Pretoria - A difficult currency environment led to Aveng, the listed construction-related group, yesterday reporting a below-target 10.5 percent rise in fully diluted headline earnings a share to R1.186 in the year to June.

Its earnings were in line with market expectations and Carl Grim, Aveng's chief executive, was particularly proud that the group had been able to achieve this growth while experiencing currency problems.

Grim said the rand had strengthened 28 percent against the dollar in the reporting period, compared with weakening by about the same percentage in the previous period.

Despite this, the group had achieved its three-year growth target, he said.

Headline earnings rose 9.7 percent to R461.7 million despite revenue remaining flat at R13.2 billion compared with R13.1 billion previously.

Operating income improved 4.3 percent to R671.7 million.

A dividend of 30c a share was declared, compared with 27c in the previous year.

Grim said the group's flat revenue reflected the appreciation of the rand against the dollar, the currency to which about 40 percent of the group's revenue was linked.

He said this translated into a negative impact of R91 million on the income statement compared with an R86 million positive impact in the previous year.

Grim said the stronger rand also affected the balance sheet, which suffered a negative R169 million in foreign currency translation.  

The underlying efficiency measures in the business showed improvement, however, and the operating margin of 5.1 percent was the highest ever.

Construction contributed 75 percent of turnover. At R9.8 billion it was 3 percent higher than in the previous year - although operating income remained unchanged largely due to the strong rand and a difficult contracting environment.

Steel and allied turnover declined 6 percent to R3.4 billion, largely due to the effect of the strong rand and rapidly increasing steel prices on the group's customers in the manufacturing sector.

Cement producer Alpha had another good year.

Looking ahead, Grim said the volatile currency environment continued to preclude a short-term perspective, but stressed that the group was able to compete internationally at current rand levels.

He said that locally there were some exciting projects in the wings and while the steel market was very tough, largely due to mining investment inertia, the current declining interest rate environment was expected to boost cement with its strong consumer demand profile.

Aveng shares closed unchanged yesterday on the JSE Securities Exchange at R9.30.