JSE-listed construction and engineering group Aveng plans to undertake a share consolidation before the end of this year to reduce the huge number of Aveng shares in issue.
This follows several rights issues by Aveng to repair its balance sheet as part of the strategy to return profitability to the group.
Aveng Group CFO Adrian Macartney said Tuesday that the group believes a share consolidation is necessary at this time with more than 60 billion shares in issue.
“We would like to reduce the stewardship associated with that and recalibrate the supply and demand of the stock, improve the liquidity of the stock, and of course reduce price volatility,” he said.
Aveng shares fell 16.67%, or 1 cent, to close at 0.05 rand on Tuesday.
Macartney provided an example of how share consolidation will work in terms of fractional ownership rules based on a ratio of “one in 100” Aveng shares, but emphasized that this is for illustrative purposes only and the actual ratio is anticipated to be higher. .
“Our board has not reached a final decision on the actual ratio and we will communicate the ratio, along with a JSE approved schedule, to shareholders in due course,” he said.
“Such an event will be subject to shareholder approval and we anticipate bringing it to shareholders for approval at the next AGM so that we can complete the process by mid-December this year.”
According to Aveng’s website, the group is scheduled to hold its General Shareholders’ Meeting on November 21.
Separate listing plans?
Responding to a question on whether Aveng will consider splitting the group and separately listing its southern African open pit mining business Moolmans and its Australian-based specialty infrastructure subsidiary McConnell Dowell, Macartney said it has not considered this “in this moment”.
“What we have indicated is that we would investigate a possible dual list structure, not necessarily in Australia, but possibly elsewhere as well,” he said.
Results for the whole year
Aveng reported its first overall full-year earnings, rather than a loss, from June 2014 on the year to June 2021, as its move to financial health gained more traction.
Aveng Group CEO Sean Flanagan said they view the year to the end of June 2021 “as a very, very significant step forward on our journey to return Aveng to the status it used to be.”
The group’s overall profit reached R751 million compared to the loss of R950 million in the previous year.
This was achieved thanks to a 23% increase in revenue to R25.7 billion from R20.9 billion.
The group achieved a 100% recovery in operating profit to R536 million from the operating loss of R532 million in the prior year.
Flanagan said that all of the group’s operations, particularly McConnell Dowell, Moolmans and Trident Steel, performed well.
The group’s debt was reduced by 42% to R1.4 billion from R2.4 billion through early debt settlement following a restructuring of its balance sheet and ongoing debt repayments.
The group raised R873 million in capital in the year.
Debt decline and strong cash generation resulted in Aveng ending the year with R1.1 billion in net cash after ending the prior year with R1 billion in debt.
Work available and in process
Available work decreased by 6% to R25.3 billion from R26.8 billion in the prior year, with McConnell Dowell accounting for Au $ 1.9 billion of the total and Moolmans R5.4 billion.
Flanagan said that the available work is the only “yellow on our robot,” but indicated that this was in part a function of being very insightful about the income the group was pursuing.
“Income is important to us, but the quality of income is much more important,” he said.
Flanagan added that Aveng continues to grow and optimize the quality, not just the size, of the group’s order book and, in addition to the work in progress, it has important lines of work in both businesses.
He said McConnell Dowell has an Au $ 10.5 billion pipeline and Moolmans has a R15 billion pipeline.
Flanagan said McConnell Dowell expects that in the first half of the current financial year it will be awarded A $ 700 million of the A $ 1.7 billion in projects where it has preferential status.
He added that McConnell Dowell has more than AU $ 3.5 billion of live bids currently pending plus another AU $ 7 billion of bids it expects to submit in the financial year.
“These will provide the business with good prospects for future growth,” he said.
Flanagan noted that Moolmans also delivered above-budget earnings and cash flow to generate net operating profit of R39 million and earnings before interest, taxes, depreciation and amortization (Ebitda) of R854 million even though revenues remained stable.
Aside from the R5.4 billion in available work, Moolmans has submitted offers worth R5 billion that are still in effect and expects to submit R10 billion in new tenders in the current financial year, he said.
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