JSE-listed infrastructure and contract mining group Aveng has reaffirmed its plans to seek an international listing and also confirmed on Tuesday that it had narrowed its offshore listing focuses to bourses in Singapore and Australia.
CEO Sean Flanagan justified the group’s foreign listing ambitions on the basis that a significant portion of the combined revenue of McConnell Dowell and Moolmans, its two remaining core businesses, were derived from outside of South Africa.
Excluding Trident Steel, which Aveng still intends selling despite having been obliged by accounting rules to reclassify the business as a continuing operation during the interim period, 85% of its revenue and 64% of its earnings before interest and taxation, are being derived from outside of South Africa.
That ratio, Flanagan said during a presentation, would rise further as Moolmans secured more work in the rest of Africa, where it was pursuing 13 tender opportunities with a combined value of R70-billion.
“We will, therefore, continue to develop the opportunity for an international listing to facilitate growth,” Flanagan said, noting that the growth prospects were strongest in Australia, as well as West and Southern Africa.
Aveng was at pains to stress that the group, which has undergone far-reaching restructuring since 2017, was moving from “recovery to growth”, despite its earnings for the interim period falling sharply to R53-million from R438-million in the comparable period of 2021.
The unanticipated slump is reflected in the Aveng share price, which has fallen significantly in recent weeks and continued to trade lower, at about R20.30 a share, after the results were formally released on Monday evening.
CFO Adrian Macartney provided a detailed exhibition of the impact that Trident’s reclassification had had on the results and presented a reconciliation of “normalised earnings”, which reflected earnings for the period of R82-million compared with R73-million in the prior period.
Macartney said that the foreign listing was unlikely to take place in the second half of the current financial year, owing to the regulatory and taxation issues that would need to be finalised before such a listing.
“We have been evaluating, over the last few months, two particular stock exchanges. We are looking at Singapore and the Australian Stock Exchange,” he said.
Flanagan argued that the international listing and attracting new capital would be required for the implementation of a growth strategy that would include both “organic and inorganic” growth.
He insisted that the foundations had been laid for the company to now pursue its aspiration of being an “international infrastructure, resources and contract mining group operating in selected markets”.
However, further balance sheet optimisation was required, including through the eventual sale of Trident Steel and through further debt-reduction initiatives.
Aveng expected to further reduce its debt by R320-million during the second half of the year, having lowered its debt by R65-million to R814-million in the first half.