AEG 201311010020A
Chairman’s Statement at the AGM
AVENG LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1944/018119/06)
ISIN: ZAE000111829
SHARE CODE: AEG
(“Aveng Group”, “Aveng” or "Group")
Chairman’s Statement at the AGM
BUSINESS UPDATE: AVENG GROUP CHAIRMAN ANGUS BAND’S STATEMENT TO
SHAREHOLDERS AT THE ANNUAL GENERAL MEETING HELD ON 1 NOVEMBER
2013
The markets in which the Group operates continue to be challenging with no material
improvement in infrastructure spending. This has led to the continued underperformance
of the Construction and Engineering: South Africa and rest of Africa segment which
additionally is still resolving some of the issues which became evident in the second half
of the prior financial year.
KEY ISSUES
- Construction and Engineering: Australasia and Asia continues to compete well in tough
market conditions which reflect the transition to more non-mining related infrastructure
spend in the Australian economy. The Queensland Curtis Liquid Natural Gas Pipeline
(“QCLNG”) project is substantially complete with the final component of the pipeline
installed in October 2013, and is on track for completion of all major works by the end
of the 2013 calendar year. Although the commercial issues are being resolved, they
remain a risk and the focus remains on concluding these effectively in the shortest
possible timeframe.
- Construction and Engineering: South Africa and rest of Africa is still adversely effected
by the the impact of labour disruptions mainly due to the civil engineering industry
strike, major contracts which contribute to revenue without appropriate margin and the
high level of fixed overhead expenses. The re-organisation of Aveng Grinaker-LTA, a
focus on fixed cost reduction, improved project execution and the strengthening of the
commercial and project management functions are being pursued. This is expected to
result in an improvement in the performance in the second half of the financial year.
Concessions has continued to deliver a solid operating performance against the results
of the preceding six months ended 30 June 2013, which is mainly attributable to
financial closure having been reached on the renewable energy project in the Western
Cape.
- Mining: As reported previously, the order book for Aveng Moolmans had declined as a
result of project renewals still being subject to negotiation. Although the majority of the
Aveng Moolmans’ contracts are performing well, the impact of the reduced order book
will be felt in the first half of the financial year, however the business unit continues to
pursue existing and new opportunities. Its order book has increased by 27% since 30
June 2013. The performance of Aveng Mining Shafts & Underground is being
negatively affected by lower revenue as a result of subdued investment in mining
projects.
- Manufacturing and Processing: Although Aveng Steel has been negatively affected
by strikes, within both the automotive and construction sectors, the operating group
has managed to offset this impact and is trading at higher levels than the prior year.
Aveng Manufacturing is performing better than the first half of the previous year as a
result of improved local volumes and the absence of major external disruptive market
occurrences such as mining and transport labour strikes.
- Cash flow: The working capital requirements of McConnell Dowell and Aveng
Grinaker-LTA, combined with the adverse performance in Construction and
Engineering: South Africa and rest of Africa continue to have an adverse impact on the
Group’s net cash position which is being aggressively managed.
- Order book: The Group’s two year order book at R39.8 billion has increased by 6%
from 30 June 2013 to 30 September 2013. The Construction and Engineering:
Australasia and Asia operating segment’s order book remained flat at R24.0 billion at
30 September 2013. In Australian dollar terms the two year order book decreased by
3% to AUD2.6 billion. Recent major contract awards in the period included
Christchurch Rebuild, Downtown Line Singapore Tunnel and the Roy Hill Marine Jetty.
Construction and Engineering: South Africa and rest of Africa’s order book increased
by 3% from June 2013 to R6.7 billion. Projects awarded in the quarter included the
design and construction of the Strand Private Hospital and the construction of the
Sasol Head Office in Johannesburg. The Mining order book increased by 15% to R6.9
billion with Aveng Mining Shafts & Underground declining by 18% since June 2013
which is reflective of the general decline in activity in the South African mining sector.
Aveng Moolmans secured an extension of the Phoenix mine contract in Botswana and
is pursuing a number of major extensions due for announcement in the next few
months.
INTEGRATED REPORT
The Group issued its 2013 Annual Integrated Report to stakeholders on 30 September
2013. The consolidated annual financial statements and Integrated Report have been
published on the Group website, www.aveng.co.za.
REPORTING
The interim results for the six months to 31 December 2013 will be released on SENS on
25 February 2014 when the Group will be updating the market on its business in a
presentation in Johannesburg on the same day, and in Cape Town on 26 February 2014.
The presentation will be available for all stakeholders on the Group’s website,
www.aveng.co.za
DISCLAIMER
This announcement includes forward-looking statements that reflect the current views or
expectations of the Board with respect to future events and financial and operational
performance. All statements other than statements of historical fact are, or
may be deemed to be, forward-looking statements, including, without limitation, those
concerning: the Group’s strategy; the economic outlook for the industry; use of the
proceeds of any rights offer; and the Group’s liquidity and capital resources and
expenditure.
These forward-looking statements speak only as of the date of this announcement and are
not based on historical facts, but rather reflect the Group’s current expectations
concerning future results and events. The Group undertakes no obligation to update
publicly or release any revisions to these forward looking statements to reflect events or
circumstances after the date of this announcement.
Sandton
01 November 2013
Sponsor:
J.P. Morgan Equities South Africa (Pty) Ltd
Date: 01/11/2013 10:55:00 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. |