Construction group Aveng reported a R65m net loss for the year to end-June‚ an eighth of the prior year’s R518m loss.
It managed to turn to an operating profit of R146m from the prior year’s R288m loss‚ and bolstered its results with R592m profit from the sale of property‚ plant and equipment.
Aveng said it returned to operating profit thanks to its largest division‚ Aveng Grinaker-LTA‚ completing unprofitable contracts and settling legal disputes.
Aveng narrowed its loss on a 23% drop in revenue to R33.8bn from the prior year’s R43.9bn.
The drop in revenue was particularly dramatic in Australia where it more than halved to R5.8bn from the prior year’s R12.8bn. Australia accounted for 17% of the group’s total revenue‚ down from 29% in its 2015 financial year.
Aveng’s Australian business‚ McConnell Dowell‚ “underwent a comprehensive resetting of its business under new leadership” during the reporting period‚ the results statement said.
The group’s Australian order book increased by 22% to A$1.5bn‚ benefiting from several large project awards in the past six months‚ including the Solid Products Jetty in Malaysia‚ Tuas Bridges in Singapore‚ Amrun Export facility in Australia‚ and Auckland’s City Rail Link in New Zealand.
The group’s revenue from New Zealand grew by 16% to R3.5bn while revenue from South East Asia fell 31% to R3.5bn.
Revenue from its South African operations declined 6% to R18.5%. SA contributed 55% of the group’s total revenue‚ up from the prior year’s 45%.
“Performance improved at Aveng Grinaker-LTA in a number of areas. Loss-making contracts have been closed out‚ including the Grootgeluk cyclic pond project‚ while the Mokolo pipeline project is in the process of being handed over‚” the results statement said.
“The ratio of projects executed at tender margin has substantially improved. While not at optimal levels‚ the achieved margin has improved significantly. The embedded margin in the Aveng Grinaker-LTA order book‚ continues to recover through robust tendering and project selection processes‚” it said.
In the first half of its financial year‚ Aveng concluded the sale of its non-core properties to the Collins Group and retained a 30% share and joint control of these assets. This transaction resulted in a profit of R577m and cash inflow of R1.1bn.
Revenue from the rest of Africa fell by 40% to R1.7bn‚ while its Middle East joint-venture with Dutco grew revenue 63% to R651m.