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AVENG LIMITED - Voluntary Announcement: Response to the Impact of Covid-19

Release Date: 26/03/2020 13:55
Code(s): AEG     PDF:  
 
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Voluntary Announcement: Response to the Impact of Covid-19

AVENG LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1944/018119/06)
Share code: AEG
Share ISIN: ZAE000194940
("Aveng", "the Company")

VOLUNTARY ANNOUNCEMENT: RESPONSE TO THE IMPACT OF COVID-19

During the course of the last week, measures have been announced by governments around the world in
response to the Covid-19 pandemic. These include most of the jurisdictions in which Aveng operates,
including South Africa, Australia, New Zealand, Singapore, Malaysia, Thailand and Indonesia.

On Monday 23 March 2020, President Ramaphosa announced a 21-day lockdown in South Africa
commencing on Thursday, 26 March. This is unprecedented in the history of South Africa’s democracy
and will have immediate and long-lasting effects on our society. Similar restrictive actions, with varying
degrees of severity, have been announced in many of the geographies in which we operate.

At Aveng, we are focused on the safety and well-being of all of our people and ensuring the long-term
sustainability of our business for the benefit of all stakeholders. Our executive team has met with the
management teams of each of our businesses to discuss the impact of these restrictions and our
responses thereto.

These events are highly complex, present significant uncertainty and continue to evolve at a rapid rate.
The executive team is monitoring the situation on a daily basis and has formulated contingency plans
across the Group. These plans will be adapted to ensure that risks are addressed as they arise and as
new information comes to hand.

Business Impact

Moolmans

The Group’s South African business, Moolmans, currently has open cut contract mining operations in the
Northern Cape and Mpumalanga provinces in South Africa and in Guinea and a deep level shafting
sinking operation in the Limpopo province of South Africa. As part of the national lockdown in South
Africa, all non-essential local mining operations are required to be placed on care and maintenance.

Moolmans will cease active mining at its South African sites in accordance with these regulations.
Essential care and maintenance activities will continue as required on a site by site basis to ensure that
all sites are rendered safe and that the business protects its assets. This will ensure a full and efficient
recommencement of mining activities as quickly as possible post the cessation of the national lockdown.

The Moolmans contract in Guinea continues to operate at this stage.

McConnell Dowell
The impact of the COVID-19 pandemic on the construction industry globally is unprecedented.
Substantial planning is being undertaken to ensure the industry is able to continue to operate safely and
efficiently where it is able to do so and, where industry lockdowns are enforced by government, to ensure
a full and efficient recommencement when the time comes.

Aveng subsidiary, McConnell Dowell has an order book comprising of 90% government projects spanning
across its operating regions in Australia, New Zealand, the Pacific and South East Asia. The full extent to
which operations across the portfolio will be impacted by government restrictions is at present unknown.
However, this strong weighting of the order book towards government work is considered to be a
significant risk mitigation in the current circumstances. In addition, there is a high level of confidence that
government stimulus packages will be made available to ease the financial impact on the industry.

Currently, 85% of McConnell Dowell’s active project portfolio remains operational, subject in some places
to manageable restrictions associated with social distancing measures. 75% of McConnell Dowell’s
operations in New Zealand have been temporarily stopped pursuant to a “Stage 4” lock-down announced
by the New Zealand government for a 4-week period. In South East Asia one project in Indonesia has
been impacted, and all projects in Australia are currently operational (as of 26 March).

Pleasingly, McConnell Dowell has been awarded more than AUD900 million in new contracts since
December, all with government customers, bringing work in hand to just over AUD2 billion with 90% for
Government customers. In addition, AUD1.4 billion of projects are currently in preferred status or ECI
contracts, with a further AUD1.3 billion of other tenders currently outstanding pending contract award.

Rest of Group

Aveng Trident Steel is primarily a service centre business serving the automotive industry in South Africa.
Following announcements by a number of large automotive customers and the port authority, Trident’s
operations have been significantly curtailed. These operations have been shut down in a controlled
manner, in line with the 21-day lockdown. The operations will recommence once the restrictions of the
lock-down have been lifted. All operations within South Africa for the remaining Manufacturing businesses
have been closed for the duration of the lockdown with limited operations remaining in other Southern
African countries for now.

The Group will continue to give liquidity and cash flow management the highest level of focus. Active cost
saving measures are being implemented for the areas of the business being directly affected in order to
mitigate the overall financial impact. Revenue will be reduced through this period until projects restart.

We will continue to engage with our clients, suppliers, insurers, banks and investors over the coming days
and weeks to find ways to protect Aveng, ensure its ongoing sustainability and alleviate the burden on our
people and other stakeholders.

The current situation is highly complex and is evolving at a rapid pace. As a result, it is not possible, at
this point, to give an accurate estimate of the financial impact that the pandemic will have on the
business. The Board will continue to communicate to shareholders as appropriate.

The information contained in this announcement has not been reviewed and reported on by Aveng’s
external auditors.
Melrose Arch
26 March 2020

JSE Sponsor
UBS South Africa Proprietary Limited




Michael Canterbury
Group Executive: Strategy & Investor Relations
Tel: 011 779 2979
Email: michael.canterbury@avenggroup.com

Date: 26-03-2020 01:55:00
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