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South Africa: A Revamped Grand Old Lady – Aveng’s Journey Back From the Brink

Engineering firm Aveng once traded at R44/share. But risky projects, poor capital allocation decisions and poor operating performance saw debt spiral while revenue collapsed. A turnaround plan, announced in 2018, aimed to set the company on a new footing. It seems to be on track.

It is so much easier to break something than rebuild it. This is a well-worn truism, but ask Aveng’s CEO, Sean Flanagan, and its CFO, Adrian Macartney, who have been involved in the company’s restructure and turnaround since 2017, and they just roll their eyes.

“We have been up to our eyeballs,” says Flanagan. “Putting the group back on a positive trajectory has required that many hard and tough decisions be taken.” This includes the sale of about 14 businesses, including Aveng Grinaker-LTA Construction, the once high-flying construction business in 2019, which was particularly difficult. “Sometimes you have to chop off a limb to save a body,” Flanagan says.

Management believes the company’s results for the year to June, released on Monday 30 November – the last day of the JSE’s Covid-19 grace period – are something of a milestone.

At the half-year results in February, Aveng reported its first operating profit in many years…