (241)            (241)        *               (241)          
  Balance at 31 December 2012                          1 435            710             57            11 017           13 219       13              13 232         
  *Amounts are less than R1 million.                                                                                                                                                  


Other information                                                                                             
                                                     Six months        Six months        Year      
                                                     ended             ended             ended     
                                                     31 December       31 December       30 June   
                                                     2012              2011              2012      
                                                     Rm                Rm                 Rm                                                                                                   
  Capital expenditure                                                                              
  Expansion                                          222               204               1 220     
  Replacement                                        560               640               867       
                                                     782               844               2 087     
  Commitments for future capital expenditure:                                                      
  Contracted                                         242               362               269       
  Authorised, but not contracted for                 181               69                474       
                                                     423               431               743       
  Earnings per share (cents)                                                                       
  Earnings                                           105,0             70,8               134,9    
  Earnings  Diluted                                 98,0              67,6               126,1    
  Headline                                           104,5             70,6               128,1    
  Headline  Diluted                                 97,5              67,5               119,8    
  Number of shares (millions)                                                                      
  In issue                                           389,8             401,6              389,8    
  Weighted average                                   375,2             387,0              386,0    
  Diluted weighted average                           402,1             405,2              412,8    
  Dividend per share (cents)                         Nil               Nil               60,0      


Notes to the interim condensed consolidated financial statements
 1.    Corporate information                                                                                                
       The interim condensed consolidated financial statements of the Group for the six months ended 
       31 December 2012 (interim results) were authorised for issue in accordance with a resolution 
       of the directors on 13 March 2012.                                                                                                
       Aveng Limited is a limited liability company incorporated and domiciled in the Republic of South 
       Africa whose shares are publicly traded. The Group operates in the construction, engineering and 
       mining environment and as a result the revenue is not seasonal in nature but is influenced by 
       the nature of the contracts that are currently in progress.                                                                                                
       Refer to commentary for a more detailed report on the performance of the different operating units 
       within the Group.           
	   
 2.    Statement of compliance                                                                                                
       The interim results have been prepared in accordance with International Financial Reporting Standards 
       (IFRS) of the International Accounting Standards Board (IASB), the SAICA Financial Reporting Guides 
       as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the 
       Financial Reporting Standards Council, requirements of the South African Companies Act, 2008 as amended, 
	   and the Listings Requirements of the JSE Stock Exchange South Africa.       
	   
 3.    Basis of preparation and accounting policies                                                                                                
       The interim results have been prepared on the historical cost basis, except for certain financial 
       instruments, which includes listed investments, that are fairly valued by marking to market. The accounting 
       policies used in the preparation of the interim results are in accordance with IFRS and are consistent 
       in all material respects with those used in the Groups audited annual financial statements as at 30 
       June 2012.                                                                                                
       The interim results comply with IAS 34 Interim Financial Reporting and do not include all the information 
       and disclosures required in the annual financial statements, and should be read in conjunction with the 
       Groups audited annual financial statements as at 30 June 2012.                                                                                                
       The interim results have been prepared under the supervision of the Chief Financial Officer, Mr HJ Verster.                                                                                                
       The Group has adopted the following new and revised Standards and Interpretations (issued by the 
       International Financial Reporting Interpretation Committee) of the IASB that became effective before or 
       on 1 July 2012:                                                                                                
       Standard    Subject                                                                                     
       IAS 1       Presentation of Other Comprehensive Income (Improvement)                                    
       IAS 12      Income Taxes  Deferred Tax, Recovery of Underlying Assets (Amendment)                      
       The adoption of these improvements and amendments did not have a material effect on the Groups 
       interim results.                                                                                                
       In addition the following Standards and Interpretations have been issued but are not yet effective. 
       The effective date refers to periods beginning on or after, unless otherwise indicated:                                                                                                
        Standard    Subject                                                                   Effective date   
        IFRS 9      Financial instruments: Classification and Measurement                     1 January 2015   
        IFRS 10     Consolidated Financial Statements                                         1 January 2013   
        IFRS 11     Joint Arrangements                                                        1 January 2013   
        IFRS 12     Disclosure of Interest in Other Entities                                  1 January 2013   
        IFRS 13     Fair Value Measurement                                                    1 January 2013   
        IAS 1       Presentation of Financial Statements (Amendment)                          1 January 2013   
        IAS 16      Property, Plant and Equipment (Improvement)                               1 January 2013   
        IAS 19      Employee Benefits (Amendment)                                             1 January 2013   
        IAS 27      Separate Financial Statements (as revised in 2011)                        1 January 2013   
        IAS 28      Investment in Associate and Joint Ventures (as revised in 2011)           1 January 2013   
        IAS 32      Financial Instruments: Presentation (Improvement)                         1 January 2014   
        IAS 34      Interim Financial Reporting (Improvement)                                 1 January 2013   
        The Group does not intend early adopting any of the above Standards and Interpretations.                                                                                               

 4.     Segment information                                                                                          
        The Group has determined five reportable segments that are largely organised and managed separately 
	according to the nature of products and services provided. These include the following operating 
	segments: Construction and Engineering: South Africa and rest of Africa; Construction and Engineering: 
	Australasia and Pacific; Mining; Manufacturing and Processsing; and Administration.                                                
        These operating segments are components of the Group:                                                        
        a) that engage in business activities from which they earn revenues and incur expenses; and                                                
        b) whose operating results are regularly reviewed by the Groups chief operating decision makers 
           to make decisions about resources to be allocated to the segments and assess their performance.                                                
        Operating segments have consistently adopted the consolidated basis of accounting and there are no 
	differences in measurement applied.                                                
        The Group measures the performance of its operating segments through a measure of segment profit or 
	loss which is referred to as Operating Profit.   
		
 5.     Income tax                                                                                                   
        The major components of income tax expense in the interim condensed consolidated statement of 
	comprehensive income are:                                                                                                                                                                     
                                                                             Six months         Six months         Year      
                                                                             ended              ended              ended     
                                                                             31 December        31 December        30 June   
                                                                             2012               2011               2012      
                                                                             Rm                 Rm                  Rm       
                                                                                                                             
        Current income tax                                                                                                   
        Current income tax charge                                            216                173                582       
        Secondary Tax on Companies                                                              57                 57        
        Deferred tax                                                                                                         
        Relating to origination and reversal of temporary differences        (57)               (48)               (442)     
        Capital gains tax                                                                                          4         
        Tax charge related to equity-accounted investments                                                         2         
        Income tax expense                                                    159                182                203    
		
 6.     Property, plant and equipment                                                                                
        During the six months ended 31 December 2012, the Group acquired assets at a cost of R782 million                                                 
        (December 2011: R844 million).    
		
 7.     Cash and cash equivalents                                                                                    
        For the purpose of the interim condensed consolidated statement of cash flows, cash and cash 
	equivalents are comprised of the following:                                                                                                                                                                     
                                                                             Six months       Six months       Year      
                                                                             ended            ended            ended     
                                                                             31 December      31 December      30 June   
                                                                             2012             2011             2012      
                                                                             Rm               Rm                Rm                                                                                                                           
        Cash and bank balances                                                5 263            5 260           5 202     
        Bank overdrafts                                                      (508)            (368)            (343)     
                                                                              4 755            4 892            4 859    
                                                                                                                                                                                                                                   
 8.     Contingent liabilities  Competition Commission                                                                                                                 
        Beyond the Performance Bonds and Guarantees as well as Other Contract claims the major contingent 
	liability relate to the Competition Commission. As previously reported the Aveng board supports 
	and has cooperated with the Competition Commission in its investigation into historic anti-competitive 
	practices in the South African construction industry in terms of the fast-track settlement process. 
	The Aveng Group has submitted a settlement offer to the Competition Commission and feedback is 
	awaited. There has been no subsequent increase in the provision raised as at 30 June 2012.    
		
 9.     Related party transactions                                                                                                                                  
        During the year the Company and its subsidiaries, in the ordinary course of business, entered into 
	various sale and purchase transactions with equity-accounted investments. There has been no 
	significant changes to the nature of related party transactions since 30 June 2012.                                                                                                                     
        There were no related party transactions with directors or entities in which the directors have 
	a material interest.   
		
 10.    Dividend policy                                                                                                                             
        There has been no changes to the dividend policy of the Group since 30 June 2012.   
		
 11.    Events after reporting date                                                                                                                           
        The directors are not aware of any matters or circumstances arising after the period ended 31 
	December 2012, not otherwise dealt with in the Group's interim results, which could have a 
	material effect on the financial statements.                                                                                                                                                                                                                                                                                                                                                                     

Segmental analysis                                                                                     
  Business segmentation                     Six months        Six months        Year        
                                            ended             ended             ended       
                                            31 December       31 December       30 June     
                                            2012              2011              2012        
                                            (Unaudited)       (Unaudited)       (Audited)   
                                            Rm                Rm                 Rm                                                                                              
  Revenue                                                                                   
  Construction and Engineering                                                              
  South Africa and rest of Africa (1)       3 973             4 080             7 931       
  Australasia and Pacific                   12 761            7 641             17 122      
  Total Construction and Engineering        16 734            11 721            25 053      
  Mining2                                   3 793             3 138             6 680       
  Manufacturing and Processing              4 458             4 290             9 148       
  Administration                            2                 *                 5           
                                            24 987            19 149            40 886      
  Operating profit                                                                          
  Construction and Engineering                                                              
  South Africa and rest of Africa1          (39)              (123)             (757)       
  Australasia and Pacific                   195               128               360         
  Total Construction and Engineering        156               5                 (397)       
  Mining (2)                                390               296               579         
  Manufacturing and Processing              86                277               585         
  Administration                            (114)             (246)             (232)       
                                            518               332               535         
  *Amount is less than R1 million.                                                    
  (1) Aveng Shafts and Underground Mining has been reclassified from Construction and Engineering: 
      South Africa and rest of Africa to Mining for periods ending June 2012 and December 2011.                                                  
  (2) Includes Aveng Shafts and Underground Mining from 1 July 2012.                                                  




COMMENTARY

OVERVIEW 
Despite difficult trading conditions in the South African and Australian construction and 
engineering markets, the Group improved its operating performance with operating profit 
increasing by 56% to R518 million after absorbing costs from the labour disruptions that 
were prevalent in the second quarter of some R120 million. In addition to mitigating key 
risks from challenging contracts in Australia, other McConnell Dowell (MacDow) projects 
delivered strong results. The performance of Aveng Grinaker-LTA also improved inspite of 
the impact of labour disruptions while Aveng Mining generated a strong performance.

Whilst the Groups order book declined by 15% to R39.7 billion between June and December 
2012, mainly as a result of the softening infrastructure market in Australia, the order 
book nevertheless remains strong. Generally, projects are taking much longer to conclude, 
are more expensive and are more resource intensive. The decline comes off a high base as 
in the comparative six months period ended 31 December 2011 (the comparative period or 
2011), the order book grew by 24%. Aveng Grinaker-LTAs order book also declined during 
the period but since January 2013, a number of significant new projects have been won. This 
includes work at Nacala Section 2 Rail Project in Tete, Mozambique for Vale and the Majuba 
Rail Link for Eskom Holdings. MacDow has also been awarded a number of significant projects 
since the 8 November 2012 business update, such as the Airport Terminal for Perth Airport 
and the Ocean Keys Shopping Centre for AMP in Perth. 

The Group is pleased to announce that Aveng Concessions, together with its consortium 
partners, has been identified as the preferred bidder in the Mauritius Road Decongestion 
Project. Aveng Grinaker-LTA has a significant interest in the design and construct 
subcontract.


Safety 
The Groups safety vision, Home Without Harm, Everyone Everyday remains integral to the 
manner in which the Group conducts business. Avengs six month All Injury Frequency Rate 
(AIFR) remained stable at 4.7 against the performance reported at 30 June 2012. 

However, the Group regrettably suffered three fatalities during the period, two of whom 
were subcontractors. The Aveng Board and Management extends their sincere condolences to 
the families of their deceased colleagues. 

The Group is focusing attention on improving the management and control of high consequence 
activities in particular subcontractors and transport.


OPERATING ENVIRONMENT
The South African construction and engineering market remained subdued, with limited 
infrastructure spend taking place in the local market. However, it was pleasing that some 
of the large infrastructure projects in Africa have now reached implementation stage.

The South African Governments renewable energy programme aimed to create 3 725 MW of 
renewable energy to ensure the continued uninterrupted supply of electricity in the country, 
has provided a considerable market opportunity for the local construction and engineering 
sector. The Group is involved in the programme as a sponsor, developer, investor, 
engineering, procurement and construction contractor, and operator. Together with its 
investment partners, Aveng was awarded preferred bidder status for a wind farm project and 
a solar photovoltaic facility in the second bid window of the programme during 2012. Both 
projects are expected to reach financial close in April 2013 and construction work should 
commence shortly thereafter.

Mining activities in Africa within the Groups focus area remains strong, while the Groups 
Manufacturing and Processing operating segment is experiencing lower demand in a highly 
competitive trading environment. 

The Australian economy, although sound, has experienced a period of consolidation. The 
construction and engineering operating environment in Australasia and the Pacific is slowing, 
with large mining and gas projects unlikely to continue at the same pace and scale as 
experienced over the last few years. Good road and rail opportunities do exist, though 
generally government spending in the region is constraining the development of the 
opportunities.


FINANCIAL PERFORMANCE
Revenue increased by 30% to R24 987 million compared to R19 149 million in the comparative 

period, mainly due to the high levels of activity within MacDow and Aveng Mining.

Operating profit improved by 56% to R518 million (2011: R332 million) due to:
* improved profitability by MacDow, despite additional risk provisioning for the Queensland 
  Curtis Liquid Natural Gas Pipeline (QCLNG) and Hay Point Berth (Hay Point) projects; 
* an improved, albeit still a loss-making, performance by Aveng Grinaker-LTA;  
* a substantial improvement in the operating performance of Aveng Mining; and
* an enhancement of the Rand-denominated performance due to the weakening of the currency 
  against the US and Australian Dollar for non-Rand functional foreign operations.

These positive contributions were partially offset by a material decline in the Manufacturing 
and Processing operating segment which was affected by slower demand, marginally lower steel 
prices and steel supply constraints.

The operating profit was also adversely affected by R120 million in the second quarter of the 
half year by the impact of the labour disruptions in the mining and transport sectors as well 
as at the Medupi power station site, with Aveng Grinaker-LTA being the worst affected. The 
Medupi disruptions have not yet been resolved and will have some additional impact in the 
second half of the financial year. Claims will be lodged for the cost of the labour disruptions.

Headline earnings for the period increased by 43% to R392 million (2011: R274 million) due 
to the following:
* the higher operating profit as described above; and
* the effective tax rate realised was lower due to the substitution of Secondary Tax on 
  Companies with Dividend Withholding Tax, combined with a shift in the geographical profit 
  mix for the period.

The increase was partly offset by:
* lower equity-accounted income due to weaker performances out of the Aveng Grinaker-LTAs 
  Mauritian investment and MacDows Middle East investments; and
* lower net interest income received when compared to the comparative period due to lower 
  average cash balances.

Undiluted and diluted headline earnings per share increased by 48% and 44% respectively 
against the comparative period, benefitting from the share buy-back programme undertaken 
in the previous financial year.

Operating Free Cash Flow amounted to an outflow of R521 million for the period (2011: 
outflow of R754 million) reflecting: 
* higher inventory levels within the Manufacturing and Processing operating segment to 
  compensate for supply disruptions, especially from domestic steel suppliers;
* greater receivables due to the higher level of activity and unsettled claims within 
  MacDow; and
* capital expenditure by Aveng Mining, Aveng Manufacturing and MacDow of R782 million.
  Consequently, the Groups net cash position has declined by R626 million on the 30 
  June 2012 position of R3 931 million to R3 305 million.

The following key initiatives drove the capital expenditure for the period:
* equipment in support of Aveng Moolmans Northern Cape activities following contract 
  extensions particularly at Sishen;
* Aveng Manufacturings construction of a concrete pipe, culverts and sleeper factory in 
  Tete Mozambique, in order to take advantage of the infrastructural development   
  opportunities in the region. This includes Malawi, South-Eastern Zambia and Northern 
  Zimbabwe. Investments were also made in South Africa for machinery supporting train 
  rail construction; and 
* plant and equipment replacement at MacDow in support of its revenue growth.

OPERATING REVIEW
The Construction and Engineering operating segments generated revenue growth of 43% to R16 734 
million primarily driven by the major contracts in MacDow. Operating profit was R156 million, 
which has been adversely effected by the provisioning made on the QCLNG and Hay Point projects 
and the impact of labour disruptions on Aveng Grinaker-LTA as well as interruptions at Medupi. 

Construction and Engineering: Australasia and Pacific
This operating segment comprises MacDow Construction, Tunneling, Electrical and Pipeline 
business units.

Revenue increased by 67% (in Rand terms) to R12 761 million (49% increase to AUD1 459 million) 
against the comparative period, being reflective of the strong work on hand position entering 
the financial year and the high level of activity on a number of large projects particularly 
on the QCLNG, Australia Pacific Liquid Natural Gas Pipeline (APLNG), and Hay Point projects. 
There has been a marginal slow-down in the South East Asia business resulting from the tough 
competitive environments in those markets.

Performance in Rand terms was supported by a strong Australian Dollar, which averaged R8.80 
compared to R7.85 in the comparative period.

Underlying operating profitability has been pleasing for the business increasing by 52%, despite 
continued uncertainty on the QCLNG and Hay Point projects impacting profit recognition within the 
Australia operations. The QCLNG project however will remain a material risk to both profit and 
cash flow through to completion later in the 2013 calendar year.

Performance of the divisions may be summarised as follows:

The Australian Construction business unit maintained strong growth, reporting revenue growth of 
67% over the comparative period from R3 473 million to R5 801 million.
The Adelaide Desalination Plant, the largest of its type in the world, which was initially delayed 
by geotechnical and weather challenges, achieved full capacity of 100 gigaliters of desalinated 
water per annum. The plant was officially handed over to the client, South Australian Water, in 
December 2012. The commercial issues have been finalised with the client. The desalination plant 
has been short-listed for the Global Water Intelligence Desalination Plant award of 2013 as one 
of the most technically accomplished plants.
The Hay Point project in Queensland has been affected by significant changes to scope, difficult 
ground conditions and inclement weather. MacDow is working with the client to mitigate the delays 
with an accelerated work programme and to resolve the commercial position to eliminate further 
downside exposure on this project, which is expected to be resolved shortly. 

The Komo Airfield project which entails the construction of approximately 3 km of runway and apron 
areas in a very remote and challenging environment has been subject to further construction delays 
following a landslide on the southern end of the runway, these events are not expected to have an 
adverse impact. MacDow expects to successfully complete this challenging project in the second half 
of the 2013 calendar year.

Work has progressed well on FMG Berth 4 in the Pilbara and the FMG Rail project in a joint venture 
partnership with the Lennings Rail Services business unit within Aveng Manufacturing. The Seaford 
Rail overpass was completed on time, while good progress continued to be made on the Gold Coast 
Light Rail Public Private Partnership (PPP) project. 

Built Environs successfully completed the Single Leap 2 Defence Housing PPP project and Walkerville 
Marketplace.

Overseas Construction performed well, with New Zealand, the Pacific Islands and the Middle East 
recording revenue growth, while South East Asias revenue has slowed which is reflective of the 
competitive markets. Overall, the business unit experienced revenue growth of 10% to R1 802 million 
however this was mainly the fact that a number of large contracts are only in the early stages of 
completion. The business operates in New Zealand, the Pacific Islands, Singapore, Indonesia, 
Thailand, Philippines, Malaysia, Hong Kong, UAE, Qatar, and Saudi Arabia. Significant projects 
include the Te Mihi Geothermal Power Station and Christchurch Rehabilitation Projects in New Zealand, 
the Vale Jetty in Malaysia, and the Donggi Liquid Natural Gas Terminal in Indonesia. 

The Pipelines business unit reported a 179% increase in revenue to R3 584 million for the period. 
Work on a number of significant contracts on coal seam methane projects secured in Queensland in 
the previous financial year is in progress. 

Work on the APLNG and Gladstone Liquid Natural Gas Pipeline (GLNG) projects has progressed well; 
the projects are on schedule, just over a third complete and achieving acceptable overall 
performance.

However, overall profitability continues to be impacted by the QCLNG project which is now 80% 
complete. Further risk provisions have been taken on the project, which is being undertaken with 
a joint venture partner and involves detailed design and construction work for a 540 km 42 inch 
underground gas pipeline network. The recent extreme weather events in Queensland will extend the 
programme beyond the current 31 August 2013 schedule which represents additional commercial risks 
for which provision has been made.

The Electrical business unit achieved significant growth across all of its key business sectors 
in Australia and New Zealand increasing revenue by 43% to R1 218 million for the period. This 
business unit continued to win long-term maintenance contracts whilst diversifying its business 
into other utilities such as gas network maintenance.

The Tunneling business unit is currently performing below revenue expectations, which is a 
reflection of the current shortage of work. Revenue declined by 16% to R431 million on the 
comparative period, due primarily to the absence of new work secured during the 2012 financial 
year. This division is currently executing the Waterview Project in New Zealand, the Beauty World 
Mass Rapid Transit Station in Singapore which is 80% complete and the Cable Tunnels in Abu Dhabi.

Order book 
Major contracts awarded since the 8 November 2012 business update, with a cumulative value of  
R4 713 million include: 
* Apron Replacement at Melbourne Airport for Australia Pacific Airport Corporation; 
* Riverbank Pedestrian Bridge for the Department of Planning Transport and Infrastructure in 
  South Australia;
* Supermarket for the Coles Group in Western Australia; 
* Ocean Keys Shopping Centre for AMP in Perth;
* Qatar Pot Relining Works for Qatar Aluminum;
* Bakan Gold Development for PT Resources;
* Airport Terminal for Perth Airport;
* Mt Gambier Hospital for the Department of Planning Transport and Infrastructure;
* Waitaki River Bridge Replacement in New Zealand;
* Kiribati Roads Rehabilitation Project for the Government of Kiribati; and
* Powercor Network Services Program to undertake the Armour Rod and Vibration Damper Retrofit 
  Program across the Powercor electricity network.

Construction and Engineering: South Africa and rest of Africa

This operating segment comprises Aveng Grinaker-LTA, Aveng Water and Aveng E+PC business units. The 
Aveng Shafts and Underground Mining activities of the Group, previously reported under this operating 
segment, are now reported under the Mining operating segment. Comparatives have been restated.

Revenue for the operating segment declined by 3% to R3 973 million from R4 080 million in the 
comparative period. The operating segment reported an operating loss of R39 million (2011: R123 million) 
after absorbing the impact of labour disruptions.

Aveng Grinaker-LTA 
Revenue declined by 2% to R3 648 million from R3 713 million. Operating profit remained marginally 
negative for the period, though an improvement against the comparative periods result.

This business generated a loss due to the following:
* slower realisation of the restructuring benefits; 
* work performed on Medupi without recognising any margin;
* the impact of the labour disruptions; and
* the cost of retaining skills and related capacity in anticipation of improved market conditions.

Aveng Grinaker-LTA is of the view that it should be compensated for the significant costs associated 
with the labour disruptions relating to the Medupi power station. The disruptions started in the 
latter part of the period, but escalated into the 2013 calendar year. Together with its joint venture 
partners, the Group intends to robustly protect its rights in this matter.

The Construction business unit, which now includes the Building, Civils and Earthworks, and Mechanical 
and Electrical businesses, reported a decrease in revenue of 4% to R2 979 million. The operating loss 
declined compared to the comparative period and was attributable to the partial realisation of benefits 
from the internal restructuring process which only impacted the last quarter. In addition, the Coastal 
division performed well, benefitting from the integration of the building operations with the civil 
operations. Certain higher margin large contracts were awarded during the period and should have a 
positive impact on results, however, the impact is primarily expected to be felt for the new financial 
year.

The Specialised business unit, comprising Rand Roads, Ground Engineering (GEL), Karenna, Automotive and 
Control Systems (ACS), Facades and DSE structural steel fabrication (DSE), continued to under-perform 
relative to expectations. Rand Roads largely performs most of its work with the Construction business 
unit, which is generally at lower margins. DSEs productivity and utilisation levels remain below capacity 
whilst the labour disruptions at Medupi delayed the delivery of DSEs contract work to the site. The steel 
contract concluded directly with Hitachi for structural work is progressing very well and is unrelated to 
the pipe welding difficulties recently reported in the national press. The contractual claims against Genrec 
relating to the DSE steel fabrication contract for Medupi continue to be pursued through legal and 
contractual channels.


Order book
Aveng Concessions together with its consortium partners has been identified as the preferred bidder in the 
Mauritius Road Decongestion Project. Aveng Grinaker-LTA is a joint venture partner in the design and 
construct subcontract that will have a material and positive impact on Aveng Grinaker-LTAs 
order book. This PPP encompasses design, construction, financing,operation and maintenance.
Major contracts awarded since the 8 November 2012 business update, with a combined contract value of 
R2 960 million, include: 
* Majuba Rail Link for Eskom Holdings;
* Nacala Section 2 Rail Project in Tete, Mozambique for Vale;
* construction of an extension to the Rehau Polymer Facility for the Nelson Mandela Bay Logistics Park for 
the Coega Development Corporation;
* construction and electrification of a 20 km new railway line for the Kalagadi Resources manganese mine;
* Vodacom Data Centre for Coffey Projects; and
* Sandton City Atrium Repositioning for Liberty Group Properties.

Aveng E+PC and Aveng Water
The tapering off of work on large contracts in the current year and delays in the start of new contracts 
adversely impacted the first six months of the financial year. The extension of certain existing contracts 
served to partially offset the impact of the delays. 

Both Aveng E+PC and Aveng Water experienced a shortage of work, and were thus adversely affected by the 
cost of retaining skills and related capacity in anticipation of improved market conditions. Revenue 
decreased by 11% to R325 million in relation to the comparative period. Aveng Waters HiPro Water Recovery 
Process serves to strengthen the Groups offering to the mine water treatment market but projects are very slow 
in being developed. 

Mining
This operating segment with effect from 1 July 2012 comprises Aveng Moolmans and Aveng Shafts and Underground 
Mining business units, collectively known as Aveng Mining. 

On a comparable basis, revenue for this operating segment increased by 21% to R3 793 million driven by strong 
growth from Aveng Moolmans.
 
Aveng Moolmans revenue growth is attributable to growth in West Africa and South Africa, as well as 
extensions to existing contracts at Smaldeel, Kansanshi and additional work at Sishen. A heightened focus on 
operating efficiencies as well as the completion of some lower margin projects has driven the improved results 
within Aveng Moolmans. The depreciation in the Rand/US Dollar exchange rate from an average R7.54 in the 
comparative period to R8.48 enhanced Aveng Moolmans operating profit.

The performance of the Aveng Shafts and Underground Mining business unit was hampered by project commencement 
delays on three new contracts and the impact of the labour disruptions, which all contributed to margin 
slippage. 

Operating profit grew by 32% to R390 million with the improved efficiencies and new business offsetting the 
impact of labour disruptions in the mining industry. 

Manufacturing and Processing
This operating segment comprises Aveng Manufacturing and Aveng Trident Steel.

Segmental revenue increased by 4% from R4 290 million in the comparative period to R4 458 million, with 
operating profit of R86 million (2011: R277 million), reflecting a very difficult trading environment.

Revenue growth of 15% by Aveng Manufacturing over the comparative period was largely attributable to 
additional Australian rail construction revenue as well as an increase in infrastructure products, which was 
at an all-time low during the prior year. Aveng Manufacturings business units with high exposure to the 
mining industry, namely DFC and Duraset, were notably affected by the labour disruptions that impacted the 
platinum and gold mines in particular. Lennings Rail Services experienced a far greater percentage of lower 
margin maintenance contracts than planned and the impact of the holding cost associated with the pursuit of 
growth prospects. DFC was adversely impacted by the mine sector disruptions and lower demand by its platinum 
mining clients. Viewed as a capital investment by clients, demand for DFCs products was subject to the 
current growth constraints in the mining sector. Sales volumes for Steeledale increased materially by 35%. 
However, higher inventory levels entering the current financial year and price decreases in the first 
quarter of the year, culminated in lower profitability for this unit.
 
Revenue performance by Aveng Trident Steel was consistent with the comparative period. Contributing factors 
to its lack of growth include a marginal reduction in sales volume of 3%, due to lower industry demand, though 
mitigated by a more favourable sales mixture. Similar to the Steeledale, given the high inventory levels and 
the aforementioned price decreases in the first quarter of the financial year, the adverse impact on 
profitability was significant. Periodic supply interruptions from domestic steel mills necessitated the need to 
increase inventory levels. The impact of the labour disruptions in the transport sector also adversely affected 
the performance of the business.

Administration
The administrative operating expense of R114 million is in respect of the costs associated with the Groups 
central administrative function. The comparative expense of R246 million included a non-recurring unrealised 
foreign exchange loss on the translation of inter-group loans for the period of R99 million. 


ORDER BOOK 
The Groups two year order book decreased by 15% from R46.9 billion at 30 June 2012 to R39.7 billion at 31 
December 2012. This decrease emanated primarily from the operating segment, Construction and Engineering: 
Australasia and Pacific. This operating segments order book decreased by 17% from R29.9 billion to R24.7 
billion. In Australian dollar terms the order book decreased by 22% from AUD3.6 billion in June 2012 to 
AUD2.8 billion at 31 December 2012. 
The lower order book reflected the softening infrastructure market as well as the timing of securing new 
work. The expectation is that some large projects are likely to be secured in the first half of the 2013 
calendar year. 

At 31 December 2012, the order book for the operating segment, Construction and Engineering: South Africa 
and rest of Africa had declined by 14% from R7.2 billion at 30 June 2012 to R6.5 billion at 31 December 2012. 
The start of the 2013 calendar year has seen a notable improvement in the health of the order book with the 
winning of a number of significant new contracts. 

Following further project awards since the start of the new calendar year (January 2013), the Groups current 
two year order book improved by 5% to R41.7 billion from the R39.7 billion at 31 December 2012

COMPETITION COMMISSION 
Aveng has proactively engaged and cooperated with the Competition Commission in its investigation into 
historic anti-competitive practices in the South African construction industry. The matter has not been 
finalised and Avengs view remains that the investigation must be completed as soon as possible in order 
for the industry to move forward. 
As the settlement process has not been concluded the provision for a potential penalty, which was 
announced by Aveng in its SENS announcement of September 2012, remains unchanged at this time.


OUTLOOK AND PROSPECTS
The Group anticipates that public sector infrastructure spend in South Africa will remain somewhat muted 
in the coming year due to the slow rollout of infrastructure spend. However, positive signs of progress are 
evident in Governments support for the National Development Plan and the Draft Infrastructure Development 
Bill. 

Growth in other key African markets is a priority. Infrastructure development in Africa remains an important 
focus area for the Group, specifically targeting opportunities in Mauritius and Mozambique. As this strategy 
gains traction the mix of projects will shift to higher margin work, resulting in further improvement in the 
performance of Aveng Grinaker-LTA.

Although the Australian economy is expected to weaken in the transition from the peak of the mining boom to
growth in non-mining sectors which will impact negatively on infrastructure spend, MacDow is tendering on 
a number of large PPP opportunities and social infrastructure.

Following further project awards since the start of the new calendar year (February 2013), the Groups 
current two year order book improved by 6% to R42.0 billion from the R39.7 billion at 31 December 2012.

The Manufacturing and Processing operating segment has seen some positive steel price increases since 
the beginning of the year and restocking of inventories. The Aveng Manufacturing business unit continues 
to pursue growth opportunities in the rest of Africa, particularly in Mozambique, where Aveng is constructing 
a plant for the manufacture of concrete pipes and sleepers. 

The Mining operating segment continues to be well placed to participate in the growth of the African mining 
industry as well as seeking shaft sinking projects in other regions.

Following the operating profit impact of R120 million in the period due to labour disruptions and given the 
continued disruptions specifically affecting the Medupi project, earnings may be impacted in the second half 
of the 2013 financial year.

Having won bids for two projects in the second round of the Renewable Energy Independent Power Procurement 
Programme as an Engineering, Procure and Construct, and concessions player, Aveng continues to focus on the 
Renewable Energy market and is planning to bid for additional projects in subsequent rounds. Further wind and 
solar projects are being developed for future bid windows to ensure that the Group continues to play a 
significant role in the renewable energy value chain over the medium to longer term.

The Group has a well balanced portfolio, geographical diversity and multi-disciplinary capabilities across 
the infrastructure value chain. It will continue to focus on project delivery and to reduce the financial 
impact of challenging contracts to improve its operational performance.

By order of the Board

AWB Band                            WR Jardine 				             HJ Verster
(Chairman) 		            (Chief Executive Officer)                        (Financial Director)
15 March 2013


DIRECTORS 
AWB Band*# (Chairman), PJ Erasmus*#, MA Hermanus*#, RL Hogben*#, 
WR Jardine (Chief Executive Officer), MJ Kilbride*#, 
JJA Mashaba (Group Human Resources Director), TM Mokgosi-Mwantembe*#, 
DG Robinson^, MJD Ruck*#, MI Seedat*#, NL Sowazi*, 
HJ Verster (Financial Director), PK Ward*#.
(*non-executive)     (#independent)     (^Australian) 


Registered office
204 Rivonia Road, Morningside, Sandton, 2057 
PO Box 6062, Rivonia, 2128, South Africa
Telephone +27 11 779 2800   
Telefax +27 11 784 5030

Registrars
Computershare Investor Services (Pty) Limited 
(Registration number 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107, South Africa
Telephone +27 11 370 5000   
Telefax +27 11 370 5560

Company Secretary
Michelle Nana

DISCLAIMER
Certain Statements in this release that are neither reported financial results nor other
historical information, are forward looking statements, including but not limited to, statements 
that are predictions of or indicate future earnings, savings, synergies, events, trends, plans 
or objectives about the Companys operations and financial conditions. They are based on Aveng 
Limiteds 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 Companys future 
business activities and its ongoing results. Undue reliance should not be placed on such statements 
because, by their nature, they are subject to known and unknown risks and uncertainties and can be 
affected by other factors that could cause actual results and company plans and objectives to differ 
materially from those expressed or implied in the forward looking statements (or past results).
This document is printed on Power Matt paper which is of a certified recyclable grade, 
contains no chlorine or acid chemicals and is harvested using accredited forestry techniques.

www.aveng.co.za
Safety is paramount, never to be compromised in the pursuit of any objective
Date: 15/03/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.