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CONSTRUCTION WORLD
OCTOBER
2016
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MARKETPLACE
Trading statement
Headline loss per share (HEPS loss) for the
12 months ended 30 June 2016 will be
between 45% and 55% better than the
comparative period. The HEPS loss will be
between 65 and 94 cents per share, compared
to 144,3 cents per share in 2015, while the
headline loss for the year will be between
R260-million and R318-million, compared to
R578-million in 2015.
The basic loss per share (EPS loss) will
be between 75% and 85% better than the
comparative period. The EPS loss will be
between 17 and 29 cents per share, compared
to 114,8 cents per share in 2015, with basic
loss in earnings expected to be between
R69-million and R115-million for the year,
compared to R460-million in 2015.
This result is a material improvement on
the prior year and is underpinned by:
• an improved financial performance from
Aveng Grinaker-LTA on completion of loss-
making and non-contributing contracts,
an improvement in the ratio of contracts
operating at tendered margins, strong
performance in the building business,
the resolution of some major commercial
claims and a further reduction in fixed
operating expenses
• realisation of cost savings initiatives
previously implemented throughout
the Group
• improved financial performance from
Aveng Steel in the second half of the year
Fair value gains on the infrastructure invest-
ments though partially offset by:
• restructuring expenses incurred to further
right-size the Group’s overhead structure
in response to market conditions
• underperformance on certain contracts in
McConnell Dowell
• additional expenses on a problematic
water contract in Aveng Water
• contract cancellations and activity
reductions in Aveng Mining
• Continuing difficult trading conditions
in most of the markets in which the
Group operates.
The basic loss for the year includes the profit
on sale of the South African property portfolio
of R577-million in the first half of the year,
partially offset by the impairment of certain
steel assets recognised in the second half of
the year.
Aveng has entered into a binding agree-
ment with Royal Bafokeng Holdings (RBH)
who will acquire Aveng’s equity interests and
loan in the following investments, for a cash
consideration of R860-million:
• The 138 MW Gouda wind farm, one of the
largest wind farms in the Western Cape on
which 46 wind turbines are erected.
• Imvelo Concession Company, which is the
MAJOR DIVESTMENT
Aveng Limited (Aveng) has announced its trading statement
for the year ended 30 June 2016. Also announced are
agreements for the monetisation of four of its major
infrastructure investments for a cash consideration of
R860-million; and the sale of its Steeledale business to
Kutana, a black women-owned investment group.
holder of a 27-year concession to build,
operate and maintain the Department
of Environmental Affairs’ office campus
in Tshwane.
• N3 Toll Concessions, which entered into a
30-year concession agreement to design,
construct, finance, operate and maintain
the N3 toll road between the Cedara
Interchange in KwaZulu-Natal to the
Heidelberg South interchange in Gauteng.
• The 74 MW Sishen Solar Photovoltaic Plant
located in the municipality of Dibeng in
the Northern Cape.
These sales are subject to the normal and
customary terms and conditions, including
the fulfilment of certain conditions precedent.
The effective date is estimated to be on or
about 31 October 2016.
Kobus Verster, Aveng CEO, said: “These
investments have reached an appropriate
maturity where we can transfer them to
a strong investment company and realise
value for the Group. Aveng Capital Partners
will continue to pursue project development
opportunities for the Group as our investment
and structured financing arm.”
Albertinah Kekana, Royal Bafokeng
Holdings CEO, commented: “This proposed
agreement and its focus on renewable energy,
property and road infrastructure is in line with
our diversification strategy. This proposed
deal represents our long term investment
approach and our commitment to the South
African growth story.”
Proposed disposal of steel and
mesh business
Aveng has reached an agreement with Kutana
to acquire its steel reinforcing and mesh
business (Steeledale) in terms of a phased
exit strategy.
From the effective transaction date,
which is estimated to be on or about
1 November 2016, Kutana will acquire 70% of
the Steeledale business. Aveng can elect to
sell the remaining 30% at any time after three
years. The sale price is determined by way
of a formula applicable at the effective date
and the purchase consideration is expected
to be approximately R252-million, of which
between R93-million and R123-million will
be paid in cash and the remainder paid on a
deferred basis.
This transaction is subject to the
normal and customary terms and condi-
tions, including the fulfilment of certain
conditions precedent.
“I am pleased that both these transac-
tions have been implemented in line with
our strategy and previous announcements.
In addition to realising value, we have also
established partnerships with two excep-
tional empowered companies and I look
forward to forging positive relationships,”
concluded Verster.
Kobus Verster, Aveng CEO and Albertinah Kekana, CEO of Royal Bafokeng Holdings.