Aveng confident it will weather the storm despite hefty losses
Aveng says it is confident it will be able to weather the storm plaguing SA’s construction industry, thanks partly to a financial restructuring process and asset sales.
Former industry stalwarts including Group Five, Basil Read and Erbacon have succumbed to a depressed construction market in which major projects have failed to materialise owing to the state’s strained finances.
In the year to end-June, Aveng made a loss after tax of R1.7bn, including asset write-downs of R241m.
“As a result of these losses and continued difficult trading conditions in the domestic market, the group’s available cash resources were negatively impacted,” it said on Thursday.
The group’s cash balance, net of bank overdraft facilities, fell to R1.6bn at the end of June, from R2.1bn a year before.
But Aveng said based on budgets and business plans for the next three years, as well as liquidity forecasts, it would have enough cash “for the foreseeable future”.
The group said a financial restructuring process had helped its debt-to-equity ratio improve from 127% to 87% at the end of June.
The company, which also operates in Australasia and Asia, has also announced sales of noncore businesses and assets worth R1bn.
“Aveng’s strategy remains valid, and the group is focused on completing the disposal of the non-core assets in 2020 and derisking the group, reducing debt, returning Moolmans to profitability, growing the McConnell Dowell order book profitably and improving equity value for shareholders,” it said.
Its core two-year order book had increased to R17.7bn from R13bn.