AVENG LIMITED STRATEGIC ACTION PLAN EXECUTION AND TRADING STATEMENT. Salient features

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1 AVENG LIMITED (Incorporated in the Republic of South Africa) (Registration number: 1944/018119/06) ISIN: ZAE SHARE CODE: AEG JSE 2019 Convertible Bond Code: AEGCB JSE 2019 Convertible Bond ISIN: ZAE ("Aveng", "the Company" or the Group ) STRATEGIC ACTION PLAN EXECUTION AND TRADING STATEMENT Salient features Good progress with the implementation of the strategic action plan Rights offer of R493 million completed Convertible bondholders support for early redemption and equitization McConnell Dowell performance continues to improve Progress in addressing and closing underperforming contracts Non-core assets classified as Held For Sale and fair valued Significant interest in non-core assets with early progress on disposals INTRODUCTION Aveng announced its strategic action plan in February 2018 following the completion of a thorough strategic review, which was undertaken with the assistance of an independent advisor. The aim of the strategic action plan was to create a robust and sustainable group. Following the announcement, the implementation of the strategic action plan has focused on: Ensuring a long term sustainable capital structure for the Group Creating liquidity through the sale of non-core businesses and assets; and Increased focus on our core businesses. ENSURING A LONG TERM SUSTAINABLE CAPITAL STRUCTURE An essential aspect of the strategic action plan is to finalise a set of capital markets transactions to ensure a long term sustainable capital structure for the Group. This includes raising new capital and settling the existing convertible bonds before their July 2019 maturity date. Aveng are well advanced in agreeing the terms of a revised common terms agreement with its South African lending banks. Through this process, Aveng was able to negotiate renewed facilities, obtain additional funding to improve its liquidity position and extend the funding term. These renegotiated terms will remove some of the immediate pressure on liquidity and provide certainty as to the availability of ongoing banking facilities. The Company expects to finalise the terms of the revised common terms agreement prior to the release of its year end results. At the end of June 2018, the Company completed a successful rights offer, raising gross proceeds of R493 million of new capital from shareholders. The quantum achieved was at the higher end of expectations reflecting stakeholder support for the strategic action plan.

2 In order to address the convertible bonds maturing in July 2019, the Company has announced on 29 August 2018 the terms of an early bond redemption. In terms of the early bond redemption Aveng have agreed to: i) capitalise approximately R96 million of interest costs under the existing convertible bonds; ii) repurchase R657 million of its existing convertible bonds at a price of 70% of par, funded through the issue of a new debt instrument of R460 million; and iii) settle the remaining R1 403 million bonds at par through the issuance of new Aveng shares at a price of R0.10 per share. The early bond redemption will result in the de-leveraging of the balance sheet of approximately R1.5 billion and a related reduction in the interest burden. The Company remains firmly of the view that the implementation of the early bond redemption is in the best interest of all stakeholders. Deleveraging the Company to reduce its debt burden and improve liquidity is critical to realising value for Aveng shareholders. On 30 August 2018, bondholders voted to accept the terms of the early bond redemption as announced on SENS. On 10 September 2018, shareholders will be requested to vote to pass the necessary resolutions to give effect to the specific issue of shares to settle the bonds. Continuous engagement with the largest shareholders indicates that there is support for the proposed transaction. Improved liquidity management The Group has commissioned consultants to assist in introducing an improved liquidity management process in all its South African operations. The process is now fully operational and embedded within all of the South African businesses. The process has resulted in better management of cash, existing bank facilities and working capital. A significant improvement in the accuracy of cash flow forecasting is now evident, facilitating improved control and management of the Company s overall liquidity position. Following stakeholder support, the company s balance sheet will significantly improve and combined with improved liquidity allows the Company to complete the execution of the strategic action plan. CREATING LIQUIDITY THROUGH SALE OF NON-CORE ASSETS AND BUSINESSES The strategic review identified businesses and other assets that were considered to be non-core. These included Aveng Trident Steel, Aveng Grinaker-LTA, Aveng Manufacturing and certain properties and other assets. Performance of non-core businesses Significant progress has been made to turn around Aveng Grinaker-LTA following the appointment of a new leadership team. The loss making Civil Engineering business unit received immediate attention resulting in leadership changes and a specific focus on operational delivery on underperforming contracts. Three of the loss-making roads contracts in the Civil Engineering business have been completed in line with the revised budgets. The remaining two road contracts are achieving cost and productivity milestones and are performing in line with expectations. Interventions in the Inland Building business unit are underway to ensure that projects are completed within the expected time and cost objectives. Pleasingly, the remainder of the businesses including Mechanical & Electrical, Building Coastal, Ground Engineering and Aveng Water continue to show positive results, although these are insufficient to offset the losses incurred in Civil Engineering. Rand Roads results were negatively

3 impacted post year end following the recognition of a provision for a doubtful debt as a result of a client entering Business Rescue. Whilst two of the Aveng Manufacturing business units have performed profitably, other business units exposed to the mining and rail sectors continue to experience headwinds resulting in an overall operating loss for the segment. New leadership has developed a focused strategy to address underperformance, including closing non-performing sites, rationalising production facilities and reducing operational costs and capacity. In addition, there is a strong focus on driving offshore revenue opportunities, notably in Aveng DFC. Overall, whilst some business units remain loss making, the improvement initiatives undertaken are expected to place the segment on a stronger footing as the disposal process is underway. Aveng Trident Steel is led by a consistent and stable management team and continues to show improvements in profitability and will report an operating profit for the year to 30 June Volumes have remained largely static, but there has been some improvement in margins. Coupled with strong cost management, this has led to an overall improvement in the financial performance. Disposals Process As announced on 2 August 2018, Aveng has entered into agreements to sell its Van der Bijl Park and Jet Park properties for a total value of R254 million. The values achieved on these disposals were at or better than management expectations. These disposals evidence the commencement of the process to delever the Company and focus on core operations. The disposal of the Jet Park property remains subject to shareholder approval. The disposal process for non-core businesses was launched during the period, with significant interest from credible buyers for the majority of the businesses earmarked for sale. There has been engagement with potential buyers for all non-core assets, with non-binding offers received for several and negotiations well advanced on others. The decision to dispose of non-core assets has resulted in the consideration of impairment and the reclassification of the assets as held for sale. This requires the realisable value to be assessed under a different valuation approach, being fair value less costs to sell. This change in measurement criteria has resulted in adjustments to non-core asset values and related assets such as deferred taxation. The approximate value of these adjustments will be R2.2 billion. These adjustments will be reflected in basic earnings and basic earnings per share but are excluded from headline earnings and headline earnings per share. Management obtained independent valuations in support of the fair value assessments and remain confident that it will be able to realise acceptable values for these assets given the interest received from the market. The achievement of this objective remains one of management s overriding priorities. The planned completion of all disposals is by June UNLOCKING VALUE FROM CORE BUSINESSES McConnell Dowell In June 2017 McConnell Dowell completed a reset of its balance sheet post review of all longoutstanding uncertified revenue and claims. This allowed the business to embark on a more customer-centric settlement process aimed at disengagement from various litigation processes

4 through settling claims. This has yielded good results, with 20 of the 24 identified legacy claims being settled largely in line with the expected values during the course of the financial year. The remaining outstanding claims remain a source of future additional liquidity and progress in resolving them remains on track. Subsequent to the financial reset, McConnell Dowell has continued to strengthen its senior leadership team with the addition of experienced industry professionals. The stability and experience of this executive leadership team is delivering improved project performance and greater consistency of execution throughout the organisation. McConnell Dowell has been optimised and is now well-positioned to capitalise on growth opportunities. The business will report an operating profit for the financial year ended 30 June The improved operating performance together with the results of the settlement process on legacy claims has also resulted in a positive cash flow for the year. Notably, McConnell Dowell has been operating on a self-sustaining basis since the recapitalisation in September 2017, and this trend is expected to continue. McConnell Dowell has successfully completed a number of large contracts during the period and received several industry awards in the process. The markets serviced by McConnell Dowell offer significant opportunities but remain intensely competitive. In conjunction with the improved operating model, McConnell Dowell has undertaken an in-depth review of all markets in which it operates and has redefined its addressable market to target opportunities that are in line with its acknowledged areas of specialisation and in which the company has demonstrable history of successful execution. At 30 June 2018, McConnell Dowell s two-year order book was AUD 0.8 billion vs AUD1.5 billion in December The existing order book is higher quality due to the improved project execution demonstrated in the current results as well as the elimination of zero contribution legacy contracts. As such there is a higher level of confidence that the order book will result in McConnell Dowell delivering the gross margin embedded within the current workload. Winning new work continues to be a key focus for the business. A key aspect of this strategy is focussing on a number of Early Client Involvement (ECI) projects. In this type of process, clients engage with a preferred contractor to fully develop the scope and costs associated with the project. Due to the collaborative nature of this process, there is a higher likelihood that this will result in contract awards. The approximate value of work in pursuit by McConnell Dowell through ECI projects is AUD1.3 billion with the likelihood of converting this into confirmed order book being higher than via traditional tendering methods. Moolmans Moolmans continues to enjoy a strong market position as the pre-eminent open-cut mining contractor. Its track record of operational and financial performance and resilience in a difficult commodity market has made it more sustainable than other competitors. The mining sector in South Africa continues to be under significant pressure. Moolmans has underperformed for the year due to a number of underperforming contracts. A comprehensive, group lead, and structured turnaround intervention is underway. The immediate focus has been on improving contract performance, renegotiating contractual terms and, where necessary, exiting contracts. Good progress has been made. Two new leaders have recently been appointed. The turnaround programme is expected to continnue through the first half of the current financial year. Moolman s order book as at 30 June 2018 was R5,3 billion versus R6,7 billion in December 2017.Similar to McConnell Dowell, Moolmans will be enhancing its business development focus and processes. TRADING STATEMENT

5 In accordance with section 3.4 (b) of the JSE Listings Requirements, shareholders are advised that the headline loss per share ( HEPS loss ) for the 12 months ended 30 June 2018 will be more than 100% better than the comparative period. The HEPS loss will be between 297 cps and 329 cps, compared to a reported loss of cps in 2017 (adjusted for the deemed bonus element of the rights offer, cps in 2017), while the headline loss for the year will be between R1 602 million and R1 770 million, compared to a loss of R6 449 million in The basic loss per share ( EPS loss ) will be more that 100% better than the comparative period. The EPS loss will be between 607 cps and 671 cps, compared to a reported loss of cps in 2017 (adjusted for the deemed bonus element of the rights offer, cps in 2017), with basic loss in earnings of between R3 272 million and R3 616 million for the year, compared to a loss of R6 708 million in Shares were taken up during the rights issue. The shares were only issued on 2 July 2018 resulting in an event after the reporting date. Consequently, the issued ordinary shares will only increase in the 2019 financial year. However, the weighted average number of shares for the review period and prior corresponding period have been adjusted in accordance with IAS 33, Earnings Per Share, in order to account for the deemed bonus element inherent in the rights issue as a result of the Rights Offer being priced at a discount to the market share price. The Group is currently in the process of completing its financial statements and finalising the year end audit. The Group will release its results for the financial year ended 30 June 2018 on 25 September The financial information contained in this trading statement has not been reviewed nor reported on by Aveng s independent external auditors. JSE Sponsor UBS South Africa Proprietary Limited 7 September 2018 Jet Park Michael Canterbury Group Executive: Strategy & Investor Relations Tel: michael.canterbury@avenggroup.com