Aveng Limited’s return to profitability and positive cash generation in the six months to December 31, coupled with recently announced changes to key leadership roles, signals a new phase of the journey for the group, CEO designate Scott Cummins said yesterday.
The group reported a double-digit improvement in revenue, operating earnings, earnings from continuing operations, and headline earnings. Aveng has changed its reporting currency from the South African rand to the Australian dollar (A$), given that 91% of its revenue is sourced from outside South Africa.
Aveng, which does building and infrastructure construction in Australia and South-East Asia through its subsidiary McConnell Dowell, and contract mining in South Africa through its Moolmans subsidiary, has been restructuring since 2017, interspersed also with the tribulations of the Covid-19 pandemic, and saw the last of its debt repaid last year and the sale of its last non-core asset in the six months under review.
Cummins said in an interview that a new leadership team had been formed, all based in Australia, to provide “a strong matrix structure consolidating and simplifying the historical African and Australian corporate layers to leverage the collective expertise across the entire group”.
“Aveng has now transitioned to a smaller, focused, and more sustainably profitable, engineering-led, infrastructure, building, and mining contractor. Our commitment to ensuring the success of our two businesses remains unwavering and to ensure a sustainable future as an international engineering-led contractor focused on infrastructure, resources, and contract mining in selected markets,” said Cummins.
In the six months McConnell Dowell accelerated its repayments and repaid A$10 million (R124m) of a term debt facility. The remaining balance of A$13m was expected to be settled by June 2024, which would leave a relatively debt-free balance sheet. Earnings for the current period had been retained to further bolster the balance sheet.
On Moolmans, he said the subsidiary would continue to focus on project execution through a focus on improving production levels across all its sites, and on expanding the client, commodity, and geographic footprint.
“The business currently operates exclusively in South Africa, with the majority of its commodity exposure in manganese and iron ore extraction. Prospective projects within the SADC region have been identified together with further opportunities with existing clients at existing projects,” he said.
“From an operational perspective, McConnell Dowell operates 74% of its projects at or above bid margins, illustrating strong operational performance across most of its portfolio. The focus going forward is on improving this performance to mitigate the project risks on specific projects and maximise opportunity,” he said.
He said the group had entered the second half in a strong position, with work in hand that supported 100% of the 2024 full-year revenue and more than 60% of 2025 revenue.
A priority was to increase the margin percentage of the group – margins on some contracts in Australia had shrunk due to cost inflation – in addition to ensuring operational performance, even if the revenue line remained flat over the period. There were signs that cost inflation pressures had begun to soften, he said.
“While the management epicentre will shift to Australia, governance and control remain in South Africa, and the group will remain listed on the JSE. Our objective in delivering the above is to achieve a focused management and governance structure, allowing greater efficiency and effectiveness. Over time, this shift will enhance access to diverse capital markets,” he said.
He said that while the group would remain listed on the JSE, they were looking at various markets to provide the group the best access to capital.
BUSINESS REPORT