Aveng, the construction and contract mining group that has concluded a significant restructuring, went back into a loss of R1.28 billion in the year to June 30 from earnings of R130 million the year before, but the group has geared up for growth.
Work in hand increased significantly to R52.2bn from R30.8bn at June 30, 2022 and investments were made in new equipment and human capital through the year. The share price increased 4.16% to R8.01 yesterday afternoon, but the price is well down from R16.15 that it traded at a year ago.
Directors said the financial year was one of transition, characterised by a normalisation of operating activities as the group emerged from the Covid-19 pandemic, rapid growth of McConnell Dowell in its Australasia markets as revenue, work in hand and people numbers grew, the awarding of new contracts at Moolmans and the related investment in, delivery and commissioning of heavy mining equipment.
They said the group had delivered on the strategy announced in February 2018 to simplify the business, de-risk the balance sheet and reduce debt. The strategy required the sale of non-core assets and the repayment of debt so the group could focus on McConnell Dowell and Moolmans.
In the past year, revenue increased to R28.9bn from R22.5bn, but an operating loss of R1.06bn was reported compared with an R360m operating profit a year before.
The headline loss per share came to 753 cents versus 152 headline earnings per share a year before.
The net cash position stood at R1.4bn, compared with R2.1bn in 2022. Net asset value per share was slightly lower at 2 403 cents from 2 873 cents at June 30, 2022.
Both McConnell Dowell and the South Africa-based open-cut mining and shaft sinking services company Moolmans invested in systems in the areas of new business and human capital management, the directors said.
New financing facilities were arranged to support the investment in new equipment and the partial funding of a project guarantee, together with new general banking facilities for the South African operations.
“These activities provide the foundation for a focused business and balance sheet as we build for the future,” the directors said.
Aveng’s continuing operations grew revenue by 28% in the year, but the operational performance was disappointing.
There were losses in the Southeast Asia business unit of McConnell Dowell, primarily from the Batangas LNG terminal project. Both McConnell Dowell and the group reported operating losses as a result.
Operational under-performance at Moolmans further contributed to the group operating loss.
A review of the BLNG project and a broader portfolio of current projects led to the design and implementation of improved operational standards and governance procedures for tenders and projects at McConnell Dowell.
The sale of Trident Steel enabled Aveng to extinguish its South African legacy debt of R478m and its short-term trade finance facility of R450m.
“The settlement of South African legacy debt, which at its height amounted to R3.3bn in 2018, marks a pivotal moment in ensuring a sustainable capital structure and a platform for growth for Aveng,” the director said.
McConnell Dowell won R38bn (A$3.2bn) in new work and grew work in hand by 40%, to R44.2bn (A$3.5bn) by June 30, 2023.
Moolmans grew work in hand to R8bn after winning R9.4bn of new work, including a new five-year contract at Tshipi é Ntle. Moolmans had secured 93% of its planned revenue for the 2024 financial year.
Directors said Aveng enters its 2024 financial year in a strong position and the McConnell Dowell and Moolmans were expected to return to profitability and generate positive operating cash flow.