AEG 201512110042A
Trading Statement

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”)



Trading statement for the six months ending 31 December 2015

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 period
to be reported upon next will differ by more than 20% from those of the previous corresponding period.

Aveng shareholders are therefore advised that in respect of the unaudited financial results for the six months
ending 31 December 2015, the Group anticipates reporting a headline loss, with HEPS reducing by at least
100% compared to 34.5 cents per share for 31 December 2014. The headline loss for the six months is
expected to be no more than R300 million. This compared to a headline earnings of R138 million for the period
ended 31 December 2014 and a headline loss of R716 million for the second six months ended 30 June 2015.
The Group will update shareholders with a more precise range once the year end has closed.

The forecast financial information contained in this trading statement has not been reviewed and reported on
by Aveng’s auditors.




Interim results

The expected reduction in earnings compared to 31 December 2014 is primarily attributable to:

    -   The continued global economic slowdown affecting the key regions in which Aveng operates – most
        notably Australia - , resulting in a decrease in available contracts and associated revenue;
    -   Severe weakness in steel demand and pricing, resulting in an operating loss at Aveng Steel;
    -   Significant pressure on commodity prices across the board translating into lower margins in Aveng
        Mining;
    -   The inclusion of the results of the Electrix business in the prior period (R65 million operating earnings),
        which was subsequently sold;
    -     Lower fair value gains in Aveng Capital Partners on projects completed in the comparative period; and
    -     Withholding tax payable of R105 million on profit expatriated from Guinea following the completion of
          a project.

    This was partially offset by:

    -     An improved gross profit margin percentage as a result of a substantial improvement in the
          performance of Aveng Grinaker-LTA and the completion of longstanding underperforming contracts;
    -     Ongoing reduction in overheads throughout the Group.

Commercial claims

Actions commenced in the prior year have resulted in the successful resolution of a number of long standing
claims across the Group during the current period. Notably, this includes certain claims related to the power
programme in South Africa. This has added to the positive cash generation by Aveng Grinaker-LTA during the
period.

Following the repayment of the advance payment linked to the QCLNG project, the arbitration process has
advanced to the hearing stage, which is expected to continue through March 2016. The Group remains
optimistic on the merits of these claims. Having settled the QCLNG advance payment, there are no further
advance payments outstanding on the overall uncertified revenue for the Group and whilst earnings risk
remains, the settlement of claims will therefore be cash accretive.

Cash and Liquidity

Aveng Grinaker-LTA’s emphasis on resolving claims and debtor collections combined with improved
operational performance has resulted in positive cash flow. Combined with working capital reduction in Aveng
Steel and the positive cash flow from the Mining and Manufacturing business units, the South African
operations are expected to be cash positive for the period.
As anticipated, McConnell Dowell continues to be cash negative in the period as a result of the utilisation of
advance payments as contracts are completed and new work replenishment was slow in the prior year and the
completion of remedial works on legacy projects.
The conclusion of the property sale added R1.2 billion to the overall liquidity for the Group, offset by the
repayment of the QCLNG advance payment. The Group continued to review its liquidity position and remains
comfortable with the current liquidity outlook.

Order book
The Group’s two year order book increased by 6% since 30 June 2015 to R30.7 billion mainly due to recent
project awards at McConnell Dowell and the Building business unit within Aveng Grinaker-LTA. The quality of
the order book is improving as a result of a more selective approach to tendering and the reduction in the level
of non-contributing revenue within the order book has led to an improved embedded margin. This has
reduced the previously identified unsecured order book risk for the current year. The recent announcement
from our client, Anglo American PLC, is likely to negatively impact the order book of Aveng Mining.

Notable recent awards include:

    -   129 Rivonia, in Sandton
    -   The Leonardo Towers in Sandton
    -   New Hilton hotel in Swaziland
    -   Waitaki Bridges Replacement Project in New Zealand
    -   O-Bahn City Access project in South Australia
    -   Negi Pipeline in Australia

Strategic review

The Board is concerned with the current market valuation of the Company which it feels does not reflect the
intrinsic value of businesses within the Group as well as the upside potential resulting from the various
performance improvement and restructuring initiatives that are underway. Despite the improvements
produced by these initiatives, the Board is conscious of the poor market conditions for a number of the
Group’s key businesses and together with management are in the process of completing a strategic review to
unlock shareholder value in a timely manner. Shareholders will be kept abreast as these initiatives come to
fruition.

Reporting

The interim results for the six months to 31 December 2015 will be released on the Stock Exchange News
Service system on 23 February 2016 when the Group will be updating the market on its business in a
presentation in Johannesburg on the same day, and in Cape Town on 25 February 2016. The presentation will
be available for all stakeholders on the Group’s website, www.aveng.co.za

Forward Looking statements

This announcement includes forward-looking statements that reflect the current views or 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; use of the proceeds
of any rights offer; 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.

By order of the Board

Jet Park

11 December 2015

Sponsor:

J.P. Morgan Equities South Africa Proprietary Limited




Aveng Investor Relations contact:

Annemarie Marx

Tel: (011) 290 5641

Email: annemarie.marx@avenggroup.com

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