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AVENG LIMITED - Reviewed interim condensed consolidated financial statements for the six months ended 31 December 2025

Aveng Limited
Full analysis

What this filing means

Aveng returned to interim profitability and grew its order book, but strategic setbacks regarding asset disposals and persistent legacy project losses weigh on the outlook.

Aveng is finally making money again after a period of losses, and they have a large pipeline of new work. However, they failed to sell off a problematic mining contract and decided to keep a major subsidiary they were planning to split off, which means investors have to wait longer for a big payout.

Bull case

  • Return to operating and headline profitability with H1 2026 operating earnings of R107 million vs a R356 million loss in the prior period.
  • Gross margin improved significantly to 5.6% from 2.7%, driven by a return to gross profitability across all operating segments.
  • Strong liquidity position with net cash increasing to R2.8 billion and robust operating free cash inflow of R444 million.
  • Combined work in hand grew to R38.6 billion, with the Infrastructure segment showing particularly strong momentum in Australia and New Zealand.

Bear case

  • Strategic setbacks as the Tshipi contract disposal was terminated due to ongoing commercial disputes, leaving Aveng with a 'not sustainable' contract.
  • The board abandoned plans for the immediate separation of McConnell Dowell, indicating a longer-than-expected timeline to unlock shareholder value.
  • Persistent legacy project losses of A$20.2 million on the J108 and Kidston projects will drive significant cash outflows through FY 2027.
  • Severe safety underperformance in the Mining segment with a Lost-Time Injury Frequency Rate of 2.11, well above the 0.95 target.
View original SENS announcement

AI-generated summary by SENS-AI, based on the original JSE SENS filing.

SENS-AI conclusion

Aveng's interim results confirm a genuine operational turnaround, characterized by a return to headline earnings of R4 million and a robust R38.6 billion order book. However, the bull case is dampened by the failure to divest the unsustainable Tshipi contract and the delayed separation of McConnell Dowell, which were key catalysts for a valuation re-rating. While the balance sheet is healthy with R2.8 billion in net cash, the market must now digest ongoing legacy outflows and a longer strategic horizon. Investor Takeaway: The return to profitability is a critical milestone, but the lack of immediate strategic exits makes the current valuation difficult to justify until legacy project 'tails' are fully extinguished. Signal-to-Price Note: The price has shown negative momentum recently despite the return to profit, likely reflecting market disappointment over the cancelled Tshipi sale and the deferred McConnell Dowell separation.

Neutral. The operational recovery is priced in, but strategic execution risks remain high. Wait for clarity on Tshipi resolution before increasing exposure.

Evidence from the filing

  • The Group has returned to operating and headline profitability, significantly reversing prior period losses.

    “Operating earnings before capital items of A$9.4 million (R107 million) | 31 December 2024: loss of A$31.0 million (R356 million) • Headline earnings of A$0.3 million (R4 million) | 31 December 2024: loss of A$34.4 million (R399 million)”

  • Gross profitability has returned across all operating segments, reflecting a healthier underlying business.

    “The Group's gross earnings of A$69.4 million (R791 million) in H1 2026 (H1 2025: A$38.3 million), at a gross margin of 5.6% (H1 2025: 2.7%), reflect the return to a gross profitability of all segments across the Group.”

  • Aveng has delivered strong operating free cash inflow and substantially improved its cash and net cash positions.

    “The Group closed with a higher cash balance of A$308.8 million (R3.4 billion) (June 2025: A$267.3 million (R3.1 billion)) and an improved net cash position of A$250.1 million (R2.8 billion) (June 2025: A$211.4 million (R2.5 billion)”

  • The combined work in hand increased to A$3.5 billion, driven by significant growth in the Infrastructure segment.

    “The Group enters the second half of the 2026 financial year with combined work in hand amounting to A$3.5 billion (R38.6 billion), up from A$3.2 billion (R37.5 billion) in June 2025.”

  • The inability to dispose of the Moolmans' Tshipi contract due to ongoing commercial disputes is a significant red flag.

    “The Tshipi contract is not sustainable in its current format and management are considering all options to bring this to resolution. Renewed efforts have been made to seek a commercial settlement whilst the formal claims processes continue. Ongoing commercial disputes on the Tshipi contract have negatively impacted our ability to conclude a disposal transaction. As a result, negotiations have been terminated”

  • The decision to retain McConnell Dowell signals a failure to unlock shareholder value through structural changes.

    “During the period, the Aveng board thoroughly investigated a range of options for the separation of McConnell Dowell and concluded that the best route to obtaining value for shareholders at this juncture is for Aveng to retain its ownership of McConnell Dowell.”

  • The company continues to recognise further losses on key projects with additional forecast costs expected.

    “The gross earnings include losses of A$20.2 million (H1 2025: A$76.7 million) from the Jurong Region Line (J108) project in the Infrastructure Southeast Asia business unit, and the Kidston Pumped Storage Hydro (Kidston) project”

  • The Mining segment's substantial underperformance against safety targets indicates critical operational control deficiencies.

    “The Mining segment recorded a lost-time injury frequency rate of 2.11 against a target of less than 0.95 and total recordable injury frequency rate of 3.61 against a target of less than 3.00.”
Category
Results
Published
Feb 23, 2026

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