JSE-listed Aveng expects to report a loss a share and a headline loss a share for the financial year ended June 30, compared with earnings a share of 106c and headline earnings a share of 252c reported for the 2022 financial year.

Aveng is structured to deliver its projects through its two subsidiaries, McConnell Dowell and Moolmans, across four operating geographies – South Africa, Australia, New Zealand and the Pacific Islands.

MOOLMANS

The improved operational trend in the last quarter was insufficient to fully mitigate the losses incurred in the first nine months of the financial year, Aveng told shareholders in a July 21 operational update.

Moolmans expects to record an operating loss in the order of R105-million.

Its focus during the year was investment in equipment, people and systems to aid efficient project execution.

With the new five-year Tshipi é Ntle project secured, Moolmans committed to a R900-million investment in new heavy mining equipment. The majority of this equipment is now on site and is either in deployment or awaiting commissioning.

The delivery of this operating equipment has resulted in a gradual, positive operational performance improvement during the last quarter. This trend is expected to continue as the remaining equipment is delivered to site and commissioned.

Final delivery of equipment is expected by September.

The staggered delivery profile of new heavy mining equipment and further delivery delays experienced from original-equipment manufacturer suppliers resulted in delayed improvements in operational performance.

Further, during the second half of the financial year, Moolmans secured a one-year extension to the Sishen iron-ore mine contract valued at R900-million. Negotiations are ongoing with the client on a new five-year contract.

Moolmans’ work in hand was R8-billion as at June 30.

MCCONNELL DOWELL

McConnell Dowell’s Australian and New Zealand & Pacific business units are expected to report increased operating earnings in comparison to the prior year.

This improved performance is overshadowed by the losses in Southeast Asia, primarily from the Batangas liquified natural gas (LNG) terminal project (BLNG).

Despite the improved performance in the Australian and New Zealand & Pacific business units, McConnell Dowell is expected to report an operating loss in the order of R820-million for the year.

The BLNG project is expected to report a total operational loss of R1.35-billion after providing for costs to date and costs to complete.

Over the last quarter, McConnell Dowell says it developed a comprehensive programme to completion for the BLNG project, in consultation with the client, FGEN and the client’s owner's representative (a client-appointed independent engineer).

McConnell Dowell has been working to execute the remaining work to support delivery against this programme.

Construction activity is proceeding to support ongoing commissioning activities, with initial systems energisation scheduled to occur this month.

Overall progress supports completion and handing over the facility for operation later this calendar year.

Since the last announcement in April, McConnell Dowell has received payment for certifications that were previously overdue on the contract. McConnell Dowell says it continues to work with FGEN to seek the best outcome for both parties, including minimising the time and cost to complete the project, and resolving remaining claims.

Following the “disappointing” outcome of the BLNG project, management conducted a review of other projects within the portfolio to ensure that risks and opportunities were identified and that mitigating actions were taken in support of both near-term forecasts and future budgets.

Lessons learnt from the BLNG project have been applied to improve tender evaluations, project execution and ongoing risk management of projects.

The previously reported McConnell Dowell debt of R529-million, arising from the BLNG project guarantee, has reduced by R251-million with the balance converted to term debt. This debt will be settled over the next 12 months.

The company says its bankers and guarantee providers remain supportive of McConnell Dowell, providing guarantee facilities in excess of current projected growth requirements.

The Australian and New Zealand and Pacific business units are indicated to continue to perform to expectation with strong liquidity and cash flow. McConnell Dowell closed the financial year with a cash balance of about R2.2-billion.

McConnell Dowell is said to have continued its recent success in building its order book, with A$1-billion of new work secured in the second half of the year.

MANAGEMENT CHANGES

Moolmans MD Jerome Govender tendered his resignation to pursue opportunities outside the group.

In the interim, group CEO Sean Flanagan has assumed the role of executive chairperson of Moolmans and a search for a new Moolmans MD is under way. He will continue performing his duties as group CEO.

Further, Rod Dixon joined Moolmans as operations director with effect from June 1 and Tumi Smith joined on July 1 as human resources executive. Both are members of the Moolmans Exco.

GROUP LIQUIDITY

The group is expected to report a net cash position of R1.3-billion, excluding IFRS16, after taking into account positive cash on hand of R2.3-billion and debt of R1-billion.

Aveng, the parent company, settled its legacy debt after partially using a portion of the total cash proceeds of R1.2-billion received for the sale of Trident Steel.