JOHANNESBURG - Aveng reported on Tuesday a wider annual net operating loss due to declining revenue in two business units in its manufacturing business as well as under-performance of three key contracts in its core mining Moolmans unit.
After market close, the construction firm reported a net operating earnings loss of R401 million ($27.92 million) for the year ended June compared to an adjusted loss of R113 million in 2017.
Moolmans, which specialises in both surface and underground mining, is grappling with problematic contracts which caused the business to report a 95 percent decline in net operating earnings. Aveng said it will renegotiate or exit some contracts in order to derisk the business.
The manufacturing business jumped into a net operating loss of R196 million from a profit of R51 million, reflecting weak operating conditions in the infrastructure, rail, underground mining and water sectors.
Aveng undertook a strategic review in 2017 which included the disposal of non-core assets such as Aveng Trident Steel, Aveng Grinaker-LTA and Aveng Manufacturing.
The review also included reducing debt and improving the firm’s liquidity by settling all of or a portion of its R2 billion convertible bonds before their July, 2019 maturity date and a rights issue.
Aveng anticipates the disposals to be completed by June, 2019.
“In the short-to medium-term, the board, executive committee and management of Aveng will remain focused on accelerating the group’s turnaround. This will include the management of liquidity and the disposal of the non-core assets by the targeted deadline of June 2019,” it said in a statement.
The group’s rights offer, concluded in July, raised R493 million of new capital from shareholders, while the early bond redemption removed R1.5 billion of debt from its balance sheet, it said.
The firm’s two-year order book declined by 28 percent to R17.9 billion.