Extract from the Group report:
"Management has prepared a budget and business plan for the 2019 financial year and the following two years, as well as cash
flow forecasts covering a minimum of 12 months from the date of these financial statements. These forecasts have been
prepared with the assistance of independent external advisers to ensure that they have been accurately compiled using
appropriate assumptions. The budgets, plans and forecasts have, together with the assumptions used, been interrogated and
approved by the Board. These forecasts and plans, being implemented by management, indicate that the Group will have
sufficient cash resources for the foreseeable future. In approving the operational and liquidity forecasts, the Board has
considered the following information up to the date of approval of these financial statements:
Strategy adopted by the Board and announced on 26 February 2018;
Successful R493 million rights issue concluded on 4 July 2018;
Early redemption of the R2 billion convertible bond, including the successful raising of a new R460 million debt instrument
to facilitate the settlement of R657 million of existing convertible bonds at a 30% discount ahead of the early redemption.
The remaining R1,4 billion bonds were settled through the specific issue of ordinary shares at R0,10 per share on
25 September 2018:
Implementation of a revised Common Terms Agreement with the SA lending banks that includes renewed facilities, additional
funding of R400 million and extended funding terms to 2020;
Updated non-core asset disposal plan, targeting majority of disposals by 30 June 2019, including the announced property
disposals of R254 million;
Updated budget and business plans for the post year end period up to 31 December 2019 for the Group, incorporating the
benefits already realised from the Strategic Action Plan such as improved operating performance, greater predictability of
performance and working capital enhancements, as well as future benefits to liquidity to be achieved once non-core
businesses have been disposed;
Sensitivity testing of key inputs included in the operating and liquidity budgets to ascertain the effect of non-achievement of
one or all of the key inputs (operational performance, non-core asset disposal timing), including any effect on the ongoing
compliance with covenant requirements in place with the SA lending banks, Australian banks and other financing agreements;
A short-term liquidity forecast management process that has been introduced and embedded in all the South African
operations with the help of external consultants.
The Group has cash of R2,1 billion (2017: R2,0 billion) at year end, R568 million (2017: R625 million) of which is held in joint
arrangements. Advance payments that will be used in the short term amount to R85 million (2017: R146 million) while short-term
debt repayments are R255 million (2017: R704 million). After working capital requirements of R800 million (2017: R800 million)
and unutilised facilities of R536 million (2017: R1,4 billion), the short-term liquidity of the Group is considered to be satisfactory to
the Board with liquidity headroom of R904 million."
This in my opinion is great. New customers now know if they enter into a contract with Aveng they will be able to finish the project because they have enough cash to do so. A debt to equity ration of 40% is amazing.
As soon as Allan Grey has sold their required shares to fit their strategy we can see the 10 cents in my view. They are currently selling at 70% loss.
