aveng grinaker -lta · aveng grinaker -lta ... thermal power systems design, ... civil engineering...

AVENG GRINAKER-LTAInvestor Conference 19 & 20 October 2015

Majuba Rail – Bridge over the Vaal River

INVESTOR CONFERENCE │ 19 & 20 OCTOBER 2015

AGENDA

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OVERVIEW

STRATEGY

MARKET OPERATIONAL

OUTLOOK Q & A

OVERVIEWDepartment of Environmental Affairs3


What we do

The Construction and Engineering operating group of companies offers services across the construction and engineering value chain.

The service offering varies from the construction of buildings, bulk concrete structures, roads and earthworks, and mechanical and electrical engineering as well as turnkey water treatment solutions.

The company employs in excess of 1 700 permanent staff and a further 5 500 as contract employees across projects.

The business represents 19% of the group.

OVERVIEW | Business

Chris Botha

Managing Director

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Appointed in January 2014. Chris has worked on major infrastructure projects in South Africa and in various African countries over the past 22 years.

With the consolidation of Construction and Engineering, Chris’ main focus is on the turnaround and close out of loss making projects, re-establishing the Brand while positioning for growth in selected sectors and targeted geographies.


OVERVIEW | The Aveng Grinaker-LTA team

DIVISIONAL LEADERSHIP EMPLOYEES AND CORE COMPETENCIES

MECHANICAL & ELECTRICAL

Dr. Lilian Simon, Div. Managing Director17 years in engineering & power construction industryThermal power systems design, EPC and international experience

Approximate 2000 employees Full SMEIP offering for processing plants High-pressure pipe fabrication facility Aveng Engineering division: Aveng Water, Operations &

Maintenance

CIVIL ENGINEERING

Richard Evans, Div. Managing Director24 years in construction industryStructures, Roads & Building expertise, sub-Sahara Africa experience

Approximate 3100 employees Pipelines, dams, bridges, geotechnical and Asphalt &

Binders Chimneys design build specialists and maintenance Survey, technical and laboratory services

COASTALAlex Boyazoglu, Div. Managing Director27 years in construction industryComplex building expertise incl. Middle East, North Africa

Approximate 500 direct employees General contracting, industrial and commercial building

base Footprint spans entire SA coastline and extends to Namibia

BUILDINGMarc Meire, Div. Managing Director29 Years in construction industryDesign-build, complex high rises and retail building expertise

Approximate 700 direct employees Management of all types of building contracts Participation in Property PPPs and Design Build projects Building Sasol Corporate H/O and Old Mutual H/O &

basement

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Management stability with MD appointments

Substantially reduced staff attrition

Consolidation of Engineering into AGLTA

Consolidation of operations onto Aveng Park

Rationalisation of the Overhead

New brand, improved internal and external perception

Improvement in Safety performance and systems initiatives

Successful delivery of major projects i.e. Mall of the South

Progress on close out of loss making projects Commissioning Mokolo pipeline & completing Grootegeluk

Close out of water projects; BECSA, Optimum

Plant re-capitalisation and operational support efficiencies

Risk management processes

Municipal works awards; Ekurhuleni, Dept. of Education

Leveraging strength in Building and Roads markets

OVERVIEW | Successes in the turnaround

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PEOPLE & STRUCTURE OPERATIONS

MARKETTowers, Maude Street, Sandton – Artists Impression7


MARKET | Overview

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ISSUE TREND FEATURES AND RELEVANCE

GDP Growth – RSA’s growth stagnation Risks remain in our trading environment; commodity prices, labour unrest and power supply

RSA Public Sector Investment Growth in Provincial and Municipal spend. Focus on Education, Health and Public works. Housing and urban planning in Metros

SAFCEC Civil Engineering Industry Outlook Roads activity and Building sector’s relative buoyancy

Cross Border Investment Mine Capex down. LNG opportunity in the medium term. Projects need funding offer.

Public policy priorities: Private sector participation in investment; Power IPPs, Transnet logistics corridors, Lesotho Highlands Phase 2, Roads infrastructure. Nuclear energy timing unclear.


Relative peak in Commercial Building[Retail & Sandton CBD Office Developments]

Active and growing in municipal market in Gauteng and Western Cape

Industrial opportunities in Coastal

Cross border property development and design build opportunities

Ongoing IPPs (Solar, Coal, Gas and Wind)

Opportunities with PRASA, SANRA[Major Roads, PRASA Depots]

Municipal water treatment & sanitation

Positioning for major projects[Lesotho Highlands, Mozambique LNG]

Cross border roads and rail

Well positioned in the industrial operations and maintenance sector

Solar IPPs with experience to leverage

Lower activity in mining processing new or expansion projects in SA and rest of Africa

RSA power plant maintenance and refurbishment programme

MARKET | Attractive opportunities

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BUILDING MARKET CIVIL ENGINEERING MARKET M&E MARKET

Focus on opportunity selection, effective competitive positioning, risk evaluation and execution capability.

OPERATIONALDepartment of Environmental Affairs10


OPERATIONAL | Progress on business plan

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ACTIONS JUN ‘14 STATUS

JUN 15STATUS CURRENT COMMENT ON STATUS

Managing the liquidity risk and improving cash generation Constrained by unresolved claims

Reducing fixed cost and streamlining operations Reduced by 30%

Resolution of long standing commercial matters and de-risking the Balance Sheet Mokolo, Eskom negotiations

Improving project risk management and support across the business Better procedures and support

Re-establishment of operational standards and controls in some parts of the business

Focus on control audits, peer reviews and reporting systems

Roll-out of integrated safety performance improvement initiatives Award winning Siyanda and now CMO

Establishing critical performance management procedures In place

Implementing a suitable long term organisational transformation strategy Plan defined, challenges being tackled

Re-establishing the relationship with labour organisations On track, risk remains

Defining and resourcing Africa expansion strategy Business plan in implementation

Re-establishing our external brand through targeted stakeholder engagement On track


OPERATIONAL | Major project update

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Mokolo crocodile pipeline, TCTA, RSA

Value R800m

Target date November 2015

Commercial Status Currently in commissioning Disputes over flood damage and delay claims Disputes over time impacts of engineer’s instructions and

variations to the contract Resolution timing – September 2016



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Grootegeluk cyclic ponds | Exxaro resources, RSA

Value R250m

Target date November 2015

Commercial Status Handing over quality product to a satisfied client Project will be closed out in November 2015



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Kusile balance of plant | Eskom, RSA

Value R1.1bn

Target date 2019

Commercial Status Sync targets for unit 1 proposed Negotiations ongoing Resolution timing – September 2016


OPERATIONAL | Mall of the south | Zenprop, RSA | R 800m

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OPERATIONAL | Operations completedNACALA RAIL | VALE, MOZAMBIQUE | US$ 100m

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OPERATIONAL | Current & New projectsSASOL HEAD OFFICE | ALCHEMY PROPERTIES, RSA | R 1, 200m

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OPERATIONAL | Current & New projectsSTELLA ROAD | OLD MUTUAL, RSA | R 1, 000m

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OPERATIONAL | Current & New projectsMAJUBA RAIL | ESKOM, RSA | R 1, 200m

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OPERATIONAL | Current & New projectsCAPE TOWN INTERNATIONAL CONVENTION CENTRE | CTICC, RSA | R 600m

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OPERATIONAL | Current & New projectsDR PIXLEY KA ISAKA SEME MEMORIAL HOSPITAL | INDEPENDENT DEVELOPMENT TRUST, RSA | R1, 300m (our share)

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STRATEGYSasol Corporate Head Office22


BURNING PLATFORMS: Operating model Management instability Staff attrition Increasing portfolio risk Contracting performance Poor brand perception

OUTCOMES: Ideal portfolio mix Management allocation Commercial control gaps Project risk evaluation Staff depth gaps filled

STRATEGY

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Recover & Stabilise2014FY

SUCCESSES: Management stability Portfolio risk visibility & control Reduced fixed cost

Sishen IPP Building projects performance Roads sector positioning Eskom engagement

Resourced Africa plan Embedded margin tracking Controls improvement Realignment with partners Performance management

Recover & Stabilise2015FY

OBJECTIVES: Operational Performance Claims recovery Cash generation Portfolio structure vs. cost base

Entry into Municipal Sector Safety improvement Risk management maturity Cross border work acquisition Leverage group rail and

concessionary investments value chain

Position For Growth2016FY

OBJECTIVES:

Profitability

Cash generation

Transformation initiatives

People enablement

Growth in priority sectors

Sustainable operations in target

geographies

Grow & Optimise 2017FY

OUTLOOKCradlestone Mall24


OUTLOOK

Tough and competitive market conditions in SA in the short to medium term but with opportunity

Civil Engineering opportunities in municipal and roads sectors

Commercial Building activity at peak

Maintaining capacity for delivering major projects in medium term pipeline

M&E position in Industrial sector is favourable

Aveng Water operate and maintenance services opportunity

Organically grow into new sectors

Actively pursue opportunities in local power plant maintenance and refurbishment programme

Maintain relationships with partners for major opportunities – Lesotho Highlands Phase 2, ongoing IPPs

Secure target opportunities in Ethiopia, Tanzania and Mozambique considering the long lead times

Consistent critical review of operating structure and cost base

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Q & AMajuba Rail Project26

aveng grinaker -lta · aveng grinaker -lta ... thermal power systems design, ... civil engineering...

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