Following the trading statement issued on 13 February 2017, Aveng received the award notification from a Dispute Adjudication Board in relation to the Mokolo Crocodile Water Augmentation project claim previously instituted by the Group. Aveng had not previously anticipated receiving this award during the reporting cycle. Whilst the award was in favour of the Group, the amount awarded was significantly less than that which was anticipated in the preparation of the 31 December 2016 results. Aveng is not in agreement with this award and is considering filing a notification of dissatisfaction which may move this dispute into arbitration.
Despite the Group's view on the recoverability of this claim, Aveng believes that it is prudent for this adjusting post balance sheet event to be recognized and the Group is therefore required to revise the previously provided guidance to the market, resulting in earnings reducing by R92 million. Shareholders are advised that the Group expects the adjusted headline loss to be between (R91) million and (R72) million.
Aveng shareholders are reminded that the unaudited financial results for the six months ended 31 December 2016 will include two non-recurring exceptional items:
*a present value charge of R165 million (R255 million payable over 12 years) for the expense pertaining to the settlement agreement (the "Settlement") concluded on 11 October 2016 with the South African government; and
*an insurance recovery related to the Moma Sands counter claims of R150 million.
Including the impact of the non-recurring items highlighted above:
*The Group anticipates reporting a headline loss of between R380 million and R400 million and between 65% and 73% worse than the headline loss of R231 million for the period ended 31 December 2015.
*HEPS is expected to reduce by between 66% and 74% and be between (96.0) and (101.0) cents per share compared to (58.0) cents per share for 31 December 2015.
*Earnings for the period is expected to decrease by between 265% and 274% and be between (R380) million and (R400) million compared to earnings of R230 million for 31 December 2015. The prior period included the once off gain on the sale of the majority of the Group's property portfolio.
*EPS is expected to reduce by between 266% and 275% and be between (96.0) and (101.0) cents per share compared to 57.8 cents earnings per share for 31 December 2015.
The forecast financial information contained in this trading statement has not been reviewed and reported on by Aveng's auditors.
The Group's reviewed interim results for the six months to 31 December 2016 will be released on the Stock Exchange News Service on 20 February 2017. The Group will be updating the market on its business in a presentation in Johannesburg on 21 February 2017. The presentation will be webcast and will be available for all stakeholders on the Group's website, www.aveng.co.za/ir.