Aveng Half year results to December 2002 Part A : Strategy & objectives : Carl Grim Part B : Financial performance : Dennis Gammie Part C : Operational overview and prospects : Carl Grim

Corporate governance Board: Chairman of board : 5 independent non-executives 3 non-executives 5 executives Chairman of board : Independent non-executive Audit & risk committee: 2 independent non-executives 1 non-executive Remuneration committee: 4 independent non-executives

Corporate governance (cont.) Nomination committee 4 independent non-executives Corporate social investment committee 2 independent non-executives 1 executive Note # Simple Code of Business Conduct formally committed to at all levels # Substantially meet King II recommendations

Vision : Globally competitive “To be a globally competitive construction-related group focused principally on the developing world”

Mission : Consistent long-term value “To deliver consistent long-term value for all stakeholders by:- (i) engaging disciplined people respected for their Integrity (Values) quality of work and entrepreneurial spirit (ii) securing local and hard currency generating opportunities that most profitably leverage our ‘best in class’ (Capabilities) construction capabilities”

Values Integrity Quality of work “walking the talk” “holding the catch” “engaging disciplined people respected for their… Entrepreneurial spirit “making it happen”

Capabilities “Best in class” Locally steel processing and trading building and construction across all engineering disciplines cement, aggregates and concrete Developing world selected mining services for demanding clients specialized energy-related projects and pipelines complex infrastructure [marine] projects

Strategy Vision Mission Values Capabilities Strategy

Strategy : Balancing risk “The group’s strategy is to deliver consistent long-term value by seeking an optimal balance of risk across Aveng corporate office responsibility group businesses, market segments and potential opportunities/projects” Operating division responsibility Business unit responsibility

Strategy : Aveng risk framework Downside risk (loss potential) Walk-away segment Speculative segment Base-load segment Targeted segment Upside risk (profit potential)

Strategy : Balancing risk (1) Higher risk gives lower consistency and probably higher growth VALUE? Lower risk gives greater consistency but probably lower growth VALUE? “Higher value from filling the targeted segment and spreading other opportunities along the risk line”

Strategy : Balancing risk (2) Lower value Higher value “Higher value by lowering the slope of the risk line to incorporate more “targeted” and less “speculative” opportunities”

Strategy : Aveng corporate office Lower risk; lower growth South African construction-related businesses occupying a leading position in their sectors and having stable and significant cash-generating capabilities Higher risk; higher growth Hard currency generating construction opportunities in the developing world that most profitably leverage our “best in class” capabilities. Balancing risk “Balancing risk across group businesses”

Strategy : Operating divisions High capital-intensity, high margin, annuity cash flows Cash positive, low margin work Balancing risk Infrastructure work – generally public money International commodity- price-driven work – generally privately financed Different engineering disciplines, products and services South Africa vs Africa vs Middle East vs Australia vs S.E. Asia “Balancing risk across market segments”

Strategy : Operating divisions “Firstly to analyse the relative macro risk dynamics associated with each business unit using the Turnbull risk analysis methodology and secondly to optimally manage these risks by balancing the divisions exposure to opportunities on projects having different - cash flows - levels and technical complexity - funding sources - risk responsibility and - growth characteristics”

Strategy : Business units Balance Chase hard “Balancing risk across potential opportunities/projects”

Strategy : Business units “To categorise potential opportunities or projects into one of the four segments of the Aveng risk framework by: (i) completing the standard risk analysis template (ii) debating these risks at the appropriate executive committee and then to respond by: chasing ‘targeted’ and balancing ‘base-load’ and ‘speculative’ opportunities/projects”

Objectives Vision Mission Strategy Objectives capabilities values return on equity 20% headline eps growth hard currency revenues 50% debt to ratio 35%

Objectives : Balancing risk Maximising upside risk Return on average equity: 20%* Headline eps growth: 20%* Hard currency revenue: 50% Net debt to equity ratio: 35% Minimising downside risk *Approximately CPIX + 10%

Objectives scorecard : ROE % Target 20% 18.4% Return on average equity : 20%

Objectives scorecard : HEPS growth % Target 20% 1998 1999 2000 2001 Dec-01 2002 Dec-02 Growth in diluted HEPS : 20%

Objectives scorecard : Hard currency % Target 50% 1998 1999 2000 2001 Dec-01 2002 Dec-02 Hard currency revenue : 50%

Objectives scorecard : Debt to equity % Target 35% 1998 1999 2000 2001 Dec-01 2002 Dec-02 Net debt to equity ratio : 35%

Financial performance Part B Financial performance Dennis Gammie

Financial presentation : Basis of preparation The AFS have been prepared in accordance with SA GAAP Accounting policies are consistent with those of the prior reporting year, except for the implementation of the following statements effective 1 July 2002 Financial Instruments : recognition and measurement (AC 133) No material effect on results

Equity based compensation On issue of an option the cost is expensed, reduced by any amounts to be paid by employees to acquire the option The liability is fairly valued at balance sheet date Any changes in the value of the liability is recognised in net profit during the period in which it occurs

Financial performance December 2002 2001 % change Revenue 6 969 5 930 + 18 Operating income 271 243 + 12 Net finance costs 119 101 Tax 46 40 + 15 Earnings 307 126 + 144 Headline earnings 190 154 + 23

Number of shares Millions 2002 2001 % change In issue 396,1 Weighted 389,5 371,3 + 5 Diluted weighted 385,2 + 1

Share performance (per share) Cents 2002 2001 % change Headline earnings 48,7 41,6 + 17 Earnings 78,9 33,9 + 133 Diluted headline 40,1 + 21 Diluted earnings 32,7 + 141 NAV 641 586 + 9

Balance sheet Rm 2002 2001 % Change Capital employed 4 610 4 022 + 15 Gross assets 8 276 6 628 + 25 Net debt 1 160 1 153 + 1

Borrowings Rm 2002 2001 Interest bearing debt 1 870 1 514 Cash 710 361 Net debt 1 160 1 153 Floating 48% 32% Fixed 52% 68%

Capital expenditure Rm 2002 2001 Replacement 169 100 Expansion 129 66 Total additions 298 166 Depreciation (196) (175) Disposals (26) (20) Net increase 76 (29)

Capital expenditure June 2001 June 2002 Dec 2001 Dec 2002 703 536 364 (billion) 703 536 364 292 298 175 196 166 June 2001 June 2002 Dec 2001 Dec 2002 Capex Depreciation

Working capital December 2002 2001 June Stock days 43 40 41 Debtors days 75 67 84 Creditors days 108 87 115

Margins and tax rate % Dec 2002 2001 June Operating income 3,9 4,1 4,9 Effective tax rate 30,1 28,2 26,6 Return on revenue 2,7 2,6 3,2

Cash movements December 2002 2001 Opening net borrowings (1 190) (1 195) Operating income 467 418 Net finance costs (119) (102) Working capital movement 43 (420) Tax (37) (27) Capex (298) (166) Divs (105) (74) Capital and investments 79 413 (1 160) (1 153)

Divisional operating income Steel & Allied (47%) Steel & Allied (33%) Construction (67%) Construction (53%) R243m R271m Dec 2001 Dec 2002

Geographical revenue December 2001 December 2002 Australia & SE Asia (18%) Australia & SE Asia (15%) South Africa & CMA (53%) South Africa & CMA (59%) Africa & Middle East (26%) Africa & Middle East (29%) December 2001 December 2002

Segmental analysis Ebit to revenue: Assets to revenue: % December 2002 2001 Ebit to revenue: Construction 2,9 3,7 Steel & Allied 6,2 5,7 Assets to revenue: Republic of South Africa 96 88 Africa & Middle East 107 124 Australia & South East Asia 111 82

Ratios Annualised December 2002 2001 Return on equity 14,9 14,2 Return on capital employed 16,5 17,9 Interest cover 3,0 Asset turnover 2,9

Operational overview & prospects Part C Operational overview & prospects Carl Grim

Aveng : Three operating divisions Construction : order book driven Steel & Allied : trading and processing Cement : manufacturing

Operating divisions Construction Steel & Allied Cement : AVENG Carl Grim FD Dennis Gammie Corporate office 100% 100% 46% Grinaker-LTA Frank Crowley Dep Howard Jones Trident Steel Ernie Behr Dep Ben Fourie Alpha Karl Meissner-Roloff Operating groups Civil & Process Engineering S A Cement Operations 63% Trident Service Centres Mechanical & Electrical Engineering McConnell Dowell Corporation David Robinson Business units Roads & Earthworks Trident Sterling Tube 62.5% Tanga Cement – Quarrying & Concrete Civil Engineering Opencast Mining Trident Midrand Steel Building Mechanical Engineering Property Development 30% 25% Tshipi Steel Ash Resources Electrical Engineering 33% Infrastructure & Mining Services Slagment Pipelines Operating divisions Construction Steel & Allied Cement :

McConnell Dowell Corporation Aveng : Construction division Grinaker-LTA Frank Crowley Dep Howard Jones Operating group 63% Civil & Process Engineering McConnell Dowell Corporation David Robinson Business units Mechanical & Electrical Engineering Civil Engineering Roads & Earthworks Opencast Mining Mechanical Engineering Building Electrical Engineering Property Development Pipelines

Construction market segment revenue : 2002 Process Engineering & Pipelines (15%) Building (17%) Civil Engineering (21%) Mining & Earthworks (26%) Mechanical & Electrical Engineering (21%) R9,6 billion

Construction operating income: six months to December Rm Dec 2000 Dec 2001 Dec 2002

McConnell Dowell Corporation : operating income six months to December Australian Dollars Dec 2000 Dec 2001 Dec 2002

Construction order book : December 2002 (two years only) (billion) R8.2b Dec 2000 June 2001 Dec 2001 June 2002 Dec 2002

Construction order book : December 2002 (two years only) % of Revenue 94% 82% Target Zone Dec 2000 June 2001 Dec 2001 June 2002 Dec 2002

Order book, risk & profit The greater the perceived project risk, the higher the profit % mark up necessary to offset that risk The larger the order book, and the less important it is to win work, the higher the profit % mark up Order book Risk The larger the order book, the easier it becomes to walk away from overly risky projects

Strategy : Construction Product-Service Carefully defined market segments Carefully defined ‘best in class’ capabilities positioning Resultant project profile and geographical spread

Construction : Strategy scorecard  To integrate Grinaker-LTA To improve McConnell Dowell Corporation profitability/positioning To build a globally competitive construction group  

Grinaker-LTA Infrastructure Aveng : Steel & Allied divisions AVENG Carl Grim FD Dennis Gammie Corporate office Trident Steel Ernie Behr Dep Ben Fourie Operating group Trident Service Centres Business units Trident Sterling Tube Trident Midrand Steel 30% Tshipi Steel Grinaker-LTA Infrastructure & Mining Services

Steel & Allied market segment revenue : 2002 Export (15%) Construction & Mining (56%) Manufacturing (20%) Motor (9%)

Steel & Allied : Operating income for six months to December Rm Dec 2000 Dec 2001 Dec 2002

Steel & Allied : Motor strategy Flat sheet – de-coiler Coil Rectangular angled blanks – “cut to length” line Shaped blanks and tool cuts – press feed line Formed blanks – stamping plant Vehicle body – assembly line Aveng interest

Suppliers to Trident Steel % Iscor 58 Highveld Steel 33 Scaw Metals 5 Davesteel (Cape Gate) 2 Imports 100

Steel & Allied : Key strengths concrete reinforcing and steel mesh blanks to motor industry specialised steels railway sleepers No.1 in No 2/3 in - steel pipe - mine stope and roof support products Over 610 000 tons of steel p.a Strong links to the rapidly growing motor export market

Steel and Allied : Strategy scorecard  To acquire group company minority interests To rationalise business units To broaden range of specialised steels To move to next level of beneficiation (shaped blanks and tool cuts) for motor industry To rationalise coastal branches    

Aveng : Cement division Alpha Karl Meissner-Roloff Operating group S A Cement Operations Business units Quarrying & Concrete 62.5% Tanga Cement 25% Ash Resources 33% Slagment

Cement: Daily tons sold 2002 tons up 5% on 2001

Cement : Approximate market share Cimpor 11/12% Alpha 31/32% PPC 39/40% Lafarge 17/18%

Cement : Market segments year to December 2002 (change from 2001) Concrete products 16,8% (+0,3) Merchants & blenders 54,3% (- 0,4) Construction, mining & other 16,4% (- 1,1) Readymix Concrete 12,6% (+ 1,3)

Cement : Geographic segments year to December 2002 (change from 2001) Export 5.5% (+ 1,0) Botswana, Swaziland, Namibia 10,9% (- 0,8) Gauteng 30,4% (+ 0,4) Control of Southern areas 17% (+ 0,2) Southern KZN 8,6% (+ 0,2) Northern areas 17,3% (- 1,1) Western Cape 10,3% (+ 0,3)

Cement : Key strengths Large market share in a stable market with world #1 & #2 present No threat from importing [$65/ton in Durban, $95/ton in Johannesburg] Cement capacity up to 5 m t pa by December 2003 [running at 60% of capacity] Excellent efficiency when benchmarked against Holcim stable of kilns Buoyant market conditions [5% growth last year]

Cement : Strategy scorecard Sale non-core interest in Omnia Sale non-core interest in NPC Capex based efficiency projects (R340 m over 3 years) Resolve jointly held operations    

Can Aveng deliver “consistent long-term value”? Solid and well positioned underlying businesses large local market shares platinum and motor expansion depth of management Clear vision and robust strategy that balances :- cash generating and growth businesses rand and hard-currency revenues base-load and higher margin work Good track record with conservative accounting Buoyant South African prospects

Prospects : Local Buoyant South African prospects :- Construction : R105 billion over 3 years on infrastructure [+/- 50% on construction spend] Steel : SEIFSA “Business Conditions Index” at its highest level for 8 years Cement : Tonnage in 6 month period to December 2002 up 9,9% on prior period

Construction building expenditure as % of GDP % change – quarter on quarter Source: SARB September 2002

Prospects : International Uncertain international prospects prospect of war in the Middle East oil, gold and commodity prices general uncertainty – banking and insurance rand/dollar exchange rate fluctuation

Prospects “Trading conditions within South Africa have been buoyant. However, in the face of the current international political and economic difficulties and the uncertainty of the rand/dollar exchange rate, it is unlikely that the group will manage to maintain the same growth in earnings for the next six months”

Challenges Black economic empowerment ownership employment equity procurement corporate social investment Replicate first half financial performance Working capital management/debt reduction Managing HIV/Aids Skills development/people capacity

Targeting consistent long-term value www.aveng.co.za