Wrap Text
Audited summarised consolidated annual financial statements for the year ended 30 June 2014
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
Audited summarised consolidated annual financial statements for the year ended 30 June 2014
Salient features
Revenue R53 billion
Increase of 2% from June 2013
Net operating earnings R784 million
Increase of 20% from June 2013
Headline earnings R421 million
Decrease of 10% from June 2013
Adjusted earnings per share 120.3 cents
(excluding impairment) Decrease of 4% from June 2013
Earnings per share (101.9 cents)
Decrease of 182% from June 2013
Headline earnings 112.5 cents
per share Decrease of 10% from June 2013
Dividends per share No dividend was declared for the
full year and the prior year
Net asset value per share R33.44
Decrease of 2% from June 2013
Two-year order book R40,9 billion
11% increase from R36,7 billion in December 2013
Cash and bank balances R4,1 billion
Increase of 6% from June 2013
Net cash position R1,3 billion
Decrease of 46% from June 2013
Statement of financial position
as at 30 June 2014
Audited Audited Audited
2014 2013* 2012*
Notes Rm Rm Rm
ASSETS
Non-current assets
Investment property 5 86 71 -
Property, plant and equipment 5 6 346 6 789 6 666
Goodwill arising on consolidation 6 663 1 425 1 384
Intangible assets 5 / 6 321 184 165
Equity-accounted investments 306 144 105
Available-for-sale investments 190 70 146
Deferred taxation assets 7 1 403 1 347 998
Amounts due from contract customers* 8 2 946 2 520 241
12 261 12 550 9 705
Current assets
Inventories 2 793 2 780 2 467
Amounts due from contract customers* 8 8 405 6 737 6 648
Trade and other receivables* 2 785 2 773 2 739
Cash and bank balances* 9 4 136 4 120 4 852
Non-current assets held-for-sale 10 607 - -
18 726 16 410 16 706
TOTAL ASSETS 30 987 28 960 26 411
EQUITY AND LIABILITIES
Equity
Share capital and share premium 2 008 1 388 1 435
Reserves* 1 220 748 546
Retained earnings* 10 157 11 159 10 920
Equity attributable to
equity-holders of parent 13 385 13 295 12 901
Non-controlling interest 11 12 10
13 396 13 307 12 911
Liabilities
Non-current liabilities
Deferred taxation liabilities 7 257 319 299
Borrowings and other liabilities 2 303 1 312 748
Payables other than contract-related* 11 102 181 307
Employee-related payables* 682 462 369
3 344 2 274 1 723
Current liabilities
Amounts due to contract customers* 8 2 677 2 367 2 271
Borrowings and other liabilities 564 219 180
Payables other than contract-related* 11 95 102 -
Employee-related payables* 893 1 208 1 142
Trade and other payables* 9 805 9 050 7 894
Taxation payable 213 210 242
Bank overdraft* 9 - 223 48
14 247 13 379 11 777
TOTAL LIABILITIES 17 591 15 653 13 500
TOTAL EQUITY AND LIABILITIES 30 987 28 960 26 411
* Comparatives have been amended as detailed in note 3: New accounting standards and
interpretations adopted, changes in accounting policies and other reclassifications.
Statement of comprehensive earnings
for the year ended 30 June 2014
Audited Audited
2014 2013*
Notes Rm Rm
Revenue 52 959 51 704
Cost of sales (49 122) (48 233)
Gross earnings 3 837 3 471
Other earnings* 254 430
Operating expenses* (3 373) (3 274)
Operating earnings before other gains and losses 718 627
Earnings / (loss) from equity-accounted investments 33 (12)
Share of dividend earnings from available-for-sale
investments 33 41
Net operating earnings 784 656
Impairment of non-financial assets** 6 (831) -
Fair value adjustments 15 -
Finance earnings 136 132
Finance and transaction expenses (319) (162)
(Loss) / earnings before taxation (215) 626
Taxation 12 (161) (167)
(LOSS) / EARNINGS FOR THE PERIOD (376) 459
Other comprehensive earnings
Items that may be subsequently recycled to earnings
(net of taxation)
Exchange differences on translating foreign operations 402 196
Available-for-sale fair value reserve 93 -
Other comprehensive loss from equity-accounted
investments (28) -
Other comprehensive earnings for the period 467 196
Total comprehensive earnings for the period 91 655
Total comprehensive earnings for the period
attributable to:
Equity-holders of the parent* 86 661
Non-controlling interests 5 (6)
91 655
(Loss) / earnings for the period attributable to:
Equity-holders of the parent (381) 466
Non-controlling interest 5 (7)
(376) 459
Other comprehensive earnings for the period
attributable to:
Equity-holders of the parent 467 195
Non-controlling interest - 1
467 196
Results per share (cents)
(Loss) / earnings - basic (101,9) 124,6
Adjusted earnings 120,3 124,6
Headline earnings 112,5 124,6
Diluted (loss) / earnings (94,8) 115,9
Diluted adjusted earnings 111,9 115,9
Diluted headline earnings 104,7 115,9
Number of shares (millions)
In issue 416,7 389,8
Weighted average 374,0 374,0
Diluted weighted average 402,1 402,1
EBITDA for the Group being net operating earnings before depreciation and amortisation is R1 693 million
(2013: R1 887 million).
* Comparatives have been amended as detailed in note 3: New accounting standards and interpretations adopted,
changes in accounting policies and other reclassifications.
** The impairment of goodwill and related intangible assets was published by the Group in the trading statement
on 2 July 2014, amounting to R830 million. However as a result of rounding, the amount is presented as
R831 million in the statement of comprehensive earnings.
2014 2013
Gross of Net of Gross of Net of
taxation taxation taxation taxation
Rm Rm Rm Rm
Determination of headline earnings
Earnings for the year attributable to
equity-holders of the parent* - (381) - 466
Impairment of goodwill 816 816 - -
Impairment of intangibles 15 15 - -
Adjusted earnings** 450 466
Earnings on sale of property, plant and equipment (25) (18) (2) (1)
Impairment of property, plant and equipment - - 2 1
Fair value adjustment on investment property (15) (11) - -
Headline earnings 421 466
* Earnings and adjusted earnings are calculated in accordance with IAS 33 Earnings per share. Earnings is based on the
earnings attributable to equity-holders of the parent. Headline earnings are calculated in accordance with Circular 2 / 2013.
** Adjusted earnings exclude impairment of goodwill and related intangible assets.
Statement of changes in equity
Equity-
Total settled
share Foreign Available- Equity share-
capital currency for-sale accounted based
Share Share and translation fair value investments payment
capital premium premium reserve* reserve reserve reserve
Audited Rm Rm Rm Rm Rm Rm Rm
Opening balance as previously reported 19 1 416 1 435 546 - - -
Adoption of new IFRS 10 accounting standard
(refer to note 3: New accounting standards and
interpretations adopted, changes in accounting
policies and other reclassifications) - - - - - - -
Balance at 1 July 2012 as restated 19 1 416 1 435 546 - - -
Earnings for the period - - - - - - -
Other comprehensive earnings for the period - - - 195 - - -
(net of taxation)
Total comprehensive earnings for the period - - - 195 - - -
Movement in treasury shares - (47) (47) - - - 21
Transfer between reserves - - - (14) - - -
Business combination - acquisition of subsidiary - - - - - - -
Dividends paid** - - - - - - -
Total contributions and distributions recognised
directly in equity - (47) (47) (14) - - 21
Balance at 1 July 2013 restated 19 1 369 1 388 727 - - 21
Earnings for the period - - - - - - -
Other comprehensive earnings for the period - - - 402 93 (28) -
(net of taxation)
Total comprehensive earnings for the period - - - 402 93 (28) -
Movement in treasury shares - (1) (1) - - 5
Issue of shares to BEE consortium*** 1 620 621 - - - -
Dividends paid - - - - - - -
Total contributions and distributions recognised
directly in equity 1 619 620 - - - 5
Balance at 30 June 2014 20 1 988 2 008 1 129 93 (28) 26
* The foreign currency translation reserve represents the net movement for all the translation movements between the presentational
currency of South African Rand, and the various functional currencies that the subsidiaries and other joint operations operate in.
** The final dividend of 2012.
*** The issue of 26 832 834 shares was recorded at fair value of the consideration given, being the closing share price at the date of issue
on 30 June 2014.
Statement of changes in equity (continued)
Total
attributable
to equity Non-
Insurance Total other Retained holders of controlling Total
reserve reserves earnings the parent interest equity
Audited Rm Rm Rm Rm Rm Rm
Opening balance as previously reported 56 602 10 864 12 901 10 12 911
Adoption of new IFRS 10 accounting standard
(refer to note 3: New accounting standards and
interpretations adopted, changes in accounting
policies and other reclassifications) (56) (56) 56 - - -
Balance at 1 July 2012 as restated - 546 10 920 12 901 10 12 911
Earnings for the period - - 466 466 (7) 459
Other comprehensive earnings for the period - 195 - 195 1 196
(net of taxation)
Total comprehensive earnings for the period - 195 466 661 (6) 655
Movement in treasury shares - 21 - (26) - (26)
Transfer between reserves - (14) 14 - - -
Business combination - acquisition of subsidiary - - - - 9 9
Dividends paid** - - (241) (241) (1) (242)
Total contributions and distributions recognised
directly in equity - 7 (227) (267) 8 (259)
Balance at 1 July 2013 restated - 748 11 159 13 295 12 13 307
Earnings for the period - - (381) (381) 5 (376)
Other comprehensive earnings for the period - 467 - 467 - 467
(net of taxation)
Total comprehensive earnings for the period - 467 (381) 86 5 91
Movement in treasury shares - 5 - 4 - 4
Issue of shares to BEE consortium*** - - (621) - - -
Dividends paid - - - - (6) (6)
Total contributions and distributions recognised
directly in equity - 5 (621) 4 (6) (2)
Balance at 30 June 2014 - 1 220 10 157 13 385 11 13 396
* The foreign currency translation reserve represents the net movement for all the translation movements between the presentational
currency of South African Rand, and the various functional currencies that the subsidiaries and other joint operations operate in.
** The final dividend of 2012.
*** The issue of 26 832 834 shares was recorded at fair value of the consideration given, being the closing share price at the date of
issue on 30 June 2014.
Statement of cash flows
for the year ended 30 June 2014
Audited Audited
2014 2013*
Notes Rm Rm
Operating activities
Cash (utilised) / retained from operations (98) 627
Depreciation 881 1 181
Amortisation 28 50
Non-cash and other movements 549 (337)
Cash generated by operations 1 360 1 521
Changes in working capital:
Increase in inventories (13) (313)
Increase in amounts due from contract customers (2 094) (2 368)
Increase in trade and other receivables (12) (34)
Increase in amounts due to contract customers 310 96
Increase in trade and other payables 755 1 156
Decrease in payables other than contract-related (102) -
(Decrease) / increase in employee-related payables (106) 159
Total changes in working capital (1 262) (1 304)
Cash generated by operating activities 98 217
Finance and transaction expenses paid (283) (164)
Finance earnings received 127 126
Taxation paid (252) (464)
Cash outflow from operating activities (310) (285)
Investing activities
Property, plant and equipment purchased
- expansion 5 (384) (459)
- replacement 5 (677) (925)
Proceeds on disposal of property, plant and equipment 256 165
Acquisition of investment property 5 - (71)
Acquisition of intangible assets 5 (176) (29)
Proceeds on disposal of intangible assets - 2
Movement in equity-accounted investments (140) (39)
Acquisition of subsidiary - (9)
Proceeds from sale of available-for-sale investment - 80
Dividend earnings 33 41
Cash outflow from investing activities (1 088) (1 244)
Operating free cash outflow (1 398) (1 529)
Financing activities with equity-holders
Shares repurchased (7) (47)
Dividends paid (6) (242)
Financing activities with debt-holders
Proceeds from borrowings raised 1 336 603
Net decrease in cash and bank balances before
foreign exchange movements on cash (75) (1 215)
Foreign exchange movements on cash and
bank balances 314 308
Cash and bank balances at beginning of the year 3 897 4 804
Total cash and bank balances at end of the year 9 4 136 3 897
Borrowings excluding bank overdrafts 2 867 1 531
Net cash position 1 269 2 366
* Comparatives have been amended as detailed in note 3: New accounting standards and
interpretations adopted, changes in accounting policies and other reclassifications.
Accounting policies to the summarised consolidated annual financial statements
1. Corporate information
The summarised consolidated annual financial statements of the Group for the year ended 30 June 2014 were authorised
for issue in accordance with a resolution of the directors on 25 August 2014.
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 and execution of the contracts currently in progress.
Refer to the commentary for a detailed report on the performance of the different operating segments within the Group.
2. Basis of preparation and accounting policy
The summarised consolidated annual financial statements have been prepared on a historical cost basis, except for
certain financial assets which are measured at fair value.
These summarised consolidated annual financial statements are presented in South African Rand (“ZAR”) and all values
are rounded to the nearest million (“Rm”) except where otherwise indicated. The summarised consolidated annual financial
statements are prepared in accordance with IAS 34 - Interim Financial Statements and the Listings Requirements of the
Johannesburg Stock Exchange Limited (“JSE”). The accounting policies adopted are consistent with those of the previous
year, except for the adoption of new and revised Standards and Interpretations that became effective during this reporting
period.
The summarised financial results do not include all the information and disclosures required in the consolidated
annual financial statements, and should be read in conjunction with the Group’s audited consolidated annual financial
statements as at 30 June 2014 that are available on the Company’s website, www.aveng.co.za.
The Company’s integrated report for the year ended 30 June 2014 will be available by 22 September 2014.
The annual financial results have been prepared under the supervision of the Chief Executive Officer (“CEO”) and acting
Group Financial Director, Mr HJ Verster.
The results have been audited by Ernst & Young Incorporated and the unqualified audit opinion is available on
request from the company secretary at the Company’s registered office.
Contracting revenue
The Group uses the percentage of completion method in accounting for its construction contracts. Use of the percentage
of completion method requires the Group to estimate the construction services and activities performed to date as a
proportion of the total services and activities to be performed. In addition, judgements are required when recognising and
measuring any variations or claims on each contract.
3. New accounting standards and interpretations adopted, changes in accounting policies and other reclassifications
As part of the Group’s financial reporting improvement initiatives, the structure, format and presentation of
disclosures in the summarised consolidated annual financial statements were reviewed. This resulted in the reallocation of
certain comparative amounts.
For more detail on new accounting standards and interpretations adopted, changes in accounting policies and other
reclassifications, refer to the full consolidated annual financial statements available on the Group’s website.
Change in accounting policy - Investment property
During the year, the Group changed its accounting policy on investment property from the cost model to the fair value
model. There is no impact in the prior year as the property was acquired late in June 2013 and the fair value
approximated the cost at the acquisition date. Earnings and losses arising from changes in the fair value of investment
properties are included in earnings in the period in which they arise.
N3 Toll concession (“N3TC”)
In prior years the available-for-sale investment in N3TC was shown at cost, which approximated fair value, due to
limited marketability and reliable valuation methodologies for investments of this nature.
As a result of the adoption of IFRS13 - Fair value measurement, and a single framework being applied for all fair
value measurements, the fair value of the investment was determined by calculating the present value of the projected equity
cash flows related to the Group’s 10,9% shareholding, based on the risk-adjusted discount rate of 18%. The projected
equity cash flows comprising dividends and equity investments were sourced from the updated N3TC financial model. The
financial model forecasts revenue (toll pricing and traffic volume), operating costs, capital expenditure and other relevant
financial performance measures over the concession term.
Notes to the summarised consolidated annual financial statements
4. Segmental report
The Group has determined four reportable segments that are largely organised and managed separately according to the
nature of products and services provided.
These operating segments are components of the Group:
- that engage in business activities from which they earn revenues and incur expenses; and
- which have operating results that are regularly reviewed by the Group’s chief operating decision makers to make
decisions about resources to be allocated to the segments and assess their performance.
Construction and
Engineering Manu- Adminis-
South Africa facturing tration
Segment report 2014 and the Rest Australasia and and Elimi-
(Rm) of Africa and Asia Mining Processing nations Total
External revenue 8 105 28 169 6 581 9 958 146 52 959
Internal revenue 438 - 1 654 (1 093) -
Gross revenue 8 543 28 169 6 582 10 612 (947) 52 959
Cost of sales (8 529) (26 594) (5 708) (9 459) 1 168 (49 122)
Gross earnings 14 1 575 874 1 153 221 3 837
Other earnings 48 (10) (14) 248 (18) 254
Operating expenses (662) (1 296) (332) (1 036) (47) (3 373)
Operating (loss) /earnings before
other gains and losses (600) 269 528 365 156 718
Earnings / (loss) from
equity-accounted investments 27 2 1 (1) 4 33
Share of dividend earnings from
available-for-sale investments 7 - - - 26 33
Net operating (loss) /earnings (566) 271 529 364 186 784
Impairment of
non-financial assets - - - - (831) (831)
Fair value adjustment - - - - 15 15
Finance earnings 53 39 17 11 16 136
Finance and transaction expenses (63) (101) (59) (7) (89) (319)
(Loss) / earnings before taxation (576) 209 487 368 (703) (215)
Taxation 152 (14) (163) (110) (26) (161)
(Loss) / earnings after taxation (424) 195 324 258 (729) (376)
Capital expenditure* 152 243 298 406 138 1 237
Depreciation (85) (258) (407) (112) (19) (881)
Amortisation (13) - - (5) (10) (28)
* Segment capital expenditure includes an intangible asset investment R176 million.
Construction and
Engineering Manu- Adminis-
South Africa facturing tration
Segment report 2013 and the Rest Australasia and and Elimi-
(Rm)* of Africa** and Asia Mining Processing** nations Total
External revenue 7 173 26 749 7 435 10 146 201 51 704
Internal revenue 219 - - 409 (628) -
Gross revenue 7 392 26 749 7 435 10 555 (427) 51 704
Cost of sales (7 738) (24 918) (6 427) (9 477) 327 (48 233)
Gross (loss) / earnings (346) 1 831 1 008 1 078 (100) 3 471
Other earnings 140 5 71 191 23 430
Operating expenses (765) (1 192) (381) (1 034) 98 (3 274)
Operating (loss) / earnings before
other gains and losses (971) 644 698 235 21 627
(Loss) / earnings from
equity-accounted investments (2) (5) 2 - (7) (12)
Share of dividend earnings from
available-for-sale investments 5 - 1 - 35 41
Net operating (loss) / earnings (968) 639 701 235 49 656
Finance earnings 39 57 11 11 14 132
Finance and transaction expenses (8) (80) (43) (10) (21) (162)
(Loss) / earnings before taxation (937) 616 669 236 42 626
Taxation 472 (157) (315) (36) (131) (167)
(Loss) / earnings after taxation (465) 459 354 200 (89) 459
Capital expenditure*** 47 384 615 306 106 1 458
Depreciation (93) (402) (581) (93) (12) (1 181)
Amortisation (11) - - (10) (29) (50)
* Comparatives have been amended as detailed in note 3: New accounting standards and interpretations adopted, changes in
accounting policies and other reclassifications.
** Aveng Steel Fabrication (“ASF”), Aveng Manufacturing Automation & Control Solutions (“A&CS”) and Aveng Manufacturing Facades
business units are now reported under the Manufacturing and Processing segment compared to the Construction and Engineering:
South Africa and Rest of Africa segment in the prior year. Comparatives have been adjusted.
*** Segment capital expenditure includes an intangible asset investment of R29 million.
Construction and
Engineering Manu- Adminis-
South Africa facturing tration
Segment report 2014 and the Rest Australasia and and Elimi-
(Rm) of Africa and Asia Mining Processing nations Total
ASSETS
Investment property - - - - 86 86
Property, plant and equipment 702 1 170 2 746 1 374 354 6 346
Goodwill arising on consolidation - 431 - - 232 663
Intangible assets 6 35 - 155 125 321
Equity-accounted investments 18 56 4 - 228 306
Available-for-sale investments - 64 - - 126 190
Deferred taxation assets 965 472 238 (102) (170) 1 403
Amounts due from contract customers 2 185 8 085 997 534 (450) 11 351
Inventories 98 23 304 2 368 - 2 793
Trade and other receivables 242 174 93 1 980 296 2 785
Cash and bank balances 330 2 830 466 720 (210) 4 136
Non-current assets held-for-sale - - - - 607 607
TOTAL ASSETS 4 546 13 340 4 848 7 029 1 224 30 987
LIABILITIES
Deferred taxation liabilities 2 - 211 18 26 257
Borrowings and other liabilities - 862 653 7 1 345 2 867
Employee-related payables 196 886 230 151 112 1 575
Amounts due to contract customers 669 1 612 231 106 59 2 677
Trade and other payables 1 368 5 202 824 2 307 104 9 805
Taxation payable 18 61 95 - 39 213
Payables other than contract-related 197 - - - - 197
TOTAL LIABILITIES 2 450 8 623 2 244 2 589 1 685 17 591
Construction and
Engineering Manu- Adminis-
South Africa facturing tration
Segment report 2013 and the Rest Australasia and and Elimi-
(Rm)* of Africa** and Asia Mining Processing** nations Total
ASSETS
Investment property - - - - 71 71
Property, plant and equipment 647 1 146 2 872 1 401 723 6 789
Goodwill arising on consolidation - 377 - - 1 048 1 425
Intangible assets 16 32 - 57 79 184
Equity-accounted investments (10) 49 3 - 102 144
Available-for-sale investments - 58 - - 12 70
Deferred taxation assets 823 451 188 82 (197) 1 347
Amounts due from contract customers 1 895 6 409 1 061 467 (575) 9 257
Inventories 129 17 292 2 342 - 2 780
Trade and other receivables 254 509 (110) 1 804 316 2 773
Cash and bank balances 527 2 477 794 476 (154) 4 120
TOTAL ASSETS 4 281 11 525 5 100 6 629 1 425 28 960
LIABILITIES
Deferred taxation liabilities 12 60 139 91 17 319
Borrowings and other liabilities - 767 698 - 66 1 531
Employee-related payables 181 947 328 145 69 1 670
Amounts due to contract customers 1 015 955 528 58 (189) 2 367
Bank overdraft - - - 122 101 223
Trade and other payables 1 168 4 921 861 1 761 339 9 050
Taxation payable 10 86 28 25 61 210
Payables other than contract-related 283 - - - - 283
TOTAL LIABILITIES 2 669 7 736 2 582 2 202 464 15 653
* Comparatives have been amended as detailed in note 3: New accounting standards and interpretations adopted, changes in
accounting policies and other reclassifications.
** Aveng Steel Fabrication (“ASF”), Aveng Manufacturing Automation & Control Solutions (“A&CS”) and Aveng Manufacturing Facades
business units are now reported under the Manufacturing and Processing segment, compared to the Construction and Engineering:
South Africa and Rest of Africa segment in the prior year. Comparatives have been adjusted.
The Group operates in five principal geographical areas:
2014 2013 2014 2013* 2014 2013
Segment Segment Capital Capital
Revenue Revenue assets assets expenditure expenditure
Rm Rm Rm Rm Rm Rm
South Africa 19 489 19 164 14 205 13 564 794 750
Rest of Africa including Mauritius 4 609 4 984 2 706 3 350 199 257
Australasia and Asia 25 001 24 661 12 377 10 768 225 327
Southeast Asia 3 300 2 544 1 244 989 19 57
Middle East and other regions 560 351 455 289 - 67
52 959 51 704 30 987 28 960 1 237 1 458
* Comparatives have been amended as detailed in note 3: New accounting standards and interpretations adopted,
changes in accounting policies and other reclassifications.
5. Investment property, property, plant and equipment and intangible assets
During the year ended 30 June 2014, the Group acquired assets at a cost of R1 237 million (2013: R1 502 million), applied to
R384 million (2013: R459 million) in expansions, and R677 million (2013: R925 million) in replacements relating to property,
plant and equipment, R176 million (2013: R47 million) in intangible assets and Rnil (2013: R71 million) in investment property.
The change in accounting policy on investment property from the cost model to the fair value model resulted in an increase of
R15 million (before taxation) in the carrying amount of the property. Indefinite useful life intangible assets of R15 million were impaired during the current financial year. Refer to note 6: Impairment
of non-financial assets for further details.
6. Impairment of non-financial assets
As at 30 June 2014, the market capitalisation of the Group was below the carrying amount of its equity, resulting in the
identification of a potential indicator of impairment of goodwill and other assets of the Group.
Cash-generating unit (“CGU”) impaired: Goodwill and associated indefinite useful life intangible asset
- Aveng Engineering: Goodwill of Aveng Water business unit
- Aveng Grinaker-LTA: Goodwill and associated indefinite useful life asset
• Aveng Engineering
The recoverable amount of the Aveng Engineering, CGU which includes the Aveng Water business, does not require impairment
on a technical basis. However, this position is premised on the Aveng Water business remaining within Aveng Engineering.
From 1 July 2014, the operating group will be managed by Aveng Grinaker-LTA.
As such the Aveng Water business unit would play a supporting role in securing for example, civil engineering water infrastructure
contracts, as opposed to its current market facing position. Consequently, the relocation to another business unit and its
ancillary role therein would have a detrimental impact on the R75 million goodwill of the Aveng Water business, especially
given the further impairment below. The Group have consequently determined to fully impair the goodwill directly related
to Aveng Engineering’s Water business amounting to R75 million. No other impairment of the assets of Aveng Engineering
is considered necessary.
• Aveng Grinaker-LTA
Given the fact that a verifiable and objective fact pattern supporting the turnaround of Aveng Grinaker-LTA remains
largely qualitative in nature, a pragmatic view was adopted relating to the recoverability of the R741 million goodwill
and R15 million associated with indefinite useful life intangible assets.
Significant strides have been made in improving the quality of management and processes within the operating group
and whilst the net operating loss position has reduced in 2014 along with the recent cash burn rate, a number of legacy
issues continue to affect the business, notably within the Mechanical and Electrical business unit. Despite a robust zero
based budgeting and business planning process applied to the CGU, the construction industry remains challenging thereby
increasing the range of key assumptions used in the valuation. These factors have the ability to detrimentally impact the
recoverable amount assumptions modelled for this operating group.
Based on the sensitivities of the recoverable amount to changes in discount rate and margin assumptions, the Group fully
impaired the goodwill directly related to Aveng Grinaker-LTA, amounting to R741 million.
The impairment loss has been included in a separate line item in the statement of comprehensive earnings.
The LTA trademark is considered to have indefinite useful life given the strength and durability of the trademark and
the time in which it has been in existence. As part of the impairment testing that was performed on the goodwill balance,
an impairment of the LTA trademark to the value of R15 million was also effected.
Impairments recognised during the year 2014 2013
Rm Rm
Goodwill (816) -
Intangible assets (15) -
(831) -
There was no impairment of property, plant and equipment during the current year (2013: R2 million).
7. Deferred taxation
2014 2013
Rm Rm
Reconciliation of deferred taxation asset
At the beginning of the year 1 347 998
Transfer from statement of comprehensive earnings - current year 234 209
Transfer from statement of comprehensive earnings - prior year (97) 71
Effect of change in foreign tax rate (2) (1)
Foreign currency translation movement 49 66
Reallocation from deferred taxation liability 33 (117)
Restructuring (161) 121
1 403 1 347
Reconciliation of deferred taxation liability
At the beginning of the year (319) (299)
Transfer from statement of comprehensive earnings - current year (42) (33)
Transfer from statement of comprehensive earnings - prior year 1 19
Available-for-sale fair value reserve (21) -
Reallocation from deferred taxation asset (33) 117
Restructuring 161 (121)
Foreign currency translation movement (4) (2)
(257) (319)
Deferred taxation asset balance at year end comprises
Accelerated capital allowances (368) (338)
Provisions 577 498
Contracts* (194) 21
Other 426 174
Assessed losses carried forward* 962 992
1 403 1 347
Deferred taxation liability balance at year-end comprises
Accelerated capital allowances (304) (384)
Provisions 20 16
Contracts 1 35
Other (3) 11
Assessed losses carried forward 29 3
(257) (319)
* In addition an amount of R383 million was reclassified between assessed losses carried forward and contracts.
The reclassification had no impact on the net deferred taxation asset balance, net deferred taxation liability balance
or earnings.
Unused taxation losses
The Group’s results include a number of legal statutory entities within a number of taxation jurisdictions. The
deferred taxation assets cannot be offset against the deferred taxation liabilities, as the Group will not be able to
settle taxation on a net basis in most of the different jurisdictions.
As at June 2014, the Group had unused taxation losses of R4 301 million (2013: R3 577 million) available for offset
against future profits. A deferred taxation asset has been recognised in respect of R3 691 million (2013: R3 304 million)
of such losses. No deferred taxation asset has been recognised in respect of the remaining R610 million
(2013: R 273 million) due to the uncertainty of future taxable profits in the related specific local entities.
The Group performed a five year forecast for the financial years 2015 to 2019 which is the key evidence that supports the
recognition of the deferred taxation asset. This forecast specifically focused on Aveng (Africa) Proprietary Limited,
out of which Aveng Grinaker-LTA operates and which, given its financial performance over the past three years, has
contributed significantly to these assessed losses in the Group. Aveng Grinaker-LTA has been repositioned in 2013 and
2014 to strengthen its service offering to clients in its core operations. This process saw new executive leadership
progressively appointed during the year. The new management has been tasked with minimising losses and cash outflows
on existing contracts, strengthening contract execution and commercial management and to return Aveng Grinaker-LTA to
profitability. Fundamental to these initiatives, is securing quality contracts that fulfil both risk and return
requirements for the Group. Inputs used assumed forecast real revenue growth averages of 3,9% between 2014 and
2019 that are supported by average industry benchmarks. Furthermore, the industry benchmark for average gross margins
over the past ten years was approximately 9%. These have been used as key inputs into the five year forecast for the
periods 2015 and beyond.
Also included in Aveng (Africa) Proprietary Limited are Aveng Manufacturing and Aveng Steel operating groups.
Aveng Trident Steel will continue to focus on diversifying its revenues and strengthening its profit margins by
increasing its branch network in South Africa, increasing value added products and maintaining its focus on operational
efficiency improvements. Aveng Manufacturing enters challenging market environments in a strong position in the 2015
financial year. These two operating groups are expected to continue their contribution to earnings and thereby also reduce
the extent of assessed losses in Aveng (Africa) Proprietary Limited.
8. Amounts due from / (to) contract customers
2014 2013
Rm Rm
Uncertified claims and variations (Underclaims) 6 763 4 181
Provision for amounts due from contract customers (1 102) (1 076)
Progress billings received (Overclaims) (1 766) (1 690)
Uncertified claims and variations less progress billings received 3 895 1 415
Contract receivables 5 527 6 042
Provision for contract receivables (46) (64)
Retention receivables 209 174
9 585 7 567
Amounts received in advance (911) (677)
Net amounts due from contract customers 8 674 6 890
Disclosed on the statement of financial position as follows:
Uncertified claims and variations 6 763 4 181
Provision for amounts due from contract customers (1 102) (1 076)
Contract and retention receivables 5 736 6 216
Provision for contract receivables (46) (64)
Amounts due from contract customers 11 351 9 257
Progress billings received (1 766) (1 690)
Amounts received in advance (911) (677)
Amounts due to contract customers (2 677) (2 367)
Net amounts due from contract customers 8 674 6 890
9. Cash and bank balances
2014 2013
Cash and bank balances consist of: Rm Rm
Cash and bank balances 4 136 4 120
Less: Bank overdrafts - (223)
4 136 3 897
Cash and bank balances at the end of the
period include the following cash and bank
balances that are restricted from immediate use:
Group share of cash held by joint operations 636 935
636 935
Off-setting of transactional banking
counterparty’s balances
Favourable balance 1 648 1 444
Overdraft (598) (377)
Net balance included in cash and bank balances 1 050 1 067
The Group has early-adopted IAS 32 - Financial instruments: Presentation and therefore the Group is off-setting
notional bank overdrafts.
10. Non-current assets held-for-sale
During the current year, the Group made a decision to dispose of non-core properties. These have been classified as non-current
assets held-for-sale at year-end. These properties will be sold as a single portfolio of land and buildings and therefore meets
the definition of a disposal group. When assessed for impairment (as a single portfolio), the fair value as determined by valuation
experts substantially exceeds the carrying amount of the properties and therefore no impairment is necessary. The Administration and
Elimination segment houses the disposal group. Refer to note 4: Segment report for more information.
No formal offers from potential buyers were sited by year-end and no agreement is in place regarding the sale of above-mentioned
properties. Once the sale is concluded, the intention of management is to lease back these properties. It is unlikely that the lease
period will be for the majority of their useful lives. These leases will be classified as operating leases in terms of IAS 17 -
Leases and thus the properties will be sold outright.
11. Payables other than contract-related
Reconciliation of payables other than contract-related - 2014
Opening Reallocated/ Unwinding
balance Recognised Utilised of discount Total
Rm Rm Rm Rm Rm
Payables other than contract-related 283 - (102) 16 197
Reconciliation of payables other than contracted-related - 2013
Opening Reallocated/ Unwinding
balance Recognised Utilised of discount Total
Rm Rm Rm Rm Rm
Payables other than contract-related 307 (24) - - 283
The Group has proactively engaged and cooperated with the Competition Commission in its investigation into historic
anti-competitive practices in the South African construction industry. In June 2013, the Group entered into a settlement
agreement with the Competition Commission with respect to the abovementioned investigations, levying an administrative
penalty against the Group of R307 million. This represents a full and final settlement of all alleged collusive conduct
as defined in the Consent Agreement, confirmed by the Competition Tribunal. During the current year, an amount of
R102 million was paid. The remaining balance will be settled over the next two years.
At the date on which these summarised consolidated annual financial statements have been approved, the Group is not aware
of any civil damage claims, relating to the Competition Commission Consent agreement that was confirmed by the
Competition Commission Tribunal.
12. Taxation
2014 2013
Rm Rm
Major components of the taxation expense
Current
Local income taxation - current period 30 131
Local income taxation - recognised in current taxation
for prior periods (9) (5)
Dividend withholding taxation - 1
Foreign income taxation or withholding taxation
- current period 262 348
Foreign income taxation or withholding taxation
- recognised in current taxation for prior periods (28) (43)
255 432
Deferred
Deferred taxation - current period (192) (176)
Deferred taxation - foreign rate change 2 1
Deferred taxation - arising from prior period adjustments 96 (90)
(94) (265)
161 167
The net movement on deferred taxation amounts to R118 million (2013: R329 million), which comprises a credit to the
statement of comprehensive earnings of R94 million, a debit of R21 million (2013: Rnil) fair value adjustment on
available-for-sale investments (R114 million at the CGT rate of 18,7%) and R45 million to the foreign currency translation
reserve.
South African income taxation is calculated at 28% (2013: 28%) of the taxable income for the year. Taxation in other
jurisdictions is calculated at rates prevailing in the relevant jurisdictions.
13. Contingent liabilities
Contingent liabilities at the reporting date, not otherwise provided for in the summarised consolidated annual
financial statements, arising from:
Performance bonds and guarantees issued in: 2014 2013
- South Africa and Rest of Africa (ZARm) 8 238 8 179
- Australasia and Asia (AUDm) 4 800 4 580
Other contract claims (ZARm) - 3
South Africa and the Rest of Africa
Guarantees and bonds (ZARm) 5 150 5 013
Parent company guarantees (ZARm) 3 088 3 166
8 238 8 179
Australia and Asia
Guarantees and bonds (AUDm) 651 646
Parent company guarantees (AUDm) 4 149 3 934
4 800 4 580
Contract performance guarantees issued by the parent company on behalf of other Group companies are calculated either on
the basis of all or part of the contract sum of each respective assignment, depending on the terms of the agreement,
without being offset against amounts received as compensation from the customer.
Performance bonds and guarantees issued in Australia includes advance payment guarantees for an amount of AUD142,5
million (R1 429 million), of which AUD30 million (R301 million) was called on 1 July 2014, have been issued by McConnell
Dowell to the client on the QCLNG contract. A letter of support has been issued by Aveng Limited indicating continued
financial support on the guarantees still outstanding.
Taxation dispute with Zambia Revenue Authority (“ZRA”)
A subsidiary of the Group, Moolmans Mining Zambia is currently in a taxation dispute with the ZRA relating to
additional taxation assessments issued to the company by the ZRA. The dispute is currently ongoing. As at 30 June 2014, the
outcome of the dispute is still uncertain. Aveng Moolmans has raised sufficient provision in this regard.
14. Events after the reporting period
14.1 QCLNG contract
Included in trade and other payables is an advanced payment from McConnell Dowell with regards to a portion of the Queensland
Curtis Liquefied Natural Gas (“QCLNG”) export gas pipeline contract of AUD142,5 million (R1 429 million) which is backed
by bank guarantees. AUD30 million (R301 million) of the advance payment was paid back during July 2014 with the balance due in
December 2014. Contingency funding plans are in place should the balance of advance payments have to be paid.
14.2 Convertible bond
Subsequent to 30 June 2014, the Group issued R2 billion senior unsecured convertible bonds with a tenure of five
years. The offering forms part of the Group’s strategy to manage its liquidity needs, diversify its funding sources and
reduce its reliance on bank debt, and to position itself to take advantage of growth opportunities. The main terms of the
bonds are:
- Issuer call: From the end of year three, subject to the share price being 130% of the conversion price;
- Coupon 7,25%; and
- Conversion price: 30% on the preference share price (currently R28,76, but will be adjusted downwards due to
dividends declared to shareholders and customary bondholder protection clauses).
The Group will list the unsecured senior convertible bonds on the Johannesburg Stock Exchange on 29 August 2014.
The bondholders of the bonds have an option to convert the bonds into fully paid Group ordinary shares. The issue of
the ordinary shares required for the conversion is subject to the approval of the shareholders at a special shareholders
meeting scheduled on 19 September 2014.
Consequently, if the approval for the issue of the required additional Group shares is not approved, the bondholders
will be settled in cash on maturity or earlier as provided under the terms of the bonds.
The Group intends to use the net proceeds from the offering to repay certain existing debt facilities, extend its debt
maturity profile and for general corporate purposes.
15. Related parties
During the period Aveng Limited and its subsidiaries, in the ordinary course of business, entered into various sale
and purchase transactions with equity-accounted investments. There have been no significant changes to the nature of
related party transactions since 30 June 2013.
There were no related party transactions with directors or entities in which the directors have a material interest.
16. Black economic empowerment (“BEE”) transaction
During the 2012 financial year, shareholders approved amendments to the terms of the 2004 BEE transaction which served
to extend this structure. The final shares in terms of the amended BEE share transaction were issued on 30 June 2014.
This resulted in the issued share capital of the Company increasing by 26 832 834 shares to 416 670 931 shares. Of the
26 832 834 shares issued, 8 586 507 were each allocated to the Community Investment Trust, and the Aveng Empowerment Trust,
and 9 659 820 to the BEE strategic partner. This concludes the arrangement for the Community Investment Trust and the
BEE strategic partner.
Of the total economic benefit of R942 million (as previously reported), R301 million was already paid to employees up
to 2013. This was funded by a scrip lending agreement between Investec Private Bank Limited (“Investec”) and Aveng
Management Company Proprietary Limited, whereby the Aveng Management Company Proprietary Limited lent 8 586 593 Aveng
treasury shares to Investec in order to facilitate a loan to be provided to the Aveng Empowerment Trust by Investec. These
shares will be returned to the Aveng Management Company Proprietary Limited by Investec at the end of the loan period, being
16 February 2015. The shares allocated to the Aveng Empowerment Trust on 30 June 2014 will be used to discharge its
obligation to Investec. The scrip lending shares held by Aveng Management Company Proprietary Limited are regarded as
treasury shares for accounting purposes in these summarised consolidated annual financial statements and are therefore
eliminated in the Group’s results.
17. Disposals of assets
Disposal of non-core assets
The Group embarked on a programme to dispose of non-core assets with the objective of raising at least R2,5 billion.
The assets to be disposed of, include properties and a business unit to be identified, if and when negotiations are
sufficiently advanced.
No formal offers from potential buyers were sited by year-end and no agreement is in place regarding the
above-mentioned properties.
These steps, together with cash management and turnaround initiatives implemented, will allow the Group to manage its
liquidity needs, reduce its level and cost of borrowings and position the business to take advantage of growth
opportunities in Africa, Australasia and Asia.
The non-core properties have been classified as non-current assets held-for-sale at year-end. Refer to note 10:
Non-current assets held-for-sale. These properties will be sold as a single portfolio of land and buildings and therefore
meets the definition of a disposal group.
Unlike the properties the non-core business unit did not meet the reclassification criteria necessary for recognition
as a disposal group at 30 June 2014.
Commentary
Overview
Salient features
- All Injury Frequency Rate improved to 3,8.
- Revenue increased marginally by 2% to R53 billion.
- Net operating earnings increased by 20%.
- Headline earnings per share decreased by 10%.
- Major loss-making contracts in Australia are substantially completed.
- Two-year order book increased by 11% to R40,9 billion from December 2013.
- Net cash deteriorated to R1,3 billion from R2,4 billion.
- Cash and bank balances of R4,1 billion (2013: R3,9 billion).
Safety
Safety is a core value of the Aveng Group and integral to the way the Group conducts its business. The Group remains
fully committed to improving its safety culture by driving the safety vision: “Home without harm, Everyone, Everyday”,
across all operations.
Regrettably, the Group suffered four fatalities during the 12 month period to 30 June 2014. This remains unacceptable
as Aveng strives towards fatality free operations. The Aveng Board and management extend their sincere condolences to
the families of deceased employees.
Along with the improvement in the All Injury Frequency Rate, other notable achievements were realised at Kopermyn and
Pembani coal washing plants, Sapref project, Sadiola gold mine, Skorpion Zinc and Jurong Co. Jetty Works.
Operating environment
Overview
Despite the slowdown in mining related infrastructure spend in Australia, the market still offers good opportunities,
particularly in transport related infrastructure, and oil & gas pipelines.
The South African market continued to be challenging due to the ongoing low levels of infrastructure related spend,
the impact of lower mining activities, labour disruptions - though the impact was lower than the previous year - and a
generally subdued manufacturing and steel sector.
In response to the current operating environment and isolated areas of underperformance, which affected the Group’s
cash flow and liquidity, the Board implemented a recovery and stabilisation plan during the year. This involves a number
of immediate measures to resolve and settle major outstanding project claims, restore cash flow and liquidity and realign
fixed overhead cost structures to ensure future sustainability. The plan is well advanced and forms a stable foundation
for the optimisation and growth of our businesses.
Construction and Engineering: Australasia and Asia: Despite the challenging business environment in Australia due to
the softness of its core commodity-based sector and increasingly demanding commercial conditions, multi-year major mining
and infrastructure contracts contributed to ongoing revenue growth. Operations in New Zealand and South East Asia
achieved increased revenue with excellent contract execution in most areas.
Construction and Engineering: South Africa and Rest of Africa: The South African construction industry, which
generated 88% of this operating segment’s revenue, remained weak during the year under review. The industry was characterised by
low levels of activity, strong competition and heavy rainfalls across South Africa in March 2014, which specifically
disrupted sites in the Lephalale area.
The Mining segment continued to benefit from its diversified client and commodities portfolio despite the difficult
trading environment. Pricing and cost pressures characterise the current mining environment. The open cut business managed
its operations well in this environment, with a sound operational performance.
The Manufacturing businesses had a strong year. In particular, the Infraset and Lennings Rail Services businesses
performed well by taking advantage of transport related opportunities in sub-Saharan Africa and South Africa. The successful
expansion into Mozambique and Zambia will provide the business with a platform to pursue other sub-Saharan
opportunities. It is expected that benefits will continue to accrue from the further breaking-down of silos and cross-pollination
across Manufacturing and Processing and other operating groups.
Aveng Steel operated in extremely challenging market conditions. Lower demand from the construction industry in a
generally weak economy was compounded by industrial action in the automotive, construction and mining sectors. Intense
competition has further exacerbated overstocking in the steel industry. Despite this, Aveng Steeledale affected a significant
turnaround in performance.
Financial performance
Statement of comprehensive earnings
Revenue of R53 billion remained largely flat against the prior year’s R52 billion reflecting consolidating growth. The
weaker South African Rand foreign exchange rate contributed R1,6 billion (2013: R3,4 billion) to Rand denominated
revenue from the Construction and Engineering: Australasia & Asia and Mining operating segments.
Group net operating earnings increased by 20% to R784 million (2013: R656 million) as a result of:
- a significant 42% reduction in the net operating losses of Aveng Grinaker-LTA;
- a robust 55% increase in net operating earnings in the Manufacturing and Processing segment; and
- Aveng Mining Shafts & Underground experiencing a 147% increase in net operating earnings, having avoided receivable
write-downs of the previous year.
- The performance was negatively affected by significant losses from McConnell Dowell’s Gold Coast contract and
while the impact of labour disruptions was reduced, the direct cost was still material at R179 million.
Earnings from equity-accounted and other investments increased to R66 million from R29 million in June 2013 due to
earnings from the investments in renewable energy contracts, as well as McConnell Dowell’s Middle East investments.
Goodwill and related intangible assets arising from the 2001 merger of Grinaker and LTA, with a carrying amount of
R756 million, were impaired during the financial year. In addition, goodwill of R75 million associated with Aveng Water
was also impaired. The impairment affected the earnings per share of the Group while the headline earnings per share
remained unaffected.
As a result of improved returns from the Group’s investment in the Goldfields Mall investment property, the carrying
amount of the Group’s investment in that property increased by R15 million to reflect its fair value (refer to note 3:
New accounting standards and interpretations adopted, changes in accounting policies and other reclassification of the
summarised consolidated annual financial statements).
Net finance expenses increased to R183 million, largely due to additional interest paid as a result of higher credit
facilities to fund increased working capital requirements associated with major contracts, and asset based finance at
Aveng Moolmans. Borrowings of R2,9 billion increased by R1,4 million compared to R1,5 billion at June 2013.
The taxation expense marginally decreased from R167 million in the comparative period to R161 million. Excluding the
impact of the impairment charges in the current year, the effective tax rate reduced marginally to 26% (2013: 27%).
Loss per share (LPS) of 101,9 cents decreased 182%, adjusted earnings per share (AEPS) of 120,3 cents decreased 4%
(2013: EPS and AEPS 124,6 cents) and headline earnings per share (HEPS) of 112,5 cents decreased by 10%. AEPS modifies LPS
by eliminating the impact of the aforementioned impairment.
Statement of financial position
The Group reduced capital expenditure to R1,2 billion (2013: R1,5 billion), applied to R384 million in expansions and
R677 million in replacements relating to property, plant and equipment, and R176 million to intangible assets. The
majority of the amount was spent as follows:
- R243 million in support of new contracts at McConnell Dowell;
- R259 million at Aveng Moolmans of which R108 million was for new contract awards and R97 million for volume
expansions attributable to existing mining operations in South Africa;
- R404 million in the Manufacturing and Processing segment comprising R288 million for expansions and R116 million
for replacements. The capital expenditure mainly related to the high-tensile cut-to-length line in KwaZulu-Natal, an ERP
system for Aveng Trident Steel and outlays for the Nacala rail contract; and
- R123 million at Aveng Grinaker-LTA comprising R94 million for expansions and R29 million for replacements. The
outlay mainly related to assets purchased for the Nacala rail contract of R57 million.
Equity-accounted investments held by the Group increased to R306 million from R144 million in the prior year, as a
result of the increase in the Group’s investments in renewable energy contracts of R107 million, and equity-accounted
earnings of R33 million.
Amounts due from customers (non-current and current) increased significantly from the comparative period by R2,1
billion to R11,4 billion (2013: R9,3 billion). The main contributors were as follows:
- An increase in uncertified claims and variations of R2,6 billion to R6,8 billion, mainly relating to McConnell
Dowell with a carrying amount of R4,5 billion (2013: R2,7 billion) and Aveng Grinaker-LTA of R1,2 billion (2013: R872
million);
- A decrease in contract and retention receivables of R480 million to R5,7 billion; and
- The loss allowance provision against amounts due from contract customers increased by R26 million to R1,1 billion,
of the back of higher demobilisation provisions relating to Aveng Moolmans’ contracts in West Africa. This provision was
reallocated from the provisions (as disclosed in 2013) to amounts due from contract customers to reflect the net risk
exposure implicit in uncertified claims and variations (refer to note 3: New accounting standards and interpretations
adopted, changes in accounting policies and other reclassification of the summarised consolidated annual financial
statements).
Amounts due to contract customers increased by R310 million to R2,7 billion from the prior period, due to an increase
in progress billings in McConnell Dowell of R700 million mitigated by the utilisation of amounts received in advance in
Aveng Grinaker-LTA of R300 million.
Trade and other payables increased by R755 million largely due to improved payment terms negotiated in the
Manufacturing and Processing segment. Included in trade and other payables balance is an advance payment from the Queensland Curtis
Liquefied Natural Gas Pipeline (QCLNG) contract amounting to AUD142,5 million, of which AUD30 million was settled
subsequent to year-end, with the remainder anticipated to be settled by December 2014. Payables other than contract-related
decreased to R197 million compared to R283 million in the prior period due to the first payment to the Competition
Commission in terms of the administrative levy settlement concluded in the prior financial year.
These factors culminated in an operating free cash outflow of R1,4 billion (2013: R1,5 billion adjusted for the
deconsolidation of previously consolidated entities in terms of IFRS 10 Consolidated Financial Statements) primarily
reflecting the increased working capital requirements associated with major contracts.
Cash and bank balances increased to R4,1 billion (2013: R3,9 billion) while the net cash position deteriorated to R1,3
billion from R2,4 billion in the comparative period. The deterioration was due to the increase in borrowings due to
working capital requirements needed to fund contracts in Australasia and Asia.
The final shares in terms of the amended BEE share transaction were issued on 30 June 2014 resulting in the issued
share capital increasing by 26,9 million shares to 416,7 million. Of the 26,9 million shares issued, 8,6 million were
allocated to both the Community Investment Trust and the Aveng Empowerment Trust and 9,7 million to the BEE strategic
partner. Of the total economic benefit of R942 million (as previously reported in the 2012 financial year), R301 million was
awarded to employees. The Community Investment Trust and the BEE strategic partner converted to a direct shareholding of
2% and 2,3% respectively. The Community Investment Trust will utilise the future proceeds from its shareholding to focus
on community development initiatives which include key focus areas of technical skills development and improvement of
mathematics and science education at secondary school level. The issuing of shares was settled against retained earnings
and had no impact on the cash flows of the Group. This concludes a transaction that resulted in a very positive outcome
in line with the Group’s commitment to empowering in the spirit of South Africa’s transformation objectives.
In line with the strategic objective to strengthen the financial position of the Group, the Board decided to diversify
the Group’s funding sources, extend the debt maturity profile and reduce overall borrowing levels and the cost thereof
to enable Aveng to concurrently pursue contract claims to a positive conclusion whilst taking advantage of growth
opportunities. Consequently, the Group:
- Embarked on a programme to dispose of non core assets with the objective of raising at least R2,5 billion. The
assets to be disposed of comprise properties and a business unit which will be identified when negotiations are sufficiently
advanced.
- Subsequent to the Group’s reporting date, on 16 July 2014, a R2 billion senior unsecured convertible bond with a
coupon of 7,25% maturing on 24 July 2019 was successfully placed. The bonds are convertible to shares at a premium of 30%
on the reference share price at the option of the bondholders (currently R28,76 though subject to standard modifications
common to these instruments), subject to approval of shareholders at a meeting to be convened on 19 September 2014. The
instruments will be listed on the Johannesburg Stock Exchange (“JSE”) on 29 August 2014.
- The Group has adequate funding facilities available due to arranging revolving credit facilities of R2 billion, an
18 month revolving credit bridge facility (backed by the sale of properties) of R1 billion and the convertible bond of
R2 billion.
Operating Review
Construction and Engineering: Australasia and Asia
This operating segment comprises McConnell Dowell Construction, Tunnelling, Electrix, Built Environs and the Pipeline
business units.
Revenue increased by 5% from 2013, though remained flat in Australian dollar terms at AUD3 billion. Additional
substantial losses on the Gold Coast contract due to execution challenges experienced had a significant impact on the operating
segments and the Group’s performance, with net operating earnings decreasing by 58% to R271 million (2013: R639
million).
Revenue growth of 2% in the Australian Operations was driven by the Hay Point Berth and Roy Hill iron ore marine
contracts. Inclement weather during the first half of the year resulted in delays to the Hay Point Berth contract. Completion
of the works on this contract is expected in the first half of the 2015 financial year.
The Gold Coast contract has now been substantially completed with technical hand-over to the client during July 2014.
Cash outflow associated with this contract is still expected in the early part of the 2015 financial year due to close
out and demobilisation actions. Its cost to completion has significantly exceeded budget due to complex design and scope
amendments, along with the impact of delay events and acceleration requirements. This resulted in a material loss being
recognised in the financial year along with a significant increase in uncertified revenue. With completion reached, the
process to finalise and resolve claims with the affected counterparties will be intensified. Given the technical and
legal complexities associated with the process, it is expected that the commercial negotiations will be protracted, and
thus the final outcome remains an uncertain and material risk to the Group.
The Pipelines business unit reported an 11% decline in revenue as the large liquefied natural gas pipeline contracts
in Queensland progressed towards completion. Construction work on the Australia Pacific Liquid Natural Gas contract was
completed in June 2014 and work on the Gladstone Liquefied Natural Gas contract continued. Commercial close-out for these
two contracts is expected in the first quarter of the 2015 financial year. Segment profitability, however, continues to
be negatively impacted by the non-contributing QCLNG contract. Although the key contract milestones were successfully
met and milestone completion incentives earned, the commercial claims process remains a material risk. Significant
executive management effort is being applied to recover losses on the QCLNG contract. In December 2013, the QCLNG joint
venture was unsuccessful in the first part of the commercial claims arbitration under the expedited arbitration. Leave to
appeal this outcome, as announced on 21 July 2014, was unsuccessful. The second arbitration case will be managed on the
International Chamber of Commerce rules instead of an expedited arbitration structure that has been applied in the first
part of the arbitration process. Claims were submitted on 23 July 2014 and the arbitration case is only likely to be heard
by the end of the 2015 financial year. Claims contained in the second arbitration are considerably larger in both number
and monetary value than those to which the initial arbitration award applied. The parties involved are intent on
expediting the arbitration process.
The Overseas Operations performed well in challenging market conditions, achieving strong profit growth on excellent
execution performances, despite a marginal 1% decrease in revenue. Revenue was sourced from the power, marine and
building sectors in New Zealand and South East Asia (Indonesia and Malaysia) supported by a solid performance by the Middle
East business (oil, gas and mechanical and electrical work).
The Electrix business unit continued to perform well as reflected in another year of strong growth in the electrical
and gas sector in New Zealand and Australia, resulting in a 32% growth in revenue. Securing the Kiwi Rail North Regional
Traction Maintenance contract positions the business to expand further in the transport sector.
The revenue of the Building operation increased as work continued on the Perth Airport Terminal 1 expansion and the
Ocean Keys Shopping Centre expansion, which are McConnell Dowell’s two largest contracts in Western Australia.
The Tunnelling and Underground operation reported a significant increase in revenue of 83% due to the Beauty World
tunnel and station contract in Singapore and the Waterview contract in New Zealand.
The operational team continued to focus on strengthening execution performance.
Construction and Engineering: South Africa and Rest of Africa
This operating segment comprises Aveng Grinaker-LTA and Aveng Engineering.
This segment no longer includes Aveng Steel Fabrication, Aveng Manufacturing Facades and Aveng Manufacturing
Automation & Control Solutions, effective 1 July 2013. Comparatives have been amended accordingly.
Revenue increased by R1,1 billion to R8,5 billion (2013: R7,4 billion), mainly due to Aveng Engineering’s increased
activity on the Sishen and Gouda renewable energy contracts, the ramp up of the major rail contracts and the commencement
of two new major building contracts by Aveng Grinaker-LTA, namely Mall of the South and the Sasol Corporate Head Office.
Net operating losses significantly reduced against the prior year, though losses emanated from insufficient margins on
legacy contracts, most notably the Mokolo Crocodile Pipeline contract, at Aveng Grinaker-LTA. This was partly offset by
a profit at Aveng Engineering as a result of good progress on the renewable energy contracts and the cost reduction
process. As a result, the net operating loss for the segment reduced by R402 million (42%) to R566 million loss (2013: R968
million loss).
Aveng Grinaker-LTA
Revenue increased by 12% to R7,5 billion (2013: R6,7 billion). The increase was as a result of the ramp-up of the
Nacala and Majuba Rail Link contracts, as well as the commencement of the Mall of the South and the Sasol Corporate Head
Office.
Although significant improvement has been made from the prior year, performance was negatively impacted by delays
experienced on the Mokolo Crocodile Pipeline contract as a result of excessive rain and other non contributing legacy
contracts that continue to be worked out of the revenue stream.
The first half of the financial year, was focused on rebuilding morale within the business. Senior management embarked
on client engagements on the problematic contracts. Capability assessments and business process mapping also received
attention.
The second half of the financial year saw a strengthening of leadership in the civils business unit, as well as
increased focus on contract execution, commercial, tendering and financial functions. The senior management team is
responsible for leading the immediate and medium term business strategy and plans. The fixed cost structure of the operating group
is being reassessed, though savings will only begin to realise during the 2015 financial year.
Civil Engineering achieved a 39% increase in revenue, but its profit margin was heavily impacted by the Mokolo
Crocodile Pipeline contract which was a significant contributor to the overall operating losses. The losses on this contract
arose from the unusual heavy rainfall in March 2014 which caused significant damage to the pipeline and further delays.
Very little progress was made on the contract during March 2014. Some of the work areas remained inaccessible for an
extended period, culminating in a three-month delay to the project. The installation of the mechanical and electrical work on
the pump station has commenced which enables the work in these areas to progress in advance of what has been
programmed. Opportunities to recover the losses through, among others, insurance claims are being pursued. All notices have been
lodged with the insurers.
The Nacala Rail contract in Tete province, Mozambique commenced in July 2013 and achieved good progress. 76% had been
completed despite commissioning delays and heavy rains in the second half of the year, with contract completion expected
in September 2014 as the average daily current production is in line with the recovery programme requirements.
The Majuba Rail Link contract was also adversely impacted by inclement weather and labour disruptions, resulting in a
revised programme for completion in October 2015 with all efforts being made to meet the contractual milestone.
The Medupi Power Station Joint Venture contract’s contractual claims were submitted to counter the eroding effect of
delayed actions and are currently being discussed with Eskom. The contract is subject to continuous review to streamline
delivery.
Mechanical & Electrical (M&E) experienced a 9% decline in revenue. M&E is involved in Eskom’s two new coal fired power
plant contracts. Actions to recuperate associated costs relating to delays continue.
The Building and Coastal operation experienced a 3% increase in revenue due to the completion of the Cradlestone Mall
contract in Krugersdorp in the first half of the year and the ramp up of the Sasol Head Office in Sandton and the Mall
of the South in Alberton in the latter part of the year. Works on the two new contracts are progressing well despite
heavy rains during the second half of the financial year and unforeseen ground conditions on the Sasol contract.
Aveng Engineering
Aveng Engineering was established on 1 July 2013 as the operating group responsible for generic engineering services
and contract management activities in the water, power and energy, and minerals sectors. It houses the design and
construction services of the Aveng Group’s renewable energy interests.
The operating group’s revenue for the year under review increased by 60% to R1 billion (2013: R643 million) reflecting
a distinct shift from the minerals processing and water sectors, which are under pressure, to the more buoyant
renewable energy sector. Net operating earnings, despite being impacted by challenges in the Water and Minerals Processing
divisions, improved as a result of equity accounted profits on the good progress of the renewable energy contracts and cost
optimisation measures.
The Power division is involved in a joint venture with Acciona Energia to design, build and operate the Sishen
Photovoltaic solar energy farm in the Northern Cape and the Gouda Wind Energy Facility in the Western Cape. The Sishen solar
facility is on schedule for completion in December 2014 and the Gouda wind facility is on schedule for completion in May
2015.
Mining
This operating segment comprises Aveng Moolmans and Aveng Mining Shafts & Underground.
The segment reported an 11% decrease in revenue to R6,6 billion (2013: R7,4 billion). Net operating earnings reduced
by 25% to R529 million (2013: R701 million) due to the general downturn in the mining and commodity market and non
renewal of contracts at Aveng Moolmans.
The revenue of Aveng Moolmans declined by 14%, impacted by weak commodity prices in the mining industry which
contributed to the completion and non renewal of three gold mining contracts in West and Central Africa (Ghana, Guinea and
Tanzania) during the second half of the financial year and the cancellation of the Lumwana copper contract in Zambia in 2013.
Net operating earnings were further impacted by the unforeseen costs associated with demobilisation of equipment and
contract closures, and a reduction in scope at the Sadiola contract in Mali. Despite the decrease in revenue, efficiency
initiatives assisted in sustaining the operating margins.
In December 2013, Moolmans was awarded a significant five year contract at the Nkomati Nickel Mine in Mpumalanga for
the African Rainbow Minerals and Norilsk Nickel Africa joint venture, utilising the idle fleet from the cancelled
contracts in Zambia and Ghana. The contract to mine 30 million tonnes per annum of waste and ore commenced in July 2014.
Aveng Moolmans also secured extensions for Tati Nickel’s Phoenix Mine in Botswana to September 2015 and the Langer
Heinrich Uranium Mine in Namibia to December 2018.
Aveng Moolmans continued to record good operational performances in its South African operations. The contract at
Sishen Iron Ore Mine for Anglo American’s Kumba Iron Ore was renewed until 2017.
The Zambia Revenue Authority (ZRA) has issued additional tax assessments against Aveng Moolmans which are currently
being disputed. Aveng Moolmans has raised sufficient provision in this regard.
The non renewal of contracts, new awards and extensions have altered the geographic and commodity profile of Aveng
Moolmans’ contract portfolio and reduced its overexposure to one client in the gold mining sector. Work in the rest of
Africa accounts for 38% of the order book, compared to 50% in December 2013.
Aveng Mining Shafts & Underground experienced a marginal reduction in revenue of 3% due to the impact of conditions in
the mining industry and a more selective approach to new work in order to strengthen the quality of the operation’s
earnings. Net operating earnings were impacted by margin slippage at some South African contracts combined with operational
challenges experienced at the Chuquicamata Copper Mine in Chile.
Agreement has in principle been reached with Codelco, the client for the Chuquicamata contract, to settle a
significant number of outstanding claims. This will assist the contract in returning to profitability, and reduce cash flow
pressure.
Good operational progress was made on work at the Wesizwe Platinum Bakubung Mine and Sasol’s Shondoni coal contract.
Despite delays in the environmental management plan for Platreef, site establishment has commenced.
Manufacturing and Processing
This operating segment comprises Aveng Manufacturing and Aveng Steel, and now includes Aveng Steel Fabrication, Aveng
Manufacturing Facades, and Aveng Manufacturing Automation & Control Solutions, effective 1 July 2013. Comparatives have
been amended accordingly.
Revenue remained flat at R10,6 billion (2013: R10,6 billion) and net operating earnings increased by 54% to R363
million (2013: R235 million).
Aveng Manufacturing
Aveng Manufacturing delivered a very strong financial performance in spite of tough market conditions and the impact
of the platinum mining labour disruption impacting Aveng Manufacturing Duraset, Aveng Manufacturing Facades and Aveng
Manufacturing DFC. Total revenue grew by 13% to R3,4 billion (2013: R3 billion) with a resulting improvement in net
operating earnings largely as a result of:
- substantial increases in the volumes of railway sleeper sales in Mozambique, Zambia and South Africa by Aveng
Manufacturing Infraset;
- award of significant rail construction and maintenance contracts at Aveng Manufacturing Lennings Rail Services; and
- ongoing growth in the supply of concrete products to domestic construction contracts.
Aveng Manufacturing focused on strengthening working capital management by specifically improving receivables
collection and inventory control.
Aveng Manufacturing Infraset’s revenue increased by 37%, benefiting from the opportunities in its precast concrete
markets in South Africa and southern Africa. It was particularly successful in increasing the supply of concrete sleepers
and pipes to rail contracts from its newly constructed factory in Tete, Mozambique to the Nacala Section 2 railway
contract and also to Zambian Railways from its Brakpan factory. The expanded Zambian factory commenced operations in mid June
2014 in support of its Zambia Railways contract. New awards include Eskom’s Majuba Rail contract and supply for a rail
development contract for Kalagadi Manganese in the Northern Cape. In addition, Aveng Manufacturing Infraset experienced
ongoing growth in the supply of its tile and paving products to low-cost housing contracts in South Africa.
Despite a 10% decrease in revenue, Aveng Manufacturing Lennings Rail Services regained momentum after completion of
the FMG rail construction contract in Australia. Contracts currently underway include Nacala Section 2 railway contract in
Mozambique, Majuba Rail contract for Eskom, construction contracts for Exxaro and Kalagadi Manganese as well as a
number of three-year contracts for maintenance of the Transnet rail network.
Aveng Manufacturing Facades experienced significant growth in revenue during the first half of the year as a result of
its work on major building contracts such as Sandton City’s Atrium on 5th and Pretoria Towers. Cost overruns, together
with labour disruptions, resulted in an operating loss for this business unit. New leadership has been appointed and the
business is being repositioned to strengthen its future performance.
Aveng Manufacturing Duraset was particularly affected by protracted labour disruptions in the platinum sector
resulting in low demand which contributed to a 6% reduction in revenue.
Aveng Manufacturing DFC achieved 9% growth in revenue due to the impact of higher international sales volumes in the
USA and Finland in spite of the weaker mining and water reticulation sectors in the South African and Australian markets.
The business entered into long-term contracts with Tsurumi, a Japanese supplier of water pumps and Clay-val, a European
supplier of large water valves, to supply their products to the rest of Africa.
Aveng Manufacturing Automation & Control Solutions performed well, reporting a 17% increase in revenue as a result of
an increase in general product sales, this despite delays in the awarding of new contracts. The business focused on
improving its operational efficiencies and strengthening its business development in the sugar, water and chemical
processing industries.
Aveng Steel
This operating group consists of Aveng Trident Steel, Aveng Steel Fabrication and Aveng Steeledale.
The financial performance of Aveng Steel was heavily impacted by lower sales volumes due to two consecutive labour
disruptions within the automotive and component manufacturing sectors in the first quarter of the financial year, and
subdued activity in its key markets. This resulted in a 4% decline in revenue to R7,2 billion (2013: R7,5 billion). Profit
margins of Aveng Steel declined as marginal price increases did not compensate for the lower demand and the impact of the
aforementioned labour disruptions.
The benefits of integrating the three businesses began to materialise during the year and interventions to turn around
Aveng Steeledale and Aveng Steel Fabrication resulted in additional cost reductions. As a consequence of these actions,
Aveng Steeledale achieved a significant turnaround in performance delivering a net operating profit in the second half
of the financial year. Cost cutting measures combined with stronger receivables management and improved productivity on
some contracts enabled Aveng Steel Fabrication to significantly reduce its operating losses.
Aveng Trident Steel’s performance was constrained by weak demand, the inability to effect price increases as well as
increased competition and lower demand from the automotive industry, partly as a result of the labour disruptions.
Aveng Steeledale achieved its primary objective to restore fundamental business practices and a turnaround to
profitability. This resulted in a significant reduction in direct and indirect costs, while stronger emphasis was placed on
leveraging Steeledale’s competitive advantages of geographic spread and experience in managing construction sites.
Aveng Steel Fabrications’ contract to supply fabricated steel to the Medupi and Kusile power stations proceeded to
plan and is expected to continue until the second half of the 2015 financial year. Low levels of demand for infrastructure
development and the depletion of work on hand impacted the business’ financial performance and it is expected to
continue into 2015.
Administration
Administration, which comprises concessions, corporate services, corporate held investments including properties, and
consolidation eliminations, reflected an improved result for the current period.
The segment reported a net operating earnings of R186 million (before the impairment charge of R831 million) compared
to net operating loss of R48 million in the comparative period. The improved performance is due to:
- R111 million net success fee earned on the Gouda renewable energy contract which reached financial close in July
2013, and lower contract development costs compared to the 2013 financial year;
- profit on the disposal of unused surplus land;
- mark-to-market loss on hedging instruments of R29 million;
- cost-saving initiatives; and
- a change in philosophy regarding the recovery of centralised administration costs to better reflect usage of the
support services.
Dividend declaration
The Board has reviewed the current period’s financial performance and as a result of the adverse cash flow associated
with Australian contracts and losses at Aveng Grinaker-LTA, the Board has resolved not to declare a dividend. The Group
will revert to its stated dividend policy in the medium term.
Two-year order book
The Group’s two-year order book increased to R40,9 billion as at June 2014, an increase of 11% compared with the R36,7
billion two-year order book reported as at December 2013.
Within the Construction and Engineering: Australasia and Asia segment, the two-year order book increased by 19% to
R24,1 billion (from R20,3 billion in December 2013) and reflects the award of new contracts, particularly in the marine,
civil, rail and transport-related sectors. Overseas construction, pipelines and electrical operations gained at the
expense of Australia Construction, Tunnels and Building. Geographically, New Zealand and Southeast Asia gained at the expense
of Australia. The evolution of the order book reflects progress made against the objective of diversifying beyond
Australia into less commodity dependent sectors. Important contract awards in the second half of financial year include
Webb-Dock, Brisbane Ferry Terminals, K2K Highway Upgrade and 4th Parallel Pipeline JV.
The Construction and Engineering: South Africa and rest of Africa segment’s two-year order book decreased by 13% to
R7,4 billion from R8,5 billion since December 2013. Oil and gas and infrastructure contracts gained at the expense of
power and water contracts. Diversification of cross border activities resulted in an order book outside of South Africa of
9%. The amount of public sector work remains unchanged since December 2013. Significant contract awards in the second
half of financial year included work for Sanral, Platreef Resources, Netcare, Engen and Aspen Pharmacare.
The combined order book of Aveng Mining increased by 21% to R8,6 billion from R7,1 billion in December 2013, with
South Africa gaining significantly relative to non South African operations. Platinum, nickel and manganese related
contracts gained at the expense of gold and coal, thus reducing the previously heavy dependency of gold contracts outside of
South Africa. Aveng Moolmans accounts for 68% of the order book, up by 18% compared to December 2013, with 33% of work
currently outside South Africa down from 47% in December 2013.
Outlook and prospects
Management has a clear plan to improve liquidity over the short term and is addressing the overall fixed cost base of
the Group. The Group will continue to focus on improved operational performance with a specific focus on returns and
cash generation.
With the slowdown in some of its traditional markets, the Construction and Engineering: Australasia and Asia segment
continues with its strategy to diversify into non-mining opportunities in its traditional markets and regions outside
Australia. McConnell Dowell aims to achieve increased profitable market share within the oil & gas and minerals & mining
sectors. In addition to the aforementioned prospects, targets in the contract pipeline include transport infrastructure,
hydro power, reticulation pipelines, and urban and major redevelopment infrastructure works. With a significant portion
of its non-contributing revenue having reached completion, the segment is expected to generate an improved performance.
The commercial resolution of the QCLNG and Gold Coast claims will remain a materially significant risk to the medium-term
earnings of the segment and the Group.
Within the Construction and Engineering: South Africa and rest of Africa, progress has been made in key focus areas
intended to stabilise Aveng Grinaker-LTA, to address its critical challenges in underperforming contracts and return it to
sustainable profitability. Although the early stages of the business turnaround are evident, the focus remains firmly
on improving contract execution and commercial management, while aligning the fixed cost structure with revenue. In
combination with achieving commercial resolution to loss making contracts and the working out of non contributing contracts
in the revenue stream, the business will continue to focus on its recovery process. Prospective pipeline targets are
healthcare, retail, rail infrastructure, interchange-focused road works, water and renewable energy.
It is anticipated that investment in the Mining industry will remain constrained until the 2016 financial year, and
the lead times to secure new contracts will continue to be lengthy. The cost pressures faced by mining companies will
maintain pressure on contractor’s profit margins. In this environment, Aveng Moolmans and Aveng Mining Shafts & Underground
will both focus on improving internal operational efficiencies and mitigating risk by securing contracts of a longer
duration in support of an improved financial performance.
Aveng Manufacturing enters the 2015 financial year with strong prospects in a difficult market. Railway development
remains a key growth market and Aveng Manufacturing will continue to construct, supply concrete products and pursue
additional rail maintenance work for the major railway contracts underway in Mozambique, Zambia and South Africa during 2015.
The steel industry is anticipated to remain under pressure in the coming financial year, with no improvement in prices
or demand projected in the present economic environment. The steel sector labour disruptions in July 2014 will have a
notable impact on the first half of the 2015 financial year.
Aveng Trident Steel will continue to focus on diversifying its revenues and strengthening its profit margins by
increasing its branch network in South Africa, targeting higher value added products and maintaining its focus on operational
efficiency improvements. Aveng Steeledale will focus on strengthening its distribution network and preserving a lower
cost base. The business will benefit from an increase in infrastructure investment. Aveng Steel Fabrication will focus on
boosting its operations and achieving sustainability by reducing costs, securing more work and improving profitability.
All operations within the Aveng Group will focus on optimisation and efficiency initiatives focusing on the efficacy
and cost competitiveness of the fixed cost base.
In summary, while the Group expects the underlying performance of the business to improve in the 2015 financial year,
the resolution of the claims will remain a material risk to earnings.
By order of the Board
AWB Band HJ Verster
(Chairman) (Chief Executive Officer, and acting Group Financial Director)
26 August 2014
Morningside, Sandton
Directors
AWB Band*# (Chairman), P Erasmus*#, MA Hermanus*#, MJ Kilbride*#, JJA Mashaba (Group Executive Director),
TM Mokgosi-Mwantembe*#, DG Robinson^, E Diack*#, MI Seedat*#, K Mzondeki*#,
HJ Verster (Chief Executive Officer and acting Group 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
Company Secretary
Michelle Nana
Registrars
Computershare Investor Services (Proprietary) 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
Sponsor
J.P. Morgan Equities South Africa (Proprietary) Limited
Registration number: 1995/011815/06
1 Fricker Road, cnr Hurlingham Road, Illovo, 2196, South Africa
Telephone +27 11 537 5333
Telefax +27 11 507 0770
www.aveng.co.za
Date: 26/08/2014 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.
Sharenet Sites 
