AVENG : Announcement of the QCLNG arbitration award update on corporate actions renewal & withdrawal of cautionary

AEG 201707310020A

Announcement of the QCLNG arbitration award, update on corporate actions, renewal & withdrawal of cautionary

AVENG LIMITED

(Incorporated in the Republic of South Africa)

(Registration number: 1944/018119/06)

ISIN: ZAE000111829

SHARE CODE: AEG

('Aveng', 'the Company' or 'the Group')

ANNOUNCEMENT OF THE QCLNG ARBITRATION AWARD, UPDATE ON CORPORATE

ACTIONS, RENEWAL AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENTS AND

TRADING STATEMENT.

INTRODUCTION

In Aveng's Interim Results announcement of 20 February 2017, the Group highlighted the expected

resolution of the long-outstanding QCLNG matter and the associated balance sheet risk in its outlook.

Furthermore, in the SENS announcement of 17 May 2017, Aveng reported that it was re-evaluating

certain long-outstanding uncertified revenue. Aveng wishes to provide the following update:

• The resolution of disputed claims pertaining to the Queensland Curtis Liquefied Natural Gas

('QCLNG') pipeline project, which was completed in 2014 by a joint venture that included

McConnell Dowell (a subsidiary of Aveng), and the financial effect thereof;

• Termination of the Aveng Steel disposal process;

• The Aveng Grinaker-LTA empowerment transaction; and

• Renewal and withdrawal of cautionary announcements.

QCLNG AWARD

McConnell Dowell (a 100% subsidiary of Aveng), together with its joint venture partner, was

responsible for the execution of the QCLNG project in Australia over a four-year period that started in

2010. Following various contractual disputes and a protracted arbitration process, the QCLNG award

provides that McConnell Dowell is entitled to receive compensation in the amount of AUD50.5 million

(R508 million) (including interest), being 50% of the total award to the joint venture.

Salient features of the award include:

• AUD50.5 million (R508 million) to be settled forthwith;

• Each party is accountable for its legal expenses; adequate provision has been made for

McConnell Dowell's legal fees; and

• The QCLNG award is binding and final, with only very limited appeal rights.

Kobus Verster, Aveng Chief Executive Officer, commented, 'The QCLNG arbitration award marks an

important milestone and brings an end to this protracted legal process. This award, allows us to

remove substantial risk and uncertainty from the company. I would like to thank our core bankers and

other financial institutions for their continued support during this prolonged process.'

Given that the QCLNG award is less than the amount recognised within uncertified revenue and

claims, the Group will record a non-cash write-down of AUD234 million (R2,4 billion) in relation to the

QCLNG award in its reported results for the year ended 30 June 2017. This charge will reduce both

earnings per share and headline earnings per share each by 595 cents.

NET DEBT

The proceeds from the QCLNG award will improve the Group's net cash position by R508 million. At

30 June 2017, the Group's net debt position is R1 070 million (31 December 2016: R937 million). On

settlement of the QCLNG award post year end, the Group will significantly reduce its net debt

position.

OTHER LONG-OUTSTANDING UNCERTIFIED REVENUE

As stated in the trading statement and cautionary announcement of 17 May 2017 and the subsequent

renewal, Aveng continuously assesses its recognised uncertified revenue. Following the QCLNG

award and previously reported awards in South Africa, which resulted in significant write-downs,

management is conducting a detailed review of previously recognised uncertified revenue and project

performance. This exercise is progressing well and the results thereof will be communicated in due

course.

STEEL DISPOSAL UPDATE

Shareholders are referred to the cautionary announcement dated 3 July 2017, in relation to the sale of

Aveng Trident Steel by Aveng Africa (Pty) Ltd.

Shareholders are advised that negotiations relating to the disposal of Aveng Trident Steel have been

terminated due to the inability to reach agreement on an acceptable value. No other negotiations are

currently in progress.

Over recent months, the Company has continued with various interventions that have resulted in the

business being able to generate positive cash flow and reach an EBITDA break-even position for the

year, notwithstanding challenging market conditions.

With the termination of negotiations, it is management's intention to implement further optimisation

initiatives within Aveng Trident Steel. This includes capitalising on its leading position within the

automotive sector.

AVENG GRINAKER-LTA EMPOWERMENT TRANSACTION UPDATE

Following overwhelming shareholder support at the extraordinary meeting held on 29 March 2017,

Aveng is pleased to report that the Aveng Grinaker-LTA empowerment transaction, which will result in

the sale of 51% beneficial interest in the business to Kutana Construction, has advanced. Aveng has

received unconditional approval from both the South African Competition Commission and

competition authorities in Namibia and Botswana. Approval is awaited from the Swaziland authorities.

RENEWAL OF CAUTIONARY - UNCERTIFIED REVENUE

The cautionary announcement dated 3 July 2017 is hereby renewed and shareholders are advised to

exercise caution in respect of this matter when dealing in Aveng securities.

WITHDRAWAL OF CAUTIONARY - STEEL DISPOSAL

The cautionary announcement dated 3 July 2017 is hereby withdrawn and shareholders are no longer

required to exercise caution in respect of this matter when dealing in Aveng securities.

TRADING STATEMENT

In terms of paragraph 3.4 (b) of the JSE Limited Listings Requirements, a listed company is required

to publish a trading statement as soon as a reasonable degree of certainty exists that the financial

results for the upcoming reporting period will differ by more than 20% from those of the previous

corresponding period.

The Company released a trading statement on 17 May 2017 stating that the Group expects basic

earnings per share ('EPS') and headline earnings per share ('HEPS') for the year ended 30 June

2017 to be substantially more than 20% lower than the basic EPS loss of (25.4) cents and basic

HEPS loss of (75.2) cents reported for the previous comparative period.

Shareholders are advised that a further trading statement will be released as soon as there is a

reasonable degree of certainty as to the likely range by which the Group's EPS and HEPS are

expected to decrease.

The above information has not been reviewed or reported on by the Company's external auditors.

31 July 2017

Jet Park

JSE Sponsor: UBS South Africa Proprietary Limited

Michael Canterbury

Group Executive: Strategy & Investor Relations

Tel: 011 779 2979

Email: michael.canterbury@avenggroup.com

FORWARD-LOOKING STATEMENTS

This announcement includes forward-looking statements that reflect the current views and

expectations of the Board with respect to future events and financial and operational performance. All

statements, other than statements of historical fact are, or may be deemed to be, forward-looking

statements, including, without limitation, those concerning the Group's strategy; the economic outlook

for the industry; and the Group's liquidity and capital resources and expenditure.

These forward-looking statements speak only as of the date of this announcement and are not based

on historical facts, but rather reflect the Group's current expectations concerning future results and

events. The Group undertakes no obligation to update publicly or release any revisions to these

forward-looking statements to reflect events or circumstances after the date of this announcement.

Date: 31/07/2017 10:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').

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