Aveng is exploring the separate listing of its Australasian construction and engineering subsidiary McConnell Dowell on the Aussie and Johannesburg stock exchanges, CEO Scott Cummins said yesterday.
He said in an interview the group had seen leadership and structural transition in the past year, and it had staged a big turnaround for the year to June 30, with headline earnings of R466 million compared with a R950m loss at the same time last year.
He also forecast continued earnings growth in the new financial year, as the group had 80% of its 2025 financial year work in hand and he anticipated better margins from the elimination of lower margin earnings as pre-Covid contracts worked their way off the books.
He said they had a timeline of 12 months where they hoped to at least be far down the line of the separation of the group’s two subsidiaries, and with the possible listings of McConnel Dowell.
It was envisaged the sub-Saharan Africa-based mining contracting business, which does mining work such as open cut mining, shaft sinking, access development, and underground mining would remain within Aveng.
Explaining the planned split, Cummins said the two subsidiaries lacked the synergies that were typical in a single large group; both businesses were distinctly different in operation, with their own growth trajectories and each had different capital allocation time requirements.
Each business also needed capital to expand, and investors were increasingly focused on “pure play” businesses, he said.
In addition, Moolmans mining had a transformation agenda that it needed to fulfil, and the plan was to introduce a black empowerment partner with direct ownership into the Moolmans business, Cummins said.
He said it was also important to realise the split was not being done out of necessity, and the changes were expected to enable each company to grow more strongly along their own strategies.
The past financial year to June 30, saw robust performance and a return to profitability and positive cash flow for the group. A 27% rise in revenue from continuing operations of A$3.1 billion (R37.1bn) was reported, while operating earnings before capital items improved by over 100% to A$34.5m.
“We’ve considerably strengthened the balance sheet through improved profitability, strong cash generation and repayment of debt,” Cummins said.
Work in hand stood at R37.2bn with higher embedded margins, compared with R52.2bn at the same time last year.
Included in gross earnings in the prior year was the impact of the Batangas LNG Terminal Project loss of A$104m. The group continued to be impacted by the effects of hyper-escalation on projects awarded pre-Covid.
“The impact has largely been ameliorated by way of various strategies adopted to address this potential risk. The embedded margin in work in hand is expected to improve as these projects are concluded,” he said.
The increase in operating earnings was driven by earnings in the infrastructure and building segments, with operating earnings of A$57.4m versus a loss of A$49m in June, 2023 in infrastructure, and A$8.6m versus A$0.1m in the building segment.
The mining segment generated operating earnings of R24.5m versus a R110m loss the year before.
The infrastructure segment was operating with 96% and the building segment with 100% of projects profitable. The mining segment was focused on project execution and improving production levels and operating efficiencies across all its sites.
The work in hand in the infrastructure segment had reduced as expected, reflecting the timing of larger infrastructure project awards, particularly for government-funded projects. The group was pivoting towards greater specialisation in construction and engineering projects.
Tendering activity in the second half returned to required levels in support of future revenue projections at expected margins. Work in hand in the building segment was at comfortable levels, Cummins said.
He added that there were signs of a softening transport infrastructure market in Australia, balanced by reduced-cost escalation pressures and the emergence of a general trend towards new energy, defence and water, and wastewater-related developments.
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