BUSINESS MAVERICK: Another milestone: Aveng records first operating profit since 2014

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The slow process of turning around infrastructure and mining company Aveng appears to be gaining momentum, but the CEO is not ready to admit victory.

A year ago, at the presentation of its interim results, management at Aveng announced the achievement of a major milestone — its first operating profit in many years. A year later, management has another milestone to report: headline earnings per share of 0.6 cents. It might seem small, but it’s up from a loss of 1.1 cents per share for the six months to December 2019, and a loss of 4.9 cents for the full year to June 2020.

The good news is that Aveng’s reserves and capital improved to 10.8 cents per share from 9.5 cents at the close of the 2020 financial year in June. As part of the recapitalisation and restructuring, banks and other lenders will convert certain Aveng debt into shares at five cents per share. When the recapitalisation and restructuring are completed, Aveng’s issued shares will increase to about 53 billion from 19.3 billion pre the rights issue. This will result in Aveng’s shareholders’ interest being diluted to 6.2 cents per share from an estimated 10.8 cents per share currently, De Klerk notes.

Gross profit margins, he adds, were slashed to 5.7% from 10%, but earnings from other sources saved the day as operating earnings jumped by about 160%. Moolmans, which is an open cast mining company operating in sub-Saharan Africa, has narrower growth prospects, and as such its growth is not expected to be as meteoric.

 

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