Aveng sees first positive headline earnings performance since 2014

The group’s various restructuring efforts have paid off, says CFO Adrian Macartney.

Aveng has reported headline earnings of R751 million for the year ended 30 June 2021, the group’s first positive headline earnings performance since June 2014.

The group has undergone significant restructuring since 2017 and only has two remaining core businesses, McConnell Dowell and Moolmans. The last remaining non-core unit, Trident Steel, is expected to be sold during the current financial year, despite it reporting a strong rise in operating earnings from R14 million to R247 million.

McConnell Dowell, which operates in Australia, New Zealand and South East Asia, and accounts for the lion’s share of the current order book, has A$3.4 billion (about R36 billion) worth of “live tenders” outstanding, along with a further A$7 billion (about R74 billion) of tenders that are expected to be submitted during the current financial year.

Moolmans, the contract mining business that operates in South Africa and the Southern African region, contributed R5.4 million to the backlog, with the size of its order book weighed down by ongoing policy uncertainty and weak economic conditions in South Africa.

However, the group has submitted tenders worth R5 billion and expects to submit bids worth R10 billion more by year-end.

Aveng further reported that its group debt has been reduced from R2.4 billion to R1.4 billion, supported by a R873 million rights issue and early debt repayments of R616 million. The group ended the year with net cash of R1.1 billion.

Revenue also rose by 23 percent to R25.7 billion on the back of growth primarily in the Australian market, which helped lift McConnell Dowell’s revenues to R16.9 billion.

CFO Adrian Macartney said that Aveng aimed to complete a share consolidation by 13 December in an effort to reduce the administrative burden associated with having more than 60 billion shares in issue and a market capitalisation of less than R2.5 billion, when the shares trade at four cents.

He explained that the precise details of the consolidation, including the ratio to be used, would be communicated to shareholders soon, as they would still have to approve the corporate event.

Aveng has made no decision regarding the reinstatement of dividends and indicates that the proceeds from non-core disposals will continue to be used primarily to reduce debt further.