Aveng reported an adjusted headline loss of R76 million or 19.2 cents loss per share for the six months ended 31 December 2016, compared to a headline loss of R231 million or 58 cents loss per share for the comparative period.
In line with expectations, Group revenue declined by 21% to R14.3 billion (2015: R18 billion), due to a weak macro-economic climate and the completion of some large projects, with McConnell Dowell being most significantly impacted. Adjusted net operating earnings increased to R151 million from R52 million in 2015, driven primarily by a marked improvement in Aveng Grinaker-LTA, Aveng Trident Steel and a 25% reduction in Group overheads. This improved performance was partially offset by the under-performance at McConnell Dowell and the impact of the downturn in the mining sector in the prior year.
Outlook and prospects
Challenging economic conditions are expected to continue in the short term. There are attractive mining opportunities being investigated as a result of a more optimistic outlook emerging on commodity prices. We expect the benefits of the various business optimisation initiatives to continue to contribute to performance in the second half of the financial year as the business positions itself for profitable growth within the second phase of our strategy.
The claims resolution process on QCLNG is expected to be concluded during the course of the current financial year and Gold Coast in the 2018 calendar year. In addition, we are involved in other significant commercial close outs and negotiations which add uncertainty. Winning work at acceptable margins, improving operational performance and the recovery of claims remain a priority for McConnell Dowell.
The Group will look to grow the Aveng Grinaker-LTA order book with the finalisation of the transformation transaction, which is aligned to the strategy of Aveng to further develop and transform the South African construction industry and will ultimately result in value enhancement for shareholders.
The divestment of Aveng Trident Steel remains an objective, however the achievement of acceptable value under current market conditions is likely to be challenging.
Appointment of new sponsor/change in sponsor
Shareholders are advised that the Company has appointed UBS South Africa (Pty) Ltd. as sponsor to the Company, replacing JP Morgan Equities South Africa (Pty) Ltd., with effect from 10 February 2017.