AVENG has made a sizeable turnaround in the year to June 30, its first full-year profit in seven years, on the back of strong operational performances from Australasia focused McConnell Dowell, specialising mining services group Moolmans and Trident Steel.
Headline earnings came to R751 million or 2 cents per share compared to a headline loss of R950m or a loss of 4 cents a share in the prior year. Revenue increased 23 percent to R25.7 billion (R20.9bn). Net operating earnings rose to R536m from a R532m loss in June 2020.
“Despite the uncertainty and volatility created by health and economic crises, the group continues to build resilience and has been buoyed by its strategy of diversification, improving operational performance and the firm commitment of leadership and employees.
“It has been a long time in putting the building blocks in place to be able to report these results,” chief executive Sean Flanagan said.
The group’s long term strategy is focused on ensuring a long-term capital structure, creating liquidity by selling non-core assets and unlocking value from core businesses.
In the shorter term, the focus included completing a turnaround at Moolmans in spite of good results, a share consolidation planned for this year (there are 64bn shares in issue), while the balance sheet would continue to be strengthened.
The share price increased 16.7 percent by midday yesterday to 7 cents.
Negotiations were also under way to sell the non-core but profitable Trident Steel, the proceeds of which would be used to reduce debt further.
“We are confident that market opportunities and growth potential exists for McConnell Dowell and Moolmans,” said Flanagan..
In the past year McConnell Dowell restored its dividend for the first time in many years with an interim dividend of AU$5m and a final dividend of AU$6.5m. Work in hand was AU$1.9bn at June 30, from AU$1.8bn last year and there was a substantially longer term pipeline of work being considered and tendered for.
Moolmans recorded revenue of R4bn (June 2020: R4bn) and an improvement in operating earnings to R239m (June 2020: R38m). It benefited from the key appointments the previous year.
A renewed focus on increasing the work in hand had resulted in the business tendering for contracts in South Africa and the rest of Africa. Work in hand increased to R5.4bn from R4.9bn at June 30, 2020. Expansion into West Africa would be a focus, as would the acquisition of new equipment.
The group’s recapitalisation and debt restructure was successfully completed in the year ended June 30, 2021, raising R492m of new capital. This resulted in the net cash position improving by R1.1bn from December 2020 including a R260m cash injection of additional liquidity after settlement of debt.
McConnell Dowell reported operating earnings of AU$28m (AU$13m loss) for the full year.
Moolmans completed the second year of its turnaround plan.
Trident Steel, with its focus on the automotive industry, saw a reduction of revenue for the period to R3.2bn from R3.5bn, but operating earnings increased substantially to R247m from R13m, before impairments.
Aveng Construction: South Africa (formerly Aveng Grinaker-LTA) continued to wind-down and finalise the remaining contracts not sold as part of the disposals process. The division reported a net operating loss of R164m. Aveng Manufacturing saw lower revenue of R1bn from R1.3bn following the disposal of various business units. The remaining business units were operationally profitable at R24m versus a loss of R54m in 2020.
BUSINESS REPORT ONLINE