JSE-listed construction group Aveng had a two-year order book of R30,4-billion and would, going forward, target further opportunities worth about R100-billion, CEO Roger Jardine said on Wednesday.

He explained that this project pipeline included work that would form part of South Africa’s R787-billion infrastructure spend, $22-billion to be spent on infrastructure in the rest of Africa and $272-billion to be spent on infrastructure in the Middle East.

The group would look at where it could play a role, said Jardine.

Further, he noted that, after strong investment in its contract-mining subsidiary, Moolmans, there had been a strong growth in the order book for the subsidiary.

New clients in the gold, iron-ore, coal, copper and other commodity sectors had been signed up.

In 2009, Aveng had experienced cancellations of awarded work amounting to R4,2-billion.

The group also posted a 10% drop in headline earnings in the year ended June 30, falling to R2,1-billion from R2,3-billion in 2008.

The company explained that while its construction and engineering and opencast mining units had performed well, its manufacturing and processing business had experienced a 54% decline.

Aveng said that the steel markets it served had contracted materially in the year under review, with some segments down by more than 30%.

The group would, going forward, focus on conducting its business better by improving margins, cost structures and business plans in order to generate more value for shareholders.

It would then systematically grow the group in the infrastructure value chain, said Jardine.

The water and power sectors were two of the areas where Aveng saw significant market opportunities.

The acquisition of water management solutions company Keyplan by Aveng’s subsidiary, Engineering & Projects Company, in 2008, was of strategic importance, noted Jardine, adding that the water infrastructure space was one area it would enter into “proactively” in the future.

It was already active in the water services and solutions market in Africa and Australia and planned to extend its footprint further in Africa and also into the Middle East. The group also planned to acquire new technologies and skills in the water infrastructure sector.

Further, the group would also extend its activities in the power construction market, including South Africa’s nuclear power programme and independent power producer opportunities in South Africa and in the rest of Africa.

Jardine noted that Aveng was confident that South Africa’s nuclear programme would proceed at some stage, saying that the group was maintaining a readiness to participate in the programme when it goes ahead.

Meanwhile, the company would also be open to potential acquisitions, as it had a strong balance sheet and unencumbered cash of R2,4-billion.

However, Aveng would not go on a “shopping spree” just because it had the cash or rush into any acquisitions, he said.

COMPETITION COMMISSION

Jardine also emphasised Aveng’s position with regard to uncompetitive behaviour, saying that it did not condone such behaviour and was ready to cooperate with the competition authorities.

This followed an announcement made by the Competition Commission, last week, that it had started with an investigation into potential collusive practices in the construction sector.

It had named a number of large construction groups, including Aveng and Grinaker-LTA, as part of its investigations.

Jardine said that the group would cooperate with the authorities and move forward to promote a new way of doing business in the industry. It would inform the market as new developments in the investigation occurred.

The group, in February, paid a R46-million administrative penalty to the Competition Commission to settle a complaint against one of its business units, Infraset, which had been found by the commission to have contravened the Competition Act.

To subscribe to Engineering News's print magazine email subscriptions@creamermedia.co.za or buy now.